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 811-3835
Value Line Centurion Fund, Inc.
(Exact name of registrant as specified in charter) |
220 East 42nd Street, New York, N.Y. 10017
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: 212-907-1500
Date of fiscal year end: December 31, 2006
Date of reporting period: December 31, 2006
Item 1. | Reports to Stockholders. |
A copy of the Annual Report to Stockholders for the period ended 12/31/06 is included with this Form.
n Value Line Centurion Fund, Inc. | Annual Report |
Bradley Brooks, CFA, Portfolio Manager
Objective:
Long-term growth of capital
Inception Date:
November 15, 1983
Net Assets at December 31, 2006:
$283,836,045
Portfolio Composition at December 31, 2006:
(Percentage of Total Net Assets)
An Update from Fund Management
In 2006, the Fund returned 3.85% versus the total return of 15.79% for the S&P 500 Index. Since the Fund’s inception more than 23 years ago, the annual total return has been 9.97%.
Over the past year, the Fund’s quantitative-based model had sub-par performance during what turned out to be a fairly volatile year. An overweighted position in the technology sector, one of the worst performing areas for the year, along with some poorly timed trades in the energy arena were the main causes for the poor returns. Going forward, the Fund is currently overweighted to the consumer discretionary area and underweighted in the energy and financial segments of the market.
In selecting stocks, we rely heavily on the Value Line Timeliness Ranking System, purchasing stocks that are ranked the highest for price appreciation over the next six to twelve months. The system favors stocks that have above-average earnings and stock-price momentum compared with those of the other roughly 1,700 stocks in the Value Line Investment Survey. We generally buy stocks when their Timeliness ranking rises to the top category and sell them when their ranking drops out of it.
The views expressed above are those of the Fund’s portfolio manager(s) as of December 31, 2006 and are subject to change without notice. They do not necessarily represent the views of Value Line. The views expressed herein are based on current market conditions and are not intended to predict or guarantee the future performance of any Fund, any individual security, any market or market segment. The composition of each Fund’s portfolio is subject to change. No recommendation is made with respect to any security discussed herein.
Top Ten Common Stock Holdings (As of 12/31/2006)
Company | Percentage of Total Net Assets | |
TeleTech Holdings, Inc. | 1.22% | |
Robbins & Myers, Inc. | 1.21% | |
Infosys Technologies Ltd. ADR | 1.17% | |
Safeway, Inc. | 1.17% | |
CNA Financial Corp. | 1.16% | |
Acuity Brands, Inc. | 1.16% | |
Varian Semiconductor Equipment Associates, Inc. | 1.15% | |
Albemarle Corp. | 1.14% | |
Sepracor, Inc. | 1.13% | |
Novellus Systems, Inc. | 1.13% |
About information in this report:
• | It is important to consider the Fund’s investment objectives, risks, fees and expenses before investing. All funds involve some risk, including possible loss of the principal amount invested. |
• | The S&P 500 Index is an index of 500 primarily large cap U.S. stocks that is generally considered to be representative of U.S. stock market activity. Index returns are provided for comparative purposes. Please note that that the index is unmanaged and not available for direct investment and its returns do not reflect the fees and expenses that have been deducted from the Fund. |
VALUE LINE CENTURION FUND, INC. | 1 |
n Value Line Centurion Fund, Inc. | Annual Report |
Sector Weightings vs. Index (As of 12/31/2006)
Average Annual Total Returns (For periods ended 12/31/2006)
1 Yr | 3 Yrs | 5 Yrs | 10 Yrs | Since Inception 11/15/1983 | ||||||
Value Line Centurion Fund, Inc. | 3.85% | 8.12% | 3.08% | 5.39% | 9.97% | |||||
S&P 500 Index | 15.79% | 10.44% | 6.19% | 8.42% | 12.53% |
All performance data quoted is historical and the results represent past performance and neither guarantee nor predict future investment results. To obtain performance data current to the most recent month (available within 7 business days of the most recent month end), please call us at (800) 221-3253 or visit our website at www.guardianinvestor.com. Current performance may be higher or lower than the performance quoted here. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost.
Total return figures are historical and assume the reinvestment of dividends and distributions and the deduction of all Fund expenses. The actual total returns for owners of variable annuity contracts or variable life insurance policies that provide for investment in the Fund will be lower to reflect separate account and contract/policy charges. The return figures shown do not reflect the deduction of taxes that a contractowner may pay on distributions or redemption of units.
Growth of a Hypothetical $10,000 Investment
To give you a comparison, this chart shows you the performance of a hypothetical $10,000 investment made 10 years ago in the Fund and in the S&P 500 Index. Index returns do not include the fees and expenses of the Fund, but do include the reinvestment of dividends.
2 | VALUE LINE CENTURION FUND, INC. |
n Value Line Centurion Fund, Inc. | Annual Report |
Fund Expenses (Unaudited)
By investing in the Fund, you incur two types of costs: (1) transaction costs, including, as applicable, sales charges on purchase payments, reinvested dividends, or other distributions; redemption fees and exchange fees; and (2) ongoing costs, including, as applicable, management fees; distribution and/or 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 examples are based on an investment of $1,000 invested on July 1, 2006 and held for six months ended December 31, 2006.
Actual Expenses
The first line in the table 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 entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line in the table 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.
Beginning Account Value July 1, 2006 | Ending Account Value December 31, 2006 | Expenses Paid During Period* | Annualized Expense Ratio | ||||||||
Actual | $ | 1,000 | $ | 1,022.20 | $ | 4.28 | 0.84% | ||||
Hypothetical (5% return before expenses) | $ | 1,000 | $ | 1,020.97 | $ | 4.28 | 0.84% |
* | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by 184/365 (to reflect the Fund’s most recent fiscal half-year). This expense ratio may differ from the expense ratio shown in the financial highlights. |
VALUE LINE CENTURION FUND, INC. | 3 |
n | Value Line Centurion Fund, Inc. |
Schedule of Investments
December 31, 2006
Common Stocks — 97.2% | |||||
Shares | Value | ||||
Advertising — 1.0% | |||||
28,000 | Omnicom Group, Inc. | $ | 2,927,120 | ||
Aerospace/Defense — 1.0% | |||||
35,000 | Precision Castparts Corp. | 2,739,800 | |||
Air Transport — 1.8% | |||||
81,000 | AMR Corp.* | 2,448,630 | |||
65,000 | Continental Airlines, Inc. Class B* | 2,681,250 | |||
5,129,880 | |||||
Apparel — 1.9% | |||||
45,000 | Guess?, Inc.* | 2,854,350 | |||
48,000 | Phillips-Van Heusen Corp. | 2,408,160 | |||
5,262,510 | |||||
Bank — 1.0% | |||||
93,000 | Synovus Financial Corp. | 2,867,190 | |||
Biotechnology — 1.0% | |||||
40,000 | Amgen, Inc.* | 2,732,400 | |||
Building Materials — 0.8% | |||||
30,000 | Genlyte Group, Inc. (The)* | 2,343,300 | |||
Cable TV — 1.9% | |||||
66,000 | Comcast Corp. Class A* | 2,764,080 | |||
111,000 | DIRECTV Group, Inc. (The)* | 2,768,340 | |||
5,532,420 | |||||
Chemical–Basic — 2.0% | |||||
61,000 | E.I. du Pont de Nemours and Co. | 2,971,310 | |||
18,000 | Potash Corporation of Saskatchewan, Inc. | 2,582,640 | |||
5,553,950 | |||||
Chemical–Diversified — 1.1% | |||||
45,000 | Albemarle Corp. | 3,231,000 | |||
Chemical–Specialty — 3.9% | |||||
150,000 | Hercules, Inc.* | 2,896,500 | |||
60,000 | International Flavors & Fragrances, Inc. | 2,949,600 | |||
51,000 | OM Group, Inc.* | 2,309,280 | |||
135,000 | Tredegar Corp. | 3,052,350 | |||
11,207,730 | |||||
Computer & Peripherals — 0.8% | |||||
26,000 | Apple, Inc.* | 2,205,840 | |||
Computer Software & Services — 7.1% | |||||
87,000 | BMC Software, Inc.* | 2,801,400 | |||
35,000 | Cognizant Technology Solutions Corp. Class A* | 2,700,600 | |||
61,000 | Infosys Technologies Ltd. ADR | 3,328,160 | |||
140,000 | Jack Henry & Associates, Inc. | 2,996,000 | |||
156,000 | Oracle Corp.* | 2,673,840 | |||
73,000 | Paychex, Inc. | 2,886,420 | |||
48,000 | SEI Investments Co. | 2,858,880 | |||
20,245,300 | |||||
Diversified Companies — 3.3% | |||||
63,000 | Acuity Brands, Inc. | 3,278,520 | |||
69,000 | Honeywell International, Inc. | 3,121,560 | |||
123,000 | Kadant, Inc.* | 2,998,740 | |||
9,398,820 | |||||
Drug — 5.8% | |||||
56,000 | Biogen Idec, Inc.* | 2,754,640 | |||
32,000 | Cephalon, Inc.* | 2,253,120 | |||
57,000 | Forest Laboratories, Inc.* | 2,884,200 | |||
98,000 | Immucor, Inc.* | 2,864,540 |
Shares | Value | ||||
104,000 | Schering-Plough Corp. | $ | 2,458,560 | ||
52,000 | Sepracor, Inc.* | 3,202,160 | |||
16,417,220 | |||||
E-Commerce — 1.9% | |||||
52,000 | Akamai Technologies, Inc.* | 2,762,240 | |||
175,000 | Interwoven, Inc.* | 2,567,250 | |||
5,329,490 | |||||
Electrical Equipment — 0.9% | |||||
83,000 | FLIR Systems, Inc.* | 2,641,890 | |||
Electronics — 1.8% | |||||
110,000 | Avnet, Inc.* | 2,808,300 | |||
39,000 | Rogers Corp.* | 2,306,850 | |||
5,115,150 | |||||
Entertainment — 1.0% | |||||
82,000 | Walt Disney Co. (The) | 2,810,140 | |||
Financial Services–Diversified — 2.2% | |||||
40,000 | American International Group, Inc. | 2,866,400 | |||
82,000 | CNA Financial Corp.* | 3,306,240 | |||
6,172,640 | |||||
Furniture/Home Furnishings — 2.1% | |||||
122,000 | Kimball International, Inc. Class B | 2,964,600 | |||
150,000 | Tempur-Pedic International, Inc.* | 3,069,000 | |||
6,033,600 | |||||
Grocery — 1.2% | |||||
96,000 | Safeway, Inc. | 3,317,760 | |||
Hotel/Gaming — 1.1% | |||||
53,000 | MGM MIRAGE* | 3,039,550 | |||
Human Resources — 1.8% | |||||
85,000 | AMN Healthcare Services, Inc.* | 2,340,900 | |||
100,000 | Kelly Services, Inc. Class A | 2,894,000 | |||
5,234,900 | |||||
Industrial Services — 4.2% | |||||
78,000 | Amdocs Ltd.* | 3,022,500 | |||
80,000 | CB Richard Ellis Group, Inc. Class A* | 2,656,000 | |||
100,000 | CSG Systems International, Inc.* | 2,673,000 | |||
145,000 | TeleTech Holdings, Inc.* | 3,462,600 | |||
11,814,100 | |||||
Information Services — 2.1% | |||||
150,000 | Gartner, Inc.* | 2,968,500 | |||
71,000 | Thomson Corp. (The) | 2,942,240 | |||
5,910,740 | |||||
Internet — 1.0% | |||||
62,000 | Priceline.com, Inc.* | 2,703,820 | |||
Machinery — 3.2% | |||||
82,000 | Lindsay Corp. | 2,677,300 | |||
48,000 | Manitowoc Company, Inc. (The) | 2,852,640 | |||
75,000 | Robbins & Myers, Inc. | 3,444,000 | |||
8,973,940 | |||||
Medical Supplies — 4.1% | |||||
60,000 | Digene Corp.* | 2,875,200 | |||
70,000 | Illumina, Inc.* | 2,751,700 | |||
57,000 | Stryker Corp. | 3,141,270 | |||
35,000 | Zimmer Holdings, Inc.* | 2,743,300 | |||
11,511,470 | |||||
See notes to financial statements.
4 |
n | Value Line Centurion Fund, Inc. |
Schedule of Investments (Continued)
December 31, 2006
Shares | Value | ||||
Metals & Mining Diversified — 1.9% | |||||
30,000 | Allegheny Technologies, Inc. | $ | 2,720,400 | ||
80,000 | Brush Engineered Materials, Inc.* | 2,701,600 | |||
5,422,000 | |||||
Newspaper — 1.0% | |||||
57,000 | E.W. Scripps Co. (The) Class A | 2,846,580 | |||
Office Equipment & Supplies — 2.0% | |||||
61,000 | OfficeMax, Inc. | 3,028,650 | |||
164,000 | Xerox Corp.* | 2,779,800 | |||
5,808,450 | |||||
Oilfield Services/Equipment — 0.7% | |||||
26,000 | Core Laboratories N.V.* | 2,106,000 | |||
Packaging & Container — 2.0% | |||||
109,000 | Rock-Tenn Co. Class A | 2,954,990 | |||
42,000 | Sealed Air Corp. | 2,726,640 | |||
5,681,630 | |||||
Precision Instrument — 3.1% | |||||
108,000 | II-VI, Inc.* | 3,017,520 | |||
140,000 | Newport Corp.* | 2,933,000 | |||
56,000 | Waters Corp.* | 2,742,320 | |||
8,692,840 | |||||
Recreation — 2.9% | |||||
44,000 | Harley-Davidson, Inc. | 3,100,680 | |||
85,000 | Hasbro, Inc. | 2,316,250 | |||
125,000 | Mattel, Inc. | 2,832,500 | |||
8,249,430 | |||||
Retail-Special Lines — 4.1% | |||||
102,000 | American Eagle Outfitters, Inc. | 3,183,420 | |||
70,000 | Coach, Inc.* | 3,007,200 | |||
50,000 | Dick’s Sporting Goods, Inc.* | 2,449,500 | |||
74,000 | NBTY, Inc.* | 3,076,180 | |||
11,716,300 | |||||
Retail Store — 4.9% | |||||
120,000 | Big Lots, Inc.* | 2,750,400 | |||
35,000 | J.C. Penney Company, Inc. | 2,707,600 | |||
42,000 | Kohl’s Corp.* | 2,874,060 | |||
58,000 | Nordstrom, Inc. | 2,861,720 | |||
47,000 | Target Corp. | 2,681,350 | |||
13,875,130 | |||||
Securities Brokerage — 1.0% | |||||
34,000 | Morgan Stanley | 2,768,620 | |||
Semiconductor — 1.8% | |||||
165,000 | Integrated Device Technology, Inc.* | 2,554,200 | |||
72,000 | NVIDIA Corp.* | 2,664,720 | |||
5,218,920 | |||||
Semiconductor-Equipment — 3.2% | |||||
84,000 | ATMI, Inc.* | 2,564,520 | |||
93,000 | Novellus Systems, Inc.* | 3,201,060 | |||
72,000 | Varian Semiconductor Equipment Associates, Inc.* | 3,277,440 | |||
9,043,020 | |||||
Shoe — 0.9% | |||||
76,000 | Steven Madden Ltd. | 2,666,840 | |||
Telecommunication Services — 2.9% | |||||
81,000 | AT&T, Inc. | 2,895,750 | |||
47,000 | BT Group PLC ADR | 2,814,830 | |||
300,000 | Qwest Communications International, Inc.* | 2,511,000 | |||
8,221,580 | |||||
Shares | Value | ||||||
Telecommunications Equipment — 0.9% | |||||||
95,000 | Cisco Systems, Inc.* | $ | 2,596,350 | ||||
Wireless Networking — 0.9% | |||||||
21,000 | Research In Motion Ltd.* | 2,683,380 | |||||
Total Common Stock and Total Investment Securities — 97.2% | $ | 276,000,740 | |||||
Repurchase Agreements — 2.8% | |||||||
Principal Amount | Value | ||||||
$ | 4,000,000 | With Morgan Stanley & Co., 4.60%, dated 12/29/06, due 1/2/07, delivery value $4,002,044 (collateralized by $3,330,000 U.S. Treasury Notes 7.50%, due 11/15/16, with a value of $4,078,388) | $ | 4,000,000 | |||
3,800,000 | With UBS Securities, LLC, 4.50%, dated 12/29/06, due 1/2/07, delivery value $3,801,900 (collateralized by $3,528,000 U.S. Treasury Notes 5.50%, due 8/15/28, with a value of $3,886,360) | 3,800,000 | |||||
Total Repurchase Agreements | $ | 7,800,000 | |||||
| Cash and Other Assets In Excess of Liabilities — (0.0%) | 35,305 | |||||
Net Assets — 100.0% | $ | 283,836,045 | |||||
| Net Asset Value Per Outstanding Share ($283,836,045 ÷ 14,973,612 shares outstanding) | $ | 18.96 | ||||
* | Non-income producing. |
ADR — American Depositary Receipt
See notes to financial statements.
5 |
n | Value Line Centurion Fund, Inc. |
Statement of Assets and Liabilities
December 31, 2006
ASSETS: | |||
Investment securities, at value | $ | 276,000,740 | |
Repurchase agreements (cost — $7,800,000) | 7,800,000 | ||
Cash | 104,400 | ||
Interest and dividends receivable | 188,369 | ||
Total Assets | 284,093,509 | ||
LIABILITIES: | |||
Accrued expenses: | |||
Advisory fee | 121,469 | ||
Service and distribution plan fees payable | 60,742 | ||
Directors’ fees and expenses | 6,585 | ||
Other | 68,668 | ||
Total Liabilities | 257,464 | ||
Net Assets | $ | 283,836,045 | |
NET ASSETS CONSIST OF: | |||
Capital stock, at $1.00 par value (authorized 50,000,000, outstanding 14,973,612 shares) | $ | 14,973,612 | |
Additional paid-in capital | 220,545,138 | ||
Accumulated net realized gain on investments | 19,960,950 | ||
Net unrealized appreciation of investments | 28,356,345 | ||
Net Assets | $ | 283,836,045 | |
Net Asset Value Per Outstanding Share | $18.96 | ||
Statement of Operations
Year Ended
December 31, 2006
INVESTMENT INCOME: | ||||
Dividends (net of foreign withholding tax of $17,085) | $ | 1,610,399 | ||
Interest | 382,691 | |||
Total Income | 1,993,090 | |||
Expenses: | ||||
Advisory fee | 1,536,747 | |||
Service and distribution plan fees | 1,229,398 | |||
Auditing and legal fees | 83,700 | |||
Custodian fees | 55,970 | |||
Insurance | 49,151 | |||
Directors’ fees and expenses | 29,726 | |||
Printing | 5,799 | |||
Other | 14,445 | |||
Total Expenses Before Custody Credits | 3,004,936 | |||
Less: Service and distribution plan fees waived | (263,289 | ) | ||
Less: Custody credits | (5,594 | ) | ||
Net Expenses | 2,736,053 | |||
Net Investment Loss | (742,963 | ) | ||
NET REALIZED AND UNREALIZED GAIN (LOSS) | ||||
Net realized gain | 21,464,140 | |||
Change in net unrealized appreciation (depreciation) | (9,100,122 | ) | ||
Net Realized Gain and Change in Net Unrealized Appreciation (Depreciation) on Investments and Foreign Exchange Transactions | 12,364,018 | |||
NET INCREASE IN NET ASSETS | $ | 11,621,055 | ||
See notes to financial statements.
6 |
n | Value Line Centurion Fund, Inc. |
Statement of Changes in Net Assets
Year Ended December 31, | ||||||||
2006 | 2005 | |||||||
Operations: | ||||||||
Net investment loss | $ | (742,963 | ) | $ | (1,296,252 | ) | ||
Net realized gain on investments | 21,464,140 | 25,962,206 | ||||||
Change in net unrealized appreciation (depreciation) | (9,100,122 | ) | 3,369,570 | |||||
Net increase in net assets from operations | 11,621,055 | 28,035,524 | ||||||
Distributions to Shareholders: | ||||||||
Net realized gains | (25,263,799 | ) | (31,154,504 | ) | ||||
Capital Share Transactions: | ||||||||
Proceeds from sale of shares | 7,978,268 | 8,388,252 | ||||||
Proceeds from reinvestment of dividends and distributions to shareholders | 25,263,799 | 31,154,504 | ||||||
Cost of shares repurchased | (61,580,675 | ) | (61,015,036 | ) | ||||
Net decrease from capital share transactions | (28,338,608 | ) | (21,472,280 | ) | ||||
Total Decrease in Net Assets | (41,981,352 | ) | (24,591,260 | ) | ||||
NET ASSETS: | ||||||||
Beginning of year | 325,817,397 | 350,408,657 | ||||||
End of year | $ | 283,836,045 | $ | 325,817,397 | ||||
See notes to financial statements.
7 |
n | Value Line Centurion Fund, Inc. |
Financial Highlights
Selected data for a share of capital stock outstanding throughout each year:
Years Ended December 31, | |||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||
Net asset value, beginning of year | $20.07 | $20.24 | $18.15 | $15.19 | $19.71 | ||||||||||
Income from investment operations: | |||||||||||||||
Net investment loss | (.05 | ) | (.08 | ) | (.05 | ) | (.03 | ) | (.01 | ) | |||||
Net gain (loss) on securities (both realized and unrealized) | .63 | 1.88 | 2.14 | 2.99 | (4.51 | ) | |||||||||
Total from investment operations | .58 | 1.80 | 2.09 | 2.96 | (4.52 | ) | |||||||||
Less distributions: | |||||||||||||||
Distributions from net realized gains | (1.69 | ) | (1.97 | ) | — | — | — | ||||||||
Net asset value, end of year | $18.96 | $20.07 | $20.24 | $18.15 | $15.19 | ||||||||||
Total return* | 3.85 | % | 9.13 | % | 11.51 | % | 19.49 | % | (22.93 | )% | |||||
Ratios/supplemental data: | |||||||||||||||
Net assets, end of year (in thousands) | $283,836 | $325,817 | $350,409 | $355,435 | $338,651 | ||||||||||
Ratio of expenses to average net assets (1) | .98 | %(2) | .96 | % | .95 | % | .99 | % | .76 | % | |||||
Ratio of net investment loss | (.24 | )% | (.39 | )% | (.27 | )% | (.19 | )% | (.06 | )% | |||||
Portfolio turnover rate | 220 | % | 219 | % | 187 | % | 129 | % | 126 | % | |||||
* | Total returns do not reflect the effects of charges deducted under the terms of GIAC’s variable contracts. Including such charges would reduce the total returns for all periods shown. |
(1) | Ratio reflects expenses grossed up for custody credit arrangement. The ratio of expenses to average net assets net of custody credits would not have changed for all periods shown. |
(2) | Ratio reflects expenses grossed up for the voluntary waiver of a portion of the service and distribution fee by the Distributor. The ratio of expenses to average net assets net of the voluntary fee waiver, but exclusive of the custody credit arrangement, would have been .89% for the year ended December 31, 2006. |
See notes to financial statements.
8 |
n | Value Line Centurion Fund, Inc. |
Notes to Financial Statements
December 31, 2006
1. Significant Accounting Policies
Value Line Centurion Fund, Inc. (the “Fund”) is an open-end diversified management investment company registered under the Investment Company Act of 1940, as amended, whose primary investment objective is long-term growth of capital. The Fund’s portfolio will usually consist of common stocks ranked 1 or 2 for year-ahead performance by the Value Line Investment Survey, one of the nation’s major investment advisory services.
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 midpoint between the latest available and representative asked and bid prices, and commencing 60 days prior to maturity such securities are valued at amortized cost. Securities for which market quotations are not readily available or that are not readily marketable and all other assets of the Fund are valued at fair value as the Board of Directors may determine in good faith. In addition, the Fund may use the fair value of a security when the closing market price on the primary exchange where the security is traded no longer accurately reflects the value of a security due to factors affecting one or more relevant securities markets or the specific issuer.
In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (SFAS No. 157). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. Management is currently evaluating the impact the adoption of SFAS No. 157 will have on the Fund’s financial statement disclosures.
(B) Repurchase Agreements
In connection with transactions in repurchase agreements, the Fund’s custodian takes possession of the underlying collateral securities, the value of which exceeds the principal amount of the repurchase transaction, including accrued interest. To the extent that any repurchase transaction exceeds one business day, it is the Fund’s policy to mark-to-market the collateral on a daily basis to ensure the adequacy of the collateral. In the event of default of the obligation to repurchase, the Fund has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. Under certain circumstances, in the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral or proceeds may be subject to legal proceedings.
(C) Federal Income Taxes
It is the Fund’s policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. Therefore, no provision for federal income tax is required.
In July 2006, the Financial Accounting Standards Board issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109” (the “Interpretation”). The Interpretation establishes for all entities, including pass-through entities such as the Fund, a minimum threshold for financial statement recognition of the benefit of positions taken in filing tax returns (including whether an entity is taxable in a particular jurisdiction), and requires certain expanded tax disclosures. The Interpretation is effective for fiscal years beginning after December 15, 2006, and is to be applied to all open tax years as of the date of effectiveness. Management has recently begun to evaluate the application of the Interpretation to the Fund, and is not in a position at this time to estimate the significance of its impact, if any, on the Fund’s financial statements.
9 |
n | Value Line Centurion Fund, Inc. |
Notes to Financial Statements (Continued)
December 31, 2006
(D) Dividends and Distributions
It is the Fund’s policy to distribute to its shareholders, as dividends and as capital gains distributions, all the net investment income for the year and all the net capital gains realized by the Fund, if any. Such distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. All dividends or distributions will be payable in shares of the Fund at the net asset value on the ex-dividend date. This policy is, however, subject to change at any time by the Board of Directors.
(E) Securities Transactions and Income
Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Interest income on investments, adjusted for amortization of discount and premium, if applicable, is earned from settlement date and recognized on the accrual basis. Dividend income is recorded on the ex-dividend date.
(F) 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.
Net realized foreign exchange gains or losses arise from currency fluctuations realized between the trade and settlement dates on securities transactions, the differences between the U.S. dollar amounts of dividends, interest, and foreign withholding taxes recorded by the Fund, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities, other than investments, at the end of the fiscal period, resulting from changes in the exchange rates. The effect of the change in foreign exchange rates on the value of investments are included in realized gain (loss) on investments and changes in unrealized appreciation (depreciation) on investments.
(G) Representations and Indemnifications
In the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties which provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote.
2. Capital Share Transactions, Dividends and Distributions
Shares of the Fund are available to the public only through the purchase of certain contracts issued by The Guardian Insurance and Annuity Company, Inc. (GIAC). Transactions in capital stock were as follows:
Year Ended December 31, | Year Ended December 31, 2005 | |||||||
Shares sold | 392,891 | 426,506 | ||||||
Shares issued in reinvestment of dividends and distributions | 1,482,617 | 1,589,516 | ||||||
Shares repurchased | (3,135,375 | ) | (3,095,339 | ) | ||||
Net decrease | (1,259,867 | ) | (1,079,317 | ) | ||||
Distributions per share from net realized gains | $ | 1.69 | $ | 1.97 | ||||
3. Purchases and Sales of Securities
Purchases and sales of investment securities, excluding short-term investments, were as follows:
Year Ended December 31, 2006 | |||
PURCHASES: | |||
Investment Securities | $ | 657,656,635 | |
SALES: | |||
Investment Securities | $ | 706,282,154 | |
4. Income Taxes
At December 31, 2006, information on the tax components of capital is as follows:
Cost of investments for tax purposes | $ | 255,444,395 | ||
Gross tax unrealized appreciation | $ | 31,333,592 | ||
Gross tax unrealized depreciation | (2,977,247 | ) | ||
Net tax unrealized appreciation on investments | $ | 28,356,345 | ||
Undistributed ordinary income | $ | 1,921,000 | ||
Undistributed long-term gains | $ | 18,039,950 | ||
10 |
n | Value Line Centurion Fund, Inc. |
Notes to Financial Statements (Continued)
December 31, 2006
The tax composition of distributions to shareholders for the year ended December 31, 2006 were as follows:
2006 | 2005 | |||||
Ordinary income | $ | 8,593,152 | — | |||
Long-term capital gain | 16,670,647 | $ | 31,154,504 | |||
$ | 25,263,799 | $ | 31,154,504 | |||
Permanent book-tax differences relating to the current year were reclassified within the composition of the net asset accounts. The Fund decreased accumulated net investment loss on investments by $742,963 and decreased accumulated net realized gain on investments by $742,963. Net assets are not affected by this reclassification. These reclasses were primarily due to differing treatments of net operating losses for tax purposes.
5. Investment Advisory Fee, Service and Distribution Fees and Transactions with Affiliates
An advisory fee of $1,536,747 was paid or payable to Value Line, Inc. (the “Adviser”), the Fund’s investment adviser, for the year ended December 31, 2006. This was computed at the rate of 1/2 of 1% of the average daily net assets of the Fund during the period and paid monthly. The Adviser provides research, investment programs, supervision of the investment portfolio and pays costs of administrative services, office space, equipment and compensation of administrative, bookkeeping, and clerical personnel necessary for managing the affairs of the Fund. The Adviser also provides persons, satisfactory to the Fund’s Board of Directors, to act as officers and employees of the Fund and pays their salaries and wages. Direct expenses of the Fund are charged to the Fund while common expenses of the Value Line Funds are allocated proportionately based upon the Funds’ respective net assets. The Fund bears all other costs and expenses.
The Fund has a Service and Distribution Plan (the “Plan”) adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940, for the payment of certain expenses incurred by Value Line Securities, Inc. (the “Distributor”), a wholly-owned subsidiary of the Adviser, in advertising marketing and distributing the Fund’s shares and for servicing the Fund’s shareholders at an annual rate of 0.40% of the Fund’s average daily net assets. For the year ended December 31, 2006, fees amounting to $1,229,398 before fee waivers were paid or payable to the Distributor under this Plan. Effective May 23, 2006 the Distributor voluntarily waived 0.15% of the fee. The fees waived amounted to $263,289. The Distributor has no right to recoup previously waived amounts.
For the year ended December 31, 2006, the Fund’s expenses were reduced by $5,594 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.
11 |
n | Value Line Centurion Fund, Inc. |
Report of Independent Registered
Public Accounting Firm
To the Board of Directors and Shareholders of Value Line Centurion Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Value Line Centurion Fund, Inc. (the “Fund”) at December 31, 2006, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2006 by correspondence with the custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 13, 2007
12 |
n | Value Line Centurion Fund, Inc. |
Federal Tax Status of Distributions (Unaudited)
For corporate taxpayers 50.79% of the ordinary income distributions paid during the calendar year 2006, qualify for the corporate dividends received deductions. During the calendar year 2006, 54.44% of the ordinary income distribution are treated as qualified dividends. During the calendar year 2006, the Fund distributed $16,670,647 of long-term capital gain to its shareholders.
13 |
n | Value Line Centurion Fund, Inc. |
Management Information
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.
Name, Address, And Age | Position | Length of Time Served | Principal Occupation During the Past 5 Years | Other Directorships Held by Director | ||||
Interested Director* | ||||||||
Jean Bernhard Buttner Age 72 | Chairman of the Board of Directors and President | Since 1983 | Chairman, President and Chief Executive Officer of Value Line, Inc. (the “Adviser”) and Value Line Publishing, Inc.; Chairman and President of each of the 14 Value Line Funds and Value Line Securities Inc. (the “Distributor”) | Value Line, Inc. | ||||
Non-Interested Directors | ||||||||
John W. Chandler 18 Victoria Lane Lanesboro, MA 01237 Age 83 | Director | Since 1991 | Consultant, Academic Search Consultation Service, Inc. (1994-2004); Trustee Emeritus and Chairman (1993-1994) of the Board of Trustees of Duke University; President Emeritus, Williams College. | None | ||||
Frances T. Newton 4921 Buckingham Drive Charlotte, NC 28209 Age 65 | Director | Since 2000 | Customer Support Analyst, Duke Power Company. | None | ||||
Francis Oakley 54 Scott Hill Road Williamstown, MA 01267 Age 75 | Director | Since 2000 | Professor of History, Williams College, (1961 to 2002) Professor Emeritus since 2002. Professor 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. | Berkshire Life Insurance Company of America | ||||
David H. Porter 5 Birch Run Drive Saratoga Springs, NY 12866 Age 71 | Director | Since 1997 | Visiting Professor of Classics, Williams College, since 1999; President Emeritus, Skidmore College since 1999 and President, 1987-1998. | None | ||||
Paul Craig Roberts 169 Pompano St. Panama City Beach, FL 32413 Age 68 | Director | Since 1983 | Chairman, Institute for Political Economy. | A. Schulman Inc. (plastics) | ||||
Nancy-Beth Sheerr 1409 Beaumont Drive Gladwyne, PA 19035 Age 58 | Director | Since 1996 | Senior Financial Advisor, Veritable, L.P. (Investment Advisor) Since 2004; Senior Financial Advisor, Hawthorn, (2001-2004). | None |
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 1-800-221-3532.
* | 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. |
14 |
n | Value Line Centurion Fund, Inc. |
Management Information (Continued)
Name, Address, And Age | Position | Length of Time Served | Principal Occupation During the Past 5 Years | |||
Officers | ||||||
David T. Henigson Age 49 | Vice President, Secretary and Chief Compliance Officer | Since 1994 | Director, Vice President and Chief Compliance Officer of the Adviser. Director and Vice President of the Distributor. Vice President, Secretary and Chief Compliance Officer of each of the 14 Value Line Funds. | |||
Stephen R. Anastasio Age 47 | Treasurer | Since 2005 | Controller of the Adviser 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 Assistant | Since 2005 | Director, Vice President and Secretary of the Adviser, Director and Vice President of the Distributor. |
15 |
n | Value Line Centurion Fund, Inc. |
Form N-Q
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 coped 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.
Proxy Voting
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.
16 |
Item 2. | Code of Ethics |
(a) The Registrant has adopted a Code of Ethics that applies to its principal executive officer, and principal financial officer and principal accounting officer.
(f) Pursuant to item 12(a), the Registrant is attaching as an exhibit a copy of its Code of Ethics that applies to its principal executive officer, and principal financial officer and principal accounting officer.
Item 3. | Audit Committee Financial Expert. |
(a)(1)The Registrant has an Audit Committee Financial Expert serving on its Audit Committee.
(2) The Registrant’s Board has designated John W. Chandler, a member of the Registrant’s Audit Committee, as the Registrant’s Audit Committee Financial Expert. Mr. Chandler is an independent director who is a senior consultant with Academic Search Consultation Service. He spent most of his professional career at Williams College, where he served as a faculty member, Dean of the Faculty, and President (1973-85). He also served as President of Hamilton College (1968-73), and as President of the Association of American Colleges and Universities (1985-90). He has also previously served as Trustee Emeritus and Chairman of the Board of Trustees of Duke University.
A person who is designated as an “audit committee financial expert” shall not make such person an “expert” for any purpose, including without limitation under Section 11 of the Securities Act of 1933 or under applicable fiduciary laws, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities that are greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and Board of Trustees in the absence of such designation or identification.
Item 4. | Principal Accountant Fees and Services |
(a) | Audit Fees 2006 - $40,006 |
(b) | Audit-Related fees – None. |
(c) | Tax Preparation Fees 2006 - $6,935 |
(d) | All Other Fees – None |
(e) (1) | Audit Committee Pre-Approval Policy. All services to be performed for the Registrant by PricewaterhouseCoopers LLP must be pre-approved by the audit committee. All services performed were pre-approved by the committee. |
(e) (2) | Not applicable. |
(f) | Not applicable. |
(g) | Aggregate Non-Audit Fees 2006 -$6,935. |
(h) | Not applicable. |
Item 11. | Controls and Procedures. |
(a) | The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in rule 30a-2(c) under the Act (17 CFR 270.30a-2(c) ) based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report, are appropriately designed to ensure that material information relating to the registrant is made known to such officers and are operating effectively. |
(b) | The registrant’s principal executive officer and principal financial officer have determined that there have been no significant changes in the registrant’s internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including corrective actions with regard to significant deficiencies and material weaknesses. |
Item 12. | Exhibits. |
(a) | Code of Business Conduct and Ethics for Principal Executive and Senior Financial Officers attached hereto as Exhibit 100.COE |
(b) | (1) Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2) attached hereto as Exhibit 99.CERT. |
(2) | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
By | /s/ Jean B. Buttner | |
Jean B. Buttner, President |
Date: March 9, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Jean B. Buttner | |
Jean B. Buttner, President, Principal Executive Officer | ||
By: | /s/ Stephen R. Anastasio | |
Stephen R. Anastasio, Treasurer, Principal Financial Officer |
Date: March 9, 2007