<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY , 1999
FILE NO. 2-31640
FILE NO. 811-2660
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 45 /X/
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 45 /X/
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VALUE LINE LEVERAGED GROWTH INVESTORS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
220 East 42nd Street
New York, New York 10017-5891
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's Telephone number, including Area Code: (212) 907-1500
David T. Henigson
Value Line, Inc.
220 East 42nd Street
New York, New York 10017-5891
(NAME AND ADDRESS OF AGENT FOR SERVICE)
Copy to:
Peter D. Lowenstein
Two Greenwich Plaza, Suite 100
Greenwich, CT 06830
It is proposed that this filing will become effective (check
appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/X/ on May 3, 1999 pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485
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<PAGE>
VALUE LINE LEVERAGED GROWTH INVESTORS, INC.
--------------------------------
PROSPECTUS
MAY 3, 1999
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[LOGO]
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS, AND ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
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FUND SUMMARY
What is the Fund's goal? PAGE 2
What are the Fund's main investment strategies? PAGE 2
What are the main risks of investing in the Fund? PAGE
2
How has the Fund performed? PAGE 3
What are the Fund's fees and expenses? PAGE 4
HOW WE MANAGE THE FUND
Our investment strategies PAGE 5
The risks of investing in the Fund PAGE 6
WHO MANAGES THE FUND
Investment Adviser PAGE 7
Management fees PAGE 7
Portfolio management PAGE 7
ABOUT YOUR ACCOUNT
How to buy shares PAGE 8
How to sell shares PAGE 10
Special services PAGE 11
Dividends, distributions and taxes PAGE 12
FINANCIAL HIGHLIGHTS
Financial Highlights PAGE 13
<PAGE>
FUND SUMMARY
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WHAT IS THE FUND'S GOAL?
The Fund's sole investment objective is to realize capital
growth. Although the Fund will strive to achieve its goal,
there is no assurance that it will.
WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?
To achieve the Fund's goals, we invest substantially all of
the Fund's net assets in common stocks or securities
convertible into common stock. The Fund may employ "leverage"
by borrowing money and using it for the purchase of
additional securities. In selecting securities for purchase
or sale, we rely on the Value Line Timeliness-TM- Ranking
System or the Value Line Performance-TM- Ranking System.
These Ranking Systems compare the Adviser's estimate of the
probable market performance of each stock during the next
twelve months relative to all of the stocks under review.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?
Investing in any mutual fund involves risk, including the
risk that you may lose part or all of the money you invest.
The price of Fund shares will increase and decrease according
to changes in the value of the Fund's investments. The Fund
will be affected by changes in stock prices which tend to
fluctuate more than bond prices. An investment in the Fund is
not a complete investment program and you should consider it
just one part of your total investment program. Borrowing for
investment increases both investment opportunity and
investment risk. For a more complete discussion of risk,
please turn to page 6.
2
<PAGE>
HOW HAS THE FUND PERFORMED?
This bar chart and table can help you evaluate the potential
risks of investing in the Fund. We show how returns for the
Fund's shares have varied over the past ten calendar years,
as well as the average annual returns of these shares for
one, five, and ten years all compared to the performance of
the S&P 500-Registered Trademark-, a broad based market
index. You should remember that unlike the Fund, this index
is unmanaged and does not include the costs of buying,
selling, and holding the securities. The Fund's past
performance is not necessarily an indication of how it will
perform in the future.
YEAR BY YEAR RETURNS (%)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
<S> <C>
1989 32.25%
1990 -1.61%
1991 46.35%
1992 -2.46%
1993 16.20%
1994 -3.71%
1995 37.06%
1996 22.31%
1997 23.79%
1998 39.63%
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: Q4 1998 +30.98%
WORST QUARTER: Q3 1990 (15.68%)
</TABLE>
AVERAGE ANNUAL RETURN AS OF 12/31/98
<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS
<S> <C> <C> <C>
- --------------------------------------------------------------
FUND 39.63% 22.78% 19.67%
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S&P 500-REGISTERED TRADEMARK- INDEX 28.58% 24.06% 19.21%
- --------------------------------------------------------------
</TABLE>
3
<PAGE>
WHAT ARE THE FUND'S FEES AND EXPENSES?
These tables describe the fees and expenses you pay in
connection with an investment in the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
<S> <C>
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MAXIMUM SALES CHARGES (LOAD) IMPOSED ON PURCHASES NONE
AS A PERCENTAGE OF OFFERING PRICE
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MAXIMUM DEFERRED SALES CHARGES (LOAD) AS A NONE
PERCENTAGE OF ORIGINAL PURCHASE PRICE OR
REDEMPTION PRICE, WHICHEVER IS LOWER
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MAXIMUM SALES CHARGES (LOAD) IMPOSED ON REINVESTED
DIVIDENDS NONE
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REDEMPTION FEE NONE
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EXCHANGE FEE NONE
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MAXIMUM ACCOUNT FEE NONE
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</TABLE>
Annual Fund operating expenses are expenses that are deducted
from the Fund's assets.
ANNUAL FUND OPERATING EXPENSES (% OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
<S> <C>
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MANAGEMENT FEES .75%
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DISTRIBUTION AND SERVICE (12B-1) FEES NONE
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OTHER EXPENSES (INCLUDING INTEREST EXPENSE) 0.12%
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TOTAL ANNUAL FUND OPERATING EXPENSES 0.87%
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</TABLE>
EXAMPLE
This example is intended to help you compare the cost of
investing in the Fund to the cost of investing in other
mutual funds. We show the cumulative amount of Fund expenses
on a hypothetical investment of $10,000 with an annual 5%
return over the time shown. This is an example only, and does
not represent future expenses, which may be greater or less
than those shown here.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C> <C>
$87 $ 278 $ 482 $ 1,073
</TABLE>
4
<PAGE>
HOW WE MANAGE THE FUND
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OUR INVESTMENT STRATEGIES
We analyze economic and market conditions, seeking to
identify the market sector or securities that we think make
the best investments. The following is a description of how
the Adviser pursues the Fund's objectives.
In selecting securities for purchase or sale, the Adviser
relies on the Value Line Timeliness-TM- Ranking System or the
Value Line Performance-TM- Ranking System. The Value Line
Timeliness Ranking System has evolved after many years of
research and has been used in substantially its present form
since 1965. It is based upon historical prices and reported
earnings, recent earnings and price momentum and the degree
to which the last reported earnings deviated from estimated
earnings, among other factors. The Timeliness Rankings are
published weekly in the Standard Edition of The Value Line
Investment Survey for approximately 1,700 stocks. On a scale
of 1 (highest) to 5 (lowest), the rankings compare the
Adviser's estimate of the probable market performance of each
stock during the coming twelve months relative to all 1,700
stocks under review. The Rankings are updated weekly to
reflect the most recent information.
The Value Line Performance Ranking System for common stocks
was introduced in 1995. It is a variation of the Value Line
Small-Capitalization Ranking System, which has been employed
in managing pension client assets since 1981, and in managing
the Value Line Small-Cap Growth Fund, Inc. since 1993. The
Performance Ranking System evaluates the approximately 1,800
stocks in the Expanded Edition of The Value Line Investment
Survey. This stock selection system relies on factors similar
to those found in the Value Line Timeliness Ranking System
except that it does not rely on earnings estimates. The
Performance Ranks use a scale of 1 (highest) to 5 (lowest) to
compare the Adviser's estimate of the probable market
performance of each Expanded Edition stock during the coming
twelve months relative to all 1,800 stocks under review in
the Expanded Edition.
Neither the Value Line Timeliness Ranking System nor the
Value Line Performance Ranking System eliminates market risk,
but the Adviser believes that they provide objective
standards for determining whether the market is undervaluing
or overvaluing a particular security. The Fund will usually
invest in Common Stocks ranked 1 or 2 but it may also invest
in common stocks ranked 3. Reliance upon the rankings,
whenever feasible, is a fundamental policy of the Fund which
may not be changed without shareholder approval. The
utilization of these Rankings is no assurance that the Fund
will perform more favorably than the market in general over
any particular period.
LEVERAGE
The Fund may employ "leverage" by borrowing funds to purchase
or carry securities. Leverage may be used in periods when the
Adviser believes that the opportunities for gain are
potentially greater than the risk of loss. The Fund will only
borrow from banks, and only if the value of the Fund's
assets, less its liabilities other than borrowings, is equal
to at least 300% of all borrowings including the proposed
borrowing. If at any time the value of the Fund's assets
5
<PAGE>
should fail to meet the 300% coverage requirement, the Fund
will, within three business days, reduce its borrowings to
the extent necessary. To do so, or to meet maturing bank
loans, the Fund might on occasion be required to dispose of
portfolio securities when such disposition might not
otherwise be desirable. Interest on money borrowed is an
expense of the Fund which it would not otherwise incur, with
the result that it may have little or no investment income
during periods when its borrowings are substantial. The Fund
may be required to maintain minimum average balances in
connection with its borrowings or to pay a commitment or
other fee to maintain a line of credit.
TEMPORARY DEFENSIVE POSITION
From time to time in response to adverse market or other
conditions, we may invest a portion of the Fund's net assets
in cash or cash equivalents, debt securities, bonds, or
preferred stocks for temporary defensive purposes. This could
help the Fund avoid losses but may mean lost opportunities.
PORTFOLIO TURNOVER
The Fund may engage in active and frequent trading of
portfolio securities in order to take advantage of better
investment opportunities to achieve its investment objectives
which would result in higher brokerage commissions and other
expenses. High portfolio turnover may negatively affect the
Fund's performance. Portfolio turnover may also result in
capital gain distributions that could raise your income tax
liability.
THE RISKS OF INVESTING IN THE FUND
Investing in any mutual fund involves risk, including the
risk that you may receive little or no return on your
investment, and the risk that you may lose part or all of the
money you invest. The Fund may borrow funds to purchase
securities. Borrowing for investment increases both
investment opportunity and investment risk. Therefore, before
you invest in this Fund you should carefully evaluate the
risks. Because of the nature of the Fund, you should consider
an investment in it to be a long-term investment that will
best meet its objectives when held for a number of years. The
Fund's use of the Value Line Ranking Systems involves the
risk that over certain periods of time the price of
securities not covered by the Ranking Systems, or lower
ranked securities, may appreciate to a greater extent than
those securities in the Fund's portfolio. Please see the
Statement of Additional Information for a further discussion
of risks. Information on the Fund's recent holdings can be
found in the Fund's current annual or semi-annual report.
YEAR 2000 RISKS
Like other mutual funds, the Fund could be adversely affected
if the computer systems used by the Adviser and the Fund's
service providers do not properly process and calculate
date-related information and data after January 1, 2000. The
Adviser is working to avoid such problems and to obtain
assurances from service providers that they are taking
similar steps.
6
<PAGE>
WHO MANAGES THE FUND
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The business and affairs of the Fund are managed by the
Fund's officers under the direction of the Fund's Board of
Directors.
INVESTMENT ADVISER
Value Line, Inc. serves as the Fund's investment adviser and
manages the Fund's business affairs. Value Line also acts as
investment adviser to the other Value Line mutual funds and
furnishes investment counseling services to private and
institutional clients with combined assets of over $5
billion.
The Adviser was organized in 1982 and is the successor to
substantially all of the operations of Arnold Bernhard & Co.,
Inc. which with its predecessor had been in business since
1931. Value Line Securities, Inc., the Fund's distributor, is
a subsidiary of the Adviser. Another subsidiary of the
Adviser publishes The Value Line Investment Survey and other
publications.
MANAGEMENT FEES
For managing the Fund and its investments, the Adviser is
paid a yearly fee of 0.75% of the Fund's average daily net
assets.
PORTFOLIO MANAGEMENT
A committee of employees of the Investment Adviser is jointly
and primarily responsible for the day-to-day management of
the Fund's portfolio.
7
<PAGE>
ABOUT YOUR ACCOUNT
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HOW TO BUY SHARES
/ / BY TELEPHONE
Once you have opened an account, you can buy additional
shares by calling 800-243-2729 between 9:00 a.m. and 4:00
p.m. New York time. You must pay for these shares within
three business days of placing your order.
/ / BY WIRE
If you are making an initial purchase by wire, you must call
us at 800-243-2729 so we can assign you an account number.
Request your bank to wire the amount you want to invest to
State Street Bank and Trust Company, ABA #011000028,
attention DDA # 99049868. Include your name, account number,
tax identification number and the name of the Fund in which
you want to invest.
/ / THROUGH A BROKER-DEALER
You can open an account and buy shares through a
broker-dealer, who may charge a fee for this service.
/ / BY MAIL
Complete the Account Application and mail it with your check
payable to NFDS, Agent, to Value Line Funds, c/o National
Financial Data Services, Inc., P.O. Box 419729, Kansas City,
MO 64141-6729. If you are making an initial purchase by mail,
you must include a completed Account Application, or an
appropriate retirement plan application if you are opening a
retirement account, with your check.
/ / MINIMUM/ADDITIONAL INVESTMENTS
Once you have completed an application, you can open an
account with an initial investment of $1,000, and make
additional investments at any time for as little as $100. The
price you pay for shares will depend on when we receive your
purchase order.
/ / TIME OF PURCHASE
If we or an authorized agent receives your order before the
close of regular trading on the New York Stock Exchange
(currently 4:00 p.m., Eastern time) on a business day, you
will pay that day's closing share price which is based on the
Fund's net asset value. If we receive your order after the
close of trading, you will pay the next business day's price.
A business day is any day that the New York Stock Exchange is
open for business. We reserve the right to reject any
purchase order and to waive the initial and subsequent
investment minimums at any time.
8
<PAGE>
/ / NET ASSET VALUE
We determine the Fund's net asset value (NAV) per share as of
the close of regular trading on the New York Stock Exchange
each day that exchange is open for business. We calculate NAV
by adding the market value of all the securities and assets
in the Fund's portfolio, deducting all liabilities, and
dividing the resulting number by the number of shares
outstanding. The result is the net asset value per share. We
price securities for which market prices or quotations are
available at their market value. We price securities for
which market valuations are not available at their fair
market value as determined by the Board of Directors. Any
investments which have a maturity of less than 60 days we
price at amortized cost. The amortized cost method of
valuation involves valuing a security at its cost and
accruing any discount or premium over the period until
maturity, regardless of the impact of fluctuating interest
rates on the market value of the security.
9
<PAGE>
HOW TO SELL SHARES
/ / BY MAIL
You can redeem your shares (sell them back to the Fund) by
mail by writing to: Value Line Funds, c/o National Financial
Data Services, Inc., P.O. Box 419729, Kansas City, MO
64141-6729. The request must be signed by all owners of the
account, and you must include a signature guarantee for each
owner. Signature guarantees are also required when redemption
proceeds are going to anyone other than the account holder(s)
of record. If you hold your shares in certificates, you must
submit the certificates properly endorsed with signature
guaranteed with your request to sell the shares. A signature
guarantee can be obtained from most banks or securities
dealers, but not from a notary public. A signature guarantee
helps protect against fraud.
/ / THROUGH A BROKER-DEALER
You may sell your shares through a broker-dealer, who may
charge a fee for this service.
The Fund has authorized brokers to accept purchase and
redemption orders on behalf of the Fund. The Fund has also
authorized these brokers to designate others to accept
purchase and redemption orders on behalf of the Fund.
We treat any order to buy or sell shares that you place with
one of these brokers, or anyone they have designated, as if
you had placed it directly with the Fund. The shares that you
buy or sell through brokers or anyone they have designated
are priced at the next net asset value that is computed after
they accept your order.
/ / BY EXCHANGE
You can exchange all or part of your investment in the Fund
for shares in other Value Line funds. You may have to pay
taxes on your exchange. When you exchange shares, you are
purchasing shares in another fund so you should be sure to
get a copy of that fund's prospectus and read it carefully
before buying shares through an exchange. To execute an
exchange, call 800-243-2729.
When you send us a properly completed request to sell or
exchange shares, you will receive the net asset value as
determined on the business day we receive your request. You
may have to pay taxes on the gain from your sale of shares.
We will pay you promptly, normally the next business day, but
no later than seven days after we receive your request to
sell your shares. If you purchased your shares by check, we
will wait until your check has cleared, which can take up to
15 days, before we send the proceeds to you.
10
<PAGE>
ACCOUNT MINIMUM
If as a result of redemption your account balance falls below
$500, the Fund may ask you to increase your balance within 30
days. If your account is not at the minimum by the required
time, the Fund may redeem your account, after first notifying
you in writing.
SPECIAL SERVICES
To help make investing with us as easy as possible, and to
help you build your investments, we offer the following
special services. You can get further information about these
programs by calling Shareholder Services at 800-223-0818.
/ / Valu-Matic-Registered Trademark- allows you to make
regular monthly investments of $25 or more automatically
from your checking account.
/ / Through our Systematic Cash Withdrawal Plan you can
arrange a regular monthly or quarterly payment from your
account payable to you or someone you designate. If your
account is $5,000 or more, you can have monthly or
quarterly withdrawals of $25 or more.
/ / You may buy shares in the Fund for your individual or
group retirement plan, including your Regular or Roth
IRA. You may establish your IRA account even if you
already are a member of an employer-sponsored retirement
plan. Not all contributions to an IRA account are tax
deductible; consult your tax advisor about the tax
consequences of your contribution.
11
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund pays dividends from its net investment income and
distributes any capital gains that it has realized annually.
We automatically reinvest all dividends and any capital
gains, unless you instruct us otherwise in your application
to purchase shares. At December 31, 1998, the Fund had
unrealized appreciation of $340,727,000 representing
approximately 56% of the Fund's net assets. In the event the
Fund disposes of securities in its portfolio and recognizes
sizeable gains the Fund will distribute such gains to
stockholders who may be taxed on such amounts. Investors
should consider the tax consequences of buying shares of the
Fund prior to the record date of a distribution because such
distribution will generally be taxable even though the net
asset value of shares of the Fund is reduced by the
distribution.
Tax laws are subject to change, so we urge you to consult
your tax adviser about your particular tax situation and how
it might be affected by current tax law. The tax status of
your dividends from the Fund is not affected by whether you
reinvest your dividends or receive them in cash.
Distributions from a fund's long-term capital gains are
taxable as capital gains, while dividends from short-term
capital gains and net investment income are generally taxable
as ordinary income. In addition, you may be subject to state
and local taxes on distributions.
We will send you a statement by January 31 each year
detailing the amount and nature of all dividends and capital
gains that you were paid during the prior year.
12
<PAGE>
FINANCIAL HIGHLIGHTS
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The financial highlights table is intended to help you
understand the Fund's financial performance for the past five
years. Certain information reflects financial results for a
single Fund share. The total returns in the table represent
the rate that an investor would have earned or lost on an
investment in the Fund assuming reinvestment of all dividends
and distributions. This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with the
Fund's financial statements, is included in the Fund's annual
report, which is available upon request by calling
800-223-0818.
FINANCIAL HIGHLIGHTS
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<TABLE>
<S> <C> <C> <C> <C> <C>
SELECTED DATA FOR A SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT EACH YEAR:
YEAR ENDED DECEMBER 31,
- ------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $35.58 $31.51 $28.50 $23.18 $24.67
- ------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.08) (.06) (.01) .09 .12
Net gains or losses on securities (both
realized and unrealized) 14.13 7.37 6.40 8.48 (1.05)
- ------------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations 14.05 7.31 6.39 8.57 (.93)
- ------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- # (.09) (.12)
Distributions from capital gains (1.21) (3.24) (3.38) (3.16) (.31)
Distributions in excess of capital gains -- -- -- -- (.13)
- ------------------------------------------------------------------------------------------------------------
Total distributions (1.21) (3.24) (3.38) (3.25) (.56)
- ------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $48.42 $35.58 $31.51 $28.50 $23.18
- ------------------------------------------------------------------------------------------------------------
TOTAL RETURN 39.63% 23.79% 22.31% 37.06% (3.71)%
- ------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) $608,498 $432,815 $371,060 $337,280 $ 264,803
Ratio of expenses to average net assets
(including interest expense) .87%(1) .86%(1) .88%(1) .88% .89%
Ratio of expenses to average net assets
(excluding interest expense) .84%(1) .86%(1) .87%(1) -- --
Ratio of net income to average net assets (0.22)% (0.17)% (0.02)% .31% .49%
Portfolio turnover rate 54% 37% 34% 54% 49%
</TABLE>
# Dividend paid was less than one cent.
(1)After offset of custody credits. Excluding the custody
credits would not have changed the expense ratio.
- --------------------------------------------------------------------------------
13
<PAGE>
FOR MORE INFORMATION
Additional information about the Fund's investments is
available in the Fund's annual and semi-annual reports to
shareholders. In the Fund's annual report, you will find a
discussion of the market conditions and investment strategies
that significantly affected the Fund's performance during its
last fiscal year. You can find more detailed information
about the Fund in the current Statement of Additional
Information dated May 3, 1999, which we have filed
electronically with the Securities and Exchange Commission
(SEC) and which is legally a part of this prospectus. If you
want a free copy of the Statement of Additional Information,
the annual or semi-annual report, or if you have any
questions about investing in this Fund, you can write to us
at 220 East 42nd Street, New York, NY 10017-5891 or call
toll-free 800-223-0818. You may also obtain the prospectus
from our Internet site at http://www.valueline.com.
You can find reports and other information about the Fund on
the SEC Web site (http://www.sec.gov), or you can get copies
of this information, after payment of a duplicating fee, by
writing to the Public Reference Section of the SEC,
Washington, D.C. 20549-6009. Information about the Fund,
including its Statement of Additional Information, can be
reviewed and copied at the Securities and Exchange
Commission's Public Reference Room in Washington, D.C. You
can get information on operation of the public reference room
by calling the SEC at 1-800-SEC-0330.
<TABLE>
<S> <C>
INVESTMENT ADVISER SERVICE AGENT
Value Line, Inc. State Street Bank and Trust Company
220 East 42nd Street c/o NFDS
New York, NY 10017-5891 P.O. Box 419729
Kansas City, MO 64141-6729
CUSTODIAN DISTRIBUTOR
State Street Bank and Trust Company Value Line Securities, Inc.
225 Franklin Street 220 East 42nd Street
Boston, MA 02110 New York, NY 10017-5891
</TABLE>
<TABLE>
<S> <C>
Value Line Securities, Inc.
220 East 42nd Street, New York, NY 10017-5891 File no. 811-2660
</TABLE>
<PAGE>
VALUE LINE LEVERAGED GROWTH INVESTORS, INC.
220 East 42nd Street, New York, New York 10017-5891
1-800-223-0818 or 1-800-243-2729
www.valueline.com
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
MAY 3, 1999
- -------------------------------------------------------------------------------
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Prospectus of Value Line Leveraged Growth
Investors, Inc. dated May 3, 1999, a copy of which may be obtained without
charge by writing or telephoning the Fund. The financial statements,
accompanying notes and report of independent auditors appearing in the Fund's
1998 Annual Report to Shareholders are incorporated by reference in this
Statement. A copy of the Annual Report is available from the Fund upon request
and without charge by calling 800-223-0818.
--------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Description of the Fund and Its Investments and Risks............................... B-2
Management of the Fund.............................................................. B-8
Investment Advisory and Other Services.............................................. B-10
Brokerage Allocation and Other Practices............................................ B-11
Capital Stock....................................................................... B-12
Purchase, Redemption and Pricing of Shares.......................................... B-12
Taxes............................................................................... B-13
Performance Data.................................................................... B-15
Financial Statements................................................................ B-15
</TABLE>
B-1
<PAGE>
DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
CLASSIFICATION. The Fund is an open-end, diversified management investment
company incorporated in Maryland in 1972. The Fund's investment adviser is Value
Line, Inc. (the "Adviser").
INVESTMENT STRATEGIES AND RISKS. The sole investment objective of the Fund
is to realize capital growth. No consideration is given to current income in the
choice of investments. The Fund's investment objective cannot be changed without
shareholder approval. There can be no assurance that the Fund will achieve its
investment objective. There are risks in all investments, including any stock
investment, and in all mutual funds that invest in stocks.
The Fund seeks to achieve its investment objective by investing
substantially all of its assets in common stocks or securities convertible into
common stock. However, a portion of its assets may be held from time to time in
cash, debt securities, bonds or preferred stocks when the Adviser deems such a
position appropriate in the light of economic or market conditions. The Fund may
also write covered call options, purchase and sell stock index futures contracts
and options thereon, and enter into repurchase agreements.
LEVERAGE
The Fund may employ "leverage" by borrowing funds to purchase or carry
securities. Borrowing for investment increases both investment opportunity and
investment risk. Since substantially all of the Fund's assets fluctuate in
value, whereas the interest obligation resulting from the borrowing is a fixed
one, the asset value per share of the Fund will tend to increase more when the
portfolio assets increase in value and decrease more when portfolio assets
decrease in value than would otherwise be the case. This is the speculative
factor known as leverage. Leverage may be used in periods when the Adviser
believes that the opportunities for gain are potentially greater than the risk
of loss.
The Fund will only borrow from banks, and only if the value of the Fund's
assets, less its liabilities other than borrowings, is equal to at least 300% of
all borrowings including the proposed borrowing. If at any time the value of the
Fund's assets should fail to meet the 300% coverage requirement, the Fund will,
within three business days, reduce its borrowings to the extent necessary. To do
so, or to meet maturing bank loans, the Fund might on occasion be required to
dispose of portfolio securities when such disposition might not otherwise be
desirable. This is a fundamental policy of the Fund which may not be changed
without approval of a majority of its outstanding shares.
Interest on money borrowed is an expense of the Fund which it would not
otherwise incur, with the result that it may have little or no investment income
during periods when its borrowings are substantial. The Fund may be required to
maintain minimum average balances in connection with its borrowings or to pay a
commitment or other fee to maintain a line of credit.
MISCELLANEOUS INVESTMENT PRACTICES
COVERED CALL OPTIONS. The Fund may write covered call options on stocks
held in its portfolio ("covered options") in an attempt to earn additional
income on its portfolio or to partially offset an expected decline in the price
of a security. When the Fund writes a covered call option, it gives the
purchaser of the option the right to buy the underlying security at the price
specified in the option (the "exercise price") at any time during the option
period. If the option expires unexercised, the
B-2
<PAGE>
Fund will realize income to the extent of the amount received for the option
(the "premium"). If the option is exercised, a decision over which the Fund has
no control, the Fund must sell the underlying security to the option holder at
the exercise price. By writing a covered option, the Fund foregoes, in exchange
for the premium less the commission ("net premium"), the opportunity to profit
during the option period from an increase in the market value of the underlying
security above the exercise price. The Fund will not write call options in an
aggregate amount greater than 25% of its net assets.
The Fund will purchase call options only to close out a position. When an
option is written on securities in the Fund's portfolio and it appears that the
purchaser of that option is likely to exercise the option and purchase the
underlying security, it may be considered appropriate to avoid liquidating the
Fund's position, or the Fund may wish to extinguish a call option sold by it so
as to be free to sell the underlying security. In such instances the Fund may
purchase a call option on the same security with the same exercise price and
expiration date which had been previously written. Such a purchase would have
the effect of closing out the option which the Fund has written. The Fund
realizes a gain if the amount paid to purchase the call option is less than the
premium received for writing a similar option and a loss if the amount paid to
purchase a call option is greater than the premium received for writing a
similar option. Generally, the Fund realizes a short-term capital loss if the
amount paid to purchase the call option with respect to a stock is greater than
the premium received for writing the option. If the underlying security has
substantially risen in value, it may be difficult or expensive to purchase the
call option for the closing transaction.
STOCK INDEX FUTURES CONTRACTS AND OPTIONS THEREON. The Fund may trade in
stock index futures contracts and in options on such contracts. Such contracts
will be entered into on exchanges designated by the Commodity Futures Trading
Commission ("CFTC").
The Fund's futures and options on futures transactions must constitute bona
fide hedging or other risk management purposes pursuant to regulations
promulgated by the CFTC. In addition, the Fund may not engage in such activities
generally if the sum of the amount of initial margin deposits and premiums paid
for unexpired commodity options would exceed 5% of the fair market value of the
Fund's net assets, after taking into account unrealized profits and unrealized
losses on such contracts it has entered into; provided, however, that in the
case of an option that is in-the-money at the time of purchase, the in-the-money
amount may be excluded in calculating the 5%. In instances involving entering
into long futures or options contracts by the Fund, an amount equal to the
market value of the futures contract will be deposited in a segregated account
with the Fund's custodian of cash and liquid debt securities to collateralize
the position and thereby insure that the use of such futures contract is
unleveraged. No more than 25% of the Fund's net assets may be deposited in such
segregated account.
There can be no assurance of the Fund's successful use of stock index
futures as a hedging device. Hedging transactions involve certain risks. One
risk arises because of the imperfect correlation between movements in the price
of the stock index future and movements in the price of the securities which are
the subject of the hedge. The risk of imperfect correlation increases as the
composition of the Fund's securities portfolio diverges from the securities
included in the applicable stock index. In addition to the possibility that
there may be an imperfect correlation, or no correlation at all, between
movements in the stock index future and the portion of the portfolio being
hedged, the price of stock index futures may not correlate perfectly with the
movement in the stock index due to certain market distortions. Increased
participation by speculators in the futures market also may cause temporary
price distortions. Due to the possibility of price distortions in the futures
market and
B-3
<PAGE>
because of the imperfect correlation between movements in the stock index and
movements in the price of stock index futures, a correct forecast of general
market trends by the Adviser still may not result in a successful hedging
transaction.
For example, should the Fund anticipate a decrease in the value of its
portfolio securities, it could enter into futures contracts to sell stock
indexes thereby partially hedging its portfolio against the anticipated losses.
Losses in the portfolio, if realized, should be partially offset by gains on the
futures contracts. Conversely, if the Fund anticipated purchasing additional
portfolio securities in a rising market, it could enter into futures contracts
to purchase stock indexes thereby locking in a price. The implementation of
these strategies by the Fund should be less expensive and more efficient than
buying and selling the individual securities at inopportune times.
A stock index future obligates the seller to deliver (and the purchaser to
take) an amount of cash equal to a specific dollar amount times the difference
between the value of a specific stock index at the close of the last trading day
of the contract and the price at which the contract is entered into. There can
be no assurance of the Fund's successful use of stock index futures as a hedging
device.
The contractual obligation is satisfied by either a cash settlement or by
entering into an opposite and offsetting transaction on the same exchange prior
to the delivery date. Entering into a futures contract to deliver the index
underlying the contract is referred to as entering into a short futures
contract. Entering into a futures contract to take delivery of the index is
referred to as entering into a long futures contract. An offsetting transaction
for a short futures contract is effected by the Fund entering into a long
futures contract for the same date, time and place. If the price of the short
contract exceeds the price in the offsetting long, the Fund is immediately paid
the difference and thus realizes a gain. If the price of the long transaction
exceeds the short price, the Fund pays the difference and realizes a loss.
Similarly, the closing out of a long futures contract is effected by the Fund
entering into a short futures contract. If the offsetting short price exceeds
the long price, the Fund realizes as a gain, and if the offsetting short price
is less than the long price, the Fund realizes a loss.
No consideration will be paid or received by the Fund upon entering into a
futures contract. Initially, the Fund will be required to deposit with the
broker an amount of cash or cash equivalents equal to approximately 1% to 10% of
the contract amount. This amount is subject to change by the board of trade on
which the contract is traded and members of such board of trade may charge a
higher amount. This amount is known as "initial margin" and is in the nature of
a performance bond or good faith deposit on the contract which is returned to
the Fund upon termination of the futures contract, assuming all contractual
obligations have been satisfied. Subsequent payments, known as "variation
margin," to and from the broker will be made daily as the price of the index
underlying the futures contract fluctuates, making the long and short positions
in the futures contract more or less valuable, a process known as
"marking-to-market."
The Fund may also purchase put and call options on stock index futures
contracts on commodity exchanges or write covered options on such contracts. A
call option gives the purchaser the right to buy, and the writer the obligation
to sell, while a put option gives the purchaser the right to sell and the writer
the obligation to buy. Unlike a stock index futures contract, which requires the
parties to buy and sell the stock index on a set date, an option on a stock
index futures contract entitles its holder to decide on or before a future date
whether to enter into such a futures contract. If the holder decides not to
enter into the contract, the premium paid for the option is lost. Since the
value of the
B-4
<PAGE>
option is fixed at the point of sale, the purchase of an option does not require
daily payments of cash in the nature of "variation" or "maintenance" margin
payments to reflect the change in the value of the underlying contract. The
value of the option purchased by the Fund does change and is reflected in the
net asset value of the Fund. The writer of an option, however, must make margin
payments on the underlying futures contract. Exchanges provide trading
mechanisms so that an option once purchased can later be sold and an option once
written can later be liquidated by an offsetting purchase.
Successful use of stock index futures by the Fund also is subject to the
Adviser's ability to predict correctly movements in the direction of the market.
If the Adviser's judgment about the several directions of the market is wrong,
the Fund's overall performance may be worse than if no such contracts had been
entered into. For example, if the Fund has hedged against the possibility of a
decline in the market adversely affecting stocks held in its portfolio and stock
prices increase instead, the Fund will lose part or all of the benefit of the
increased value of its stock which it has hedged because it will have offsetting
losses in its futures positions. In addition, in such situations, if the Fund
has insufficient cash, it may have to sell securities to meet daily variation
margin requirements. Such sales of securities may be, but will not necessarily
be, at increased prices which reflect the rising market. The Fund may have to
sell securities at a time when it may be disadvantageous to do so. When stock
index futures are purchased to hedge against a possible increase in the price of
stocks before the Fund is able to invest its cash (or cash equivalents) in
stocks in an orderly fashion, it is possible that the market may decline
instead; if the Fund then concludes not to invest in stocks at that time because
of concern as to possible further market decline or for other reasons, the Fund
will realize a loss on the futures contract that is not offset by a reduction in
the price of securities purchased.
Use of options on stock index futures entails the risk that trading in the
options may be interrupted if trading in certain securities included in the
index is interrupted. The Fund will not purchase these options unless its
investment adviser is satisfied with the development, depth and liquidity of the
market and the investment adviser believes the options can be closed out.
Options and futures contracts entered into by the Fund will be subject to
special tax rules. These rules may accelerate income to the Fund, defer Fund
losses, cause adjustments in the holding periods of Fund securities, convert
capital gain into ordinary income and convert short-term capital losses into
long-term capital losses. As a result, these rules could affect the amount,
timing and character of Fund distributions. However, the Fund anticipates that
these investment activities will not prevent the Fund from qualifying as a
regulated investment company.
REPURCHASE AGREEMENTS. The Fund may invest temporary cash balances in
repurchase agreements. A repurchase agreement involves a sale of securities to
the Fund, with the concurrent agreement of the seller (a member bank of the
Federal Reserve System or a securities dealer which the Adviser believes to be
financially sound) to repurchase the securities at the same price plus an amount
equal to an agreed-upon interest rate, within a specified time, usually less
than one week, but, on occasion, at a later time. The Fund will make payment for
such securities only upon physical delivery or evidence of book-entry transfer
to the account of the custodian or a bank acting as agent for the Fund.
Repurchase agreements may also be viewed as loans made by the Fund which are
collateralized by the securities subject to repurchase. The value of the
underlying securities will be at least equal at all times to the total amount of
the repurchase obligation, including the interest factor.
B-5
<PAGE>
In the event of a bankruptcy or other default of a seller of a repurchase
agreement, the Fund could experience both delays in liquidating the underlying
securities and losses, including: (a) possible decline in the value of the
underlying security during the period while the Fund seeks to enforce its rights
thereto; (b) possible subnormal levels of income and lack of access to income
during this period; and (c) expenses of enforcing its rights. The Board of
Directors monitors the creditworthiness of parties with which the Fund enters
into repurchase agreements.
YEAR 2000. Like other mutual funds, the Fund could be adversely affected if
the computer systems used by the Adviser and other service providers do not
properly process and calculate date-related information and data from and after
January 1, 2000. This is commonly known as the "Year 2000 Problem." The Adviser
is taking steps that it believes are reasonably designed to address the Year
2000 Problem with respect to the computer systems that it uses and to obtain
satisfactory assurances that comparable steps are being taken by the Fund's
other major service providers. At this time, however, there can be no assurance
that these steps will be sufficient to avoid any adverse impact to the Fund.
The Year 2000 Problem is expected to impact corporations, which may include
issuers of portfolio securities held by the Fund, to varying degrees based upon
various factors, including, but not limited to, the corporation's industry
sector and degree of technological sophistication. The Fund is unable to predict
what impact, if any, the Year 2000 Problem will have on issuers of the portfolio
securities held by the Fund.
FUND POLICIES.
(i)
The Fund may not issue senior securities except evidences of
indebtedness, subject to the restrictions set forth under "Leverage"
on page B-2 of this Statement of Additional Information.
(ii)
The Fund may not engage in the underwriting of securities.
(iii)
The Fund may not invest 25% or more of its assets in securities of
issuers in any one industry.
(iv)
The Fund may not purchase securities of other investment companies
or invest in real estate, mortgages or illiquid securities of real
estate investment trusts although the Fund may purchase securities of
issuers which engage in real estate operations.
(v)
The Fund may not lend money except in connection with the purchase
of debt obligations or by investment in repurchase agreements,
provided that repurchase agreements maturing in more than seven days when
taken together with other illiquid investments do not exceed 10% of the
Fund's assets.
(vi)
The Fund may not engage in arbitrage transactions, short sales,
purchases on margin or participate on a joint or joint and several
basis in any trading account in securities except that these prohibitions
will not apply to futures contracts or options on futures contracts entered
into by the Fund for permissable purposes or to margin payments made in
connection with such contracts.
(vii)
The Fund may not purchase or sell any put or call options or any
combination thereof, except that the Fund may write and sell covered
call option contracts on securities owned by the Fund. The Fund may also
purchase call options for the purpose of terminating its outstanding
B-6
<PAGE>
obligations with respect to securities upon which covered call option
contracts have been written (i.e., "closing purchase transactions"). The
Fund may also purchase and sell put and call options on stock index futures
contracts.
(viii)
The Fund may not invest more than 5% of its total assets in the
securities of any one issuer or purchase more than 10% of the
outstanding voting securities, or any other class of securities, of any one
issuer. For purposes of this restriction, all outstanding debt securities of
an issuer are considered as one class, and all preferred stock of an issuer
is considered as one class. This restriction does not apply to obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
(ix)
The Fund may not invest more than 5% of its total assets in
securities of issuers having a record, together with its
predecessors, of less than three years of continuous operation. This
restriction does not apply to any obligation issued or guaranteed by the
U.S. Government, its agencies or instrumentalities.
(x)
The Fund may not purchase securities for the purpose of exercising
control over another company.
(xi)
The Fund may not invest more than 2% of the value of its total
assets in warrants (valued at the lower of cost or market), except
that warrants attached to other securities are not subject to these
limitations.
(xii)
The Fund may not invest in commodities or commodity contracts except
that the Fund may invest in stock index futures contracts and
options on stock index futures contracts.
(xiii)
The Fund may not purchase the securities of any issuer if, to the
knowledge of the Fund, those officers and directors of the Fund and
of the Adviser, who each owns more than 0.5% of the outstanding securities
of such issuer, together own more than 5% of such securities.
(xiv)
The primary investment objective of the Fund is to realize capital
growth.
In addition, management of the Fund has adopted a policy that it will not
recommend that the Fund purchase interest in oil, gas or other mineral type
development programs or leases, although the Fund may invest in the securities
of companies which operate, invest in or sponsor such programs.
If a percentage restriction is adhered to at the time of investment, a later
change in percentage resulting from changes in values or assets will not be
considered a violation of the restriction. For purposes of industry
classifications, the Fund follows the industry classifications in The Value Line
Investment Survey.
The policies set forth above may not be changed without the affirmative vote
of the majority of the outstanding voting securities of the Fund which means the
lesser of (1) the holders of more than 50% of the outstanding shares of capital
stock of the Fund or (2) 67% of the shares present if more than 50% of the
shares are present at a meeting in person or by proxy.
B-7
<PAGE>
MANAGEMENT OF THE FUND
The business and affairs of the Fund are managed by the Fund's officers
under the direction of the Board of Directors. Set forth below is certain
information regarding the Directors and Officers of the Fund.
DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION WITH FUND PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- ---------------------------------- --------------------- ---------------------------------------------
<S> <C> <C>
*Jean Bernhard Buttner Chairman of the Board Chairman, President and Chief Executive
Age 64 of Directors and Officer of the Adviser and Value Line Pub-
President lishing, Inc. Chairman and President of the
Value Line Funds and Value Line Securities,
Inc. (the "Distributor"); Chairman and
President of each of the 15 Value Line Funds.
John W. Chandler Director Consultant, Academic Search Consultation
2801 New Mexico Ave., N.W. Service, Inc. Trustee Emeritus and Chairman
Washington, DC 20007 (1993-1994) of Duke University; President
Age 75 Emeritus, Williams College.
*Leo R. Futia Director Retired Chairman and Chief Executive Officer
201 Park Avenue South of The Guardian Life Insurance Company of
New York, NY 10003 America and Director since 1970. Director
Age 79 (Trustee) of The Guardian Insurance & Annuity
Company, Inc., Guardian Investor Services
Corporation and the Guardian-sponsored mutual
funds.
David H. Porter Director President Emeritus, Skidmore College since
813 North Broadway January 1, 1999; President, Skidmore College,
Saratoga Springs, NY 12866 1987-1998; Director of Adirondack Trust
Age 63 Company.
Paul Craig Roberts Director Chairman, Institute for Political Economy;
505 S. Fairfax Street Director, A. Schulman Inc. (plastics).
Alexandria, VA 22320
Age 60
Nancy-Beth Sheerr Director Chairman, Radcliffe College Board of
1409 Beaumont Drive Trustees.
Gladwyne, PA 19035
Age 49
Alan N. Hoffman, CFA Vice President Portfolio Manager with the Adviser.
Age 45
</TABLE>
B-8
<PAGE>
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION WITH FUND PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- ---------------------------------- --------------------- ---------------------------------------------
<S> <C> <C>
Stephen Grant Vice President Portfolio Manager with the Adviser.
Age 44
David T. Henigson Vice President, Director, Vice President and Compliance
Age 41 Secretary and Officer of the Adviser. Director and Vice
Treasurer President of the Distributor. Vice Presi-
dent, Secretary and Treasurer of each of the
15 Value Line Funds.
</TABLE>
- --------------
* "Interested" director as defined in the Investment Company Act of 1940 (the
"1940 Act").
Unless otherwise indicated, the address for each of the above is 220 East 42nd
Street, New York, NY.
Directors of the Fund are also directors/trustees of 11 other Value Line
Funds.
The following table sets forth information regarding compensation of
Directors by the Fund and by the Fund and the eleven other Value Line Funds of
which each of the Directors is a director or trustee for the fiscal year ended
December 31, 1998. Directors who are officers or employees of the Adviser do not
receive any compensation from the Fund or any of the Value Line Funds.
COMPENSATION TABLE
FISCAL YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
TOTAL
PENSION OR ESTIMATED COMPENSATION
RETIREMENT ANNUAL FROM FUND
AGGREGATE BENEFITS BENEFITS AND FUND
COMPENSATION ACCRUED AS PART UPON COMPLEX
NAME OF PERSONS FROM FUND OF FUND EXPENSES RETIREMENT (12 FUNDS)
- ------------------------------------------- --------------- ------------------ ----------- --------------
<S> <C> <C> <C> <C>
Jean B. Buttner $ -0- N/A N/A $ -0-
John W. Chandler 2,968 N/A N/A 35,620
Leo R. Futia 2,718 N/A N/A 32,620
David H. Porter 2,968 N/A N/A 35,620
Paul Craig Roberts 2,718 N/A N/A 32,620
Nancy-Beth Sheer 2,968 N/A N/A 35,620
</TABLE>
As of February 5, 1999, no person owned of record or, to the knowledge of
the Fund, owned beneficially, 5% or more of the outstanding stock of the Fund
other than the Adviser and its affiliates, which owned 867,661 shares of record
or approximately 7.1%. In addition, First Union National Bank as Trustee of the
Value Line, Inc. Profit Sharing and Savings Plan and officers and directors of
the Fund as a group owned 179,325 shares (1.5%).
B-9
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES
The Fund's investment adviser is Value Line, Inc. (the "Adviser"). Arnold
Bernhard & Co., Inc., 220 East 42nd Street, New York, NY 10017, a holding
company, owns approximately 81% of the outstanding shares of the Adviser's
common stock. Jean Bernhard Buttner, Chairman, President and Chief Executive
Officer of the Adviser and Chairman and President of the Fund, owns all of the
voting stock of Arnold Bernhard & Co., Inc.
The investment advisory agreement between the Fund and the Adviser, dated
August 10, 1988, provides for an advisory fee at an annual rate of 0.75% of the
Fund's average daily net assets during the year. During 1996, 1997 and 1998, the
Fund paid or accrued to the Adviser advisory fees of $2,815,000, $3,022,000 and
$3,686,000, respectively.
The investment advisory agreement provides that the Adviser shall render
investment advisory and other services to the Fund including, at its expense,
all administrative services, office space and the services of all officers and
employees of the Fund. The Fund pays all other expenses not assumed by the
Adviser including taxes, interest, brokerage commissions, insurance premiums,
fees and expenses of the custodian and shareholder servicing agents, legal and
accounting fees, fees and expenses in connection with qualification under
federal and state securities laws and costs of shareholder reports and proxy
materials. The Fund has agreed that it will use the words "Value Line" in its
name only so long as Value Line, Inc. serves as investment adviser to the Fund.
The agreement will terminate upon its assignment.
The Adviser acts as investment adviser to 14 other investment companies
constituting The Value Line Family of Funds and furnishes investment counseling
services to private and institutional accounts with combined assets in excess of
$5 billion.
Certain of the Adviser's clients may have investment objectives similar to
the Fund and certain investments may be appropriate for the Fund and for other
clients advised by the Adviser. From time to time, a particular security may be
bought or sold for only one client or in different amounts and at different
times for more than one but less than all such clients. In addition, a
particular security may be bought for one or more clients when one or more other
clients are selling such security, or purchases or sales of the same security
may be made for two or more clients at the same time. In such event, such
transactions, to the extent practicable, will be averaged as to price and
allocated as to amount in proportion to the amount of each order. In some cases,
this procedure could have a detrimental effect on the price or amount of the
securities purchased or sold by the Fund. In other cases, however, it is
believed that the ability of the Fund to participate, to the extent permitted by
law, in volume transactions will produce better results for the Fund.
The Adviser and/or its affiliates, officers, directors and employees may
from time to time own securities which are also held in the portfolio of the
Fund. The Adviser has imposed rules upon itself and such persons requiring
monthly reports of security transactions for their respective accounts and
restricting trading in various types of securities in order to avoid possible
conflicts of interest. The Adviser may from time to time, directly or through
affiliates, enter into agreements to furnish for compensation special research
or financial services to companies, including services in connection with
acquisitions, mergers or financings. In the event that such agreements are in
effect with respect to issuers of securities held in the portfolio of the Fund,
specific reference to such agreements will be made in the "Schedule of
Investments" in shareholder reports of the Fund. As of the date of this
Statement of Additional Information no such agreements exist.
B-10
<PAGE>
The Fund has entered into a distribution agreement with Value Line
Securities, Inc. (the "Distributor") whose address is 220 East 42nd Street, New
York, NY 10017, pursuant to which the Distributor acts as principal underwriter
and distributor of the Fund for the sale and distribution of its shares. The
Distributor is a wholly-owned subsidiary of the Adviser. For its services under
the agreement, the Distributor is not entitled to receive any compensation. The
Distributor also serves as distributor to the other Value Line funds. Jean
Bernhard Buttner is Chairman and President of the Distributor.
The Adviser has retained State Street Bank and Trust Company ("State
Street") to provide certain bookkeeping and accounting services for the Fund.
The Adviser pays State Street $32,400 per annum for each Value Line fund for
which State Street provides these services. State Street, whose address is 225
Franklin Street, Boston, MA 02110, also acts as the Fund's custodian, transfer
agent and dividend-paying agent. As custodian, State Street is responsible for
safeguarding the Fund's cash and securities, handling the receipt and delivery
of securities and collecting interest and dividends on the Fund's investments.
As transfer agent and dividend-paying agent, State Street effects transfers of
Fund shares by the registered owners and transmits payments for dividends and
distributions declared by the Fund. National Financial Data Services, Inc., a
State Street affiliate, whose address is 330 W. Ninth St., Kansas City, MO
64105, provides certain transfer agency functions to the Fund as an agent for
State Street. PricewaterhouseCoopers LLP, whose address is 1177 Avenue of the
Americas, New York, NY 10036, acts as the Fund's independent accountants and
also performs certain tax preparation services.
BROKERAGE ALLOCATION AND OTHER PRACTICES
Orders for the purchase and sale of portfolio securities are placed with
brokers and dealers who, in the judgment of the Adviser, are able to execute
them as expeditiously as possible and at the best obtainable price. Debt
securities are traded principally in the over-the-counter market on a net basis
through dealers acting for their own account and not as brokers. Purchases and
sales of securities which are not listed or traded on a securities exchange will
ordinarily be executed with primary market makers acting as principal, except
when it is determined that better prices and executions may otherwise be
obtained. The Adviser is also authorized to place purchase or sale orders with
brokers or dealers who may charge a commission in excess of that charged by
other brokers or dealers if the amount of the commission charged is reasonable
in relation to the value of the brokerage and research services provided. Such
allocation will be in such amounts and in such proportions as the Adviser may
determine. Orders may also be placed with brokers or dealers who sell shares of
the Fund or other funds for which the Adviser acts as investment adviser, but
this fact, or the volume of such sales, is not a consideration in their
selection. During 1996, 1997 and 1998, the Fund paid brokerage commissions of
$301,615, $273,447 and $446,533, respectively, of which $200,977 (67%), $158,927
(58%) and $274,397 (61%), respectively, was paid to Value Line Securities, Inc.,
the Fund's distributor and a subsidiary of the Adviser. Value Line Securities,
Inc. clears transactions for the Fund through unaffiliated broker-dealers.
The Board of Directors has adopted procedures incorporating the standards of
Rule 17e-1 under the 1940 Act which requires that the commissions paid to Value
Line Securities or any other "affiliated person" be "reasonable and fair"
compared to the commissions paid to other brokers in connection with comparable
transactions. The procedures require that the Adviser furnish reports to the
Directors with respect to the payment of commissions to affiliated brokers and
maintain records with respect thereto. During 1998, $335,108 (75%) of the Fund's
brokerage commissions were paid to brokers or dealers solely for their services
in obtaining the best prices and executions; the
B-11
<PAGE>
balance, or $111,425 (25%), went to brokers or dealers who provided information
or services to the Adviser and, therefore, indirectly to the Fund and to
shareholders of the Value Line funds. The information and services furnished to
the Adviser include the furnishing of research reports and statistical
compilations and computations and the providing of current quotations for
securities. The services and information were furnished to the Adviser at no
cost to it; no such services or information were furnished directly to the Fund,
but certain of these services might have relieved the Fund of expenses which it
would otherwise have had to pay. Such information and services are considered by
the Adviser, and brokerage commissions are allocated in accordance with its
assessment of such information and services, but only in a manner consistent
with the placing of purchase and sale orders with brokers and/or dealers, which,
in the judgment of the Adviser, are able to execute such orders as expeditiously
as possible and at the best obtainable price. The Fund is advised that the
receipt of such information and services has not reduced in any determinable
amount the overall expenses of the Adviser.
PORTFOLIO TURNOVER. The Fund's annual portfolio turnover rate may exceed
100%. A rate of portfolio turnover of 100% would occur if all of the Fund's
portfolio were replaced in a period of one year. To the extent that the Fund
engages in short-term trading in attempting to achieve its objective, it may
increase portfolio turnover and incur higher brokerage commissions and other
expenses than might otherwise be the case. The Fund's portfolio turnover rate
for recent fiscal years is shown under "Financial Highlights" in the Fund's
Prospectus.
CAPITAL STOCK
Each share of the Fund's common stock, $1 par value, has one vote with
fractional shares voting proportionately. Shares have no preemptive rights, are
freely transferable, are entitled to dividends as declared by the Directors and,
if the Fund were liquidated, would receive the net assets of the Fund.
PURCHASE, REDEMPTION AND PRICING OF SHARES
PURCHASES: Shares of the Fund are purchased at net asset value next calculated
after receipt of a purchase order. Minimum orders are $1,000 for an initial
purchase and $100 for each subsequent purchase. The Fund reserves the right to
reduce or waive the minimum purchase requirements in certain cases such as
pursuant to payroll deduction plans, etc., where subsequent and continuing
purchases are contemplated.
AUTOMATIC PURCHASES: The Fund offers a free service to its shareholders,
Valu-Matic, through which monthly investments of $25 or more may be made
automatically into the shareholder's Fund account. The required form to enroll
in this program is available upon request from the Distributor.
RETIREMENT PLANS: Shares of the Fund may be purchased as the investment medium
for various tax-sheltered retirement plans. Upon request, the Distributor will
provide information regarding eligibility and permissible contributions. Because
a retirement plan is designed to provide benefits in future years, it is
important that the investment objectives of the Fund be consistent with the
participant's retirement objectives. Premature withdrawals from a retirement
plan may result in adverse tax consequences. For more complete information,
contact Shareholder Services at 1-800-223-0818.
B-12
<PAGE>
REDEMPTION: The right of redemption may be suspended, or the date of payment
postponed beyond the normal seven-day period, by the Fund under the following
conditions authorized by the 1940 Act: (1) For any period (a) during which the
New York Stock Exchange is closed, other than customary weekend and holiday
closing, or (b) during which trading on the New York Stock Exchange is
restricted; (2) For any period during which an emergency exists as a result of
which (a) disposal by the Fund of securities owned by it is not reasonably
practical, or (b) it is not reasonably practical for the Fund to determine the
fair value of its net assets; (3) For such other periods as the Securities and
Exchange Commission may by order permit for the protection of the Fund's
shareholders.
The value of shares of the Fund on redemption may be more or less than the
shareholder's cost, depending upon the market value of the Fund's assets at the
time. Shareholders should note that if a loss has been realized on the sale of
shares of the Fund, the loss may be disallowed for tax purposes if shares of the
same Fund are purchased within (before or after) 30 days of the sale.
It is possible that conditions may exist in the future which would, in the
opinion of the Board of Directors, make it undesirable for the Fund to pay for
redemptions in cash. In such cases the Board may authorize payment to be made in
portfolio securities or other property of the Fund. However, the Fund has
obligated itself under the 1940 Act to redeem for cash all shares presented for
redemption by any one shareholder up to $250,000 (or 1% of the Fund's net assets
if that is less) in any 90-day period. Securities delivered in payment of
redemptions are valued at the same value assigned to them in computing the net
asset value per share. Shareholders receiving such securities may incur
brokerage costs on their sales.
NET ASSET VALUE: The net asset value of the Fund's shares for purposes of both
purchases and redemptions is determined once daily as of the close of regular
trading on the New York Stock Exchange (generally 4:00 p.m., New York time) on
each day that the New York Stock Exchange is open for trading except on days on
which no orders to purchase, sell or redeem Fund shares have been received. The
New York Stock Exchange is currently closed on New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. The net asset value per share is
determined by dividing the total value of the investments and other assets of
the Fund, less any liabilities, by the total outstanding shares. Securities
listed on a securities exchange 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 prices. Securities for which market quotations are
not readily available or which are not readily marketable and all other assets
of the Fund are valued at fair value as the Board of Directors or persons acting
at their direction may determine in good faith. Short-term instruments with
maturities of 60 days or less at the date of purchase are valued at amortized
cost, which approximates market.
TAXES
The Fund intends to continue to qualify as a regulated investment company
under the Internal Revenue Code of 1986, as amended (the "Code"). The Fund so
qualified during the Fund's last fiscal year. By so qualifying, the Fund is not
subject to Federal income tax on its net investment income or net realized
capital gains which are distributed to shareholders (whether or not reinvested
in additional Fund shares).
B-13
<PAGE>
The Code requires each regulated investment company to pay a nondeductible
4% excise tax to the extent the company does not distribute, during each
calendar year, 98% of its ordinary income, determined on a calendar year basis,
and 98% of its capital gains, determined, in general, on an October 31 year end,
plus certain undistributed amounts from previous years. The Fund anticipates
that it will make sufficient timely distributions to avoid imposition of the
excise tax.
Realized losses incurred after October 31, if so elected by the Fund, are
deemed to arise on the first day of the following fiscal year. In the year ended
December 31, 1998, the Fund did not incur such losses.
Distributions of net investment income and of the excess of net short-term
capital gain over net long-term capital loss are taxable to shareholders as
ordinary income. Distributions of the excess of net long-term capital gain over
net short-term capital loss (net capital gains) are taxable to the shareholders
as long-term capital gain, regardless of the length of time the shares of the
Fund have been held by such shareholders and regardless of whether the
distribution is received in cash or in additional shares of the Fund. Because a
portion of the Fund's income will consist of dividends paid by U.S.
corporations, a portion of the dividends paid by the Fund will be eligible for
the corporate dividends-received deduction. Upon request, the Fund will inform
shareholders of the amounts of qualifying dividends.
A distribution by the Fund will reduce the Fund's net asset value per share.
Such a distribution is taxable to the shareholder as ordinary income or capital
gain as described above even though, from an investment standpoint, it may
constitute a return of capital. In particular, investors should be careful to
consider the tax implications of buying shares just prior to a distribution. The
price of shares purchased at that time (at the net asset value per share) may
include the amount of the forthcoming distribution. Those purchasing just prior
to a distribution will then receive a return of capital upon the distribution
which will nevertheless be taxable to them. All distributions, whether received
in shares or cash, must be reported by each shareholder on his Federal income
tax return. Furthermore, under the Code, dividends declared by the Fund in
October, November or December of any calendar year, and payable to shareholders
of record in such a month, shall be deemed to have been received by the
shareholder on December 31 of such calendar year if such dividend is actually
paid in January of the following calendar year.
A shareholder may realize a capital gain or capital loss on the sale or
redemption of shares of the Fund. The tax consequences of a sale or redemption
depend upon several factors, including the shareholder's tax basis in the shares
sold or redeemed and the length of time the shares have been held. Basis in the
shares may be the actual cost of those shares (net asset value of Fund shares on
purchase or reinvestment date). Under certain circumstances, a loss on the sale
or redemption of shares held for twelve months or less may be treated as a
long-term capital loss to the extent that the Fund has distributed long-term
capital gain dividends on such shares. Moreover, a loss on sale or redemption of
Fund shares will be disallowed if shares of the Fund are purchased within 30
days before or after the shares are sold or redeemed.
For shareholders who fail to furnish to the Fund their social security or
taxpayer identification numbers and certain related information or who fail to
certify that they are not subject to back-up withholding, dividends,
distributions of capital gains and redemption proceeds paid by the Fund will be
subject to a 31% Federal income tax withholding requirement. If the withholding
provisions are
B-14
<PAGE>
applicable, any such dividends or capital-gains distributions to these
shareholders, whether taken in cash or reinvested in additional shares, and any
redemption proceeds will be reduced by the amounts required to be withheld.
The foregoing discussion relates solely to U.S. Federal income tax law as
applicable to U.S. persons (i.e., U.S. citizens or residents, domestic
corporations and partnerships, and certain trusts and estates) and is not
intended to be a complete discussion of all Federal tax consequences.
Shareholders are advised to consult with their tax advisers concerning the
application of Federal, state and local taxes to an investment in the Fund.
PERFORMANCE DATA
From time to time, the Fund may state its total return in advertisements and
investor communications. Total return may be stated for any relevant period as
specified in the advertisement or communication. Any statements of total return
or other performance data on the Fund will be accompanied by information on the
Fund's average annual compounded rate of return for the periods of one year,
five years and ten years, all ended on the last day of a recent calendar
quarter. The Fund may also advertise aggregate total return information for
different periods of time.
The Fund's average annual compounded rate of return is determined by
reference to a hypothetical $1,000 investment that includes capital appreciation
and depreciation for the stated period, according to the following formula:
P(1+T) to the power of n = ERV
Where: P = a hypothetical initial purchase order of
$1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of the
hypothetical $1,000 purchase at the end
of the period.
The Fund's average annual total returns for the one, five and ten year
periods ending December 31, 1998 were 39.63%, 22.78% and 19.67%, respectively.
The Fund's total return may be compared to relevant indices and data from
Lipper Analytical Services, Inc., Morningstar or Standard & Poor's Indices.
From time to time, evaluations of the Fund's performance by independent
sources may also be used in advertisements and in information furnished to
present or prospective investors in the Fund.
Investors should note that the investment results of the Fund will fluctuate
over time, and any presentation of the Fund's current yield, total return or
distribution rate for any period should not be considered as a representation of
what an investment may earn or what an investor's total return, yield or
distribution rate may be in any future period.
FINANCIAL STATEMENTS
The Fund's financial statements for the year ended December 31, 1998,
including the financial highlights for each of the five fiscal years in the
period ended December 31, 1998, appearing in the
B-15
<PAGE>
1998 Annual Report to Shareholders and the report thereon of
PricewaterhouseCoopers LLP, independent accountants, appearing therein, are
incorporated by reference in this Statement of Additional Information.
B-16
<PAGE>
PART C: OTHER INFORMATION
ITEM 23. EXHIBITS.
(a) Articles of Incorporation, as amended.
(b) By-laws.
(c) Instruments Defining Rights of Security Holders. Reference is made to
Article Fifth of the Articles of Incorporation filed as Exhibit (a)
hereto.
(d) Investment Advisory Agreement.
(e) Underwriting Contract, as amended.
(f) not applicable.
(g) Custodian Agreement, as amended.
(h) not applicable.
(i) Legal Opinion.
(j) Consent of independent accountants.
(k) not applicable.
(l) not applicable.
(m) not applicable.
(27) Financial data schedule.
(o) not applicable.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None
ITEM 25. INDEMNIFICATION.
Incorporated by reference to Article Seventh (7)(c) of the Articles of
Incorporation filed as Exhibit (a) hereto.
ITEM 26. BUSINESS OR OTHER CONNECTIONS OF INVESTMENT ADVISER.
Value Line, Inc., Registrant's investment adviser, acts as investment
adviser for a number of individuals, trusts, corporations and institutions, in
addition to the registered investment companies in the Value Line Family of
Funds listed in Item 27.
<TABLE>
<CAPTION>
POSITION WITH
NAME THE ADVISER OTHER EMPLOYMENT
- -------------------------- -------------------------------- ---------------------------------------------------
<S> <C> <C>
Jean Bernhard Buttner Chairman of the Board, President Chairman of the Board and Chief Executive Officer
and Chief Executive Officer of Arnold Bernhard & Co., Inc. and Chairman of the
Value Line Funds and the Distributor
Samuel Eisenstadt Senior Vice President and ---------------------------------------------
Director
David T. Henigson Vice President, Treasurer and Vice President and a Director of Arnold Bernhard &
Director Co., Inc. and the Distributor
</TABLE>
C-1
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH
NAME THE ADVISER OTHER EMPLOYMENT
- -------------------------- -------------------------------- ---------------------------------------------------
<S> <C> <C>
Howard A. Brecher Vice President, Secretary and Vice President, Secretary, Treasurer and a Director
Director of Arnold Bernhard & Co., Inc.
Harold Bernard, Jr. Director Retired Administrative Law Judge
W. Scott Thomas Director Partner, Brobeck, Phleger & Harrison, attorneys,
One Market Plaza, San Francisco, CA 94105
Linda S. Wilson Director President, Radcliffe College, 10 Garden Street,
Cambridge, MA 02138
</TABLE>
ITEM 27. PRINCIPAL UNDERWRITERS.
(a) Value Line Securities, Inc., acts as principal underwriter for the
following Value Line funds, including the Registrant: The Value Line
Fund, Inc.; The Value Line Income Fund, Inc.; The Value Line Special
Situations Fund, Inc.; Value Line Leveraged Growth Investors, Inc.; The
Value Line Cash Fund, Inc.; Value Line U.S. Government Securities Fund,
Inc.; Value Line Centurion Fund, Inc.; The Value Line Tax Exempt Fund,
Inc.; Value Line Convertible Fund, Inc.; Value Line Aggressive Income
Trust; Value Line New York Tax Exempt Trust; Value Line Strategic Asset
Management Trust; Value Line Small-Cap Growth Fund, Inc.; Value Line
Asset Allocation Fund, Inc.; Value Line U.S. Multinational Company Fund,
Inc.
(b)
<TABLE>
<CAPTION>
(2)
POSITION AND (3)
(1) OFFICES POSITION AND
NAME AND PRINCIPAL WITH VALUE LINE OFFICES WITH
BUSINESS ADDRESS SECURITIES, INC. REGISTRANT
- ------------------------- ------------------ --------------------
<S> <C> <C>
Jean Bernhard Buttner Chairman of the Chairman of the
Board Board and President
David T. Henigson Vice President, Vice President,
Secretary, Secretary and
Treasurer and Treasurer
Director
Stephen LaRosa Asst. Vice Asst. Treasurer
President
</TABLE>
The business address of each of the officers and directors is 220 East
42nd Street, NY 10017-5891.
(c) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
Value Line, Inc.
220 East 42nd Street
New York, NY 10017
For records pursuant to:
Rule 31a-1(b)(4),(5),(6),(7),(10),(11)
Rule 31a-1(f)
State Street Bank and Trust Company
c/o NFDS
P.O. Box 419729
Kansas City, MO 64141
For records pursuant to Rule 31a-1(b)(2)(iv)
C-2
<PAGE>
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
For all other records
ITEM 29. MANAGEMENT SERVICES.
None.
ITEM 30. UNDERTAKINGS.
None.
--------------
C-3
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 45 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated February 12, 1999, relating to the financial
statements and financial highlights appearing in the December 31, 1998 Annual
Report to Shareholders of Value Line Leveraged Growth Investors, Inc., which are
also incorporated by reference into the Registration Statement. We also consent
to the references to us under the heading "Financial Highlights" in the
Prospectus and under the heading "Financial Statements" in the Statement of
Additional Information.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
February 22, 1999
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, and State of New York, on
the 22nd day of February, 1999.
VALUE LINE LEVERAGED GROWTH INVESTORS
FUND, INC.
By: /s/ DAVID T. HENIGSON
...................................
DAVID T. HENIGSON, VICE PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Amendment
has been signed below by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
------------------------------------------------ --------------------------------- ---------------------
<S> <C> <C> <C>
*JEAN B. BUTTNER Chairman and Director; President; February 22, 1999
(JEAN B. BUTTNER) Principal Executive Officer
*JOHN W. CHANDLER Director February 22, 1999
(JOHN W. CHANDLER)
*LEO R. FUTIA Director February 22, 1999
(LEO R. FUTIA)
*DAVID H. PORTER Director February 22, 1999
(DAVID H. PORTER)
*PAUL CRAIG ROBERTS Director February 22, 1999
(PAUL CRAIG ROBERTS)
*NANCY-BETH SHEERR Director February 22, 1999
(NANCY-BETH SHEERR)
/s/ DAVID T. HENIGSON Treasurer; Principal Financial February 22, 1999
................................................ and Accounting Officer
(DAVID T. HENIGSON)
</TABLE>
*By /s/ DAVID T. HENIGSON
...................................
(DAVID T. HENIGSON,
ATTORNEY-IN-FACT)
C-5
<PAGE>
Exhibit 99(a)
ARTICLES OF INCORPORATION
of
VALUE LINE LEVERAGED GROWTH INVESTORS, INC.
THIS IS TO CERTIFY:
FIRST: We, the subscribers, Mitchel J. Valicenti, Hoch Reid and Donald
F. French, the post office address of all of whom is 70 Pine Street, New
York, N.Y. 10005, all being of full legal age, do, under and by virtue of the
General Laws of the State of Maryland authorizing the formation of
corporations, associate ourselves with the intention of forming a corporation.
SECOND: The name of the corporation is Value Line Leveraged Growth
Investors, Inc. (hereinafter called the "Corporation").
THIRD: The purpose or purposes for which the Corporation is formed and the
business or objects to be transacted, carried on and promoted by it, are as
follows:
(1) To hold, invest and reinvest its funds, and in connection
therewith to hold part or all of its funds in cash, and to purchase or
otherwise acquire, hold for investment or otherwise, sell, assign,
negotiate, transfer, exchange or otherwise dispose of or turn to account
or realize upon, securities (which term "securities" shall for the
purposes of these Articles of Incorporation, without limitation of the
generality thereof, be deemed to include any stocks, shares, bonds,
debentures, notes, mortgages or other obligations, and any certificates,
<PAGE>
receipts, warrants or other instruments representing rights to receive,
purchase or subscribe for the same, or evidencing or representing any other
rights or interests therein, or in any property or assets) created or
issued by any issuer (which term "issuer" shall for the purposes of these
Articles of Incorporation, without limitation of the generality thereof be
deemed to include any persons, firms, associations, corporations,
syndicates, combinations, organizations, governments, or subdivisions
thereof); and to exercise, as owner or holder of any securities, all
rights, powers and privileges in respect thereof; and to do any and all
acts and things for the preservation, protection, improvement and
enhancement in value of any or all such securities.
(2) To issue and sell shares of its own capital stock in such amounts
and on such terms and conditions, for such purposes and for such amount or
kind of consideration (including without limitation thereto, securities)
now or hereafter permitted by the laws of Maryland and by these Articles of
Incorporation, as its Board of Directors may determine; when shares of the
capital stock of the Corporation are issued for a consideration consisting
of or including securities, the actual value of such securities shall for
the purposes of Section 20 of the Maryland General Corporation Law, be
deemed to be an amount not exceeding the fair market value
-2-
<PAGE>
thereof fixed on a date and in a manner determined by the Board of
Directors of the Corporation, and a description of such consideration
shall, for such purposes, be deemed to be "securities".
(3) To purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue or cancel (all without the vote or consent of the
stockholders of the Corporation) shares of its capital stock, in any
manner and to the extent now or hereafter permitted by the laws of said
State and by these Articles of Incorporation.
(4) To conduct its business in all its branches at one or more offices
in Maryland and elsewhere in any part of the world, without restriction or
limit as to extent.
(5) To carry out all or any of the foregoing objects and purposes as
principal or agent, and alone or with associates or, to the extent now or
hereafter permitted by the laws of Maryland, as a member of, or as the
owner or holder of any stock of, or shares of interest in, any firm,
association, corporation, trust or syndicate; and in connection therewith
to make or enter into such deeds or contracts with any persons, firms,
associations, corporations, syndicates, governments or subdivisions
thereof, and to do such acts and things and to exercise such powers, as a
natural person could lawfully make, enter into, do or exercise.
-3-
<PAGE>
(6) To do any and all such further acts and things and to exercise
any and all such further powers as may be necessary, incidental,
relative, conducive, appropriate or desirable for the accomplishment,
carrying out or attainment of all or any of the foregoing purposes or
objects.
The foregoing objects and purposes shall, except as otherwise expressly
provided, be in no way limited or restricted by reference to, or inference
from, the terms of any other clause of this or any other Article of these
Articles of Incorporation, and shall each be regarded as independent, and
construed as powers as well as objects and purposes, and the enumeration of
specific purposes, objects and powers shall not be construed to limit or
restrict in any manner the meaning of general terms or the general powers of
the Corporation now or hereafter conferred by the laws of the State of
Maryland, nor shall the expression of one thing be deemed to exclude another,
though it be of like nature, not expressed; provided, however, that the
Corporation shall not have power to carry on within the State of Maryland any
business whatsoever the carrying on of which would preclude it from being
classified as an ordinary business corporation under the laws of said State;
nor shall it carry on any business, or exercise any powers in any other
state, territory, district or country except to the extent that the same may
lawfully be carried on or exercised under the laws thereof.
-4-
<PAGE>
FOURTH: The post office address of the place at which the principal
office of the Corporation in the State of Maryland will be located is 10
Light Street, Baltimore, Maryland 21202.
The Corporation's resident agent is The Prentice-Hall Corporation
System, Maryland, whose post office address is 10 Light Street, Baltimore,
Maryland 21202. Said resident agent is a corporation of the State of
Maryland.
FIFTH: (1) The total amount of authorized capital stock of the
Corporation and the number and par value of its shares is $25,000,000
consisting of 25,000,000 shares of the par value of $1.00 each, all of
one class.
(2) At all meetings of stockholders each stockholder of the
Corporation shall be entitled to one vote for each share of stock
standing in his name on the books of the Corporation. Any fractional
share, if any such fractional shares are outstanding, shall carry
proportionately all the rights of a whole share, including the right to
vote and the right to receive dividends. The presence in person or by
proxy of the holders of a majority of the shares of capital stock of the
Corporation outstanding and entitled to vote thereat shall constitute a
quorum at any meeting of the shareholders. If at any meeting of the
shareholders there shall be less than a quorum present, the shareholders
present at such meeting may, without further notice, adjourn the same
from time to time until a quorum shall attend, but no business shall be
transacted at any such adjourned meeting except such as might have been
lawfully transacted had the meeting not been adjourned.
-5-
<PAGE>
(3) The Corporation shall be an open-end investment company and:
(a) Each holder of the capital stock of the Corporation, upon
proper written request (including signature guarantees, if
required by the Board of Directors) to the Corporation accompanied,
when stock certificates representing such shares are outstanding,
by surrender of the appropriate stock certificate or certificates
in proper form for transfer, or any such other form as the Board of
Directors may provide, shall be entitled to require the Corporation
to redeem all or any part of the capital stock standing in the name
of such holder on the books of the Corporation, at the net asset
value of such shares. The method of computing such net asset
value, the time as of which such net asset value shall be computed
and the time within which the Corporation shall make payment
therefor shall be determined as hereinafter provided in Article
SEVENTH of these Articles of Incorporation, Notwithstanding the
foregoing, the Board of Directors of the Corporation may, subject
to rules of the Securities and Exchange Commission or any successor
thereto, suspend the right of the holders of the capital stock of
the Corporation to require the Corporation to redeem such capital
stock:
-6-
<PAGE>
(i) for any period (A) during which the New York Stock
Exchange is closed other than the customary weekend and
holiday closings, or (B) during which trading on the New York
Stock Exchange is restricted;
(ii) for any period during which and emergency, as defined
by rules of the Securities and Exchange commission or any
successor thereto, exists as a result of which (A) disposal by
the Corporation of securities owned by it is not reasonably
practicable, or (B) it is not reasonably practicable for the
Corporation fairly to determine the value of its net assets; or
(iii) for such other periods as the Securities and
Exchange Commission or any successor thereto may by order
permit for the protection of security holders of the
Corporation.
(b) All shares of the capital stock of the Corporation now or
hereafter authorized shall be subject to redemption and redeemable,
in the sense used in the General Laws of the State of Maryland
authorizing the formation of corporations, at the redemption price
for any such shares, determined in the manner set out in these
Articles of Incorporation. In the absence of any specification
-7-
<PAGE>
as to the purposes for which shares of the capital stock of the
Corporation are redeemed or purchased by it, all shares so redeemed
or purchased shall be deemed to be acquired for retirement in the
sense contemplated by the laws of the State of Maryland and the
number of the authorized shares of the capital stock of the
Corporation shall not be reduced by the number of any shares
redeemed or purchased by it.
(4) Notwithstanding any provision of law requiring any action to be
taken or authorized by the affirmative vote of the holders of a majority or
other designated proportion of the shares, or to be otherwise taken or
authorized by a vote of the stockholders, such action shall be effective and
valid if taken or authorized by the affirmative vote of the holders of a
majority of the total number of shares outstanding and entitled to vote
thereon pursuant to the provisions of these Articles of Incorporation.
(5) No holder of stock of the Corporation shall, as such holder,
have any right to purchase or subscribe for any shares of the capital
stock of the Corporation which it may issue or sell (whether out of the
number of shares authorized by these Articles of Incorporation, or out of
any shares of the capital stock of the Corporation acquired by it after
the issue thereof, or otherwise) other than such right, if any, as the
Board of Directors, in its discretion, may determine.
-8-
<PAGE>
(6) All persons who shall acquire stock in the Corporation shall
acquire the same subject to the provisions of these Articles of
Incorporation.
SIXTH: The number of Directors of the Corporation shall be eight and the
names of those who shall act as such until the first annual meeting or until
their successors are duly chosen and qualified are as follows:
Arnold Bernhard James H. Halsey
George W. Anderson Ruxton M. Ridgly
Walter C. Boschen Owen Daly II
Shelby Cullom Davis Edmund F. Mansure
However, the By-Laws of the Corporation may fix the number of Directors
at a number greater or less than that named in these Articles of
Incorporation and may authorize the Board of Directors, by the vote of a
majority of the entire Board of Directors, to increase or decrease the number
of Directors fixed by these Articles of Incorporation or by the By-Laws
within a limit specified in the By-Laws, provided that in no case shall the
number of Directors be less than three, and to fill the vacancies created by
any such increase in the number of Directors. Unless otherwise provided by
the By-Laws of the Corporation, the Directors of the Corporation need not be
stockholders therein.
SEVENTH: The following provisions are hereby adopted for the purpose of
defining and regulating the powers of the Corporation and of the Directors and
stockholders.
(1) The By-Laws of the Corporation may divide the Directors of the
Corporation into classes and prescribe the tenure of office of the
several classes, but no class shall be elected for a period shorter than
that from the time of the election following the
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division into classes until the next annual meeting and thereafter for a
period shorter than the interval between annual meetings or for a longer
period than five years, and the term of office of at least one class
shall expire each year.
(2) The holders of shares of any class of the Corporation shall
have only such rights to inspect the records, documents, accounts and books
of the Corporation as are provided by Maryland law, subject to reasonable
regulations of the Board of Directors, not contrary to Maryland law, as to
whether and to what extent, and at what times and places, and under what
conditions and regulations such rights shall be exercised.
(3) Any officer elected or appointed by the Board of Directors or by
any committee of said Board or by the stockholders or otherwise, may be
removed at any time with or without cause, in such lawful manner as may be
provided in the By-Laws of the Corporation.
(4) If the By-Laws so provide, the Board of Directors of the
Corporation shall have power to hold their meetings, to have an office or
offices and, subject to the provisions of the laws of Maryland, to keep
the books of the Corporation outside of said State at such places as may
from time to time be designated by them.
(5) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the Board of Directors may exercise
all such powers and do all such acts and things as may be exercised or done
by the Corporation, subject, nevertheless, to the express provisions of
the laws of Maryland, of these Articles of Incorporation and of the
By-Laws of the Corporation.
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<PAGE>
(6) Shares of stock in other corporations shall be voted by the
President or a Vice-President, or such officer or officers of the
Corporation or such other person or persons as the Board of Directors
shall designate for the purpose, or by a proxy or proxies thereunto duly
authorized by the Board of Directors, except as otherwise ordered by vote
of the holders of a majority of the shares of the capital stock of the
Corporation outstanding and entitled to vote in respect thereto.
(7) (a) The Corporation shall not purchase or sell any securities
(other than capital stock of the Corporation) from or to any of the
following acting as principals, and shall not make any loan to, (i)
any officer or director of the Corporation, (ii) any partnership of
which any officer or director of the Corporation is a member, or
(iii) any corporation, person, or organization acting as an
investment adviser of the Corporation, (iv) any officer, director,
partner or trustee of any corporation, person, or organization so
acting; provided, however, that nothing herein contained shall
prevent any transaction which is the subject of an order of
exemption under the Investment Company Act of 1940 (which statute,
as from time to time amended is hereinafter referred to as the
"1940 Act").
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<PAGE>
(b) Subject only to the provisions of subdivision (a) of this
paragraph (7) and the provisions of the 1940 Act, any director,
officer or employee individually, or any partnership of which any
director, officer or employee may be a member, or any corporation
or association of which any director, officer or employee may be
an officer, director, trustee, employee or stockholder, may be a
party to, or may be pecuniarily or otherwise interested in, any
contract or transaction of the Corporation, and in the absence of
fraud no contract or other transaction shall be thereby affected
or invalidated; provided that in case a director, or a partnership,
corporation or association of which a director is a member, officer,
director, trustee, employee or stockholder is so interested, such
fact shall be disclosed or shall have been known to the Board of
Directors or a majority thereof; and any director of the Corporation
who is so interested, or who is also a director, officer, trustee,
employee or stockholder of such other corporation or association or a
member of such partnership which is so interested, may be counted in
determining the existence of a quorum at any meeting of the Board
of Directors of the Corporation which shall authorize any such
contract or transaction, and may vote thereat to authorize any such
contract or transaction, with like force
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and effect as if he were not such director, officer, trustee, employee
or stockholder of such other corporation or association or not so
interested or a member of a partnership so interested.
(c) Each director and officer (and his heirs, executors and
administrators) shall be indemnified by the Corporation against
reasonable costs and expenses incurred by him in connection with any
action, suit or proceeding to which he is made a party by reason of his
being or having been a director or officer of the Corporation, except
in relation to any action, suit or proceeding in which he has been
adjudged liable because of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his office. In the absence of an adjudication which expressly
absolves the director or officer of liability to the Corporation or its
stockholders for willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office,
or in the event of a settlement, each director and officer (and his
heirs, executors and administrators) shall be indemnified by the
Corporation against payments made, including reasonable costs and
expenses, provided
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that such indemnity shall be conditioned upon the prior
determination by a resolution of two-thirds of those
members of the Board of Directors of the Corporation who are not
involved in the action, suit or proceeding that the director or
officer has no liability by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office, and provided further that if
a majority of the members of the Board of Directors of the
Corporation are involved in the action, suit or proceeding, such
determination shall have been made by a written opinion of
independent counsel. The indemnity provided herein shall, in the
event of the settlement of any such action, suit or proceeding, not
exceed the costs and expenses (including attorneys' fees) which
would reasonably have been incurred if such action, suit or
proceeding had been litigated to a final conclusion. Such
determination by resolution of the Board of Directors or by
independent counsel and the payment of amounts by the Corporation
on the basis thereof shall not prevent a stockholder from
challenging such indemnification by appropriate legal proceeding on
the grounds that the officer or director was liable because of
willful misfeasance, bad faith, gross
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<PAGE>
negligence or reckless disregard of the duties involved in the conduct
of his office. The foregoing rights and indemnifications shall be
exclusive of any other right to which the officers and directors may be
entitled according to law.
(d) Specifically, but without limitation of the foregoing, the
Corporation may enter into a management or investment advisory
contract and other contracts with, and may otherwise do business
with any manager or investment adviser for the Corporation and/or
principal underwriter of the shares of capital stock of the
Corporation or any subsidiary or affiliate of any such manager or
investment advisor and/or principal underwriter and may permit any
such firm or corporation to enter into any contracts or other
arrangements with any other firm or corporation relating to the
Corporation notwithstanding that the Board of Directors of the
Corporation may be composed in part of partners, directors, officers
or employees of any such firm or corporation, and officers of the
Corporation may have been or may be or become partners, directors,
officers or employees of any such firm or corporation, and in the
absence of fraud the Corporation and any such firm or corporation
may deal freely with each other, and no such contract nor any other
contract or transaction between the Corporation and any such firm or
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<PAGE>
corporation shall be invalidated or in any wise affected thereby, nor
shall any director or officer of the Corporation be liable to the
Corporation or to any stockholder or creditor thereof or to any
other person for any loss incurred by it or him solely because of
the existence of any such contract or transaction; provided that
nothing herein shall protect any director or officer of the
Corporation against any liability to the Corporation or to its
security holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
(8) The computation of net asset value, as in these Articles of
Incorporation referred to, shall be computed as provided in the 1940 Act
or any rule, regulation or order thereunder, and, except as so provided
shall be computed in accordance with the following rules:
(a) The net asset value of each share of capital stock of the
Corporation tendered to the Corporation for redemption shall be
determined as of the close of business on the New York Stock
Exchange next succeeding the tender of such capital stock, or in
accordance with any provision of the 1940 Act or any rule or
regulation thereunder, or at such other time as may be determined
by the Board of Directors in accordance with any such provision,
rule or regulation.
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<PAGE>
(b) The net asset value of each share of capital stock of the
Corporation for the purpose of the issue of such capital stock
shall be determined as of the close of business on the New York
Stock Exchange next succeeding the receipt of an order to purchase
such stock, or in accordance with any provision of the 1940 Act,
any rule or regulation thereunder, or at such other time as may be
determined by the Board of Directors in accordance with any such
provision, rule or regulation.
(c) The net asset value of each share of capital stock of the
Corporation, as of the close of business on the New York Stock
Exchange on any day, shall be the quotient obtained by dividing the
value, as at such close, of the net assets of the Corporation
(i.e., the value of the assets of the Corporation less its
liabilities exclusive of the par value of its capital stock and
surplus) by the total number of shares of capital stock outstanding
at such close. The assets and liabilities of the Corporation shall
be determined in accordance with generally accepted accounting
principles; provided, however, that in determining the liabilities
of the Corporation there shall be included such reserves for taxes
or contingent liabilities as may be authorized or approved by the
Board of Directors, and provided further that in determining the
value of the assets of the Corporation for the purpose of obtaining
the net
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<PAGE>
asset value, each security listed on the New York Stock Exchange
shall be valued on the basis of the closing sale thereof on the New
York Stock Exchange on the business day as of which such value is
being determined; if there be no sale on such day, then the security
shall be valued on the basis of the mean between closing bid and
asked prices on such day; if no bid and asked prices are quoted for
such day, then the security shall be valued by such method as the
Board of Directors shall deem in good faith to reflect its fair
market value; securities not listed on the New York Stock Exchange
shall be valued in like manner on the basis of quotations on any
other stock exchange which the Board of Directors may from time to
time approve for that purpose; readily marketable securities traded
in the over-the-counter market shall be valued at the mean between
their bid and asked prices, or, if the Board of Directors shall so
determine, at their bid prices; and all other assets of the
Corporation and all securities as to which the Corporation might be
considered an "underwriter" (as that term is used in the Securities
Act of 1933), whether or not such securities are listed or traded
in the over-the-counter market, shall be valued by such method as
they shall deem in good faith to reflect their fair market value.
In connection with the accrual of any fee or refund
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<PAGE>
payable to or by an investment adviser of the Corporation, the amount
of which accrual is not definitely determinable as of any time at
which the net asset value of each share of the capital stock of the
Corporation is being determined due to the contingent nature of such
fee or refund, the Board of Directors is authorized to establish from
time to time formulae for such accrual, on the basis of the
contingencies in question to the date of such determination, or on
such other basis as the Board of Directors may establish.
(A) Capital stock to be issued shall be deemed to be
outstanding as of the time of the determination of the net asset
value per share applicable to such issuance and the net price
thereof shall be deemed to be an asset of the Corporation; and
(B) Capital stock to be redeemed by the Corporation shall be
deemed to be outstanding until the time of the determination of
the net asset value applicable to such redemption and thereupon
and until paid the redemption price thereof shall be deemed to be
a liability of the Corporation.
(C) Capital stock voluntarily purchased or contracted to be
purchased by the Corporation pursuant to the provisions of
paragraph 8(e)
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<PAGE>
of this Article SEVENTH shall be deemed to be outstanding until
whichever is the later of (i) the time of the making of such
purchase or contract to purchase, and (ii) the time as of which
the purchase price is determined, and thereupon and until paid,
the purchase price thereof shall be deemed to be a liability of
the Corporation.
(d) The net asset value of each share of the capital stock of
the Corporation, as of any time other than the close of business on
the New York Stock Exchange on any day, may be determined by
applying to the net asset value as of the close of business on that
Exchange on the preceding business day, computed as provided in
paragraph 8(c) of this Article SEVENTH, such adjustments as are
authorized by or pursuant to the direction of the Board of
Directors and designed reasonably to reflect any material changes
in the market value of securities and other assets held and any
other material changes in the assets or liabilities of the
Corporation and in the number of its outstanding shares which shall
have taken place since the close of business on such preceding
business day.
(e) In addition to the foregoing, the Board of Directors is
empowered, in its absolute discretion, to establish other bases or
times, or both, for determining the net asset value of each share of
capital stock of the Corporation in accordance with
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<PAGE>
any provision of the 1940 Act or any rule or regulation thereunder
and to authorize the voluntary purchase by the Corporation, either
directly or through an agent, of shares of capital stock of the
Corporation upon such terms and conditions and for such
consideration as the Board of Directors shall deem advisable in
accordance with any such provision, rule or regulation.
(f) Payment of the net asset value of capital stock of the
Corporation properly surrendered to it for redemption shall be made
by the Corporation within seven days after tender of such stock to
the Corporation for such purpose plus any period of time during
which the right of the holders of the capital stock of the
Corporation to require the Corporation to redeem such capital stock
has been suspended. Any such payment may be made in portfolio
securities of the Corporation and/or in cash, as the Board of
Directors shall deem advisable, and no shareholder shall have a
right, other than as determined by the Board of Directors, to have
his shares redeemed in kind. However, the Corporation shall be
obligated to redeem shares of its capital stock solely in cash
limited in amount with respect to each shareholder during any
ninety-day period to the lesser of (i) $250,000 or (ii) 1% of the
net asset value of the Corporation at the beginning of such period.
For the purpose of determining the amount of any payment to be made
in portfolio
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<PAGE>
securities, such securities shall be valued provided in paragraph
8(c) of this Article SEVENTH.
EIGHTH: From time to time any of the provisions of these Articles of
Incorporation may be amended, altered or repealed (including any amendment
which changes the terms of any of the outstanding stock classification,
reclassification or otherwise), upon the vote of the holders of a majority of
the shares of capital stock of the Corporation at the time outstanding and
entitled to vote, and other provisions which might under the statutes of the
State of Maryland at the time in force be lawfully contained in articles of
incorporation, may be added or inserted upon such a vote and all rights at
any time conferred upon the stockholders of the Corporation by these Articles
of Incorporation are granted subject to the provisions of this Article EIGHTH.
The Term "these Articles of Incorporation" as used herein and in the
By-Laws of the Corporation shall be deemed to mean these Articles of
Incorporation as from time to time amended and restated.
IN WITNESS WHEREOF, we have signed these Articles of Incorporation on
this 4th day of January, 1972.
Hoch Reid
----------------------------
Mitchel J. Valicenti
----------------------------
Donald F. French
----------------------------
WITNESS:
LINDA P. SANDERS
- --------------------------
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<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
This is to certify that on this 4th day of January, 1972, before me, the
subscriber, a Notary Public of the State of New York, personally appeared
Mitchel J. Valicenti, Hoch Reid, and Donald F. French and severally
acknowledged the foregoing articles of incorporation to be their act.
Witness my hand and Notarial Seal the day and year last above written.
Victoria Panos
----------------------------
Notary Public
[SEAL] VICTORIA PANOS
Notary Public, State of New York
No. 41-8268410 Qual. in Queens Co.
Cert filed in New York County
Commission Expires March 30, 1972
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<PAGE>
VALUE LINE LEVERAGED GROWTH INVESTORS, INC.
ARTICLES OF AMENDMENT
OF THE
ARTICLES OF INCORPORATION
Value Line Leveraged Growth Investors, Inc., a Maryland Corporation
having its principal office in Baltimore City, Maryland (hereinafter called
the "Corporation"), hereby certifies to the State Department of Assessments
and Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by striking out
Article FIFTH, Paragraph (1) and inserting in lieu thereof the following:
FIFTH: (1) The total amount of authorized capital stock of the
Corporation and the number and par value of its shares is
$50,000,000 consisting of 50,000,000 shares of the par value of
$1.00 each, all of one class.
SECOND: The board of directors of the Corporation, at a meeting duly
convened and held on January 24, 1984, adopted a resolution in which was set
forth the foregoing amendment to the charter, declaring that the said
amendment of the charter was advisable and directing that it be submitted for
action thereon at the annual meeting of the stockholders of the Corporation
to be held on March 27, 1984.
Third: Notice setting forth the said amendment of charter and stating
that a purpose of the meeting of the stockholders would be to take action
thereon, was given as required by law, to all stockholders of the Corporation
entitled to vote thereon. The amendment of the charter of the Corporation as
hereinabove set forth was approved by the stockholders of the Corporation at
said meeting by the affirmative vote of a majority of all the votes entitled
to be cast thereon.
FOURTH: (a) The total number of shares of all classes of stock of the
Corporation heretofore authorized, and the number and par value of the shares
of each class are as follows: 25,000,000 shares of the par value of $1.00
per share.
<PAGE>
(b) The total number of shares of all classes of stock of the
Corporation as increased, and the number and par value of the shares of each
class, are as follows: 50,000,000 shares of the par value of $1.00 per share.
IN WITNESS WHEREOF, Value Line Leveraged Growth Investors, Inc. has
caused these presents to be signed in its name and on its behalf by its
President and its corporate seal to be hereunto affixed and attested by its
Secretary on March 30, 1984.
VALUE LINE LEVERAGED GROWTH
INVESTORS, INC.
/s/ Mark K. Tavel
------------------------------
By: Mark K. Tavel, President
Attest:
/s/ Peter D. Lowenstein
- ----------------------------
Peter D. Lowenstein, Secretary
[Seal]
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<PAGE>
STATE OF NEW YORK,
ss.:
COUNTY OF NEW YORK
I HEREBY CERTIFY that on March 30, 1984, before me the subscriber, a
notary public of the State of New York in and for the County of New York,
personally appeared Mark K. Tavel, President of Value line Leveraged Growth
Investors, Inc., a Maryland corporation, and in the name and on behalf of
said Corporation, acknowledged the foregoing Articles of Amendment to be the
corporate act of said Corporation and further made oath in due form of law
that the matters and facts set forth in said Articles of Amendment with
respect to the approval thereof are true to the best of his knowledge,
information and belief.
WITNESS my hand and notarial seal, the day and year above last written.
/s/[Illegible]
--------------------------
Notary Public
[Illegible]
Notary Public, State of New York
No. [Illegible]
Qualified in Bronx County
Certificate filed in New York County
Commission Expires March 30, [Illegible]
<PAGE>
Exhibit 99(b)
THE VALUE LINE LEVERAGED GROWTH FUND, INC.
BY-LAWS
ARTICLE I
STOCKHOLDERS
Section 1. PLACE OF MEETING. All meetings of the stockholders shall be
held at the principal office of the Corporation in the State of Maryland or
at such other place within or without the State of Maryland as may from time
to time designated by the Board of Directors and stated in the notice of
meeting.
Section 2. ANNUAL MEETINGS. The annual meeting of the stockholders of
the Corporation shall be held at such hour as may be determined by the Board
of Directors and as shall be designated in the notice of meeting on such date
within 31 days after the 14th day of March in each year as may be fixed by the
Board of Directors for the purpose of electing directors for the ensuing year
and for the transaction of such other business as may properly be brought
before the meeting.
Section 3. SPECIAL OR EXTRAORDINARY MEETINGS. Special or extraordinary
meetings of the stockholders for any purpose or purposes may be called by the
Chairman of the Board of Directors, if any, or by the President or by a
majority of the Board of Directors who are not interested persons, as that
term is defined in the Investment Company Act of 1940 (the "1940 Act") of the
Corporation or of the Corporation's investment adviser,
<PAGE>
and shall be called by the Secretary upon receipt of the request in writing
signed by stockholders holding not less than one quarter in amount of the
entire capital stock issued and outstanding and entitled to vote thereat.
Such request shall state the purpose or purposes of the proposed meeting.
Section 4. NOTICE OF MEETINGS OF STOCKHOLDERS. Not less than ten days'
and not more than ninety days' written or printed notice of every meeting of
stockholders, stating the time and place thereof (and the general nature of
the business proposed to be transacted at any special or extraordinary
meeting), shall be given to each stockholder entitled to vote thereat by
leaving the same with him or at his residence or usual place of business or
by mailing it, postage prepaid, and addressed to him at his address as it
appears upon the books of the Corporation.
No notice of the time, place or purpose of any meeting of stockholders
need be given to any stockholder who attends in person or by proxy or to any
stockholder who, in writing executed and filed with the records of the
meeting, either before or after the holding thereof, waives such notice.
Section 5. CLOSING OF TRANSFER BOOKS: RECORD DATES. The Board of
Directors may fix the time, not exceeding twenty days preceding the date of
any meeting of stockholders, and dividend payment date or any date for the
allotment of rights, during which the books of the Corporation shall be
closed against transfers of stock. If such books are closed for the
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purpose of determining stockholders entitled to notice of or to vote at a
meeting of stockholders, such books shall be closed for at least ten days
immediately preceding such meeting. In lieu of providing for the closing of
the books against transfers of stock as aforesaid, the Board of Directors may
fix, in advance, a date, not exceeding sixty days and not less than ten days
preceding the date of any meeting of stockholders, and not exceeding sixty
days preceding any dividend payment date or any date for the allotment of
rights, as a record date for the determination of the stockholders entitled
to notice of and to vote at such meeting, or entitled to receive such
dividends or rights, as the case may be; and only stockholders of record on
such date shall be entitled to notice of and to vote at such meeting or to
receive such dividends or rights, as the case may be.
Section 6. QUORUM, ADJOURNMENT OF MEETINGS. The presence in person or by
proxy of the holders of record of a majority of the shares of the capital
stock of the Corporation issued and outstanding and entitled to vote thereat,
shall constitute a quorum at all meetings of the stockholders. If at any
meeting of the stockholders there shall be less than a quorum present, the
stockholders present at such meeting may, without further notice, adjourn the
same from time to time until a quorum shall attend, but no business shall be
transacted at any such adjourned meeting except such as might have been
lawfully transacted had the meeting not been adjourned.
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Section 7. VOTING AND INSPECTORS. At all meetings of stockholders every
stockholder of record entitled to vote thereat shall be entitled to one vote
for each share of stock standing in his name on the books of the Corporation
(and such stockholders of record holding fractional shares, if any, shall
have proportionate voting rights as provided in the Articles of
Incorporation) on the date for the determination of stockholders entitled to
vote at such meeting either in person or by proxy appointed by instrument in
writing subscribed by such stockholder or his duly authorized attorney. No
proxy which is dated more than three months before the meeting at which it is
offered shall be accepted, unless such proxy shall, on its face, name a
longer period for which it is to remain in force.
All elections shall be had and all questions decided by a majority of the
votes cast at a duly constituted meeting, except as otherwise provided in the
Articles of Incorporation or in these By-Laws or by specific statutory
provision superseding the restrictions and limitations contained in the
Articles of Incorporation or in these By-Laws.
At any election of Directors, the Board of Directors prior thereto may,
or, if they have not so acted, the Chairman of the meeting may, and upon the
request of the holders of ten per cent (10%) of the stock entitled to vote at
such election shall, appoint two inspectors of election who shall first
subscribe an oath or affirmation to execute faithfully the duties of
inspectors at such election with strict impartiality and according to the
best of their ability, and shall after the election make a certificate of the
result of the vote taken.
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No candidate for the office of Director shall be appointed such Inspector.
The Chairman of the meeting may cause a vote by ballot to be taken upon
any election or matter, and such vote shall be taken upon the request of the
holders of ten per cent (10%) of the stock entitled to vote on such election
or matter.
Section 8. CONDUCT OF STOCKHOLDERS' MEETING. The meetings of the
stockholders shall be presided over by the Chairman of the Board of
Directors, if any, or if he shall not be present by the President or if he
shall not be present, by a Vice-President, or if neither Chairman of the
Board of Directors, the President nor any Vice-President is present, by a
chairman to be elected at the meeting. The Secretary of the Corporation, if
present, shall act as Secretary of such meetings, or if he is not present, an
Assistant Secretary shall so act; if neither the Secretary nor an Assistant
Secretary is present, then the meeting shall elect its secretary.
Section 9. CONCERNING VALIDITY OF PROXIES, BALLOTS, ETC. At every
meeting of the stockholders, all proxies shall be received and taken in charge
of and all ballots shall be received and canvassed by the secretary of the
meeting, who shall decide all questions touching the qualification of voters,
the validity of the proxies, and the acceptance or rejection of votes,
unless inspectors of election shall have been appointed as provided in
Section 7, in which event such inspectors of election shall decide all such
questions.
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<PAGE>
ARTICLE II
BOARD OF DIRECTORS
Section 1. NUMBER AND TENURE OF OFFICE. The business and property of
the Corporation shall be conducted and managed by a Board of Directors
consisting of eight Directors, which number may be increased or decreased as
provided in Section 2 of this Article. Each director shall hold office until
the annual meeting of stockholders of the Corporation next succeeding his
election or until his successor is duly elected and qualifies. Directors
need not be stockholders.
Section 2. INCREASE OR DECREASE IN NUMBER OF DIRECTORS. The Board of
Directors, by the vote of a majority of the entire board, may increase the
number of Directors to a number not exceeding fifteen, and may elect
Directors to fill the vacancies created by any such increase in the number of
Directors until the next annual meeting or until their successors are duly
elected and qualify; the Board of Directors, by the vote of a majority of the
entire Board, may likewise decrease the number of Directors to a number not
less than three. Vacancies occurring other than by reason of any such
increase shall be filled as provided by the Maryland General Corporation Law.
Section 3. PLACE OF MEETING. The Directors may hold their meetings,
have one or more offices, and keep the books of the Corporation outside the
State of Maryland, at any office or offices of the Corporation or at any
other place as they may
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<PAGE>
from time to time by resolution determine, or, in the case of meetings, as
they may from time to time by resolution determine or as shall be specified
or fixed in the respective notices or waivers of notice thereof.
Section 4. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held at such time and on such notice, if any, as the Directors may
from time to time determine.
The annual meeting of the Board of Directors shall be held as soon as
practicable after the annual meeting of the stockholders for the election of
Directors.
Section 5. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be held from time to time upon call of the Chairman of the Board of
Directors, if any, the President or two or more of the Directors, by oral or
telegraphic or written notice duly served on or sent or mailed to each
Director not less than one day before such meeting. No notice need be given
to any Director who attends in person or to any Director who, in writing
executed and filed with the records of the meeting either before or after the
holding thereof, waives such notice. Such notice or waiver of notice need not
state the purpose or purposes of such meeting.
Section 6. QUORUM. One third of the Directors then in office shall
constitute a quorum for the transaction of business, provided that a quorum
shall in no case be less than two Directors. If at any meeting of the Board
there shall be less than a quorum present, a majority of those present may
adjourn the meeting from time to time until a quorum shall have been
obtained. The act of the majority of the Directors present at any meeting at
which there is a quorum shall be the act of the Directors, except as may be
otherwise specifically provided by statute, by the Articles of Incorporation
or by these By-Laws.
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<PAGE>
Section 7. EXECUTIVE COMMITTEE. The Board of Directors may, by the
affirmative vote of a majority of the entire Board, elect from the Directors
an Executive Committee to consist of such number of Directors as the Board
may from time to time determine. The Board of Directors by such affirmative
vote shall have power at any time to change the members of such Committee and
may fill vacancies in the Committee by election from the Directors. When the
Board of Directors is not in session, the Executive Committee shall have and
may exercise any or all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation (including the
power to authorize the seal of the Corporation to be affixed to all papers
which may require it) except as provided by law and except the power to
increase or decrease the size of, or fill vacancies on the Board. The
Executive Committee may fix its own rules of procedure, and may meet, when
and as provided by such rules or by resolution of the Board of Directors, but
in every case the presence of a majority shall be necessary to constitute a
quorum. In the absence of any member of the Executive Committee the members
thereof present at any meeting, whether or not they constitute a quorum, may
appoint a member of the Board of Directors to act in the place of such absent
member.
Section 8. OTHER COMMITTEES. The Board of Directors, by the affirmative
vote of a majority of the entire Board, may appoint other committees which
shall in each case consist of such number of members (not less than two) and
shall have and
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<PAGE>
may exercise such powers as the Board may determine in the resolution
appointing them. A majority of all members of any such committee may
determine its action, and fix the time and place of its meetings, unless the
Board of Directors shall otherwise provide. The Board of Directors shall have
power at any time to change the members and powers of any such committee, to
fill vacancies, and to discharge any such committee.
Section 9. INFORMAL ACTION BY DIRECTORS AND COMMITTEES. Any action
required or permitted to be taken at any meeting of the Board of Directors or
any committee thereof may be taken without a meeting, if a written consent to
such action is signed by all members of the Board, or of such committee, as
the case may be.
Section 10. COMPENSATION OF DIRECTORS. No Director shall receive any
stated salary or fees from the Corporation for his services as such Director
if such Director is, otherwise than by reason of being such Director,
affiliated (as such term is defined in the 1940 Act) with the Corporation or
with any investment adviser of the Corporation. Except as provided in the
preceding sentence, Directors shall be entitled to receive such compensation
from the Corporation for their services as may from time to time be voted by
the Board of Directors.
ARTICLE III
OFFICERS
Section 1. EXECUTIVE OFFICERS. The executive officers of the Corporation
shall be chosen by the Board of Directors as soon as may be practicable after
the annual meeting of the stockholders. These may include a Chairman of the
Board
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<PAGE>
of Directors, and shall include a President, one or more Vice Presidents (the
number thereof to be determined by the Board of Directors), a Secretary and a
Treasurer. The Chairman of the Board of Directors, if any, and the President
shall be selected from among the Directors. The Board of Directors or the
Executive Committee may also in its discretion appoint Assistant Secretaries,
Assistant Treasurers, and other officers, agents and employees, who shall
have such authority and perform such duties as the Board or the Executive
Committee may determine. The Board of Directors may fill any vacancy which
may occur in any office. Any two officers, except those of President and Vice
President, may be held by the same person, but no officer shall execute,
acknowledge or verify any instrument in more than one capacity, if such
instrument is required by law or these By-Laws to be executed, acknowledged
or verified by two or more officers.
Section 2. TERM OF OFFICE. The term of office of all officers shall be
one year and until their respective successors are chosen and qualify,
subject, however, to any provision for removal contained in the Articles of
Incorporation. Any officer may be removed from office at any time with or
without cause by the vote of a majority of the entire Board of Directors.
Section 3. POWERS AND DUTIES. The officers of the Corporation shall
have such powers and duties as generally pertain to their respective offices,
as well as such powers and duties as may from time to time be conferred b the
Board of Directors or the Executive Committee.
ARTICLE IV
CAPITAL STOCK
Section 1. CERTIFICATES OF SHARES. Each stockholder of the Corporation
shall be entitled to a certificate of certificates for the full shares of
stock of the Corporation owned
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<PAGE>
by them in such form as the Board of Directors may from time to time
prescribe.
Section 2. TRANSFER OF SHARES. Shares of the Corporation shall be
transferable on the books of the Corporation by the holder thereof in person
or by his duly authorized attorney or legal representative, upon surrender
and cancellation of certificates, if any, for the same number of shares, duly
endorsed or accompanied by proper instruments of assignment and transfer,
with such proof of the authenticity of the signature as the Corporation or
its agents may reasonably require, in the case of shares not represented by
certificates, the same or similar requirements may be imposed by the Board of
Directors.
Section 3. STOCK LEDGERS. The stock ledgers of the Corporation,
containing the name and address of the stockholders and the number of shares
held by then respectively, shall be kept at the principal offices of the
Corporation or, if the Corporation employs a transfer agent, at the offices of
the transfer agent of the Corporation.
Section 4. LOST, STOLEN OR DESTROYED CERTIFICATES. The Board of
Directors may determine the conditions upon which a new certificate of stock
of the Corporation of any class may be issued in place of a certificate which
is alleged to have been lost, stolen or destroyed; and may, in their
discretion, require the owner of such certificate or his legal representative
to give bond, with sufficient surety to the Corporation and the transfer
agent, if any, to indemnify it and such transfer agent against any and all
loss or claims which may arise by reason of the issue of a new certificate in
the place of the one so lost, stolen or destroyed.
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<PAGE>
ARTICLE V
CORPORATE SEAL
The Board of Directors shall provide a suitable corporate seal, in such
form and bearing such inscriptions as it may determine.
ARTICLE VI
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board of
Directors.
ARTICLE VII
MISCELLANEOUS
Section 1. INDEMNIFICATION. Each director and officer (and his heirs,
executors and administrators) shall be indemnified by the Corporation to the
extent set forth in the Articles of Incorporation.
Section 2. ADVISORY CONTRACT. Any advisory or management contract to
which the Corporation shall be a party shall not be amended, without the
affirmative vote or the written consent of the holders of a majority (as
defined in the Investment Company Act of 1940) of all the shares of the
capital stock of the Corporation at the time outstanding and entitled to vote.
Section 3. CUSTODIANSHIP. All cash and securities owned by the
Corporation shall be held by a bank or trust company of good standing, having
a capital, surplus and undivided profits aggregating not less than two
million ($2,000,000), provided such a bank or trust company can be found
ready and willing to act. Upon the resignation or inability to serve of any
such bank or trust company the Corporation shall (1) use its best
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efforts to obtain a qualified successor, (ii) require the cash and securities
of the Corporation held by such bank or trust company to be delivered
directly to the successor, and (iii) in the event that no qualified successor
can be found, submit to the holders of the shares of the capital stock of the
Corporation at the time outstanding and entitled to vote, before permitting
delivery of such cash and securities to anyone other than a qualified
successor, the question whether the Corporation shall be dissolved and
liquidated or shall function without a qualified bank or trust company to
hold such cash and securities. Upon such resignation or inability to serve,
such bank or trust company may deliver any assets of the Corporation held by
it to a qualified bank or trust company selected by it, such assets to be
held subject to the terms of the agreement which governed such retiring bank
or trust company, pending action by the Corporation as set forth in this
Section 3. Nothing herein contained, however, shall prevent the termination
of any agreement between the Corporation and any such bank or trust company
by the Corporation at the discretion of the Board of Directors, and any such
agreement shall be terminated upon the affirmative vote of the holders of a
majority of all the shares of the capital stock of the Corporation at the
time outstanding and entitled to vote.
ARTICLE VIII
AMENDMENT OF BY-LAWS
Except as set forth below, the By-Laws of the Corporation may be
altered, amended, added to or repealed by the stockholders or by majority
vote of the entire Board of Directors; but any such alteration, amendment,
addition or repeal of the By-Laws by action of the Board of Directors may be
altered or repealed by the stockholders. Sections 2 and 3 of Article VII may
be altered, amended or repealed only by the stockholders.
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<PAGE>
Exhibit 99(d)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 10 day of Aug. 1988, between VALUE LINE
LEVERAGED GROWTH INVESTORS, INC., a Maryland corporation (hereinafter called
"the Fund"), and VALUELINE, INC., a New York corporation (hereinafter called
"the Company");
WITNESSETH:
WHEREAS, the Fund desires to have the Company Act as its investment
adviser and provide it with investment research, advice, supervision and
management; and
WHEREAS, the Company is willing to undertake the same upon the terms and
conditions set forth.
NOW, THEREFORE, it is hereby agreed by and between the parties hereto as
follows:
1. DUTIES. The Company shall provide the Fund with such investment
research, data, advice and supervision as the latter may from time to time
consider necessary for proper supervision of its funds. The company shall act
as manager and investment adviser of the Fund and, as such, shall furnish
continuously an investment program and shall determine from time to time what
securities shall be purchased or sold by the Fund, and what portion of the
assets of the Fund shall be held uninvested, subject always to the provisions
of the Fund's Articles of Incorporation and By-Laws, to the Fund's
fundamental investment policies as in effect from time to time, and to the
control and review by the Fund's Board of Directors. The Company shall take,
on behalf of the Fund, all actions which it deems necessary to carry into
effect the investment policies determined as provided above, and to that end
the Company may designate a person or persons who are to be authorized by the
Fund as the representative or representatives of the Fund, to give
instructions to the Custodian of the assets of the Fund as to deliveries of
securities and payments of cash for the account of the Fund.
2. ALLOCATION OF CHARGES AND EXPENSES; BROKERAGE. The Company shall
furnish at its own expense all administrative services, office space,
equipment and administrative, bookkeeping and clerical personnel necessary
for managing the affairs of the Fund. The Company shall also provide persons
satisfactory to the Fund's Board of Directors to act as officers and
employees of the Fund and shall pay the salaries and wages of all officers
and employees of the Fund who are also officers and employees of the Company
or of an affiliated person (as defined in the Investment Company Act of 1940)
other than the Fund. All other costs and expenses not expressly assumed by
the Company under this Agreement, or to be paid by the Distributor or
Distributors of the shares of the Fund, shall be paid by the Fund, including
(i) interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities; (iii) insurance premiums
for fidelity and other coverage requisite to its operations; (iv)
compensation and expenses of its directors other than those affiliated with
the Company; (v) legal and audit expenses; (vi) custodian and shareholder
servicing agent fees and expenses; (vii) expenses incident to the redemption
of its shares; (viii) expenses incident to the issuance of its shares against
payment therefor by or on behalf of the subscribers thereto, including
printing of stock certificates; (ix) fees and expenses incident to the
registration under the Securities Act of 1933 or under any state securities
laws of shares of the Fund for public sale and fees imposed on the Fund under
the Investment Company Act of 1940; (x) expenses of printing and mailing
prospectuses, reports and notices and proxy
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<PAGE>
material to shareholders of the Fund; (xi) all other expenses incidental to
holding meetings of the Fund's shareholders; (xii) a pro rata share, based on
relative net asset value of the fund and other investment companies for which
the Company also act as manager and investment adviser, of 50% of the fees or
dues of the Investment Company Institute; (xiii) fees and expenses in
connection with registration of the Fund or qualification of its shares under
the securities laws of states and foreign jurisdictions and (xiv) such
non-recurring expenses as may arise, including actions, suits or proceedings
to which the Fund is a party and the legal obligation which the Fund may have
to indemnify its officer and directors with respect thereto.
The Company shall place purchase and sale orders for portfolio
transactions of the Fund with brokers and/or dealers including, where
permitted by law, the Fund's Distributor or affiliates thereof or of the
Company, which, in the judgment of the Company, are able to execute such
orders as expeditiously as possible and at the best obtainable price.
Purchases and sales of securities which are not listed or traded on a
securities exchange shall ordinarily be executed with primary market makers
acting as principal except when it is determined that better prices and
executions may otherwise be obtained, provided, that the Company may cause
the Fund to pay a member of a securities exchange, broker or dealer an amount
of commission for effecting a purchase or sale order for a portfolio
transaction in excess of the amount of commission another member of an
exchange, broker or dealer would have charged for effecting that transaction
if the Company determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such member, broker, dealer, viewed in terms of that particular
transaction or the Company's overall responsibilities. As used herein,
"brokerage and research services" shall have the same meaning as in Section
28(e)(3) of the Securities Exchange Act of 1934, as such Section may be
amended from time to time, and any rules or regulations promulgated by the
Securities and Exchange Commission. It is understood that, consistent with
the Company's fiduciary duty to the Fund, it is the intent of this Agreement
to allow the Company the widest discretion permitted by law in determining
the manner and means by which portfolio securities' transactions can be
effected in the best interests of the Fund.
3. COMPENSATION. (a) For its services and for the facilities to be
furnished as provided herein, the Fund shall pay to the Company an advisory
fee payable monthly, computed at the annual rate of 3/4 of 1% of the Fund's
average net assets during the year pro rated for any portion of a year during
which this Agreement is in effect. For this purpose, the value of the Fund's
net assets shall be determined in the same manner as for the purchase and
redemption of Fund shares as described in the Fund's current Prospectus.
(b) If the Fund's Distributor receives fees in connection with the tender
of portfolio securities of the Fund, the gross amount of the advisory fee
computed in accordance with the preceding paragraph 3(a) shall be reduced by
the amount of tender fees received; if the amount of such tender fees exceeds
the amount of advisory fees computed in accordance with paragraph 3(a), the
excess shall be paid by the Company to the Fund.
(c) In the event that the total expenses of the Fund, excluding
interest, taxes, brokerage commissions and extraordinary expenses, exceeds in
any fiscal year the lowest applicable percentage limitation prescribed by any
state in which shares of the Fund are sold, the compensation of the Company,
computed in accordance with the preceding two paragraphs 3(a) and 3(b), shall
be reduced by the amount of such excess.
4. DURATION AND TERMINATION OF AGREEMENT. This Agreement shall become
effective on the date set forth above and will continue in effect from year
to year thereafter only so long as such continuance is specifically approved
at least annually in accordance with the Investment Company Act of 1940. This
Agreement may be terminated on sixty days written notice by either party.
This Agreement shall terminate automatically in the event of its assignment
as defined in the Investment Company Act of 1940.
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<PAGE>
5. NAME OF FUND. The Company consents to the use by the Fund of the
name "Value Line Leveraged Growth Investors, Inc." so long, and only so long,
as this Agreement (or any agreement with any organization which has succeeded
to the business of the Company) or any extension, renewal or amendment
thereof, remains in effect. The fund agrees that if and when no such
agreement is in effect, (a) it will cease to use said name or any name
indicating or suggesting that the Fund is advised by or otherwise connected
with the Company and (b) it will not thereafter refer to the former
association between the Company and the Fund.
6. COMPANY MAY ACT FOR OTHERS. Nothing herein contained shall limit
the freedom of the Company or any affiliated person of the Company to render
investment supervisory or corporate administrative services to other
investment companies, to act as investment adviser or investment counselor to
other persons, firms or corporations, and to engage in other business
activities.
7. AMENDMENT OF AGREEMENT. This Agreement may not be amended except
pursuant to a direction given by the vote of the holders of a majority (as
defined in the Investment Company Act of 1940) of the outstanding shares of
the Fund.
8. LIABILITY. The Company shall not be liable for any error of
judgment, or mistake of law, or any loss suffered by the Fund, in connection
with the matters to which this Agreement relates, except for loss resulting
in the performance of its duties or from reckless disregard by the Company of
its obligations and duties hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date and year first
above written.
VALUE LINE LEVERAGED GROWTH
INVESTORS, INC.
By /s/ Thomas J. Dextore
---------------------
VALUE LINE, INC.
By /s/ Jean B. Buttner
-------------------
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Exhibit 99(e)
VALUE LINE LEVERAGED GROWTH INVESTORS, INC.
UNDERWRITING CONTRACT
This Agreement made this 14th day of February, 1972, between VALUE
LINE LEVERAGED GROWTH INVESTORS, INC., a Maryland corporation (hereinafter
called "the Fund") and VALUE LINE SECURITIES, INC., a New York corporation
(hereinafter called "the Underwriter").
WITNESSETH
WHEREAS the Fund and the Underwriter desire to enter into an
Underwriting Contract, for the sale of shares of the Fund in certain limited
offerings, through the Underwriter acting as agent for the Fund, to dealers
and investors, all subject to, and in compliance with, the provisions of the
Securities Act of 1933 and of the Investment Company Act of 1940, and of all
other applicable laws and regulations.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
Sec. 1. INTERPRETATION AND CONSTRUCTION
A. In this Underwriting Contract, unless the context otherwise
requires, -
(a) the expression "dealer" means a dealer in securities who is a
member of the National Association of Securities Dealers, Inc., or a
dealer who is a 'non-member broker or dealer in a foreign country
who is not
<PAGE>
eligible for membership in a registered securities association
as that phrase is used in Paragraph (c) of Section 25 of the Rules of
Fair Practice of the National Association of Securities Dealers, Inc.,
or as that or any similar phrase is used in any amendment of, or
substitute for, that Rule:
Provided that all future sales agreement contemplated by this
Underwriting Contract with such non-eligible foreign dealers shall contain
provisions forbidding the sale of shares of the Fund by such dealers to
residents, citizens or nationals of the United States or to purchasers who
such dealers have reason to believe may resell such shares to such persons;
(b) the expression "shares" means shares of the capital stock of the
Fund;
(c) the expression "shareholder" means a registered holder of shares;
(d) the expression "prospectus" means the prospectus of the Fund;
(e) the expression "net asset value", in relation to a share, means
the net asset value of that share determined in accordance with the
provisions of the currently effective prospectus;
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(g) the expression "selling commission" means, in relation to the
sale of shares, that part of the public offering price treated as selling
commission, determined in accordance with the provisions of the currently
effective prospectus;
(h) the expression "dealer's discount", in relation to the sale of
shares, means the proportion of the selling commission allowed to a dealer
when such sale is made by him;
(i) the expression "sales agreement" means an agreement relating to
the sale of shares in the form authorized by Section 7 of this
Underwriting Contract, and in effect between the Underwriter and a dealer.
B. Any reference in this Underwriting Contract to a term or thing in the
singular shall, where the context requires, also constitute a reference to
such terms or things in the plural.
Sec. 2 APPLICATION OF UNDERWRITING CONTRACT
This Underwriting Contract relates to the issue and sale of shares which
are from time to time duly authorized and registered and available for sale
by the Fund, including repurchased and treasury shares, if and to the extent
that such shares may legally be sold, but if, and only if, the Board of
Directors of the Fund sees fit to sell them and only to the extent set forth
in Sec. 3 below.
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<PAGE>
Sec. 3. APPOINTMENT OF UNDERWRITER
The Fund hereby appoints Value Line Securities, Inc. as the principal
underwriter (as defined in the Investment Company Act of 1940) and general
distributor of the shares of the Fund but only in connection with certain
limited offerings as described in the first effective prospectus of the Fund.
Sec. 4. GRANT OF AUTHORITY TO UNDERWRITER TO SELL SHARES
A. The Fund hereby grants to the Underwriter of authority to sell shares
as agent of the Fund; and in consideration of the grant of such authority the
Underwriter agrees, subject to the terms of any further instructions given
to it from time to time by the Fund, to use its best efforts to sell shares
to BONA FIDE investors and to solicit orders for shares from responsible
dealers, all upon the terms, and subject to the conditions, set forth in this
Underwriting Contract.
B. The Fund hereby grants to the Underwriter the authority, during the
term of this Underwriting Contract, to sell for the Fund shares to be issued
or sold by the Fund on orders for such shares placed with the Underwriter by
investors or by dealers with whom the Underwriter has sales agreements.
C. The authority to sell shares granted to the Underwriter by the
foregoing provisions of this Section shall, subject as hereinafter provided,
be exclusive:
Provided that such exclusive authority shall not apply or have effect in
relation to -
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(a) shares issued by the Fund to shareholders as a stock dividend;
(b) shares offered by the Fund to shareholders for reinvestment of
cash distributed by the Fund to shareholders (together with cash received
to pay for full shares) in any case where, by virtue of the provisions of
the currently effective prospectus, no selling commission is required to
be paid by the shareholder in the circumstances;
(c) shares issued by the Fund to shareholders in connection with a
reorganization or recapitalization of the Fund, or the merger or
consolidation of any other investment company with the Fund, or the
acquisition by the Fund, by purchase or otherwise, of all or substantially
all of the assets of any other investment company or all or substantially
all of the outstanding stock of any cash investment company.
(d) shares issued by the Fund at the asset value per share to any
registered unit investment trust or foreign unit investment trust which is
the issuer of periodic payment plan certificates (as that expression is
defined in the Investment Company Act of 1940) the net proceeds of which
are invested in shares of the Fund, and to any foreign investment company
substantially all the assets of which, or substantially all the assets
attributable to a class of shares of which, consist of shares of the Fund.
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D. The Underwriter hereby agrees that no selling commission shall be paid -
(a) in respect of any purchase of shares by the Fund's directors or
officers, or by the Underwriter, or by the Fund's Manager and Investment
Adviser, or by the directors, officers and BONA FIDE full-time employees
or sales representatives of the Underwriter or of the Fund's Manager and
Investment Adviser who have acted as such for not less than ninety days,
or by any pension or profit sharing plan established for any of such
persons, in any case where the purchaser of such shares gives a written
assurance that the purchase is made for investment purposes and that the
shares will not be resold except through redemption or repurchase by or on
behalf of the Fund, to the extent permitted by Rule 22d-1 under the
Investment Company Act of 1940; or
(b) in respect of any purchase of shares in exercise of the dividend
reinvestment privilege as set forth in the currently effective prospectus.
Sec. 5. SALES OF SHARES; PRICE AND TIME
The Fund agrees that it will cause the public offering price of shares to
be computed on each day during which the New York Stock Exchange ("the NYSE")
is open for trading as of the close of the NYSE to the extent required in
connection with the limited offerings of its shares contemplated by Sec. 3.
hereof.
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All sales of shares made hereunder, in respect of an order received by
the Underwriter prior to the close of the NYSE on a day when the NYSE is open
for trading, shall be at the public offering price computed as of the time of
such close.
The public offering price for orders received by dealers prior to the
close of the NYSE on a day when the NYSE is open for trading shall be the
public offering price computed as of the time of such close, provided the
order is accepted by the Underwriter and received by the Underwriter prior to
5:00 P.M. (New York City time) on that day.
Orders received by dealers on any day after the close of the NYSE, or on
any day on which the NYSE is not open for trading, shall be filled, if
accepted by the Underwriter at the public offering price computed as of the
next close of the NYSE.
Sec. 6. COMPENSATION FOR SALES OF SHARES
A. As compensation for any sale of shares hereunder the Underwriter
shall be entitled to retain the applicable selling commission, less the
amount of the applicable dealer's discount (if any) which shall be paid to
the dealer in any case where he makes the sale.
B. The Fund shall in all cases receive not less than the difference
between the public offering price in effect at the time of the sale and the
selling commission.
Sec. 7. SALES AGREEMENTS
The form of all sales agreements between the Underwriter and dealers
shall at all times be in such form as may from time to time be approved by
the Board of Directors of the Fund.
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Sec. 8. COVENANTS BY UNDERWRITER
A. The Underwriter agrees that in selling shares it will in all respects
duly conform with all federal and state laws relating to the sale of such
securities.
B. The Underwriter agrees that it will endeavor to ensure that dealers
sell shares of the Fund only to bona fide investors and that the method and
materials used in selling such shares are sound and conservative.
C. The Underwriter agrees that it will indemnify and save harmless the
Fund from any damage or expense on account of any wrongful act done by it or
by its representatives.
D. All written communications or reports to shareholders or investors
and all sales literature and all advertisements or radio or television
broadcasts used in connection with the sale of shares or relating to the Fund
or the management of the Fund shall be approved in writing in advance of any
use thereof by the Board of Directors of the Fund or a duly authorized
representative of such Board.
Sec. 9. PAYMENT OF CHARGES BY FUND
The Fund agrees that it will pay, or cause to be paid, in connection
with the limited offerings mentioned in Sec. 3 hereof, expenses for
registering shares under Federal laws and regulations, transfer agent fees
and the cost of preparing, printing and mailing stock certificates.
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Sec. 10. PAYMENT OF CHARGES BY UNDERWRITER
The Underwriter agrees that it will pay, or cause to be paid all
expenses of the limited offerings contemplated by Sec. 3 hereof which are not
set forth in Sec. 9 hereof.
Sec. 11. DEALINGS WITH THE FUND
The Underwriter agrees that it will not deal with the Fund as principal
in connection with purchases or sales of securities or other property for the
account of the Fund, and that it will not take any long or short positions in
shares.
Sec. 12. GUARANTEE BY UNDERWRITER OF NET PURCHASE PRICE TO FUND
With respect to any shares which are from time to time hereafter issued
pursuant to instructions of the Fund upon receipt of the net purchase price
therefor by check but prior to clearance of such check through the Fund's
account, the Underwriter, in each such instance, guarantees to the Fund the
payment in full of such check and agrees to indemnify the Fund against, and
save it harmless from, any and all loss, cost, expense or damage which it may
directly or indirectly suffer, or be subject to, as a result of any such
check not being promptly honored in full upon presentment thereof for payment.
Sec. 13. AMENDMENT OF CONTRACT, BY-LAWS, ETC.
A. If at any time during the term of this Underwriting Contract the Fund
considers it necessary or advisable in its best
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interests that any amendment of this Underwriting Contract be made in order
to comply with any recommendations or requirements of the Securities and
Exchange Commission or other government authority, or to obtain any advantage
under federal or state tax laws, and notifies the Underwriter of the form of
amendment which it considers necessary or advisable and the reasons therefor,
and if the Underwriter declines to assent to such amendment, then the Fund
may terminate this Underwriting Contract forthwith.
B. If at any time during the term of this Underwriting Contract, upon
request by the Underwriter, the Fund fails after a reasonable time to make any
changes in its Articles of Incorporation or By-Laws or in its methods of
doing business which are necessary in order to comply with any requirements
of federal law or regulation of which the Underwriter is or may be a member,
relating to the sales of shares, then the Underwriter may terminate this
Underwriting Contract forthwith.
Sec. 14. APPROVAL AND CONTINUANCE OF UNDERWRITING CONTRACT
A. This Underwriting Contract shall become effective on the date hereof
and shall continue in effect, unless terminated as hereinafter provided, for
a period of two years and thereafter only if such continuance is specifically
approved at least annually by the Board of Directors of the Fund, including
the vote of a majority of the directors who are not parties to the Agreement
or "interested persons" (as defined in the Investment Company Act of 1940)
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<PAGE>
or any such party, cast in person at a meeting called for the purpose of
voting on such approval, or by the vote of the holders of a majority (as so
defined) of the outstanding voting securities of the Fund and by the vote of
a majority of the directors who are not parties to this Agreement or
"interested persons" (as so defined) of any such party, cast in person at a
meeting called for the purpose of voting on such approval.
B. This Underwriting Contract may, on sixty (60) days' written notice to
the other party, be terminated at any time without payment of penalty -
(a) by the Fund acting pursuant to a direction given by a majority
of the Board of Directors of the Fund or by a vote of the holders of a
majority of the outstanding shares; or
(b) by the Underwriter.
C. This Underwriting Contract shall automatically terminate in the event
of its assignment (as defined in the Investment Company Act of 1940).
Sec. 15. COVENANT BY UNDERWRITER WITH REGARD TO ASSOCIATION WITH FUND
The Underwriter agrees that if it ceases to be the principal
underwriter, as defined in the Investment Company Act of 1940, of the Fund,
then -
(a) if the Fund continues thereafter to use the name Value Line
Leveraged Growth Investors, Inc.,
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<PAGE>
or any other name including the words "Value Line", the Underwriter
will, upon receipt of a written request from the Fund, thenceforth cease
to use the name "Value Line Securities, Inc." or any other name including
the words "Value Line"; and
(b) the Underwriter will not thenceforth in any manner refer to or
otherwise publicise its former association with the Fund.
IN WITNESS WHEREOF the Fund has caused this instrument to be executed in
its name and behalf and under its corporate seal by one of its Vice
Presidents thereunto duly authorized and the Underwriter has caused this
instrument to be executed in its name and behalf and under its corporate seal
by its President thereunto duly authorized, all as of the date and year first
above written.
VALUE LINE LEVERAGED GROWTH INVESTORS, INC.
By /s/ Harold Benjamin
-----------------------------------------
V. Pres.
Attest /s/ David Huxley
-------------------------
Secretary
VALUE LINE SECURITIES, INC.
By /s/ Garrison A. Southard, Jr.
-----------------------------------------
President
Attest /s/ David Huxley
-------------------------
Secretary
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<PAGE>
AGREEMENT AMENDING
UNDERWRITING CONTRACT
THIS AGREEMENT, made as of the 3rd day of April, 1972 between VALUE LINE
LEVERAGED INVESTORS, INC., a Maryland corporation (hereinafter called ("the
Fund") and VALUE LINE SECURITIES, INC., a New York corporation (hereinafter
called "the Underwriter")
W I T N E S S E T H
WHEREAS the Fund and the Underwriter duly entered into an Underwriting
Contract made the 14th day of February, 1972 (hereinafter called "the
Underwriting Contract")
AND WHEREAS the Fund and the Underwriter have mutually agreed to amend
Section 3 of the Underwriting Contract to remove certain limitations on the
effect of the appointment of the Underwriter as principal underwriter (as
defined in the Investment Company Act of 1940) and general distributor of the
shares of the Fund.
NOW, THEREFORE, the parties hereto agree that Section 3 of the Underwriting
Contract should be amended by deleting the words "but only in connection with
certain limited offerings as described in the first effective prospectus of the
Fund".
IN WITNESS WHEREOF, the Fund has caused this instrument to be executed in
its name and behalf and under its corporate seal by its Vice President thereunto
duly authorized, and the Underwriter has caused this instrument to be executed
in its name and behalf and under its corporate seal by its President
<PAGE>
thereunto duly authorized, all as of the day and year first above written.
VALUE LINE LEVERAGED GROWTH INVESTORS, INC.
ATTEST
By /s/ Harold Benjamin
-------------------------------------------
Harold Benjamin, Vice President
/s/ David Huxley
- ----------------
David Huxley
Secretary
VALUE LINE SECURITIES, INC.
ATTEST
By /s/ Garrison A. Southard, Jr.
------------------------------------------
Garrison A. Southard, Jr., President
/s/ David Huxley
- ----------------
David Huxley
Secretary
<PAGE>
Exhibit 99(f)
CUSTODIAN AGREEMENT
Dated as of:
Between
VALUE LINE LEVERAGED GROWTH INVESTORS, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
CUSTODIAN AGREEMENT
AGREEMENT made as of this 21st day of June, 1990 between VALUE LINE
LEVERAGED GROWTH INVESTORS, INC., a corporation established under the laws of
Maryland (the "Fund"), and STATE STREET BANK AND TRUST COMPANY ("Bank").
The Fund, an open-end management investment company, desires to place and
maintain its portfolio securities and cash in the custody of the Bank. The Bank
has at least the minimum qualifications required by Section 17(f)(1) of the
Investment Company Act of 1940 to act as custodian of the portfolio securities
and cash of the Fund, and has indicated its willingness to so act, subject to
the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. BANK APPOINTED CUSTODIAN. The Fund hereby appoints the Bank as custodian
of its portfolio securities and cash delivered to the Bank as hereinafter
described, and the Bank agrees to act as such upon the terms and conditions
hereinafter set forth.
2. DEFINITIONS. Whenever used herein, the terms listed below will have the
following meaning:
(a) AUTHORIZED PERSON. Authorized person will mean any of the persons
duly authorized to give Proper Instructions or otherwise act on behalf of
the Fund by appropriate resolution of the Board of Directors.
<PAGE>
(b) SECURITY. The term security as used herein will have the same
meaning as when such term is used in the Securities Act of 1933 as amended,
including, without limitation, any note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest or
participation in any profit sharing agreement, collateral-trust
certificate, preorganization certificate or subscription, transferable
share, investment contract, voting-trust certificate, certificate of
deposit for a security, fractional undivided interest in oil, gas, or other
mineral rights, any put, call, straddle, option, or privilege on any
security, certificate of deposit, or group or index of securities
(including any interest therein or based on the value thereof), or any put,
call, straddle, option, or privilege entered into on a national securities
exchange relating to a foreign currency, or, in general, any interest or
instrument commonly known as a "security", or any certificate of interest
or participation in, temporary or interim certificate for, receipt for,
guarantee of, or warrant or right to subscribe to, or option contract to
purchase or sell any of the foregoing and futures, forward contracts and
options thereon.
(c) PORTFOLIO SECURITY. Portfolio security will mean any security
owned by the Fund.
(d) OFFICERS' CERTIFICATE. Officers' Certificate will mean unless
otherwise indicated, any request, direction, instruction, or certification
in writing signed by any two Authorized Persons of the Fund.
(e) BOOK-ENTRY SYSTEM AND DEPOSITORY. Book-Entry System shall mean
the Federal Reserve-Treasury Department Book Entry System for United States
government, instrumentality and agency securities operated by the Federal
Reserve Banks, its successor or successors and its nominee or nominees.
Depository shall mean the Depository
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<PAGE>
Trust Company ("DTC"), a clearing agency registered with the Securities and
Exchange Commission under Section 17A of the Securities Exchange Act of 1934, it
successor or successors and its nominee or nominees. The term "Depository" shall
further mean and include any other person authorized to act as a depository
under the Investment Company Act of 1940, its successor or successors and its
nominee or nominees, specifically identified in a certified copy of a resolution
of the Fund's Directors.
3A. PROPER INSTRUCTIONS. For purposes of this Agreement, "Proper
Instructions" shall mean (i) instructions regarding the purchase or sale of
securities for the portfolio of the Fund, and payments and deliveries in
connection therewith, given by an Authorized Person as designated in an
Officers' Certificate, such instructions to be given in such form and manner
as the Bank and the Fund shall agree upon from time to time, and (ii)
instructions (which may be continuing instructions) regarding other matters
signed or initialled by such one or more persons from time to time designated
in an Officers' Certificate as having been authorized by the Directors of the
Fund. Oral instructions given by a person whom the Bank reasonably believes
to be authorized to give such instructions with respect to the transaction
involved will be considered Proper Instruction only if the Bank receives
written instructions (which may be sent by telecopier) confirming such oral
instructions, provided however that if the Bank is notified by an Authorized
Person of the Fund that the Fund is unable to promptly confirm such oral
instructions in writing, then the Bank may act upon receipt of a second oral
instruction confirming such prior oral instruction. The Bank shall compare
the original oral instruction with any confirmatory written or oral
instruction, as the case may be, and shall report any discrepancy to the Fund
immediately, and the Bank shall be responsible for any expense incurred in
taking any action, including any reprocessing, necessary to correct any
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<PAGE>
such discrepancy or error in Proper Instructions given by the Fund, to the
extent such expense is caused by the unreasonable delay of the Bank in reporting
such discrepancy to the Fund. Except as provided in the preceeding sentence, the
Fund shall be responsible, at the Fund's expense, for taking any action,
including any reprocessing, necessary to correct any such discrepancy or error
in Proper Instructions given by the Fund, and to the extent such action requires
the Bank to act, the Fund shall give the Bank specific Proper Instructions as to
the action required. The Bank shall act upon and comply with any subsequent
Proper Instructions which modifies a prior Proper Instruction. Upon receipt of
an Officers' Certificate as to the authorization by the Directors of the Fund
accompanied by a detailed description of procedures approved by the Fund, Proper
Instructions may include communication effected directly between
electro-mechanical or electronic devices provide that the Directors and the Bank
are satisfied that such procedures afford adequate safeguards for the Fund's
assets.
3B. BANK'S COMMUNICATIONS WITH FUND. For purpose of this Agreement, all
communications from the Bank to the Fund shall be in writing (which may be sent
by means of a telecopier) and any such writing reasonably believed by the Fund
to be from a person authorized to make such communication on behalf of the Bank
may be relied upon the Fund. An oral communication from a person whom the Fund
reasonably believes to be authorized to make such communication on behalf of the
Bank with respect to the transaction may be relied upon by the Fund only if the
Fund receives a written communication (which may be sent by telecopier)
confirming such oral communication, provided however, that if the Fund is
notified by such authorized person that the Bank is unable to promptly confirm
such oral communication in writing, then the Fund may act in reliance upon
receipt of a second oral communication confirming such prior oral communication.
The Fund shall compare the original oral communication with any confirmatory
written or oral
-4-
<PAGE>
communication, as the case may be, and shall report any discrepancy to the Bank
immediately, and the Fund shall be responsible for any expense incurred in
taking any action, including any reprocessing, necessary to correct any such
discrepancy or error in communications given by the Bank, to the extent such
expense is caused by the unreasonably delay of the Fund in reporting such
discrepancy to the Bank. Except as provided in the preceding sentence, the Bank
shall be responsible, at the Bank's expense, for any action taken, including any
reprocessing, necessary to correct any such discrepancy or error in
communications given by the Bank, and to the extend such action requires the
Bank to act, the Fund shall give the Bank specific Proper Instructions as to the
action required. The Fund may act in reliance upon any subsequent communication
from the Bank which modifies a prior communication.
4. SEPARATE ACCOUNTS. If the Fund has more than one series or portfolio,
the Bank will segregate the assets of the Fund into a Separate Account for each
series or portfolio containing the assets of such series or portfolio (and all
investment earnings thereon), all as directed from time to time by Proper
Instructions.
5. CERTIFICATION AS TO AUTHORIZED PERSONS. The Secretary or Assistant
Secretary of the Fund will at all times maintain on file with the Bank his
certification to the Bank, in such form as may be acceptable to the Bank, of the
names and signatures of the Authorized Persons, it being understood that upon
the occurrence of any change in the information set forth in the most recent
certification on file (including without limitation any person named in the most
recent certification who is no longer an Authorized Person as designated
therein), the Secretary or Assistant Secretary of the Fund will sign a new or
amended certification setting forth the change and the new, additional or
omitted names or signatures. The Bank will be entitled to rely and act upon
any Officers' Certificate given to
-5-
<PAGE>
it by the Fund which has been signed by Officers named in the most recent
certification.
6. CUSTODY OF CASH AND SECURITIES. As custodian for the Fund, the Bank
will keep safely all of the portfolio securities delivered to the Bank, and
will deposit to the account of the Fund all of the cash of the Fund delivered
to the Bank, as set forth below.
A. CASH. The Bank will open and maintain a separate account or
accounts in the name of the Fund or in the name of the Bank, as custodian of
the Fund, subject only to draft or order by the Bank acting pursuant to the
terms of this Agreement. The Bank will hold in such account or accounts as
custodian, subject to the provisions hereof (including sections 6(C) and
6(D), all cash received by it, for the account of the Fund. Upon receipt by
the Bank of Proper Instructions (which may be continuing instructions) or in
the case of payments for redemptions and repurchases of outstanding shares of
beneficial interest of the Fund, notification from the Fund's transfer
agent as provided in Section 8, requesting such payment, designating the
payee or the account or accounts to which the Bank will release funds or
deposit, and stating that is for a purpose permitted under the terms of this
Section 6(A), specifying the applicable subsection, or describing such
purpose with sufficient particularity to permit the Bank to ascertain the
applicable subsection, the Bank will make payments of cash held for the
accounts of the Fund, insofar as funds are available for that purpose, only
as permitted in (a)-(g) below.
(a) PURCHASE OF SECURITIES: upon the purchase of securities for the
Fund, against contemporaneous receipt of such securities by the Bank
registered in the name of the Fund or in the name of, or properly endorsed
and in form for transfer to, the Bank, or a nominee of the Bank, or
receipt for the account of the Bank through use of (1) the
-6-
<PAGE>
Book-Entry System pursuant to Section 6(B)(a)(3) below, (2) a Depository
pursuant to 6(B)(b) below, or (3) Book Entry Paper pursuant to Section
6(B)(c) below, each such payment to be made at the purchase price shown
on a broker's confirmation (or transaction report in the case of Book
Entry Paper) of purchase of the securities received by the Bank before
such payment is made, as confirmed in the Proper Instructions received
by the Bank before payment is made;
(b) REDEMPTIONS: in such amount as may be necessary for the
repurchase or redemption of shares of beneficial interest of the Fund
offered for repurchase or redemption in accordance with Section 8 of
this Agreement;
(c) DISTRIBUTIONS AND EXPENSES OF FUND: for the payment on the
account of the Fund of dividends or other distributions to shareholders
as may from time to time be declared by the Directors of the Fund,
interest, taxes, management or supervisory fees, distribution fees,
fees of the Bank for its services hereunder and reimbursement of the
expenses and liabilities of the Bank as provided hereunder, fees of any
transfer agent, fees for legal, accounting, and auditing services, or
other operating expenses of the Fund;
(d) PAYMENT IN RESPECT OF SECURITIES: for payments in connection
with the conversion, exchange or surrender of portfolio securities or
securities subscribed to by the Fund held by or to be delivered to the
Bank;
(e) REPAYMENT OF CASH: to repay the cash delivered to the Fund for
the purpose of collateralizing the obligation to return to the Fund
certificates borrowed from the Trust representing portfolio securities,
but only upon redelivery to the Bank of such borrowed certificates;
-7-
<PAGE>
(f) OTHER AUTHORIZED PAYMENTS: for other authorized transactions of
the Fund, or other obligations of the Fund incurred for proper Fund
purposes; provided that before making any such payment the Bank will also
receive a certified copy of a resolution of the Directors signed by an
Authorized Person of the Fund (other than the Person certifying such
resolution) and certified by its Clerk or Assistant Clerk, naming the
person or persons to whom such payment is to be made, and either
describing the transaction for which payment is to be made and declaring
it to be an authorized transaction of the Fund, or specifying the amount
of the obligation for which payment is to be made, setting forth the
purpose for which such obligation was incurred and declaring such purpose
to be a proper corporate purpose; and
(g) TERMINATION: upon the termination of this Agreement as
hereinafter set forth pursuant to Section 9 and Section 13 of this
Agreement.
The Bank is hereby authorized to endorse for collection and collect on
behalf of and in the name of the Fund all checks, drafts, or other negotiable
or transferrable instruments or other orders for the payment of money received
by it for the account of the Fund.
B. SECURITIES. Except as provided in subsections (a), (b) and (c)
of this Section 6(B), and in Sections 6(C) and 6(D), the Bank as custodian,
will receive and hold pursuant to the provisions hereof, in a separate
account or accounts and physically segregated at all times from those of other
persons, any and all portfolio securities which may now or hereafter be
delivered to it by or for the account of the Fund. All such portfolio
securities will be held or disposed of by the Bank for, and subject at all
times to, the instructions of the Fund pursuant to the terms of this
Agreement. Subject to the
-8-
<PAGE>
specific provisions in Subparagraphs (a), (b), and (c) relating to securities
that are not physically held by the Bank, the Bank will register all portfolio
securities (unless otherwise directed by Proper Instructions or an Officers'
Certificate), in the name of a registered nominee of the Bank as defined in the
Internal Revenue Code and any Regulations of the Treasury Department issued
thereunder, which nominee shall be exclusively assigned to the Fund, and will
execute and deliver all such certificates in connection therewith as may be
required by such laws or Regulations or under the laws of any State. The Bank
will ensure that the specific portfolio securities of the Fund held by it
hereunder will be at all times identifiable.
The Bank will use the same care with respect to the safekeeping of
portfolio securities and cash of the Fund held by it as it uses in respect of
its own similar property but it need not maintain any special insurance for the
benefit of the Fund.
The Fund will from time to time furnish to the Bank appropriate instruments
to enable it to hold or deliver in proper form for transfer, or to register in
the name of its registered nominee, any securities which it may hold for the
account of the Fund and which may from time to time be registered in the name of
the Fund.
Neither the Bank nor any nominee of the Bank will vote any of the portfolio
securities held hereunder by or for the account of the Fund, except in
accordance with Proper Instructions of an Officers' Certificate.
The Bank will execute and deliver, or cause to be executed and delivered,
to the Fund all notices, proxies and proxy soliciting materials with respect to
such securities, such proxies to be executed by the registered holder of such
securities (if registered otherwise than in the name of the Fund), but without
indicating the manner in which such proxies are to be voted.
-9-
<PAGE>
(a) BOOK-ENTRY SYSTEM. Provided (i) the Bank has received a certified
copy of a resolution of the Directors of the Fund specifically approving
deposits of the Fund assets in the Book-Entry System, indicating that, and
(ii) for each year following such approval, the Directors of the Fund has
reviewed and approved the arrangement and has not delivered an Officer's
Certificate to the Bank indicating that it has withdrawn its approval:
1. The Bank may keep Securities of the Fund in the Book-Entry
System provided that such securities are represented in an account
("Account") of the Bank (or its agent) in such System which shall not
include any assets of the Bank (or such agent) other than assets held
as a fiduciary, custodian, or otherwise for customers.
2. The records of the Bank (and any such agent) with respect to
the Fund's participation in the Book-Entry System through the Bank
(or any such agent) will identify by book entry securities belonging
to the Fund which are included with other securities deposited in the
Account and shall at all times during the regular business hours of
the Bank (or such agent) be open for inspection by duly authorized
officers, employees or agents of the Fund. Where securities are
transferred to the Fund's account, the Bank shall also, by book entry
or otherwise, identify as belonging to the Fund a quantity of
securities in fungible bulk of securities (i) registered in the name
of the Bank or its nominee, or (ii) shown on the Bank's account on the
books of the Federal Reserve Bank.
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<PAGE>
3. The Bank (or its agent) shall pay for securities purchased for
the account of the Fund or shall pay cash collateral against the
return of securities loaned by the Fund upon (i) receipt of advice
from the Book-Entry System that such Securities have been transferred
to the Account, and (ii) the making of an entry on the records of the
Bank (or its agent) to reflect such payment and transfer for the
account of the Fund. The Bank (or its agent) shall transfer
securities sold or loaned for the account of the Fund upon
(a) receipt of advice from the Book-Entry System that
payment for Securities sold or payment of the initial cash
collateral against the delivery of securities loaned by the Fund
has been transferred to the Account, and
(b) the making of an entry on the records of the Bank (or
its agent) to reflect such transfer and payment for the account
of the Fund. Copies of all advice from the Book-Entry System of
transfers of Securities for the account of the Fund shall
identify the Fund, be maintained for the Fund by the Bank and
shall be provided to the Fund at its request. The Bank shall send
the Fund a confirmation, as defined by Rule 17f-4 under the
Investment Company Act of 1940, of any transfers to or from the
account of the Fund.
4. The Bank will promptly provide the Fund with any report
obtained by the Bank or its agent on the Book-Entry System's
accounting system, internal accounting control and procedures for
safeguarding Securities deposited in the Book-Entry System. The
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<PAGE>
Bank will provide the Fund and cause any such agent to provide, at
such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal
accounting control and procedures for safeguarding securities,
including Securities deposited in the Book-Entry System, relating
to the services provided by the Bank or such agent under the
Agreement.
5. Anything to the contrary in the Agreement notwithstanding,
the Bank shall be liable to the Fund for any loss or damage to the
Fund resulting from use of the Book-Entry System by reason of any
gross negligence, wilful misfeasance or bad faith of the Bank or any
of its agents or of any of its or their employees or from any
reckless disregard by the Bank or any such agent of its duty to
enforce effectively such rights as it may have against the Book-Entry
System; at the election of the Fund, it shall be entitled to be
subrogated for the Bank in any claim against the Book-Entry System
or any other person which the Bank or its agent may have as a
consequence of any such loss or damage if and to the extent that the
Fund has not been made whole for any loss or damage.
(b) USE OF DIRECT PAPER SYSTEM FOR COMMERCIAL PAPER. Provided (i)
the Bank has received a certified copy of a resolution of the Fund's
Directors specifically approving participation in a system maintained by
the Bank for the holding of commercial paper in direct paper form
("Direct Paper") and (ii) for each year following such approval the
Directors of the fund have received and approved the arrangements, upon
receipt of Proper Instructions and upon receipt of confirmation from an
Issuer (as defined below) that the Fund has purchased such Issuer's
Direct Paper,
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<PAGE>
the Bank shall issue and hold in direct paper form, on behalf of the
Fund, commercial paper issued by issuers with whom the Bank has entered
into a direct paper agreement (the "Issuers"). In maintaining its Direct
Paper system, the Bank agrees that:
1. The Bank will maintain all Direct Paper held by the Fund in
an account of the Bank that includes only assets held by it for
customers;
2. the records of the Bank with respect to the Fund's purchase
of Direct Paper through the Bank will identify, by book entry,
Commercial Paper belonging to the Fund which is included in the
Direct Paper System and shall at all times during the regular
business hours of the Bank be open for inspection by duly authorized
officers, employees or agents of the Fund.
3. (a) The Bank shall pay for direct Paper purchased for the
account of the Fund upon contemporaneous (i) receipt of advice from
the Issuer that such sale of Direct Paper has ben effected, and (ii)
the making of an entry on the records of the Bank to reflect such
payment and transfer for the account of the Fund.
(b) The Bank shall cancel such Direct Paper obligation upon the
maturity thereof upon contemporaneous (i) receipt of advice that
payment for such Direct Paper has been transferred to the Fund, and
(ii) the making of an entry on the records of the Bank to reflect
such payment for the account of the Fund.
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<PAGE>
4. the Bank shall transmit to the Fund a transaction journal
confirming each transaction in Direct Paper for the account of the
Fund on the next business day following the transaction;
5. the Bank will send to the Fund such reports on its system of
internal accounting control as the Fund may reasonably request from
time to time;
C. OPTIONS AND FUTURES TRANSACTIONS.
(A) PUTS AND CALLS TRADED ON SECURITIES EXCHANGES, NASDAQ OR
OVER-THE-COUNTER.
1. The Bank shall take action as to put options ("puts") and
call options ("calls") purchased or sold (written) by the Fund
regarding escrow or other arrangements (i) in accordance with the
provisions of any agreement entered into upon receipt of Proper
Instructions between the Bank, any broker-dealer registered under the
Securities Exchange Act of 1934 and a member of the National
Association of Securities Dealers, Inc., and, if necessary, the Fund
relating to the compliance with the rules of the Options Clearing
Corporation and of any registered national securities exchange, or of
any similar organization or organizations.
2. Unless another agreement requires it to do so, the Bank shall
be under no duty or obligation to see that the Fund has deposited or is
maintaining adeuqate margin, if required, with any broker in connection
with any option, nor shall the Bank be under any duty or obligation to
present such option to the broker for exercise unless it receives
Proper Instructions from the Fund. The Bank shall have no
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<PAGE>
responsibility for the legality of any put or call purchased or sold
on behalf of the Fund, the propriety of any such purchase or sale,
or the adequacy of any collateral delivered to a broker in
connection with an option or deposited to or withdrawn from a
Segregated Account as described in sub-paragraph c of this Section
6(C). The Bank specifically, but not by way of limitation, shall
not be under any duty or obligation to: (i) periodically check or
notify the Fund that the amount of such collateral held by a broker
or held in a Segregated Account as described in sub-paragraph (c) of
this Section 6(C) is sufficient to protect such broker of the Fund
against any loss; (ii) effect the return of any collateral delivered
to a broker; or (iii) advise the Fund that any option it holds, has
or is about to expire. Such duties or obligations shall be the sole
responsibility of the Fund.
(b) PUTS, CALLS AND FUTURES TRADED ON COMMODITIES EXCHANGES.
1. The Bank shall take action as to puts, calls and futures
contracts ("Futures") purchased or sold by the Fund in accordance
with the provisions of any agreement among the Fund, the Bank and a
Futures Commission Merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Commodity Futures
Trading Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in
connection with transactions by the Fund.
2. The responsibilities and liabilities of the Bank as to
Futures, puts and calls traded on commodities exchanges, any Futures
Commission Merchant
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account and the Segregated Account shall be limited as set forth in
sub-paragraph (a)(2) of this Section 6(C) as if such sub-paragraph
referred to Futures Commission Merchants rather than brokers, and
Futures and puts and calls thereon instead of options.
(c) SEGREGATED ACCOUNT.
The Bank shall upon receipt of Proper Instructions establish and
maintain a Segregated Account or Accounts for and on behalf of the Fund,
into which Account or Accounts may be transferred cash and/or securities
including securities maintained in an Account by the Bank pursuant to
Section 6(B) hereof, (i) in accordance with the provisions of any
agreement among the Fund, the Bank and a broker-dealer registered under
the Exchange Act and a member of the NASD or any Futures Commission
Merchant registered under the Commodity Exchange Act, relating to
compliance with the rules of the Options Clearing Corporation and of any
registered national securities exchange or the Commodity Futures Trading
Commission or any registered Contract Market, or of any similar
organization or organizations regarding escrow or other arrangements in
connection with transactions by the Fund, and (ii) for the purpose of
segregating cash or securities in connection with options purchased or
written by the Fund, or commodity futures purchased or written by the
Fund, and (iii) for the purposes of compliance by the Fund with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of Segregated Accounts by registered
investment companies and (iv) for other proper corporate purposes, BUT
ONLY, in the case of clause (iv), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the Directors of the
Fund signed by an offer of the Fund and
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<PAGE>
certified by the Clerk of an Assistant Clerk, setting forth the purpose
or purposes of such Segregated Account and declaring such purposes to be
proper corporate purposes.
D. SEGREGATED ACCOUNT FOR "WHEN-ISSUED", "FORWARD COMMITMENT" AND
RESERVE REPURCHASE AGREEMENT TRANSACTIONS. Notwithstanding the provisions of
Section 6(A), 6(B) and 6(C) hereof, the Bank will maintain a segregated
account (the "Segregated Account") in the name of the Fund (i) for the
deposit of liquid assets, such as cash, U.S. Government securities or other
high grade debt obligations, having a market value (marked to the market on a
daily basis) at all times equal to not less than the aggregate purchase price
due on the settlement dates of all the Fund's then outstanding forward
commitment or "when-issued" agreements relating to the purchase of portfolio
securities and all the Fund's then outstanding commitments under reverse
repurchase agreements entered into with broker-dealer firms, and (ii) for the
deposit of any portfolio securities which the Fund has agreed to sell on a
forward commitment basis, all in accordance with Securities and Exchange
Commission Release No. IC-10666. No assets shall be deposited in the
Segregated Account except pursuant to Proper Instructions. Assets may be
withdrawn from the segregated account pursuant to Proper Instructions only
(a) for sale or delivery to meet the Fund's obligations under outstanding
firm commitment or when-issued agreements for the purchase of portfolio
securities and under reverse repurchase agreements, (b) for exchange for
other liquid assets of equal or greater value deposited in the Segregated
Account, (c) to the extent that the Fund's outstanding forward commitment or
when-issued agreements for the purchase of portfolio securities or reverse
repurchase agreements are sold to other parties or the Fund's obligations
thereunder are met from assets of the Fund other than those in the
Segregated Account, or (d) for delivery upon settlement of a forward
commitment agreement for the sale of portfolio securities.
-17-
<PAGE>
7. TRANSFER OF SECURITIES. The Bank will transfer, exchange, deliver or
release portfolio securities held by it hereunder, insofar as such securities
are available for such purpose, provided that before making any transfer,
exchange, delivery or release under this Section the Bank will receive Proper
Instructions requesting such transfer, exchange or delivery stating that it
is for a purpose permitted under the terms of this Section 7, specifying the
applicable subsection, or describing the purpose of the transaction with
sufficient particularity to permit the Bank to ascertain the applicable
subsection, only
(a) upon sales of portfolio securities for the account of the Fund,
against contemporaneous receipt by the Bank of payment therefor in
full, each such payment to be in the amount of the sale price shown in
a broker's confirmation of sale of the portfolio securities received by
the Bank before such payment is made, as confirmed in the Proper
Instructions received by the Bank before such payment is made, provided
however, that portfolio securities may be delivered to the broker
selling the same for examination in accordance with "street delivery"
custom;
(b) in exchange for or upon conversion into other securities alone
or other securities and cash pursuant to any plan of merger,
consolidation, reorganization, share split-up, change in par value,
recapitalization or readjustment or otherwise;
(c) upon conversion of portfolio securities pursuant to their terms
into other securities;
(d) upon exercise of subscription, purchase or sale or other similar
rights represented by such portfolio securities;
-18-
<PAGE>
(e) for the purpose of redeeming in kind shares of beneficial
interest of the Fund upon authorization from the Fund;
(f) in the case of option contracts owned by the Fund, for
presentation to the endorsing broker;
(g) when such portfolio securities are called, redeemed or retired
or otherwise become payable;
(h) for the purpose of releasing certificates representing
portfolio securities of the Fund, against contemporaneous receipt by
the Bank of the fair market value of such security, as set forth in
Proper Instructions received by the Bank before such payment is made;
(i) for the purpose of tendering shares pursuant to a tender offer
therefor;
(j) for the purpose of delivering securities lent by the Fund to a
bank or broker-dealer, but only against receipt in accordance with
street delivery custom, except as otherwise provided in Subsections
6(B)(a) and (b) hereof, of adequate collateral as agreed upon from time
to time by the Fund and the Bank, and upon receipt of payment in
connection with any repurchase agreement relating to such securities
entered into by the Fund;
(k) for other authorized transactions of the Fund or for other
proper corporate purposes; provided that before making such transfer,
the Bank will also receive a certified copy of resolution of the
Directors of the Fund, signed by an authorized officer of the Fund
(other than the officer certifying such resolution) and certified by
its Secretary or Assistant Secretary, specifying the portfolio
securities to be delivered, setting forth the transaction
-19-
<PAGE>
in or purpose for which such delivery is to be made, declaring such
transaction to be an authorized transaction of the Fund or such purpose
to be a proper corporate purpose, and naming the person or persons to
whom delivery of such securities shall be made; and
(l) upon termination of this Agreement as hereinafter set forth
pursuant to Section 9 and Section 13 of this Agreement.
As to any deliveries made by the Bank pursuant to subsections (a), (b),
(c), (d), (f), (g), (h), (i), and (j) securities or cash receivable in
exchange therefor shall be delivered to the Bank.
8. REDEMPTIONS. In the case of payment of assets of the Fund held by the
Bank in connection with redemptions and repurchases by the Fund of
outstanding shares of beneficial interest, the Bank will rely on notification
by the Fund's transfer agent if receipt of a request for redemption and
certificates, if issued, in proper form for redemption before such payment is
made. Payment shall be made in accordance with the Articles of Incorporation
of the Fund, from assets available for said purposes.
9. MERGER, DISSOLUTION, ETC. OF FUND. In the case of the following
transactions not in the ordinary course of business, namely, the merger of
the Fund into or the consolidation of the Fund with another investment
company, the sale by the Fund of all, or substantially all of its assets to
another investment company, or the liquidation or dissolution of the Fund and
distribution of its assets, the Bank will deliver the portfolio securities
held by it under this Agreement and disburse cash only upon the order of the
Fund set forth in an Officers' Certificate, accompanied by a certified copy
of a resolution of the Fund's Directors authorizing any of the foregoing
-20-
<PAGE>
transactions. Upon completion of such delivery and disbursement and the payment
of the fees, disbursements and expenses of the Bank due to the Bank pursuant to
Section 12E hereof, this Agreement will terminate.
10. ACTIONS OF BANK WITHOUT PRIOR AUTHORIZATION.
Notwithstanding anything herein to the contrary, unless and until the Bank
receives an Officers' Certificate to the contrary, it will without prior
authorization or instruction of the Fund or the transfer agent:
(a) Receive and hold for the account of the Fund hereunder and deposit
in the account or accounts referred to in Section 6 hereto, all income,
dividends, interest and other payments or distribution of cash with respect
to the portfolio securities held thereunder;
(b) Present for payment all coupons and other income items held by it
for the account of the Fund which call for payment upon presentation and
hold the cash received by it upon such payment for the account of the Fund
in the account or accounts referred to in Sections 6 hereof;
(c) Receive and hold for the account of the Fund hereunder and deposit
in the account or accounts referred to in Section 6 hereof all securities
received as a distribution on portfolio securities as a result of a stock
dividend, share split-up, reorganization, recapitalization, merger,
consolidation, readjustment, distribution of rights and similar securities
issued with respect to any portfolio securities held by it hereunder.
(d) Execute as agent on behalf of the Fund all necessary ownership and
other certificates and affidavits required by the Internal Revenue Code or
the regulations of the Treasury Department issued thereunder, or by the
laws
-21-
<PAGE>
of any state, now or hereafter in effect, inserting the Fund's name on such
certificates as the owner of the securities covered thereby, to the extent
it may lawfully do so and as may be required to obtain payment in respect
thereof. The Bank will execute and deliver such certificates in connection
wit portfolio securities delivered to it or by it under this Agreement as
may be required under the provisions of the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, or under the laws
of any State;
(e) Present for payment all portfolio securities which are called,
redeemed, retired or otherwise become payable, and hold cash received by it
upon payment for the account of the Fund in the account or accounts
referred to in Section 6 hereof; and
(f) Exchange interim receipts or temporary securities for definitive
securities.
The Bank will use all diligence to collect any funds which may to its
knowledge become collectible arising from such securities, including dividends,
interest and other income, and to transmit to the Fund notice actually received
by it of any call for redemption, offer of exchange, right of subscription,
reorganization or other proceedings affecting such securities.
If portfolio securities upon which such income is payable are in default or
payment is refused after due demand or presentation, the Bank will notify the
Fund by telecopier of any default or refusal to pay no later than one business
day from the day on which it receives knowledge of such default or refusal. In
addition, the Bank will send the Fund a written report once each month showing
any income on any portfolio security held by it which is more than ten days
overdue of the date of such report and which has not previously been reported.
-22-
<PAGE>
11. MAINTENANCE OF RECORDS. The Bank will maintain records with respect to
transactions for which the Bank is responsible pursuant to the terms and
conditions of this Agreement and in compliance with the applicable rules and
regulations under the Investment Company Act of 1940 as amended, and will
furnish the Fund daily with a statement of condition of the Fund. The Bank will
furnish to he Fund at the end of every month, and at the close of each quarter
of the Fund's fiscal year, a list of the portfolio securities and the aggregate
amount of cash held by it for the Fund. The books and records of the Bank
pertaining to its actions under this Agreement and reports by the Bank or its
independent accountants concerning its accounting system, procedures for
safeguarding securities and internal accounting controls will be open to
inspection and audit at reasonable times by officers of or auditors employed by
the Fund and will be preserved by the Bank in the manner and in accordance with
the applicable rules and regulations under the Investment Company Act of 1940.
The Bank agrees to treat all records and other information relative to the
Fund and its shareholders as confidential, except it may disclose such
information after prior notification to and approval in writing by the Fund,
which approval shall not by unreasonably withheld. Nothing in this Section 11
shall prevent the Bank from divulging information to bank or securities
regulatory authorities or where the Bank may be exposed to civil or criminal
contempt proceedings for failure to comply.
12. CONCERNING THE BANK.
A. PERFORMANCE OF DUTIES.
(1) The Bank and the Fund shall each exercise reasonable care in
the performance of their respective duties and functions under this
Agreement.
-23-
<PAGE>
(2) In its dealings with the Fund, the Bank shall be entitled
to rely upon any Officers' Certificate, Proper Instructions,
resolution of the Directors, telegram, facsimile communication,
written notice, or certificate.
B. RESPONSIBILITY OF CUSTODIAN. So long as and to the extent that
it is in the exercise of reasonable care, the Custodian shall not be
responsible for the title, validity or genuineness of any property or
evidence of title thereto received by it or delivered by it pursuant to
this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by
it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms
of a three-party futures or options agreement. The Custodian shall be
held harmless and be protected by the Fund and shall be held to the
exercise of reasonable care in carrying out the Proper Instructions of
the Fund. It shall be entitled to rely on and may act upon advice of
counsel (who may be counsel for the Fund) or mutually acceptable to both
parties on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
C. NO DUTY OF BANK. The Bank will be under no duty or obligation to
inquire into and will not be liable for:
(a) the validity of the issue of any portfolio securities
purchased by or for the Fund, the legality of the purchases thereof
or the propriety of the price incurred therefor;
-24-
<PAGE>
(b) the legality of any sale of any portfolio securities by or
for the Fund or the propriety of the amount for which the same
are sold;
(c) the legality of an issue or sale of any shares of common
stock of the Fund or the sufficiency of the amount to be received
therefor provided that it reflects the net asset value as provided
by the Fund;
(d) the legality of the repurchase of any shares of common
stock of the Fund or the propriety of the amount to be paid
therefor provided that it reflects the net asset value as provided
by the Fund;
(e) the legality of the declaration of any dividend by the
Fund or the legality of the distribution of any portfolio
securities as payment in kind of such dividend; or
(f) any property or moneys of the Fund unless and until
received by it, except as otherwise provided in Section 10 hereof,
and any such property or moneys delivered or paid by it pursuant to
the terms hereof.
Moreover, the Bank will not be under any duty or obligation to ascertain
whether any portfolio securities at any time delivered to or held by it for
the account of the Fund are such as may properly be held by the Fund under
the provisions of its Agreement and Declaration of Fund or By-Laws, any
federal or state statutes or any rule or regulation of any governmental
agency.
D. FEES AND EXPENSES OF BANK. The Fund will pay or reimburse the
Bank from time to time for any transfer taxes payable upon transfer of
portfolio securities made hereunder, and for the Bank's normal
disbursements,
-25-
<PAGE>
expenses and charges made or incurred by the Bank in the performance of
this Agreement (including any duties listed on any Schedule hereto, if
any). For the services rendered by the Bank hereunder, the Fund will pay
to the Bank such compensation or fees at such rate and at such times as
shall be agreed upon in writing by the parties from time to time. The
Bank will also be entitled to reimbursement by the Fund for normal
industry costs for securities transfers and services incurred in
conjunction with termination of this Agreement by the Fund.
E. ADVANCES BY BANK. The Bank may, in its sole discretion, advance
funds on behalf of the Fund to make any payment permitted by this
Agreement upon receipt of Proper Instructions as required by this
Agreement for such payments by the Fund. Should such a payment or
payments, with advanced funds, result in an overdraft (due to
insufficiencies of the Fund's account with the Bank, or for any other
reason) any such related indebtedness shall be deemed a loan made by
the Bank to the Fund payable on demand and bearing interest at the
current rate charged by the Bank for such loans unless the Fund shall
provide the Bank with agreed-upon compensating balances. The Fund
authorizes the Bank, in its sole discretion, at any time to charge any
overdraft or indebtedness, together with interest due thereon, against
any balance of account standing to the credit of the Fund on the Bank's
books.
13. TERMINATION.
(a) This Agreement may be terminated at any time without penalty
upon ninety days written notice delivered by either party to the other
by means of registered mail, and upon the expiration of such ninety days
this Agreement will terminate; provided, however, that the effective
date of such termination may be postponed to a date of delivery
-26-
<PAGE>
of such notice (i) by the Bank in order to prepare for the transfer by
the Bank of all of the assets of the Fund held hereunder, and (ii) by
the Fund in order to give the Fund an opportunity to make suitable
arrangements for a successor custodian. At any time after the
termination of this Agreement, the Fund will, at its request, have
access to the records of the Bank relating to the performance of its
duties as custodian.
(b) In the event of the termination of this Agreement, the Bank
will immediately upon receipt or transmittal, as the case may be, of
notice of termination, commence and prosecute diligently to completion
the transfer of all cash and the delivery of all portfolio securities
duly endorsed and all records maintained under Section 11 to the
successor custodian when appointed by the Fund. The obligation of the
Bank to deliver and transfer over the assets of the Fund held by it
directly to such successor custodian will commence as soon as such
successor is appointed and will continue until completed as aforesaid.
If the Fund does not select a successor custodian within ninety days
from the date of delivery or notice of termination the Bank may, subject
to the provisions of subsection (c) of this Section 13, deliver the
portfolio securities and cash of the Fund held by the Bank to a bank or
trust company of its own selection which meets the requirements of
Section 17(f)(1) of the Investment Company Act of 1940 and has a
reported capital, surplus and undivided profits aggregating not less
than $2,000,000, to be held as the property of the Fund under terms
similar to those on which they were held by the Bank, whereupon such
bank or trust company so selected by the Bank will become the successor
custodian or such assets of the Fund with the same effect as though
selected by the Directors of the Fund.
-27-
<PAGE>
(c) Prior to the expiration of ninety days after notice of
termination has been given, the Fund may furnish the Bank with an order
of the Fund advising that a successor custodian cannot be found willing
and able to act upon reasonable and customary terms and that there has
been submitted to the shareholders of the Fund the question of whether
the Fund will be liquidated or will function without a custodian for the
assets of the Fund held by the Bank. In that event the Bank will deliver
the portfolio securities and cash of the Fund held by it, subject as
aforesaid, in accordance with one of such alternatives which may be
approved by the requisite vote of shareholders, upon receipt by the Bank
of a copy of the minutes of the meeting of shareholders at which action
was taken, certified by the Fund's Secretary.
14. NOTICES. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and mailed or delivered to it
at its office at the address set forth below; namely:
(a) In the case of notices sent to the Fund to:
Value Line Leveraged Growth Investors, Inc.
c/o Value Line Inc.
711 3rd Avenue
New York, New York 10017
Attn: Treasurer
(b) In the case of notices sent to the Bank to:
State Street Bank and Trust Company
Mutual Fund Services
1776 Heritage Drive
North Quincy, MA 02171
-28-
<PAGE>
or at such other place as such party may from time to time
designate in writing.
15. AMENDMENTS. This Agreement may not be altered or amended, except by
an instrument in writing, executed by both parties, and in the case of the
Fund, such alteration or amendment will be authorized and approved by its
Directors.
16. PARTIES. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Fund
without the written consent of the Bank or by the Bank without the written
consent of the Fund, authorized and approved by its Directors; and provided
further that termination proceedings pursuant to Section 13 hereof will not
be deemed to be an assignment within the meaning of this provision.
17. GOVERNING LAW. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts.
-29-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate and their respective Corporate seals to be affixed
hereto as of the date first above written by their respective officers
thereunto duly authorized.
VALUE LINE LEVERAGED GROWTH
INVESTORS, INC.
By: /s/ Jean B. Buttner
-------------------------------
ATTEST:
/s/[Illegible]
- -----------------------------
STATE STREET BANK AND TRUST COMPANY
By: /s/[Illegible]
--------------------------------
ATTEST:
/s/[Illegible]
- -----------------------------
-30-
<PAGE>
Exhibit (f)
AMENDMENT TO CUSTODIAN CONTRACT
AMENDMENT made by and between STATE STREET BANK AND TRUST COMPANY (the
"Custodian") each Fund listed on Appendix A (the "Fund").
WHEREAS, the Custodian and each Fund are parties to a Custodian
Contract, as amended (each a "Custodian Contract") governing the terms and
conditions under which the Custodian maintains custody of the securities and
other assets of the Fund; and
WHEREAS, the Custodian and each Fund desires to amend the relevant
Custodian Contract;
NOW THEREFORE, the Custodian and each Fund hereby amend and revise in
its entirety the defined term "Authorized person" in Section 2(a) of the
Custodian Contract as follows:
"Authorized person" of a Fund shall mean any of the persons duly
authorized to give Proper Instructions or otherwise act with respect to
such Fund on behalf of the Board of Trustees/Directors of such Fund by
appropriate resolution of such Board of Trustees/Directors, it being
understood that the signatures of two Authorized persons of a Fund shall
be required for the release of the assets of the Fund.
1
<PAGE>
Except as specifically superseded or modified herein, the terms and
provisions of the Custodian Contract shall continue to apply with full force
and effect.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative as of
the 1st day of October, 1997.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Ronald E. Logue
------------------------------------
Ronald E. Logue
Executive Vice President
Attest: /s/ Thomas M. Lenz
--------------------------------
Thomas M. Lenz
Vice President
EACH FUND LISTED ON APPENDIX A
By: /s/ Jean B. Buttner
-------------------------------------
Name: Jean B. Buttner
Title: Chairman and President
Attest: /s/ David T. Menigson
---------------------------------
Name: David T. Menigson
Title: Secretary
2
<PAGE>
APPENDIX A
LIST OF FUNDS
Value Line Aggressive Income Trust
Value Line Asset Allocation Fund, Inc.,
Value Line Cash Fund, Inc. (The)
Value Line Centurion Fund, Inc.
Value Line Convertible Fund, Inc.
Value Line Fund, Inc. (The)
Value Line Income Fund, Inc., (The)
Value Line Leveraged Growth Investors, Inc.
Value Line New York Tax Exempt Trust
Value Line Small-Cap Growth Fund, Inc.
Value Line Special Situations Fund, Inc.
Value Line Strategic Asset Management Trust
Value Line Tax-Exempt Fund, Inc. (The)
Value Line U.S. Government Securities Fund, Inc.
Value Line U.S. Multi-National Company Fund, Inc.
3
<PAGE>
Exhibit (g)
PETER D. LOWENSTEIN
ATTORNEY AT LAW
TWO GREENWICH PLAZA, SUITE 100
GREENWICH, CONNECTICUT 06830
203 622-3932
FAX 203 622-0321
February 19, 1999
Value Line Leveraged Growth Investors, Inc.
220 East 42nd Street
New York, NY 10017
Gentlemen:
I have acted as special counsel to Value Line Leveraged Growth Investors,
Inc., a Maryland corporation (the "Fund"), in connection with certain matters,
including the issuance of shares of its common stock, $1.00 par value (the
"Common Stock").
As special counsel for the Fund, I am familiar with its Charter and
By-laws. I have examined the prospectus included in Post-Effective Amendment No.
45 to its Registration Statement on Form N-1A, File No. 2-31640 (the
"Registration Statement"), substantially in the form in which it is to become
effective (the "Prospectus"). I have further examined and relied upon a
certificate of the Maryland State Department of Assessments and Taxation to the
effect that the Fund is duly incorporated and existing under the laws of the
State of Maryland and is in good standing and duly authorized to transact
business in the State of Maryland.
I have also examined and relied upon such corporate records of the Fund and
other document and certificates with respect to factual matters as I have deemed
necessary to render the opinion expressed herein. I have assumed, without
independent verification, the genuineness of all signatures, the authenticity of
all documents submitted to me as originals and the conformity with originals of
all documents submitted to me as copies.
Based on such examination, I am of the opinion and so advise you that:
1. The Fund is duly organized and validly existing as a corporation
in good standing under the laws of the State of Maryland.
2. The shares of Common Stock of the Fund to be offered for sale
pursuant to the Prospectus are to the extent of the number of
shares authorized to be issued, duly authorized and, when sold,
issued and paid for as contemplated by the Prospectus, will have
been validly and legally issued and will be fully paid and
nonassessable.
<PAGE>
I am a member of the bars of the States of Connecticut and New York and I
do not purport to be an expert in, and express no opinion with respect to, the
laws of any jurisdiction other than the federal laws of the United States and
the laws of the States of Connecticut and New York.
I consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Peter D. Lowenstein
-------------------------
Peter D. Lowenstein
PDL:psp
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 45 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated February 12, 1999, relating to the financial
statements and financial highlights appearing in the December 31, 1998 Annual
Report to Shareholders of Value Line Leveraged Growth Investors, Inc., which are
also incorporated by reference into the Registration Statement. We also consent
to the references to us under the heading "Financial Highlights" in the
Prospectus and under the heading "Financial Statements" in the Statement of
Additional Information.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
February 22, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 266468
<INVESTMENTS-AT-VALUE> 608341
<RECEIVABLES> 1632
<ASSETS-OTHER> 132
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 610105
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1607
<TOTAL-LIABILITIES> 1607
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 240846
<SHARES-COMMON-STOCK> 12568
<SHARES-COMMON-PRIOR> 12164
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 25779
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 341873
<NET-ASSETS> 608498
<DIVIDEND-INCOME> 2347
<INTEREST-INCOME> 887
<OTHER-INCOME> 0
<EXPENSES-NET> 4295
<NET-INVESTMENT-INCOME> (1061)
<REALIZED-GAINS-CURRENT> 38523
<APPREC-INCREASE-CURRENT> 133597
<NET-CHANGE-FROM-OPS> 171059
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 14660
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10027
<NUMBER-OF-SHARES-REDEEMED> 9921
<SHARES-REINVESTED> 298
<NET-CHANGE-IN-ASSETS> 175683
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1233
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3686
<INTEREST-EXPENSE> 155
<GROSS-EXPENSE> 4302
<AVERAGE-NET-ASSETS> 492748
<PER-SHARE-NAV-BEGIN> 35.58
<PER-SHARE-NII> (.08)
<PER-SHARE-GAIN-APPREC> 14.13
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 1.21
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 48.42
<EXPENSE-RATIO> .87
<AVG-DEBT-OUTSTANDING> 2438
<AVG-DEBT-PER-SHARE> .20
</TABLE>
