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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 29, 1995
REGISTRATION NO. 33-60829
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
Pre-Effective Amendment No. 1 /X/
Post-Effective Amendment No. / /
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 1 /X/
(CHECK APPROPRIATE BOX OR BOXES)
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VALUE LINE U.S. MULTINATIONAL COMPANY FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
220 East 42nd Street
New York, New York 10017-5891
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's Telephone Number, Including Area Code: (212) 907-1500
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David T. Henigson
Value Line, Inc.
220 East 42nd Street
New York, New York 10017-5891
(NAME AND ADDRESS OF AGENT FOR SERVICE)
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Copy to:
Peter D. Lowenstein, Esq.
Two Greenwich Plaza, Suite 100
Greenwich CT 06830
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APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
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Pursuant to the provisions of Rule 24f-2 under the Investment Company Act of
1940, as amended, the Registrant registered an indefinite number of shares of
common stock under the Securities Act of 1933 on June 29, 1995.
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VALUE LINE U.S. MULTINATIONAL COMPANY FUND, INC.
FORM N-1A
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495)
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N-1A ITEM NO. LOCATION
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PART A (PROSPECTUS)
Item 1. Cover Page..................................... Cover Page
Item 2. Synopsis....................................... Summary of Fund Expenses
Item 3. Condensed Financial Information................ Summary of Fund Expenses; Financial Highlights
Item 4. General Description of Registrant.............. Cover Page; Investment Objective and Policies;
Investment Restrictions; Additional
Information
Item 5. Management of the Fund......................... Summary of Fund Expenses; Management of the
Fund; Additional Information
Item 6. Capital Stock and Other Securities............. Dividends, Distributions and Taxes; Additional
Information
Item 7. Purchase of Securities Being Offered........... How to Buy Shares; Calculation of Net Asset
Value; Investor Services
Item 8. Redemption or Repurchase....................... How to Redeem 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 Objective and Policies.............. Investment Objective and Policies; Investment
Restrictions
Item 14. Management of the Fund......................... Directors and Officers
Item 15. Control Persons and Principal Holders of
Securities................................... Management of the Fund (Part A); Directors and
Officers
Item 16. Investment Advisory and Other Services......... Management of the Fund (Part A); The Adviser
Item 17. Brokerage Allocation........................... Management of the Fund (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................................ How to Buy Shares; How to Redeem 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 Statement
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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.
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VALUE LINE
U.S. MULTINATIONAL COMPANY PROSPECTUS
FUND, INC. October 1,
1995
220 East 42nd Street, New York, New York 10017-5891
1-800-223-0818 or 1-800-243-2729
Value Line U.S. Multinational Company Fund, Inc. (the
"Fund") is a no-load investment company whose
investment objective is maximum total return. The Fund
invests primarily in common stocks or securities
convertible into common stock of U.S. companies that
have significant sales from international operations.
From time to time, a portion of the Fund's assets may
be invested in short-term indebtedness or may be held
in cash.
The Fund's investment adviser is Value Line, Inc. (the
"Adviser").
Shares of the Fund are offered at net asset value.
There are no sales charges or redemption fees.
Fund shares are not deposits or obligations of, or guaranteed or
endorsed by, any bank, nor are they federally insured or otherwise
protected by the Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any other agency.
This Prospectus sets forth concise information about the Fund that a
prospective investor ought to know before investing. This Prospectus
should be retained for future reference. Additional information about
the Fund is contained in a Statement of Additional Information, dated
October 1, 1995, 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 Fund at the address or telephone numbers
listed above.
DISTRIBUTOR
Value Line Securities, Inc.
220 East 42nd Street
New York, NY 10017-5891
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.
<PAGE>
SUMMARY OF FUND EXPENSES
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SHAREHOLDER TRANSACTION EXPENSES
Sales Load on Purchases......................... None
Sales Load on Reinvested Dividends.............. None
Deferred Sales Load............................. None
Redemption Fees................................. None
Exchange Fee.................................... None
ANNUAL FUND OPERATING EXPENSES AFTER EXPENSE
REIMBURSEMENTS*
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees................................. 0%
12b-1 Fees...................................... 0%
Other Expenses.................................. 0%
Total Fund Operating Expenses (after expenses
absorbed and fee waiver)....................... 0%
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EXAMPLE 1 YEAR 3 YEARS
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You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time
period and no voluntary waiver of fees and expenses:................. $ 15 $ 47
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* The Adviser has voluntarily agreed to bear all expenses for the fiscal year
ending March 31, 1996. If the Adviser did not bear such expenses, the Fund's
total operating expenses on an annualized basis would be 1.49% of average net
assets (Management Fees=.75%, 12b-1 Fees=.25% and Other Expenses=.49%).
The foregoing is based upon the annualized expenses for the period from
commencement of operations to March 31, 1996, and is designed to assist
investors in understanding the various costs and expenses that an investor in
the Fund will bear directly or indirectly. Because the Fund is a new fund and
has not completed a full fiscal year, "Other Expenses" is based upon amounts
estimated to be payable in the current fiscal year. ACTUAL EXPENSES IN THE
FUTURE MAY BE GREATER OR LESS THAN THOSE SHOWN. See "Management of the Fund" and
"Service and Distribution Plan."
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INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is maximum total return, consisting of
capital appreciation and dividend and interest income. The Fund will at all
times keep not less than 65% of the market value of its total assets invested in
stocks (including common stocks and securities convertible into common stocks
such as debt securities and preferred stocks) of U.S. companies that derive at
least 25% of their sales from outside of the United States. This is a
fundamental policy of the Fund which along with its investment objective cannot
be changed without shareholder approval. There can be no assurance that the Fund
will achieve its investment objective. There are risks in all investments,
including any stock investment, and in all mutual funds that invest in stocks.
BASIC INVESTMENT STRATEGY
The Fund seeks to achieve its investment objective by investing primarily in
U.S. "U.S. Multinational" stocks which includes common stocks and securities
convertible into common stocks such as bonds, debentures, corporate notes and
preferred stocks. As used in this Prospectus, "U.S. Multinational" stocks refer
to the common stock of companies that derive at least 25% of their sales from
outside the United States. A goal of the Fund is to maintain an equity portfolio
with an aggregate share of at least 50% of sales from outside the United States,
although individual stocks may represent non-United States sales of as little as
25%. When the Adviser deems it appropriate in the light of economic or market
conditions, up to 35% of the Fund's total assets may be held from time to time
in cash, U.S. Government securities, or money-market instruments which are rated
in the top two categories by a nationally recognized rating organization. The
Fund may also write covered call options and enter into repurchase agreements.
In selecting securities for purchase or sale, the Adviser may rely on the
Value Line Timeliness-TM- Ranking System or the Value Line Performance-TM-
Ranking System, if a ranking is available for that particular stock. 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.
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
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determining whether the market is undervaluing or overvaluing a particular
security. The utilization of these Rankings is no assurance that the Fund will
perform more favorably than the market in general over any particular period.
MISCELLANEOUS INVESTMENT PRACTICES
COVERED CALL OPTIONS. The Fund may write covered call options on stocks
held in its portfolio ("covered options"). When the Fund writes a covered call
option, it gives the purchaser of the option the right to buy the underlying
security at the price specified in the option (the "exercise price") at any time
during the option period. If the option expires unexercised, the Fund will
realize income to the extent of the amount received for the option (the
"premium"). If the option is exercised, a decision over which the Fund has no
control, the Fund must sell the underlying security to the option holder at the
exercise price. By writing a covered option, the Fund foregoes, in exchange for
the premium less the commission ("net premium"), the opportunity to profit
during the option period from an increase in the market value of the underlying
security above the exercise price. The Fund will not write call options in an
aggregate amount greater than 25% of its net assets.
The Fund will purchase call options only to close out a position. When an
option is written on securities in the Fund's portfolio and it appears that the
purchaser of that option is likely to exercise the option and purchase the
underlying security, it may be considered appropriate to avoid liquidating the
Fund's position, or the Fund may wish to extinguish a call option sold by it so
as to be free to sell the underlying security. In such instances the Fund may
purchase a call option on the same security with the same exercise price and
expiration date which had been previously written. Such a purchase would have
the effect of closing out the option which the Fund has written. The Fund
realizes a gain if the amount paid to purchase the call option is less than the
premium received for writing a similar option and a loss if the amount paid to
purchase a call option is greater than the premium received for writing a
similar option. Generally, the Fund realizes a short-term capital loss if the
amount paid to purchase the call option with respect to a stock is greater than
the premium received for writing the option. If the underlying security has
substantially risen in value, it may be expensive to purchase the call option
for the closing transaction.
SHORT SALES. The Fund may from time to time make short sales of securities
in order to protect a profit or to attempt to minimize a loss with respect to
convertible securities. The Fund will only make a short sale of a security if it
owns other securities convertible into an equivalent amount of such securities.
No more than 10% of the value of the Fund's net assets taken at market may at
any one time be held as collateral for such sales.
LENDING PORTFOLIO SECURITIES. The Fund 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 Fund. 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 Fund 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 Fund may pay reasonable custodian and
administrative fees in connection with the loans.
4
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REPURCHASE AGREEMENTS. The Fund may invest temporary cash balances in
repurchase agreements. A repurchase agreement involves a sale of securities to
the Fund, with the concurrent agreement of the seller (a member bank of the
Federal Reserve System or a securities dealer which the Adviser believes to be
financially sound) to repurchase the securities at the same price plus an amount
equal to an agreed-upon interest rate, within a specified time, usually less
than one week, but, on occasion, at a later time. The Fund will make payment for
such securities only upon physical delivery or evidence of book-entry transfer
to the account of the custodian or a bank acting as agent for the Fund.
Repurchase agreements may also be viewed as loans made by the Fund which are
collateralized by the securities subject to repurchase. The value of the
underlying securities will be at least equal at all times to the total amount of
the repurchase obligation, including the interest factor. In the event of a
bankruptcy or other default of a seller of a repurchase agreement, the Fund
could experience both delays in liquidating the underlying securities and
losses, including: (a) possible decline in the value of the underlying security
during the period while the Fund seeks to enforce its rights thereto; (b)
possible subnormal levels of income and lack of access to income during this
period; and (c) expenses of enforcing its rights. The Board of Directors
monitors the creditworthiness of parties with which the Fund enters into
repurchase agreements.
RESTRICTED SECURITIES. On occasion, the Fund may purchase securities which
would have to be registered under the Securities Act of 1933 if they were to be
publicly distributed. However, it will not do so if the value of such securities
and other securities which are not readily marketable (including repurchase
agreements maturing in more than seven days) would exceed 15% of the market
value of its net assets. It is management's policy to permit the occasional
acquisition of such restricted securities only if (except in the case of
short-term, non-convertible debt securities) there is an agreement by the issuer
to register such securities, ordinarily at the issuer's expense, when requested
to do so by the Fund. The acquisition in limited amounts of restricted
securities is believed to be helpful toward the attainment of the Fund's
investment objective without unduly restricting its liquidity or freedom in the
management of its portfolio. However, because restricted securities may only be
sold privately or in an offering registered under the Securities Act of 1933, or
pursuant to an exemption from such registration, substantial time may be
required to sell such securities, and there is a greater than usual risk of
price decline prior to sale.
In addition, the Fund may purchase certain restricted securities ("Rule 144A
securities") for which there is a secondary market of qualified institutional
buyers, as contemplated by Rule 144A under the Securities Act of 1933. Rule 144A
provides an exemption from the registration requirements of the Securities Act
for the resale of certain restricted securities to qualified institutional
buyers.
The Adviser, under the supervision of the Board of Directors, will consider
whether securities purchased under Rule 144A are liquid or illiquid for purposes
of the Fund's limitation on investment in securities which are not readily
marketable or are illiquid. Among the factors to be considered are the frequency
of trades and quotes, the number of dealers and potential purchasers, dealer
undertakings to make a market and the nature of the security and the time needed
to dispose of it.
To the extent that the liquid Rule 144A securities that the Fund holds
become illiquid, due to lack of sufficient qualified institutional buyers or
market or other conditions, the percentage of the Fund's assets invested in
illiquid assets would increase. The Adviser, under the supervision of the Board
of Directors, will monitor the Fund's investments in Rule 144A securities and
will consider appropriate measures to enable the Fund to maintain sufficient
liquidity for operating purposes and to meet redemption requests.
5
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RISK FACTORS
Investors should be aware of the following:
- There are risks in all investments, including any stock investment, and in
all mutual funds. The Fund's net asset value will fluctuate to reflect the
investment performance of the securities held by the Fund.
- The value a shareholder receives upon redemption may be greater or lesser
than the value of such shares when acquired.
- The use of investment techniques such as investing in repurchase
agreements and lending portfolio securities involves greater risk than does an
investment in a fund that does not engage in these activities.
- Investments in securities of U.S. multinational companies that have
substantial international operations may be affected by economic and political
conditions in foreign countries and fluctuations in currency exchange rates.
INVESTMENT RESTRICTIONS
The Fund 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 Fund may not
(a) borrow in excess of 10% of the value of its total assets and then only
as a temporary measure;
(b) purchase securities (other than U.S. government securities) if the
purchase would cause the Fund, 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
(c) invest 25% or more of the value of the Fund's total assets in securities
of issuers in one particular industry.
MANAGEMENT OF THE FUND
The management and affairs of the Fund are supervised by the Fund's Board of
Directors. The Fund's officers conduct and supervise the daily business
operations of the Fund. The Fund's investment decisions are made by an
investment committee of employees of the Adviser. The Fund's Annual Report will
contain a discussion on the Fund's performance, which will be made available
upon request and without charge.
THE 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 a majority 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 $4 billion. Value Line Securities,
Inc., the Fund's distributor, is a subsidiary of the
6
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Adviser. The Adviser manages the Fund's investments, provides various
administrative services and supervises the Fund's daily business affairs,
subject to the authority of the Board of Directors. The Adviser is paid an
advisory fee at an annual rate of 0.75% of the Fund's average daily net assets
during the year. Although this fee is higher than that paid by many other
investment companies, it is not unusually high for investment companies with a
similar investment objective. From time to time, the Adviser may voluntarily
assume certain expenses of the Fund and waive its advisory fee. This will have
the effect of lowering the overall expense ratio of the Fund. For more
information about the Fund's management fees and expenses, see the "Summary of
Fund Expenses" on page 2.
BROKERAGE. The Fund pays a portion of its total brokerage commissions to
Value Line Securities, Inc., which clears transactions for the Fund through
unaffiliated broker-dealers.
CALCULATION OF NET ASSET VALUE
The net asset value of the Fund's shares for purposes of both purchases and
redemptions is determined once daily as of the close of regular trading 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 Fund shares have been
received. The New York Stock Exchange is currently closed on 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 Fund,
less any liabilities, by the total outstanding shares. Securities listed on a
securities exchange and over-the-counter securities traded on the NASDAQ
national market are valued at the closing sales price on the date as of which
the net asset value is being determined. In the absence of closing sales prices
for such securities and for securities traded in the over-the-counter market,
the security is valued at the midpoint between the latest available and
representative asked and bid prices. Securities for which market quotations are
not readily available or which are not readily marketable and all other assets
of the Fund are valued at fair value as the Board of Directors may determine in
good faith. Short-term instruments with maturities of 60 days or less at the
date of purchase are valued at amortized cost, which approximates market.
HOW TO BUY SHARES
PURCHASE BY CHECK. To buy shares, send a check made payable to "NFDS-Agent"
and a completed and signed application form to Value Line Funds, c/o NFDS, P.O.
Box 419729, Kansas City, MO 64141-6729. For assistance in completing the
application and for information on pre-authorized telephone purchases, call
Value Line Securities at 1-800-223-0818 during New York business hours. Upon
receipt of the completed and signed purchase application and a check, National
Financial Data Services, Inc. ("NFDS"), the Fund's shareholder servicing agent,
will buy full and fractional shares (to three decimal places) at the net asset
value next computed after the funds are received and will confirm the investment
to the investor. Subsequent investments may be made by attaching a check to the
confirmation's "next payment" stub, by telephone or by federal funds wire.
Investors may also buy shares through broker-dealers other than Value Line
Securities. Such broker-dealers may charge investors a reasonable service fee.
Neither Value Line Securities nor the Fund receives any part of such fees when
charged (and which can be avoided by investing directly). If an order to
purchase shares is cancelled due to nonpayment or because the purchaser's check
does not clear, the purchaser will be responsible for any loss incurred by the
Fund or Value Line Securities by reason of such cancellation. If the purchaser
is a shareholder, Value Line Securities
7
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reserves the right to redeem sufficient shares from the shareholder's account to
protect the Fund against loss. Minimum orders are $1,000 for an initial purchase
and $100 for each subsequent purchase. The Fund may refuse any order for the
purchase of shares.
WIRE PURCHASE--$1,000 MINIMUM. An investor should call 1-800-243-2729 to
obtain an account number. After receiving an account number, instruct your
commercial bank to wire transfer "federal funds" via the Federal Reserve System
as follows:
State Street Bank and Trust Company, Boston, MA
ABA # 011000028
Attn: Mutual Fund Division
DDA # 99049868
Value Line American Worldwide Fund
A/C # ________________________
Shareholder's name and account information
Tax ID # ________________________
NOTE: A COMPLETED AND SIGNED APPLICATION MUST BE MAILED IMMEDIATELY AND
RECEIVED BY NFDS BEFORE IT CAN HONOR ANY WITHDRAWAL OR EXCHANGE TRANSACTIONS.
After your account has been opened, you may wire additional investments in
the same manner.
For an initial investment made by federal funds wire purchase, the wire must
include a valid social security number or tax identification number. Investors
purchasing shares in this manner will then have 30 days after purchase to
provide the certification and signed account application. All payments should be
made in U.S. dollars and, to avoid fees and delays, should be drawn on only U.S.
banks. Until receipt of the above, any distributions from the account will be
subject to withholding at the rate of 31%.
SUBSEQUENT TELEPHONE PURCHASES--$250 MINIMUM. Upon completion of the
telephone purchase authorization section of the account application,
shareholders who own Fund shares with a current value of $500 or more may also
purchase additional shares in amounts of $250 or more up to twice the value of
their shares by calling 1-800-243-2729 between 9:00 a.m. and 4:00 p.m. New York
time. Such orders will be priced at the closing net asset value on the day
received and payment will be due within three business days. If payment is not
received within the required time or a purchaser's check does not clear, the
order is subject to cancellation and the purchaser will be responsible for any
loss incurred by the Fund or Value Line Securities. Shares may not be purchased
by telephone for a tax-sheltered retirement plan.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund distributes net investment income and any net realized capital
gains to shareholders at least annually. Income dividends and capital gains
distributions are automatically reinvested in additional shares of the Fund
unless the shareholder has requested otherwise. Because the Fund intends to
distribute all of its net investment income and capital gains to shareholders,
it is not expected that the Fund will be required to pay any federal income
taxes. However, shareholders of the Fund normally will have to pay federal
income taxes, and any applicable state or local taxes, on the dividends and
capital gains distributions they receive from the Fund (whether or not
reinvested in additional Fund shares). Shareholders will be informed annually of
the amount and nature of the Fund's income and distributions.
8
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Mutual funds are required to withhold 31% for federal income tax purposes of
dividends, distributions of capital gains and redemption proceeds from accounts
without a valid social security or tax identification number. You must provide
this information when you complete the Fund's application and certify that you
are not currently subject to federal backup withholding. The Fund reserves the
right to close, by redemption, accounts for which the holder fails to provide a
valid social security or tax identification number.
PERFORMANCE INFORMATION
The Fund may from time to time include information regarding its total
return performance 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 Fund's net asset value, and will assume the
reinvestment of all capital gains distributions and income dividends. It will
take into account nonrecurring charges, if any, which the Fund may incur but
will not take into account income taxes due on Fund distributions.
Comparative performance information may be used from time to time in
advertising the Fund's shares, including data from Lipper Analytical Services,
Inc. and other industry or financial publications. The Fund may compare its
performance to that of other mutual funds with similar investment objectives and
to stock or other relevant indices. From time to time, articles about the Fund
regarding its performance or ranking may appear in national publications such as
Kiplinger's Personal Finance, Money Magazine, Financial World, Morningstar,
Personal Investors, Forbes, Fortune, Business Week, Wall Street Journal,
Investor's Business Daily, Donoghue, The Financial Times, The Economist, Worth,
Smart Money, Mutual Fund Forecaster, U.S. News and World Report and Barron's.
Some of these publications may publish their own rankings or performance reviews
of mutual funds, including the Fund. Reference to or reprints of such articles
may be used in the Fund's promotional literature.
Investors should note that the investment results of the Fund will fluctuate
over time, and any presentation of the Fund'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.
HOW TO REDEEM SHARES
Shares of the Fund may be redeemed at any time at their current net asset
value next determined after NFDS receives a request in proper form. The value of
shares of the Fund on redemption may be more or less than the shareholder's
cost, depending upon the market value of the Fund's assets at the time. A
shareholder holding certificates for shares must surrender the certificates
properly endorsed with signature guaranteed. A signature guarantee may be
executed by any "eligible" guarantor. Eligible guarantors include domestic
banks, savings associations, credit unions, member firms of a national
securities exchange, and participants in the New York Stock Exchange Medallion
Signature Program, the Securities Transfer Agents Medallion Program ("STAMP")
and the Stock Exchanges Medallion Program. A guarantee from a Notary Public is
not an acceptable source. The signature on any request for redemption of shares
not represented by certificates, or on any stock power in lieu thereof, must be
similarly guaranteed. In each case the signature or signatures must correspond
to the names in which the account is registered. Additional documentation may be
required when shares are registered in the name of a corporation, agent or
fiduciary. For further information, you should contact NFDS.
The Fund does not impose a redemption charge, but shares redeemed through
brokers or dealers may be subject to a service charge by such firms. A check for
the redemption proceeds will
9
<PAGE>
be mailed within seven days following receipt of all required documents.
However, payment may be postponed under unusual circumstances such as when
normal trading is not taking place on the New York Stock Exchange. In addition,
shares purchased by check may not be redeemed for up to 15 days following the
purchase date.
If the Board of Directors determines that it is in the best interests of the
Fund, the Fund may redeem, upon prior written notice, at net asset value all
shareholder accounts which, due to redemptions, fall below $500 in net asset
value. In such event, an investor will have 60 days to increase the shares in
his account to the minimum level.
SERVICE AND DISTRIBUTION PLAN
The Fund has a Service and Distribution Plan (the "Plan"), adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940, for the payment of
certain expenses incurred by Value Line Securities, Inc. (the "Distributor") in
advertising, marketing and distributing the Fund's shares and for servicing the
Fund's shareholders at an annual rate of 0.25% of the Fund's average daily net
assets. Under the Plan, the Distributor may make payments to securities dealers,
banks, financial institutions and other organizations which render distribution
and administrative services with respect to the distribution of the Fund's
shares. Such services may include, among other things, answering investor
inquiries regarding the Fund; processing new shareholder account applications
and redemption transactions; responding to shareholder inquiries; and such other
services as the Fund may request to the extent permitted by applicable statute,
rule or regulation. The Plan also provides that the Adviser may make such
payments out of its advisory fee, its past profits or any other source available
to it. The fees payable to the Distributor under the Plan are payable without
regard to actual expenses incurred.
The Glass-Steagall Act and other applicable laws prohibit banks from
engaging in the business of underwriting, selling or distributing securities.
Generally, banks will be engaged to provide administrative services. However,
judicial or administrative decisions or interpretations of such laws, as well as
changes in either Federal or State statutes or regulations relating to the
permissible activities of banks and their affiliates, could prevent a bank from
continuing to perform all or a part of its administrative services. In that
case, its shareholder clients would be permitted to remain shareholders of the
Fund and alternative means for continuing the servicing of such shareholders
would be sought. It is not expected that shareholders would suffer any adverse
financial consequences as a result of any of these consequences.
INVESTOR SERVICES
VALU-MATIC.-REGISTERED TRADEMARK- The Fund offers a free, pre-authorized
check service to its shareholders through which monthly investments of $25 or
more are automatically made into the shareholder's Fund account. Further
information regarding this service can be obtained from Value Line Securities by
calling 1-800-223-0818.
EXCHANGE OF SHARES. Shares of the Fund may be exchanged for shares of the
other Value Line funds in any identically registered account on the basis of the
respective net asset values next computed after receipt of the exchange order.
No telephone exchanges can be made for less than $1,000. If shares of the Fund
are being exchanged for shares of The Value Line Cash Fund, Inc. or The Value
Line Tax Exempt Fund--Money Market Portfolio and the shares (including shares in
accounts under the control of one investment advisor) have a value in excess of
$500,000, then, at the discretion
10
<PAGE>
of the Adviser, the shares to be purchased will be purchased at the closing
price on the third business day following the redemption of the shares being
exchanged to allow the redeeming fund to utilize normal securities settlement
procedures in transferring the proceeds of the redemption.
The exchange privilege may be exercised only if the shares to be acquired
may be sold in the investor's State. Prospectuses for the other funds may be
obtained from Value Line Securities by calling 1-800-223-0818. Each such
exchange involves a redemption and a purchase for tax purposes. Broker-dealers
are not prohibited from charging a commission for handling the exchange of Fund
shares. To avoid paying such a commission, send the request with signature
guaranteed to NFDS. The Fund reserves the right to terminate the exchange
privilege of any account making more than eight exchanges a year. (An exchange
out of The Value Line Cash Fund, Inc. or The Value Line Tax Exempt Fund--Money
Market Portfolio is not counted for this purpose.) The exchange privilege may be
modified or terminated upon sixty days' notice to shareholders, and any of the
Value Line funds may discontinue offering its shares generally or in any
particular state without prior notice. To make an exchange, call 1-800-243-2729.
Although it has not been a problem in the past, shareholders should be aware
that a telephone exchange may be difficult during periods of major economic or
market changes.
SYSTEMATIC CASH WITHDRAWAL PLAN. A shareholder who has invested a minimum
of $5,000 in the Fund, or whose shares have attained that value, may request a
transfer of his shares to a Value Line Systematic Cash Withdrawal Account which
NFDS will maintain in his name on the Fund's books. Under the Systematic Cash
Withdrawal Plan ("the Plan"), the shareholder will request that NFDS, acting as
his agent, redeem monthly or quarterly a sufficient number of shares to provide
for payment to him, or someone he designates, of any specified dollar amount
(minimum $25). All certificated shares must be placed on deposit under the Plan
and dividends and capital gains distributions, if any, are automatically
reinvested at net asset value. The Plan will automatically terminate when all
shares in the account have been redeemed. The shareholder may at any time
terminate the Plan, change the amount of the regular payment, or request
liquidation of the balance of his account on written notice to NFDS. The Fund
may terminate the Plan at any time on written notice to the shareholder.
TAX-SHELTERED RETIREMENT PLANS. Shares of the Fund may be purchased for
various types of retirement plans. For more complete information, contact Value
Line Securities, Inc. at 1-800-223-0818 during New York business hours.
ADDITIONAL INFORMATION
The Fund is an open-end, diversified management investment company
incorporated in Maryland in 1995. The Fund has 50 million authorized shares of
common stock, $.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 Directors, and, if
the Fund were liquidated, would receive the net assets of the Fund.
INQUIRIES. All inquiries regarding the Fund should be directed to the Fund
at the telephone numbers or address set forth on the cover page of this
Prospectus. Inquiries from shareholders regarding their accounts and account
balances should be directed to National Financial Data Services, Inc., servicing
agent for State Street Bank and Trust Company, the Fund's transfer agent,
1-800-243-2729. Shareholders should note they may be required to pay a fee for
special requests
11
<PAGE>
such as historical transcripts of an account. Our Info-Line provides the latest
account information 24 hours a day, every day, and is available to shareholders
with pushbutton phones. The Info-Line toll-free number is 1-800-243-2739.
WITHHOLDING. Mutual funds are required to withhold 31% of dividends,
distributions of capital gains and redemption proceeds from accounts without a
valid social security or tax identification number. You must provide this
information when you complete the Fund's application and certify that you are
not currently subject to backup withholding.
SHAREHOLDER MEETINGS. The Fund does not intend to hold routine annual
meetings of shareholders. However, special meetings of shareholders will be held
as required by law, for purposes such as changing fundamental policies or
approving an advisory agreement. Shareholders of record of not less than a
majority of the outstanding shares of the Fund may remove a Director by votes
cast in person or by proxy at a meeting called for that purpose. The Directors
are required to call a meeting of shareholders for the purpose of voting upon
the question of the removal of any Director when so requested by the
shareholders of record of not less than 10% of the Fund's outstanding shares.
12
<PAGE>
THE VALUE LINE FAMILY OF FUNDS
- - -------------------------------------------
1950--THE VALUE LINE FUND seeks long-term growth of capital along with modest
current income by investing substantially all of its assets in common stocks or
securities convertible into common stock.
1952--THE VALUE LINE INCOME FUND'S primary investment objective is income, as
high and dependable as is consistent with reasonable growth. Capital growth to
increase total return is a secondary objective.
1956--THE VALUE LINE SPECIAL SITUATIONS FUND seeks to obtain long-term growth of
capital by investing not less than 80% of its assets in "special situations". No
consideration is given to achieving current income.
1972--VALUE LINE LEVERAGED GROWTH INVESTORS' sole investment objective is to
realize capital growth by investing substantially all of its assets in common
stocks. The Fund may borrow up to 50% of its net assets to increase its
purchasing power.
1979--THE VALUE LINE CASH FUND, a money market fund, seeks high current income
consistent with preservation of capital and liquidity.
1981--VALUE LINE U.S. GOVERNMENT SECURITIES FUND seeks maximum income without
undue risk to principal. Under normal conditions, at least 80% of the value of
its net assets will be invested in issues of the U.S. government and its
agencies and instrumentalities.
1983--VALUE LINE CENTURION FUND* seeks long-term growth of capital as its sole
objective by investing primarily in stocks ranked 1 or 2 by Value Line for
year-ahead relative performance.
1984--THE VALUE LINE TAX EXEMPT FUND seeks to provide investors with maximum
income exempt from federal income taxes while avoiding undue risk to principal.
The Fund presently offers investors a choice of two portfolios: a Money Market
Portfolio and a High-Yield Portfolio.
1985--VALUE LINE CONVERTIBLE FUND seeks high current income together with
capital appreciation primarily from convertible securities ranked 1 or 2 for
year-ahead performance by The Value Line Convertible Ranking System.
1986--VALUE LINE AGGRESSIVE INCOME TRUST seeks to maximize current income by
investing in high-yielding, low-rated, fixed-income corporate securities.
1987--VALUE LINE NEW YORK TAX EXEMPT TRUST seeks to provide New York taxpayers
with maximum income exempt from New York State, New York City and federal
individual income taxes while avoiding undue risk to principal.
1987--VALUE LINE STRATEGIC ASSET MANAGEMENT TRUST* invests in stocks, bonds and
cash equivalents according to computer trend models developed by Value Line. The
objective is to professionally manage the optimal allocation of these
investments at all times.
1992--THE VALUE LINE ADJUSTABLE RATE U.S. GOVERNMENT SECURITIES FUND seeks high
current income consistent with low volatility of principal by investing
primarily in adjustable rate U.S. Government securities.
1993--VALUE LINE SMALL-CAP GROWTH FUND invests primarily in common stocks or
securities convertible into common stock, with its primary objective being
long-term growth of capital.
1993--VALUE LINE ASSET ALLOCATION FUND seeks high total investment return,
consistent with reasonable risk. The Fund invests in stocks, bonds and money
market instruments utilizing quantitative modeling to determine the correct
asset mix.
1995--VALUE LINE U.S. MULTINATIONAL COMPANY FUND'S investment objective is
maximum total return. It invests primarily in securities of U.S. companies that
have significant sales from international operations.
- - ------------------------
* ONLY AVAILABLE THROUGH THE PURCHASE OF GUARDIAN INVESTOR, A TAX DEFERRED
VARIABLE ANNUITY, OR VALUEPLUS, A VARIABLE LIFE INSURANCE POLICY.
FOR MORE COMPLETE INFORMATION ABOUT ANY OF THE VALUE LINE FUNDS, INCLUDING
CHARGES AND EXPENSES, SEND FOR A PROSPECTUS FROM VALUE LINE SECURITIES, INC.,
220 E. 42ND STREET, NEW YORK, NEW YORK 10017-5891 OR CALL 1-800-223-0818, 24
HOURS A DAY, 7 DAYS A WEEK. READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR
SEND MONEY.
13
<PAGE>
INVESTMENT ADVISER
Value Line, Inc.
220 East 42nd Street
New York, NY 10017-5891
DISTRIBUTOR
Value Line Securities, Inc.
220 East 42nd Street
New York, NY 10017-5891
SHAREHOLDER SERVICING AGENT
State Street Bank and Trust Company
c/o NFDS
P.O. Box 419729
Kansas City, MO 64141-6729
CUSTODIAN & TRANSFER AGENT
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
LEGAL COUNSEL
Peter D. Lowenstein, Esq.
Two Greenwich Plaza, Suite 100
Greenwich, CT 06830
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary of Fund Expenses................ 2
Financial Highlights....................
Investment Objective and Policies....... 3
Risk Factors............................ 6
Investment Restrictions................. 6
Management of the Fund.................. 6
Calculation of Net Asset Value.......... 7
How to Buy Shares....................... 7
Dividends, Distributions and Taxes...... 8
Performance Information................. 9
How to Redeem Shares.................... 9
Service and Distribution Plan........... 10
Investor Services....................... 10
Additional Information.................. 11
</TABLE>
- - -------------------------------------------
PROSPECTUS
- - -------------------
OCTOBER 1, 1995
VALUE LINE
U.S. MULTINATIONAL
COMPANY
FUND, INC.
(800) 223-0818
[LOGO]
<PAGE>
VALUE LINE U.S. MULTINATIONAL COMPANY FUND, INC.
220 East 42nd Street, New York, New York 10017-5891
1-800-223-0818 or 1-800-243-2729
- - --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
OCTOBER 1, 1995
- - -------------------------------------------------------------------------------
This Statement of Additional Information is not a prospectus and must be
read in conjunction with the Prospectus of Value Line U.S. Multinational Company
Fund, Inc. (the "Fund") dated October 1, 1995, a copy of which may be obtained
without charge by writing or telephoning the Fund.
--------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Investment Objective and Policies................................................... B-1
Investment Restrictions............................................................. B-2
Directors and Officers.............................................................. B-3
The Adviser......................................................................... B-5
Brokerage Arrangements.............................................................. B-6
How to Buy Shares................................................................... B-6
How to Redeem Shares................................................................ B-7
Service and Distribution Plan....................................................... B-8
Taxes............................................................................... B-8
Performance Data.................................................................... B-9
Additional Information.............................................................. B-10
Financial Statements................................................................ B-10
</TABLE>
The Fund's investment adviser is Value Line, Inc. (the "Adviser").
INVESTMENT OBJECTIVE AND POLICIES
(SEE ALSO "INVESTMENT OBJECTIVE AND POLICIES" IN THE FUND'S PROSPECTUS)
The Fund 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 Fund does not invest for the purposes of
management or control of companies whose securities the Fund owns. It
B-1
<PAGE>
is the policy of the Fund to purchase and hold securities which are believed to
have potential for long-term capital appreciation. The Fund generally does not
attempt to realize short-term trading profits.
The policies set forth in the Fund's Prospectus and in this Statement of
Additional Information and the policies set forth below under "Investment
Restrictions" are, unless otherwise indicated, fundamental policies of the Fund
and, under the Investment Company Act of 1940, as amended (the "1940 Act") may
not be changed without the affirmative vote of a majority of the outstanding
voting securities of the Fund. Under the 1940 Act, a "majority of the
outstanding voting securities of the Fund" means the lesser of (1) the holders
of more than 50% of the outstanding shares of capital stock of the Fund or (2)
67% of the shares present if more than 50% of the shares are present at a
meeting in person or by proxy.
INVESTMENT RESTRICTIONS
The Fund may not:
(1) Engage in arbitrage transactions, short sales except as set forth
in the Prospectus, purchases on margin or participate on a joint or
joint and several basis in any trading account in securities.
(2) Issue senior securities or borrow money in excess of 10% of the
value of its net 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 Fund may be pledged, mortgaged or otherwise
encumbered, transferred or assigned to secure a debt.
(3) Engage in the underwriting of securities, except to the extent that
the Fund 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, illiquid securities of real
estate investment trusts, real estate limited partnerships or
interests in oil, gas or mineral leases although the Fund may purchase
securities of issuers which engage in real estate operations.
(5) Invest in commodities or commodity contracts, including futures
contracts.
(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 securities that are illiquid or restricted by virtue of
the absence of a readily available market do not exceed 15% of the Fund's
net assets. The Fund 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 Fund.
(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 restriction, all outstanding debt securities of
an issuer are
B-2
<PAGE>
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) Purchase securities of other registered investment companies,
except in mergers or other business combinations.
(9) Invest 25% or more of its total assets in securities of issuers in
any one industry.
(10) 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.
(11) Purchase or retain the securities of any issuer if, to the
knowledge of the Fund, those officers and directors of the Fund and
of the Adviser, who each owns more than 0.5% of the outstanding securities
of such issuer, together own more than 5% of such securities.
(12) Invest more than 2% of the value of its total assets in warrants
(valued at the lower of cost or market), except that warrants
attached to other securities are not subject to these limitations.
(13) Purchase securities for the purpose of exercising control over
another company.
If a percentage restriction is adhered to at the time of investment, a later
change in percentage resulting from changes in values or assets will not be
considered a violation of the restriction. For purposes of industry
classifications, the Fund follows the industry classifications in The Value Line
Investment Survey.
DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION WITH FUND PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- - ---------------------------------- --------------------- ---------------------------------------------
<S> <C> <C>
*Jean Bernhard Buttner Chairman of the Board Chairman, President and Chief Executive
Age 60 of Directors, Officer of the Adviser and Value Line
President Publishing, Inc. Chairman of the Value Line
Funds and Value Line Securities, Inc.
Francis C. Oakley Director Professor of History, Williams College, 1961
936 Main Street to present and President Emeritus since 1994;
Williamstown, MA 01267 President of Williams College, 1985-1993;
Age 63 Director, Berkshire Life Insurance Company
Marion N. Ruth Director Real Estate Executive; President, Ruth Realty
5 Outrider Road (real estate broker).
Rolling Hills, CA 90274
Age 60
</TABLE>
B-3
<PAGE>
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION WITH FUND PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- - ---------------------------------- --------------------- ---------------------------------------------
Frances T. Newton Director Computer Programming Professional, Duke Power
4921 Buckingham Drive Company.
Charlotte, NC 28209
Age 54
<S> <C> <C>
F. Barry Nelson Vice President Research Director, the Value Line Con-
Age 52 vertibles Survey and Vice President, Value
Line Convertible Fund, Inc. since 1993;
Securities Analyst, Forbes, Walsh, Kelly &
Co., Inc., 1992-1993; Vice President, NatWest
Securities Corporation, Feb.-Oct. 1992;
Senior Vice President, Louis Nicoud &
Associates, 1986-1992.
James D. von Riesemann Vice President Securities analyst with the Adviser since
Age 34 1994; prior thereto, student.
David T. Henigson Vice President, Compliance Officer and since 1992, Vice
Age 38 Secretary and President and Director of the Adviser. Di-
Treasurer rector and Vice President of the Distribu-
tor.
</TABLE>
- - ------------------------
* "Interested" director as defined in the Investment Company Act of 1940 (the
"1940 Act").
Unless otherwise indicated, the address for each of the above is 220 East 42nd
Street, New York, NY.
Directors and certain officers of the Fund are also directors and officers
of other investment companies for which the Adviser acts as investment adviser.
Directors who are officers or employees of the Adviser receive no remuneration
from the Fund. The following table sets forth information regarding compensation
of Directors by the Fund and by the Fund and the two other Value Line Funds of
which each of the Directors is a director for the fiscal year ended March 31,
1995. Directors who are officers or employees of the Adviser do not receive any
compensation from the Fund or any of the Value Line Funds.
COMPENSATION TABLE
FISCAL YEAR ENDED MARCH 31, 1995
<TABLE>
<CAPTION>
TOTAL
PENSION OR ESTIMATED COMPENSATION
RETIREMENT ANNUAL FROM FUND
AGGREGATE BENEFITS BENEFITS AND FUND
COMPENSATION ACCRUED AS PART UPON COMPLEX
NAME OF PERSON FROM FUND OF FUND EXPENSES RETIREMENT (2 FUNDS)
- - ------------------------------------------- -------------- --------------------- --------------- --------------
<S> <C> <C> <C> <C>
Jean B. Buttner............................ $ -0- N/A N/A $ -0-
Francis C. Oakley.......................... -0- N/A N/A 20,000
Marion N. Ruth............................. -0- N/A N/A 20,000
Frances T. Newton.......................... -0- N/A N/A 20,000
</TABLE>
As of the date of this Statement of Additional Information, the Adviser
owned 100% of the Fund's outstanding shares.
B-4
<PAGE>
THE ADVISER
(SEE ALSO "MANAGEMENT OF THE FUND" IN THE FUND'S PROSPECTUS)
The investment advisory agreement between the Fund and the Adviser dated
September , 1995 provides for an advisory fee at an annual rate of 0.75% of
the Fund's average daily net assets during the year. The Adviser shall reimburse
the Fund for expenses (exclusive of interest, taxes, brokerage expenses,
distribution expenses and extraordinary expenses) which in any year exceed the
limits prescribed by any state in which shares of the Fund are qualified for
sale. Presently, the most restrictive limitation is 2.5% of the first $30
million of average daily net assets, 2% of the next $70 million and 1.5% of any
excess over $100 million.
The investment advisory agreement provides that the Adviser shall render
investment advisory and other services to the Fund including, at its expense,
all administrative services, office space and the services of all officers and
employees of the Fund. The Fund pays all other expenses not assumed by the
Adviser including taxes, interest, brokerage commissions, insurance premiums,
fees and expenses of the custodian and shareholder servicing agent, legal, audit
and Fund accounting expenses, fees and expenses in connection with qualification
under federal and state securities laws and costs of shareholder reports and
proxy materials. The Fund has agreed that it will use the words "Value Line" in
its name only so long as Value Line, Inc. serves as investment adviser to the
Fund.
The 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
$4 billion.
Certain of the Adviser's clients may have investment objectives similar to
the Fund and certain investments may be appropriate for the Fund and for other
clients advised by the Adviser. From time to time, a particular security may be
bought or sold for only one client or in different amounts and at different
times for more than one but less than all such clients. In addition, a
particular security may be bought for one or more clients when one or more other
clients are selling such security, or purchases or sales of the same security
may be made for two or more clients at the same time. In such event, such
transactions, to the extent practicable, will be averaged as to price and
allocated as to amount in proportion to the amount of each order. In some cases,
this procedure could have a detrimental effect on the price or amount of the
securities purchased or sold by the Fund. In other cases, however, it is
believed that the ability of the Fund to participate, to the extent permitted by
law, in volume transactions will produce better results for the Fund.
The Fund does not purchase or sell a security based solely on information
contained in any of the Value Line publications. The Adviser and/or its
affiliates, officers, directors and employees may from time to time own
securities which are also held in the portfolio of the Fund. The Adviser has
imposed rules upon itself and such persons requiring monthly reports of security
transactions for their respective accounts and restricting trading in various
types of securities in order to avoid possible conflicts of interest. The
Adviser may from time to time, directly or through affiliates, enter into
agreements to furnish for compensation special research or financial services to
companies, including services in connection with acquisitions, mergers or
financings. In the event that such agreements are in effect with respect to
issuers of securities held in the portfolio of the Fund, specific reference to
such agreements will be made in the "Schedule of Investments" in shareholder
reports of the Fund. As of the date of this Statement of Additional Information,
no such agreements exist.
B-5
<PAGE>
BROKERAGE ARRANGEMENTS
(SEE ALSO "MANAGEMENT OF THE FUND" IN THE FUND'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. 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
services may include but are not limited to information as to the availability
of securities for purchase or sale; statistical or factual information or
opinions pertaining to investments; and appraisals or evaluations of portfolio
securities. Such allocation will be in such amounts and in such proportions as
the Adviser may determine. Orders may also be placed with brokers or dealers who
sell shares of the Fund or other funds for which the Adviser acts as investment
adviser, but this fact, or the volume of such sales, is not a consideration in
their selection. A portion of the Fund's brokerage commissions may be paid to
Value Line Securities. Value Line Securities, Inc. clears transactions for the
Fund through unaffiliated broker-dealers.
The Board of Directors has adopted procedures incorporating the standards of
Rule 17e-1 under the 1940 Act which requires that the commissions paid to Value
Line Securities, Inc. or any other "affiliated person" be "reasonable and fair"
compared to the commissions paid to other brokers in connection with comparable
transactions. The procedures require that the Adviser furnish reports to the
Directors with respect to the payment of commissions to affiliated brokers and
maintain records with respect thereto.
PORTFOLIO TURNOVER. It is not expected that the Fund's annual portfolio
turnover rate will exceed 100%. A rate of portfolio turnover of 100% would occur
if all of the Fund's portfolio were replaced in a period of one year. To the
extent that the Fund engages in short-term trading in attempting to achieve its
objective, it may increase portfolio turnover and incur higher brokerage
commissions and other expenses than might otherwise be the case.
HOW TO BUY SHARES
(SEE ALSO "CALCULATION OF NET ASSET VALUE", "HOW TO BUY SHARES",
"SERVICE AND DISTRIBUTION PLAN" AND "INVESTOR SERVICES" IN THE FUND'S
PROSPECTUS)
Shares of the Fund are purchased at net asset value next calculated after
receipt of a purchase order. Minimum orders are $1,000 for an initial purchase
and $100 for each subsequent purchase. The Fund reserves the right to reduce or
waive the minimum purchase requirements in certain cases such as pursuant to
payroll deduction plans, etc., where subsequent and continuing purchases are
contemplated.
The Fund has entered into a distribution agreement with Value Line
Securities, Inc. (the "Distributor") pursuant to which the Distributor acts as
principal underwriter and distributor of the Fund for the sale and distribution
of its shares. The Distributor is a wholly-owned subsidiary of the Adviser. For
B-6
<PAGE>
its services under the agreement, the Distributor is not entitled to receive any
compensation. However, see "Service and Distribution Plan" for certain payments
to the Distributor. The Distributor also serves as distributor to the other
Value Line funds.
AUTOMATIC PURCHASES. The Fund offers a free service to its shareholders,
Valu-Matic Bank Check Program, through which monthly investments of $25 or more
are automatically made into the shareholder's Value Line account. The Fund's
Transfer Agent debits via automated clearing house a draft each month on the
shareholder's checking account and invests the money in full and fractional
shares. The purchase is confirmed directly to the shareholder (who will also
receive debit information each month with his bank statement). The required form
to enroll in this program is available upon request from the Distributor.
RETIREMENT PLANS. Shares of the Fund may be purchased as the investment
medium for various tax-sheltered retirement plans. Upon request, the Distributor
will provide information regarding eligibility and permissible contributions.
Because a retirement plan is designed to provide benefits in future years, it is
important that the investment objectives of the Fund be consistent with the
participant's retirement objectives. Premature withdrawals from a retirement
plan may result in adverse tax consequences. For more complete information,
contact the Distributor at 1-800-223-0818 during New York business hours.
HOW TO REDEEM SHARES
(SEE ALSO "HOW TO REDEEM SHARES" AND "INVESTOR SERVICES" IN THE FUND'S
PROSPECTUS)
The right of redemption may be suspended, or the date of payment postponed
beyond the normal seven-day period by the Fund under the following conditions
authorized by the 1940 Act: (1) for any period (a) during which the New York
Stock Exchange is closed, other than customary weekend and holiday closing, or
(b) during which trading on the New York Stock Exchange is restricted; (2) for
any period during which an emergency exists as a result of which (a) disposal by
the Fund of securities owned by it is not reasonably practical, or (b) it is not
reasonably practical for the Fund to determine the fair value of its net assets;
(3) for such other periods as the Securities and Exchange Commission may by
order permit for the protection of the Fund's shareholders.
The value of shares of the Fund on redemption may be more or less than the
shareholder's cost, depending upon the market value of the Fund's assets at the
time. Shareholders should note that if a loss has been realized on the sale of
shares of the Fund, the loss may be disallowed for tax purposes if shares of the
same Fund are purchased within (before or after) 30 days of the sale.
It is possible that conditions may exist in the future which would, in the
opinion of the Board of Directors, make it undesirable for the Fund to pay for
redemptions in cash. In such cases the Board may authorize payment to be made in
portfolio securities or other property of the Fund. However, the Fund has
obligated itself under the 1940 Act to redeem for cash all shares presented for
redemption by any one shareholder up to $250,000 (or 1% of the Fund's net assets
if that is less) in any 90-day period. Securities delivered in payment of
redemptions are valued at the same value assigned to them in computing the net
asset value per share. Shareholders receiving such securities may incur
brokerage costs on their sales.
B-7
<PAGE>
SERVICE AND DISTRIBUTION PLAN
(SEE ALSO "SERVICE AND DISTRIBUTION PLAN" IN THE FUND'S PROSPECTUS)
The Service and Distribution Plan, adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940, provides for the payment of certain expenses
incurred by Value Line Securities, Inc. in advertising, marketing and
distributing the Fund's shares and for servicing the Fund's shareholders at an
annual rate of 0.25% of the Fund's average daily net assets.
TAXES
(SEE "DIVIDENDS, DISTRIBUTIONS AND TAXES" IN THE FUND'S PROSPECTUS)
The Fund intends to qualify as a regulated investment company under the
United States Internal Revenue Code (the "Code"). By so qualifying, the Fund is
not subject to federal income tax on its net investment income or net realized
capital gains which are distributed to shareholders (whether or not reinvested
in additional Fund shares).
Distributions of investment income and of the excess of net short-term
capital gain over net long-term capital loss are taxable to shareholders as
ordinary income (whether or not reinvested in additional Fund shares).
Distributions of the excess of net long-term capital gain over net short-term
capital loss (net capital gains) are taxable to shareholders as long-term
capital gain, regardless of the length of time the shares of the Fund have been
held by such shareholders and regardless of whether the distribution is received
in cash or in additional shares of the Fund. It is expected that dividends from
domestic corporations will constitute most of the Fund's gross income and that a
substantial portion of the dividends paid by the Fund will qualify for the
dividends-received deduction for corporate investors. Upon request, the Fund
will advise investors of the amount of dividends which so qualify.
The Code requires each regulated investment company to pay a nondeductible
4% excise tax to the extent the company does not distribute, during each
calendar year, 98% of its ordinary income, determined on a calendar year basis,
and 98% of its capital gains determined, in general, on an October 31 year end,
plus certain undistributed amounts from previous years. The Fund anticipates
that it will make sufficient timely distributions to avoid imposition of the
excise tax.
Options and futures contracts entered into by the Fund will be subject to
special tax rules. These rules may accelerate income to the Fund, defer Fund
losses, cause adjustments in the holding periods of Fund securities, convert
capital gain into ordinary income and convert short-term capital losses into
long-term capital losses. As a result, these rules could affect the amount,
timing and character of Fund distributions.
A distribution by the Fund will result in a reduction in the Fund's net
asset value per share. Such a distribution is taxable to the shareholder as
ordinary income or capital gain as described above, even though, from an
investment standpoint, it may constitute a return of capital. In particular,
investors should be careful to consider the tax implications of buying shares
just prior to a distribution. The price of shares purchased at that time
includes the amount of the forthcoming distribution. Those purchasing just prior
to a distribution will then receive a return of capital upon the distribution
which nevertheless is taxable to them. All distributions, whether received in
cash or reinvested in shares, must be reported by each shareholder on his or her
federal income tax return. Under the Code, dividends declared by the Fund in
October, November and December of any calendar year,
B-8
<PAGE>
and payable to shareholders of record in such a month, shall be deemed to have
been received by the shareholder on December 31 of such calendar year if such
dividend is actually paid in January of the following calendar year.
A shareholder may realize a capital gain or capital loss on the sale or
redemption of shares of the Fund. The tax consequences of a sale or redemption
depend upon several factors, including the shareholder's tax basis in the shares
sold or redeemed and the length of time the shares have been held. Basis in the
shares may be the actual cost of those shares (net asset value of Fund shares on
purchase or reinvestment date), or under special rules, an average cost. Under
certain circumstances, a loss on the sale or redemption of shares held for six
months or less may be treated as a long-term capital loss to the extent that the
Fund has distributed long-term capital gain dividends on such shares. Moreover,
a loss on sale or redemption of Fund shares will be disallowed to the extent the
shareholder purchases other shares of the Fund within 30 days before or after
the date the shares are sold or redeemed.
For shareholders who fail to furnish to the Fund their social security or
taxpayer identification numbers and certain related information, or who fail to
certify that they are not subject to backup withholding, dividends,
distributions of capital gains and redemption proceeds paid by the Fund will be
subject to a 31% Federal income tax withholding requirement. If the withholding
provisions are applicable, any dividends or capital gains distributions to these
shareholders, whether taken in cash or reinvested in additional shares, and any
redemption proceeds will be reduced by the amounts required to be withheld.
The foregoing discussion relates solely to U.S. federal income tax law as
applicable to U.S. persons (i.e., U.S. citizens or residents, domestic
corporations and partnerships, and certain trusts and estates) and is not
intended to be a complete discussion of all federal tax consequences.
Shareholders are advised to consult with their tax advisers concerning the
application of federal, state and local tax laws to an investment in the Fund.
PERFORMANCE DATA
From time to time, the Fund may state its total return in advertisements and
investor communications. Total return may be stated for any relevant period as
specified in the advertisement or communication. Any statements of total return
or other performance data on the Fund will be accompanied by information on the
Fund's average annual total return over the most recent four calendar quarters
and the period from the Fund's inception of operations. The Fund may also
advertise aggregate annual total return information over different periods of
time.
The Fund'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
<TABLE>
<S> <C> <C> <C>
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.
</TABLE>
B-9
<PAGE>
ADDITIONAL INFORMATION
EXPERTS
The financial statement of the Fund as of September 20, 1995, included in
this Statement of Additional Information have been so included 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 Fund employs State Street Bank and Trust Company, Boston, MA as
custodian for the Fund. The custodian's responsibilities include safeguarding
and controlling the Fund's cash and securities, handling the receipt and
delivery of securities and collecting interest and dividends on the Fund's
investments. The custodian does not determine the investment policies of the
Fund or decide which securities the Fund will buy or sell.
FINANCIAL STATEMENT
VALUE LINE U.S. MULTINATIONAL COMPANY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 20, 1995
ASSETS
<TABLE>
<S> <C>
Cash......................................................................... $ 100,000
Deferred Organization Costs.................................................. 70,000
---------
Total Assets................................................................. 170,000
LIABILITIES
Deferred Organization Costs Payable.......................................... 70,000
---------
Net Assets................................................................... $ 100,000
---------
---------
Shares of $.01 par value Common Stock (authorized 50,000,000 shares)
Shares issued and outstanding............................................... 10,000
---------
Net Asset Value Per Share.................................................... $10.00
---------
---------
</TABLE>
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
NOTE 1 -- ORGANIZATION
Value Line U.S. Multinational Company Fund, Inc. (the "Fund") was formed as
a corporation under the laws of the State of Maryland in June, 1995 and is
registered as an open-end management investment company with the Securities and
Exchange Commission. The Fund has had no significant transactions other than the
issuance of an aggregate of 10,000 shares of common stock, to Value Line, Inc.,
representing the initial capital of the Fund, and those transactions relating to
organizational matters.
Costs incurred in connection with the Fund's organization and initial
registration, estimated to be $70,000, will be amortized over sixty months
beginning at the commencement of operations of the Fund. In the event any of the
initial shares of the Fund are redeemed by any holder thereof during
B-10
<PAGE>
the five-year amortization period, the redemption proceeds will be reduced by a
pro rata portion of any unamortized deferred organizational expenses in the same
proportion as the number of initial shares being redeemed bears to the number of
initial shares outstanding at the time of redemption.
NOTE 2 -- INVESTMENT ADVISORY AGREEMENT
The Fund has executed an Investment Advisory Agreement with Value Line, Inc.
The compensation to be paid to the Investment Adviser is as set forth under "The
Adviser" in this Statement of Additional Information.
NOTE 3 -- SERVICE AND DISTRIBUTION PLAN
The Fund has adopted a Service and Distribution Plan pursuant to Rule 12b-1
under the Investment Company Act of 1940. The compensation payable to the
Distributor is set forth under "Service and Distribution Plan" in this Statement
of Additional Information.
B-11
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholder and Board of Directors
of Value Line U.S. Multinational Company Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities
presents fairly, in all material respects, the financial position of Value Line
U.S. Multinational Company Fund, Inc. (the "Fund") at September 20, 1995, in
conformity with generally accepted accounting principles. This financial
statement is the responsibility of the Fund's management; our responsibility is
to express an opinion on this financial statement based on our audit. We
conducted our audit of this financial statement in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
New York, New York
September 21, 1995
B-12
<PAGE>
VALUE LINE U.S. MULTINATIONAL COMPANY FUND, INC.
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
a. Financial Statements
To be supplied by amendment.
b. Exhibits
1. Articles of Incorporation filed --Exhibit 1
June 12, 1995.
2. By-Laws. --Exhibit 2
3. Not applicable.
4. Proposed Form of specimen stock --Exhibit 4*
certificate.
5. Proposed Form of Investment --Exhibit 5
Advisory Agreement between the
Registrant and Value Line, Inc.
6. Proposed Form of Distribution --Exhibit 6
Agreement between the Registrant
and Value Line Securities, Inc.
7. Not applicable.
8. Proposed Form of Custodian --Exhibit 8*
Agreement between the Registrant
and State Street Bank & Trust
Company.
9. Proposed Form of Transfer Agency --Exhibit 9*
Agreement between the Registrant
and State Street Bank & Trust
Company.
10. Opinion of Counsel. --Exhibit 10*
11. Not applicable.
12. Not applicable.
13. Form of Investment Letter from --Exhibit 13*
Value Line, Inc. to the
Registrant.
14. Model Retirement Plan. --Exhibit 14
15. Service and Distribution Plan. --Exhibit 15
16. Not applicable.
- - ------------------------
* Filed herewith.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
The Registrant is not controlled directly or indirectly by any person.
Information with respect to the Registrant's investment adviser is set forth
under the caption "The Adviser" in the Statement of Additional Information
forming Part B of the Registration Statement.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
As of the date hereof, Value Line, Inc. owned all of the outstanding shares
of common stock of the Registrant.
C-1
<PAGE>
ITEM 27. INDEMNIFICATION.
Article V of the Registrant's Bylaws is as follows:
ARTICLE V
INDEMNIFICATION AND INSURANCE
SECTION 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Any person who was
or is a party or is threatened to be made a party in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is a current or former
director or officer of the Corporation, or is or was serving while a director or
officer of the Corporation at the request of the Corporation as a director,
officer, partner, trustee, employee, agent or fiduciary of another corporation,
partnership, joint venture, trust, enterprise or employee benefit plan, shall be
indemnified by the Corporation against judgments, penalties, fines, excise
taxes, settlements and reasonable expenses (including attorneys' fees) actually
incurred by such person in connection with such action, suit or proceeding to
the full extent permissible under the Maryland General Corporation Law, the
Securities Act of 1933 and the Investment Company Act of 1940, as such statutes
are now or hereafter in force, except that such indemnity shall not protect any
such person against any liability to the Corporation or any stockholder thereof
to which such person 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 ("disabling conduct").
SECTION 2. ADVANCES. Any current or former director or officer of the
Corporation claiming indemnification within the scope of this Article V shall be
entitled to advances from the Corporation for payment of the reasonable expenses
incurred by him in connection with proceedings to which he is a party in the
manner and to the full extent permissible under the Maryland General Corporation
Law, the Securities Act of 1933 and the Investment Company Act of 1940, as such
statutes are now or hereafter in force; provided, however, that the person
seeking indemnification shall provide to the Corporation a written affirmation
of his good faith belief that the standard of conduct necessary for
indemnification by the Corporation has been met and a written undertaking to
repay any such advance unless it is ultimately determined that he is entitled to
indemnification, and provided further that at least one of the following
additional conditions is met: (1) the person seeking indemnification shall
provide a security in form and amount acceptable to the Corporation for his
undertaking; (2) the Corporation is insured against losses arising by reason of
the advance; or (3) a majority of a quorum of directors of the Corporation who
are neither "interested persons" as defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended, nor parties to the proceeding
("disinterested non-party directors"), or independent legal counsel, in a
written opinion, shall determine, based on a review of facts readily available
to the Corporation at the time the advance is proposed to be made, that there is
reason to believe that the person seeking indemnification will ultimately be
found to be entitled to indemnification.
SECTION 3. PROCEDURE. At the request of any current or former director or
officer, or any employee or agent whom the Corporation proposes to indemnify,
the Board of Directors shall determine, or cause to be determined, in a manner
consistent with the Maryland General Corporation Law, the Securities Act of 1933
and the Investment Company Act of 1940, as such statutes are now or hereafter in
force, whether the standards required by this Article V have been met; provided,
however, that indemnification shall be made only following: (1) a final decision
on the merits by a court or other body before whom the proceeding was brought
that the person to be indemnified was not liable by reason of disabling conduct
or (2) in the absence of such a decision, a reasonable determination, based upon
a review of the facts, that the person to be indemnified was not liable by
reason of disabling conduct, by (a) the vote of a majority of a quorum of
disinterested non-party directors or (b) an independent legal counsel in a
written opinion.
SECTION 4. INDEMNIFICATION OF EMPLOYEES AND AGENTS. Employees and agents
who are not officers or directors of the Corporation may be indemnified, and
reasonable expenses may be advanced to such employees or agents, in accordance
with the procedures set forth in this Article V to the extent
C-2
<PAGE>
permissible under the Investment Company Act of 1940, the Securities Act of 1933
and the Maryland General Corporation Law, as such statutes are now or hereafter
in force, and to such further extent, consistent with the foregoing, as may be
provided by action of the Board of Directors or by contract.
SECTION 5. OTHER RIGHTS. The indemnification provided by this Article V
shall not be deemed exclusive of any other right, in respect of indemnification
or otherwise, to which those seeking such indemnification may be entitled under
any insurance or other agreement, vote of stockholders or disinterested
directors or otherwise, both as to action by a director or officer of the
Corporation in his official capacity and as to action by such person in another
capacity while holding such office or position, and shall continue as to a
person who has ceased to be a director or officer and shall inure to the benefit
of the heirs, executors and administrators of such a person.
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.
<TABLE>
<CAPTION>
POSITION WITH
NAME THE ADVISER OTHER EMPLOYMENT
- - ---------------------------- ---------------------------------- ------------------------------------------------
<S> <C> <C>
Jean Bernhard Buttner Chairman of the Board, President, Chairman of the Board and Chief Executive
and Chief Executive Officer Officer of Arnold Bernhard & Co., Inc.; Chairman
of the Value Line Funds and the Distributor
Samuel Eisenstadt Senior Vice President and Director
David T. Henigson Vice President, Treasurer and Vice President and a Director of Arnold Bernhard
Director & Co., Inc. and the Distributor
Howard A. Brecher Secretary and Director Secretary and Treasurer of Arnold Bernhard &
Co., Inc.
Harold Bernard, Jr. Director Administrative Law Judge
Arnold Van H. Bernhard Director Self-Employed
William S. Kanaga Director Retired Chairman of Arthur Young (now Ernst &
Young)
W. Scott Thomas Director Partner, Brobeck, Phleger & Harrison, attorneys
</TABLE>
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; The Value Line Adjustable Rate U.S. Government
Securities Fund, Inc.; Value Line Small-Cap Growth Fund, Inc.; Value Line
Asset Allocation Fund, Inc.
C-3
<PAGE>
(b)
<TABLE>
<CAPTION>
(2)
POSITION AND (3)
(1) OFFICES POSITION AND
NAME AND PRINCIPAL WITH VALUE LINE OFFICES WITH
BUSINESS ADDRESS SECURITIES, INC. REGISTRANT
- - -------------------------- ------------------- -------------------
<S> <C> <C>
Jean Bernhard Buttner Chairman of the Chairman of the
Board Board and President
David T. Henigson Vice President, Vice President,
Secretary, Secretary and
Treasurer and Treasurer
Director
Stephen LaRosa Asst. Vice Asst. Treasurer
President
</TABLE>
The business address of each of the officers and directors is 220 East 42nd
Street, New York, NY 10017-5891.
(c) Not applicable.
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-1(f)
State Street Bank and Trust Company
c/o NFDS
P.O. Box 419729
Kansas City, MO 64141
For records pursuant to Rule 31a-1(b)(2)(iv)
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 file a post-effective amendment including financial
statements which need not be certified, within six months from the effective
date of this Registration Statement.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this 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 26th day of
September, 1995.
VALUE LINE U.S. MULTINATIONAL COMPANY FUND,
INC.
By /s/ DAVID T. HENIGSON
----------------------------------------------
David T. Henigson
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- - ------------------------------------------------------ ----------------------------- ------------------------
<S> <C> <C>
* Chairman of the Board; September 26, 1995
------------------------------------------- President; Principal
Jean B. Buttner Executive Officer
/s/ DAVID T. HENIGSON Treasurer; Principal September 26, 1995
------------------------------------------- Financial and Accounting
David T. Henigson Officer
* Director September 26, 1995
-------------------------------------------
Francis C. Oakley
* Director September 26, 1995
-------------------------------------------
Marion N. Ruth
* Director September 26, 1995
-------------------------------------------
Frances T. Newton
*By /s/ DAVID T. HENIGSON
--------------------------------------
David T. Henigson
Attorney in fact
</TABLE>
C-5
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Pre-Effective Amendment No. 1 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
September 21, 1995, relating to the financial statement of Value Line U.S.
Multinational Company Fund, Inc., which appears in such Statement of Additional
Information, and to the incorporation by reference of our report into the
Prospectus which constitutes part of this Registration Statement. We also
consent to the reference to us under the heading "Additional Information" in the
Statement of Additional Information.
PRICE WATERHOUSE LLP
New York, New York
September 22, 1995
<PAGE>
EXHIBIT 4
NUMBER [Logo] SHARES
VALUE LINE U.S. MULTINATIONAL COMPANY FUND, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
THIS CERTIFIES that is the owner of
SEE REVERSE SIDE FOR CERTAIN DEFINITIONS
CUSIP
FULLY PAID AND NON-ASSESSABLE SHARES OF THE CAPITAL STOCK, PAR VALUE OF ONE CENT
($.01) PER SHARE, OF VALUE LINE U.S. MULTINATIONAL COMPANY FUND, INC.
(HEREINAFTER CALLED THE "CORPORATION"), TRANSFERABLE ON THE BOOKS OF THE
CORPORATION BY THE HOLDER HEREOF IN PERSON OR BY DULY AUTHORIZED ATTORNEY UPON
SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED. THIS CERTIFICATE AND THE
SHARES REPRESENTED HEREBY ARE ISSUED AND SHALL BE HELD SUBJECT TO ALL OF THE
PROVISIONS OF THE ARTICLES OF INCORPORATION AND THE BY-LAWS OF THE CORPORATION,
TO ALL OF WHICH THE HOLDER OF THIS CERTIFICATE BY ACCEPTANCE HEREOF ASSENTS.
THIS CERTIFICATE IS NOT VALID UNLESS COUNTERSIGNED BY THE TRANSFER AGENT.
WITNESS THE FACSIMILE SEAL OF THE CORPORATION AND THE FACSIMILE SIGNATURES
OF ITS DULY AUTHORIZED OFFICERS.
[Seal] Dated
/s/ David T. Henigson /s/ Jean B. Buttner
SECRETARY CHAIRMAN
PLEASE DETACH AND DISCARD UNLESS CHANGES ARE REQUIRED
VALUE LINE U.S. MULTINATIONAL COMPANY FUND, INC.
NUMBER SHARES
KCK
ACCOUNT NO. ALPHA CODE DEALER NO. CONFIRM NO.
TRADE DATE CONFIRM DATE BATCH I.D. NO.
CHANGE NOTICE: IF THE ABOVE INFORMATION IS INCORRECT OR MISSING,
PLEASE PRINT THE CORRECT INFORMATION BELOW AND RETURN TO:
VALUE LINE C/O NATIONAL FINANCIAL DATA SERVICE
<PAGE>
Exhibit 8
CUSTODIAN AGREEMENT
Dated as of:
Between
VALUE LINE U.S. MULTINATIONAL COMPANY FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
----
1 Bank Appointed Custodian...........................................l
2. Definitions........................................................l
(a) Authorized Person.............................................l
(b) Security......................................................1
(c) Portfolio Security............................................1
(d) Officers' Certificate.........................................2
(e) Book-Entry System and Depository..............................2
3. A. Proper Instructions...........................................2
B. Bank's Communications with Fund...............................3
4. Separate Accounts..................................................3
5. Certification as to Authorized Persons.............................3
6. Custody of Cash and Securities.....................................4
A. Cash..........................................................4
(a) Purchase of Securities...................................4
(b) Redemptions..............................................4
(c) Distributions and Expenses of Fund.......................4
(d) Payment in Respect of Securities.........................5
(e) Repayment of Cash........................................5
(f) Other Authorized Payments................................5
(g) Termination..............................................5
B. Securities....................................................5
(a) Book-Entry System........................................6
(b) Use of Direct Paper System for Commercial
Paper....................................................8
C. Options and Futures Transactions..............................8
(a) Puts and Calls Traded on Securities
Exchanges, NASDAQ or Over-the-Counter....................8
(b) Puts, Calls and Futures Traded on
Commodities Exchanges....................................9
(c) Segregated Account......................................10
<PAGE>
D. Segregated Account for "when issued", "forward commitment"
and Reverse Repurchase Agreement Transactions................10
7. Transfer of Securities............................................11
8. Redemptions.......................................................12
9. Merger, Dissolution, etc. of Fund.................................12
10. Actions of Bank Without Prior Authorization.......................13
11. Maintenance of Records and Confidentiality........................14
12. Concerning the Bank...............................................14
A. Performance of Duties........................................14
B. Responsibility of Custodian..................................15
C. No Duty of Bank..............................................15
D. Fees and Expenses of Bank....................................16
E. Advances by Bank.............................................16
13. Termination.......................................................16
14. Notices...........................................................17
15. Amendments........................................................17
16. Parties...........................................................18
17. Governing Law.....................................................18
<PAGE>
CUSTODIAN AGREEMENT
AGREEMENT made as of this day of September , 1995 between VALUE LINE
U.S. MULTINATIONAL COMPANY FUND, INC., a corporation established under the laws
of Maryland (the "Fund"), and STATE STREET BANK AND TRUST COMPANY ("Bank").
The Fund, an open-end management investment company, desires to place and
maintain its portfolio securities and cash in the custody of the Bank. The Bank
has at least the minimum qualifications required by Section 17(f)(1) of the
Investment Company Act of 1940 to act as custodian of the portfolio securities
and cash of the Fund, and has indicated its willingness to so act, subject to
the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. BANK APPOINTED CUSTODIAN. The Fund hereby appoints the Bank as
custodian of its portfolio securities and cash delivered to the Bank as
hereinafter described, and the Bank agrees to act as such upon the terms and
conditions hereinafter set forth.
2. DEFINITIONS. Whenever used herein, the terms listed below will have
the following meaning:
(a) AUTHORIZED PERSON. Authorized person will mean any of the
persons duly authorized to give Proper Instructions or otherwise act on behalf
of the Fund by appropriate resolution of the Board of Directors.
(b) SECURITY. The term security as used herein will have the same
meaning as when such term is used in the Securities Act of 1933 as amended,
including, without limitation, any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation in any profit
sharing agreement, collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract, voting-trust certificate,
certificate of deposit for a security, fractional undivided interest in oil,
gas, or other mineral rights, any put, call, straddle, option, or privilege on
any security, certificate of deposit, or group or index of securities (including
any interest therein or based on the value thereof), or any put, call, straddle,
option, or privilege entered into on a national securities exchange relating to
a foreign currency, or, in general, any interest or instrument commonly known as
a "security", or any certificate of interest or participation in, temporary or
interim certificate for, receipt for, guarantee of, or warrant or right to
subscribe to, or option contract to purchase or sell any of the foregoing and
futures, forward contracts and options thereon.
(c) PORTFOLIO SECURITY. Portfolio security will mean any security
owned by the Fund.
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(d) OFFICERS' CERTIFICATE. Officers' Certificate will mean unless
otherwise indicated, any request, direction, instruction, or certification in
writing signed by any two Authorized Persons of the Fund.
(e) BOOK-ENTRY SYSTEM AND DEPOSITORY. Book-Entry System shall mean
the Federal Reserve-Treasury Department Book Entry System for United States
government, instrumentality and agency securities operated by the Federal
Reserve Banks, its successor or successors and its nominee or nominees.
Depository shall mean the Depository Trust Company ("DTC"), a clearing agency
registered with the Securities and Exchange Commission under Section 17A of the
Securities Exchange Act of 1934, it successor or successors and its nominee or
nominees. The term "Depository" shall further mean and include any other person
authorized to act as a depository under the Investment Company Act of 1940, its
successor or successors and its nominee or nominees, specifically identified in
a certified copy of a resolution of the Fund's Directors.
3A. PROPER INSTRUCTIONS. For purposes of this Agreement, "Proper
Instructions" shall mean (i) instructions regarding the purchase or sale of
securities for the portfolio of the Fund, and payments and deliveries in
connection therewith, given by an Authorized Person as designated in an
Officers' Certificate, such instructions to be given in such form and manner as
the Bank and the Fund shall agree upon from time to time, and (ii) instructions
(which may be continuing instructions) regarding other matters signed or
initialed by such one or more persons from time to time designated in an
Officers' Certificate as having been authorized by the Directors of the Fund.
Oral instructions given by a person whom the Bank reasonably believes to be
authorized to give such instructions with respect to the transaction involved
will be considered Proper instructions only if the Bank receives written
instructions which may be sent by telecopier) confirming such oral instructions,
provided however that if the Bank is notified by an Authorized Person of the
Fund that the Fund is unable to promptly confirm such oral instructions in
writing, then the Bank may act upon receipt of a second oral instruction,
confirming such prior oral instruction. The Bank shall compare/the original oral
instruction with any confirmatory written/or oral instruction, as the case may
be, and shall report any discrepancy to the Fund immediately, and the Bank shall
be responsible for any expense incurred in taking any action, including any
reprocessing, necessary to correct any such discrepancy or error in Proper
Instructions given by the Fund, to the extent such expense is caused by the
unreasonable delay of the Bank in reporting such discrepancy to the Fund. Except
as provided in the preceding sentence, the Fund shall be responsible, at the
Fund's expense, for taking any action, including any reprocessing, necessary to
correct any such discrepancy or error in Proper Instructions given by the Fund,
and to the extent such action requires the Bank to act, the Fund shall give the
Bank specific Proper Instructions as to the action required. The Bank shall act
upon and comply with any subsequent Proper Instructions which modifies a prior
Proper Instruction. Upon receipt of an Officers' Certificate as to the
authorization by the Directors of the Fund accompanied by a
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detailed description of procedures approved by the Fund, Proper Instructions may
include communication effected directly between electro-mechanical or electronic
devices provide that the Directors and the Bank are satisfied that such
procedures afford adequate safeguards for the Fund's assets.
3B. BANK'S COMMUNICATIONS WITH FUND. For purposes of this Agreement, all
communications from the Bank to the Fund shall be in writing (which may be sent
by means of a telecopier) and any such writing reasonably believed by the Fund
to be from a person authorized to make such communication on behalf of the Bank
may be relied upon by the Fund. An oral communication from a person whom the
Fund reasonably believes to be authorized to make such communication on behalf
of the Bank with respect to the transaction may be relied upon by the Fund only
if the Fund receives a written communication (which may be sent by telecopier)
confirming such oral communication, provided however, that if the Fund is
notified by such authorized person that the Bank is unable to promptly confirm
such oral communication in writing, then the Fund may act in reliance upon
receipt of a second oral communication confirming such prior oral communication.
The Fund shall compare the original oral communication with any confirmatory
written or oral communication, as the case may be, and shall report any
discrepancy to the Bank immediately, and the Fund shall be responsible for any
expense incurred in taking any action, including any reprocessing, necessary to
correct any such discrepancy or error in communications given by the Bank, to
the extent such expense is caused by the unreasonable delay of the Fund in
reporting such discrepancy to the Bank. Except as provided in the preceding
sentence, the Bank shall be responsible, at the Bank's expense, for any action
taken, including any reprocessing, necessary to correct any such discrepancy or
error in communications given by the Bank, and to the extent such action
requires the Bank to act, the Fund shall give the Bank specific Proper
Instructions as to the action required. The Fund may act in reliance upon any
subsequent communication from the Bank which modifies a prior communication.
4. SEPARATE ACCOUNTS. If the Fund has more than one series or portfolio,
the Bank will segregate the assets of the Fund into a Separate Account for each
such series or portfolio containing the assets of such series or portfolio (and
all investment earnings thereon), all as directed from time to time by Proper
Instructions.
5. CERTIFICATION AS TO AUTHORIZED PERSONS. The Secretary or
Assistant Secretary of the Fund will at all times maintain on file with the Bank
his certification to the Bank, in such form as may be acceptable to the Bank, of
the names and signatures of the Authorized Persons, it being understood that
upon the occurrence of any change in the information set forth in the most
recent certification on file (including without limitation any person named in
the most recent certification who is no longer an Authorized Person as
designated therein), the Secretary or Assistant Secretary of the Fund will sign
a new or amended certification setting forth the change and the new, additional
or omitted names or signatures. The Bank will be entitled to rely and act upon
any Officers' Certificate given to it by the Fund which has been signed by
Officers named in the most recent certification.
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6. CUSTODY OF CASH AND SECURITIES. As custodian for the Fund, the Bank
will keep safely all of the portfolio securities delivered to the Bank, and will
deposit to the account of the Fund all of the cash of the Fund delivered to the
Bank, as set forth below.
A. CASH. The Bank will open and maintain a separate account or
accounts in the name of the Fund or in the name of the Bank, as custodian of the
Fund, subject only to draft or order by the Bank acting pursuant to the terms of
this Agreement. The Bank will hold in such account or accounts as custodian,
subject to the provisions hereof (including sections 6(C) and 6(D), all cash
received by it, for the account of the Fund. Upon receipt by the Bank of Proper
Instructions (which may be continuing instructions) or in the case of payments
for redemptions and repurchases of outstanding shares of beneficial interest of
the Fund, notification from the Fund's transfer agent as provided in Section 8,
requesting such payment, designating the payee or the account or accounts to
which the Bank will release funds or deposit, and stating that it is for a
purpose permitted under the terms of this Section 6(A), specifying the
applicable subsection, or describing such purpose with sufficient particularity
to permit the Bank to ascertain the applicable subsection, the Bank will make
payments of cash held for the accounts of the Fund, insofar as funds are
available for that purpose, only as permitted in (a)-(g) below.
(a) PURCHASE OF SECURITIES: upon the purchase of securities for the
Fund, against contemporaneous receipt of such securities by the Bank
registered in the name of the Fund or in the name of, or properly endorsed
and in form for transfer to, the Bank, or a nominee of the Bank, or receipt
for the account of the Bank through use of (1) the Book-Entry System
pursuant to Section 6(B)(a)(3) below, (2) a Depository pursuant to 6(B)(b)
below, or (3) Book Entry Paper pursuant to Section 6(B)(c) below, each such
payment to be made at the purchase price shown on a broker's confirmation
(or transaction report in the case of Book Entry Paper) of purchase of the
securities received by the Bank before such payment is made, as confirmed
in the Proper Instructions received by the Bank before payment is made;
(b) REDEMPTIONS: in such amount as may be necessary for the
repurchase or redemption of shares of beneficial interest of the Fund
offered for repurchase or redemption in accordance with Section 8 of this
Agreement;
(c) DISTRIBUTIONS AND EXPENSES OF FUND: for the payment on the
account of the Fund of dividends or other distributions to shareholders as
may from time to time be declared by the Directors of the Fund, interest,
taxes, management or supervisory fees, distribution fees, fees of the Bank
for its services hereunder and reimbursement of the expenses and
liabilities of the Bank as provided hereunder, fees of any transfer agent,
fees for legal, accounting, and auditing services, or other operating
expenses of the Fund;
(d) PAYMENT IN RESPECT OF SECURITIES: for payments in connection
with the conversion, exchange or surrender of portfolio securities or
securities subscribed to by the Fund held by or to be delivered to the
Bank;
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(e) REPAYMENT OF CASH: to repay the cash delivered to the Fund for
the purpose of collateralizing the obligation to return to the Fund
certificates borrowed from the Trust representing portfolio securities, but
only upon redelivery to the Bank of such borrowed certificates;
(f) OTHER AUTHORIZED PAYMENTS: for other authorized transactions of
the Fund, or other obligations of the Fund incurred for proper Fund
purposes; provided that before making any such payment the Bank will also
receive a certified copy of a resolution of the Directors signed by an
Authorized Person of the Fund (other than the Person certifying such
resolution) and certified by its Clerk or Assistant Clerk, naming the
person or persons to whom such payment is to be made, and either describing
the transaction for which payment is to be made and declaring it to be an
authorized transaction of the Fund, or specifying the amount of the
obligation for which payment is to be made, setting forth the purpose for
which such obligation was incurred and declaring such purpose to be a
proper corporate purpose; and
(g) TERMINATION: upon the termination of this Agreement as
hereinafter set forth pursuant to Section 9 and Section 13 of this
Agreement.
The Bank is hereby authorized to endorse for collection and collect on
behalf of and in the name of the Fund all checks, drafts, or other negotiable or
transferable instruments or other orders for the payment of money received by it
for the account of the Fund.
B. SECURITIES. Except as provided in subsections (a), (b) and (c)
of this Section 6(B), and in Sections 6(C) and 6(D), the Bank as custodian, will
receive and hold pursuant to the provisions hereof, in a separate account or
accounts and physically segregated at all times from those of other persons, any
and all portfolio securities which may now or hereafter be delivered to it by or
for the account of the Fund. All such portfolio securities will be held or
disposed of by the Bank for, and subject at all times to, the instructions of
the Fund pursuant to the terms of this Agreement. Subject to the specific
provisions in Subparagraphs (a), (b), and (c) relating to securities that are
not physically held by the Bank, the Bank will register all portfolio securities
(unless otherwise directed by Proper Instructions or an Officers' Certificate),
in the name of a registered nominee of the Bank as defined in the Internal
Revenue Code and any Regulations of the Treasury Department issued thereunder,
which nominee shall be exclusively assigned to the Fund, and will execute and
deliver all such certificates in connection therewith as may be required by such
laws or Regulations or under the laws of any State. The Bank will ensure that
the specific portfolio securities of the Fund held by it hereunder will be at
all times identifiable.
The Bank will use the same care with respect to the safekeeping of
portfolio securities and cash of the Fund held by it as it uses in respect of
its own similar property but it need not maintain any special insurance for the
benefit of the Fund.
The Fund will from time to time furnish to the Bank appropriate instruments
to enable it to hold or deliver in proper form for transfer, or to register in
the name of its registered nominee, any
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securities which it may hold for the account of the Fund and which may from time
to time be registered in the name of the Fund.
Neither the Bank nor any nominee of the Bank will vote any of the portfolio
securities held hereunder by or for the account of the Fund, except in
accordance with Proper Instructions of an Officers' Certificate.
The Bank will execute and deliver, or cause to be executed and delivered,
to the Fund all notices, proxies and proxy soliciting materials with respect to
such securities, such proxies to be executed by the registered holder of such
securities (if registered otherwise than in the name of the Fund), but without
indicating the manner in which such proxies are to be voted.
(a) BOOK-ENTRY SYSTEM. Provided (i) the Bank has received a
certified copy of a resolution of the Directors of the Fund specifically
approving deposits of the Fund assets in the Book-Entry System, indicating
that, and (ii) for each year following such approval, the Directors of the
Fund has reviewed and approved the arrangement and has not delivered an
Officer's Certificate to the Bank indicating that it has withdrawn its
approval:
1. The Bank may keep Securities of the Fund in the
Book-Entry System provided that such securities are represented in an
account ("Account") of the Bank (or its agent) in such System which
shall not include any assets of the Bank (or such agent) other than
assets held as a fiduciary, custodian, or otherwise for customers.
2. The records of the Bank (and any such agent) with
respect to the Fund's participation in the Book-Entry System through
the Bank (or any such agent) will identify by book entry securities
belonging to the Fund which are included with other securities
deposited in the Account and shall at all times during the regular
business hours of the Bank (or such agent) be open for inspection by
duly authorized officers, employees or agents of the Fund. Where
securities are transferred to the Fund's account, the Bank shall also,
by book entry or otherwise, identify as belonging to the Fund a
quantity of securities in fungible bulk of securities (i) registered
in the name of the Bank or its nominee, or (ii) shown on the Bank's
account on the books of the Federal Reserve Bank.
3. The Bank (or its agent) shall pay for securities
purchased for the account of the Fund or shall pay cash collateral
against the return of securities loaned by the Fund upon (i) receipt
of advice from the Book-Entry System that such Securities have been
transferred to the Account, and (ii) the making of an entry on the
records of the Bank (or its agent) to reflect such payment and
transfer for the account of the Fund. The Bank (or its agent) shall
transfer securities sold or loaned for the account of the Fund upon
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(a) receipt of advice from the Book-Entry System
that payment for Securities sold or payment of the initial cash
collateral against the delivery of securities loaned by the Fund
has been transferred to the Account, and
(b) the making of an entry on the records of the
Bank (or its agent) to reflect such transfer and payment for the
account of the Fund. Copies of all advices from the Book-Entry
System of transfers of Securities for the account of the Fund
shall identify the Fund, be maintained for the Fund by the Bank
and shall be provided to the Fund at its request. The Bank shall
send the Fund a confirmation, as defined by Rule 17f-4 under the
Investment Company Act of 1940, of any transfers to or from the
account of the Fund.
4. The Bank will promptly provide the Fund with any report
obtained by the Bank or its agent on the Book-Entry System's
accounting system, internal accounting control and procedures for
safeguarding Securities deposited in the Book-Entry System. The Bank
will provide the Fund and cause any such agent to provide, at such
times as the Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, including
Securities deposited in the Book-Entry System, relating to the
services provided by the Bank or such agent under the Agreement.
5. Anything to the contrary in the Agreement
notwithstanding, the Bank shall be liable to the Fund for any loss or
damage to the Fund resulting from use of the Book-Entry System by
reason of any gross negligence, willful misfeasance or bad faith of
the Bank or any of its agents or of any of its or their employees or
from any reckless disregard by the Bank or any such agent of its duty
to enforce effectively such rights as it may have against the
Book-Entry System; at the election of the Fund, it shall be entitled
to be subrogated for the Bank in any claim against the Book-Entry
System or any other person which the Bank or its agent may have as a
consequence of any such loss or damage if and to the extent that the
Fund has not been made whole for any loss or damage.
(b) USE OF DIRECT PAPER SYSTEM FOR COMMERCIAL PAPER. Provided (i)
the Bank has received a certified copy of a resolution of the Fund's
Directors specifically approving participation in a system maintained by
the Bank for the holding of commercial paper in direct paper form ("Direct
Paper") and (ii) for each year following such approval the Directors of the
Fund have received and approved the arrangements, upon receipt of Proper
Instructions and upon receipt of confirmation from an Issuer (as defined
below) that the Fund has purchased such Issuer's Direct Paper, the Bank
shall issue and hold in direct paper form, on behalf of the Fund,
commercial paper issued by issuers with whom
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the Bank has entered into a direct paper agreement (the "Issuers"). In
maintaining its Direct Paper System, the Bank agrees that:
1. the Bank will maintain all Direct Paper held by the
Fund in an account of the Bank that includes only assets held by it
for customers;
2. the records of the Bank with respect to the Fund's
purchase of Direct Paper through the Bank will identify, by book
entry, Commercial Paper belonging to the Fund which is included in the
Direct Paper System and shall at all times during the regular business
hours of the Bank be open for inspection by duly authorized officers,
employees or agents of the Fund.
3. (a) The Bank shall pay for Direct Paper purchased for
the account of the Fund upon contemporaneous (i) receipt of advice
from the Issuer that such sale of Direct Paper has been effected, and
(ii) the making of an entry on the records of the Bank to reflect such
payment and transfer for the account of the Fund.
(b) The Bank shall cancel such Direct Paper obligation
upon the maturity thereof upon contemporaneous (i) receipt of advice
that payment for such Direct Paper has been transferred to the Fund,
and (ii) the making of an entry on the records of the Bank to reflect
such payment for the account of the Fund.
4. the Bank shall transmit to the Fund a transaction
journal confirming each transaction in Direct Paper for the account of
the Fund on the next business day following the transaction;
5. the Bank will send to the Fund such reports on its
system of internal accounting control as the Fund may reasonably
request from time to time;
C. OPTIONS AND FUTURES TRANSACTIONS.
(a) PUTS AND CALLS TRADED ON SECURITIES EXCHANGES, NASDAO OR
OVER-THE-COUNTER.
1. The Bank shall take action as to put options ("puts")
and call options ("calls") purchased or sold (written) by the Fund
regarding escrow or other arrangements (i) in accordance with the
provisions of any agreement entered into upon receipt of Proper
Instructions between the Bank, any broker-dealer registered under the
Securities Exchange Act of 1934 and a member of the National
Association of Securities Dealers, Inc., and, if necessary, the Fund
relating to the compliance with the rules of the Options Clearing
Corporation and
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of any registered national securities exchange, or of any similar
organization or organizations.
2. Unless another agreement requires it to do so, the Bank
shall be under no duty or obligation to see that the Fund has
deposited or is maintaining adequate margin, if required, with any
broker in connection with any option, nor shall the Bank be under any
duty or obligation to present such option to the broker for exercise
unless it receives Proper Instructions from the Fund. The Bank shall
have no responsibility for the legality of any put or call purchased
or sold on behalf of the Fund, the propriety of any such purchase or
sale, or the adequacy of any collateral delivered to a broker in
connection with an option or deposited to or withdrawn from a
Segregated Account as described in sub-paragraph c of this Section
6(C). The Bank specifically, but not by way of limitation, shall not
be under any duty or obligation to: (i) periodically check or notify
the Fund that the amount of such collateral held by a broker or held
in a Segregated Account as described in sub-paragraph (c) of this
Section 6(C) is sufficient to protect such broker of the Fund against
any loss; (ii) effect the return of any collateral delivered to a
broker; or (iii) advise the Fund that any option it holds, has or is
about to expire. Such duties or obligations shall be the sole
responsibility of the Fund.
(b) PUTS, CALLS AND FUTURES TRADED ON COMMODITIES EXCHANGES.
1. The Bank shall take action as to puts, calls and
futures contracts ("Futures") purchased or sold by the Fund in
accordance with the provisions of any agreement among the Fund, the
Bank and a Futures Commission Merchant registered under the Commodity
Exchange Act, relating to compliance with the rules of the Commodity
Futures Trading Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in
connection with transactions by the Fund.
2. The responsibilities and liabilities of the Bank as to
Futures, puts and calls traded on commodities exchanges, any Futures
Commission Merchant account and the Segregated Account shall be
limited as set forth in sub-paragraph
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(a)(2) of this Section 6(C) as if such sub-paragraph referred to
Futures Commission Merchants rather than brokers, and Futures and puts
and calls thereon instead of options.
(c) SEGREGATED ACCOUNT.
The Bank shall upon receipt of Proper Instructions establish and
maintain a Segregated Account or Accounts for and on behalf of the
Fund, into which Account or Accounts may be transferred cash and/or
securities including securities maintained in an Account by the Bank
pursuant to Section 6(B) hereof, (i) in accordance with the provisions
of any agreement among the Fund, the Bank and a broker-dealer
registered under the Exchange Act and a member of the NASD or any
Futures Commission Merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Options Clearing
Corporation and of any registered national securities exchange or the
Commodity Futures Trading Commission or any registered Contract
Market, or of any similar organization or organizations regarding
escrow or other arrangements in connection with transactions by the
Fund, and (ii) for the purpose of segregating cash or securities in
connection with options purchased or written by the Fund, or commodity
futures purchased or written by the Fund, and (iii) for the purposes
of compliance by the Fund with the procedures required by Investment
Company Act Release No. 10666, or any subsequent release or releases
of the Securities and Exchange Commission relating to the maintenance
of Segregated Accounts by registered investment companies and (iv) for
other proper corporate purposes, BUT ONLY, in the case of clause (iv),
upon receipt of, in addition to Proper Instructions, a certified copy
of a resolution of the Directors of the Fund signed by an officer of
the Fund and certified by the Clerk of an Assistant Clerk, setting
forth the purpose or purposes of such Segregated Account and declaring
such purposes to be proper corporate purposes.
D. SEGREGATED ACCOUNT FOR "WHEN-ISSUED", "FORWARD COMMITMENT"
AND REVERSE REPURCHASE AGREEMENT TRANSACTIONS.
Notwithstanding the provisions of Section 6(A), 6(B) and 6(C) hereof, the Bank
will maintain a segregated account (the "Segregated Account") in the name of the
Fund (i) for the deposit of liquid assets, such as cash, U.S. Government
securities or other high grade debt obligations, having a market value (marked
to the market on a daily basis) at all times equal to not less than the
aggregate purchase price due on the settlement dates of all the Fund's then
outstanding forward commitment or "when-issued" agreements relating to the
purchase of portfolio securities and all the Fund's then outstanding commitments
under reverse repurchase agreements entered into with broker-dealer firms, and
(ii) for the deposit of any portfolio securities which the Fund has agreed to
sell on a forward commitment basis, all in accordance with Securities and
Exchange Commission Release No. IC-10666. No assets shall be deposited in the
Segregated Account except pursuant to Proper Instructions. Assets may be
withdrawn from the segregated account pursuant to Proper Instructions only (a)
for sale or delivery to meet the Fund's obligations under outstanding firm
commitment or when-issued agreements for the purchase of portfolio securities
and under reverse repurchase agreements, (b) for exchange for other liquid
assets of equal or greater value
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deposited in the Segregated Account, (c) to the extent that the Fund's
outstanding forward commitment or when-issued agreements for the purchase of
portfolio securities or reverse repurchase agreements are sold to other parties
or the Fund's obligations thereunder are met from assets of the Fund other than
those in the Segregated Account, or (d) for delivery upon settlement of a
forward commitment agreement for the sale of portfolio securities.
7. TRANSFER OF SECURITIES. The Bank will transfer, exchange, deliver or
release portfolio securities held by it hereunder, insofar as such securities
are available for such purpose, provided that before making any transfer,
exchange, delivery or release under this Section the Bank will receive Proper
Instructions requesting such transfer, exchange or delivery stating that it is
for a purpose permitted under the terms of this Section 7, specifying the
applicable subsection, or describing the purpose of the transaction with
sufficient particularity to permit the Bank to ascertain the applicable
subsection, only
(a) upon sales of portfolio securities for the account of the Fund,
against contemporaneous receipt by the Bank of payment therefor in full,
each such payment to be in the amount of the sale price shown in a broker's
confirmation of sale of the portfolio securities received by the Bank
before such payment is made, as confirmed in the Proper Instructions
received by the Bank before such payment is made, provided however, that
portfolio securities may be delivered to the broker selling the same for
examination in accordance with "street delivery" custom;
(b) in exchange for or upon conversion into other securities alone or
other securities and cash pursuant to any plan or merger, consolidation,
reorganization, share split-up, change in par value, recapitalization or
readjustment or otherwise;
(c) upon conversion of portfolio securities pursuant to their terms
into other securities;
(d) upon exercise of subscription, purchase or sale or other similar
rights represented by such portfolio securities;
(e) for the purpose of redeeming in kind shares of beneficial
interest of the Fund upon authorization from the Fund;
(f) in the case of option contracts owned by the Fund, for
presentation to the endorsing broker;
(g) when such portfolio securities are called, redeemed or retired or
otherwise become payable;
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(h) for the purpose of releasing certificates representing portfolio
securities of the Fund, against contemporaneous receipt by the Bank of the
fair market value of such security, as set forth in Proper Instructions
received by the Bank before such payment is made;
(i) for the purpose of tendering shares pursuant to a tender offer
therefor;
(j) for the purpose of delivering securities lent by the Fund to a
bank or broker-dealer, but only against receipt in accordance with street
delivery custom, except as otherwise provided in Subsections 6(B)(a) and
(b) hereof, of adequate collateral as agreed upon from time to time by the
Fund and the Bank, and upon receipt of payment in connection with any
repurchase agreement relating to such securities entered into by the Fund;
(k) for other authorized transactions of the Fund or for other proper
corporate purposes; provided that before making such transfer, the Bank
will also receive a certified copy of resolution of the Directors of the
Fund, signed by an authorized officer of the Fund (other than the officer
certifying such resolution) and certified by its Secretary or Assistant
Secretary, specifying the portfolio securities to be delivered, setting
forth the transaction in or purpose for which such delivery is to be made,
declaring such transaction to be an authorized transaction of the Fund or
such purpose to be a proper corporate purpose, and naming the person or
persons to whom delivery of such securities shall be made; and
(l) upon termination of this Agreement as hereinafter set forth
pursuant to Section 9 and Section 13 of this Agreement.
As to any deliveries made by the Bank pursuant to subsections (a), (b),
(c), (d), (f), (g), (h), (i) and (j) securities or cash receivable in exchange
therefor shall be delivered to the Bank.
8. REDEMPTIONS. In the case of payment of assets of the Fund held by the
Bank in connection with redemptions and repurchases by the Fund of outstanding
shares of beneficial interest, the Bank will rely on notification by the Fund's
transfer agent if receipt of a request for redemption and certificates, if
issued, in proper form for redemption before such payment is made. Payment shall
be made in accordance with the Articles of Incorporation of the Fund, from
assets available for said purposes.
9. MERGER, DISSOLUTION, ETC. OF FUND. In the case of the following
transactions not in the ordinary course of business, namely, the merger of the
Fund into or the consolidation of the Fund with another investment company, the
sale by the Fund of all, or substantially all of its assets to another
investment company, or the liquidation or dissolution of the Fund and
distribution of its assets, the Bank will deliver the portfolio securities held
by it under this Agreement and disburse cash only upon the order of the Fund set
forth in an Officers' Certificate, accompanied by a certified copy of a
resolution of the Fund's Directors authorizing any of the foregoing
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transactions. Upon completion of such delivery and disbursement and the payment
of the fees, disbursements and expenses of the Bank due to the Bank pursuant to
Section 12E hereof, this Agreement will terminate.
10. ACTIONS OF BANK WITHOUT PRIOR AUTHORIZATION. Notwithstanding anything
herein to the contrary, unless and until the Bank receives an Officers'
Certificate to the contrary, it will without prior authorization or instruction
of the Fund or the transfer agent:
(a) Receive and hold for the account of the Fund hereunder and
deposit in the account or accounts referred to in Section 6 hereof, all
income, dividends, interest and other payments or distribution of cash with
respect to the portfolio securities held thereunder;
(b) Present for payment all coupons and other income items held by it
for the account of the Fund which call for payment upon presentation and
hold the cash received by it upon such payment for the account of the Fund
in the account or accounts referred to in Section 6 hereof;
(c) Receive and hold for the account of the Fund hereunder and
deposit in the account or accounts referred to in Section 6 hereof all
securities received as a distribution on portfolio securities as a result
of a stock dividend, share split-up, reorganization, recapitalization,
merger, consolidation, readjustment, distribution of rights and similar
securities issued with respect to any portfolio securities held by it
hereunder.
(d) Execute as agent on behalf of the Fund all necessary ownership
and other certificates and affidavits required by the Internal Revenue Code
or the regulations of the Treasury Department issued thereunder, or by the
laws of any state, now or hereafter in effect, inserting the Fund's name on
such certificates as the owner of the securities covered thereby, to the
extent it may lawfully do so and as may be required to obtain payment in
respect thereof. The Bank will execute and deliver such certificates in
connection with portfolio securities delivered to it or by it under this
Agreement as may be required under the provisions of the Internal Revenue
Code and any Regulations of the Treasury Department issued thereunder, or
under the laws of any State;
(e) Present for payment all portfolio securities which are called,
redeemed, retired or otherwise become payable, and hold cash received by it
upon payment for the account of the Fund in the account or accounts
referred to in Section 6 hereof; and
(f) Exchange interim receipts or temporary securities for definitive
securities.
13
<PAGE>
The Bank will use all diligence to collect any funds which may to its
knowledge become collectible arising from such securities, including dividends,
interest and other income, and to transmit to the Fund notice actually received
by it of any call for redemption, offer of exchange, right of subscription,
reorganization or other proceedings affecting such securities.
If portfolio securities upon which such income is payable are in default or
payment is refused after due demand or presentation, the Bank will notify the
Fund by telecopier of any default or refusal to pay no later than one business
day from the day on which it receives knowledge of such default or refusal. In
addition, the Bank will send the Fund a written report once each month showing
any income on any portfolio security held by it which is more than ten days
overdue on the date of such report and which has not previously been reported.
11. MAINTENANCE OF RECORDS. The Bank will maintain records with respect
to transactions for which the Bank is responsible pursuant to the terms and
conditions of this Agreement and in compliance with the applicable rules and
regulations under the Investment Company Act of 1940 as amended, and will
furnish the Fund daily with a statement of condition of the Fund. The Bank will
furnish to the Fund at the end of every month, and at the close of each quarter
of the Fund's fiscal year, a list of the portfolio securities and the aggregate
amount of cash held by it for the Fund. The books and records of the Bank
pertaining to its actions under this Agreement and reports by the Bank or its
independent accountants concerning its accounting system, procedures for
safeguarding securities and internal accounting controls will be open to
inspection and audit at reasonable times by officers of or auditors employed by
the Fund and will be preserved by the Bank in the manner and in accordance with
the applicable rules and regulations under the Investment Company Act of 1940.
The Bank agrees to treat all records and other information relative to the
Fund and its shareholders as confidential, except it may disclose such
information after prior notification to and approval in writing by the Fund,
which approval shall not be unreasonably withheld. Nothing in this Section 11
shall prevent the Bank from divulging information to bank or securities
regulatory authorities or where the Bank may be exposed to civil or criminal
contempt proceedings for failure to comply.
12. CONCERNING THE BANK.
A. PERFORMANCE OF DUTIES.
(1) The Bank and the Fund shall each exercise reasonable
care in the performance of their respective duties and functions under
this Agreement.
(2) In its dealings with the Fund, the Bank shall be
entitled to rely upon any Officers' Certificate, Proper Instructions,
resolution of the Directors, telegram, facsimile communication,
written notice, or certificate.
14
<PAGE>
B. RESPONSIBILITY OF CUSTODIAN. So long as and to the extent that
it is in the exercise of reasonable care, the Custodian shall not be
responsible for the title, validity or genuineness of any property or
evidence of title thereto received by it or delivered by it pursuant to
this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by
it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms
of a three-party futures or options agreement. The Custodian shall be
held harmless and be protected by the Fund and shall be held to the
exercise of reasonable care in carrying out the Proper Instructions of
the Fund. It shall be entitled to rely on and may act upon advice of
counsel (who may be counsel for the Fund) or mutually acceptable to both
parties on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
C. NO DUTY OF BANK. The Bank will be under no duty or obligation to
inquire into and will not be liable for:
(a) the validity of the issue of any portfolio securities
purchased by or for the Fund, the legality of the purchases thereof or
the propriety of the price incurred therefor;
(b) the legality of any sale of any portfolio securities by
or for the Fund or the propriety of the amount for which the same are
sold;
(c) the legality of an issue or sale of any shares of
common stock of the Fund or the sufficiency of the amount to be
received therefor provided that it reflects the net asset value as
provided by the Fund;
(d) the legality of the repurchase of any shares of common
stock of the Fund or the propriety of the amount to be paid therefor
provided that it reflects the net asset value as provided by the Fund;
(e) the legality of the declaration of any dividend by the
Fund or the legality of the distribution of any portfolio securities
as payment in kind of such dividend; or
(f) any property or moneys of the Fund unless and until
received by it, except as otherwise provided in Section 10 hereof, and
any such property or moneys delivered or paid by it pursuant to the
terms hereof.
Moreover, the Bank will not be under any duty or obligation to ascertain
whether any portfolio securities at any time delivered to or held by it for the
account of the Fund are such as may properly be held by the Fund under the
provisions of its Agreement and Declaration of Fund or By-Laws, any federal or
state statutes or any rule or regulation of any governmental agency.
15
<PAGE>
D. FEES AND EXPENSES OF BANK. The Fund will pay or reimburse the Bank
from time to time for any transfer taxes payable upon transfer of portfolio
securities made hereunder, and for the Bank's normal disbursements, expenses and
charges made or incurred by the Bank in the performance of this Agreement
(including any duties listed on any Schedule hereto, if any). For the services
rendered by the Bank hereunder, the Fund will pay to the Bank such compensation
or fees at such rate and at such times as shall be agreed upon in writing by the
parties from time to time. The Bank will also be entitled to reimbursement by
the Fund for normal industry costs for securities transfers and services
incurred in conjunction with termination of this Agreement by the Fund.
E. ADVANCES BY BANK. The Bank may, in its sole discretion, advance
funds on behalf of the Fund to make any payment permitted by this Agreement upon
receipt of Proper Instructions as required by this Agreement for such payments
by the Fund. Should such a payment or payments, with advanced funds, result in
an overdraft (due to insufficiencies of the Fund's account with the Bank, or for
any other reason) any such related indebtedness shall be deemed a loan made by
the Bank to the Fund payable on demand and bearing interest at the current rate
charged by the Bank for such loans unless the Fund shall provide the Bank with
agreed-upon compensating balances. The Fund authorizes the Bank, in its sole
discretion, at any time to charge any overdraft or indebtedness, together with
interest due thereon, against any balance of account standing to the credit of
the Fund on the Bank's books. In addition, if the Bank, its affiliates,
subsidiaries or agents, advances cash or securities for any purpose (including
but not limited to securities settlements, foreign exchange contracts and
assumed settlement) any property at any time held for the account of the Fund
shall be security therefor and should the Fund fail to repay the Bank promptly,
the Bank shall be entitled to dispose of Fund assets to the extent necessary
to obtain reimbursement.
13. TERMINATION.
(a) This Agreement may be terminated at any time without penalty upon
ninety days written notice delivered by either party to the other by means
of registered mail, and upon the expiration of such ninety days this
Agreement will terminate; provided, however, that the effective date of
such termination may be postponed to a date of delivery of such notice (i)
by the Bank in order to prepare for the transfer by the Bank of all of the
assets of the Fund held hereunder, and (ii) by the Fund in order to give
the Fund an opportunity to make suitable arrangements for a successor
custodian. At any time after the termination of this Agreement, the Fund
will, at its request, have access to the records of the Bank relating to
the performance of its duties as custodian.
(b) In the event of the termination of this Agreement, the Bank will
immediately upon receipt or transmittal, as the case may be, of notice of
termination, commence and prosecute diligently to completion the transfer
of all cash and the delivery of all portfolio securities duly endorsed and
all records maintained under Section 11 to the
16
<PAGE>
successor custodian when appointed by the Fund. The obligation of the Bank
to deliver and transfer over the assets of the Fund held by it directly to
such successor custodian will commence as soon as such successor is
appointed and will continue until completed as aforesaid. If the Fund does
not select a successor custodian within ninety days from the date of
delivery of notice of termination the Bank may, subject to the provisions
of subsection (c) of this Section 13, deliver the portfolio securities and
cash of the Fund held by the Bank to a bank or trust company of its own
selection which meets the requirements of Section 17(f)(1) of the
Investment Company Act of 1940 and has a reported capital, surplus and
undivided profits aggregating not less than $2,000,000, to be held as the
property of the Fund under terms similar to those on which they were held
by the Bank, whereupon such bank or trust company so selected by the Bank
will become the successor custodian of such assets of the Fund with the
same effect as though selected by the Directors of the Fund.
(c) Prior to the expiration of ninety days after notice of
termination has been given, the Fund may furnish the Bank with an order of
the Fund advising that a successor custodian cannot be found willing and
able to act upon reasonable and customary terms and that there has been
submitted to the shareholders of the Fund the question of whether the Fund
will be liquidated or will function without a custodian for the assets of
the Fund held by the Bank. In that event the Bank will deliver the
portfolio securities and cash of the Fund held by it, subject as aforesaid,
in accordance with one of such alternatives which may be approved by the
requisite vote of shareholders, upon receipt by the Bank of a copy of the
minutes of the meeting of shareholders at which action was taken, certified
by the Fund's Secretary.
14. NOTICES. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and mailed or delivered to it at
its office at the address set forth below; namely:
(a) In the case of notices sent to the Fund to:
c/o Value Line Inc.
711 3rd Avenue
New York, New York 10017
Attn: Treasurer
(b) In the case of notices sent to the Bank to:
State Street Bank and Trust Company
Mutual Fund Services
1776 Heritage Drive
North Quincy, MA 02171
or at such other place as such party may from time to time designate in
writing.
17
<PAGE>
15. AMENDMENTS. This Agreement may not be altered or amended, except by
an instrument in writing, executed by both parties, and in the case of the Fund,
such alteration or amendment will be authorized and approved by its Directors.
16. PARTIES. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Fund
without the written consent of the Bank or by the Bank without the written
consent of the Fund, authorized and approved by its Directors; and provided
further that termination proceedings pursuant to Section 13 hereof will not be
deemed to be an assignment within the meaning of this provision.
17. GOVERNING LAW. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts.
18
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate and their respective corporate seals to be affixed hereto
as of the date first above written by their respective officers thereunto duly
authorized.
VALUE LINE U.S. MULTINATIONAL COMPANY
FUND, INC.
By:__________________________________
ATTEST:
_____________________
STATE STREET BANK AND TRUST COMPANY
By:__________________________________
ATTEST:
_____________________
19
<PAGE>
Exhibit 9
TRANSFER AGENCY AND SERVICE AGREEMENT
between
VALUE LINE U.S. MULTINATIONAL COMPANY FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
----
Article 1 Terms of Appointment; Duties of the Bank . . . . . . . . . 1
Article 2 Fees and Expenses. . . . . . . . . . . . . . . . . . . . . 5
Article 3 Representations and Warranties of the Bank . . . . . . . . 5
Article 4 Representations and Warranties of the Fund . . . . . . . . 6
Article 5 Responsibility of Bank, Fund . . . . . . . . . . . . . . . 6
Article 6 Covenants of the Fund and the Bank . . . . . . . . . . . . 8
Article 8 Termination of Agreement . . . . . . . . . . . . . . . . .11
Article 9 Assignment . . . . . . . . . . . . . . . . . . . . . . . .11
Article 10 Amendment. . . . . . . . . . . . . . . . . . . . . . . . .12
Article 11 Massachusetts Law to Apply . . . . . . . . . . . . . . . .12
Article 12 Merger of Agreement. . . . . . . . . . . . . . . . . . . .12
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the___ day of __________, 1995, by and between VALUE
LINE U.S. MULTINATIONAL COMPANY FUND, INC., a corporation, having its principal
office and place of business at 220 East 42nd Street , New York, New York 10017,
(the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust
company having its principal office and place of business at 225 Franklin
Street, Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Fund desires to appoint the Bank as its transfer agent,
dividend disbursing agent, and agent in connection with certain other
activities, and the Bank desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
Article l TERMS OF APPOINTMENT; DUTIES OF THE BANK
1.01 Subject to the terms and conditions set forth in this
Agreement, the Fund hereby employs and appoints the Bank to act as, and the Bank
agrees to act as its transfer agent for the Fund's authorized and issued shares
of its common stock, $.01 par value, ("Shares"), dividend disbursing agent, and
agent in connection with any accumulation, open-account or similar plans
provided to the shareholders of the Fund ("Shareholders") and set out in the
currently effective prospectus and statement of additional information
("prospectus") of the Fund, including without limitation any periodic investment
plan or periodic withdrawal program.
1.02 The Bank agrees that it will perform the following
services:
(a) In accordance with procedures established from time to time
by agreement between the Fund and the Bank, the Bank shall:
(i) Receive for acceptance, written orders for the purchase
of Shares, and promptly deliver payment and appropriate
documentation thereof to the Custodian of the Fund
authorized pursuant to the Articles of Incorporation of
the Fund (the "Custodian");
(ii) Pursuant to written purchase orders, issue the
appropriate number of Shares and hold such Shares in the
appropriate Shareholder account;
(iii) Receive for acceptance redemption requests and
redemption directions and deliver the appropriate
documentation thereof to the Custodian;
(iv) At the appropriate time as and when it receives monies
paid to it by the Custodian with respect to any
redemption, pay over or cause to be paid over in the
appropriate manner such monies as instructed by the
redeeming Shareholders;
<PAGE>
(v) Effect transfers of Shares by the registered owners
thereof upon receipt of appropriate instructions;
(vi) Prepare and transmit payments for dividends and
distributions declared by the Fund;
(vii) Maintain records of account for and advise the Fund and
its Shareholders as to the foregoing; and
(viii) Record the issuance of shares of the Fund and maintain
pursuant to SEC Rule 17Ad-10(e) a record of the total
number of shares of the Fund which are authorized, based
upon data provided to it by the Fund, and issued and
outstanding. The Bank shall also provide the Fund on a
regular basis with the total number of shares which are
authorized and issued and outstanding and shall have no
obligation, when recording the issuance of shares, to
monitor the issuance of such shares or to take
cognizance of any laws relating to the issue or sale of
such shares, which functions shall be the sole
responsibility of the Fund.
(b) In addition to and not in lieu of the services set forth
in the above paragraph (a), the Bank shall: (i) perform the customary services
of a transfer agent, dividend disbursing agent, and, as relevant, agent in
connection with accumulation, open-account or similar plans (including without
limitation any periodic investment plan or periodic withdrawal program),
including but not limited to: maintaining all Shareholder accounts, preparing
Shareholder meeting lists, mailing proxies, mailing Shareholder reports and
prospectuses to current Shareholders, withholding taxes on U.S. resident and
non-resident alien accounts, preparing and filing U.S. Treasury Department Forms
1099 and other appropriate forms required with respect to dividends and
distributions by federal authorities for all Shareholders, preparing and mailing
confirmation forms and statements of account to Shareholders for all purchases
and redemptions of Shares and other confirmable transactions in Shareholder
accounts, preparing and mailing activity statements for Shareholders, and
providing Shareholder account information and (ii) provide a system which will
enable the Fund to monitor the total number of Shares sold in each State.
(c) In addition, the Fund shall (i) identify to the Bank in
writing those transactions and assets to be treated as exempt from blue sky
reporting for each State and (ii) verify the establishment of transactions for
each State on the system prior to activation and thereafter monitor the daily
activity for each State. The responsibility of the Bank for the Fund's blue sky
State registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Fund and the reporting of
such transactions to the Fund as provided above.
Procedures applicable to certain of these services may be
established from time to time by agreement between the Fund and the Bank.
Article 2 FEES AND EXPENSES
2
<PAGE>
2.01 For the performance by the Bank pursuant to this
Agreement, the Fund agrees to pay the Bank an annual maintenance fee for each
Shareholder account as set out in the initial fee schedule attached hereto.
Such fees and out-of-pocket expenses and advances identified under Section 2.02
below may be changed from time to time subject to mutual written agreement
between the Fund and the Bank.
2.02 In addition to the fee paid under Section 2.01 above, the
Fund agrees to reimburse the Bank for out-of-pocket expenses or advances
incurred by the Bank for the items set out in the fee schedule attached hereto.
In addition, any other expenses incurred by the Bank at the request or with the
consent of the Fund, will be reimbursed by the Fund.
2.03 The Fund agrees to pay all fees and reimbursable expenses
within thirty days following the receipt of the respective billing notice.
Postage for mailing of dividends, proxies, Fund reports and other mailings to
all shareholder accounts shall be advanced to the Bank by the Fund at least
seven (7) days prior to the mailing date of such materials.
Article 3 REPRESENTATIONS AND WARRANTIES OF THE BANK
The Bank represents and warrants to the Fund that:
3.01 It is a trust company duly organized and existing and in
good standing under the laws of The Commonwealth of Massachusetts.
3.02 It is duly qualified to carry on its business in The
Commonwealth of Massachusetts.
3.03 It is empowered under applicable laws and by its Charter
and By-Laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
Article 4 REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Bank that:
4.01 It is a corporation duly organized and existing and in
good standing under the laws of Maryland.
4.02 It is empowered under applicable laws and by its Articles
of Incorporation and By-Laws to enter into and perform this Agreement.
3
<PAGE>
4.03 All corporate proceedings required by said Articles of
Incorporation and By-Laws have been taken to authorize it to enter into and
perform this Agreement.
4.04 It is an open-end and diversified management investment
company registered under the Investment Company Act of 1940.
4.05 A registration statement under the Securities Act of 1933
is currently effective and will remain effective, and appropriate state
securities law filings have been made and will continue to be made, with respect
to all Shares of the Fund being offered for sale.
Article 5 RESPONSIBILITY OF BANK, FUND
5.01 Provided that such actions are taken in good faith and
without negligence or willful misconduct, the Bank shall not be responsible for,
any and all losses, damages, costs, charges, counsel fees, payments, expenses
and liability arising out of or attributable to:
(a) All actions of the Bank or its agent or subcontractors
required to be taken pursuant to this Agreement.
(b) The reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or services which (i) are
received by the Bank or its agents or subcontractors, and furnished to it by or
on behalf of the Fund, and (ii) have been prepared and\or maintained or
performed by the Fund or any other person or firm on behalf of the Fund.
(c) The reliance on, or the carrying out by the Bank or its
agents or subcontractors of any instructions or requests of the Fund.
(d) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state or in
violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in such
state.
5.02 At any time the Bank may apply to any officer of the Fund
for written instructions, and may consult with legal counsel (mutually
acceptable to both parties) with respect to any matter arising in connection
with the services to be performed by the Bank under this Agreement, and the Bank
and its agents or subcontractors shall not be liable for any action taken or
omitted by it in reliance upon such instructions or upon the written opinion of
such counsel. So long as and to the extent that it is in the exercise of
reasonable care, the Bank, its agents and subcontractors shall be protected in
acting upon any paper or document furnished by or on behalf of the Fund,
reasonably believed to be genuine and to have been signed by the proper person
or persons, or upon any instruction, information, data, records or documents
provided the Bank or its agents or subcontractors by machine readable input,
telex, CRT data entry or other similar means authorized by the Fund, (such
authorization shall be evidenced in writing signed by either the Chairman or
Secretary of the Fund) and shall not be held to have notice of any change of
authority of
4
<PAGE>
any person, until receipt of written notice thereof from the Fund. The Bank,
its agents and subcontractors shall also be protected in recognizing stock
certificates which are reasonably believed to bear the proper manual or
facsimile signatures of the officers of the Fund, and the proper
countersignature of any former transfer agent or former registrar, or of a co-
transfer agent or co-registrar.
5.03 In the event either party is unable to perform its
obligations under the terms of this Agreement because of acts of God, strikes,
equipment or transmission failure or damage reasonably beyond its control, or
other causes reasonably beyond its control, such party shall not be liable for
damages to the other for any damages resulting from such failure to perform or
otherwise from such causes.
5.04 Neither party to this Agreement shall be liable to the
other party for consequential damages under any provision of this Agreement or
for any consequential damages arising out of any act or failure to act
hereunder.
Article 6 COVENANTS OF THE FUND AND THE BANK
6.01 The Fund shall promptly furnish to the Bank the following:
(a) A certified copy of the resolution of the Board of
Directors of the Fund authorizing the appointment of the Bank and the execution
and delivery of this Agreement.
(b) A copy of the Articles of Incorporation and By-Laws of the
Fund and all amendments thereto.
6.02 The Bank hereby agrees to establish and maintain
facilities and procedures reasonably acceptable to the Fund for safekeeping of
stock certificates, check forms and facsimile signature imprinting devices, if
any; and for the preparation or use, and for keeping account of, such
certificates, forms and devices.
6.03 The Bank shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of the Fund and will be preserved, maintained and
made available in accordance with such Section and Rules, and will be
surrendered promptly to the Fund on and in accordance with its request.
6.04 The Bank and the Fund agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.
5
<PAGE>
6.05 In case of any requests or demands for the inspection of
the Shareholder records of the Fund, the Bank will endeavor to notify the Fund
and to secure instructions from an authorized officer of the Fund as to such
inspection. The Bank reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person.
Article 7 TERMINATION OF AGREEMENT
7.01 This Agreement may be terminated by either party upon one
hundred twenty (120) days written notice to the other.
7.02 Should the Fund exercise its right to terminate, all out-
of-pocket expenses associated with the movement of records and material will be
borne by the Fund. Additionally, the Bank reserves the right to charge for any
other reasonable expenses associated with such termination
Article 8 ASSIGNMENT
8.01 Except as provided in Section 8.03 below, neither this
Agreement nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.
8.02 This Agreement shall inure to the benefit of and be
binding upon the parties and their respective permitted successors and assigns.
8.03 The Bank may, without further consent on the part of the
Fund, subcontract for the performance hereof with (i) Boston Financial Data
Services, Inc., a Massachusetts corporation ("BFDS") which is duly registered as
a transfer agent pursuant to Section 17A(c)(1) of the Securities Exchange Act of
1934, as amended ("Section 17A(c)(1)"), (ii) a BFDS subsidiary duly registered
as a transfer agent pursuant to Section 17A(c)(1) or (iii) a BFDS affiliate;
provided, however, that the Bank shall be as fully responsible to the Fund for
the acts and omissions of any subcontractor as it is for its own acts and
omissions.
Article 9 AMENDMENT
9.01 This Agreement may be amended or modified by a written
agreement executed by both parties and authorized or approved by a resolution of
the Board of Directors of the Fund.
Article 10 MASSACHUSETTS LAW TO APPLY
10.01 This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
Article 11 MERGER OF AGREEMENT
6
<PAGE>
11.01 This Agreement constitutes the entire agreement between
the parties hereto and supersedes any prior agreement with respect to the
subject matter hereof whether oral or written.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
VALUE LINE U.S. MULTINATIONAL
COMPANY FUND, INC.
BY:___________________________________
ATTEST:
_________________________________
STATE STREET BANK AND TRUST COMPANY
BY:___________________________________
Executive Vice President
ATTEST:
___________________________________
8
<PAGE>
[VENABLE BAETJER AND HOWARD LETTERHEAD]
September 27, 1995
Value Line U.S. Multinational Company Fund, Inc.
220 East 42nd Street
New York, New York 10017-5891
Re: VALUE LINE U.S. MULTINATIONAL COMPANY FUND, INC.
Ladies and Gentlemen:
We have acted as special Maryland counsel for the Value Line U.S.
Multinational Company Fund, Inc., a Maryland corporation (the "Fund"), in
connection with the organization of the Fund and the issuance of its Common
Stock, par value of $.01 per share (collectively, the "Common Stock").
As Maryland counsel for the Fund, we are familiar with its Charter and
Bylaws. We have examined the prospectus included in its Registration Statement
on Form N-1A, File Nos. 33-60829 (the "Registration Statement"), substantially
in the form in which it is to become effective (the "Prospectus"). We have
further examined and relied upon a certificate of the Maryland State Department
of Assessments and Taxation to the effect that the Fund is duly incorporated and
existing under the laws of the State of Maryland and is in good standing and
duly authorized to transact business in the State of Maryland.
We have also examined and relied upon such corporate records of the
Fund and other documents and certificates with respect to factual matters as we
have deemed necessary to render the opinion expressed herein. We have assumed,
without independent verification, the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
with originals of all documents submitted to us as copies.
Based on such examination, we are of the opinion and so advise you
that:
1. The Fund is duly organized and validly existing as a corporation
in good standing under the laws of the State of Maryland.
<PAGE>
Value Line U.S. Multinational Company Fund, Inc.
September 27, 1995
Page 2
2. The 10,000 presently issued and outstanding shares of Common
Stock of the Fund have been validly and legally issued and are
fully paid and nonassessable.
3. The shares of Common Stock of the Fund to be offered for sale
pursuant to the Prospectus are, to the extent of the number of
shares authorized to be issued by the Fund in its Articles of
Incorporation, duly authorized and, when sold, issued and paid
for as contemplated by the Prospectus, will have been validly and
legally issued and will be fully paid and nonassessable.
This letter expresses our opinion with respect to the Maryland General
Corporation Law governing matters such as due organization and authorization and
issuance of stock. It does not extend to the securities or "Blue Sky" laws of
Maryland, to federal securities laws or other laws.
We consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Venable, Baetjer and Howard, LLP
<PAGE>
Exhibit 13
September 20, 1995
Value Line U.S. Multinational
Company Fund, Inc.
220 East 42nd Street
New York, N.Y. 10017
Gentlemen:
In connection with your sale to us today of 10,000 shares of common stock
(the "Shares") in Value Line U.S. Multinational Company Fund, Inc. (the "Fund"),
we understand that: (i) the Shares have not been registered under the Securities
Act of 1933, as amended; (ii) your sale of the Shares to us is in reliance on
the sale being exempt under Section 4(2) of the Act as not involving any public
offering; and (iii) in part, your reliance on such exemption is predicated on
our representation, which we hereby confirm, that we are acquiring the Shares
for investment and for our own account as the sole beneficial owner thereof, and
not with a view to or in connection with any resale or distribution of any or
all of the Shares or of any interest therein. We hereby agree that we will not
sell, assign or transfer the Shares or any interest therein except upon
repurchase or redemption by the Fund unless and until the Shares have been
registered under the Securities Act of 1933, as amended, or you have received
on opinion of your counsel indicating to your satisfaction that such sale,
assignment or transfer will not violate the provisions of the Securities Act
of 1933, as amended, or any rules and regulations promulgated thereunder.
We further agree, pursuant to the requirements of the Staff of the
Securities and Exchange Commission, that if any of the Shares are redeemed
during the first five years of the Fund's operations by any holder thereof, we
will reimburse the fund for its then unamortized organizational expenses in the
same ratio as the number of Shares redeemed bears to the number of Shares held
at the time of redemption.
This letter is intended to take effect as an instrument under seal, shall be
construed under the laws of New York, and is delivered at New York, New York, as
of the date above written.
Very truly yours,
David T. Henigson
Vice President
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