UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file Number 811-568
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Value Line Fund, Inc.
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(Exact name of registrant as specified in charter)
220 East 42nd Street, New York, N.Y. 10017
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 212-907-1500
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Date of fiscal year end: December 31, 2006
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Date of reporting period: June 30, 2006
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Item 1. Reports to Stockholders.
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SEMI-ANNUAL REPORT
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June 30, 2006
--------------------------------
The Value Line
Fund, Inc.
[LOGO]
VALUE LINE
No-Load
Mutual
Funds
The Value Line Fund, Inc.
To Our Value Line
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To Our Shareholders:
In the first six months of 2006, The Value Line Fund returned 2.59%, compared
with the 2.71% return of the S&P 500 Index(1).
The equity market had a mixed start to the opening half of the year, as solid
corporate earnings growth and strong economic data proved insufficient to move
the major market averages significantly higher. Several factors have contributed
to this lackluster showing. First, higher oil prices have concerned consumers
and investors alike as they have recently tested their highs again. Higher
energy prices can have a two-fold effect as they weaken consumer's purchasing
power as well as reducing the profit margins of certain industries. Second, the
Federal Reserve continues along its measured path of interest rate hikes, which
we expect to end soon. These higher short-term rates have not yet had a
meaningful impact on longer-term rates, but the significant flattening of the
yield curve will likely lower profit margins at financial corporations, which
currently account for the largest weighting of the S& P 500, at over 20%.
The Value Line Fund generally invests in multi-cap stocks that are ranked in the
Highest category for price performance over the next six to twelve months by the
Value Line Timeliness Ranking System. The System favors stocks with strong price
and earnings momentum relative to those of all other companies in the Value Line
Investment Survey of approximately 1,700 stocks. Currently, the Fund has a
significant weighting in the Information Technology sector, which can be
volatile. The Fund is significantly underweighted in the Financial sector due
to the slowing growth of earnings that we expect from this area.
Looking forward, we expect the second half of the year to continue to be
volatile for the equity markets. Record profit margins for corporations may
begin to slip given the higher interest rate environment coupled with rising
energy costs. Also, earnings growth expectations are in the mid-teens on a
percentage basis currently for the second half of 2006, which may be a high
hurdle to meet. Lastly, the upside for the market will likely be limited given
the uncertainty associated with the mid-term elections in November. Factors
mitigating a significant sell off for equities continue to be high levels of
cash holdings by U.S. corporations, which could be used for stock repurchase
programs, and merger and acquisition activity looks like it will continue at a
historically high level.
As always, we appreciate your continued investment.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
August 2, 2006
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(1) The Standard & Poor's 500 Index consists of 500 stocks which are traded on
the New York Stock Exchange, American Stock Exchange and the NASDAQ National
Market System and is representative of the broad stock market. This is an
unmanaged index and does not reflect charges, expenses or taxes, and it is not
possible to directly invest in this index.
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2
The Value Line Fund, Inc.
Fund Shareholders
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Economic Observations
The U.S. economy slowed abruptly during the second quarter, with the rate of
gross domestic product growth moderating from the opening quarter's 5.6% to just
2.5% in the most recent three months. Slower increases in personal consumption
expenditures and a disappointing showing in the critical housing market were
significant contributors to the decelerating rate of GDP growth.
Meanwhile, a measured pace of business activity is likely to be maintained over
the next several quarters, if recent data trends are sustained as we believe
they will be. Such trends are highlighted by surveys showing a modest rise in
consumer confidence, mixed retail sales numbers, solid industrial production and
factory usage, and a decline in housing activity that is thus far somewhat less
precipitous than many have been fearing. We think this uneven flow of data will
be the rule for the balance of this year and into the early months of 2007, with
the prospective rate of quarterly GDP growth averaging 2.5% to 3.0%.
Such moderate economic growth should keep inflationary excesses at bay, as the
less aggressive consumption of such raw materials as oil and gas, and industrial
metals like copper and zinc should help to limit shortages in these areas.
Overall, we expect inflation to average just 2% to 3% though most of 2007.
The case for additional monetary tightening by the Federal Reserve is weakening.
Indeed, with economic growth on a much slower track and with inflationary
shortages of labor and raw materials looking less likely now, the Fed could be
looking to keep interest rates at stable levels for at least the next few
months.
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3
The Value Line Fund, Inc.
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FUND EXPENSES (unaudited):
Example
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and service (12b-1) fees; and other Fund expenses. This
Example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with the ongoing costs of
investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (January 1, 2006 through June 30, 2006).
Actual Expenses
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example an $8,600
account value divided by $1,000=8.6), then multiply the result by the number in
the first line under the heading "Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore, the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if transactional
costs were included, your costs would have been higher.
Expenses* paid
Beginning Ending during period
account value account value 1/1/06 thru
1/1/06 6/30/06 6/30/06
---------------------------------------------------
Actual ..................................... $ 1,000.00 $ 1,025.90 $ 5.63
Hypothetical (5% return before expenses) ... $ 1,000.00 $ 1,019.25 $ 5.61
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* Expenses are equal to the Fund's annualized expense ratio of 1.12%
multiplied by the average account value over the period, multiplied by
181/365 to reflect the one-half period.
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4
The Value Line Fund, Inc.
Portfolio Highlights at June 30, 2006 (unaudited)
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Ten Largest Holdings
Percentage of
Issue Shares Value Net Assets
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Hansen Natural Corp. ......... 23,000 $ 4,378,510 2.07%
Gymboree Corp. (The) ......... 120,000 $ 4,171,200 1.97%
RSA Security, Inc. 150,000 $ 4,078,500 1.92%
McDermott International, Inc. 87,000 $ 3,955,890 1.87%
Garmin Ltd. .................. 33,500 $ 3,532,240 1.67%
Akamai Technologies, Inc. .... 93,000 $ 3,365,670 1.59%
NVIDIA Corp. ................. 157,000 $ 3,342,530 1.58%
Charles Schwab Corp. (The) ... 200,000 $ 3,196,000 1.51%
Terex Corp. .................. 32,000 $ 3,158,400 1.49%
Schlumberger Ltd. ............ 48,000 $ 3,125,280 1.47%
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Asset Allocation -- Percentage of Net Assets
[THE FOLLOWING WAS DEPICTED BY A PIE CHART IN THE PRINTED MATERIAL]
Cash & Other 3.4%
Common Stocks 96.6%
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Sector Weightings -- Percentage of Total Investment Securities
[THE FOLLOWING WAS DEPICTED BY A BAR CHART IN THE PRINTED MATERIAL]
Industrial 24.1%
Technology 15.2%
Consumer, Cyclical 15.1%
Communications 12.9%
Consumer, Non-Cyclical 12.4%
Financial 7.6%
Energy 7.1%
Basic Materials 5.6%
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5
The Value Line Fund, Inc.
Schedule of Investments
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Shares Value
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COMMON STOCKS (96.6%)
ADVERTISING (1.1%)
53,000 Monster Worldwide, Inc. * .................... $ 2,260,980
APPAREL (0.7%)
37,000 Guess?, Inc. * ............................... 1,544,750
BANK (0.7%)
26,000 State Street Corp ............................ 1,510,340
BANK -- MIDWEST (0.7%)
27,000 Hancock Holding Co ........................... 1,512,000
BEVERAGE -- SOFT DRINK (2.1%)
23,000 Hansen Natural Corp. * ....................... 4,378,510
CABLE TV (0.8%)
100,000 DIRECTV Group, Inc. (The) * .................. 1,650,000
CHEMICAL -- DIVERSIFIED (0.9%)
70,000 Norsk Hydro ASA ADR .......................... 1,869,700
CHEMICAL -- SPECIALTY (0.9%)
51,000 Arch Chemicals, Inc .......................... 1,838,550
COAL (0.7%)
37,000 Arch Coal, Inc ............................... 1,567,690
COMPUTER & PERIPHERALS (2.3%)
61,000 Hewlett-Packard Co ........................... 1,932,480
145,000 Western Digital Corp. * ...................... 2,872,450
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4,804,930
COMPUTER SOFTWARE & SERVICES (5.8%)
100,000 BMC Software, Inc. * ......................... 2,390,000
56,000 Citrix Systems, Inc. * ....................... 2,247,840
26,000 Cognizant Technology Solutions
Corp. Class A * ............................ 1,751,620
69,000 Paychex, Inc ................................. 2,689,620
32,000 SEI Investments Co ........................... 1,564,160
40,000 Transaction Systems Architects,
Inc. * ....................................... 1,667,600
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12,310,840
DIVERSIFIED COMPANIES (2.6%)
39,000 Honeywell International, Inc ................. 1,571,700
87,000 McDermott International, Inc. * .............. 3,955,890
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5,527,590
DRUG (1.1%)
104,000 Biovail Corp ................................. 2,434,640
E-COMMERCE (2.5%)
93,000 Akamai Technologies, Inc. * .................. $ 3,365,670
185,000 webMethods, Inc. * ........................... 1,825,950
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5,191,620
ELECTRICAL EQUIPMENT (4.9%)
53,000 Belden CDT, Inc .............................. 1,751,650
33,500 Garmin Ltd ................................... 3,532,240
87,000 General Cable Corp. * ........................ 3,045,000
40,000 Thomas & Betts Corp. * ....................... 2,052,000
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10,380,890
ELECTRONICS (4.8%)
105,000 AVX Corp ..................................... 1,657,950
76,500 Benchmark Electronics, Inc. * ................ 1,845,180
160,000 KEMET Corp. * ................................ 1,475,200
45,000 Molex, Inc ................................... 1,510,650
60,000 Plexus Corp. * ............................... 2,052,600
75,000 Technitrol, Inc .............................. 1,736,250
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10,277,830
ENTERTAINMENT (0.9%)
60,000 Walt Disney Co. (The) ........................ 1,800,000
ENVIRONMENTAL (0.9%)
56,000 Waste Management, Inc ........................ 2,009,280
FOOD PROCESSING (0.8%)
42,000 Archer-Daniels-Midland Co .................... 1,733,760
FURNITURE/HOME FURNISHINGS (0.7%)
66,000 Select Comfort Corp. * ....................... 1,516,020
HUMAN RESOURCES (2.4%)
57,000 Kelly Services, Inc. Class A ................. 1,548,690
114,000 MPS Group, Inc. * ............................ 1,716,840
38,000 Volt Information Sciences, Inc. * ............ 1,770,800
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5,036,330
INDUSTRIAL SERVICES (3.1%)
54,000 Amdocs Ltd. * ................................ 1,976,400
50,000 Expeditors International of
Washington, Inc ............................ 2,800,500
100,000 Quanta Services, Inc. * ...................... 1,733,000
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6,509,900
INFORMATION SERVICES (1.5%)
120,000 Gartner, Inc. * .............................. 1,704,000
40,000 Thomson Corp. (The) .......................... 1,540,800
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3,244,800
See Notes to Financial Statements.
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6
The Value Line Fund, Inc.
June 30, 2006 (unaudited)
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Shares Value
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INTERNET (3.9%)
33,000 CheckFree Corp. * ............................ $ 1,635,480
112,000 E*Trade Financial Corp. * .................... 2,555,840
150,000 RSA Security, Inc. * ......................... 4,078,500
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8,269,820
MACHINERY (3.7%)
80,000 Gardner Denver, Inc. * ....................... 3,080,000
34,000 Manitowoc Company, Inc. (The) ................ 1,513,000
32,000 Terex Corp. * ................................ 3,158,400
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7,751,400
MANUFACTURED HOUSING/ RECREATIONAL VEHICLE (0.8%)
35,000 Thor Industries, Inc ......................... 1,695,750
MARITIME (1.0%)
54,000 Kirby Corp. * ................................ 2,133,000
MEDICAL SUPPLIES (0.8%)
55,000 Illumina, Inc. * ............................. 1,631,300
METALS & MINING DIVERSIFIED (1.4%)
31,000 Alcan, Inc ................................... 1,455,140
61,000 AMCOL International Corp ..................... 1,607,350
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3,062,490
NATURAL GAS -- DIVERSIFIED (0.7%)
100,000 El Paso Corp ................................. 1,500,000
NEWSPAPER (1.0%)
105,000 News Corp. Class B ........................... 2,118,900
OILFIELD SERVICES/ EQUIPMENT (4.5%)
100,000 Global Industries Ltd. * ..................... 1,670,000
48,000 Schlumberger Ltd ............................. 3,125,280
88,000 TETRA Technologies, Inc. * ................... 2,665,520
42,000 Weatherford International Ltd. * ............. 2,084,040
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9,544,840
PRECIOUS METALS (0.8%)
51,000 Agnico-Eagle Mines Ltd ....................... 1,687,080
PRECISION INSTRUMENT (1.4%)
80,000 Newport Corp. * .............................. 1,289,600
72,000 Veeco Instruments, Inc. * .................... 1,716,480
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3,006,080
RAILROAD (1.7%)
25,000 CSX Corp ..................................... $ 1,761,000
49,000 Genesee & Wyoming, Inc. Class A* ............. 1,738,030
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3,499,030
RETAIL -- AUTOMOTIVE (1.1%)
43,000 Group 1 Automotive, Inc ...................... 2,422,620
RETAIL -- SPECIAL LINES (6.4%)
30,000 Best Buy Co., Inc ............................ 1,645,200
50,000 Christopher & Banks Corp ..................... 1,450,000
81,000 Circuit City Stores, Inc ..................... 2,204,820
94,000 Dress Barn, Inc. (The) * ..................... 2,382,900
120,000 Gymboree Corp. (The) * ....................... 4,171,200
46,000 Too, Inc. * .................................. 1,765,940
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13,620,060
RETAIL BUILDING SUPPLY (1.0%)
60,000 Home Depot, Inc. (The) ....................... 2,147,400
RETAIL STORE (1.8%)
61,000 Dillard's, Inc. Class A ...................... 1,942,850
31,000 Kohl's Corp. * ............................... 1,832,720
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3,775,570
SECURITIES BROKERAGE (4.7%)
12,000 Bear Stearns Companies, Inc. (The) ........... 1,680,960
200,000 Charles Schwab Corp. (The) ................... 3,196,000
5,000 Chicago Mercantile Exchange
Holdings, Inc. ............................. 2,455,750
43,000 Morgan Stanley ............................... 2,718,030
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10,050,740
SEMICONDUCTOR (7.2%)
187,500 Amkor Technology, Inc. * ..................... 1,773,750
170,000 Cirrus Logic, Inc. * ......................... 1,383,800
36,000 Cymer, Inc. * ................................ 1,672,560
120,000 Integrated Device Technology,
Inc. * ..................................... 1,701,600
113,000 Intersil Corp. Class A ....................... 2,627,250
300,000 LSI Logic Corp. * ............................ 2,685,000
157,000 NVIDIA Corp. * ............................... 3,342,530
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15,186,490
SHOE (2.0%)
63,000 Skechers U.S.A., Inc. Class A* ............... 1,518,930
90,000 Steven Madden Ltd ............................ 2,665,800
------------
4,184,730
See Notes to Financial Statements.
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7
The Value Line Fund, Inc.
Schedule of Investments June 30, 2006 (unaudited)
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Shares Value
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STEEL -- GENERAL (2.3%)
23,000 Carpenter Technology Corp .................... $ 2,656,500
28,000 Reliance Steel & Aluminum Co ................. 2,322,600
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4,979,100
TELECOMMUNICATION SERVICES (1.4%)
57,000 AT&T, Inc .................................... 1,589,730
175,000 Qwest Communications
International, Inc. * ........................ 1,415,750
------------
3,005,480
TELECOMMUNICATIONS EQUIPMENT (1.0%)
68,000 CommScope, Inc. * ............................ 2,136,560
TRUCKING/TRANSPORTATION LEASING (1.7%)
60,000 Swift Transportation Co., Inc. * ............. 1,905,600
53,000 United Rentals, Inc. * ....................... 1,694,940
------------
3,600,540
WIRELESS NETWORKING (1.4%)
25,000 Itron, Inc.* ................................. 1,481,500
87,000 Palm, Inc. * ................................. 1,400,700
------------
2,882,200
TOTAL COMMON STOCK AND TOTAL INVESTMENT
SECURITIES (96.6%) (Cost $192,233,139) ..... 204,802,130
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Principal
Amount Value
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REPURCHASE AGREEMENTS (3.6%)
$ 3,700,000 With Morgan Stanley & Co.,
4.43%, dated 6/30/06, due
7/3/06, delivery value
$3,701,366 (collateralized by
$3,880,000 U.S. Treasury
Notes 3.625%, due 7/15/09,
with a value of $3,783,234) ................ $ 3,700,000
3,900,000 With UBS Securities, LLC,
4.30%, dated 6/30/06, due
7/3/06, delivery value
$3,901,398 (collateralized by
$4,009,000 U.S. Treasury
Notes 5.25%, due 11/15/28,
with a value of $4,012,132) ................ 3,900,000
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TOTAL REPURCHASE AGREEMENTS
(Cost $7,600,000) .......................... 7,600,000
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LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS (-0.2%) ........ $ (434,649)
------------
NET ASSETS (100%) ............................................. $211,967,481
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NET ASSET VALUE OFFERING AND REDEMPTION PRICE, PER
OUTSTANDING SHARE ($211,967,481 divided by 15,727,531
shares outstanding) ......................................... $ 13.48
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* Non-income producing security
ADR American Depositary Receipt
See Notes to Financial Statements.
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8
The Value Line Fund, Inc.
Statement of Assets and Liabilities
at June 30, 2006 (unaudited)
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Assets:
Investment securities, at value
(Cost - $192,233,139) ....................................... $ 204,802,130
Repurchase agreements
(Cost - $7,600,000) ......................................... 7,600,000
Cash .......................................................... 168,856
Receivable for securities sold ................................ 8,419,877
Receivable for capital shares sold ............................ 101,179
Interest and dividends receivable ............................. 54,978
Prepaid expenses .............................................. 18,550
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Total Assets .............................................. 221,165,570
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Liabilities:
Payable for securities purchased .............................. 8,946,010
Payable for capital shares repurchased ........................ 19,398
Accrued expenses:
Advisory fee ................................................ 113,086
Service and distribution plan fees .......................... 41,914
Directors' fees ............................................. 3,711
Other ....................................................... 73,970
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Total Liabilities ......................................... 9,198,089
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Net Assets .................................................... $ 211,967,481
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Net assets consist of:
Capital stock, at $1.00 par value (authorized
50,000,000, outstanding 15,727,531 shares) .................. 15,727,531
Additional paid-in capital .................................... 158,776,304
Accumulated net investment loss ............................... (645,912)
Accumulated net realized gain on investments .................. 25,540,567
Net unrealized appreciation of investments
and foreign exchange translations ........................... 12,568,991
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Net Assets .................................................... $ 211,967,481
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Net Asset Value, Offering and
Redemption Price Per Outstanding
Share ($211,967,481 / 15,727,531
shares outstanding) ......................................... $ 13.48
Statement of Operations
for the Six Months Ended June 30, 2006 (unaudited)
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Investment Income:
Dividends (Net of foreign withholding tax
of $6,607) .................................................. $ 407,644
Interest ...................................................... 185,584
------------
Total Income ................................................ 593,228
------------
Expenses:
Advisory fee .................................................. 743,447
Service and distribution plan fees ............................ 276,405
Transfer agent fees ........................................... 68,685
Printing ...................................................... 33,916
Auditing and legal fees ....................................... 28,241
Custodian fees ................................................ 24,701
Postage ....................................................... 15,855
Registration and filing fees .................................. 15,468
Insurance ..................................................... 12,531
Directors' fees and expenses .................................. 11,485
Telephone ..................................................... 8,607
Other ......................................................... 3,264
------------
Total Expenses Before Custody Credits ..................... 1,242,605
Less: Custody Credits ..................................... (3,465)
------------
Net Expenses .............................................. 1,239,140
------------
Net Investment Loss ........................................... (645,912)
------------
Net Realized and Unrealized Gain (Loss)
on Investments and Foreign Exchange
Transactions:
Net Realized Gain ........................................... 17,541,273
Change in Net Unrealized Appreciation/
(Depreciation) ............................................ (11,175,293)
------------
Net Realized Gain and Change in Net
Unrealized Appreciation/(Depreciation)
on Investments and Foreign Exchange
Transactions ................................................ 6,365,980
------------
Net Increase in Net Assets from Operations .................... $ 5,720,068
------------
See Notes to Financial Statements.
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9
The Value Line Fund, Inc.
Statement of Changes in Net Assets for the
Six Months Ended June 30, 2006 (unaudited) and for the Year Ended December 31,
2005
--------------------------------------------------------------------------------
Six Months Ended
June 30, 2006 Year Ended
(unaudited) December 31, 2005*
--------------------------------------
Operations:
Net investment loss ..................................... $ (645,912) $ (1,091,265)
Net realized gain on investments ........................ 17,541,273 30,381,922
Change in net unrealized appreciation/(depreciation) .... (11,175,293) (8,531,970)
--------------------------------------
Net increase in net assets from operations .............. 5,720,068 20,758,687
--------------------------------------
Distributions to Shareholders:
Net realized gain from investment transactions .......... -- (31,360,687)
--------------------------------------
Capital Share Transactions:
Proceeds from sale of shares ............................ 3,962,153 8,141,726
Proceeds from reinvestment of distributions to
shareholders .......................................... -- 29,592,814
Cost of shares repurchased .............................. (11,430,092) (28,442,441)
--------------------------------------
Increase/(decrease) from capital share transactions ..... (7,467,939) 9,292,099
--------------------------------------
Total Decrease in Net Assets .............................. (1,747,871) (1,309,901)
Net Assets:
Beginning of period ..................................... 213,715,352 215,025,253
--------------------------------------
End of period ........................................... $ 211,967,481 $ 213,715,352
======================================
Accumulated net investment loss, at end of period ......... $ (645,912) $ --
======================================
* Numbers were previously presented rounded to thousands.
See Notes to Financial Statements.
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10
The Value Line Fund, Inc.
Notes to Financial Statements June 30, 2006 (unaudited)
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1. Significant Accounting Policies
The Fund is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end management investment company whose primary investment
objective is long-term growth of capital.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements.
(A) Security Valuation. Securities listed on a securities exchange are valued at
the closing sales prices on the date as of which the net asset value is being
determined. Securities traded on the NASDAQ Stock Market are valued at the
NASDAQ Official Closing Price. In the absence of closing sales prices for such
securities and for securities traded in the over-the-counter market, the
security is valued at the midpoint between the latest available and
representative asked and bid prices. Short-term instruments with maturities of
60 days or less at the date of purchase are valued at amortized cost, which
approximates market value. Short-term instruments with maturities greater than
60 days at the date of purchase are valued at the mid point between the latest
available and representative asked and bid prices, and commencing 60 days prior
to maturity such securities are valued at amortized cost. Securities for which
market quotations are not readily available or that are not readily marketable
and all other assets of the Fund are valued at fair value as the Board of
Directors may determine in good faith. In addition, the Fund may use the fair
value of a security when the closing market price on the primary exchange where
the security is traded no longer accurately reflects the value of a security due
to factors affecting one or more relevant securities markets or the specific
issuer.
(B) Repurchase Agreements. In connection with transactions in repurchase
agreements, the Fund's custodian takes possession of the underlying collateral
securities, the value of which exceeds the principal amount of the repurchase
transaction, including accrued interest. To the extent that any repurchase
transaction exceeds one business day, it is the Fund's policy to mark-to-market
on a daily basis to ensure the adequacy of the collateral. In the event of
default of the obligation to repurchase, the Fund has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. Under
certain circumstances, in the event of default or bankruptcy by the other party
to the agreement, realization and/or retention of the collateral or proceeds may
be subject to legal proceedings.
(C) Federal Income Taxes. It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies, including the distribution requirements of the Tax Reform Act of
1986, and to distribute all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
(D) Security Transactions and Distributions. Security transactions are accounted
for on the date the securities are purchased or sold. Interest income is accrued
as earned. Realized gains and losses on sales of securities are calculated for
financial accounting and federal income tax purposes on the identified cost
basis. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
(E) Foreign Currency Translation. Assets and liabilities which are denominated
in foreign currencies are translated to U.S. dollars at the prevailing rates of
exchange on the valuation date. The Fund does not isolate changes in the value
of investments caused by foreign exchange rate differences from the changes due
to other circumstances.
Income and expenses are translated to U.S. dollars based upon the rates of
exchange on the respective dates of such transactions.
--------------------------------------------------------------------------------
11
The Value Line Fund, Inc.
Notes to Financial Statements
--------------------------------------------------------------------------------
Net realized foreign exchange gains or losses arise from currency fluctuations
realized between the trade and settlement dates on securities transactions, the
differences between the U.S. dollar amounts of dividends, interest, and foreign
withholding taxes recorded on the Fund, and the U.S. dollar equivalent of the
amounts actually received or paid. Net unrealized foreign exchange gains and
losses arise from changes in the value of assets and liabilities, other than
investments, at the end of the fiscal period, resulting from changes in the
exchange rates. The effect of the change in foreign exchange rates on the value
of investments are included in realized gain/loss on investments and change in
net unrealized appreciation/depreciation on investments.
(F) Representations and Idemnifications. In the normal course of business the
Fund enters into contract that contain a variety of representations and
warranties which provide general indemnifications. The Fund's maximum exposure
under these arrangements is unknown, as this would involve future claims that
may be made against the Fund that have not yet occurred. However, based on
experience, the Fund expects the risk of loss to be remote.
2. Capital Share Transactions, Dividends and Distributions to Shareholders
Transactions in capital stock were as follows:
Six Months
Ended Year Ended
June 30, 2006 December 31,
(unaudited) 2005
-----------------------------
Shares sold .................................... 284,476 572,070
Shares issued to
shareholders in
reinvestment of dividends
and distributions ............................ -- 2,235,100
-----------------------------
284,476 2,807,170
Shares repurchased ............................. (816,528) (2,014,267)
=============================
Net increase ................................... (532,052) 792,903
=============================
Distributions per share
from net realized gains ...................... $ -- $ 2.22
=============================
3. Purchases and Sales of Securities
Purchases and sales of investment securities, excluding short-term securities,
were as follows:
Six Months
Ended
June 30, 2006
(unaudited)
---------------
PURCHASES:
Investment Securities ........................ $ 231,103,062
===============
SALES:
Investment Securities ........................ $ 237,025,824
===============
4. Income Taxes (unaudited)
At June 30, 2006, information on the tax components of capital is as follows:
Cost of investments for tax purposes ........... $ 199,833,139
=============
Gross tax unrealized appreciation .............. $ 20,155,521
Gross tax unrealized depreciation .............. (7,586,530)
-------------
Net tax unrealized appreciation
on investments ............................... $ 12,568,991
=============
5. Investment Advisory Fee, Service and Distribution Fees and Transactions With
Affiliates
An advisory fee of $743,447 was paid or payable to Value Line, Inc., (the
"Adviser"), for the six months ended June 30, 2006. This was computed at the
rate of .70% of the first $100 million of the Fund's average daily net assets
plus .65% on the excess thereof, and paid monthly. The Adviser provides
research, investment programs, supervision of the investment portfolio and pays
costs of administrative services, office space, equipment and compensation of
administrative, bookkeeping and clerical personnel necessary for managing the
affairs of the Fund. The Adviser also provides persons, satisfactory to the
Fund's Board of Directors, to act as officers and employees of the Fund and pays
their salaries and wages. The Fund bears all other costs and expenses.
--------------------------------------------------------------------------------
12
The Value Line Fund, Inc.
Notes to Financial Statements June 30, 2006 (unaudited)
--------------------------------------------------------------------------------
The Fund has a Service and Distribution Plan (the "Plan"), adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940, for the payment of certain
expenses incurred by Value Line Securities, Inc. (the "Distributor"), a
wholly-owned subsidiary of the Adviser, in advertising, marketing and
distributing the Fund's shares and for servicing the Fund's shareholders at an
annual rate of 0.25% of the Fund's average daily net assets. For the six months
ended June 30, 2006, fees amounting to $276,405 were paid or payable to the
Distributor under this Plan.
For the six months ended June 30, 2006, the Fund's expenses were reduced by
$3,465 under a custody credit arrangement with the Custodian.
Certain officers and directors of the Adviser and the Distributor are also
officers and directors of the Fund.
The Adviser and/or affiliated companies and the Value Line, Inc. Profit Sharing
and Savings Plan owned 592,322 shares of the Fund's capital stock, representing
3.77% of the outstanding shares at June 30, 2006. In addition, officers and
directors of the Fund as a group owned 10,577 shares of the Fund, representing
less than 1% of the outstanding shares.
--------------------------------------------------------------------------------
13
The Value Line Fund, Inc.
Financial Highlights
--------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each period:
Six
Months
Ended
June 30. Years Ended December 31,
2006 ---------------------------------------------------------------------------
(unaudited) 2005 2004 2003 2002 2001
--------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.14 $ 13.90 $ 14.25 $ 13.67 $ 18.49 $ 21.37
--------------------------------------------------------------------------------------------
Income (loss) from Investment
Operations:
Net investment loss (.04) (.07) (.08) (.03) (.05) (.04)
Net gains or losses on
securities (both realized and
unrealized) .38 1.53 1.80 2.24 (4.64) (2.70)
--------------------------------------------------------------------------------------------
Total from investment operations .34 1.46 1.72 2.21 (4.69) (2.74)
--------------------------------------------------------------------------------------------
Less distributions:
Distributions from net
realized gains -- (2.22) (2.07) (1.63) (.13) (.14)
--------------------------------------------------------------------------------------------
Net asset value, end of period $ 13.48 $ 13.14 $ 13.90 $ 14.25 $ 13.67 $ 18.49
============================================================================================
Total return 2.59%(2) 10.40% 12.09% 16.28% (25.35)% (12.82)%
============================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $ 211,967 $ 213,715 $ 215,025 $ 216,047 $ 206,338 $ 303,034
Ratio of expenses to
average net assets (1) 1.12%(3) 1.13% 1.13% 1.13% 1.11% 1.04%
Ratio of net investment
loss to average net assets (0.58)%(3) (0.52)% (0.58)% (0.19)% (0.31)% (0.18)%
Portfolio turnover rate 108%(2) 224% 297% 129% 33% 45%
(1) Ratios reflect expenses grossed up for custody credit arrangement. The ratio
of expenses to average net of custody credits would have been 1.03% for the year
ended December 31, 2001, and unchanged for the six months ended June 30, 2006,
and for the years ended December 31, 2005, 2004, 2003, and 2002.
(2) Not annualized.
(3) Annualized.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
14
The Value Line Fund, Inc.
--------------------------------------------------------------------------------
FACTORS CONSIDERED BY THE INDEPENDENT DIRECTORS IN APPROVING THE INVESTMENT
ADVISORY AGREEMENT FOR VALUE LINE FUND, INC.
The Investment Company Act of 1940 requires that the Fund's investment advisory
agreement (the "Agreement") be approved annually by both the Board of Directors
(collectively, "the Directors") and a majority of the Directors who are not
affiliated with Value Line, Inc., the Fund's investment adviser ("Value Line")
(the "Independent Directors"), voting separately. The Directors have determined
that the terms of the Fund's Agreement are fair and reasonable and that renewal
of the contract is in the best interests of the Fund and its shareholders. In
making such determinations, the Independent Directors relied upon the assistance
of counsel to the Independent Directors. Throughout the year, including the
meeting specifically focused upon the review of the Agreement, the Independent
Directors met in executive sessions separately from the Interested Directors of
the Fund and any officers of Value Line.
Both in meetings which specifically addressed the approval of the Agreement and
at other meetings during the course of the year, the Directors, including the
Independent Directors, received materials relating to Value Line's investment
and management services under the Agreement. These materials included
information on: (i) the investment performance of the Fund compared to a peer
group of funds ("Performance Universe") and its benchmark index, each as
classified by Lipper, Inc., an independent evaluation service ("Lipper"); (ii)
sales and redemption data with respect to the Fund; (iii) the general investment
outlook in the markets in which the Fund invests; (iv) arrangements with respect
to the distribution of the Fund's shares; (v) the allocation of the Fund's
brokerage; and (vi) the overall quality and scope of services provided by Value
Line.
As part of the review of the Agreement, the Independent Directors requested, and
Value Line provided, additional information in order to evaluate the quality of
Value Line's services and the reasonableness of its fees under the Agreement. In
a separate executive session, the Independent Directors engaged in an extensive
review of the following information, which included data comparing: (i) the
Fund's average management fees, transfer agent/custodian fees, service fees
(including 12b-1 fees), and other non-management fees, to those incurred by a
peer group of funds consisting of the Fund and nine other retail no-load
multi-cap growth funds, as classified by Lipper ("Expense Group") and a peer
group of funds consisting of the Fund, the Expense Group and all other retail
no-load multi-cap growth funds, excluding outliers ("Expense Universe"); (ii)
the Fund's average expense ratio to those of its Expense Group and Expense
Universe; (iii) the Fund's investment performance to the average performance of
the Performance Universe as well as the Lipper Index; (iv) Value Line's
financial results and conditions, including Value Line's and certain of its
affiliates' profitability from the services that have been performed for the
Fund as well as the Value Line family of funds; (v) the Fund's current
investment management staffing; and (vi) the Fund's potential for achieving
economies of scale.
The following summarizes matters considered by the Directors in connection with
their renewal of the Agreement. However, the Directors did not identify any
single factor as all-important or controlling, and the summary does not detail
all the matters that were considered.
Investment Performance. The Directors reviewed the Fund's overall investment
performance and compared it to its Performance Universe and the Lipper Index.
The Directors noted that, although the Fund's performance for the three-year and
10-year periods ended December 31, 2005 was below the Performance Universe
average and the Lipper Index, the Fund's performance for the one-year and
five-year periods ended December 31, 2005 exceeded the performance of the
Performance Universe average and the Lipper Index.
--------------------------------------------------------------------------------
15
The Value Line Fund, Inc.
--------------------------------------------------------------------------------
Value Line's Personnel and Methods. The Directors reviewed the background of
members of the team responsible for the daily management of the Fund, achieving
the Fund's investment objective and adhering to the Fund's investment strategy.
The Independent Directors also engaged in discussions with Value Line's senior
management who are responsible for the overall functioning of the Fund's
investment operations. Based on this review, the Directors concluded that the
Fund's management team and Value Line's overall resources were well developed
and that Value Line had investment management capabilities and personnel
essential to performing its duties under the Agreement.
Management Fee and Expenses. The Directors considered Value Line's fee under the
Agreement relative to the management fees charged by its Expense Group and
Expense Universe averages. The Directors noted that the Fund's management fee
for the most recent fiscal year was lower than both the Expense Group average
and the Expense Universe average. The Directors also noted that the Fund's total
expense ratio for the most recent fiscal year was lower than both the Expense
Group average and the Expense Universe average. Based on this information, the
Directors concluded that the Fund's management fees and total expense ratio were
reasonable.
Nature and Quality of Other Services. The Directors considered the nature,
quality, cost and extent of other services provided by Value Line and its
affiliates under various other contracts, and their overall supervision of third
party service providers. Based on this review, the Directors concluded that the
nature, quality, cost and extent of such other services provided by Value Line
and its affiliates were satisfactory, reliable and beneficial to the Fund's
shareholders.
Profitability. The Directors considered the level of Value Line's profits with
respect to the management of the Fund, including the impact of certain actions
taken during 2004 and 2005. This consideration included a review of Value Line's
methodology in allocating certain of its costs to the management of each Fund,
Value Line's voluntary reduction of management and/or Rule 12b-1 fees for
certain Funds, Value Line's termination of the use of soft dollar research, and
the cessation of trading through its affiliate, Value Line Securities, Inc. The
Directors concluded that Value Line's profits from management of the Funds,
including the financial results derived from the Fund, bear a reasonable
relationship to the services rendered and are fair for the management of the
Fund in light of the business risks involved.
Economies of Scale. The Directors noted that, given the current and anticipated
size of the Fund, any perceived and potential economies of scale were not yet a
relevant consideration for the Fund and the addition of break points was
determined not to be necessary at this time.
Conclusion. The Directors, in light of Value Line's overall performance,
considered it appropriate to continue to retain Value Line as the Fund's
investment adviser. Based on their evaluation of all material factors deemed
relevant, and with the advice of independent counsel, the Directors concluded
that the Fund's Agreement is fair and reasonable and voted to approve the
continuation of the Agreement for another year.
--------------------------------------------------------------------------------
16
The Value Line Fund, Inc.
--------------------------------------------------------------------------------
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available on the SEC's website at
http://www.sec.gov and may be reviewed and copied at the SEC's Public Reference
Room in Washington, D.C. Information on the operation of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities, and information regarding how
the Fund voted these proxies during the most recent 12-month period ended June
30 is available through the Fund's website at http://www.vlfunds.com and on the
SEC's website at http://www.sec.gov. The description of the policies and
procedures is also available without charge, upon request, by calling
1-800-243-2729.
--------------------------------------------------------------------------------
17
The Value Line Fund, Inc.
Management of the Fund
--------------------------------------------------------------------------------
MANAGEMENT INFORMATION
The business and affairs of the Fund are managed by the Fund's officers under
the direction of the Board of Directors. The following table sets forth
information on each Director and Officer of the Fund. Each Director serves as a
director or trustee of each of the 14 Value Line Funds. Each Director serves
until his or her successor is elected and qualified.
Other
Length of Principal Occupation Directorships
Name, Address, and Age Position Time Served During the Past 5 Years Held by Director
------------------------------------------------------------------------------------------------------------
Interested Director*
--------------------
Jean Bernhard Buttner Chairman of the Since 1983 Chairman, President and Chief Value Line, Inc.
Age 71 Board of Executive Officer of Value
Directors Line, Inc. (the "Adviser") and
and President Value Line Publishing, Inc.
Chairman and President of each
of the 14 Value Line Funds and
Value Line Securities, Inc.
(the "Distributor ").
------------------------------------------------------------------------------------------------------------
Non-Interested Directors
------------------------
John W. Chandler Director Since 1991 Consultant, Academic Search None
18 Victoria Lane Consultation Service, Inc.,
Lanesboro, MA 01237 1994-2004; Trustee Emeritus
Age 82 and Chairman (1993-1994) of
the Board of Trustees of
Duke University; President
Emeritus, Williams College.
------------------------------------------------------------------------------------------------------------
Frances T. Newton Director Since 2000 Customer Support Analyst, None
4921 Buckingham Drive Duke Power Company.
Charlotte, NC 28209
Age 64
------------------------------------------------------------------------------------------------------------
Francis C. Oakley Director Since 2000 Professor of History, Berkshire Life
54 Scott Hill Road Williams College, 1961 to Insurance
Williamstown, MA 01267 2002. Professor Emeritus Company
Age 74 since 2002. Professor of America
Emeritus since 1994 and
President, 1985-1994;
Chairman (1993-1997) and
Interim President (2002-2003)
of the American Council of
Learned Societies. Trustee
since 1997 and Chairman of
the Board since 2005,
National Humanities Center.
------------------------------------------------------------------------------------------------------------
David H. Porter Director Since 1997 Visiting Professor of None
5 Birch Run Drive Classics, Williams College,
Saratoga Springs, NY since 1999; President
12866 Emeritus, Skidmore
Age 70 College since 1999 and
President, 1987-1998.
------------------------------------------------------------------------------------------------------------
18
--------------------------------------------------------------------------------
The Value Line Fund, Inc.
Management of the Fund
--------------------------------------------------------------------------------
Other
Length of Principal Occupation Directorships
Name, Address, and Age Position Time Served During the Past 5 Years Held by Director
------------------------------------------------------------------------------------------------------------
Paul Craig Roberts Director Since 1987 Chairman, Institute for A. Schulman
169 Pompano St Political Economy. Inc. (plastics)
Panama City Beach, FL
32413
Age 67
------------------------------------------------------------------------------------------------------------
Nancy-Beth Sheer Director Since 1996 Senior Financial Adviser, None
1409 Beaumont Drive Veritable L.P.
Gladwyne, PA 19035 (Investment Adviser)
Age 57 since 2004; Senior
Financial Adviser
Hawthorn, 2001-2004.
------------------------------------------------------------------------------------------------------------
Officers
--------
David T. Henigson Vice President, Since 1994 Director, Vice President
Age 48 Secretary and and Compliance Officer of
Chief the Adviser. Director and
Compliance Vice President of the
Officer Distributor. Vice
President, Secretary, and
Chief Compliance Officer of
each of the 14 Value Line
Funds.
------------------------------------------------------------------------------------------------------------
Stephen R. Anastasio Treasurer Since 2005 Controller of the Adviser
Age 47 until 2003; Chief Financial
Officer of the Adviser,
2003-2005; Treasurer
of the Adviser since 2005.
Treasurer of each of the 14
Value Line Funds
------------------------------------------------------------------------------------------------------------
Howard A. Brecher Assistant Since 2005 Director, Vice President
Age 51 Secretary/ and Secretary of the
Assistant Adviser. Director and
Treasurer Vice President of the
Distributor.
------------------------------------------------------------------------------------------------------------
* Mrs. Buttner is an "interested person" as defined in the Investment
Company Act of 1940 by virtue of her positions with the Adviser and her
indirect ownership of a controlling interest in the Adviser.
Unless otherwise indicated, the address for each of the above is 220 East 42nd
Street, New York, NY 10017.
--------------------------------------------------------------------------------
The Fund's Statement of Additional Information (SAI) includes additional
information about the Fund's directors and is available, without charge, upon
request by calling 1-800-243-2729
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
19
The Value Line Fund, Inc.
The Value Line Family of Funds
--------------------------------------------------------------------------------
1950 -- The Value Line Fund seeks long-term growth of capital. Current income is
a secondary objective.
1952 -- Value Line Income and Growth Fund's primary investment objective is
income, as high and dependable as is consistent with reasonable risk. Capital
growth to increase total return is a secondary objective.
1956 -- Value Line Premier Growth Fund seeks long-term growth of capital. No
consideration is given to current income in the choice of investments.
1972 -- Value Line Larger Companies Fund's sole investment objective is to
realize capital growth.
1979 -- The Value Line Cash Fund, a money market fund, seeks to secure as high a
level of current income as is consistent with maintaining liquidity and
preserving capital. An investment in the Fund is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.
Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.
1981 -- Value Line U.S. Government Securities Fund seeks maximum income without
undue risk to capital. Under normal conditions, at least 80% of the value of its
net assets will be invested in securities issued or guaranteed by the U.S.
Government and its agencies and instrumentalities.
1983 -- Value Line Centurion Fund* seeks long-term growth of capital.
1984 -- The Value Line Tax Exempt Fund seeks to provide investors with the
maximum income exempt from federal income taxes while avoiding undue risk to
principal. The Fund may be subject to state and local taxes and the Alternative
Minimum Tax (if applicable).
1985 -- Value Line Convertible Fund seeks high current income together with
capital appreciation primarily from convertible securities ranked 1 or 2 for
year-ahead performance by the Value Line Convertible Ranking System.
1986 -- Value Line Aggressive Income Trust seeks to maximize current income.
1987 -- Value Line New York Tax Exempt Trust seeks to provide New York taxpayers
with the maximum income exempt from New York State, New York City and federal
income taxes while avoiding undue risk to principal. The Trust may be subject to
state and local taxes and the Alternative Minimum Tax (if applicable).
1987 -- Value Line Strategic Asset Management Trust* seeks to achieve a high
total investment return consistent with reasonable risk.
1993 -- Value Line Emerging Opportunities Fund invests primarily in common
stocks or securities convertible into common stock, with its primary objective
being long-term growth of capital.
1993 -- Value Line Asset Allocation Fund seeks high total investment return,
consistent with reasonable risk. The Fund invests in stocks, bonds and money
market instruments utilizing quantitative modeling to determine the asset mix.
* Only available through the purchase of Guardian Investor, a tax deferred
variable annuity, or Value Plus, a variable life insurance policy.
For more complete information about any of the Value Line Funds, including
charges and expenses, send for a prospectus from Value Line Securities, Inc.,
220 East 42nd Street, New York, New York 10017-5891 or call 1-800-243-2729,
9am-5pm CST, Monday-Friday, or visit us at www.valueline.com. Read the
prospectus carefully before you invest or send money.
--------------------------------------------------------------------------------
20
INVESTMENT ADVISER Value Line, Inc.
220 East 42nd Street
New York, NY 10017-5891
DISTRIBUTOR Value Line Securities, Inc.
220 East 42nd Street
New York, NY 10017-5891
CUSTODIAN BANK State Street Bank and Trust Co.
225 Franklin Street
Boston, MA 02110
SHAREHOLDER State Street Bank and Trust Co.
SERVICING AGENT c/o BFDS P.O. Box 219729
Kansas City, MO 64121-9729
INDEPENDENT PricewaterhouseCoopers LLP
REGISTERED PUBLIC 300 Madison Avenue
ACCOUNTING FIRM New York, NY 10017
LEGAL COUNSEL Peter D. Lowenstein, Esq.
Two Sound View Drive, Suite 100
Greenwich, CT 06830
DIRECTORS Jean Bernhard Buttner
John W. Chandler
Frances T. Newton
Francis C. Oakley
David H. Porter
Paul Craig Roberts
Nancy-Beth Sheerr
OFFICERS Jean Bernhard Buttner
Chairman and President
David T. Henigson
Vice President/Secretary/
Chief Compliance Officer
Stephen R. Anastasio
Treasurer
Howard A. Brecher
Assistant Secretary/
Assistant Treasurer
This unaudited report is issued for information of shareholders. It is not
authorized for distribution to prospective investors unless preceded or
accompanied by a currently effective prospectus of the Fund (obtainable from the
Distributor).
#536791
Item 2. Code of Ethics
N/A
Item 3. Audit Committee Financial Expert.
N/A
Item 4. Principal Accountant Fees and Services
N/A
Item 11. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and
procedures (as defined in rule 30a-2(c) under the Act (17 CFR
270.30a-2(c)) based on their evaluation of these controls and procedures
as of a date within 90 days of the filing date of this report, are
appropriately designed to ensure that material information relating to the
registrant is made known to such officers and are operating effectively.
(b) The registrant's principal executive officer and principal financial
officer have determined that there have been no significant changes in the
registrant's internal controls or in other factors that could
significantly affect these controls subsequent to the date of their
evaluation, including corrective actions with regard to significant
deficiencies and material weaknesses.
Item 12. Exhibits.
(a) (1) Certification pursuant to Rule 30a-2(a) under the Investment Company
Act of 1940 (17 CFR 270.30a-2) attached hereto as Exhibit 99.CERT.
(2) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
By: /s/ Jean B. Buttner
--------------------------
Jean B. Buttner, President
Date: 09/08/2006
----------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Jean B. Buttner
------------------------------------------------------------
Jean B. Buttner, President, Principal Executive Officer
By: /s/ Stephen R. Anastasio
------------------------------------------------------------
Stephen R. Anastasio, Treasurer, Principal Financial Officer
Date: 09/08/2006
----------