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VALUE LINE
U.S. MULTINATIONAL COMPANY PROSPECTUS
FUND, INC. October 5,
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 5, 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.
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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:................. $ 0 $ 0
</TABLE>
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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%) and the
expenses for the 1 year and 3 year periods in the example would be $15 and $47,
respectively. Because 12b-1 fees continue for the life of the investment, over
time a long term investor may pay more than the economic equivalent of the
maximum front-end sales charges permitted by the National Association of
Securities Dealers, Inc.
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
equity securities (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. Multinational equity securities" 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
equity securities" refer to the securities 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 of securities of companies with an aggregate share of at
least 50% of sales from outside the United States, although the securities of
any individual company may represent non-United States sales of that company 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.
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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.
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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
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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
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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.
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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
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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
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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 5, 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 5, 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 5, 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
54 Scott Hill Road 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
- ---------------------------------- --------------------- ---------------------------------------------
<S> <C> <C>
Frances T. Newton Director Computer Programming Professional, Duke Power
4921 Buckingham Drive Company.
Charlotte, NC 28209
Age 54
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)
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,
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<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>
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<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
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<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
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