VALUE LINE STRATEGIC ASSET MANAGEMENT TRUST, 485BPOS, 1997-04-29

VALUE LINE STRATEGIC ASSET MANAGEMENT TRUST
485BPOS, 1997-04-29

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As filed with the Securities and Exchange Commission on April 29, 1997.

File No. 33-16245
File No. 811-5276
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

------------------------

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
PRE-EFFECTIVE AMENDMENT No. |_|
POST-EFFECTIVE AMENDMENT No. 10 |X|

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
AMENDMENT No. 10 |X|

(Check appropriate box or boxes)

------------------------

Value Line Strategic Asset Management Trust
(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), or

|X| on May 1, 1997 pursuant to paragraph (b), or

|_| 60 days after filing pursuant to paragraph (a), or
|_| on (date) pursuant to paragraph (a) of Rule 485.

------------------------

Pursuant to the provisions of Rule 24f-2(a)(1) under the Investment Company
Act of 1940, Registrant has registered an indefinite number of shares of
beneficial interest under the Securities Act of 1933 . Registrant filed its Rule
24f-2 notice for the year ended December 31, 1996 on or about February 28, 1997.

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<PAGE>

VALUE LINE STRATEGICASSET MANAGEMENT TRUST

FORM N-1A
CROSS REFERENCE SHEET
(as required by Rule 495)

Form N-1A Item No. Location

Part A (Prospectus)

<S> <C> <C>
Item 1. Cover Page............................................................ Cover
Item 2. Synopsis.............................................................. Omitted
Item 3. Condensed Financial Information....................................... Financial Highlights
Item 4. General Description of Registrant..................................... Cover Page; Investment Objective and
Policies; Investment Restrictions;
Additional Information
Item 5. Management of the Fund................................................ Management of the Trust; Additional
Information
Item 6. Capital Stock and Other Securities.................................... Dividends, Distributions; Taxes;
Additional Information
Item 7. Purchase of Securities Being Offered.................................. Sale and Redemption of Shares;
Calculation of Net Asset Value
Item 8. Redemption and Repurchase of Securities............................... Sale and Redemption of Shares
Item 9. Pending Legal Proceedings............................................. Not Applicable

Part B (Statement of Additional Information)

Item 10. Cover Page............................................................ Cover Page
Item 11. Table of Contents..................................................... Table of Contents
Item 12. General Information and History....................................... Additional Information (Part A)
Item 13. Investment Objectives and Policies.................................... Investment Objective and Policies;
Investment Restrictions
Item 14. Management of the Fund................................................ Trustees and Officers
Item 15. Control Persons and Principal Holders of Securities................... Management of the Trust (Part A);
Trustees and Officers
Item 16. Investment Advisory and Other Services................................ Management of the Trust (Part A);
The Adviser
Item 17. Brokerage Allocation.................................................. Management of the Trust (Part A);
Brokerage Arrangements
Item 18. Capital Stock and Other Securities.................................... Additional Information (Part A)
Item 19. Purchase, Redemption and Pricing of Securities Being Offered.......... Sale and Redemption of Shares;
Calculation of Net Asset Value (Part A)
Item 20. Tax Status............................................................ Taxes
Item 21. Underwriters.......................................................... Not Applicable
Item 22. Calculation of Performance Data....................................... Performance Information (Part A);
Performance Data
Item 23. Financial Statements.................................................. Financial Statements
</TABLE>

Part C

Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C to this Registration Statement.
<PAGE>

PROSPECTUS

May 1, 1997

VALUE LINE STRATEGIC ASSET
MANAGEMENT TRUST

220 East 42nd Street
New York, New York 10017-5891
1-800-223-0818

CONTENTS

PAGE
-----
Financial Highlights............................................... 2
Investment Objective and Policies.................................. 3
Other Investment Strategies........................................ 5
Investment Restrictions............................................ 8
Performance Information............................................ 8
Management of the Trust............................................ 9
Calculation of Net Asset Value..................................... 10
Sale and Redemption of Shares...................................... 10
Dividends, Distributions and Taxes................................. 11
Additional Information............................................. 11

Value Line Strategic Asset Management Trust (the "Trust") is an open-end,
diversified management investment company which seeks to achieve a high total
investment return consistent with reasonable risk by investing primarily in a
broad range of common stocks, bonds and money market instruments. Its investment
objective is to achieve a high total investment return consistent with
reasonable risk. The Trust will attempt to achieve its objective by following an
asset allocation strategy based on data derived from computer models for the
stock and bond markets that shifts the assets of the Trust among equity, debt
and money market securities as the models indicate and its investment adviser,
Value Line, Inc. (the "Adviser"), deems appropriate.

Shares of the Trust are available to the public only through the purchase of
certain variable annuity contracts and variable life insurance policies issued
by The Guardian Insurance & Annuity Company, Inc. ("GIAC").

This Prospectus sets forth concise information about the Trust that a
prospective investor ought to know before investing. This Prospectus should be
retained for future reference. Additional information about the Trust is
contained in a Statement of Additional Information dated May 1, 1997, which has
been filed with the Securities and Exchange Commission and is incorporated into
this Prospectus by reference. A copy of the Statement of Additional Information
may be obtained at no charge by writing or telephoning the Trust at the address
or telephone number listed above.

- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS.

VLSAMT-1
<PAGE>

FINANCIAL HIGHLIGHTS
(for a share outstanding throughout each year)

The following information on selected per share data and ratios, with
respect to each of the five years in the period ended December 31, 1996, and the
related financial statements have been audited by Price Waterhouse LLP,
independent accountants, whose report thereon appears in the Trust's Annual
Report to Shareholders which is incorporated by reference in the Statement of
Additional Information. This information should be read in conjunction with the
financial statements and notes thereto which appear in the Trust's Annual Report
to Shareholders available from the Trust without charge.

Year Ended December 31,
- ------------------------------------------------------------------------------------------------------------------------

1996 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ...................... $ 20.27 $ 16.13 $ 17.01 $ 15.94 $ 14.54 $ 11.06
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) from
investment operations:
Net investment income ........... .53 .39 .26 .27 .26 .30
Net gains or losses on securities
(both realized and unrealized) . 2.56 4.17 (1.09) 1.62 1.93 4.50
---------- ---------- ---------- ---------- ---------- ----------
Total from investment
operations ..................... 3.09 4.56 (.83) 1.89 2.19 4.80
---------- ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net
investment income .............. (.37) (.26) (.01) (.28) (.26) (.31)
Distributions from
capital gains .................. (1.09) (.16) (.04) (.54) (.53) (1.01)
---------- ---------- ---------- ---------- ---------- ----------
Total dividends and
distributions .................. (1.46) (.42) (.05) (.82) (.79) (1.32)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value,
end of period .................. $ 21.90 $ 20.27 $ 16.13 $ 17.01 $ 15.94 $ 14.54
========== ========== ========== ========== ========== ==========
Total return+ ..................... 15.87% 28.54% -4.88% 11.86% 15.05% 43.34%
========== ========== ========== ========== ========== ==========
Ratios/Supplemental Data
Net assets, end of period
(in thousands) ................. $1,072,785 $ 876,509 $ 662,721 $ 615,648 $ 362,045 $ 188,781
Ratio of operating expenses to
average net assets ............. .58%(2) .60% .60% .61% .55% .58%
Ratio of net investment income
to average net assets .......... 2.70% 2.18% 1.65% 1.96% 2.18% 3.00%
Portfolio turnover rate ........... 71% 63% 100% 110% 106% 134%
Average commissions paid
per share of common stock
investments purchased/sold ..... $ 0.049(3) -- -- -- -- --

<CAPTION>
For the period
October 1, 1987
Year Ended December 31, (Commencement of
- ----------------------------------------------------------------------------- Operations) to
December 31,
1990 1989 1988 1987
---------- ---------- ---------- ----------------
Net asset value, beginning
of period ...................... $ 11.46 $ 9.83 $ 9.45 $ 10.00
---------- ---------- ---------- ----------
Income (loss) from
investment operations:
Net investment income ........... .32 .38 .41 .03
Net gains or losses on securities
(both realized and unrealized) . (.34) 2.12 .56 (.55)
---------- ---------- ---------- ----------
Total from investment
operations ..................... (.02) 2.50 .97 (.52)
---------- ---------- ---------- ----------
Less distributions:
Dividends from net
investment income .............. (.33) (.37) (.40) (.03)
Distributions from
capital gains .................. (.05) (.50) (.19) --
---------- ---------- ---------- ----------
Total dividends and
distributions .................. (.38) (.87) (.59) (.03)
---------- ---------- ---------- ----------
Net asset value,
end of period .................. $ 11.06 $ 11.46 $ 9.83 $ 9.45
========== ========== ========== ==========
Total return+ ..................... -0.15% 25.55% 10.30% -5.24%(1)
========== ========== ========== ==========
Ratios/Supplemental Data
Net assets, end of period
(in thousands) ................. $ 86,146 $ 65,195 $ 43,210 $ 13,857
Ratio of operating expenses to
average net assets ............. .60% .64% .79% 1.58%*
Ratio of net investment income
to average net assets .......... 3.28% 3.71% 5.27% 3.88%*
Portfolio turnover rate ........... 77% 138% 163% 8%(1)
Average commissions paid
per share of common stock
investments purchased/sold ..... -- -- -- --

</TABLE>

* Annualized.
(1) Not annualized.
(2) Before offset for custody credits.
(3) Disclosure effective for fiscal years beginning on or after 9/1/95.
+ Total returns do not reflect the effects of charges deducted under the terms
of GIAC's variable contracts. Including such charges would reduce the total
returns for all periods shown.

VLSAMT-2
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Trust is to achieve a high total
investment return (current income and capital appreciation) consistent with
reasonable risk. Achieving this objective largely depends on the Adviser's
abilities to assess the effect of economic and market trends on different
sectors of the financial markets. There can be no assurance that the Trust's
objective will be achieved or that its shareholders will be protected from the
risk of loss inherent in the ownership of securities. The Trust's investment
objective cannot be changed without shareholder approval.

Under normal conditions, the Trust will attempt to achieve its objective
by following an asset allocation strategy that enables the Adviser to
periodically shift the assets of the Trust among three types of securities: (a)
equity securities, (b) debt securities with maturities of more than one year,
and (c) money market instruments (debt securities with maturities of less than
one year). Allocation of the Trust's assets among these types of securities will
be determined by the Adviser and will be based primarily on data derived from
computer models for the stock and bond markets which the Adviser has developed
and other factors which the Adviser deems appropriate.

There are no limits on the percentage of the Trust's assets that can be
invested in equity, debt or money market securities. Thus, at any given time,
the Trust may invest entirely in equity, debt or money market securities or any
combination thereof.

When the stock market model indicates a preference for equity securities,
the percentage of the Trust's total assets invested in equity securities will be
increased. Similarly, if the expected total return from equity securities is
poor, then a greater percentage of the Trust's assets will be invested in debt
or money market securities as indicated by the Adviser's bond market model. The
central tendency is for 55% of the Trust's assets to be invested in equity
securities, 35% in debt securities and 10% in money market instruments
(including cash). The Trust is typically weighted towards equity securities over
debt and money market securities. The Trust may also write covered call options
on its portfolio securities, invest in repurchase agreements and in financial
futures contracts and related options. See "OTHER INVESTMENT STRATEGIES," below.

Investment in Equity Securities. In the selection of individual equity
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. 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. 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.

VLSAMT-3
<PAGE>

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 Trust 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
Trust which may not be changed without shareholder approval. The utilization of
these Rankings is no assurance that the Trust will perform more favorably than
the market in general over any particular period.

Investment in Debt Securities. The Trust may invest in a broad variety of debt
securities, including debt securities issued by U.S. companies rated within one
of the four highest grades assigned by Standard & Poor's Corporation ("S&P") or
Moody's Investors Service, Inc. ("Moody's") or, if unrated, judged by the
Adviser to be of comparable quality, and debt securities issued or guaranteed by
the U.S. Government, its agencies and instrumentalities ("U.S. Government
Securities"). It is the Trust's current intention to limit its investments in
debt securities to those rated within the three highest grades.

U.S. Government Securities include direct obligations of the U.S. Treasury
(such as Treasury bills, Treasury notes and Treasury bonds) or securities issued
or guaranteed by U.S. Government agencies or instrumentalities. These
obligations, including those which are guaranteed by Federal agencies or
instrumentalities, may or may not be backed by the "full faith and credit" of
the United States. Agencies and instrumentalities which issue or guarantee
securities include: the Federal Farm Credit System and the Federal Home Loan
Banks, the Tennessee Valley Authority, the Federal National Mortgage
Association, the Federal Home Loan Mortgage Corporation, the United States
Postal Service, the Government National Mortgage Association, Farmers Home
Administration, and the Export-Import Bank.

Investment in Money Market Securities. The Trust may invest in short-term
instruments (maturing in one year or less), including the following:

(1) U.S. Government obligations such as U.S. Treasury bills, notes
or bonds, and obligations of agencies or instrumentalities of the Federal
Government such as the Federal Home Loan Banks, the Federal Land Banks, or
the Federal National Mortgage Association.

(2) Obligations (including certificates of deposit and bankers
acceptances) of: (a) banks or savings and loan associations subject to
regulation by the U.S. Government (including foreign branches of such
banks), generally limited to institutions with a net worth of at least
$100,000,000 and to banks where the bank or its holding company carries a
Value Line financial strength rating of at least "A" (the third highest of
nine rating groups) or (b) U.S. branches of foreign banks, limited to
institutions having total assets of not less than $1 billion or its
equivalent.

(3) Instruments fully secured or collateralized by the type of
obligation described in the preceding paragraphs.

(4) Commercial paper issued by corporations maturing within one year
from the day of purchase and rated Prime-2 or better by Moody's or A-2 or
better by S&P, or issued by corporations having unsecured debt outstanding
which is rated at least Aa by Moody's or AA by S&P.

(5) Other debt instruments issued by corporations maturing within
one year from the day of purchase and rated at least Aa by Moody's or AA
by S&P.

Investments in obligations of a foreign branch of a U.S. bank and in U.S.
branches of a foreign bank may

VLSAMT-4
<PAGE>

subject the Trust to additional investment risks. These risks may include
international and political developments, foreign government restrictions,
foreign withholding taxes or possible seizure or nationalization of foreign
deposits. In addition, foreign branches of domestic banks and foreign banks are
not necessarily subject to the same regulatory requirements that apply to
domestic banks, such as reserve requirements, loan limitations, examinations,
accounting and record keeping.

The Adviser uses its best judgment in selecting money market investments,
taking into consideration rates, terms and marketability of obligations as well
as the capitalization, earnings, liquidity and other indicators of the financial
condition of their issuers in arriving at investment decisions.

OTHER INVESTMENT STRATEGIES

Repurchase Agreements. The Trust may invest temporary cash balances in
repurchase agreements. A repurchase agreement involves a sale of securities to
the Trust, 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 Trust 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
Trust. Repurchase agreements may also be viewed as loans made by the Trust which
are collateralized by the securities subject to repurchase. The value of the
underlying securities including interest will be at least equal at all times to
the total amount of the repurchase obligation, including the interest factor. In
the event of a bankruptcy or other default of a seller of a repurchase
agreement, the Trust 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 Trust 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 Trust
will not enter into repurchase agreements which will not mature within seven
days if any such investment, together with all other assets held by the Trust
which are not readily marketable, amounts to more than 10% of its total assets.
The Trustees monitor the creditworthiness of parties with which the Trust enters
into repurchase agreements.

Lending Portfolio Securities. The Trust may lend its portfolio securities to
broker-dealers or institutional investors if as a result thereof the aggregate
value of all securities loaned does not exceed 33 1/3% of the total assets of
the Trust. The loans will be made in conformity with applicable regulatory
policies and will be 100% collateralized by cash, cash equivalents or U.S.
Treasury bills on a daily basis in an amount equal to the market value of the
securities loaned and interest earned. The Trust will retain the right to call,
upon notice, the loaned securities and intends to call loaned voting securities
in anticipation of any important or material matter to be voted on by
shareholders. While there may be delays in recovery or even loss of rights in
the collateral should the borrower fail financially, the loans will be made only
to firms deemed by the Adviser to be of good standing and will not be made
unless, in the judgment of the Adviser, the consideration which can be earned
from such loan justifies the risk. The Trust may pay reasonable custodian and
administrative fees in connection with the loans.

When-Issued Securities. The Trust may from time to time purchase securities on a
"when-issued" basis. The price of such securities, which may be expressed in
yield terms, is fixed at the time the commitment to purchase is made, but
delivery and payment for the when-issued securities take place at a later date.
Normally, the settlement date occurs within one month of the purchase. During
the period between purchase and settlement, no payment is made by the Trust to
the issuer and no interest accrues to the Trust. Forward commitments involve a
risk of loss if the value of the security to be purchased declines prior to the
settlement date, which risk is in

VLSAMT-5
<PAGE>

addition to the risk of decline in value of the Trust's other assets. While
when-issued securities may be sold prior to the settlement date, the Trust
intends to purchase such securities with the purpose of actually acquiring them
unless a sale appears desirable for investment reasons. At the time the
commitment to purchase a security on a when-issued basis is confirmed, the Trust
will record the transaction and reflect the value of the security in determining
its net asset value. The Trust does not believe that its net asset value or
income will be adversely affected by its purchase of securities on a when-issued
basis. The Trust will maintain cash and high quality marketable securities equal
in value to commitments for when-issued securities in a segregated account.

Short Sales. The Trust may from time to time make short sales of securities or
maintain a short position, provided that at all times when a short position is
open the Trust owns an equal amount of such securities or securities convertible
into or exchangeable for an equivalent amount of such securities. No more than
10% of the value of the Trust's net assets taken at market may at any one time
be held as collateral for such sales.

Futures and Options on Futures. The Trust may trade in financial futures
contracts including stock index futures and in options on such financial futures
contracts. Currently, financial futures contracts can be entered into for
interest rate sensitive debt securities such as U.S. Treasury bills, bonds and
notes, certificates of the Government National Mortgage Association and bank
certificates of deposit ("interest rate futures"). These contracts are
principally traded on the Chicago Board of Trade and the Chicago Mercantile
Exchange. Futures on stock indexes are currently traded on the Chicago
Mercantile Exchange, the New York Futures Exchange and the Kansas City Board of
Trade. The Trust may enter into futures contracts on these instruments and
indexes as well as on new instruments and indexes as they become available on
national futures exchanges.

Financial futures contracts are contracts entered into on a commodity
exchange which provide for the future delivery of an underlying instrument or
index on a specified date, time and place. The contractual obligations may be
satisfied by either taking or making physical delivery of the underlying
commodity (or cash settlement in the case of stock index futures and certain
other financial futures contracts) 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 instrument or index underlying the
contract is referred to as entering into a short futures contract. Entering into
a futures contract to take delivery of the instrument or index is referred to as
entering into a long futures contract. An offsetting transaction for a short
futures contract is effected by the Trust 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 Trust is immediately paid the difference
and thus realizes a gain. If the price of the long transaction exceeds the short
price, the Trust pays the difference and realizes a loss. Similarly, the closing
out of a long futures contract is effected by the Trust entering into a short
futures contract. If the offsetting short price exceeds the long price, the
Trust realizes a gain, and if the offsetting short price is less than the long
price, the Trust realizes a loss.

No consideration will be paid or received by the Trust upon entering into
a futures contract. Initially, the Trust 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 Trust 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 or
securities 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."

VLSAMT-6
<PAGE>

The Trust may also purchase put and call options on financial futures
contracts on commodity exchanges or write covered options on such contracts.
Unlike a futures contract, which requires the parties to buy and sell a
commodity on a set date, an option on a futures contract entitles its holder to
decide on or before a future date whether to enter into such a contract. If the
holder decides not to enter into the contract, the premium paid for the option
is lost. Since the value of the option is fixed at the point of sale, the
purchase of an option does not require daily payments of cash in the nature of
"variation" or "maintenance" margin payments to reflect the change in the value
of the underlying contract. The value of the option purchased by the Trust does
change and is reflected in the net asset value of the Trust. 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.

The Trust's commodities transactions must constitute bona fide hedging or
other non-speculative transactions pursuant to regulations promulgated by the
Commodity Futures Trading Commission. In addition, the Trust 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 Trust'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
Trust, an amount equal to the market value of the commodity contract will be
deposited in a segregated account of cash and cash equivalents to collateralize
the position and thereby insure that the use of such commodity contract is
unleveraged.

Interest rate futures contract may be entered into in order to hedge the
Trust's portfolio of debt securities against anticipated interest rate changes.
If the Adviser anticipates that interest rates will rise, the Trust may enter
into a short interest rate futures contract or write a call option or purchase a
put option on such futures contract to attempt to hedge against a decrease in
the value of the Trust's securities. If the Adviser anticipates that interest
rates will decline, the Trust may enter into a long interest rate futures
contract or purchase a call option thereon to protect against an increase in the
prices of the securities the Trust intends to purchase.

The Trust may enter into stock index futures for the purpose of hedging
against changes in values of the Trust's portfolio securities or options on
stock indexes. 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 Trust's successful use of stock index futures
as a hedging device.

When futures are purchased to hedge against a possible increase in the
price of stocks before the Trust 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 Trust then concludes not to invest in stocks at that
time because of concern as to possible further market decline or for other
reasons, the Trust will realize a loss on the futures contract that is not
offset by a reduction in the price of securities purchased.

Options on Securities. The Trust may purchase and write listed put and call
options on equity and debt securities when deemed appropriate and consistent
with the Trust's investment objective. The Trust will engage in option
transactions to realize profits through the receipt of premiums, to protect
unrealized gains or to avoid realizing losses and to hedge securities positions
held by the Trust.

The Trust will write call options only if they are secured. A call option
is "secured" if the Trust owns the securities underlying the call, if the Trust
holds a call at the same exercise price for the same exercise period and

VLSAMT-7
<PAGE>

on the same securities as the call written, or if the Trust establishes with its
custodian at the time it writes the call, and maintains for the term of the
option, a segregated account consisting of cash, U.S. Government Securities or
other high-grade debt securities equal to the fluctuating market value of the
optioned securities. The segregated account will be adjusted at least daily to
reflect changes in the market value of the optioned securities.

The Trust will write put options only if they are secured. A put option is
"secured" if the Trust holds a put at the same exercise price, for the same
exercise period and on the same underlying security as the put written, or if
the Trust places cash, U.S. Government Securities or other high-grade debt
securities with a value equal to the exercise price of the put in a segregated
account with the Trust's custodian. The segregated account will be adjusted
daily to reflect the current value of the put.

The Trust may enter into "closing purchase transactions" or "closing sale
transactions" to terminate its obligations with respect to an option prior to
the expiration of the option. As the writer of an option, the Trust may effect a
closing purchase transaction by buying an option of the same series and exercise
price as the option previously written. As the purchaser of an option, the Trust
may liquidate its position by selling the option previously purchased.

The Trust may realize a profit or loss upon entering into a closing
purchase or sale transaction. The Trust will realize a profit if the cost of a
closing purchase transaction is less than the premium received upon writing the
original option and will incur a loss if the cost of a closing purchase
transaction exceeds the premium received upon writing the original option.
Whether the Trust realizes a profit or loss on a closing sale transaction will
depend on whether the amount received in the closing sale transaction is more or
less than the premium the Trust initially paid for the original option plus the
related transaction costs.

The Trust will not (1) sell listed put or call options to the extent that,
immediately after a sale, the aggregate value of the securities underlying the
calls or obligations securing the puts would exceed 25% of the Trust's net
assets or (2) purchase listed put or call options if, immediately after a
purchase, the premiums paid for all the options owned at that time would exceed
10% of the Trust's net assets.

INVESTMENT RESTRICTIONS

The Trust has adopted a number of investment restrictions which may not be
changed without shareholder approval. These are set forth in the Statement of
Additional Information and provide, among other things, that the Trust may not:

(a) borrow in excess of 10% of the value of its assets and then only
as a temporary measure;

(b) purchase securities (other than U.S. Government Securities) if
the purchase would cause the Trust, at the time, to have more than 5% of
the value of its total assets invested in the securities of any one
company or to own more than 10% of the outstanding voting securities of
any one company; or

PERFORMANCE INFORMATION

The Trust may from time to time include information regarding its total
return performance or yield in advertisements or in information furnished to
existing or prospective shareholders. When information regarding total return is
furnished, it will be based upon changes in the Trust's net asset value and will
assume the reinvestment of all capital gains distributions and income dividends.
It will take into account nonrecurring

VLSAMT-8
<PAGE>

charges, if any, which the Trust may incur, other than charges deducted from the
applicable contract or policy at the separate account level. It will not take
into account income taxes due on Trust distributions.

The table below illustrates the total return performance of the Trust for
the periods indicated by showing the value of a hypothetical $1,000 investment
made at the beginning of each period. The information contained in the table has
been computed by applying the Trust's average annual total return to the
hypothetical $1,000 investment. The table assumes reinvestment of all capital
gains distributions and income dividends.

Average
Annual
Total Return
-----------
For the year ended December 31, 1996.......... $1,159 15.87%
For the five years ended December 31, 1996.... $1,823 12.76%
For the period from October 1, 1987
(commencement of operations) to
December 31, 1996........................... $3,425 14.23%

Comparative performance information may be used from time to time in
advertising the Trust's shares, including data from Lipper Analytical Services,
Inc. and other industry or financial publications. The Trust may compare its
performance to that of other mutual funds with similar investment objectives and
to stock or other relevant indices. Such performance information may not be
useful for comparative purposes because it does not reflect fees and other
charges deducted from the insurance company's separate account. From time to
time, articles about the Trust regarding its performance or ranking may appear
in national publications such as Kiplinger's Personal Finance, Money Magazine,
Financial World, Morningstar, Personal Investor, Forbes, Fortune, Business Week,
The Vards Report, Wall Street Journal, Investor's Business Daily, Donoghue and
Barron's. Some of these publications may publish their own rankings or
performance reviews of mutual funds, including the Trust. Reference to or
reprints of such articles may be used in the Trust's promotional literature.
Investors should note that the investment results of the Trust will fluctuate
over time, and any presentation of the Trust's total return for any period
should not be considered as a representation of what an investment may earn or
what an investor's total return may be in any future period.

MANAGEMENT OF THE TRUST

The management and affairs of the Trust are supervised by the Trust's
Trustees. The Trust's officers conduct and supervise the daily business
operations of the Trust. The Trust's investment decisions are made by an
investment committee of employees of the Adviser. The Trust's Annual Report
contains a discussion on the Trust's performance, which will be made available
upon request and without charge.

The Adviser. Value Line, Inc. (the "Adviser") serves as the Trust's investment
adviser. The Adviser was organized in 1982 and is the successor to substantially
all of the operations of Arnold Bernhard & Co., Inc. ("AB&Co."). The Adviser was
formed as part of a reorganization of AB&Co., a sole proprietorship formed in
1931 which became a New York corporation in 1946. AB&Co. currently 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, owns all of the voting stock of AB&Co. All of the non-voting stock is
owned by or for the benefit of members of the Bernhard family and employees and
former employees of AB&Co. or the Adviser. The Adviser currently acts as
investment adviser to the other Value Line mutual funds and furnishes investment
advisory services to private and institutional accounts with combined assets in
excess of $5 billion. Value Line Securities, Inc., the Trust's distributor, is a
subsidiary of the Adviser. The Adviser manages the Trust's

VLSAMT-9
<PAGE>

investments, provides various administrative services and supervises the Trust's
daily business affairs, subject to the authority of the Board of Trustees. The
Adviser is paid a monthly advisory fee at an annual rate of 1/2 of 1% of the
Trust's average daily net assets during the year. The investment advisory
agreement provides that the Adviser shall render investment advisory and other
services to the Trust including, at its expense, all administrative services,
office space and the services of all officers and employees of The Trust. The
Trust 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 agent, 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. In addition, the
Trust has an agreement with GIAC to reimburse GIAC for certain administrative
and shareholder servicing expenses incurred by GIAC on behalf of the Trust. See
note 4 of the notes to the Trust's financial statements for the year ended
December 31, 1996. From time to time, the Adviser may voluntarily assume certain
expenses of the Trust. This will have the effect of lowering the overall expense
ratio of the Trust and of increasing the yield to investors. During fiscal 1996,
the Trust paid management fees amounting to .50% of average net assets.

Brokerage. The Trust pays a portion of its total brokerage commissions to Value
Line Securities, Inc., which clears transactions for the Trust through
unaffiliated broker-dealers.

CALCULATION OF NET ASSET VALUE

The net asset value of the Trust's shares for purposes of both purchases
and redemptions is determined once daily as of the close of trading of the first
session of the New York Stock Exchange (currently 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 Trust shares have been received. The
holidays on which the New York Stock Exchange is closed currently are New Year's
Day, President's 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 Trust,
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. Corporate bonds and other fixed income
securities are principally traded over-the-counter through market makers.
Accordingly, the Trustees have determined that the value of bonds and other
fixed income securities may be calculated by reference to valuations obtained
from an independent pricing service which determines valuations for normal
institutional size trading units of debt securities, without exclusive reliance
upon quoted prices. This service takes into account appropriate factors such as
institutional size trading characteristics and other market data in determining
valuations. Short-term instruments with maturities of 60 days or less at the
date of purchase are valued at amortized cost, which approximates market.
Short-term instruments with maturities greater than 60 days, at date of
purchase, are valued at the midpoint between the latest available and
representative asked and bid prices, and, commencing 60 days prior to maturity,
such securities are valued at amortized cost. Other assets and securities for
which market valuations are not readily available will be valued at fair value
as the Trustees may determine.

SALE AND REDEMPTION OF SHARES

VLSAMT-10
<PAGE>

purchase of certain contracts or policies issued by GIAC. There are no minimum
investment requirements. Payment for shares redeemed will be made as soon as
possible, but in any event within seven days after the order for redemption is
received by the Trust. However, payment may be postponed under unusual
circumstances such as when normal trading is not taking place on the New York
Stock Exchange.

The shares of the Trust are offered to GIAC to serve as an investment
medium for separate accounts which support variable annuity contracts and
variable life insurance policies issued by GIAC. The structure of these separate
accounts, however, permits variable annuity contractowners and variable life
policyowners, within the limitations described in the appropriate policy, to
allocate all or a part of the premiums paid for their contract or policy for an
investment in shares of the Trust. (See the prospectus describing the
appropriate contract or policy for more information regarding such allocation.)

It is conceivable that in the future it may be disadvantageous for
variable annuity and variable life insurance separate accounts to invest
simultaneously in the Trust. However, the Trust and GIAC do not currently
foresee any disadvantages to variable annuity contractowners or to variable life
insurance policyowners. The Trustees intend to monitor events for the existence
of any material irreconcilable conflict between or among such owners, and GIAC
will take whatever remedial action may be necessary to resolve any such
conflict.

DIVIDENDS, DISTRIBUTIONS AND TAXES

The Trust intends to distribute its net investment income, if any, and any
net realized capital gains to shareholders annually or more frequently if
necessary to comply with the Internal Revenue Code (the "Code"). All such
dividends or distributions will be payable in shares of the Trust at the net
asset value on the ex-dividend date. Because the Trust intends to distribute all
of its net investment income and capital gains to shareholders and thereby
qualify as a regulated investment company under the Code, it is not expected
that the Trust will be required to pay any Federal income taxes.

The Code and Treasury regulations promulgated thereunder provide the
mutual funds underlying variable annuity contracts and variable life insurance
policies must meet certain diversification requirements in order to maintain the
favorable tax treatment afforded such contracts and policies. The Adviser will
diversify the Trust's investments in accordance with those requirements.

Since shares of the Trust will be offered to investors only through
variable annuity contracts or variable life insurance policies funded through
separate accounts of GIAC, reference is made to the accompanying separate
account prospectus relating to the appropriate contract or policy for
information regarding the Federal income tax treatment accorded distributions of
investment income and capital gains to the separate accounts. A person
considering purchasing a contract or policy should also consult with his or her
tax advisor before doing so.

ADDITIONAL INFORMATION

The Trust is an open-end, diversified management investment company
organized as a Massachusetts business trust under a Declaration of Trust dated
May 14, 1987. The Trust has an unlimited number of shares of beneficial
interest, $.01 par value. Each share has one vote, with fractional shares voting
proportionately. Shares have no preemptive rights, are freely transferable, are
entitled to dividends as declared by the Trustees, and, if the Trust were
liquidated, would receive the net assets of the Trust. Shareholder voting will
be conducted in accordance with the procedures set forth in the section entitled
"Voting Rights" in the applicable contract or policy issued by GIAC.

VLSAMT-11
<PAGE>

The Trustees have the authority to issue two or more series of shares and
to designate the relative rights and preferences as between the different
series, although they have not exercised that authority. If more than one series
of shares were issued and a series were unable to meet its obligations, the
remaining series might have to assume the unsatisfied obligation of that series.

Shareholders' Inquiries. All inquiries regarding the Trust should be
directed to the Trust at the telephone numbers or address set forth on the cover
page of this Prospectus.

Transfer Agent. State Street Bank and Trust Company, Boston, MA, is the
transfer and dividend-paying agent (shareholder servicing agent) for the Trust.

VLSAMT-12
<PAGE>

VALUE LINE STRATEGIC ASSET
MANAGEMENT TRUST

220 East 42nd Street, New York, New York 10017-5891

1-800-223-0818

- --------------------------------------------------------------------------------

STATEMENT OF ADDITIONAL INFORMATION
May 1, 1997

- --------------------------------------------------------------------------------

This Statement of Additional Information is not a prospectus and must be
read in conjunction with the Prospectus of Value Line Strategic Asset Management
Trust dated May 1, 1997, a copy of which may be obtained without charge by
writing or telephoning the Fund.

------------

TABLE OF CONTENTS

Page
----
Investment Objective and Policies............... B-1
Other Investment Strategies..................... B-2
Investment Restrictions......................... B-4
Trustees and Officers........................... B-5
The Adviser..................................... B-6
Brokerage Arrangements.......................... B-8
Sale and Redemption of Shares................... B-9
Taxes........................................... B-9
Performance Data................................ B-9
Additional Information.......................... B-9
Financial Statements............................ B-10

INVESTMENT OBJECTIVE AND POLICIES
(See also "Investment Objective and Policies" in the Fund's Prospectus)

Value Line Strategic Asset Management Trust (the "Trust") is a
diversified, open-end management investment company. Its investment objective is
to achieve a high total investment return consistent with reasonable risk. The
Trust will attempt to achieve its objective by following an asset allocation
strategy based on data derived from computer models for the stock and bond
markets that shifts the assets of the Trust among equity, debt and money market
securities as the models indicate and Value Line, Inc. (the "Adviser") deems
appropriate.

B-1
<PAGE>

The Trust will not concentrate its investments in any particular industry
but reserves the right to invest up to 25% of its total assets (taken at market
value) in any one industry. The Trust does not invest for the purposes of
management or control of companies whose securities the Trust owns. The Trust
intends to limit its annual portfolio turnover so that realized short-term gains
on securities held for less than three months is less than 30% of the Trust's
gross income so that the Trust will meet one of the tests for qualification as a
regulated investment company under the Internal Revenue Code.

The policies and investment objective set forth above in the preceding
paragraphs and below under "Investment Restrictions" are fundamental policies of
the Trust and may not be changed without the affirmative vote of a majority of
the outstanding voting securities of the Trust. As used in this Statement of
Additional Information and in the Prospectus, a "majority of the outstanding
voting securities of the Trust" means the lesser of (1) the holders of more than
50% of the outstanding shares of beneficial interest of the Trust or (2) 67% of
the shares present if more than 50% of the shares are present at a meeting in
person or by proxy.

OTHER INVESTMENT STRATEGIES
(See also "Other Investment Strategies" in the Trust's Prospectus)

Futures and Options on Futures.

A risk in employing interest rate futures contracts to protect against the
price volatility of portfolio securities is that the price of a futures contract
may move more or less than the price of the securities being hedged. There is
also a risk of imperfect correlation where the securities underlying futures
contracts have different maturities than the portfolio securities being hedged.
Another risk is that the Trust's Adviser could be incorrect in its expectations
as to the direction or extent of various interest rate movements or the time
span within which the movements take place. For example, if the Trust entered
into short futures contracts on bonds in anticipation of an increase in interest
rates, and then interest rates declined instead, causing bond prices to rise,
the Trust would lose money on offsetting its futures contract.

Although the Trust intends to enter into futures and options contracts
only if there is an active market for such contracts, no assurance can be given
that an active market will exist for the contracts at any particular time. Most
futures exchanges and boards of trade limit the amount of fluctuation permitted
in futures contract prices during a single trading day. Once the daily limit has
been reached in a particular contract, no trades may be made that day at a price
beyond that limit. Futures contract prices could move to the daily limit for
several consecutive trading days with little or no trading, thereby preventing
prompt liquidation of futures positions and subjecting some futures traders to
substantial losses. In such event and in the event of adverse price movements,
the Trust would be required to make daily cash payments of variation margin. In
such circumstances, an increase in the value of the portion of the portfolio
being hedged, if any, may offset partially or completely losses on the futures
contract. However, no assurance can be given that the price of the securities
being hedged will correlate with the price movements in a futures contract and
thus provide an offset to losses on the futures contract. Similarly, there can
be no assurance that a liquid offset market will exist for a particular option
at a particular time. In such case it might be impossible to effect an
offsetting transaction for that particular option. In that case, to realize any
profit, a holder would have to exercise his option and have to comply with
margin requirements for the underlying futures contract. A writer could not
terminate his obligation until the option expired or he was assigned an exercise
notice.

There can be no assurance of the Trust's successful use of stock index
futures as a hedging device. One risk arises because of the imperfect
correlation between movements in the price of the stock index future and

B-2
<PAGE>

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 Trust's
securities portfolio diverges from the securities included in the applicable
stock index. If the price of the stock index future moves less than the price of
the securities which are the subject of the hedge, the hedge will not be fully
effective but, if the price of the securities being hedged has moved in an
unfavorable direction, the Trust would be in a better position than if it had
not hedged at all. If the price of the securities being hedged has moved in a
favorable direction, this advantage will be partially offset by the future. If
the price of the future moves more than the price of the stock, the Trust will
experience either a loss or again on the future which will not be completely
offset by movements in the price of the securities which are the subject of the
hedge. To compensate for the imperfect correlation of movements in the price of
securities being hedged and movements in the price of the stock index futures,
the Trust may enter into stock index futures contracts in a greater dollar
amount than the dollar amount of securities being hedged if the historical
volatility of the prices of such securities has been greater than the historical
volatility of the index. Conversely, the Trust may enter into fewer stock index
futures contracts if the historical volatility of the price of the securities
being hedged is less than the historical volatility of the stock index. It is
also possible that, where the Trust has entered into short futures to hedge its
portfolio against a decline in the market, the market may advance and the value
of securities held in the Trust's portfolio may decline. If this occurred, the
Trust would lose money on the future and also experience a decline in the value
of its portfolio securities. However, over time the value of a diversified
portfolio should move in the same direction as the market indexes upon which the
futures are based.

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. First, all participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting additional margin
deposit requirements, investors may close futures contracts through offsetting
transactions which would distort the normal relationship between the index and
futures markets. Secondly, from the point of view of speculators, the deposit
requirements in the futures market are less onerous than margin requirements in
the securities market. Therefore, increased participation by speculators in the
futures market also may cause temporary price distortions. Due to the
possibility of price distortions in the futures market and because of the
imperfect correlation between movements in the stock index and movements in the
price of stock index futures, a correct forecast of general market trends by the
Adviser still may not result in a successful hedging transaction.

Successful use of stock index futures by the Trust also is subject to the
Adviser's ability to predict correctly movements in the direction of the market.
For example, if the Trust has hedged against the possibility of a decline in the
market adversely affecting stocks held in its portfolio and stock prices
increase instead, the Trust will lose part or all of the benefit of the
increased value of its stocks which it has hedged because it will have
offsetting losses in its futures positions. In addition, in such situations, if
the Trust 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 Trust
may have to sell securities at a time when it may be disadvantageous to do so.

Options on Securities.

Certain securities exchanges have established limitations governing the
maximum number of calls and puts of each class of securities that may be held,
written or exercised within certain time periods by an investor or group of
investors acting in concert, regardless of whether the options are written on
the same or different securities exchanges or are held, written or exercised in
one or more accounts or through one or more brokers.

B-3
<PAGE>

The Trust and other clients of the Adviser may be considered to be such a group.
A securities exchange may order the liquidation of positions exceeding its
specified limits and may impose certain other sanctions.

INVESTMENT RESTRICTIONS

The Trust may not:

(1) Purchase or sell any put or call options or any combination thereof,
except as described in the Trust's Prospectus and Statement of Additional
Information.

(2) Borrow money in excess of 10% of the value of its assets and then only
as a temporary measure to meet unusually heavy redemption requests or for other
extraordinary or emergency purposes. Securities will not be purchased while
borrowings are outstanding. No assets of the Trust may be pledged, mortgaged or
otherwise encumbered, transferred or assigned to secure a debt except that the
Trust may enter into futures contracts as described in the Trust's Prospectus
and Statement of Additional Information.

(3) Engage in the underwriting of securities, except to the extent that
the Trust may be deemed an underwriter as to restricted securities under the
Securities Act of 1933 in selling portfolio securities.

(4) Invest in real estate, mortgages or illiquid securities of real estate
investment trusts although the Trust may purchase securities of issuers which
engage in real estate operations.

(5) Invest in commodities or commodity contracts except that it may invest
in futures contracts and options on futures contracts as described in the
Prospectus and Statement of Additional Information.

(6) 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 including restricted securities do not exceed 10% of the Trust's
assets. The Trust may lend its portfolio securities to broker-dealers and
institutional investors if as a result thereof the aggregate value of all
securities loaned does not exceed 33 1/3% of the total assets of the Trust.

(7) Invest more than 5% of the value 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 10% 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.

(8) Invest 25% or more of its assets in securities of issuers in any one
industry. For the purpose of this restriction, gas, electric, water and
telephone utilities will each be treated as a separate industry.

(9) Invest more than 5% of its total assets in securities of issuers
having a record, together with predecessors, of less than three years of
continuous operation. The restriction does not apply to any obligation issued or
guaranteed by the U.S. Government, its agencies or instrumentalities.

(10) Purchase or retain the securities of any issuer if, to the knowledge
of the Trust, those officers and trustees of the Trust 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.

(11) Issue senior securities except evidences of indebtedness permitted by
restriction No. 2 above.

(12) Purchase securities for the purpose of exercising control over
another company.

(13) Purchase securities on margin except that it may make margin deposits
in connection with interest rate futures contracts or participate on a joint or
a joint and several basis in any trading account in securities.

B-4
<PAGE>

(14) Purchase oil, gas or other mineral type development programs or
leases, except that the Trust may invest in the securities of companies which
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 Trust follows the industry classifications in The Value
Line Investment Survey.

Since the Trust will be used as an investment vehicle for variable annuity
contracts and variable life insurance policies issued by The Guardian Insurance
& Annuity Company, Inc. ("GIAC") its investments may be subject in the future to
further restrictions under the insurance laws and regulations of the states in
which such contracts or policies are offered for sale.

TRUSTEES AND OFFICERS

Principal Occupations
Name, Address and Age Position with Fund During Past 5 Years
- --------------------- ------------------ --------------------------

*Jean Bernhard Buttner Chairman of the Chairman, President and
Age 62 Board of Directors Chief Executive Officer
and President of Value Line Inc. (the
"Adviser") and Value Line
Publishing, Inc. Chairman
of The Value Line Funds
and Value Line
Securities, Inc.

John W. Chandler Trustee Consultant, Academic
2801 New Mexico Ave., N.W. Search Consultation
Washington, DC 20007 Service, Inc. since 1992;
Age 73 Consultant, Korn/Ferry
International, 1990-1992.
Trustee Emeritus and
Chairman (1993-1994) of
Duke University;
President Emeritus,
Williams College.

*Leo R. Futia Trustee Retired Chairman and
201 Park Avenue South Chief Executive Officer
New York, NY 10003 of The Guardian Life
Age 77 Insurance Company of
America and Director
since 1970. Director
(Trustee) of The Guardian
Insurance & Annuity
Company, Inc., Guardian
Investor Services
Corporation, and the
Guardian-sponsored mutual
funds.

Charles E. Reed Trustee Retired. Formerly, Senior
3200 Park Avenue Vice President of General
Bridgeport, CT 06604 Electric Co. Director
Age 83 Emeritus of People's
Bank, Bridgeport, CT.

Paul Craig Roberts Trustee Distinguished Fellow,
505 South Fairfax Street Cato Institute, since
Alexandria, VA 22320 1993; formerly, William
Age 58 E. Simon Professor of
Political Economy, Center
for Strategic and
International Studies;
Director, A. Schulman
Inc. (plastics) since
1992.

Nancy-Beth Sheerr Trustee Chairman, Radcliff
1409 Beaumont Drive College Board of
Gladwyne, PA 19035 Trustees.
Age 47

- ---------
* "Interested" Director as defined in the Investment Company Act of 1940 (the
"1940 Act").

B-5
<PAGE>

Principal Occupations
Name, Address and Age Position with Fund During Past 5 Years
- --------------------- ------------------ --------------------------

Stephen Grant Vice President Portfolio Manager with
Age 43 the Adviser.

Christopher W. Bischof Vice President Portfolio Manager with
Age 45 the Adviser since 1995;
Securities Analyst with
the Adviser, 1989-1995.

David T. Henigson Vice President, Director, Vice President
Age 39 Secretary and and Compliance Officer of
Treasurer the Adviser. Director and
Vice President of the
Distributor.

Unless otherwise indicated, the address for each of the above is 220 East 42nd
Street, New York, NY.

Trustees and certain officers of the Trust are also trustees/directors and
officers of other investment companies for which the Adviser acts as investment
adviser. Trustees who are officers or employees of the Adviser receive no
remuneration from the Trust. The following table sets forth information
regarding compensation of Trustees by the Trust and by the Trust and the eleven
other Value Line Funds of which each of the Trustees is a director or trustee
for the fiscal year ended December 31, 1996. Trustees who are officers or
employees of the Adviser do not receive any compensation from the Trust or any
of the Value Line Funds.

Compensation Table
Fiscal Year Ended December 31, 1996

Total
Pension or Estimated Compensation
Retirement Annual From Trust
Aggregate Benefits Benefits and Fund
Compensation Accrued As Part Upon Complex
Name of Person From Fund of Fund Expenses Retirement (12 Funds)
------------ --------------- ---------- -----------
Jean B. Buttner $ -0- N/A N/A $ -0-
John W. Chandler 2,991 N/A N/A 35,890
Leo R. Futia 2,741 N/A N/A 32,890
Charles E. Reed 2,991 N/A N/A 35,890
Paul Craig Roberts 2,991 N/A N/A 35,890
Nancy-Beth Sheerr 692 N/A N/A 8,305

As of the date of this Statement of Additional Information, The Guardian
Insurance & Annuity Company, Inc., a Delaware corporation, owned all of the
outstanding shares of the Trust. Such shares are allocated to one or more
Guardian separate accounts, which are registered as unit investment trusts under
the 1940 Act. The address of The Guardian Insurance & Annuity Company, Inc. is
201 Park Avenue South, New York, New York 10003. It is a subsidiary of The
Guardian Life Insurance Company of America, a mutual life insurance company
organized under the laws of the State of New York.

THE ADVISER
(See also "Management of the Trust" in the Trust's Prospectus)

The Trust's investment adviser is Value Line, Inc. (the "Adviser"). The
investment advisory agreement between the Trust and the Adviser provides for an
advisory fee payable monthly at an annual rate equal to 11/42 of 1% of the
Trust's average daily net assets during the year. During 1994, 1995 and 1996,
the Trust paid or accrued to the Adviser advisory fees of $3,234,550, $3,853,934
and $4,947,837, respectively. In the computation of the

B-6
<PAGE>

advisory fee, the net amount of any tender fees received by Value Line
Securities, Inc., the Trust's Distributor, from acting as tendering broker with
respect to any portfolio securities of the Trust will be subtracted from the
advisory fee.

The investment advisory agreement provides that the Adviser shall render
investment advisory and other services to the Trust including, at its expense,
all administrative services, office space and the services of all officers and
employees of the Trust. The Trust 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 agent, 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. In addition, the Trust has agreed to reimburse GIAC for certain
administrative and shareholder servicing expenses incurred by GIAC on behalf of
the Trust. See note 4 of the notes to the Trust's financial statements for the
year ended December 31, 1996. The Trust 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 Trust.

The Adviser acts as investment adviser to 15 other investment companies
constituting The Value Line Family of Funds and furnishes investment advisory
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 Trust and certain investments may be appropriate for the Trust 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 Trust. In other cases, however, it is
believed that the ability of the Trust to participate, to the extent permitted
by law, in volume transactions will produce better results for the Trust.

The Trust does not purchase or sell a security based solely on information
contained in the Value Line Investment Survey. 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 Trust. 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 Trust, specific reference to
such agreements will be made in the "Schedule of Investments" in shareholder
reports of the Trust. As of the date of this Statement of Additional
Information, no such agreements exist.

B-7
<PAGE>

BROKERAGE ARRANGEMENTS
(See also "Management of the Trust" in the Trust's Prospectus)

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 Trust 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 1994, 1995 and 1996, the Trust paid brokerage commissions of
$1,130,658, $810,549, and $743,211, respectively, of which $754,571 (67%),
$541,673 (67%) and $461,300 (62%) respectively, was paid to Value Line
Securities, Inc., which clears transactions for the Trust through unaffiliated
brokers.

The Trustees have adopted procedures incorporating the standards and Rule
17e-1 under the 1940 Act which require that the commission 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
Trustees with respect to the payment of commissions to affiliated brokers and
maintain records with respect thereto.

During 1996, $609,965 (82%) of the Trust's brokerage commissions went to
brokers or dealers solely for their services in obtaining best prices and
executions; the balance, or $133,246 (18%), went to brokers or dealers who
provided information or services to the Adviser and, therefore, indirectly to
the Trust 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. These services and information were furnished to the
Adviser at no cost to it; no such services or information were furnished
directly to the Trust, but certain of these services might have relieved the
Trust 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 Trust
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 Trust's annual portfolio turnover rate may exceed
100%. A rate of portfolio turnover of 100% would occur if all of the Trust's
portfolio securities were replaced in a period of one year. To the extent that
the Trust engages in short-term trading in attempting to achieve its objective,
it may increase the turnover rate and incur larger brokerage commissions and
other expenses than might otherwise be the case. The Trust's portfolio turnover
rate for recent fiscal periods is shown under "Financial Highlights," in the
Trust's Prospectus.

B-8
<PAGE>

SALE AND REDEMPTION OF SHARES
(See also "Calculation of Net Asset Value" and "Sale and Redemption of Shares"
in the Trust's Prospectus)

Shares of the Trust are sold and redeemed at net asset value next
calculated after a purchase or redemption order is received by the Trust in good
order. Shares of the Trust are available to the public only through the purchase
of certain contracts or policies issued by GIAC. There are no minimum investment
requirements. Payment for shares redeemed will be made as soon as possible, but
in any event within seven days after the order for redemption is received by the
Trust. However, the Trust may suspend the right of redemption or postpone the
date of payment beyond seven days during any period when (a) trading on the New
York Stock Exchange is closed for other than weekends and holidays or is
restricted; (b) an emergency exists, as determined by the Securities and
Exchange Commission, as a result of which disposal by the Trust of securities
owned by it is not reasonably practicable, or it is not reasonably practicable
for the Trust fairly to determine the value of its net assets; or (c) the
Securities and Exchange Commission by order so permits for the protection of
security holders of the Trust.

TAXES
(See "Dividends, Distributions and Taxes" in the Trust's Prospectus)

The Trust intends to continue to qualify as a regulated investment company
under the Internal Revenue Code. In each year in which the Trust so qualifies,
it will not be subject to Federal income taxes on its net investment income and
net capital gains which it distributes to shareholders. The computation of net
capital gains takes into account any capital loss carry forward of the Trust.

PERFORMANCE DATA

From time to time, the Trust 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 Trust will be accompanied by information
on the Trust's average annual total return over the most recent four calendar
quarters and the period from the Trust's inception of operations. The Trust may
also advertise aggregate annual total return information over different periods
of time.

The Trust's average annual total 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:

T = (ERV/P)^(1/n)-1

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.

ADDITIONAL INFORMATION

The Declaration of Trust provides that obligations of the Trust are not
binding upon the Trustees individually but only upon the property of the Trust,
that the Trustees and officers will not be liable for errors of judgment or
mistakes of fact or law, and that the Trust will indemnify its Trustees and
officers against liabilities and expenses incurred in connection with litigation
in which they may be involved because of their offices with

B-9
<PAGE>

the Trust except if it is determined in the manner provided in the Declaration
of Trust that they have not acted in good faith in the reasonable belief that
their actions were in the best interests of the Trust. However, nothing in the
Declaration of Trust protects or indemnifies a Trustee or officer against any
liability 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. The Declaration of Trust provides that a
Trustee of the Trust can be removed with cause if two-thirds of the remaining
Trustees vote that the Trustee be removed.

Experts

The financial statements of the Trust, including the financial highlights,
included in the Trust's Annual Report to Shareholders and incorporated by
reference in this Statement of Additional Information have been so incorporated
by reference in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in accounting and
auditing.

Custodian

The Trust employs State Street Bank and Trust Company Boston, MA, as
custodian for the Trust. The custodian's responsibilities include safeguarding
and controlling the Trust's cash and securities, handling the receipt and
delivery of securities and collecting interest and dividends on the Trust's
investments. The custodian does not determine the investment policies of the
Trust or decide which securities the Trust will buy or sell.

FINANCIAL STATEMENTS

The Trust's financial statements for the year ended December 31, 1996,
including the financial highlights for each of the five fiscal years in the
period ended December 31, 1996, appearing in the 1996 Annual Report to
Shareholders and the report thereon of Price Waterhouse LLP, independent
accountants, appearing therein, are incorporated by reference in this Statement
of Additional Information.

The Trust's 1996 Annual Report to Shareholders is enclosed with this
Statement of Additional Information.

B-10
<PAGE>

VALUE LINE STRATEGIC ASSET MANAGEMENT TRUST
PART C
OTHER INFORMATION

Item 24. Financial Statements and Exhibits.

a. Financial Statements

Included in Part A of this Registration Statement:

Financial Highlights for each of the nine years in the period ended
December 31, 1996 and the period from October 1, 1987 (commencement of
operations) to December 31, 1987.

Incorporated by reference in Part B of this Registration Statement:*

Schedule of Investments at December 31, 1996
Statement of Assets and Liabilities at December 31, 1996
Statement of Operations for the year ended December 31, 1996
Statement of Changes in Net Assets for the years ended
December 31, 1996 and December 31, 1995
Notes to the Financial Statements
Financial Highlights for each of the five years in the period
ended December 31, 1996
Report of Independent Accountants

Statements, schedules and historical information other than those listed
above have been omitted since they are either not applicable or are not
required.

- ------------

* Incorporated by reference from the Annual Report to Shareholders for
the year ended December 31, 1996.

b. Exhibits

16. Calculation of Performance Data -- Exhibit 1

Item 25. Persons Controlled by or Under Common Control with Registrant.

As of the date hereof, The Guardian Insurance & Annuity Company, Inc., a
Delaware corporation ("GIAC"), owned all of the outstanding shares of beneficial
interest of the Registrant. GIAC is a subsidiary of The Guardian Life Insurance
Company of America, a mutual life insurance company organized under the laws of
the State of New York.

Item 26. Number of Holders of Securities (as of December 31, 1996).

(1) (2)
Number of
Title of Class Record Shareholders
-------------- -------------------

Shares of Beneficial Interest 14
($.01 par value per share)

C-1
<PAGE>

Item 27. Indemnification.

Incorporated by reference from Post-Effective Amendment No. 1 (filed with
the Commission March 3, 1988).

Item 28. 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 29.

Position with
Name the Adviser Other Employment
---- ----------- ----------------

Jean Bernard Buttner Chairman of the Board, Chairman of the
President and Chief Board and Chief
Executive Officer 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 Vice President and a
and Director Director of Arnold
Bernhard & Co., Inc.
and the Distributor.

Howard A. Brecher Vice President, Secretary Secretary and
and Director Treasurer of Arnold
Bernhard & Co., Inc.

Harold Bernard, Jr. Director Administrative Law
Judge.

William S. Kanaga Director Retired Chairman of
Arthur Young (now
Ernst & Young).

W. Scott Thomas Director Partner, Brobeck,
Phleger & Harrison,
attorneys.

Item 29. 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 Intermediate Bond Fund, Inc.;
Value Line Small-Cap Growth Fund, Inc.; Value Line Asset Allocation Fund, Inc.;
Value Line U.S. Multinational Company Fund, Inc.

C-2
<PAGE>

(b) (2)
Position and (3)
(1) Offices Position and
Name and Principal with Value Line Offices with
Business Address Securities, Inc. Registrant
---------------- ---------------- ----------

Jean Bernard Buttner Chairman of the Board Chairman of the
Board and President

David T. Henigson Vice President, Vice President, Secretary
Secretary, Treasurer and Treasurer
and Director

Stephen LaRosa Asst. Vice President Asst. Treasurer

The business address of each of the officers and directors is 220 East
42nd Street, New York, NY 10017-5891.

Item 30. 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-(i). 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), State Street Bank and Trust Company,
225 Franklin Street, Boston, MA 02110 for all other records.

Item 31. Management Services.

None.

Item 32. Undertakings.

Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to shareholders,
upon request and without charge.

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. 10 to the registration statement on Form N-1A (the "Registration
Statement"), of our report dated February 10, 1997 relating to the financial
statements and financial highlights appearing in the December 31, 1996 Annual
Report to Shareholders of Value Line Strategic Asset Management Trust, 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 headings "Additional Information" and "Financial
Statements" in the Statement of Additional Information. Price Waterhouse LLP

Price Waterhouse LLP

1177 Avenue of the Americas
New York, New York
April 28, 1997

C-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment
to its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, and State of New York on the
28th day of April, 1997.

VALUE LINE STRATEGIC ASSET MANAGEMENT TRUST

By: /S/ 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.

Signatures Title Date
---------- ----- ----

*JEAN BERNARD BUTTNER Chairman of the Board of April 28, 1997
(Jean Bernard Buttner) Trustees and President

*JOHN W. CHANDLER Trustee April 28, 1997
(John W. Chandler)

*LEO R. FUTIA Trustee April 28, 1997
(Leo R. Futia)

*CHARLES E. REED Trustee April 28, 1997
(Charles E. Reed)

*PAUL CRAIG ROBERTS Trustee April 28, 1997
(Paul Craig Roberts)

*NANCY-BETH SHEERR Trustee April 28, 1997

DAVID T. HENIGSON Treasurer; Principal
(David T. Henigson) Financial and Accounting April 28, 1997
Officer

*By: /S/ DAVID T. HENIGSON
-------------------------------------
(David T. Henigson, Attorney-in-fact)

C-5

VALUE LINE STRATEGICE ASSET
MANAGEMENT TRUST
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATION
EXHIBIT 16

Year(s) Ended 12/31/96: 1 Year 5 Years 9.25 Years*
----- ----- -----------
Initial Investment: 1,000 1,000 1,000
Balance at End of Period: 1,159 1,823 3,425
Change: 159 823 2,425

Percentage Change: 15.87% 82.30% 242.50%

Average Annual Total Return: 15.87% 12.76% 14.23%

- ----------
* from 10/01/87 (commencement of operations)

<ARTICLE> 6
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 929,539
<INVESTMENTS-AT-VALUE> 1,084,013
<RECEIVABLES> 12,708
<ASSETS-OTHER> 87
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,096,808
<PAYABLE-FOR-SECURITIES> 23,345
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 678
<TOTAL-LIABILITIES> 24,023
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 768,981
<SHARES-COMMON-STOCK> 48,985
<SHARES-COMMON-PRIOR> 43,235
<ACCUMULATED-NII-CURRENT> 26,688
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 122,642
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 154,474
<NET-ASSETS> 1,072,785
<DIVIDEND-INCOME> 5,246
<INTEREST-INCOME> 27,274
<OTHER-INCOME> 0
<EXPENSES-NET> 5,771
<NET-INVESTMENT-INCOME> 26,749
<REALIZED-GAINS-CURRENT> 122,798
<APPREC-INCREASE-CURRENT> (6,851)
<NET-CHANGE-FROM-OPS> 142,696
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (16,569)
<DISTRIBUTIONS-OF-GAINS> (48,810)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,554
<NUMBER-OF-SHARES-REDEEMED> 3,048
<SHARES-REINVESTED> 3,245
<NET-CHANGE-IN-ASSETS> 196,276
<ACCUMULATED-NII-PRIOR> 16,507
<ACCUMULATED-GAINS-PRIOR> 48,654
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,948
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,780
<AVERAGE-NET-ASSETS> 989,891
<PER-SHARE-NAV-BEGIN> 20.27
<PER-SHARE-NII> .53
<PER-SHARE-GAIN-APPREC> 2.56
<PER-SHARE-DIVIDEND> (.37)
<PER-SHARE-DISTRIBUTIONS> (1.09)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 21.90
<EXPENSE-RATIO> .58
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>