<PAGE>
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----------------------
ANNUAL REPORT
----------------------
MARCH 31, 1996
----------------------
VALUE LINE
U.S.
MULTINATIONAL
COMPANY
FUND, INC.
[Logo]
VALUE LINE
NO-LOAD
MUTUAL
FUNDS
INVESTMENT ADVISER Value Line, Inc.
220 East 42nd Street
New York, NY 10017-5891
DISTRIBUTOR Value Line Securities, Inc.
220 East 42nd Street
New York, NY 10017-5891
CUSTODIAN BANK State Street Bank and Trust Co.
225 Franklin Street
Boston, MA 02110
SHAREHOLDER State Street Bank and Trust Co.
SERVICING AGENT c/o NFDS
P.O. Box 419729
Kansas City, MO 64141-6729
INDEPENDENT Price Waterhouse LLP
ACCOUNTANTS 1177 Avenue of the Americas
New York, NY 10036
LEGAL COUNSEL Peter D. Lowenstein, Esq.
Two Greenwich Plaza, Suite 100
Greenwich, CT 06830
DIRECTORS Jean Bernhard Buttner
Francis C. Oakley
Marion N. Ruth
Frances T. Newton
OFFICERS Jean Bernhard Buttner
CHAIRMAN AND PRESIDENT
Alan Hoffman
VICE PRESIDENT
David T. Henigson
VICE PRESIDENT AND
SECRETARY/TREASURER
Jack M. Houston
ASSISTANT SECRETARY/TREASURER
Stephen La Rosa
ASSISTANT SECRETARY/TREASURER
THIS REPORT IS ISSUED FOR THE 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).
VLF046696
<PAGE>
TO OUR VALUE LINE U.S. MULTINATIONAL COMPANY FUND SHAREHOLDERS
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DEAR SHAREHOLDER:
This is the first report for our newest mutual fund, the Value Line U.S.
Multinational Company Fund. Your Fund's mission is to seek maximum total return
through investment in American companies that are capitalizing on global growth.
Although the biggest success stories in the history of corporate America usually
involve multinational companies, to our knowledge the Value Line U.S.
Multinational Company Fund is the first open-end mutual fund to specifically
target the stocks of these firms.
Well-known American companies that prosper through a global strategy for growth
are most likely to be found in the multinational realm. Your Fund targets those
companies that derive at least 25% of their sales from outside the United
States. We intend to maintain a portfolio of stocks (and convertible securities)
whose issuers, as a whole, derive at least 50% of their sales from non-U.S.
sources.
Your Fund will have an important expense advantage: By holding U.S. securities,
it will avoid many of the implicit costs associated with buying foreign stocks.
We will not incur foreign-exchange fees, special custodial fees, foreign
commissions and trading expenses, and numerous other costs associated with
managing a portfolio of non-U.S. stocks.
The "multinational" aspect of your Fund is critical in describing the companies
we are targeting because off-shore production is central to these firms'
success. Coca-Cola is one of the world's most "global" products, but not as a
result of its direct exports. American Express is one of the most widely
recognized names in the world, but it "exports" no physical product. IBM
manufactures its hardware and develops its software in many countries. Consumer
products, financial services, and technology businesses are driven primarily by
knowledge, rather than production skills, and large, successful companies in
these areas will be among your Fund's major holdings.
In the Fund's first few months its net asset value has been rather volatile, a
reflection of the stock market itself. In today's global economy, the
archetypal multinational is a technology company, and the market for stocks of
these companies has swung sharply and repeatedly. Yet many technology stocks are
highly ranked for Timeliness-TM- by the Value Line Ranking System. Sudden price
declines create buying opportunities at attractive prices. Conversely, when a
stock we are holding appears less attractive, a volatile market may provide
opportunities to sell at prices that are, for the moment, unusually high.
Because we recognize that some shareholders are disturbed by such volatility, we
have attempted to mute some of the fluctuation in the Fund's net asset value by
investing a portion of our assets in convertible securities. These offer the
potential to capture most of the total return of the underlying stocks with much
less price volatility than is typical of common shares.
We thank you for your confidence in Value Line, and we look forward to your
support and participation in the growth of this new Fund that we expect in the
years ahead.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
CHAIRMAN AND PRESIDENT
April 16, 1996
PERFORMANCE DATA:*
GROWTH OF
AN ASSUMED
TOTAL INVESTMENT OF
RETURN $10,000
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From November 17, 1995,(+)
to March 31, 1996........ 5.93% $10,593
+ COMMENCEMENT OF OPERATIONS
* THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND ARE NO GUARANTEE
OF FUTURE PERFORMANCE. THE AVERAGE ANNUAL TOTAL RETURN AND GROWTH OF AN ASSUMED
INVESTMENT OF $10,000 INCLUDE DIVIDENDS REINVESTED AND CAPITAL GAINS
DISTRIBUTIONS ACCEPTED IN SHARES. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF
AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTMENT, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN ITS ORIGINAL COST.
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2
<PAGE>
ECONOMIC OBSERVATIONS
The pace of economic growth is increasing modestly once again, in a reversal in
form from the very early part of the year. Back then, declining retail
activity, a faltering industrial sector, and an assortment of weather-related
dislocations had combined to put the long-lived business expansion in apparent
jeopardy. Now, by comparison, the construction markets are firming, employment
is up sharply, and the American public is fairly upbeat. To be sure, pockets of
weakness still exist, with chain-store sales, for example, still rather mixed.
On the whole, though, the positives now clearly outweigh the negatives,
suggesting that GDP growth in the opening half of this year will comfortably
exceed the tepid 0.5% rate of increase recorded during the final three months of
1995.
[PERFORMANCE GRAPH]
FROM NOVEMBER 17, 1995, TO MARCH 31, 1996
THE STANDARD & POOR'S 500 INDEX IS AN UNMANAGED INDEX THAT IS REPRESENTATIVE OF
THE LARGER CAPITALIZATION STOCKS TRADED IN THE UNITED STATES.
Moreover, we think the business uptrend will remain on track through the second
half and into 1997. The current improvement and the prospective growth over the
next several quarters, meanwhile, suggest that the fears expressed earlier this
year about a widespread reversal in corporate profits were exaggerated, although
some selective weakness is likely over the next couple of months.
Thus far, the modest increase in business activity has not generated havoc on
the pricing front. There had been some concern earlier that a pickup in the
economy--even a limited one--would lead to the labor and raw-materials shortages
that often precede a rise in inflation. To date, this has not occurred. In
fact, neither wholesale nor consumer inflation shows any major signs of heating
up. We caution, though, that commodity prices have worked their way higher
recently and that this uptrend will need to be watched closely to determine
whether a more worrisome pricing scenario will evolve over the next several
months. At this point, we do not believe such fears are yet warranted.
In sum, we think that economic growth will proceed at a moderate pace in 1996,
that inflation will generally remain under control, and that corporate
earnings--with some likely exceptions--will continue their climb. Offsetting
these positives to a certain degree is the decreasing likelihood that the
Federal Reserve Board will vote to lower interest rates anytime soon.
Outside the U.S., the economic climate is generally stable and perhaps improving
selectively. Business conditions in the industrialized European countries, while
generally stagnant, are beginning to show signs of a gradual pickup; however,
fiscal drag, record unemployment, and unfavorable currency relationships suggest
that rapid economic expansion in Europe is unlikely for the time being.
Meanwhile, the Japanese economy appears to be emerging from a deep recession.
The brightest growth prospects, though, appear in the developing world
(including China, India, the Pacific Basin, and Latin America), although these
areas still account for only a tiny fraction of the world's economic activity.
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3
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SCHEDULE OF INVESTMENTS MARCH 31, 1996
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SHARES VALUE
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COMMON STOCKS (72.2%)
BANK (2.0%)
5,000 Bank of Boston Corp. . . . . . . . . . . . . . . . . $ 248,125
COMPUTER
& PERIPHERALS (12.1%)
2,000 *Dell Computer Corp . . . . . . . . . . . . . . . . . 67,000
2,000 *Digital Equipment Corp . . . . . . . . . . . . . . . 110,250
10,000 *Gateway 2000, Inc. . . . . . . . . . . . . . . . . . 278,750
5,000 Hewlett-Packard Co.. . . . . . . . . . . . . . . . . 470,000
4,000 International Business
Machines Corp. . . . . . . . . . . . . . . . . . . . 444,500
3,000 *Sun Microsystems, Inc. . . . . . . . . . . . . . . . 131,250
---------
1,501,750
BEVERAGE-
SOFT DRINK (1.3%)
2,000 Coca-Cola Co.. . . . . . . . . . . . . . . . . . . . 165,250
COMPUTER SOFTWARE
& SERVICES (5.4%)
5,000 *Barra Inc . . . . . . . . . . . . . . . . . . . . . 94,375
4,000 Computer Associates
International, Inc.. . . . . . . . . . . . . . . . . 286,500
1,500 *Microsoft Corp . . . . . . . . . . . . . . . . . . . 154,688
3,000 *Oracle Systems Corp. . . . . . . . . . . . . . . . . 141,375
---------
676,938
DIVERSIFIED
COMPANIES (1.4%)
3,000 *Thermo Electron Corp . . . . . . . . . . . . . . . . 178,500
ELECTRONICS (2.2%)
10,000 *Vishay Intertechnology, Inc. . . . . . . . . . . . . 270,000
INDUSTRIAL SERVICES (1.3%)
5,000 Manpower, Inc. . . . . . . . . . . . . . . . . . . . 155,000
INSURANCE-
DIVERSIFIED (3.0%)
4,000 American International Group, Inc. . . . . . . . . . 374,500
INSURANCE-LIFE (2.6%)
10,500 AFLAC, Inc . . . . . . . . . . . . . . . . . . . . . 328,125
INSURANCE-PROPERTY
& CASUALTY (1.6%)
3,000 Transatlantic Holdings, Inc. . . . . . . . . . . . . 204,750
MACHINERY (2.7%)
5,000 Dover Corp.. . . . . . . . . . . . . . . . . . . . . 228,750
5,000 *Thermo Fibertek, Inc. . . . . . . . . . . . . . . . 111,250
---------
340,000
MACHINE TOOL (2.0%)
6,000 Gleason Corp.. . . . . . . . . . . . . . . . . . . . 243,750
MEDICAL SUPPLIES (5.4%)
4,000 Johnson & Johnson. . . . . . . . . . . . . . . . . . 369,000
5,000 Medtronic Inc. . . . . . . . . . . . . . . . . . . . 298,125
---------
667,125
PRECISION
INSTRUMENT (1.5%)
6,250 *Thermo Instrument Systems, Inc. . . . . . . . . . . 189,062
RAILROAD (3.7%)
7,000 *Wisconsin Central
Transportation Corp. . . . . . . . . . . . . . . . . 465,500
RESTAURANT (2.3%)
6,000 McDonald's Corp. . . . . . . . . . . . . . . . . . . 288,000
SECURITIES
BROKERAGE (2.2%)
10,000 Lehman Brothers Holdings, Inc. . . . . . . . . . . . 267,500
SEMICONDUCTOR (7.1%)
7,500 *Analog Devices, Inc. . . . . . . . . . . . . . . . . 210,000
5,000 Intel Corp.. . . . . . . . . . . . . . . . . . . . . 284,375
10,000 *International Rectifier Corp . . . . . . . . . . . . 180,000
5,000 Linear Technology Corp.. . . . . . . . . . . . . . . 208,750
---------
883,125
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4
<PAGE>
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SHARES VALUE
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SHOE (3.7%)
4,000 NIKE, Inc. Class "B". . . . . . . . . . . . . . . . $ 325,000
5,000 Wolverine World Wide, Inc.. . . . . . . . . . . . . 140,000
---------
465,000
TELECOMMUNICATIONS
EQUIPMENT (5.5%)
9,000 *Andrew Corp . . . . . . . . . . . . . . . . . . . . 344,250
20,000 *Black Box Corp. . . . . . . . . . . . . . . . . . . 340,000
---------
684,250
TOILETRIES/
COSMETICS (2.1%)
5,000 Gillette Co. . . . . . . . . . . . . . . . . . . . 258,750
TOYS &
SCHOOL SUPPLIES (1.1%)
5,000 Mattel Inc.. . . . . . . . . . . . . . . . . . . . 135,625
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TOTAL COMMON STOCKS
(Cost $8,453,384). . . . . . . . . . . . . . . . . 8,990,625
---------
CONVERTIBLE PREFERRED STOCK (3.1%)
AIR TRANSPORT (2.7%)
5,000 *Continental Airlines Finance Trust,
8 1/2%, Conv. Pfd. (1) . . . . . . . . . . . . . . 328,750
COMPUTER SOFTWARE
& SERVICES (0.4%)
1,000 *Wang Laboratories, Inc. Depositary
Shares, 6 1/2% Conv., Series "B"
Pfd. (1) . . . . . . . . . . . . . . . . . . . . . 54,250
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TOTAL CONVERTIBLE
PREFERRED STOCK
(Cost $321,250). . . . . . . . . . . . . . . . . . 383,000
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PRINCIPAL
AMOUNTS VALUE
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CONVERTIBLE BONDS & NOTES (7.6%)
CHEMICAL-SPECIALTY (0.8%)
$113,000 Park Electrochemical Corp.,
5 1/2%, Conv. Sub Note, 3/1/06 . . . . . . . . . . $ 105,937
INDUSTRIAL SERVICES (2.3%)
250,000 Mercury Air Group Inc., 7 3/4%,
Conv. Sub. Deb., 2/1/06 .. . . . . . . . . . . . . 281,563
MEDICAL SERVICES (0.9%)
100,000 NABI Inc., 6 1/2%, Conv. Sub. Note,
2/1/03 (1) . . . . . . . . . . . . . . . . . . . . 113,000
OILFIELD SERVICES/
EQUIPMENT (2.6%)
250,000 Pride Petroleum Services, Inc.,
6 1/4%, Conv. Sub. Deb., 2/15/06 . . . . . . . . . 325,000
SEMICONDUCTOR (1.0%)
100,000 Analog Devices, Inc., 3 1/2%, Conv.
Sub. Note, 12/1/00 . . . . . . . . . . . . . . . . 119,500
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TOTAL CONVERTIBLE BONDS
& NOTES (Cost $813,000). . . . . . . . . . . . . . 945,000
---------
TOTAL INVESTMENT
SECURITIES (82.9%)
(Cost $9,587,634). . . . . . . . . . . . . . . . . 10,318,625
---------
SEE NOTES TO FINANCIAL STATEMENTS
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5
<PAGE>
SCHEDULE OF INVESTMENTS MARCH 31, 1996
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PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT (16.9%)
(INCLUDING ACCRUED INTEREST)
$ 2,100,000 Collateralized by $1,755,000 U.S.
Treasury Note, 9 3/8%, due 2/15/06,
with a value of $2,144,632 (with
Morgan Stanley & Co., Inc., 5.35%,
dated 3/29/96, due 4/1/96, delivery
value $2,100,936). . . . . . . . . . . . . . . . . $2,100,936
CASH AND OTHER ASSETS
LESS LIABILITIES (0.2%). . . . . . . . . . . . . 28,051
-----------
TOTAL NET ASSETS (100%). . . . . . . . . . . . . . . . . . . . $12,447,612
-----------
-----------
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER OUTSTANDING
SHARE ($12,447,612 DIVIDED BY 1,179,674
SHARES OUTSTANDING). . . . . . . . . . . . . . . . . . . . . . $ 10.55
-----------
* Non-income producing
(1) Pursuant to Rule 144A under the Securities Act of 1933, this security can
be sold only to qualified institutional investors.
SEE NOTES TO FINANCIAL STATEMENTS
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6
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
AT MARCH 31, 1996
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ASSETS:
Investment securities, at value
(Cost-$9,587,634) . . . . . . . . . . . . . . . . . . . . $10,318,625
Repurchase agreement
(Cost-$2,100,936) . . . . . . . . . . . . . . . . . . . . 2,100,936
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,025
Deferred organization costs (note 3) . . . . . . . . . . . . 48,155
Due from Value Line, Inc. (note 6) . . . . . . . . . . . . . 52,162
Dividends and interest receivable . . . . . . . . . . . . . 10,681
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TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . $12,535,584
-----------
LIABILITIES:
Due to Value Line, Inc. (note 3) . . . . . . . . . . . . . . 52,030
Accrued expenses (note 6). . . . . . . . . . . . . . . . . . 35,942
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TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . 87,972
-----------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . $12,447,612
-----------
-----------
NET ASSETS CONSIST OF:
Capital stock, at $.01 par value (authorized
50,000,000, outstanding 1,179,674
shares) . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,797
Additional paid-in capital . . . . . . . . . . . . . . . . . 11,915,277
Undistributed investment income-net. . . . . . . . . . . . . 38,707
Accumulated net realized loss
on investments. . . . . . . . . . . . . . . . . . . . . . (249,160)
Unrealized net appreciation of
investments . . . . . . . . . . . . . . . . . . . . . . . 730,991
-----------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . $12,447,612
-----------
-----------
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
OUTSTANDING SHARE ($12,447,612 DIVIDED BY
1,179,674 SHARES OUTSTANDING). . . . . . . . . . . . . . $ 10.55
-----------
-----------
STATEMENT OF OPERATIONS FROM NOVEMBER 17, 1995
(COMMENCEMENT OF OPERATIONS), TO MARCH 31, 1996
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INVESTMENT INCOME:
Interest income. . . . . . . . . . . . . . . . . . . . . . . $ 57,267
Dividend income. . . . . . . . . . . . . . . . . . . . . . . 20,840
---------
Total Income. . . . . . . . . . . . . . . . . . . . . . . 78,107
---------
EXPENSES:
Advisory fee (note 6) . . . . . . . . . . . . . . . . . . .
27,550
Auditing and legal fees. . . . . . . . . . . . . . . . . . . 17,477
Service and distribution plan fee (note 6) . . . . . . . . .
9,183
Printing . . . . . . . . . . . . . . . . . . . . . . . . . . 8,749
Registration and filing fees . . . . . . . . . . . . . . . . 8,089
Directors' fees and expenses . . . . . . . . . . . . . . . . 6,864
Amortization of deferred organization
costs (note 3). . . . . . . . . . . . . . . . . . . . . . 3,875
Accounting and bookkeeping fees. . . . . . . . . . . . . . . 2,700
Insurance, dues, and other . . . . . . . . . . . . . . . . . 2,608
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . 2,728
---------
Total Expenses before expense offset and
expenses waived/assumed by Adviser . . . . . . . . . . 89,823
Less: Expense offset . . . . . . . . . . . . . . . . . . . . (928)
Less: Expenses waived/assumed by Adviser
(note 6) . . . . . . . . . . . . . . . . . . . . . . . (88,895)
---------
Net Expenses. . . . . . . . . . . . . . . . . . . --
---------
INVESTMENT INCOME-NET. . . . . . . . . . . . . . . . . . . . 78,107
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS-NET:
Realized Loss-Net. . . . . . . . . . . . . . . . . . . (249,160)
Net Unrealized Appreciation . . . . . . . . . . . . . 730,991
---------
NET REALIZED LOSS AND NET UNREALIZED
APPRECIATION OF INVESTMENTS . . . . . . . . . . . . . . . 481,831
---------
NET INCREASE IN NET ASSETS
FROM OPERATIONS . . . . . . . . . . . . . . . . . . . . . $ 559,938
---------
---------
SEE NOTES TO FINANCIAL STATEMENTS
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7
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FROM NOVEMBER 17, 1995 (COMMENCEMENT OF OPERATIONS), TO MARCH 31, 1996
- --------------------------------------------------------------------------------
OPERATIONS:
Investment income-net . . . . . . . . . . . . . . . . . . $ 78,107
Realized loss on investments-net. . . . . . . . . . . . . (249,160)
Net unrealized appreciation of investments. . . . . . . . 730,991
-----------
Net increase in net assets from operations. . . . . . . . 559,938
-----------
DISTRIBUTIONS TO SHAREHOLDERS:
Investment income-net . . . . . . . . . . . . . . . . . . (39,400)
-----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares. . . . . . . . . . . . . . . 11,787,674
Proceeds from reinvestment of distributions
to shareholders. . . . . . . . . . . . . . . . . . . . . 39,400
-----------
Increase from capital share transactions. . . . . . . . . 11,827,074
-----------
Total Increase . . . . . . . . . . . . . . . . . . . . . . . 12,347,612
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . 100,000
-----------
End of period . . . . . . . . . . . . . . . . . . . . . . $12,447,612
-----------
-----------
Undistributed investment income-net at end of period . . . . $ 38,707
-----------
-----------
SEE NOTES TO FINANCIAL STATEMENTS
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8
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION
Value Line U.S. Multinational Company Fund, Inc. (the "Fund") was formed as a
corporation under the laws of the State of Maryland in June 1995 and is
registered as an open-end management investment company with the Securities and
Exchange Commission. Prior to the commencement of operations on November 17,
1995, the Fund had no significant transactions other than the issuance of an
aggregate of 10,000 shares of common stock, on September 20, 1995, to Value
Line, Inc. (the "Adviser"), representing the initial capital of the Fund.
2. SIGNIFICANT ACCOUNTING POLICIES
The Fund is a no-load investment company whose investment objective is maximum
total return. The Fund invests primarily in common stocks or securities
convertible into common stock of U.S. companies that have significant sales from
international operations.
The following significant accounting policies are in conformity with generally
accepted accounting principles for investment companies. Such policies are
consistently followed by the Fund in the preparation of its financial
statements. Generally accepted accounting principles may require management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results may differ from those estimates.
(A) SECURITY VALUATION. Securities listed on a securities exchange and
over-the-counter securities traded on the NASDAQ national market are valued at
the closing sales price on the date as of which the net asset value is being
determined. In the absence of closing sales prices for such securities and for
securities traded in the over-the-counter market, the security is valued at the
midpoint between the latest available and representative asked and bid price.
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. Short-term instruments
with maturities of 60 days or less at the date of purchase are valued at
amortized cost, which approximates market value.
(B) REPURCHASE AGREEMENTS. In connection with transactions in repurchase
agreements, the Fund's custodian takes possession of the underlying collateral
securities, the value of which exceeds the principal amount of the repurchase
transaction, including accrued interest. To the extent that any repurchase
transaction exceeds one business day, the value of the collateral is
marked-to-market on a daily basis to ensure the adequacy of the collateral. In
the event of default of the obligation to repurchase, the Fund has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral or proceeds may be subject to legal proceedings.
(C) FEDERAL INCOME TAXES. It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies, including the distribution requirements of the Tax Reform Act of
1986, and to distribute all of its taxable income to its shareholders.
Therefore, no federal income-tax or excise-tax provision is required.
(D) SECURITY TRANSACTIONS AND DISTRIBUTIONS. Security transactions are accounted
for on the date the securities are purchased or sold. Interest income is accrued
as earned. Realized gains and losses on sales of securities are calculated for
financial accounting and federal income-tax purposes on the identified-cost
basis. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Distributions are determined in accordance with income-tax
regulations, which may differ from generally accepted accounting principles.
(E) AMORTIZATION. Discounts on debt securities are amortized to interest income
over the life of the security with a corresponding increase to the security's
cost basis; premiums on debt securities are not amortized.
3. ORGANIZATION COST
Costs of approximately $52,030 incurred in connection with the Fund's
organization and initial registration have been deferred
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9
<PAGE>
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996
- --------------------------------------------------------------------------------
and are being amortized on a straight-line basis over 60 months, beginning at
the commencement of operations of the Fund. In the event any of the initial
shares of the Fund are redeemed by the holder thereof during the five-year
amortization period, the redemption proceeds will be reduced by a pro-rata
portion of any unamortized, deferred organizational expenses in the same
proportion as the number of initial shares being redeemed bears to the number of
initial shares outstanding at the time of redemption.
At March 31, 1996, the Fund had a payable to the Adviser of $52,030 relating to
organization costs paid by the Adviser on behalf of the Fund.
4. CAPITAL SHARE TRANSACTIONS
Transactions in capital stock were as follows:
NOVEMBER 17, 1995,*
TO MARCH 31, 1996
-------------------
Shares sold. . . . . . . . . . . . . . . . . . . . . . . . . 1,165,645
Shares issued
in reinvestment of dividends
and distributions . . . . . . . . . . . . . . . . . . . . 4,029
---------
Net increase . . . . . . . . . . . . . . . . . . . . . . . . 1,169,674
---------
---------
* Commencement of operations.
5. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, excluding short-term investments, were as
follows:
NOVEMBER 17, 1995,*
TO MARCH 31, 1996
-------------------
PURCHASES:
Investment Securities. . . . . . . . . . . . . . . . . . . . $11,279,360
-----------
-----------
SALES:
Investment Securities. . . . . . . . . . . . . . . . . . . . $ 1,442,566
-----------
-----------
* Commencement of operations.
At March 31, 1996, the aggregate cost of investment securities and the
repurchase agreement for Federal income-tax purposes was $11,688,570. The
aggregate appreciation and depreciation of investments at March 31, 1996, based
on a comparison of investment values and their costs for federal income-tax
purposes, was $900,472 and $169,481, respectively, resulting in a net
appreciation of $730,991.
Capital losses incurred after October 31, within the taxable year, are deemed to
arise on the first business day of the Fund's next taxable year. Accordingly,
the Fund has incurred and elected to defer capital losses of $249,160.
6. ADVISORY FEES, SERVICE AND DISTRIBUTION PLAN FEES, AND TRANSACTIONS WITH
AFFILIATES
The Fund has entered into an investment advisory contract with the Adviser
providing for an annual fee, payable monthly, of .75% of the Fund's average
daily net assets. The Adviser provides research, investment programs, and
supervision of the investment portfolio and pays costs of certain
administrative services and office space. The Adviser also provides persons,
satisfactory to the Fund's Board of Directors, to act as officers of the Fund
and pays their salaries and wages. The Fund bears all other costs and expenses
in its organization and operation. If the aggregate expenses of the Fund, other
than taxes, interest, brokerage commissions, and extraordinary expenses, exceed
the expense limitation imposed by any state in which the Fund sells its shares,
the advisory fee will be reduced by the amount of such excess, or the amount of
such excess will be refunded.
The Fund has a Service and Distribution Plan (the "Plan"), adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, 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.
From November 17, 1995 (commencement of operations), to March 31, 1996, advisory
fees of $27,550 and Plan fees of $9,183 were voluntarily waived by the Adviser
and the Dis-
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10
<PAGE>
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tributor, respectively. In addition, the operating expenses from commencement of
operations to March 31, 1996, amounting to $53,500, were assumed by the Adviser.
At March 31, 1996, the Fund has a receivable from the Adviser of $53,500 for
such expenses assumed.
Certain officers and directors of the Adviser and the Distributor are also
officers and a director of the Fund.
During the period ended March 31, 1996, the Fund paid brokerage commissions
totaling $8,442 to the Distributor, which clears its transactions through
unaffiliated brokers.
At March 31, 1996, the Adviser and/or affiliated companies owned 1,100,813
shares of the Fund's capital stock, representing 93.3% of the outstanding
shares. In addition, an officer and director of the Fund owned 75,307 shares of
capital stock, representing 6.4% of the outstanding shares.
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11
<PAGE>
FINANCIAL HIGHLIGHTS
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SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD:
NOVEMBER 17, 1995
(COMMENCEMENT OF
OPERATIONS), TO
MARCH 31, 1996
----------------
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . . $10.00
----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income . . . . . . . . . . . . . . . .07 (1)
Net gains or losses on securities
(both realized and unrealized) . . . . . . . . . .52
----------
Total from investment operations . . . . . . . . . .59
----------
LESS DISTRIBUTIONS:
Dividends from net investment income . . . . . . . (.04)
----------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . . $10.55
----------
----------
TOTAL RETURN . . . . . . . . . . . . . . . . . . . . . 5.93%+
----------
----------
RATIOS/SUPPLEMENTAL DATA:
Net assets end of period (in thousands). . . . . . . . $12,448
Ratio of operating expenses to average
net assets. . . . . . . . . . . . . . . . . . . . . 0%* (1)(2)
Ratio of net investment income
to average daily net assets. . . . . . . . . . . . 2.13%* (1)(2)
Portfolio turnover rate. . . . . . . . . . . . . . . . 17%+
(1) Net of custody cash credits and expense reimbursement and fees waived by
the Adviser. Had these expenses been fully paid by the Fund, investment
loss-net per share would have been $(.001), ratio of expense to average
daily net assets would be 2.45%,* and ratio of net investment loss to
average daily net assets would be (0.32%.)* See note 6.
(2) Due to the reimbursement of expenses and waiver of fees by the Adviser and
the short period covered by this report, data are not indicative of future
periods.
+ Not annualized
* Annualized
SEE NOTES TO FINANCIAL STATEMENTS
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<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
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TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF VALUE LINE U.S. MULTINATIONAL
COMPANY FUND, INC.
In our opinion, the accompanying statement of assets and liabilities, including
the schedules 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 U.S. Multinational Fund,
Inc. (the "Fund") at March 31, 1996, and the results of its operations, the
changes in its net assets and the financial highlights for the period November
17, 1995 (commencement of operations) through March 31, 1996, in conformity with
generally accepted accounting principles. 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 audit. We conducted our audit
of these financial statements in accordance with generally accepted auditing
standards which 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
audit, which included confirmation of securities at March 31, 1996 by
correspondence with the custodian and brokers, provides a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
April 26, 1996
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<PAGE>
THE VALUE LINE FAMILY OF FUNDS
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1950 -- THE VALUE LINE FUND seeks long-term growth of capital along with modest
current income by investing substantially all of its assets in common stocks or
securities convertible into common stock.
1952 -- THE VALUE LINE INCOME FUND'S primary investment objective is income, as
high and dependable as is consistent with reasonable growth. Capital growth to
increase total return is a secondary objective.
1956 -- THE VALUE LINE SPECIAL SITUATIONS FUND seeks to obtain long-term growth
of capital by investing not less than 80% of its assets in "special situations."
No consideration is given to achieving current income.
1972 -- VALUE LINE LEVERAGED GROWTH INVESTORS' sole investment objective is to
realize capital growth by investing substantially all of its assets in common
stocks. The Fund may borrow up to 50% of its net assets to increase its
purchasing power.
1979 -- THE VALUE LINE CASH FUND, a money market fund, seeks high current income
consistent with preservation of capital and liquidity.
1981 -- VALUE LINE U.S. GOVERNMENT SECURITIES FUND seeks maximum income without
undue risk to principal. Under normal conditions, at least 80% of the value of
its assets will be invested in issues of the U.S. Government and its agencies
and instrumentalities.
1983 -- VALUE LINE CENTURION FUND* seeks long-term growth of capital as its sole
objective by investing primarily in stocks ranked 1 or 2 by Value Line for
year-ahead relative performance.
1984 -- THE VALUE LINE TAX EXEMPT FUND seeks to provide investors with maximum
income exempt from federal income taxes while avoiding undue risk to principal.
The Fund offers investors a choice of two portfolios: a Money Market Portfolio
and a High-Yield Portfolio.
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 by
investing in high-yielding, lower-rated, fixed-income securities.
1987 -- VALUE LINE NEW YORK TAX EXEMPT TRUST seeks to provide New York
taxpayers with maximum income exempt from New York State, New York City, and
federal income taxes while avoiding undue risk to principal.
1987 -- VALUE LINE STRATEGIC ASSET MANAGEMENT TRUST* invests in stocks, bonds,
and cash equivalents according to computer trend models developed by Value Line.
The objective is to professionally manage the optimal allocation of these
investments at all times.
1992 -- VALUE LINE INTERMEDIATE BOND FUND seeks high current income consistent
with low volatility of principal by investing primarily in a diversified
portfolio of investment-grade debt securities.
1993 -- VALUE LINE SMALL-CAP GROWTH 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 correct
asset mix.
1995 -- VALUE LINE U.S. MULTINATIONAL COMPANY FUND'S investment objective is
maximum total return. It invests primarily in securities of U.S. companies that
have significant sales from international operations.
*ONLY AVAILABLE THROUGH THE PURCHASE OF THE GUARDIAN INVESTOR, A
TAX-DEFERRED, VARIABLE ANNUITY, OR VALUEPLUS, A VARIABLE LIFE INSURANCE POLICY.
FOR MORE COMPLETE INFORMATION ABOUT ANY OF THE VALUE LINE FUNDS, INCLUDING
CHARGES AND EXPENSES, SEND FOR A PROSPECTUS FROM VALUE LINE SECURITIES, INC.,
220 EAST 42ND STREET, NEW YORK, NEW YORK 10017-5891, OR CALL 1-800-223-0818, 24
HOURS A DAY, 7 DAYS A WEEK. READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR
SEND MONEY.
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16
