As filed with the Securities and Exchange Commission on April 30 ,
2010
File
No. 2-10827
File
No. 811-02265
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SECURITIES
AND EXCHANGE COMMISSION
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Washington,
DC 20549
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FORM
N-1A
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REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
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x
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Pre-Effective
Amendment No.
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o
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Post-Effective
Amendment No. 9 7
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x
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and/or
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REGISTRATION
STATEMENT UNDER THE
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INVESTMENT
COMPANY ACT OF 1940
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x
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Amendment
No. 9 7
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x
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The
Value Line Fund, Inc.
(Exact
Name of Registrant as Specified in Charter)
220
East 42nd
Street
New
York, New York 10017-5891
(Address
of Principal Executive Offices) (Zip Code)
Registrant’s
Telephone Number, Including Area Code: (212) 907-1500
Howard
A. Brecher, Esq.
The
Value Line Fund, Inc.
220
East 42nd
Street
New
York, New York 10017-5891
(Name
and Address of Agent for Service)
Copy
to:
Peter
D. Lowenstein, Esq.
496
Valley Road
Cos
Cob, CT 06807
It
is proposed that this filing will become effective (check appropriate
box)
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o
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immediately
upon filing pursuant to paragraph (b)
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x
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on
April 30, 2010 pursuant to paragraph
(b)
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o
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60
days after filing pursuant to paragraph (a)(1)
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o
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75
days after filing pursuant to paragraph (a)(2)
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o
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on
(date) pursuant to paragraph
(a)(1)
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o
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on
(date) pursuant to paragraph (a)(2) of Rule
485
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The
Value Line Fund, Inc.
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(VLIFX)
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P
R O S P E C T U S
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M
A Y 1, 2 0 1 0
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#00071697
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The
Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the
accuracy or adequacy of this prospectus, and any representation to the contrary is a criminal offense. |
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T
A B L E O F C O N T E N T S
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How has the Fund performed? Page
5
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Who manages the Fund? Page
7
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Tax Information Page
7
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Investment objectives Page
8
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Investment Adviser Page
11
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Management fees Page
12
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Portfolio management Page
12
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How to buy shares Page
13
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How to sell shares Page
16
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Special services Page
20
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Financial Highlights Page
23
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The
Fund’s primary investment objective is long-term growth of capital.
Current income is a secondary investment objective.
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This table describe s the
fees and expenses you pay in connection with an investment in the
Fund.
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Shareholder
Fees (fees paid directly from your investment)
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Maximum
Sales Charges (Load) Imposed on Purchases
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None
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Maximum
Deferred Sales Charges (Load) as a percentage of
original purchase price or redemption price, whichever is
lower
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None
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Maximum
Sales Charges (Load) Imposed on Reinvested Dividends
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None
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Redemption
Fee
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None
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Exchange
Fee
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None
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Annual
Fund Operating Expenses (expenses that you pay each year as a percentage
of the value of your investment)
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Management
Fees
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0. 70 %
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Distribution
and/or Service (12b-1) Fees*
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0.25%
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Other
Expenses
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0. 41 %
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Total
Annual Fund Operating Expenses
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1.36%
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Less:
Management Fee and 12b-1 Fee Waiver*
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-0.35%
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Total
Annual Operating Expenses After Fee Waiver*
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1.01%
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*
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Effective
May 1, 2010 through April 30, 2011, EULAV Asset Management, LLC., (the
“Adviser” or “EULAV”) has contractually agreed to waive the portion of the
management fee equal to 0.10% on the first $100 million of the Fund’s
average daily net assets, and 0.15% on any additional assets and EULAV
Securities, Inc. (the “Distributor”) has contractually agreed to waive all
of the Fund’s 12b-1 fee in an amount equal to 0.25% of the Fund’s average
daily net assets. There is no assurance that either the Adviser or the
Distributor will extend the contractual fee waivers beyond April 30,
2011.
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2
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Example
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This
example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods (your cost would be
the same if you did not redeem your shares). The example also assumes that
your investment has a 5% return each year and that the Fund’s operating
expenses remain the same and that the fee waiver is in effect for one year
only. This example assumes that (a) the Fund’s total operating expenses
remain the same and (b) the Adviser’s contractual management fee waiver
and the Distributor’s contractual Rule 12b-1 fee waiver is in effect for
year one. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
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1
year
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3
years
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5
years
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10
years
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Value
Line Fund
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$103
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$396
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$711
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$1,605
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Portfolio
turnover
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The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover
rate may indicate higher transaction costs and may result in higher taxes
when Fund shares are held in a taxable account. These costs, which are not
reflected in annual fund operating expenses or in the example, affect the
Fund’s performance. During the most recent fiscal year the Fund’s
portfolio turnover rate was 122% of the average value of its
portfolio.
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To
achieve the Fund’s investment objectives, the Adviser invests
substantially all of the Fund’s net assets in common stocks. In selecting
securities for purchase or sale, the Adviser relies on the Value Line
Timeliness™
Ranking System (the “Ranking System”), which compares an estimate
of the probable market performance of each stock during the next six to
twelve months to that of all of the approximately 1,700 stocks under
review and ranks stocks on a scale of 1 (highest) to 5 (lowest). All the
stocks followed by the Ranking System are listed on U.S. stock exchanges
or traded in the U.S. over-the-counter markets. The Fund’s investments
principally are selected from common stocks ranked 1, 2 or 3 by the
Ranking System at the time of purchase. Subject to the diversification
requirements of the Investment Company Act of 1940 applicable to
diversified funds (which generally means that it will not invest more than
5% of its total assets in the stocks of any one company), the Fund is not
subject to any limit on the percentage of its assets that may be invested
in any particular stock. The Adviser will determine the percentage of the
Fund’s assets invested in each stock based on the stock’s relative
attractiveness. Because the Adviser relies on the Ranking System in
managing the Fund’s portfolio, the Fund is not limited to investments
according to a company’s size.
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3
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Investing
in any mutual fund involves risk, including the risk that you may receive
little or no return on your investment, and that you may lose part or all
of your investment. Therefore, before you invest in this Fund you should
carefully evaluate the risks.
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The
chief risk that you assume when investing in the Fund is market risk, the
possibility that the securities in a certain market will decline in value
because of factors such as economic conditions. Market risk may affect a
single issuer, an industry, a sector of the economy or the market as a
whole.
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Because
the Fund is actively managed, its investment return depends on the ability
of the Adviser to manage its portfolio successfully. The Adviser’s
investment strategies may not be able to produce the desired
results.
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The
Fund’s annual portfolio turnover rate has exceeded 100% in each of the
last five years. A rate of portfolio turnover of 100% would occur if all
of the Fund’s portfolio were replaced in a period of one year. To the
extent the Fund engages in short - term trading in attempting to achieve
its investment objective, it will increase the Fund’s portfolio turnover
rate and the Fund will incur higher brokerage commissions and other
expenses.
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An
investment in the Fund is not a complete investment program and you should
consider it just one part of your total investment program. An investment
in the Fund is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other governmental agency. For a more complete
discussion of risk, please turn to page 10.
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Because
the Fund uses the Ranking System, there is the risk that securities not
covered by the Ranking System or lower rated securities will appreciate to
a greater extent than those securities in the Fund’s
portfolio.
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4
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The
price of Fund shares will increase and decrease according to changes in
the value of the Fund’s investments. The Fund will be affected by changes
in stock prices, which have historically tended to fluctuate more than
bond prices.
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This
bar chart and table can help you evaluate the potential risks of investing
in the Fund. The bar chart below shows how returns for the Fund’s shares
have varied over the past ten calendar years, and the table below shows
the average annual total returns (before and after taxes) of these shares
for one, five, and ten years. These returns are compared to the
performance of the S&P 500®
Index, a widely quoted, unmanaged index of stock performance. All
returns reflect reinvested dividends. The Fund’s past performance (before
and after taxes) is not necessarily an indication of how it will perform
in the future. Updated performance information is available at:
www.vlfunds.com.
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Total
returns (before taxes) as of 12/31 each year (%)
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Best
Quarter:
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Q4
2004 +13.28
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Worst
Quarter:
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Q4
2008 –27.77
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5
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Average
Annual Total Returns (for the period ended December 31,
2009)
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1
year
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5
years
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10
years
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Value
Line Fund
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Return
before taxes
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9.49%
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–5.29%
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–5.85%
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Return
after taxes on distributions
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9.49%
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-7.46%
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-7.37%
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Return
after taxes on distributions and sale of Fund shares
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6.17%
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-4.94%
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-4.91%
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S&P
500 Index (reflects no deduction for fees, expenses or
taxes)
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26.46%
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0.42%
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–0.95%
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After-tax
returns are intended to show the impact of assumed federal income taxes on
an investment in the Fund. The Fund’s “Return after taxes on
distributions” shows the effect of taxable distributions, but assumes that
you still hold the Fund shares at the end of the period and so do not have
any taxable gain or loss on your investment in shares of the Fund. The
Fund’s “Return after taxes on distributions and sale of Fund shares” shows
the effect of both taxable distributions and any taxable gain or loss that
would be realized if you purchased Fund shares at the beginning and sold
at the end of the specified period. “Return after taxes on distributions
and sale of Fund shares” may be greater than “Return before taxes” because
the investor is assumed to be able to use the capital loss on the sale of
Fund shares to offset other taxable gains.
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After-tax
returns are calculated using the highest individual federal income tax
rate in effect at the time of each distribution and assumed sale, but do
not include the impact of state and local taxes.
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Your
actual after-tax returns depend on your own tax situation and may differ
from those shown. After-tax returns are not relevant to investors who hold
their Fund shares in a tax-deferred account (including a 401(k) or IRA
account), or to investors that are
tax-exempt.
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6
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The
Fund’s investment adviser is EULAV Asset Management, LLC., (the “Adviser”
or “EULAV”), a subsidiary of Value Line, Inc. (“Value
Line”).
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Stephen
E. Grant is primarily responsible for the day-to-day management of the
Fund’s portfolio. Mr. Grant has been a portfolio manager with the Adviser
or Value Line since 1991 and has been the Fund’s portfolio manager since
2009.
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Minimum
initial investment in the Fund: $1,000.
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Minimum
additional investment in the Fund: $100.
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The
Fund’s shares are redeemable and you may redeem your shares (sell them
back to the Fund) through your broker-dealer, financial advisor or
financial intermediary. You may also redeem your shares by mail by writing
to: Value Line Funds, c/o Boston Financial Data Services, Inc., P.O. Box
219729, Kansas City, MO 64121-9729. You can exchange all or part of your
investment in the Fund for shares in other Value Line funds. To execute an
exchange, call 800-243-2729. The Fund reserves the right to reject any
exchange order.
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The
Fund’s distributions generally are taxable as ordinary income or capital
gains for federal income tax purposes and also may be subject to state or
local taxes, unless you are investing through a tax-deferred account, such
as a 401(k) plan or an IRA.
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If
you purchase the Fund through a broker-dealer or other financial
intermediary (such as a bank), the Fund and its related companies may pay
the intermediary for the sale of Fund shares and related services. These
payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson to recommend the
Fund over another investment. Ask your salesperson or visit your financial
intermediary’s Web site for more
information.
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7
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The
Fund’s primary investment objective is long-term growth of capital.
Current income is a secondary investment objective. Although the Fund will
strive to achieve these investment objectives, there is no assurance that
it will succeed.
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Because
of the nature of the Fund, you should consider an investment in it to be a
long-term investment that will best meet its objectives when held for a
number of years. The following is a description of how the Adviser pursues
the Fund’s objectives.
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In
selecting securities for purchase or sale, the Adviser relies on a
strategy that is based on the Ranking System. The Ranking System has
evolved after many years of research and has been used in substantially
its present form since 1965. It is based upon historical prices and
reported earnings, recent earnings and price momentum and the degree to
which the last reported earnings deviated from estimated earnings, among
other factors.
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The
Timeliness Rankings are published weekly in the Standard Edition of The
Value Line Investment Survey for approximately 1,700 stocks, including
those with large, mid and small market capitalizations. There are a
relatively small number of foreign issuers that are included, and stocks
that have traded for less than two years are not ranked. On a scale of 1
(highest) to 5 (lowest), the Timeliness Rankings compare an estimate of
the probable market performance of each stock during the coming six to
twelve months to that of all of the approximately 1,700 stocks under
review. The Timeliness Rankings are updated weekly to reflect the most
recent information.
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The
Ranking System does not eliminate market risk, but the Adviser believes
that it provides objective standards for determining expected relative
performance over the next six to twelve months. All the stocks followed by
the Ranking System are listed on U.S. stock exchanges or traded in the
U.S. over-the-counter markets. The Fund’s investments principally are
selected from common stocks ranked 1, 2 or 3 by the Ranking System at the
time of purchase. Subject to the diversification requirements of the
Investment Company Act of 1940 (which generally means that it will not
invest more than 5% of its total assets in the stocks of any one company),
the Fund is not subject to any limit on the percentage of its assets that
may be invested in any particular stock. The Adviser will determine the
percentage of the Fund’s assets invested in each stock based on the
stock’s relative attractiveness. Because the Adviser relies on the Ranking
System in managing the Fund’s portfolio, the Fund is not limited to
investments according to a company’s
size.
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8
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Reliance
upon the Ranking System, whenever feasible, is a fundamental policy of the
Fund which may not be changed without shareholder approval. The
utilization of the Ranking System is no assurance that the Fund will
perform similarly to or more favorably than the market in general over any
particular period.
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Temporary
defensive position
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From
time to time in response to adverse market, economic, political or other
conditions, we may invest a portion of the Fund’s net assets in cash or
cash equivalents, debt securities, bonds, or preferred stocks for
temporary defensive purposes. This could help the Fund avoid losses, but
it may have the effect of reducing the Fund’s capital appreciation or
income, or both. If this occurs, the Fund may not achieve its investment
objectives.
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There
are other non-principal investment strategies discussed in the Statement
of Additional Information.
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Portfolio
turnover
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The
Fund has engaged and may continue to engage in active and frequent trading
of portfolio securities in order to take advantage of better investment
opportunities to achieve its investment objectives. This strategy has
resulted in higher brokerage commissions and other expenses and may
negatively affect the Fund’s performance. Portfolio turnover may also
result in capital gain distributions that could increase your income tax
liability. See “Financial Highlights” for the Fund’s most current
portfolio turnover rates.
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9
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Because
the Fund invests substantially all of its assets in common stocks, the
value of the stocks in its portfolio and the Fund’s share price might
decrease in response to the activities of an individual company or in
response to general market or economic conditions. If an issuer is
liquidated or declares bankruptcy, the claims of owners of bonds will take
precedence over the claims of owners of common stocks.
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Certain
securities may be difficult or impossible to sell at the time and price
that the Fund would like. The Fund may have to lower the price, sell other
securities instead or forego an investment opportunity. This could have a
negative effect on the Fund’s performance.
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■
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The
Fund’s use of the Ranking System involves the risk that the Ranking System
may not have the predictive qualities anticipated by the Adviser or that
over certain periods of time the price of securities not covered by the
Ranking System, or lower ranked securities, may appreciate to a greater
extent than those securities in the Fund’s portfolio. Because the Fund is
actively managed, its investment return depends on the ability of the
Adviser to manage its portfolio successfully.
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■
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The
Fund’s annual portfolio turnover rate has exceeded 100% in each of the
last five years. A rate of portfolio turnover of 100% would occur if all
of the Fund’s portfolio were replaced in a period of one year. To the
extent the Fund engages in short-term trading in attempting to achieve its
investment objective, it will increase the Fund’s portfolio turnover rate
and the Fund will incur higher brokerage commissions and other
expenses.
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■
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Please
see the Statement of Additional Information for a further discussion of
risks. Information on the Fund’s recent portfolio holdings can be found in
the Fund’s current annual, semi-annual or quarterly reports. A description
of the Fund’s policies and procedures with respect to the disclosure of
the Fund’s portfolio securities is also available in the Statement of
Additional Information.
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10
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The
business and affairs of the Fund are managed by the Fund’s officers under
the oversight of the Fund’s Board of Directors.
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The
Fund’s investment adviser is EULAV Asset Management, LLC, a subsidiary of
Value Line located at 220 East 42nd Street, New York, NY 10017. EULAV also
acts as investment adviser to the other Value Line mutual funds and
furnishes investment counseling services to private and institutional
clients, with combined assets of approximately $2. 4 billion as of March
31, 2010.
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Value
Line was organized in 1982 and is the successor to substantially all of
the operations of Arnold Bernhard & Co., Inc., which with its
predecessor has been in business since 1931. On May 5, 2009, the
Distributor, a subsidiary of Value Line, changed its name from “Value Line
Securities, Inc.” to “EULAV Securities, Inc.” No other changes were made
to the Distributor’s organization, including its operations and personnel.
Another subsidiary of Value Line publishes The Value Line Investment
Survey and other publications.
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On
November 4, 2009, the Securities and Exchange Commission (“SEC”), Value
Line, the Distributor and two former directors and officers of Value Line
settled a matter related to brokerage commissions charged by the
Distributor to certain Value Line mutual funds (“Funds”), from 1986
through November of 2004 involving alleged misleading disclosures provided
by Value Line to the Boards of Directors/Trustees and shareholders of the
Funds regarding such brokerage commissions. Value Line paid disgorgement,
interest and penalty of $43.7 million in connection with the settlement,
which amounts are expected to constitute a “Fair Fund” to be distributed
to investors in the Funds who were disadvantaged by such brokerage
practices. Value Line will bear all costs associated with any Fair Fund
distribution, including retaining a third-party consultant approved by the
SEC staff to administer any Fair Fund distribution. Value Line has
informed the Funds’ Board that it continues to have adequate liquid
assets, and that the resolution of this matter will not have a materially
adverse effect on the ability of Adviser or the Distributor to perform
their respective contracts with the
Funds.
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11
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For
managing the Fund and its investments, the Adviser is paid a fee at an
annual rate of 0.70% on the first $100 million of the Fund’s average daily
net assets and 0.65% on any additional assets. For the fiscal year ended
December 31, 2009, the Adviser received a management fee equal to 0.67% of
the Fund’s average daily net assets (after giving effect to its fee
waiver). Effective May 1, 2009 through April 30, 2010, the Adviser
contractually agreed to waive the portion of the management fee equal to
0.10% on the first $100 million of the Fund’s average daily net assets and
0.15% on any additional assets. The Adviser has agreed to extend the fee
waiver through April 30, 2011. There is no assurance that the Adviser will
extend the contractual fee waivers beyond such date.
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A
discussion regarding the basis for the Fund’s Board of Directors’ approval
of the investment advisory agreement is available in the Fund’s most
recent semi-annual report to shareholders for the six month period ended
June 30.
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Stephen
E. Grant is primarily responsible for the day-to-day management of the
Fund’s portfolio. Mr. Grant has been a portfolio manager with the Adviser
or Value Line since 1991 and has been the Fund’s portfolio manager since
2009. There is additional information in the Statement of Additional
Information about Mr. Grant’s compensation, other accounts he manages and
his ownership of Fund shares.
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12
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■
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By
telephone
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Once
you have opened an account, you can buy additional shares by calling
800-243-2729 (the Fund’s transfer agent) between 9:00 a.m. and 4:00 p.m.
New York time. You must pay for these shares within three business days of
placing your order.
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■
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By
wire
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If
you are making an initial purchase by wire, you must call the Fund’s
transfer agent at 800-243-2729 so you can be assigned an account number.
Request your U.S. bank with whom you have an account to wire the amount
you want to invest to State Street Bank and Trust Company, ABA #011000028,
attention DDA #99049868. Include your name, account number, tax
identification number and the name of the fund in which you want to
invest.
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■
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Through
a broker-dealer
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You
can open an account and buy shares through a broker-dealer, who may charge
a fee for this service.
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■
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By
mail
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Complete
the account application and mail it with your check payable to BFDS,
Agent, to Value Line Funds, c/o Boston Financial Data Services, Inc., P.O.
Box 219729, Kansas City, MO 64121-9729. If you are making an initial
purchase by mail, you must include a completed account application or an
appropriate retirement plan application if you are opening a retirement
account, with your check. Cash, money orders, traveler’s checks, cashier’s
checks, bank drafts or third-party checks will not be accepted for either
the initial or any subsequent purchase. All purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks.
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■
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Minimum/additional
investments
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Once
you have completed an account application, you can open an account with an
initial investment of $1,000, and make additional investments at any time
for as little as $100. The price you pay for shares will depend on when
your purchase order is received. The Fund reserves the right to reject any
purchase order and to reduce or waive the minimum purchase requirements at
any time.
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13
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■
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Time
of purchase
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Your
price for Fund shares is the Fund’s net asset value per share (“NAV”)
which is generally calculated as of the close of regular trading on the
New York Stock Exchange (the “Exchange”) (generally 4:00 p.m., Eastern
time) every day the Exchange is open for business. The Exchange is
currently closed on weekends, New Year’s Day, Martin Luther King, Jr. Day,
Presidents’ Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day and on the preceding Friday or
subsequent Monday if any of those days falls on a Saturday or Sunday,
respectively. Your order will be priced at the next NAV computed after
your order is received in correct form by Boston Financial Data Services,
Inc. (“BFDS”) as agent for the Fund. The Fund reserves the right to reject
any purchase order and to waive the initial and subsequent investment
minimums at any time.
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Fund
shares may be purchased through various third-party intermediaries
authorized by the Fund including banks, brokers, financial advisers and
financial supermarkets who may charge a fee. When the intermediary is
authorized by the Fund, orders will be priced at the NAV next computed
after receipt of the order by the intermediary.
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■
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Distribution
plan
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|
The
Fund has adopted a plan of distribution under rule 12b-1 under the
Investment Company Act of 1940. Under the plan, the Fund is charged a fee
at the annual rate of 0.25% of the Fund’s average daily net assets with
the proceeds used to finance the activities of the Distributor. The plan
provides that the Distributor may make payments to securities dealers,
banks, financial institutions and other organizations which provide
distribution, marketing and administrative services with respect to the
distribution of the Fund’s shares. Such services may include, among other
things, answering investor inquiries regarding the Fund, processing new
shareholder account applications and redemption transactions, responding
to shareholder inquiries, and such other services as the Fund may request
to the extent permitted by applicable statute, rule or regulation. The
plan also provides that the Adviser may make such payments out of its
advisory fee, its past profits or any other source available to it. The
fees payable to the Distributor under the plan are payable without regard
to actual expenses incurred, which means that the Distributor may earn a
profit under the plan. The
Distributor has contractually agreed to waive all of the Fund’s 12b-1 fee
through April 30, 2011. There is no assurance that the Distributor will
extend the contractual fee waiver beyond such date. Because rule 12b-1
fees are paid out of the Fund’s assets on an ongoing basis, over time
these fees will increase the cost of your investment and may cost you more
than if you paid other types of sales charges.
|
||
14
|
■
|
Additional
dealer compensation
|
|
|
The
Adviser, the Distributor and/or their affiliates may pay additional
compensation out of their assets (which generally come directly or
indirectly from the Fund and other Value Line mutual funds) to certain
brokerage firms and other intermediaries or their affiliates, based on
Fund asset held by that firm, or such other criteria agreed to by the
Adviser, the Distributor or their affiliates. The Adviser, the Distributor
or their affiliates determine the firms to which payments may be made.
Such payments may be significant.
|
||
|
Brokerage
firms and other intermediaries that sell Fund shares may make decisions
about which investment options they will service and make available to
their clients based on the payments these entities may be eligible to
receive for their services. Therefore, payments to a brokerage firm or
other intermediary may create potential conflicts of interest between that
entity and its clients where that entity determines which investment
options it will make available to those clients.
|
||
|
■
|
Net
asset value
|
|
|
The
Fund’s NAV is determined as of the close of regular trading on the
Exchange each day the Exchange is open for business. NAV is calculated by
adding the market value of all the securities and assets in the Fund’s
portfolio, deducting all liabilities, and dividing the resulting number by
the number of shares outstanding. The result is the NAV per share.
Securities for which market prices or quotations are readily available are
priced at their market value. Securities for which market valuations are
not readily available are priced at their fair value by the Adviser
pursuant to policies and procedures adopted by the Board of Directors. The
Fund will 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. The use of fair value
pricing by the Fund may cause the NAV to differ from the NAV that would be
calculated using closing market prices. There can be no assurance that the
Fund could obtain the fair value assigned to a security if it sold the
security at approximately the time at which the Fund determined its NAV.
Investments which have a maturity of less than 60 days are priced at
amortized cost, which represents fair value. The amortized cost method of
valuation involves valuing a security at its cost and accruing any
discount or premium over the period until maturity, regardless of the
impact of fluctuating interest rates on the market value of the
security.
|
||
15
|
■
|
Important
information about opening a new account with the Value Line
Funds
|
|
|
In
furtherance of the national effort to stop the funding of terrorism and to
curtail money laundering, the USA Patriot Act and other Federal
regulations require financial institutions, including mutual funds, to
adopt certain policies and programs to prevent money laundering
activities, including procedures to verify the identity of all investors
opening new accounts. Accordingly, when completing the Fund’s account
application, you will be required to supply the Fund with certain
information for all persons owning or permitted to act on an account. This
information includes name, date of birth, taxpayer identification number
and street address. Also, as required by law, the Fund employs various
procedures, such as comparing the information you provide against fraud
databases or requesting additional information or documentation from you,
to ensure that the information supplied by you is correct. Until such
verification is made, the Fund may temporarily limit any share purchases
or close your account if it is unable to verify your
identity.
|
||
|
■
|
By
mail
|
|
|
You
can redeem your shares (sell them back to the Fund) at NAV by mail by
writing to: Value Line Funds, c/o Boston Financial Data Services, Inc.,
P.O. Box 219729, Kansas City, MO 64121-9729. The request must be signed by
all owners of the account, and you must include a signature guarantee
using the medallion imprint for each owner. Signature guarantees are also
required when redemption proceeds are going to anyone other than the
account holder(s) of record. If you hold your shares in certificates, you
must submit the certificates properly endorsed with signature guaranteed
with your request to sell the shares. A signature guarantee can be
obtained from most banks or securities dealers, but not from a notary
public. A signature guarantee helps protect against
fraud.
|
||
|
The
Fund will pay you promptly, normally the next business day, but no later
than seven days after your request to sell your shares is received. If you
purchased your shares by check, the Fund will wait until your check has
cleared, which can take up to 15 days from the day of purchase, before the
proceeds are sent to you.
|
||
|
If
your account is held in the name of a corporation, as a fiduciary or
agent, or as surviving joint owner, you may be required to provide
additional documents with your redemption request.
|
||
16
|
■
|
Through
a broker-dealer
|
|
|
Fund
shares may be sold through various third-party intermediaries including
banks, brokers, financial advisers and financial supermarkets, who may
charge a fee for this service. When the intermediary is authorized by the
Fund, the shares that you buy or sell through the intermediary are priced
at the next NAV that is computed after the receipt of your order by the
intermediary.
|
||
|
Among
the brokers that have been authorized by the Fund are Charles Schwab &
Co., Inc., TD Ameritrade Inc., Pershing LLC and Fidelity Brokerage
Services LLC (National Financial Services LLC). You should consult with
your broker to determine if it has been so authorized.
|
||
|
■
|
By
exchange
|
|
|
You
can exchange all or part of your investment in the Fund for shares in
other Value Line funds. When you exchange shares, you are purchasing
shares in another fund so you should be sure to get a copy of that fund’s
prospectus and read it carefully before buying shares through an exchange.
To execute an exchange, call 800-243-2729. The Fund reserves the right to
reject any exchange order.
|
||
|
When
you send the Fund’s transfer agent a properly completed request to sell or
exchange shares, you will receive the NAV that is next determined after
your request is received by the Fund. For each account involved you should
provide the account name, number, name of fund and exchange or redemption
amount. Call 800-243-2729 for information on additional documentation that
may be required. You may have to pay taxes on the gain from your sale or
exchange of shares.
|
||
|
Exchanges
among Value Line funds are a shareholder privilege and not a right. The
Fund may temporarily or permanently terminate the exchange privileges of
any investor that, in the opinion of the Fund, uses market timing
strategies or who makes more than four exchanges out of the Fund during a
calendar year.
|
||
|
This
exchange limitation does not apply to systematic purchases and
redemptions, including certain automated or pre-established exchange,
asset allocation or dollar cost averaging programs. These exchange limits
are subject to the Fund’s ability to monitor exchange activity.
Shareholders seeking to engage in excessive trading practices may deploy a
variety of strategies to avoid detection, and, despite the best efforts of
the Fund to prevent excessive trading, there is no guarantee that the Fund
or its agents will be able to identify such shareholders or curtail their
trading practices. The Fund receives purchase and redemption orders
through financial intermediaries and cannot always know or reasonably
detect excessive trading which may be facilitated by these intermediaries
or by the use of omnibus account arrangements offered by these
intermediaries to investors.
|
||
17
|
Account
minimum
|
||
|
If
as a result of redemptions your account balance falls below $500, the Fund
may ask you to increase your balance within 30 days. If your account is
not at the minimum by the required time, the Fund may redeem your account,
after first notifying you in writing.
|
||
|
Redemption
in kind
|
||
|
The
Fund reserves the right to make a redemption in kind—payment in liquid
portfolio securities, wholly or in part, rather than cash—if the amount
being redeemed is large enough to affect Fund operations. The redeeming
shareholder will pay transaction costs, including brokerage fees, to sell
these securities and will bear the market and tax risk of holding the
securities.
|
||
18
|
Frequent
purchases and redemptions of the Fund’s shares entail risks, including the
dilution in value of the Fund shares held by long-term shareholders,
interference with the efficient management of the Fund’s portfolio, and
increased brokerage and administrative costs. Because the Fund does not
accommodate frequent purchases and redemptions of Fund shares, the Fund’s
Board of Directors has adopted policies and procedures to prohibit
investors from engaging in late trading and to discourage excessive and
short-term trading practices that may disrupt portfolio management
strategies and harm Fund performance.
|
||
|
Although
there is no generally applied standard in the marketplace as to what level
of trading activity is excessive, the Fund considers trading in its shares
to be excessive if an investor:
|
||
|
■
|
sells
shares within 30 days after the shares were purchased;
|
|
|
■
|
makes
more than four exchanges out of the Fund during a calendar year (other
than systematic purchases and redemptions); or
|
|
|
■
|
enters
into a series of transactions that is indicative of a timing pattern
strategy.
|
|
|
In
order to seek to detect frequent purchases and redemptions of Fund shares,
the Distributor monitors selected trades that have been identified by the
Fund’s transfer agent. If the Distributor determines that an investor or a
client of a broker has engaged in excessive short-term trading that may be
harmful to the Fund, the Distributor will ask the investor or broker to
cease such activity and may refuse to process purchase orders (including
purchases by exchange) of such investor, broker or accounts that the
Distributor believes are under their
control.
|
||
19
|
While
the Distributor uses its reasonable efforts to detect excessive trading
activity, there can be no assurance that its efforts will be successful or
that market timers will not employ tactics designed to evade detection.
Neither the Adviser, the Distributor, the Fund, nor any of the Fund’s
service providers may enter into arrangements intended to facilitate
frequent purchases and redemptions of Fund shares. Frequently, shares are
held through omnibus accounts maintained by financial intermediaries such
as brokers and retirement plan administrators, where the holdings of
multiple shareholders, such as all the clients of a particular broker, are
aggregated. The ability to monitor trading practices by investors
purchasing shares through omnibus accounts is dependent upon the
cooperation of the financial intermediary in observing the Fund’s
policies. Consequently, it may be more difficult for the Fund to detect
market timing activity through such accounts. However, the Fund, through
its agent, has entered into an information sharing agreement with each
financial intermediary, which provides, among other things, that the
financial intermediary shall provide, promptly upon the Fund’s request,
certain identifying and transaction information regarding its underlying
shareholders. Should the Fund detect market timing activity, it may
terminate the account or prohibit future purchases or exchanges by an
underlying shareholder. Because omnibus accounts may apply their own
market timing policies with respect to their accounts, and because the
Distributor retains discretion in applying market timing policies, there
is a risk that different shareholders may be treated differently and some
level of market timing activity could occur.
|
||
|
To
help make investing with the Fund as easy as possible, and to help you
manage your investments, the following special services are available. You
can get further information about these programs by calling Shareholder
Services at 800-243-2729.
|
||
|
■
|
Valu-Matic®
allows you to make regular monthly investments of $25 or more
automatically from your checking account.
|
|
| ■ |
Through
the Systematic Cash Withdrawal Plan you can arrange a regular monthly or
quarterly payment from your account payable to you or someone you
designate. If your account is $5,000 or more, you can have monthly or
quarterly withdrawals of $25 or more. Such withdrawals will each
constitute a redemption of a portion of your Fund shares which may result
in income, gain or loss to you, for federal income tax
purposes.
|
|
|
■
|
You
may buy shares in the Fund for your individual or group retirement plan,
including your Individual Retirement Account (“IRA”) or Roth IRA. You may
establish your IRA account even if you already are a member of an
employer-sponsored retirement plan. Not all contributions to an IRA
account are tax deductible; consult your tax advisor about the tax
consequences of your contribution.
|
|
20
|
The
Fund intends to pay dividends from its net investment income, if any,
annually and to distribute any capital gains that it has realized
annually. The Fund may also pay dividends and capital gain distributions
at other times if necessary for the Fund to avoid U.S. federal income or
excise tax. Dividends and any capital gains are automatically reinvested,
unless you indicate otherwise in your application to purchase
shares.
|
|
|
Investors
should consider the tax consequences of buying shares of the Fund shortly
before the record date of a dividend or capital gain distribution, because
such dividend or distribution will generally be taxable even though the
net asset value of shares of the Fund will be reduced by the dividend or
distribution.
|
|
|
You
will generally be taxed on dividends and distributions you receive,
regardless of whether you reinvest them or receive them in cash. For
federal income tax purposes, distributions from short-term capital gains
will be taxable to you as ordinary income. Dividends from net investment
income will either be taxable as ordinary income or, if so designated by
the Fund and certain other conditions are met by the Fund and the
shareholder, including holding-period requirements, as “qualified dividend
income” taxable to individual shareholders at a maximum 15% U.S. federal
income tax rate.
|
|
|
Distributions
designated by the Fund as capital gain dividends will be taxable to you as
long-term capital gains, no matter how long you have owned your Fund
shares. In addition, you may be subject to state and local taxes on
dividends and distributions.
|
|
|
The
Fund will send you a statement by January 31 each year detailing the
amount and nature of all dividends and capital gains that you received
during the prior year.
|
|
|
If
you hold your Fund shares in a tax-deferred retirement account, such as an
IRA, you generally will not have to pay tax on distributions until they
are distributed from the account. These accounts are subject to complex
tax rules, and you should consult your tax adviser about the tax
consequences of investing through a tax-deferred
account.
|
|
21
|
You
generally will have a capital gain or loss if you dispose of your Fund
shares by redemption, exchange or sale in an amount equal to the
difference between the net amount of the redemption or sale proceeds (or
in the case of an exchange, the fair market value of the shares) that you
receive and your tax basis for the shares you redeem, sell or exchange.
Certain limitations may apply to limit your ability to currently deduct
capital losses.
|
|
|
As
with all mutual funds, the Fund may be required to withhold a 28% backup
withholding tax on all taxable distributions payable to you if you fail to
provide the Fund with your correct social security number or other
taxpayer identification number or to make required certifications, or if
you have been notified by the IRS that you are subject to backup
withholding. Backup withholding is not an additional tax; rather, it is a
way in which the IRS ensures it will collect taxes otherwise due. Any
amounts withheld may be credited against your U.S. federal income tax
liability.
|
|
|
The
above discussion is meant only as a summary; more information is available
in the Statement of Additional Information. You should consult your tax
adviser about your particular tax situation including federal, state,
local and foreign tax considerations and possible additional withholding
taxes for non-U.S. shareholders.
|
|
22
|
The
financial highlights table is intended to help you understand the Fund’s
financial performance for the past five years. Certain information
reflects financial results for a single Fund share. The total returns in
the table represent the rate that an investor would have earned or lost on
an investment in the Fund assuming reinvestment of all dividends and
distributions. This information has been derived from the Fund’s financial
statements which were audited by PricewaterhouseCoopers LLP, whose report, along with
the Fund’s financial statements, is included in the Fund’s annual report,
which is available upon request by calling
800-243-2729.
|
|
|
Selected
data for a share of capital stock outstanding throughout each
year:
|
|
Years
Ended December 31,
|
||||||||||||||||||
|
2009
|
2008
|
2007
|
2006
|
2005
|
||||||||||||||
|
Net
asset value, beginning of year
|
$
|
6.22
|
$
|
12.83
|
$
|
12.48
|
$
|
13.14
|
$
|
13.90
|
||||||||
|
Income
(loss) from investment operations:
|
||||||||||||||||||
|
Net
investment loss
|
(0.01
|
)
|
(0.03
|
)
|
(0.01
|
)
|
(0.05
|
)
|
(0.07
|
)
|
||||||||
|
Net
gains or (losses) on securities (both realized and
unrealized)
|
0.60
|
(6.30
|
)
|
2.37
|
0.58
|
1.53
|
||||||||||||
|
Total
from investment operations
|
0.59
|
(6.33
|
)
|
2.36
|
0.53
|
1.46
|
||||||||||||
|
Less
distributions:
|
||||||||||||||||||
|
Distributions
from net realized gains
|
—
|
(0.28
|
)
|
(2.01
|
)
|
(1.19
|
)
|
(2.22
|
)
|
|||||||||
|
Net
asset value, end of year
|
$
|
6.81
|
$
|
6.22
|
$
|
12.83
|
$
|
12.48
|
$
|
13.14
|
||||||||
|
Total
return
|
9.49
|
%
|
(49.28
|
)%
|
19.50
|
%
|
4.00
|
%
|
10.40
|
%
|
||||||||
|
Ratios/Supplemental
Data:
|
||||||||||||||||||
|
Net
assets, end of year (in thousands)
|
$
|
92,680
|
$
|
93,099
|
$
|
203,274
|
$
|
197,349
|
$
|
213,715
|
||||||||
|
Ratio
of expenses to average net assets (1)
|
1.36
|
%
|
1.17
|
%
|
1.08
|
%
|
1.12
|
%
|
1.13
|
%
|
||||||||
|
Ratio
of expenses to average net assets(2)
|
1.04
|
%
|
0.92
|
%
|
0.82
|
%
|
1.04
|
%
|
1.13
|
%
|
||||||||
|
Ratio
of net investment loss to average net assets
|
(0.22
|
)%
|
(0.26
|
)%
|
(0.11
|
)%
|
(0.37
|
)%
|
(0.52
|
)%
|
||||||||
|
Portfolio
turnover rate
|
122
|
%
|
273
|
%
|
216
|
%
|
224
|
%
|
224
|
%
|
||||||||
|
(1)
|
Ratio
reflects expenses grossed up for advisory fees waived by the Adviser,
custody credit arrangement and grossed up for the waiver of the service
and distribution plan fees by the Distributor. The ratio of expenses to
average net assets, net of custody credits, but exclusive of the waiver of
the service and distribution plan fees by the Distributor including
advisory fee waiver, would have been 1.07% for the year ended December 31,
2007 and would have been unchanged for the other years
shown.
|
|||||||||||||||||
|
(2)
|
Ratio
reflects expenses net of the advisory fees waived, custody credit
arrangement and net of the waiver of the service and distribution plan
fees by the Distributor.
|
|||||||||||||||||
23
[This
Page Intentionally Left Blank.]
[This
Page Intentionally Left Blank.]
|
For
more information
|
|
|
Additional
information about the Fund’s investments is available in the Fund’s annual
and semi-annual reports to shareholders. In the Fund’s annual report, you
will find a discussion of the market conditions and investment strategies
that significantly affected the Fund’s performance during its last fiscal
year. You can find more detailed information about the Fund in the current
Statement of Additional Information dated May 1, 2010, which has been
filed electronically with the SEC and which is legally a part of this
prospectus. If you want a free copy of the Statement of Additional
Information, the annual or semi-annual report, or if you have any
questions about investing in this Fund, you can write to the Fund at 220
East 42nd
Street, New York, NY 10017-5891 or call toll-free 800-243-2729. You
may also obtain the prospectus, Statement of Additional Information and
annual and semi-annual reports, free of charge, from the Fund’s Internet
site at http://www.vlfunds.com.
|
|
|
Reports
and other information about the Fund are available on the EDGAR Database
on the SEC Internet site (http://www.sec.gov), or you can get copies of
this information, after payment of a duplicating fee, by electronic
request at the following e-mail address: publicinfo@sec.gov, or by writing
to the Public Reference Section of the SEC, Washington, D.C. 20549-1520.
Information about the Fund, including its Statement of Additional
Information, can be reviewed and copied at the SEC’s Public Reference Room
in Washington, D.C. You can get information on operation of the public
reference room by calling the SEC at
202-551-8090.
|
|
Investment
Adviser
|
Service
Agent
|
|
|
EULAV
Asset Management, LLC
|
State
Street Bank and Trust Company
|
|
|
220
East 42nd
Street
|
c/o
BFDS
|
|
|
New
York, NY 10017-5891
|
P.O.
Box 219729
|
|
|
Kansas
City, MO 64121-9729
|
||
|
Custodian
|
Distributor
|
|
|
State
Street Bank and Trust Company
|
EULAV
Securities, Inc.
|
|
|
225
Franklin Street
|
220
East 42nd
Street
|
|
|
Boston,
MA 02110
|
New
York, NY 10017-5891
|
|
|
The
Value Line Fund, Inc.
|
||
|
220
East 42nd
Street, New York, NY 10017-5891
|
File
No. 811-02265
|
26
THE
VALUE LINE FUND, INC.
220 East
42nd
Street, New York, New York 10017-5891
800-243-2729
www.vlfunds.com
|
STATEMENT
OF ADDITIONAL INFORMATION
|
|
MAY
1, 2010
|
This
Statement of Additional Information is not a prospectus and should be read in
conjunction with the Prospectus of The Value Line Fund, Inc. (the “Fund”) dated
May 1, 2010, a copy of which may be obtained without charge by writing or
telephoning the Fund. The financial statements, accompanying notes and report of
the the independent registered public accounting firm appearing in the Fund’s
2009 Annual Report to Shareholders are incorporated by reference in this
Statement of Additional Information. A copy of the Annual Report is available
from the Fund upon request and without charge by calling
1-800-243-2729.
| TABLE OF CONTENTS | |||||
|
|
Page
|
||||
|
B-2
|
|||||
|
B-7
|
|||||
|
B-14
|
|||||
|
B-16
|
|||||
|
B-18
|
|||||
|
B-18
|
|||||
|
B-18
|
|||||
|
B-20
|
|||||
|
B-25
|
|||||
B-1
History and Classification.
The Fund is an open-end, diversified management investment company incorporated
in Delaware in 1949 and reincorporated in Maryland in 1972. The Fund’s
investment adviser is EULAV Asset Management, LLC (the “Adviser” or “EULAV”), a
wholly-owned subsidiary of Value Line, Inc. (“Value Line”).
Non-principal
Investment Strategies and Associated Risks.
Restricted and Illiquid
Securities. On occasion, the Fund may purchase illiquid securities or
securities which would have to be registered under the Securities Act of 1933,
as amended (the “Securities Act”) if they were to be publicly distributed.
However, it will not do so if the value of such securities (other than
securities eligible to be sold in a Rule 144A transaction and determined by the
Adviser to be liquid) and other securities which are not readily marketable
(including repurchase agreements maturing in more than seven days) would exceed
10% of the market value of its net assets. It is management’s policy to permit
the occasional acquisition of such restricted securities only if (except in the
case of short-term non-convertible debt securities) there is an agreement by the
issuer to register such securities, ordinarily at the issuer’s expense, when
requested to do so by the Fund. The acquisition in limited amounts of restricted
securities is believed to be helpful toward the attainment of the Fund’s
investment objectives without unduly restricting its liquidity or freedom in the
management of its portfolio. However, because restricted securities may only be
sold privately or in an offering registered under the Securities Act, or
pursuant to an exemption from such registration, substantial time may be
required to sell such securities, and there is greater than usual risk of price
decline prior to sale.
In
addition, the Fund may purchase certain restricted securities (“Rule 144A
securities”) for which there is a secondary market of qualified institutional
buyers, as contemplated by Rule 144A under the Securities Act. Rule 144A
provides an exemption from the registration requirements of the Securities Act
for the resale of certain restricted securities to qualified institutional
buyers.
The
Adviser, under the supervision of the Board of Directors, will consider whether
securities purchased under Rule 144A are liquid or illiquid for purposes of the
Fund’s limitation on investment in securities which are not readily marketable
or are illiquid. Among the factors to be considered are the frequency of trades
and quotes, the number of dealers and potential purchasers, dealer undertakings
to make a market and the nature of the security and the time needed to dispose
of it.
To
the extent that the liquid Rule 144A securities that the Fund holds become
illiquid, due to lack of sufficient qualified institutional buyers or market or
other conditions, the percentage of the Fund’s assets invested in illiquid
assets would increase. The Adviser, under the supervision of the Board of
Directors, will monitor the Fund’s investments in Rule 144A securities and will
consider appropriate measures to enable the Fund to maintain sufficient
liquidity for operating purposes and to meet redemption requests.
Covered Call Options. The Fund
may write covered call options on stocks held in its portfolio (“covered
options”) in an attempt to earn additional income on its portfolio or to
partially offset an expected decline in the price of a security. When the Fund
writes a covered call option, it gives the purchaser of the option the right to
buy the underlying security at the price specified in the option (the “exercise
price”) at any time during the option period. If the option expires unexercised,
the Fund will realize income to the extent of the amount received for the option
(the “premium”). If the option is exercised, a decision over which the Fund has
no control, the Fund must sell the underlying security to the option holder at
the exercise price. By writing a covered option, the Fund foregoes, in exchange
for the premium less the commission (“net premium”), the opportunity to profit
during the option period from an increase in the market value of the underlying
security above the exercise price. Because the call option must be covered, the
Fund also forgoes the opportunity to sell the underlying security during the
option period. The Fund will not write call options in an aggregate amount
greater than 25% of its net assets.
B-2
The
Fund will purchase call options only to close out a position. When an option is
written on securities in the Fund’s portfolio and it appears that the purchaser
of that option is likely to exercise the option and purchase the underlying
security, it may be considered appropriate to avoid liquidating the Fund’s
position, or the Fund may wish to extinguish a call option sold by it so as to
be free to sell the underlying security. In such instances the Fund may purchase
a call option on the same security with the same exercise price and expiration
date which had been previously written. Such a purchase would have the effect of
closing out the option which the Fund has written. The Fund realizes a gain if
the amount paid to purchase the call option is less than the net premium
received for writing a similar option and a loss if the amount paid to purchase
a call option is greater than the premium received for writing a similar option.
Generally, the Fund realizes a short-term capital loss if the amount paid to
purchase the call option with respect to a stock is greater than the net premium
received for writing the option. If the underlying security has substantially
risen in value, it may be difficult or expensive to purchase the call option for
the closing transaction.
Stock Index Futures Contracts and
Options Thereon. The Fund may trade in stock index futures contracts and
in options on such contracts. Such contracts will be entered into on exchanges
designated by the Commodity Futures Trading Commission (“CFTC”). The Fund will
only enter into futures contracts and options on futures transactions in
compliance with the applicable regulations promulgated by the CFTC.
There
can be no assurance of the Fund’s successful use of stock index futures as a
hedging device. Hedging transactions involve certain risks. One risk arises
because of the imperfect correlation between movements in the price of the stock
index future and movements in the price of the securities which are the subject
of the hedge. The risk of imperfect correlation increases as the composition of
the Fund’s securities portfolio diverges from the securities included in the
applicable stock index. In addition to the possibility that there may be an
imperfect correlation, or no correlation at all, between movements in the stock
index future and the portion of the portfolio being hedged, the price of stock
index futures may not correlate perfectly with the movement in the stock index
due to certain market distortions. Increased participation by speculators in the
futures market also may cause temporary price distortions. Due to the
possibility of price distortions in the futures market and because of the
imperfect correlation between movements in the stock index and movements in the
price of stock index futures, a correct forecast of general market trends by the
Adviser still may not result in a successful hedging transaction.
For
example, should the Fund anticipate a decrease in the value of its portfolio
securities, it could enter into futures contracts to sell stock indices thereby
partially hedging its portfolio against the anticipated losses. Losses in the
portfolio, if realized, should be partially offset by gains on the futures
contracts. Conversely, if the Fund anticipated purchasing additional portfolio
securities in a rising market, it could enter into futures contracts to purchase
stock indices thereby locking in a price. The implementation of these strategies
by the Fund should be less expensive and more efficient than buying and selling
the individual securities at inopportune times.
A
stock index future obligates the seller to deliver (and the purchaser to take)
an amount of cash equal to a specific dollar amount times the difference between
the value of a specific stock index at the close of the last trading day of the
contract and the price at which the contract is entered into. There can be no
assurance of the Fund’s successful use of stock index futures as a hedging
device.
B-3
The
contractual obligation is satisfied by either a cash settlement or by entering
into an opposite and offsetting transaction on the same exchange prior to the
delivery date. Entering into a futures contract to deliver the index underlying
the contract is referred to as entering into a short futures contract. Entering
into a futures contract to take delivery of the index is referred to as entering
into a long futures contract. An offsetting transaction for a short futures
contract is effected by the Fund entering into a long futures contract for the
same date, time and place. If the price of the short contract exceeds the price
in the offsetting long, the Fund is immediately paid the difference and thus
realizes a gain. If the price of the long transaction exceeds the short price,
the Fund pays the difference and realizes a loss. Similarly, the closing out of
a long futures contract is effected by the Fund entering into a short futures
contract. If the offsetting short price exceeds the long price, the Fund
realizes a gain, and if the offsetting short price is less than the long price,
the Fund realizes a loss.
No
consideration will be paid or received by the Fund upon entering into a futures
contract. Initially, the Fund will be required to deposit with the broker an
amount of cash or cash equivalents equal to approximately 1% to 10% of the
contract amount. This amount is subject to change by the board of trade on which
the contract is traded and members of such board of trade may charge a higher
amount. This amount is known as “initial margin” and is in the nature of a
performance bond or good faith deposit on the contract which is returned to the
Fund upon termination of the futures contract, assuming all contractual
obligations have been satisfied. Subsequent payments, known as “variation
margin,” to and from the broker will be made daily as the price of the index
underlying the futures contract fluctuates, making the long and short positions
in the futures contract more or less valuable, a process known as
“marking-to-market.”
The
Fund may also purchase put and call options on stock index futures contracts on
commodity exchanges or write covered options on such contracts. A call option
gives the purchaser the right to buy, and the writer the obligation to sell,
while a put option gives the purchaser the right to sell and the writer the
obligation to buy. Unlike a stock index futures contract, which requires the
parties to buy and sell the stock index on a set date, an option on a stock
index futures contract entitles its holder to decide on or before a future date
whether to enter into such a futures contract. If the holder decides not to
enter into the contract, the premium paid for the option is lost. Since the
value of the option is fixed at the point of sale, the purchase of an option
does not require daily payments of cash in the nature of “variation” or
“maintenance” margin payments to reflect the change in the value of the
underlying contract. The value of the option purchased by the Fund does change
and is reflected in the net asset value of the Fund. The writer of an option,
however, must make margin payments on the underlying futures contract. Exchanges
provide trading mechanisms so that an option once purchased can later be sold
and an option once written can later be liquidated by an offsetting
purchase.
Successful
use of stock index futures by the Fund also is subject to the Adviser’s ability
to predict correctly movements in the direction of the market. If the Adviser’s
judgment about the several directions of the market is wrong, the Fund’s overall
performance may be worse than if no such contracts had been entered into. For
example, if the Fund has hedged against the possibility of a decline in the
market adversely affecting stocks held in its portfolio and stock prices
increase instead, the Fund will lose part or all of the benefit of the increased
value of its stock which it has hedged because it will have offsetting losses in
its futures positions. In addition, in such situations, if the Fund has
insufficient cash, it may have to sell securities to meet daily variation margin
requirements. Such sales of securities may be, but will not necessarily be, at
increased prices which reflect the rising market. The Fund may have to sell
securities at a time when it may be disadvantageous to do so. When stock index
futures are purchased to hedge against a possible increase in the price of
stocks before the Fund is able to invest its cash (or cash equivalents) in
stocks in an orderly fashion, it is possible that the market may decline
instead; if the Fund then concludes not to invest in stocks at that time because
of concern as to possible further market decline or for other reasons, the Fund
will realize a loss on the futures contract that is not offset by a reduction in
the price of securities purchased.
B-4
Use
of options on stock index futures entails the risk that trading in the options
may be interrupted if trading in certain securities included in the index is
interrupted. The Fund will not purchase these options unless its Adviser is
satisfied with the development, depth and liquidity of the market and the
Adviser believes the options can be closed out.
Options
and futures contracts entered into by the Fund will be subject to special tax
rules. These rules may accelerate income to the Fund, defer Fund losses, cause
adjustments in the holding periods of Fund securities, convert capital gain into
ordinary income and convert short-term capital losses into long-term capital
losses. As a result, these rules could affect the amount, timing and character
of Fund distributions. However, the Fund anticipates that these investment
activities will not prevent the Fund from qualifying as a regulated investment
company.
Repurchase Agreements. The
Fund may invest temporary cash balances in repurchase agreements. A repurchase
agreement involves a sale of securities to the Fund, with the concurrent
agreement of the seller (a member bank of the Federal Reserve System or a
securities dealer which the Adviser believes to be financially sound) to
repurchase the securities at the same price plus an amount equal to an
agreed-upon interest rate, within a specified time, usually less than one week,
but, on occasion, at a later time. The Fund will make payment for such
securities only upon physical delivery or evidence of book-entry transfer to the
account of the custodian or a bank acting as agent for the Fund. Repurchase
agreements may also be viewed as loans made by the Fund which are collateralized
by the securities subject to repurchase. The value of the underlying securities
will be at least equal at all times to the total amount of the repurchase
obligation, including the interest factor. In the event of a bankruptcy or other
default of a seller of a repurchase agreement to which the Fund is a party, the
Fund could experience both delays in liquidating the underlying securities and
losses, including: (a) a possible decline in the value of the underlying
securities during the period while the Fund seeks to enforce its rights thereto;
(b) possible subnormal levels of income and lack of access to income during this
period; and (c) expenses of enforcing its rights.
Fundamental
Policies.
(i)
The Fund may not issue senior securities except evidences of indebtedness
permitted under clause (ii) below.
(ii)
The Fund may not borrow money in excess of 10% of the value of its assets and
then only as a temporary measure to meet unusually heavy redemption requests or
for other extraordinary or emergency purposes. Securities will not be purchased
while borrowings are outstanding. No assets of the Fund may be pledged,
mortgaged or otherwise encumbered, transferred or assigned to secure a debt
except in connection with the Fund’s entering into stock index
futures.
(iii)
The Fund may not engage in the underwriting of securities except to the extent
that the Fund may be deemed an underwriter as to restricted securities under the
Securities Act of 1933 in selling portfolio securities.
(iv)
The Fund may not invest 25% or more of its assets in securities of issuers in
any one industry.
(v)
The Fund may not purchase securities of other investment companies or invest in
real estate, mortgages or illiquid securities of real estate investment trusts
although the Fund may purchase securities of issuers which engage in real estate
operations.
B-5
(vi)
The Fund may not lend money except in connection with the purchase of debt
obligations or by investment in repurchase agreements, provided that repurchase
agreements maturing in more than seven days when taken together with other
illiquid investments do not exceed 10% of the Fund’s assets.
(vii)
The Fund may not engage in arbitrage transactions, short sales, purchases on
margin or participate on a joint or joint and several basis in any trading
account in securities except that these prohibitions will not apply to futures
contracts or options on futures contracts entered into by the Fund for
permissible purposes or to margin payments made in connection with such
contracts.
(viii)
The Fund may not purchase or sell any put or call options or any combination
thereof, except that the Fund may write and sell covered call option contracts
on securities owned by the Fund. The Fund may also purchase call options for the
purpose of terminating its outstanding obligations with respect to securities
upon which covered call option contracts have been written (i.e., “closing
purchase transactions”). The Fund may also purchase and sell put and call
options on stock index futures contracts.
(ix)
The Fund may not invest more than 5% of its total assets in the securities of
any one issuer or purchase more than 10% of the outstanding voting securities,
or any other class of securities, of any one issuer. For purposes of this
restriction, all outstanding debt securities of an issuer are considered as one
class, and all preferred stock of an issuer is considered as one class. This
restriction does not apply to obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
(x)
The Fund may not invest more than 5% of its total assets in securities of
issuers having a record, together with their predecessors, of less than three
years of continuous operation. This restriction does not apply to any obligation
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
(xi)
The Fund may not purchase securities for the purpose of exercising control over
another company.
(xii)
The Fund may not invest more than 2% of the value of its total assets in
warrants (valued at the lower of cost or market), except that warrants attached
to other securities are not subject to these limitations.
(xiii)
The Fund may not invest in commodities or commodity contracts except that the
Fund may invest in stock index futures contracts and options on stock index
futures contracts.
(xiv)
The Fund may not purchase the securities of any issuer if, to the knowledge of
the Fund, those officers and directors of the Fund and of the Adviser, who each
owns more than 0.5% of the outstanding securities of such issuer, together own
more than 5% of such securities.
(xv)
The primary investment objective of the Fund is long-term growth of capital.
Current income is a secondary objective.
In
addition, management of the Fund has adopted a policy that it will not recommend
that the Fund purchase interest in oil, gas or other mineral type development
programs or leases, although the Fund may invest in the securities of companies
which operate, invest in or sponsor such programs.
If
a percentage restriction used in this Statement of Additional Information or the
Prospectus is adhered to at the time of investment, a later change in percentage
resulting from changes in values or assets will not be considered a violation of
the restriction except for restriction (ii) and the restriction on illiquid
securities. For purposes of industry classifications, the Fund follows the
industry classifications in The Value Line Investment Survey.
The
policies set forth above may not be changed without the affirmative vote of the
majority of the outstanding voting securities of the Fund which means the lesser
of (1) the holders of more than 50% of the outstanding shares of capital stock
of the Fund or (2) 67% of the shares present if more than 50% of the shares are
present at a meeting in person or by proxy.
B-6
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 until his or her
successor is elected and qualified.
|
Name,
Address,
and
Year of Birth
|
Position
|
Length
of
Time
Served
|
Principal
Occupations
During
the Past
5
Years
|
Other
Directorships
Held
by
Director
|
||||
|
Interested
Director*
|
||||||||
|
Thomas
T. Sarkany
1946 |
Director
|
Since
2008
|
Mutual
Fund Marketing Director of EULAV Securities, Inc. (formerly, Value Line
Securities, Inc.) (the “Distributor”); Secretary of Value Line, Inc. since
November 2009 and Director since February 2010.
|
**
Value
Line, Inc.
|
||||
|
Non-Interested
Directors
|
||||||||
|
Joyce
E. Heinzerling
500
East 77th Street
New
York, NY 10162
1956
|
Director
|
Since
2008
|
President,
Meridian Fund Advisers LLC. (consultants) since April 2009; General
Counsel, Archery Capital LLC (private investment fund), until April
2009.
|
**
Burnham
Investors Trust, since 2004
(4 funds). |
||||
|
Francis
C. Oakley
54
Scott Hill Road
Williamstown,
MA 01267
1931
|
Director
(Lead
Independent Director since 2008)
|
Since
2000
|
Professor
of History, Williams College, 1961 to 2002, Professor Emeritus since 2002,
President Emeritus since 1994 and President, 1985–1994; Chairman
(1993–1997) and Interim President (2002–2003) of the America Council of
Learned Societies; Trustee since 1997 and Chairman of the Board since
2005, National Humanities Center.
|
**
|
||||
|
David
H. Porter
5
Birch Run Drive
Saratoga
Springs, NY 12866
1935
|
Director
|
Since
1997
|
Professor,
Skidmore College since 2008; Visiting Professor of Classics, Williams
College, 1999–2008; President Emeritus, Skidmore College since 1999 and
President, 1987–1998.
|
**
|
||||
|
Paul
Craig Roberts
169
Pompano St.
Panama
City Beach, FL 32413
1939
|
Director
|
Since
1983
|
Chairman,
Institute for Political Economy.
|
**
|
||||
|
Nancy-Beth
Sheerr
1409
Beaumont Drive
Gladwyne,
PA 19035
1949
|
Director
|
Since
1996
|
Senior
Financial Advisor, Veritable, L.P. (investment advisor)
|
**
|
||||
|
Daniel
S. Vandivort
59
Indian Head Road
Riverside,
CT 06878
1954
|
Director
|
Since
2008
|
President,
Chief Investment Officer, Weiss, Peck and Greer/Robeco
Investment Management 2005–2007; Managing Director, Weiss, Peck and
Greer, 1995–2005.
|
**
|
B-7
|
Name,
Address,
and
Year of Birth
|
Position
|
Length
of
Time
Served
|
Principal
Occupations
During
the Past
5
Years
|
|||||
|
Officers
|
||||||||
|
Mitchell
E. Appel
1970
|
President
|
Since
2008
|
President
of each of the 14 Value Line Funds since June 2008; Chief Financial
Officer of Value Line since April 2008 and from September 2005 to November
2007 and Treasurer from June 2005 to September 2005; Director since
February 2010; Chief Financial Officer of XTF Asset Management from
November 2007 to April 2008; Chief Financial Officer of Circle Trust
Company from 2003 through May 2005; Chief Financial Officer of the
Distributor since April 2008 and President since February 2009; President
of the Adviser since February 2009.
|
|||||
|
Howard
A. Brecher
1953
|
Vice
President
and
Secretary
|
Since
2008
|
Vice
President and Secretary of each of the 14 Value Line Funds since 2008;
Vice President and Secretary of Value Line until November 2009; Director
of Value Line; Acting Chairman and Acting CEO of Value Line since November
2009; Secretary of the Adviser since February 2009; Vice President,
Secretary, Treasurer, General Counsel and a Director of Arnold Bernhard
& Co., Inc.
|
|||||
|
Michael
J. Wagner
1950
|
Chief
Compliance
Officer
|
Since
2009
|
Chief
Compliance Officer of each of the 14 Value Line Funds since June 2009;
President of Northern Lights Compliance Services, LLC (formerly Fund
Compliance Services, LLC (2006-present) and Senior Vice President
(2004-2006); President (2004-2006) and Chief Operations Officer
(2003-2006) of Gemini Fund Services, LLC; Director of Constellation Trust
Company until 2008.
|
|||||
|
Emily
D. Washington
1979
|
Treasurer
and Chief Financial Officer
|
Since
2008
|
Treasurer
and Chief Financial Officer (Principal Financial and Accounting Officer)
of each of the 14 Value Line Funds since 2008; Associate Director of
Mutual Fund Accounting at Value Line until 2008.
|
|
*
|
Mr.
Sarkany is an “interested person” as defined in the Investment Company Act
of 1940 by virtue of his position with the Distributor.
|
|
**
|
Each
Director serves as a director or trustee of each of the 14 Value Line
Funds.
|
Unless
otherwise indicated, the address for each of the above is 220 East 42nd
Street, New York, NY 10017.
The
non-interested Directors of the Fund serve as members of the Audit Committee of
the Board of Directors. The principal function of the Audit Committee consists
of overseeing the accounting and financial reporting policies of the Fund and
meeting with the Fund’s independent registered public accounting firm to review
the range of their activities and to discuss the Fund’s system of internal
accounting controls. The Audit Committee also meets with the Fund’s independent
registered public accounting firm in executive session at each meeting of the
Audit Committee. There were four meetings of the Audit Committee during the last
fiscal year. There is a Valuation Committee consisting of Thomas T. Sarkany and
Joyce E. Heinzerling (or one other non-interested Director if she is not
available). There were three meetings of the Valuation Committee during the last
fiscal year. The Valuation Committee reviews any actions taken by the Pricing
Committee which consists of certain officers and employees of the Fund and the
Adviser, in accordance with the valuation procedures adopted by the Board of
Directors. There is also a combined Nominating/ Governance Committee consisting
of the non-interested Directors the purpose of which is to review and nominate
candidates to serve as non-interested directors and supervise Fund governance
matters. The Nominating/Governance Committee generally will not consider
nominees recommended by shareholders. The Nominating/Governance Committee met
three times during the last fiscal year.
B-8
Board Structure . The Board is
comprised of seven Directors, six of whom (85%) are not “interested persons” (as
that term is defined in the 1940 Act) of the Fund (the “Independent Directors”).
The Board has appointed Mr. Vandivort (an Independent Director) as its Chair and
Mr. Appel (the President of the Adviser) as its Chief Executive Officer. The
Board has established three standing committees: the Audit Committee, the
Nominating/Governance Committee and the Valuation Committee. The Audit Committee
and the Nominating/Governance Committee are chaired by, and composed entirely
of, Independent Directors. The Valuation Committee is composed of an Independent
Director and an interested Director. See “Committees” above for a further
description of the composition, duties and responsibilities of these
committees.
The
Directors and the members of the Board’s committees annually evaluate the
performance of the Board and the committees, which evaluation includes
considering the effectiveness of the Board’s committee structure. The Board
believes that its leadership structure, including an Independent Director as the
Chair, is appropriate in light of the asset size of the Fund and the other Value
Line mutual funds, the number of Value Line mutual funds, and the nature of the
Funds’ business, and is consistent with industry best practices. In particular,
the Board believes that having a super-majority of Independent Directors is
appropriate and in the best interests of Fund shareholders.
Risk Oversight. As part of
its responsibilities for oversight of the Fund, the Board oversees risk
management of the Fund’s investment program and business affairs. The Board
performs its oversight responsibilities as part of its Board and Committee
activities. The Independent Directors also regularly meet outside the presence
of management and have engaged independent legal counsel to assist them in
performing their oversight responsibilities. The Board has delegated to the
Audit Committee oversight responsibility of the integrity of the Fund’s
financial statements, the Fund’s compliance with legal and regulatory
requirements as they relate to the financial statements, the independent
auditor’s qualifications and independence, the Fund’s internal controls over
financial reporting, the Fund’s disclosure controls and procedures and the
Fund’s code of business conduct and ethics pursuant to the Sarbanes-Oxley Act of
2002. The Audit Committee reports areas of concern, if any, to the Board for
discussion and action.
The
Board, including the Independent Directors, has approved the Fund’s compliance
program and appointed the Fund’s Chief Compliance Officer, who is responsible
for testing the compliance procedures of the Fund and certain of its service
providers. Senior management and the Chief Compliance Officer report at least
quarterly to the Board regarding compliance matters relating to the Fund, and
the Chief Compliance Officer annually assesses (and reports to the Board
regarding) the operation of the Fund’s compliance program. The Independent
Directors generally meet at least quarterly with the Chief Compliance Officer
outside the presence of management.
Qualifications
and Experience of Directors The Board believes that each Director’s experience,
qualifications, attributes or skills on an individual basis and in combination
with those of the other Directors lead to the conclusion that each Director
should serve in such capacity. Among other attributes common to all Directors
are their ability to review critically, evaluate, question and discuss
information provided to them, to interact effectively with the Adviser, other
service providers, counsel and the independent registered public accounting
firm, to exercise effective business judgment in the performance of their
duties, and to represent the interests of all the shareholders. A Director’s
ability to perform his duties effectively may have been attained through his
educational background or professional training; business, consulting or
academic leadership positions; experience from service as a Director of the
Fund, or in various roles at public companies, private entities or other
organizations; and/or other life experiences. In addition to these shared
characteristics, set forth below is a brief discussion of the specific
qualifications, attributes or skills of each Director that support the
conclusion that each person is qualified to serve as a
Director.
B-9
Ms. Heinzerling has served as an Independent Director on the
Board since 2008. Her relevant experience includes being the principal of a
regulatory consulting company, former general counsel to an investment adviser
and a director of an unaffiliated mutual fund family.
Dr.
Oakley has served as an Independent Director on the Board since 2000. His
relevant experience includes being the former president of a college with
endowment fund oversight responsibility and serving in other leadership
positions and serving on other boards.
Dr.
Porter has served as an Independent Director on the Board since 1997. His
relevant experience includes being the former president of a college with
endowment fund oversight responsibility and serving in other leadership
positions and serving on other boards.
Dr.
Roberts has served as an Independent Director on the Board since 1983. His
relevant experience includes being an economist and a former Assistant Secretary
of the U.S. Treasury and a nationally syndicated columnist.
Mr.
Sarkany has served as an interested Director on the Board since 2008. His
relevant experience includes being the director of marketing at the Distributor
and a former trustee of another mutual fund group.
Ms.
Sheerr has served as an Independent Director on the Board since 1996. Her
relevant experience includes being a senior financial adviser of an investment
adviser and serving on other boards, including as chairman, with endowment fund
oversight responsibility.
Mr.
Vandivort has served as an Independent Director on the Board since 2008. His
relevant experience includes being the former president and chief investment
officer of an investment adviser and former chairman of a mutual fund
group.
The
following table sets forth information regarding compensation of Directors by
the Fund and the thirteen other Value Line Funds of which each of the Directors
was a director or trustee for the fiscal year ended December 31, 2009. Directors
who are officers or employees of the Adviser do not receive any compensation
from the Fund or any of the Value Line Funds. The Fund has no retirement or
pension plan for its Directors.
|
Name
of Person
|
Aggregate
Compensation
From
Fund
|
Total
Compensation
From
Fund
and
Fund
Complex
(14
Funds)
|
|||
|
Interested
Director
|
|||||
|
Thomas
T. Sarkany
|
$–0–
|
$–0–
|
|||
|
Non-Interested
Directors
|
|||||
|
Joyce
E. Heinzerling
|
1,628
|
45,000
|
|||
|
Francis
C. Oakley
|
2,063
|
57,000
|
|||
|
David
H. Porter
|
1,628
|
45,000
|
|||
|
Paul
Craig Roberts
|
1,628
|
45,000
|
|||
|
Nancy-Beth
Sheerr
|
1,628
|
45,000
|
|||
|
Daniel
S. Vandivort
|
1,773
|
49,000
|
|||
B-10
The
following table illustrates the dollar range of any equity securities
beneficially owned by each Director in the Fund and in all of the Value Line
Funds as of December 31, 2009:
|
Name
of Director
|
Dollar
Range of
Equity
Securities
in
the Fund
|
Aggregate
Dollar
Range
of Equity
Securities
in All
of
the Value Line Funds
|
|||
|
Interested
Director
|
|||||
|
Thomas
T. Sarkany
|
$–0–
|
Over
$100,000
|
|||
|
Non-Interested
Directors
|
|||||
|
Joyce
E. Heinzerling
|
$–0–
|
$10,001
– $50,000
|
|||
|
Francis
C. Oakley
|
$1
– $10,000
|
$10,001
– $50,000
|
|||
|
David
H. Porter
|
$1
– $10,000
|
$10,001
– $50,000
|
|||
|
Paul
Craig Roberts
|
$–0–
|
$10,001
– $50,000
|
|||
|
Nancy-Beth
Sheerr
|
$1
– $10,000
|
$10,001
– $50,000
|
|||
|
Daniel
S. Vandivort
|
$–0–
|
$10,001
– $50,000
|
|||
As
of January 31, 2010, no person owned of record or, to the knowledge of the Fund,
owned beneficially, 5% or more of the outstanding stock of the Fund. Officers
and directors of the Fund as a group owned less than 1% of the outstanding
shares.
None
of the non-interested Directors, and his or her immediate family members, own
any shares in Value Line or a subsidiary of Value Line, or a person (other than
a registered investment company) directly or indirectly controlling, controlled
by, or under common control with the Adviser or the Distributor.
Proxy
Voting Policies
As
a shareholder of the companies in which the Fund invests, the Fund receives
proxies to vote at those companies’ annual or special meetings. The Board of
Directors has adopted Proxy Voting Policies and Procedures (“Proxy Voting
Policies”) pursuant to which the Adviser votes shares owned by the Fund. The
Adviser endeavors to vote proxies relating to portfolio securities in accordance
with its best judgment as to the advancement of the Fund’s investment
objectives. The general principles of the Proxy Voting Policies reflect the
Adviser’s basic investment criterion that good company management is shareholder
focused and should generally be supported. The Fund generally supports
management on routine matters and supports management proposals that are in the
interests of shareholders. The Board of the Fund reviews the Proxy Voting
Policies periodically.
Subject
to the Board’s oversight, the Adviser has final authority and fiduciary
responsibility for voting proxies received by the Fund; however, the Adviser has
delegated the implementation of the Fund’s Proxy Voting Policies to Risk Metrics
Group (“RMG”), a proxy voting service that is not affiliated with the Adviser or
the Fund. In addition, RMG will make a recommendation to the Adviser consistent
with the Proxy Voting Policies with respect to each proxy that the Fund
receives. The Adviser generally anticipates that it will follow the
recommendations of RMG.
The
following is a summary of the manner in which the Adviser would normally expect
to vote on certain matters that typically are included in the proxies that the
Fund receives each year; however, the Fund’s vote may vary depending upon the
actual circumstances presented.
B-11
Election
of Directors, Corporate Governance and Routine Matters
|
●
|
Generally,
the Fund supports the company’s nominees to serve as
directors.
|
||
|
●
|
The
Fund generally supports management on routine corporate matters and
matters relating to corporate governance. For example, the Adviser
generally expects to support management on the following
matters:
|
||
|
●
|
Increases
in the number of authorized shares of or issuances of common stock or
other equity securities;
|
||
|
●
|
Provisions
of the corporate charter addressing indemnification of directors and
officers;
|
||
|
●
|
Stock
repurchase plans; and
|
||
|
●
|
The
selection of independent accountants.
|
||
|
●
|
The
types of matters on corporate governance that the Adviser would expect to
vote against include:
|
||
|
●
|
The
issuance of preferred shares where the board of directors has complete
freedom as to the terms of the preferred;
|
||
|
●
|
The
adoption of a classified board;
|
||
|
●
|
The
adoption of poison pill plans or similar anti-takeover measures;
and
|
||
|
●
|
The
authorization of a class of shares not held by the Fund with superior
voting rights.
|
||
Compensation
Arrangements and Stock Option Plans
The
Fund normally votes with management regarding compensation arrangements and the
establishment of stock option plans. The Adviser believes, if its view of
management is favorable enough that the Fund has invested in the company, that
arrangements that align the interests of management and shareholders are
beneficial to long-term performance. However, some arrangements or plans have
features that the Fund would oppose. For example, the Fund would normally vote
against an option plan that has the potential to unreasonably dilute the
interests of existing shareholders, permits equity overhang that exceeds certain
levels or that allows for the repricing of outstanding options.
Social
Policy Based Proposals
Generally,
the Adviser will vote in accordance with management recommendations on proposals
addressing social or political issues that the Adviser believes do not affect
the goal of maximizing the return on funds under management.
If
the Adviser believes that a conflict of interest exists with respect to its
exercise of any proxy received by the Fund, the Adviser will report the
potential conflict to a Proxy Voting Committee consisting of members of the
Adviser’s staff. A conflict of interest may arise, for example, if the company
to which the proxy relates is a client of the Adviser or one of its affiliates
or if the Adviser or one of its affiliates has a material business relationship
with that company. The Adviser’s Proxy Voting Committee is responsible for
ensuring that the Adviser complies with its fiduciary obligations in voting
proxies. If a proxy is referred to the Proxy Voting Committee, the Proxy Voting
Committee evaluates whether a potential conflict exists and, if there is such a
conflict, determines how the proxy should be voted in accordance with the best
interests of the Fund and its shareholders.
B-12
Every
August, the Fund will file with the Securities and Exchange Commission
information regarding the voting of proxies by the Fund for the 12-month period
ending the preceding June 30th. Shareholders will be able to view such filings
on the Commission’s website at http://www.sec.gov or at the Fund’s website at
http://www.vlfunds.com.
Shareholders
may also obtain a copy of the Proxy Voting Policies by contacting the Fund at
the address and/or phone number on the cover page of this Statement of
Additional Information.
Disclosure
of Portfolio Holdings
The
Fund’s policy is to provide portfolio holdings information to all investors on
an equal basis and in a manner that is not expected to interfere with the Fund’s
investment strategies. To that end, the Fund provides general portfolio holdings
information to shareholders in its annual and semi-annual reports, which reports
are also filed with the Securities and Exchange Commission (“SEC”). In addition,
with respect to fiscal quarter ends for which there is no shareholder report,
the Fund files with the SEC a Form N-Q. Each of these shareholder reports or
filings provides full period end portfolio holdings and is filed or mailed to
shareholders within 60 days of the period end.
In
addition, the Distributor may produce for marketing purposes Fund fact sheets,
which would include the Fund’s top ten holdings and other information regarding
the Fund’s portfolio. These fact sheets would be prepared as soon as possible
after the end of the fiscal quarter but would not be released until after the
Fund has filed with the SEC its annual, semi-annual or quarterly
reports.
Ongoing
Relationships. Officers of the Fund who are also officers of the Adviser
currently authorize the distribution of portfolio holdings information other
than that stated above to (i) the Fund’s service providers and (ii) investment
company rating agencies, such as Morningstar, Standard and Poor’s, Lipper,
Thomson Financial, Value Line Publishing and Bloomberg pursuant to policies and
procedures adopted by the Board of Directors. The Fund’s service providers are
its accountants, custodian, counsel, pricing services (Interactive Data
Corporation) and proxy voting service, which may need to know the Fund’s
portfolio holdings in order to provide their services to the Fund. Information
is provided to such firms without a time lag. Investment company rating agencies
require the portfolio holdings information more frequently than the Fund
otherwise discloses portfolio holdings in order to obtain their ratings. This
information is normally provided as soon as possible after the period end, which
may be month end or quarter end. The Adviser believes that obtaining a rating
from such rating agencies, and providing the portfolio holdings information to
them, is in the best interest of shareholders. While the Fund does not have
written confidentiality agreements from any rating agency or service provider
and may be subject to potential risks, the information is provided with the
understanding based on duties of confidentiality arising under law or contract
that it only may be used for the purpose provided and should not be used to
trade on such information or communicated to others.
Non-Ongoing
Relationships. Except for rating agencies and service providers,
non-public portfolio holdings disclosure may only be made if the Fund’s Chief
Compliance Officer determines that (i) there are legitimate business purposes
for the Fund in making the selective disclosure and (ii) adequate safeguards to
protect the interest of the Fund and its shareholders have been implemented.
These safeguards include requiring written undertakings regarding
confidentiality, use of the information for specific purposes and prohibition
against trading on that information. To the extent that an officer of the Fund
determines that there is a potential conflict of interest, with respect to the
disclosure of information that is not publicly available, between the interests
of Fund shareholders, on the one hand, and those of the Adviser, the Distributor
or any affiliated person of the Fund, the Adviser or the Distributor on the
other hand, the officer must inform the Fund’s Chief Compliance Officer of such
potential conflict. The Chief Compliance Officer is responsible for determining
whether any such disclosure is reasonable under the circumstances and shall
report any potential conflict of interest and any selective disclosure of
portfolio holdings (other than to rating agencies and service providers) to the
Fund’s Board of Directors. The Fund does not release portfolio holdings
information to any person for compensation.
B-13
The
Board of Directors of the Fund has approved the Fund’s portfolio holdings
disclosure policy and may require the Adviser to provide reports on its
implementation from time to time or require that the Fund’s Chief Compliance
Officer monitor compliance with this policy.
On
June 30, 2008, Value Line, the Fund’s former investment adviser, reorganized its
investment management division into EULAV Asset Management, LLC, a newly formed
wholly-owned subsidiary located at 220 East 42nd
Street, New York, NY 10017. As part of the reorganization, the Fund’s
investment advisory agreement, dated August 10, 1988, was transferred from Value
Line to EULAV and EULAV replaced Value Line as the Fund’s investment
adviser.
Arnold
Bernhard & Co., Inc., 220 East 42nd
Street, New York, NY 10017, a holding company, owns approximately 86% of
the outstanding shares of Value Line’s common stock. Jean Bernhard Buttner,
former Chairman, President and Chief Executive Officer of Value Line, owns all
of the voting stock of Arnold Bernhard & Co., Inc.
The
investment advisory agreement between the Fund and the Adviser, dated September
26, 1991, provides for an advisory fee at an annual rate equal to 0.70% on the
first $100 million of the Fund’s average daily net assets and 0.65% of such net
assets in excess thereof. During 2007, 2008 and 2009, the Fund paid or accrued
to the Adviser advisory fees of $1,418,348, $1,351,288 and $609,897,
respectively. Effective May 1, 2009 through April 30, 2010, the Adviser
contractually agreed to waive a portion of the Fund’s advisory fee in an amount
eqaul to 0.10% on the first $100 million of the Fund’s average daily net assets
and 0.15% on any additional assets. The fees waived amounted to $59,089 for the
year ended December 31, 2009. The Adviser has agreed to extend the fee waiver
through April 30, 2011. There is no assurance that the Adviser will extend the
contractual fee waiver beyond such date.
The
investment advisory agreement provides that the Adviser shall render investment
advisory and other services to the Fund including, at its expense, all
administrative services, office space and the services of all officers and
employees of the Fund. The Fund pays all other expenses not assumed by the
Adviser including taxes, interest, brokerage commissions, insurance premiums,
fees and expenses of the custodian and shareholder servicing agents, legal and
accounting fees, fees and expenses in connection with qualification under
federal and state securities laws and costs of shareholder reports and proxy
materials. The Fund has agreed that it will use the words “Value Line” in its
name only so long as Value Line or a subsidiary serves as investment adviser to
the Fund. The agreement will terminate upon its “assignment” (as such term is
defined in the Investment Company Act of 1940).
The
Adviser currently acts as investment adviser to 13 other investment companies
constituting The Value Line Family of Funds and furnishes investment counseling
services to private and institutional accounts resulting in combined assets
under management of approximately $2. 4 billion as of
March 31, 2010.
Certain
of the Adviser’s clients may have investment objectives similar to the Fund and
certain investments may be appropriate for the Fund and for other clients
advised by the Adviser. From time to time, a particular security may be bought
or sold for only one client or in different amounts and at different times for
more than one but less than all such clients. In addition, a particular security
may be bought for one or more clients when one or more other clients are selling
such security, or purchases or sales of the same security may be made for two or
more clients at the same time. In such event, such transactions, to the extent
practicable, will be averaged as to price and allocated as to amount in
proportion to the amount of each order. In some cases, this procedure could have
a detrimental effect on the price or amount of the securities purchased or sold
by the Fund. In other cases, however, it is believed that the ability of the
Fund to participate, to the extent permitted by law, in volume transactions will
produce better results for the Fund.
B-14
The
Adviser and/or its affiliates, officers, directors and employees may from time
to time own securities which are also held in the portfolio of the Fund. The
Fund, the Adviser and the Distributor have adopted a Code of Ethics under Rule
17j-1 of the 1940 Act which permits personnel subject to the Code of Ethics to
invest in securities, including securities that may be purchased or held by the
Fund. The Code of Ethics requires that such personnel submit reports of security
transactions for their respective accounts and restricts trading in various
types of securities in order to avoid possible conflicts of
interest.
The
Fund has entered into a distribution agreement with the Distributor whose
address is 220 East 42nd Street, New York, NY 10017, pursuant to which the
Distributor acts as principal underwriter and distributor of the Fund for the
sale and distribution of its shares. The Distributor is a wholly-owned
subsidiary of Value Line. For its services under the agreement, the Distributor
is not entitled to receive any compensation, although it is entitled to receive
fees under the Service and Distribution Plan. The Distributor also serves as
distributor to the other Value Line funds.
State
Street Bank and Trust Company (“State Street”) has been retained to provide
certain bookkeeping, accounting and administrative services for the Fund. The
Adviser pays State Street $76,400 per annum for providing these services. State
Street, whose address is 225 Franklin Street, Boston, MA 02110, also acts as the
Fund’s custodian, transfer agent and dividend-paying agent. As custodian, State
Street is responsible for safeguarding the Fund’s cash and securities, handling
the receipt and delivery of securities and collecting interest and dividends on
the Fund’s investments. As transfer agent and dividend-paying agent, State
Street effects transfers of Fund shares by the registered owners and transmits
payments for dividends and distributions declared by the Fund. Boston Financial
Data Services, Inc., a State Street affiliate, whose address is 330 W. 9th
Street, Kansas City, MO 64105, provides certain transfer agency functions to the
Fund as an agent for State Street. PricewaterhouseCoopers
LLP, whose address is 300 Madison Avenue, New York,
NY 10017 , acts as the Fund’s independent registered public accounting
firm.
Portfolio
Manager
Stephen
E. Grant is primarily responsible for the day-to-day management of the Fund’s
portfolio.
Compensation. Each portfolio
manager employed by the Adviser receives a fixed base salary and customary
benefits that are offered generally to all full-time and some part-time
employees of the Adviser. In addition, a manager may receive an annual bonus in
the Adviser’s discretion. Base salary is normally reevaluated on an annual
basis. Any bonus is completely discretionary and may be in excess of a manager’s
base salary. The profitability of the Adviser and the after tax investment
performance of the accounts that the portfolio manager is responsible for are
factors in determining the manager’s overall compensation. The level of any
bonus compensation may be influenced by the relative performance of the accounts
managed by the portfolio manager or the financial performance of the Adviser.
However, as noted, all bonus compensation is discretionary and the Adviser does
not employ formulas with respect to either of these factors to compute a
portfolio manager’s bonus. There are no differences in a portfolio manager’s
compensation structure for managing mutual funds or private
accounts.
Other
Accounts Managed. Stephen E. Grant is primarily or jointly responsible
for the day-today management of six Value Line mutual funds with combined total
assets at December 31, 2009, of approximately $1.4 billion and one private
account with total assets at December 31, 2009 of approximately $19
million.
B-15
Material Conflicts of Interest.
The Adviser’s portfolio managers typically manage more than one account.
Portfolio managers make investment decisions for each account based on the
investment objectives and policies of each such account. If the portfolio
manager identifies an investment opportunity that may be suitable for multiple
accounts, the Fund may not take full advantage of that opportunity because the
opportunity may need to be allocated among more than one account. In addition, a
portfolio manager may purchase or sell securities for one account and not
another account. The Adviser’s private accounts, like the Fund, pay an advisory
fee based primarily upon the size of the accounts. None of the accounts pay
performance-related fees. Investments are allocated among all of the Adviser’s
accounts in a manner which the Adviser deems to be fair and
equitable.
Ownership of Securities. Mr.
Grant does not own any shares of the Fund.
The
Service and Distribution Plan (12b-1 Plan) (the “Plan”) is designed to finance
the activities of the Distributor in advertising, marketing and distributing
Fund shares and for servicing Fund shareholders at an annual rate of 0.25% of
the Fund’s average daily net assets. During the fiscal year ended December 31,
2009, fees of $217,820 before fee waivers were accrued to the Distributor under
the Plan. The Distributor paid $27,165 to other broker-dealers and incurred
$49,154 in advertising and other marketing expenses. The fees payable to the
Distributor under the Plan are payable without regard to actual expenses
incurred. Effective May 1, 2009 through April 30, 2010, the Distributor
contractually agreed to waive the Fund’s 12b-1 fee equal to 0.25% of the Fund’s
average daily net assets. For the fiscal year ended December 31, 2009, fees
waived amounted to $217,820. The Distributor has agreed to extend the
contractual fee waiver through April 30, 2011. There is no assurance that the
Distributor will extend the contractual fee waiver beyond such
date.
The
principal services and expenses for which such compensation may be used include:
compensation to employees or account executives and reimbursement of their
expenses; overhead and telephone costs of such employees or account executives;
printing of prospectuses or reports for prospective shareholders; advertising;
preparation, printing and distribution of sales literature; and allowances to
other broker-dealers. A report of the amounts expended under the Plan is
submitted to and approved by the Directors, including the non-interested
Directors, each quarter. Because of the Plan, long-term shareholders may pay
more than the economic equivalent of the maximum sales charge permitted by the
Financial Industry Regulatory Authority regarding investment
companies.
As
noted above, the Plan is a compensation plan, which means that the Distributor’s
fees under the Plan are payable without regard to actual expenses incurred by
the Distributor. To the extent the revenue received by the Distributor pursuant
to the Plan exceeds the Distributor’s marketing expenses, the Distributor may
earn a profit under the Plan.
The
Plan is subject to annual approval by the Directors, including the
non-interested Directors. The Plan is terminable at any time by vote of the
Directors or by vote of a majority of the shares of the Fund. Pursuant to the
Plan, a new Director who is not an interested person (as defined in the 1940
Act) must be nominated by existing Directors who are not interested
persons.
Because
amounts paid pursuant to the Plan are paid to the Distributor, the Distributor
and its officers, directors and employees may be deemed to have a financial
interest in the operation of the Plan. None of the non-interested Directors has
a financial interest in the operation of the Plan.
B-16
The
Plan was adopted because of its anticipated benefits to the Fund. These
anticipated benefits include: the ability to realize economies of scale as a
result of increased promotion and distribution of the Fund’s shares, an
enhancement in the Fund’s ability to maintain accounts and improve asset
retention, increased stability of net assets for the Fund, increased stability
in the Fund’s investment positions, and greater flexibility in achieving
investment objectives. The costs of any joint distribution activities between
the Fund and other Value Line Funds will be allocated among the Funds in
proportion to the number of their shareholders.
Additional
Dealer Compensation
If
you purchase shares of the Fund through a broker, fund trading platform or other
financial intermediary (collectively, “intermediaries”), your intermediary may
receive various forms of compensation (which may come directly or indirectly
from the Fund and other Value Line Mutual Funds) from the Distributor, the
adviser and/or their affiliates. Such payments may be based on a variety of
factors, including sales of Fund shares through that intermediary or the value
of shares held by investors through that intermediary. Compensation from the
Distributor, the Adviser and/or their affiliates may vary among intermediaries.
The types of payments an intermediary may receive include:
|
●
|
Payments
under the Plan which are asset based charges paid from the assets of the
Fund;
|
|
|
●
|
Payments
by the Distributor out of its own assets. These payments are in addition
to payments made under the Plan.
|
You
should ask your intermediary for information about any payments it receives from
the Distributor.
Brokerage
firms and other intermediaries that sell Fund shares may make decisions about
which investment options they will service and make available to their clients
based on the payments these entities may be eligible to receive for their
services. Therefore, payments to a brokerage firm or other intermediary may
create potential conflicts of interest between that entity and its clients where
that entity determines which investment options it will make available to those
clients.
The
maximum amount of compensation that may be paid to any intermediary under the
Plan is 0.25% of the Fund’s average daily net assets. Generally, the maximum
amount of additional compensation that the Distributor pays to any intermediary
from its own assets is 0.15% of the Fund’s average daily net assets. However, to
the extent the Distributor waives any fees it would have otherwise received
under the Plan, the Distributor (and not the Fund) would pay the intermediaries
out of its own assets any such amounts waived.
As
of December 31, 2009, the Distributor may make payments out of its own assets to
the following financial intermediaries whose fees exceed the Fund’s payment, if
any, pursuant to the Plan.
|
National
City Bank
|
|
|
Pershing
LLC
|
|
|
National
Financial Services LLC
|
|
|
E*TRADE
|
|
|
TD
Ameritrade, Inc.
|
|
|
Charles
Schwab & Co., Inc.
|
|
|
USAA
Investment Management Co.
|
|
|
SunGard
Transaction Network
|
|
|
MSCS
Financial Services, LLC
|
|
|
The
Vanguard Group
|
Financial
intermediaries may have been added or removed from the list above since December
31, 2009.
B-17
Orders
for the purchase and sale of portfolio securities are placed with brokers and
dealers who, in the judgment of the Adviser, will obtain the best results for
the Fund’s portfolio taking into consideration such relevant factors such as
price, the ability of the broker to effect the transaction and the broker’s
facilities, reliability and financial responsibility. Commission rates, being a
component of price, are considered together with such factors. Debt securities
are traded principally in the over-the-counter market on a net basis through
dealers acting for their own account and not as brokers. Pursuant to the
provisions of Section 28(e) of the Securities Exchange Act of 1934, the Adviser
is also authorized to place purchase or sale orders with brokers or dealers who
may charge a commission in excess of that charged by other brokers or dealers if
the amount of the commission charged is reasonable in relation to the value of
the brokerage and research services provided viewed either in terms of that
particular transaction or in relation to the Adviser’s overall responsibilities
with respect to the account as to which the Adviser exercises investment
discretion. Such allocation will be in such amounts and in such proportion as
the Adviser may determine. The information and services furnished to the Adviser
include the furnishing of research reports and statistical compilations and
computations and the providing of current quotations for securities. The
services and information are furnished to the Adviser at no cost to it; no such
services or information were furnished directly to the Fund, but certain of
these services might have relieved the Fund of expenses which it would otherwise
have had to pay. Such information and services are considered by the Adviser,
and brokerage commissions are allocated in accordance with its assessment of
such information and services, but only in a manner consistent with the placing
of purchase and sale orders with brokers and/or dealers, which, in the judgment
of the Adviser, are able to execute such orders as expeditiously as possible.
Orders may also be placed with brokers or dealers who sell shares of the Fund or
other funds for which the Adviser acts as investment adviser, but this fact, or
the volume of such sales, is not a consideration in their
selection.
During
2007, 2008 and 2009, the Fund paid brokerage commissions of $239,036, $234,029
and $74,971, respectively. During 2009, all of the Fund’s brokerage commissions
were paid to brokers or dealers solely for their services in obtaining the best
prices and executions.
Portfolio Turnover. The Fund’s
annual portfolio turnover exceeded 100% in each of the last five years. A rate
of portfolio turnover of 100% would occur if all of the Fund’s portfolio were
replaced in a period of one year. To the extent that the Fund engages in
short-term trading in attempting to achieve its objectives, it may increase
portfolio turnover and incur higher brokerage commissions and other expenses
than might otherwise be the case. The Fund’s portfolio turnover rate for recent
fiscal years is shown under “Financial Highlights” in the Fund’s
Prospectus.
Each
share of the Fund’s common stock, $1 par value, has one vote with fractional
shares voting proportionately. Shares have no preemptive rights, are freely
transferable, are entitled to dividends as declared by the Directors and, if the
Fund were liquidated, would receive the net assets of the Fund.
Purchases: Shares of the Fund
are purchased at net asset value next calculated after receipt of a purchase
order. Minimum orders are $1,000 for an initial purchase and $100 for each
subsequent purchase. The Fund reserves the right to reduce or waive the minimum
purchase requirements.
B-18
Automatic Purchases: The Fund
offers a free service to its shareholders, Valu-Matic®,
through which monthly investments of $25 or more may be made automatically into
the shareholder’s Fund account. The required form to enroll in this program is
available upon request from the Distributor.
Retirement Plans: Shares of
the Fund may be purchased as the investment medium for various tax-sheltered
retirement plans. Upon request, the Distributor will provide information
regarding eligibility and permissible contributions. Because a retirement plan
is designed to provide benefits in future years, it is important that the
investment objectives of the Fund be consistent with the participant’s
retirement objectives. Premature withdrawals from a retirement plan may result
in adverse tax consequences. For more complete information, contact Shareholder
Services at 800-243-2729.
Redemption: The right of
redemption may be suspended, or the date of payment postponed beyond the normal
seven-day period, by the Fund under the following conditions authorized by the
1940 Act: (1) For any period (a) during which the New York Stock Exchange is
closed, other than customary weekend and holiday closing, or (b) during which
trading on the New York Stock Exchange is restricted; (2) For any period during
which an emergency exists as a result of which (a) disposal by the Fund of
securities owned by it is not reasonably practical, or (b) it is not reasonably
practical for the Fund to determine the fair value of its net assets; or (3) For
such other periods as the SEC may by order permit for the protection of the
Fund’s shareholders.
Redemptions
are taxable transactions for shareholders that are subject to tax. The value of
shares of the Fund on redemption may be more or less than the shareholder’s
cost, depending upon the market value of the Fund’s assets at the time.
Shareholders should note that if a loss has been realized on the sale of shares
of the Fund, the loss may be disallowed for tax purposes to the extent that
shares of the same Fund are purchased within (before or after) 30 days of the
sale.
It
is possible that conditions may exist in the future which would, in the opinion
of the Board of Directors, make it undesirable for the Fund to pay for
redemptions in cash. In such cases the Board may authorize payment to be made in
portfolio securities or other property of the Fund. However, the Fund has
obligated itself under the 1940 Act to redeem for cash all shares presented for
redemption by any one shareholder up to $250,000 (or 1% of the Fund’s net assets
if that is less) in any 90-day period. Securities delivered in payment of
redemptions are valued at the same value assigned to them in computing the net
asset value per share. Shareholders receiving such securities may incur
brokerage costs on their sales.
Calculation of Net Asset Value:
The net asset value of the Fund’s shares for purposes of both purchases
and redemptions is determined once daily as of the close of regular trading on
the New York Stock Exchange (generally 4:00 p.m., Eastern time) on each day that
the New York Stock Exchange is open for trading except on days on which no
orders to purchase, sell or redeem Fund shares have been received. The net asset
value per share is determined by dividing the total value of the investments and
other assets of the Fund, less any liabilities, by the total outstanding shares.
Securities listed on a securities exchange are valued at the closing sales price
on the date as of which the net asset value is being determined. The Fund
generally values equity securities traded on the NASDAQ Stock Market 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. 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 or persons acting
at their direction 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.
B-19
The
Fund has elected to be treated, has qualified and intends to continue to qualify
as a regulated investment company under the Internal Revenue Code of 1986, as
amended (the “Code”). By so qualifying, and assuming the Fund meets the
distribution requirements stated below, the Fund is not subject to federal
income tax on its net investment income or net realized capital gains which are
distributed to shareholders (whether or not reinvested in additional Fund
shares). In order to qualify as a regulated investment company under Subchapter
M of the Code, which qualification this discussion assumes, the Fund must, among
other things, (i) derive at least 90% of its gross income for each taxable year
from dividends, interest, payments with respect to securities loans, gains from
the sale or other disposition of stock, securities or foreign currencies, or
other income (including gains from options, futures and forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies and net income derived from an interest in a qualified publicly
traded partnership (as defined in Section 851(h) of the Code) (the “90% income
test”) and (ii) diversify its holdings so that at the end of each quarter of
each taxable year: (a) at least 50% of the value of the Fund’s total assets is
represented by (1) cash and cash items, U.S. government securities, securities
of other regulated investment companies, and (2) other securities, with such
other securities limited, in respect to any one issuer, to an amount not greater
than 5% of the value of the Fund’s total assets and to not more than 10% of the
outstanding voting securities of such issuer and (b) not more than 25% of the
value of the Fund’s total assets is invested in (1) the securities (other than
U.S. government securities and securities of other regulated investment
companies) of any one issuer, (2) the securities (other than securities of other
regulated investment companies) of two of more issuers that the Fund controls
and that are engaged in the same, similar, or related trades or businesses, or
(3) the securities of one or more qualified publicly traded
partnerships.
If
the Fund qualifies as a regulated investment company and distributes to its
shareholders each taxable year an amount equal to or exceeding the sum of (i)
90% of its “investment company taxable income” as that term is defined in the
Code (which includes, among other things, dividends, taxable interest, and the
excess of any net short-term capital gains over net long-term capital losses, as
reduced by certain deductible expenses) without regard to the deduction for
dividends paid and (ii) 90% of the excess of its gross tax-exempt interest, if
any, over certain disallowed deductions, the Fund generally will be relieved of
U.S. federal income tax on any income of the Fund, including “net capital gain”
(the excess of net long-term capital gain over net short-term capital loss),
distributed to shareholders. However, if the Fund meets such distribution
requirements, but chooses to retain some portion of its investment company
taxable income or net capital gain, it generally will be subject to U.S. federal
income tax at regular corporate rates on the amount retained. The Fund intends
to distribute at least annually all or substantially all of its investment
company taxable income, net tax-exempt interest, and net capital gain. If for
any taxable year the Fund did not qualify as a regulated investment company or
did not satisfy the distribution requirement described above, it generally would
be treated as a corporation subject to U.S. federal income tax and when the
Fund’s income is distributed, it would be subject to a further tax at the
shareholder level.
The
Code requires each regulated investment company to pay a nondeductible 4% excise
tax to the extent the company does not distribute, during each calendar year,
98% of its ordinary income, determined on a calendar year basis, and 98% of its
capital gains in excess of capital losses, determined, in general, for a
one-year period ending on October 31 of such year, plus certain undistributed
amounts from previous years. The Fund anticipates that it will make sufficient
timely distributions to avoid imposition of the excise tax.
B-20
Unless
a shareholder elects otherwise, distributions from the Fund will be
automatically invested in additional common shares of the Fund. For U.S. federal
income tax purposes, such distributions generally will be taxable whether a
shareholder takes them in cash or they are reinvested in additional shares of
the Fund. In general, assuming that the Fund has sufficient earnings and
profits, dividends from investment company taxable income are taxable either as
ordinary income or, if so designated by the Fund and certain other conditions
are met, as “qualified dividend income” taxable to individual shareholders at a
maximum 15% U.S. federal income tax rate. Dividend income distributed to
individual shareholders will qualify for such maximum 15% U.S. federal income
tax rate to the extent that such dividends are attributable to “qualified
dividend income” as that term is defined in Section 1(h)(11)(B) of the Code from
the Fund’s investment in common and preferred stock of U.S. companies and stock
of certain foreign corporations, provided that certain holding period and other
requirements are met by both the Fund and the shareholders.
A
dividend that is attributable to qualified dividend income of the Fund that is
paid by the Fund to an individual shareholder will not be taxable as qualified
dividend income to such shareholder if (1) the dividend is received with respect
to any share of the Fund held for fewer than 61 days during the 121-day period
beginning on the date which is 60 days before the date on which such share
became ex-dividend with respect to such dividend, (2) to the extent that the
shareholder is under an obligation (whether pursuant to a short sale or
otherwise) to make related payments with respect to positions in substantially
similar or related property, or (3) the shareholder elects to have the dividend
treated as investment income for purposes of the limitation on deductibility of
investment interest.
Distributions
from net capital gain that are designated as capital gain dividends, if any, are
taxable as long-term capital gains for U.S. federal income tax purposes without
regard to the length of time the shareholder has held shares of the Fund.
Capital gain dividends distributed by the Fund to individual shareholders
generally will qualify for the maximum 15% federal income tax rate on long-term
capital gains. A shareholder should also be aware that the benefits of the
favorable tax rate on long-term capital gains and qualified dividend income may
be impacted by the application of the alternative minimum tax to individual
shareholders. Under current law, the maximum 15% U.S. federal income tax rate on
qualified dividend income and long-term capital gains will cease to apply to
taxable years beginning after December 31, 2010.
Distributions
by the Fund in excess of the Fund’s current and accumulated earnings and profits
will be treated as a return of capital to the extent of (and in reduction of)
the shareholder’s tax basis in its shares and any such amount in excess of that
basis will be treated as gain from the sale of shares, as discussed below. The
federal income tax status of all distributions will be reported to shareholders
annually.
At
the time of an investor’s purchase of Fund shares, a portion of the purchase
price may be attributable to realized or unrealized appreciation in the Fund’s
portfolio or undistributed taxable income of the Fund. Consequently, subsequent
distributions by the Fund with respect to these shares from such appreciation or
income may be taxable to such investor even if the net asset value of the
investor’s shares is, as a result of the distributions, reduced below the
investor’s cost for such shares and the distributions economically represent a
return of a portion of the investment. In particular, investors should be
careful to consider the tax implications of buying shares just prior to a
distribution. The price of shares purchased at that time (at the net asset value
per share) may include the amount of the forthcoming distribution. Those
purchasing just prior to a distribution will then receive, in effect, a return
of capital upon the distribution which will nevertheless be taxable to
them.
B-21
Under
the Code, dividends declared by the Fund in October, November or December of any
calendar year, and payable to shareholders of record in such a month, shall be
deemed to have been received by such shareholder on December 31 of such calendar
year if such dividend is actually paid in January of the following calendar
year. In addition, certain other distributions made after the close of a taxable
year of the Fund may be “spilled back” and treated as paid by the Fund (except
for purposes of the 4% excise tax) during such taxable year. In such case,
shareholders generally will be treated as having received such dividends in the
taxable year in which the distributions were actually made.
If
the Fund invests in certain pay-in-kind securities, zero coupon securities or,
in general, any other securities with original issue discount (or with market
discount if the Fund elects to include market discount in income currently), the
Fund must accrue income on such investments for each taxable year, which
generally will be prior to the receipt of the corresponding cash payments.
However, the Fund must distribute, at least annually, all or substantially all
of its net investment income, including such accrued income, to shareholders to
qualify as a regulated investment company under the Code and avoid U.S. federal
income and excise taxes. Therefore, the Fund may have to dispose of its
portfolio securities under disadvantageous circumstances to generate cash, or
may have to borrow the cash, to satisfy distribution requirements.
Dividends
received by the Fund from U.S. corporations in respect of any share of stock
with a tax holding period of at least 46 days (91 days in the case of certain
preferred stock) extending before and after each dividend held in an unleveraged
position and distributed and designated by the Fund (except for capital gain
dividends received from a regulated investment company) may be eligible for the
70% dividends-received deduction generally available to corporations under the
Code. Any corporate shareholder should consult its adviser regarding the
possibility that its tax basis in its shares may be reduced for U.S. federal
income tax purposes by reason of “extraordinary dividends” received with respect
to the shares and, to the extent reduced below zero, current recognition of
income may be required. In order to qualify for the deduction, corporate
shareholders must meet the minimum holding period requirement stated above with
respect to their Fund shares, taking into account any holding period reductions
from certain hedging or other transactions or positions that diminish their risk
of loss with respect to their Fund shares, and, if they borrow to acquire or
otherwise incur debt attributable to Fund shares, they may be denied a portion
of the dividends-received deduction. The entire dividend, including the
otherwise deductible amount, will be included in determining the excess, if any,
of a corporation’s adjusted current earnings over its alternative minimum
taxable income, which may increase a corporation’s alternative minimum tax
liability. Upon request, the Fund will inform shareholders of the amounts of the
qualifying dividends.
To
the extent that the Fund invests in stock of foreign issuers, it may be subject
to withholding and other taxes imposed by foreign countries, including taxes on
interest, dividends and capital gains with respect to such investments. Tax
conventions between certain countries and the U.S. may reduce or eliminate such
taxes in some cases. The Fund does not expect to satisfy the requirements for
passing through to its shareholders their pro rata shares of qualified foreign
taxes paid by the Fund, with the result that shareholders will not be entitled
to a tax deduction or credit for such taxes on their own tax
returns.
B-22
If
the Fund acquires any equity interest (under Treasury regulations that may be
promulgated in the future, generally including not only stock but also an option
to acquire stock such as is inherent in a convertible bond) in certain foreign
corporations that receive at least 75% of their annual gross income from passive
sources (such as interest, dividends, certain rents and royalties, or capital
gains) or that hold at least 50% of their assets in investments producing such
passive income (“passive foreign investment companies”), the Fund could be
subject to U.S. federal income tax and additional interest charges on “excess
distributions” received from such companies or on gain from the sale of stock in
such companies, even if all income or gain actually received by the Fund is
timely distributed to its shareholders. The Fund would not be able to pass
through to its shareholders any credit or deduction for such a tax. Elections
may generally be available that would ameliorate these adverse tax consequences,
but such elections could require the Fund to recognize taxable income or gain
(subject to tax distribution requirements) without the concurrent receipt of
cash. These investments could also result in the treatment of capital gains from
the sale of stock of passive foreign investment companies as ordinary income.
The Fund may limit and/or manage its holdings in passive foreign investment
companies to limit its tax liability or maximize its return from these
investments.
Options
written or purchased by the Fund and futures contracts purchased on certain
securities and indices may cause the Fund to recognize gains or losses from
marking-to-market even though such options may not have lapsed, been closed out,
or exercised or such futures contracts may not have been performed or closed
out. The tax rules applicable to these contracts may affect the characterization
of some capital gains and losses recognized by the Fund as long-term or
short-term. Additionally, the Fund may be required to recognize gain if an
option, futures contract, short sale, or other transaction that is not subject
to the mark-to-market rules is treated as a “constructive sale” of an
“appreciated financial position” held by the Fund under Section 1259 of the
Code. Any net mark-to-market gains and/or gains from constructive sales may also
have to be distributed to satisfy the distribution requirements referred to
above even though the Fund may receive no corresponding cash amounts, possibly
requiring the Fund to dispose of portfolio securities or to borrow to obtain the
necessary cash. Losses on certain options, futures and/or offsetting positions
(portfolio securities or other positions with respect to which the Fund’s risk
of loss is substantially diminished by one or more options or futures contracts)
may also be deferred under the tax straddle rules of the Code, which may also
affect the characterization of capital gains or losses from straddle positions
and certain successor positions as long-term or short-term. Certain tax
elections may be available that would enable the Fund to ameliorate some adverse
effects of the tax rules described in this paragraph. The tax rules applicable
to options, futures contracts, short sales, and straddles may affect the amount,
timing and character of the Fund’s income and gains or losses and hence of its
distributions to shareholders.
Realized
losses incurred after October 31, if so elected by the Fund, are deemed to arise
on the first day of the following fiscal year. In addition, for U.S. federal
income tax purposes, the Fund is permitted to carry forward a net capital loss
for any year to offset its capital gains, if any, for up to eight years
following the year of the loss. To the extent subsequent capital gains are
offset by such losses, they would not result in U.S. federal income tax
liability to the Fund and are not expected to be distributed as such to
shareholders.
B-23
A
shareholder may realize a capital gain or capital loss on the sale, exchange or
redemption of shares of the Fund. The tax consequences of a sale, exchange or
redemption depend upon several factors, including the shareholder’s adjusted tax
basis in the shares sold, exchanged or redeemed and the length of time the
shares have been held. Initial basis in the shares will be the actual cost of
those shares (net asset value of Fund shares on purchase or reinvestment date).
Shareholders should consult their own tax advisers with reference to their
individual circumstances to determine whether any particular transaction in the
Fund’s shares is properly treated as a sale for tax purposes, as the following
discussion assumes, and the tax treatment of any gains or losses recognized in
such transactions. In general, if Fund shares are sold, redeemed or exchanged,
the shareholder will recognize gain or loss equal to the difference between the
amount realized on the sale and the shareholder’s adjusted tax basis in the
shares. Such gain or loss generally will be treated as long-term capital gain or
loss if the shares were held for more than one year and otherwise generally will
be treated as short-term capital gain or loss. Any loss realized by shareholders
upon the sale, redemption or exchange of shares within six months of the date of
their purchase will generally be treated as a long-term capital loss to the
extent of any distributions of net long-term capital gains with respect to such
shares. Moreover, a loss on a sale, exchange or redemption of Fund shares will
be disallowed to the extent that shares of the Fund are purchased (including
through the reinvestment of dividends) within 30 days before or after the shares
are sold, exchanged or redeemed. Individual shareholders may generally deduct in
any year only $3,000 of capital losses that are not offset by capital gains and
remaining losses may be carried over to future years. Corporations may generally
deduct capital losses only against capital gains with certain carrybacks and
carryovers allowable for excess losses.
Under
Treasury regulations, if a shareholder recognizes a loss with respect to Fund
shares of $2 million or more for an individual shareholder, or $10 million or
more for a corporate shareholder, in any single taxable year (or greater amounts
over a combination of years), the shareholder must file with the Internal
Revenue Service a disclosure statement on Form 8886. Shareholders who own
portfolio securities directly are in many cases excepted from this reporting
requirement but, under current guidance, shareholders of regulated investment
companies are not excepted. A shareholder who fails to make the required
disclosure to the IRS may be subject to substantial penalties. The fact that a
loss is reportable under these regulations does not affect the legal
determination of whether or not the taxpayer’s treatment of the loss is proper.
Shareholders should consult with their tax advisers to determine the
applicability of these regulations in light of their individual
circumstances.
Shareholders
that are exempt from U.S. federal income tax, such as retirement plans that are
qualified under Section 401 of the Code, generally are not subject to U.S.
federal income tax on Fund dividends or distributions or on sales or exchanges
of Fund shares unless the acquisition of the Fund shares was debt-financed. A
plan participant whose retirement plan invests in the Fund generally is not
taxed on Fund dividends or distributions received by the plan or on sales or
exchanges of Fund shares by the plan for U.S. federal income tax purposes.
However, subject to certain limited exceptions, distributions to plan
participants from a retirement plan account generally are taxable as ordinary
income and different tax treatment, including penalties on certain excess
contributions and deferrals, certain pre-retirement and post-retirement
distributions and certain prohibited transactions, is accorded to accounts
maintained as qualified retirement plans. Shareholders and plan participants
should consult their tax advisers for more information.
For
shareholders who fail to furnish to the Fund their social security or taxpayer
identification numbers and certain related information or who fail to certify
that they are not subject to backup withholding, dividends, distributions of
capital gains and redemption proceeds paid by the Fund will be subject to U.S.
federal 28% “backup withholding” requirement. In addition, the Fund may be
required to backup withhold if it receives notice from the IRS or a broker that
the number provided is incorrect or backup withholding is applicable as a result
of previous underreporting of interest or dividend income. If the withholding
provisions are applicable, any such dividends or capital gain distributions to
these shareholders, whether taken in cash or reinvested in additional shares,
and any redemption proceeds will be reduced by the amounts required to be
withheld. The 28% backup withholding rate currently applies to amounts paid by
the Fund through December 31, 2010 and is scheduled to rise to 31% for amouts
paid by the Fund after such date.
B-24
The
foregoing discussion relates solely to U.S. federal income tax laws as
applicable to shareholders who are U.S. persons (i.e., U.S. citizens or
residents, domestic corporations and partnerships, and certain trusts and
estates) and hold their shares as capital assets and is not intended to be a
complete discussion of all federal tax consequences. Except as otherwise
provided, this discussion does not address the special tax rules that may be
applicable to particular types of investors, such as financial institutions,
insurance companies, securities dealers or tax-exempt or tax-deferred plans,
accounts or entities. Shareholders who are not U.S. persons may be subject to a
non-resident alien U.S. withholding tax at the rate of 30% or at a lower treaty
rate on amounts treated as ordinary dividends from the Fund (other than certain
dividends derived from short-term capital gains and qualified interest income of
the Fund currently only for certain taxable years of the Fund commencing prior
to January 1, 2010, provided that the Fund chose to make a specific designation
relating to such dividends) and, unless an effective IRS Form W-8 BEN or other
authorized certificate is on file, to backup withholding at the rate of 28% on
certain other payments from the Fund. The Fund does not expect to be a “U.S.
real property holding corporation” as defined in section 897(c)(2) of the Code
and, therefore, does not expect to be subject to look-through rules for gains
from the sale or exchange of U.S. real property interests. However, to the
extent that the Fund receives distributions from a REIT (if any) that are
attributable to gains from sales or exchanges of U.S. real property interests,
certain distributions by the Fund to non-U.S. shareholders could be subject to
U.S. federal withholding tax at a rate of up to 35% and non-U.S. shareholders
owning 5% or more of the Fund within one year of certain distributions would be
required to file a U.S. federal income tax return to report such gains.
Shareholders are advised to consult with their tax advisers concerning the
application of federal, state, local and foreign taxes to an investment in the
Fund.
The
Fund’s financial statements for the year ended December 31, 2009, including the
financial highlights for each of the five fiscal years in the period ended
December 31, 2009, appearing in the 2009 Annual Report to Shareholders and the
report thereon of PricewaterhouseCoopers LLP,
independent registered public accounting firm, appearing therein, are
incorporated by reference in this Statement of Additional
Information.
B-25
PART
C: OTHER INFORMATION
|
Item
28.
|
Exhibits.
|
|
|
(a)
|
Articles
of Incorporation, as amended.*
|
|
|
(b)
|
By-laws.*
|
|
|
(c)
|
Instruments
Defining Rights of Security Holders. Reference is made to Article Fifth of
the Articles of Incorporation filed as Exhibit (a) to Post-Effective
Amendment No. 84, filed February 24, 1999.
|
|
|
(d)
|
Investment
Advisory Agreement.*
|
|
|
(e)
|
Underwriting
Contract.*
|
|
|
(f)
|
Not
applicable.
|
|
|
(g)
|
Custodian
Agreement.*
|
|
|
(h)
|
(1) Administration
Agreement with State Street Bank and Trust Company.****
|
|
|
(2) Fee
Waiver Agreement.†
|
||
|
(i)
|
Legal
Opinion.*
|
|
|
(j)
|
Consent
of Independent Registered Public Accounting Firm.†
|
|
| (k) | Not applicable. | |
|
(l)
|
Not
applicable.
|
|
|
(m)
|
Service
and Distribution Plan.***
|
|
|
(p)
|
Code
of Ethics.**
|
|
|
(r)
|
Powers
of Attorney
|
|
|
*
|
Filed
as an exhibit to Post-Effective Amendment No. 84, filed February 24, 1999,
and incorporated herein by reference.
|
||
|
**
|
Filed
as an exhibit to Post-Effective Amendment No. 85, filed April 26, 2000,
and incorporated herein by reference.
|
||
|
***
|
Filed
as an exhibit to Post-Effective Amendment No. 86, filed April 27, 2001,
and incorporated herein by reference.
|
||
|
****
|
Filed
as an exhibit to Post-Effective Amendment No. 93, filed April 27, 2007,
and incorporated herein by reference.
|
||
|
†
|
Filed
herewith.
|
||
|
Item
29.
|
Persons
Controlled by or Under Common Control With
Registrant.
|
None
C-1
|
Item
30.
|
Indemnification.
|
Incorporated
by reference to Article Seventh (7)(c) of the Articles of Incorporation filed as
Exhibit (a) to Post-Effective Amendment No. 84, filed February 24,
1999.
|
Item
31.
|
Business
or Other Connections of Investment
Adviser.
|
EULAV
Asset Management, LLC, Registrant’s investment adviser, acts as investment
adviser for a number of individuals, trusts, corporations and institutions, in
addition to the registered investment companies in the Value Line Family of
Funds listed in Item 32.
|
Name
|
Position
With
the
Adviser
|
Other
Employment
|
|||||||
|
Mitchell
Appel
|
President
|
President
of the Distributor; Chief Financial Officer and a Director of Value Line,
Inc.
|
|||||||
|
Howard
A. Brecher
|
Secretary
and Treasurer
|
Vice
President, Secretary, Treasurer and a Director of Arnold Bernhard &
Co., Inc. Acting Chairman and Acting CEO and a Director of Value Line,
Inc.
|
|||||||
|
Item
32.
|
Principal
Underwriters.
|
|
(a)
|
EULAV
Securities, Inc., acts as principal underwriter for the following Value
Line funds, including the Registrant: The Value Line Fund, Inc.; Value
Line Income and Growth Fund, Inc.; Value Line Premier Growth Fund, Inc.;
Value Line Larger Companies Fund, Inc.; Value Line U.S. Government Money
Market Fund, Inc.; Value Line U.S. Government Securities Fund, Inc.; Value
Line Centurion Fund, Inc.; The Value Line Tax Exempt Fund, Inc.; Value
Line Convertible Fund, Inc.; Value Line Aggressive Income Trust; Value
Line New York Tax Exempt Trust; Value Line Strategic Asset Management
Trust; Value Line Emerging Opportunities Fund, Inc.; Value Line Asset
Allocation Fund, Inc.
|
|
|
(b)
|
|
(1)
Name
and Principal
Business
Address
|
(2)
Position
and Offices
with
EULAV
Securities,
Inc.
|
(3)
Position
and
Offices
with
Registrant
|
||||
|
Mitchell
Appel
|
President
|
President
|
||||
|
Raymond
Stock
|
Vice
President
|
None
|
||||
The
business address of each of the officers and directors is 220 East 42nd
Street, New York, NY 10017-5891.
|
(c)
|
Not
applicable.
|
C-2
|
Item
33.
|
Location
of Accounts and Records.
|
|
EULAV
Asset Management, LLC
|
|
|
Value
Line, Inc.
|
|
|
220
East 42nd
Street
|
|
|
New
York, NY 10017
|
|
|
For
records pursuant to:
|
|
|
Rule
31a-1(b)(4),(5),(6),(7),(10),(11)
|
|
|
Rule
31a-1(f)
|
|
|
State
Street Bank and Trust Company
|
|
|
c/o
BFDS
|
|
|
P.O.
Box 219729
|
|
|
Kansas
City, MO 64121-9729
|
|
|
For
records pursuant to Rule 31a-1(b)(2)(iv)
|
|
|
State
Street Bank and Trust Company
|
|
|
225
Franklin Street
|
|
|
Boston,
MA 02110
|
|
|
For
all other records
|
|
|
Item
34.
|
Management
Services.
|
|
None.
|
|
|
Item
35.
|
Undertakings.
|
|
None.
|
C-3
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933 and the Investment Company Act
of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statements pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this
Amendment to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, and State of
New York, on the 29 th day of April , 2010.
|
THE
VALUE LINE FUND, INC.
|
||
|
By:
|
/s/
Mitchell E. Appel
|
|
|
Mitchell
E. Appel, President and Chief Executive
Officer
|
||
Pursuant
to the requirements of the Securities Act of 1933, this Amendment has been
signed below by the following persons in the capacities and on the dates
indicated.
|
Signatures
|
Title
|
Date
|
||||||||
|
*Joyce E. Heinzerling
|
Director
|
April 29 , 2010
|
||||||||
|
(Joyce
E. Heinzerling)
|
||||||||||
|
*Francis C. Oakley
|
Director
|
April 29 , 2010
|
||||||||
|
(Francis
C. Oakley)
|
||||||||||
|
*David H. Porter
|
Director
|
April 29 , 2010
|
||||||||
|
(David
H. Porter)
|
||||||||||
|
*Paul Craig Roberts
|
Director
|
April 29 , 2010
|
||||||||
|
(Paul
Craig Roberts)
|
||||||||||
|
*Thomas T. Sarkany
|
Director
|
April 29 , 2010
|
||||||||
|
(Thomas
T. Sarkany)
|
||||||||||
|
*Nancy-Beth Sheerr
|
Director
|
April 29 , 2010
|
||||||||
|
(Nancy-Beth
Sheerr)
|
||||||||||
|
*Daniel S. Vandivort
|
Director
|
April 29 , 2010
|
||||||||
|
(Daniel
S. Vandivort)
|
||||||||||
|
/s/
Mitchell E. Appel
|
President
and
|
April 29 , 2010
|
||||||||
|
(Mitchell
E. Appel)
|
Chief
Executive Officer
|
|||||||||
|
(Principal
Executive Officer)
|
||||||||||
|
/s/
Emily D. Washington
|
Treasurer;
Principal Financial
|
April 29 , 2010
|
||||||||
|
(Emily
D. Washington)
|
and
Accounting Officer
|
|||||||||
|
*By:
|
/s/
Howard A. Brecher
|
|
(Howard
A. Brecher, Attorney-In-Fact)
|
C-4
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby
consent to the incorporation by reference in this Registration Statement on Form
N-1A of our report dated February 2 6 , 20 10 , relating to the financial statements and financial
highlights which appears in the December 31, 200 9
Annual Report to Shareholders of The Value Line Fund, Inc., which are also
incorporated by reference into the Registration Statement. We also consent to
the references to us under the headings “Financial Highlights”, “Investment
Advisory and Other Services” and “Financial Statements” in such Registration
Statement.
/s/
PricewaterhouseCoopers LLP
New York,
New York
April 28,
2010
C-5
EXHIBIT
INDEX
|
Exhibit
Number
|
Document
Title
|
|
(h)
( 2 )
|
Fee
Waiver Agreement
|
|
(j)
|
Consent
of Independent Registered Public Accounting
Firm
|
C-6