<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
CUSTODIAN BANK State Street Bank and Trust Co.
225 Franklin Street
Boston, MA 02110
SHAREHOLDER State Street Bank and Trust Co.
SERVICING AGENT c/o NFDS
P.O. Box 419729
Kansas City, MO 64141-6729
INDEPENDENT Price Waterhouse LLP
ACCOUNTANTS 1177 Avenue of the Americas
New York, NY 10036
LEGAL COUNSEL Peter D. Lowenstein, Esq.
Two Greenwich Plaza, Suite 100
Greenwich, CT 06830
DIRECTORS Jean Bernhard Buttner
Francis C. Oakley
Marion N. Ruth
Frances T. Newton
OFFICERS Jean Bernhard Buttner
CHAIRMAN AND PRESIDENT
Alan N. Hoffman
VICE PRESIDENT
Michael Romanowski
VICE PRESIDENT
David T. Henigson
VICE PRESIDENT and
SECRETARY/TREASURER
Jack M. Houston
ASSISTANT SECRETARY/TREASURER
Stephen La Rosa
ASSISTANT SECRETARY/TREASURER
THIS REPORT IS ISSUED FOR INFORMATION OF SHAREHOLDERS. IT IS NOT
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR
ACCOMPANIED BY A CURRENTLY EFFECTIVE PROSPECTUS OF THE FUND (OBTAINABLE
FROM THE DISTRIBUTOR).
VLF703074
------------------------------------
ANNUAL REPORT
------------------------------------
MARCH 31, 1997
----------------------------------------
VALUE LINE
U.S.
MULTINATIONAL
COMPANY
FUND, INC.
[LOGO]
<PAGE>
VALUE LINE U.S. MULTINATIONAL COMPANY FUND, INC.
To Our Value Line
- --------------------------------------------------------------------------------
To Our Shareholders:
The U.S. Multinational Company Fund completed its first full fiscal year on
March 31, 1997. By most measures, our first year was a resounding success: the
U.S. Multinational Company Fund posted a total return (including reinvested
dividends) of 18.36% during that period, just shy of the 19.81% total return of
the unmanaged benchmark Standard & Poor's 500 Composite Index. And that
respectable full-year showing was achieved despite an extremely difficult second
half of the fiscal year.
Since the end of last summer, the U.S. equity market has proceeded down two
different paths; the experts call this a "bifurcated market." On the one hand,
the large-capitalization, liquid, "household name" stocks--like those that
comprise the two most popular broad indexes, the S&P 500 and the Dow Jones
Industrial Average--have done very well. So well, in fact, that those underlying
indexes have seen old price records shattered and new ones set with stunning
frequency. On the other hand, many of the smaller, more speculative
issues--especially technology stocks, in which the U.S. Multinational Company
Fund has a significant concentration--have suffered a bout of persistent
underperformance.
This relative underperformance has resulted from several factors. First, there
has been a definite large-cap bias in the marketplace, and while the
Multinational Fund's holdings don't exhibit a small-cap orientation PER SE,
there has been some spillover effect into many issues that we do hold. Second,
several of the stocks in this portfolio have been star performers over the past
few years, making them vulnerable to profit-taking by investors who trade
actively. And finally, in the recent past, some of the profit-taking has been
magnified by an institutional "myopia," whereby a company earnings report that
"only meets" analysts' forecasts (or that beats the published forecasts, but
falls a penny or two short of a rumored "whisper number") prompts holders to
sell that company's stock at any price. Often that kind of selling has been
savage, and saw too many cases earlier this year of stocks losing 40%, 50%, or
more of their market value in just a few trading sessions.
These aren't flimsy, speculative outfits that are vulnerable to the discovery of
some kind of underlying weakness. We've seen the wholesale revaluation of
innovative, well-managed, well-capitalized companies that often have a
technology solution that's worked TOO WELL, resulting in earnings that have
risen VERY RAPIDLY, so their stocks have gone up A LOT. Institutional money
managers have then decided to lock in profits.
We believe that correction will come through the continued operational success
of technology companies with international businesses, since huge portions of
the globe still don't enjoy the day-to-day comforts and efficiencies (typically
achieved through some channel of technology) that most Americans take for
granted. Correction will come through the realization that stocks that are by
nature volatile on the downside are also prone to rapid price appreciation as
well. And once the market hysteria has been corrected, the fundamental
characteristics that have motivated the performance of these blue-chip growth
stocks in the past will drive future growth as well.
We appreciate your confidence in Value Line, and we are grateful that the U.S.
Multinational Company Fund continues to serve your needs in the sphere of growth
investing.
Sincerely,
[SIGNATURE]
Jean Bernhard Buttner
CHAIRMAN AND PRESIDENT
May 29, 1997
- --------------------------------------------------------------------------------
2
<PAGE>
VALUE LINE U.S. MULTINATIONAL COMPANY FUND, INC.
U.S. Multinational Company Fund Shareholders
- --------------------------------------------------------------------------------
Economic Observations
The current economic expansion is now in its seventh year. Although this does
not yet qualify as the longest peacetime period of growth in our nation's
history (both the 1960s and the 1980s experienced somewhat longer upcycles), it
is still quite noteworthy, especially since there are as yet few signs that this
lengthy run of uninterrupted prosperity is about to draw to a close. In fact,
recent reports show that there is still a good deal of strength around, with
high doses of consumer confidence, continuing solid job growth, and healthy
levels of retail, housing, and manufacturing activity pointing to relatively
good levels of economic growth over the next few quarters.
Inflation, meanwhile, continues to be reasonably subdued. This healthy pricing
trend, which is remarkable given the longevity of the business expansion, is,
moreover, unlikely to change dramatically in the months ahead. Underscoring our
optimism in this area is the recent hammering out of a presumably workable
budget accord (which should reduce the government's need to borrow to finance
the deficit) and the fact that there is still a lack of serious shortages on
either the labor or the raw materials fronts. On this latter score, though, we
do note that the recent pickup in wage pressures could, if unchecked, pose a
threat later in the year or in 1998.
Interest rates, meantime, reflecting the likely moderate pace of upcoming
economic growth and the fairly subdued pricing structure, are unlikely to
increase all that much over the next year. Nevertheless, we caution that recent
remarks by Federal Reserve Chairman Alan Greenspan, in which he indicated that
the central bank has, in the past, occasionally raised rates before higher
inflation actually took hold, and the one-quarter of a percentage point increase
in short-term interest rates that was tacked on in March, would seem to suggest
that the Fed will not be shy about tightening the credit reins further, if it
sees the need. An additional upward move in rates, if sufficiently pronounced,
would not be good news for either the stock or the bond markets, or, ultimately,
for the U.S. economy.
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT IN VALUE LINE
U.S. MULTINATIONAL COMPANY FUND AND THE S&P 500 INDEX*
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Value Line S&P
<S> <C> <C>
11/17/95 10,000.00 10,000.00
11/30/95 10,060.00 10,088.00
12/31/95 9,890.29 10,282.00
1/31/96 10,161.39 10,633.00
2/28/96 10,653.39 10,731.00
3/31/96 10,593.15 10,835.00
4/30/96 11,245.81 10,994.00
5/31/96 11,788.02 11,277.00
6/30/96 11,436.59 11,321.00
7/31/96 10,924.50 10,821.00
8/31/96 11,526.95 10,478.00
9/30/96 12,500.92 11,671.00
10/31/96 12,541.08 11,993.00
11/30/96 13,374.48 12,899.00
12/31/96 13,106.49 12,644.00
1/31/97 13,858.34 13,434.00
2/28/97 13,360.49 13,539.00
3/31/97 12,537.53 12,981.00
</TABLE>
FROM NOVEMBER 17, 1995+, TO MARCH 31, 1997
THE STANDARD & POOR'S 500 INDEX IS AN UNMANAGED INDEX THAT IS REPRESENTATIVE OF
THE LARGER CAPITALIZATION STOCKS TRADED IN THE UNITED STATES.
Performance Data:*
<TABLE>
<CAPTION>
Total
Return
--------------------------
<S> <C>
1 Year ended March 31, 1997....................................................... 18.36%
From November 17, 1995+ to March 31, 1997......................................... 17.95%
</TABLE>
+ COMMENCEMENT OF OPERATIONS
* THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND ARE NO GUARANTEE
OF FUTURE PERFORMANCE.
- --------------------------------------------------------------------------------
3
<PAGE>
VALUE LINE U.S. MULTINATIONAL COMPANY FUND, INC.
Schedule of Investments
- -------------------------------------------
<TABLE>
<CAPTION>
Shares Value
- -----------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (91.4%)
ADVERTISING (1.3%)
4,600 Omnicom Group, Inc...................... $ 229,425
AEROSPACE/DEFENSE (1.3%)
4,000 McDonnell Douglas Corp.................. 244,000
AUTO PARTS-ORIGINAL EQUIPMENT (1.7%)
9,000 Lear Corp.*............................. 300,375
BANK (3.3%)
5,000 Bank of Boston Corp..................... 335,000
2,500 Citicorp................................ 270,625
-------------
605,625
BEVERAGE-SOFT DRINK (1.9%)
6,000 Coca-Cola Co............................ 335,250
CHEMICAL-BASIC (2.1%)
10,000 Monsanto Co............................. 382,500
CHEMICAL-SPECIALTY (1.2%)
5,000 Praxair, Inc............................ 224,375
COAL/ALTERNATE ENERGY (1.4%)
4,500 AES Corp.*.............................. 252,000
COMPUTER & PERIPHERALS (14.9%)
7,500 Adaptec, Inc.*.......................... 268,125
7,000 Cisco Systems, Inc.*.................... 336,875
4,000 Dell Computer Corp.*.................... 270,500
9,000 EMC Corp.*.............................. 319,500
10,000 Gateway 2000, Inc.*..................... 512,500
10,000 Hewlett-Packard Co...................... 532,500
8,000 Sun Microsystems, Inc.*................. 231,000
7,000 3Com Corp.*............................. 229,250
-------------
2,700,250
COMPUTER SOFTWARE & SERVICES (9.4%)
6,500 BMC Software, Inc.*..................... 299,813
10,500 Computer Associates International,
Inc................................... 408,187
<CAPTION>
Shares Value
- -----------------------------------------------------------------------
<C> <S> <C>
COMPUTER SOFTWARE & SERVICES
(CONTINUED)
5,500 McAfee Associates, Inc.*................ $ 243,375
3,000 Microsoft Corp.*........................ 275,062
6,500 Oracle Corp.*........................... 250,656
5,000 Parametric Technology Corp.*............ 225,625
-------------
1,702,718
DIVERSIFIED COMPANIES (1.0%)
6,250 Thermo Instrument Systems, Inc.*........ 181,250
DRUG (4.2%)
3,000 Merck & Co., Inc........................ 252,750
3,000 Pfizer, Inc............................. 252,375
3,500 Schering-Plough Corp.................... 254,625
-------------
759,750
FINANCIAL SERVICES (2.0%)
3,200 American Express Co..................... 191,600
3,200 Franklin Resources, Inc................. 163,200
-------------
354,800
FOREIGN TELECOMMUNICATIONS (1.3%)
3,600 Northern Telecom Ltd.................... 235,350
MACHINERY (3.8%)
13,000 Albany International Corp. Class "A".... 268,125
5,200 Deere & Co.............................. 226,200
6,000 Gleason Corp............................ 196,500
-------------
690,825
MEDICAL SUPPLIES (9.1%)
4,000 Boston Scientific Corp.*................ 247,000
4,500 Guidant Corp............................ 276,750
7,100 Invacare Corp........................... 166,850
8,000 Johnson & Johnson....................... 423,000
5,000 Medtronic Inc........................... 311,250
7,500 United States Surgical Corp............. 228,750
-------------
1,653,600
</TABLE>
- --------------------------------------------------------------------------------
4
<PAGE>
VALUE LINE U.S. MULTINATIONAL COMPANY FUND, INC.
March 31, 1997
- -------------------------------------------
<TABLE>
<CAPTION>
Shares Value
- -----------------------------------------------------------------------
<C> <S> <C>
OILFIELD SERVICES/ EQUIPMENT (7.0%)
10,000 BJ Services Co.*........................ $ 478,750
6,000 Smith International, Inc.*.............. 273,750
6,000 Transocean Offshore, Inc................ 336,750
3,000 Western Atlas, Inc.*.................... 181,875
-------------
1,271,125
PETROLEUM-PRODUCING (1.0%)
4,000 Louisiana Land & Exploration Co......... 189,500
RAILROAD (1.9%)
9,500 Wisconsin Central Transportation
Corp.*................................ 334,875
RESTAURANT (1.6%)
6,000 McDonald's Corp......................... 283,500
RETAIL-SPECIAL LINES (1.1%)
5,000 Tiffany & Co............................ 190,000
SEMICONDUCTOR (6.2%)
10,000 Analog Devices Inc.*.................... 225,000
8,500 Atmel Corp.*............................ 203,469
5,000 Intel Corp.............................. 695,625
-------------
1,124,094
SHOE (4.3%)
8,000 NIKE, Inc. Class "B".................... 496,000
7,500 Wolverine World Wide, Inc............... 273,750
-------------
769,750
TELECOMMUNICATIONS EQUIPMENT (6.4%)
9,750 Andrew Corp.*........................... 352,219
7,000 Ascend Communications, Inc.*............ 285,250
10,000 Newbridge Networks Corp.*............... 286,250
6,400 Tellabs, Inc.*.......................... 231,200
-------------
1,154,919
</TABLE>
<TABLE>
<CAPTION>
Shares or
Principal
Amount Value
- -----------------------------------------------------------------------
<C> <S> <C>
TOILETRIES/COSMETICS (2.0%)
5,000 Gillette Co............................. $ 363,125
-------------
TOTAL COMMON STOCKS AND TOTAL INVESTMENT
SECURITIES (91.4%)(COST $14,813,439).. 16,532,981
-------------
REPURCHASE AGREEMENT (8.9%)
(INCLUDING ACCRUED INTEREST)
$ 1,600,000 Collateralized by $1,720,000 U.S.
Treasury Bills, due 2/5/98, with a
value of $1,637,385 (with First
Chicago Capital Markets, Inc. 5.90%,
dated 3/31/97, due 4/1/97, delivery
value $1,600,262)..................... 1,600,262
LIABILITIES OVER CASH AND OTHER ASSETS (-0.3%)..........
( 52,283)
-------------
TOTAL NET ASSETS (100%)................................. $ 18,080,960
-------------
-------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
OUTSTANDING SHARE
($18,080,960 DIVIDED BY 1,465,715 SHARES
OUTSTANDING)..........................................
$ 12.34
-------------
-------------
</TABLE>
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
5
<PAGE>
VALUE LINE U.S. MULTINATIONAL COMPANY FUND, INC.
Statement of Assets and Liabilities
at March 31, 1997
<TABLE>
<S> <C>
Assets:
Investment securities, at value (Cost--$14,813,439)................... $ 16,532,981
Repurchase agreement (Cost--$1,600,262)............................... 1,600,262
Cash.................................................................. 90,021
Due from Value Line, Inc. (note 5).................................... 67,978
Deferred organization costs (note 2).................................. 37,756
Receivable for capital shares sold.................................... 11,875
Dividends receivable.................................................. 9,173
-------------
Total Assets...................................................... 18,350,046
-------------
Liabilities:
Payable for securities purchased...................................... 192,160
Accrued expenses (note 5)............................................. 76,926
-------------
Total Liabilities................................................. 269,086
-------------
Net Assets............................................................ $ 18,080,960
-------------
-------------
Net Assets consist of:
Capital stock, at $.01 par value (authorized 50,000,000, outstanding
1,465,715 shares)................................................... $ 14,658
Additional paid-in capital............................................ 15,622,440
Accumulated net realized gain on investments.......................... 724,320
Unrealized net appreciation of investments............................ 1,719,542
-------------
Net Assets............................................................ $ 18,080,960
-------------
-------------
Net Asset Value, Offering and Redemption Price, per Outstanding Share
($18,080,960 DIVIDED BY 1,465,715 shares outstanding).............. $ 12.34
-------------
-------------
</TABLE>
Statement of Operations
for the year ended March 31, 1997
<TABLE>
<S> <C>
Investment Income:
Interest income....................................................... $ 119,844
Dividend income (Net of foreign withholding taxes of $140)............ 81,772
-------------
Total Income...................................................... 201,616
-------------
Expenses:
Advisory fee (note 5)................................................. 114,141
Service and distribution plan fee (note 5)............................ 38,047
Accounting and bookkeeping fees....................................... 32,400
Auditing and legal fees............................................... 30,140
Custodian fees........................................................ 25,872
Registration and filing fees.......................................... 17,230
Directors' fees and expenses.......................................... 16,471
Amortization of deferred organization costs (note 2).................. 10,399
Printing.............................................................. 9,403
Insurance, dues and other............................................. 3,183
Transfer agent........................................................ 1,058
-------------
Total Expenses before Custody Credits............................. 298,344
Less: Custody Credits............................................. (7,020)
Less: Expenses waived/assumed by Adviser (note 5)................. (230,490)
-------------
Net Expenses...................................................... 60,834
-------------
Investment Income--Net................................................ 140,782
-------------
Realized and Unrealized Gain on Investments--Net:
Realized Gain--Net................................................ 986,627
Change in Unrealized Appreciation................................. 988,551
-------------
Net Realized Gain and Net Unrealized Appreciation of Investments...... 1,975,178
-------------
Net Increase in Net Assets from Operations............................ $ 2,115,960
-------------
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
VALUE LINE U.S. MULTINATIONAL COMPANY FUND, INC.
Statement of Changes in Net Assets
for the year ended March 31, 1997 and for the period from November 17, 1995* to
March 31, 1996
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended November 17, 1995*
March 31, 1997 to March 31, 1996
---------------------------------------
<S> <C> <C>
Operations:
Investment income--net................ $ 140,782 $ 78,107
Realized gain (loss) on
investments--net...................... 986,627 (249,160)
Net change in unrealized appreciation
of investments........................ 988,551 730,991
---------------------------------------
Net increase in net assets from
operations............................ 2,115,960 559,938
---------------------------------------
Distributions to Shareholders:
Investment income--net................ (179,489) (39,400)
Realized gains--net................... (13,147) --
---------------------------------------
Total distributions..................... (192,636) (39,400)
---------------------------------------
Capital Share Transactions:
Proceeds from sale of shares.......... 4,016,641 11,787,674
Proceeds from reinvestment of
distributions to shareholders......... 192,342 39,400
Cost of shares repurchased............ (498,959) --
---------------------------------------
Increase from capital share
transactions.......................... 3,710,024 11,827,074
---------------------------------------
Total Increase.......................... 5,633,348 12,347,612
Net Assets:
Beginning of period................... 12,447,612 100,000
---------------------------------------
End of period......................... $ 18,080,960 $ 12,447,612
---------------------------------------
---------------------------------------
Undistributed investment income--net,
at end of period...................... $ -- $ 38,707
---------------------------------------
---------------------------------------
</TABLE>
* COMMENCEMENT OF OPERATIONS
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
7
<PAGE>
VALUE LINE U.S. MULTINATIONAL COMPANY FUND, INC.
Notes to Financial Statements
- -------------------------------------------
1. Significant Accounting Policies
Value Line U.S. Multinational Company Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940, as amended, as a diversified open-end
management investment company whose primary investment objective is maximum
total return. The Fund invests primarily in common stock or securities
convertible into common stock of U.S. companies that have significant sales from
international operations.
The following significant accounting policies are in conformity with generally
accepted accounting principles for investment companies. Such policies are
consistently followed by the Fund in the preparation of its financial
statements. Generally accepted accounting principles may require management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results may differ from those estimates.
(A) Security Valuation. Securities listed on a securities exchange and
over-the-counter securities traded on the NASDAQ national market are valued at
the closing sales price on the date as of which the net asset value is being
determined. In the absence of closing sales prices for such securities and for
securities traded in the over-the-counter market, the security is valued at the
midpoint between the latest available and representative asked and bid 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 value.
(B) Repurchase Agreements. In connection with transactions in repurchase
agreements, the Fund's custodian takes possession of the underlying collateral
securities, the value of which exceeds the principal amount of the repurchase
transaction, including accrued interest. To the extent that any repurchase
transaction exceeds one business day, the value of the collateral is
marked-to-market on a daily basis to ensure the adequacy of the collateral. In
the event of default of the obligation to repurchase, the Fund has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral or proceeds may be subject to legal proceedings.
(C) Federal Income Taxes. It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies, including the distribution requirements of the Tax Reform Act of
1986, and to distribute all of its taxable income to its shareholders.
Therefore, no federal income tax or excise tax provision is required.
(D) Security Transactions and Distributions. Security transactions are accounted
for on the date the securities are purchased or sold. Interest income is accrued
as earned. Realized gains and losses on sales of securities are calculated for
financial accounting and federal income tax purposes on the identified cost
basis. Dividend income and distributions to shareholders are recorded on the ex-
dividend date. Distributions are determined in accordance with income tax
regulations, which may differ from generally accepted accounting principles.
(E) Amortization. Discounts on debt securities are amortized to interest income
over the life of the security with a corresponding increase to the security's
cost basis; premiums on debt securities are not amortized.
2. Organization Cost
Costs of $52,030 incurred in connection with the Fund's organization and initial
registration have been deferred and are being amortized on a straight-line basis
over 60 months, beginning at the commencement of operations of the Fund. In the
event any of the initial shares of the Fund are redeemed by the holder thereof
during the five-year amortization period, the redemption proceeds will be
reduced by a pro rata portion of any unamortized, deferred organizational
expenses in the same proportion as the number of initial shares being redeemed
bears to the number of initial shares outstanding at the time of redemption.
- --------------------------------------------------------------------------------
8
<PAGE>
VALUE LINE U.S. MULTINATIONAL COMPANY FUND, INC.
March 31, 1997
- -------------------------------------------
3. Capital Share Transactions
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
November 17,
Year Ended 1995* to
March 31, 1997 March 31, 1996
--------------------------------
<S> <C> <C>
Shares sold............................. 311,397 1,165,645
Shares issued to shareholders in
reinvestment of dividends............. 14,727 4,029
--------------------------------
326,124 1,169,674
Shares repurchased...................... 40,083 --
--------------------------------
Net increase............................ 286,041 1,169,674
--------------------------------
</TABLE>
* COMMENCEMENT OF OPERATIONS.
4. Purchases and Sales of Securities
Purchases and sales of securities, excluding short-term investments, were as
follows:
<TABLE>
<CAPTION>
Year Ended
March 31, 1997
---------------
<S> <C>
PURCHASES:
Investment Securities................... $ 11,673,926
---------------
SALES:
Investment Securities................... $ 7,434,749
---------------
---------------
</TABLE>
At March 31, 1997, the aggregate cost of investment securities and repurchase
agreements for federal income tax purposes was $16,413,701. The aggregate
appreciation and depreciation of investments at March 31, 1997, based on a
comparison of investment values and their costs for federal income tax purposes,
was $2,677,308 and $957,766, respectively, resulting in a net appreciation of
$1,719,542.
5. Advisory Fees, Service and Distribution Plan Fees and Transactions With
Affiliates
An Advisory fee of $32,901 was payable to Value Line, Inc. (the "Adviser") for
the three month period January 1, 1997 to March 31, 1997 and for the nine month
period April 1, 1996 to December 31, 1996 advisory fees of $81,240 were
voluntarily waived by the Adviser. The fee is computed at the annual rate of .75
of 1% of the daily net assets and is payable monthly. The Adviser provides
research, investment programs, and supervision of the investment portfolio and
pays costs of certain administrative services and office space. The Adviser also
provides persons, satisfactory to the Fund's Board of Directors, to act as
officers of the Fund and pays their salaries and wages. The Fund bears all other
costs and expenses in its organization and operation.
The Fund has a Service and Distribution Plan (the "Plan"), adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, for the payment
of certain expenses incurred by Value Line Securities, Inc. (the "Distributor")
a wholly-owned subsidiary of the Adviser, in advertising, marketing and
distributing the Fund's shares and for servicing the Fund's shareholders at an
annual rate of 0.25% of the Fund's average daily net assets. Fees amounting to
$10,967 for the three month period January 1, 1997 to March 31, 1997 were
payable to the Distributor, and fees amounting to $27,080 for the nine month
period, April 1, 1996 to December 31, 1996, were voluntarily waived by the
Distributor.
In addition, the operating expenses for the nine month period, April 1, 1996 to
December 31, 1996, amounting to $122,170 were assumed by the Adviser. At March
31, 1997 the Fund had a receivable from the Adviser of $67,978 for such expenses
assumed.
Certain officers and directors of the Adviser and the Distributor, are also
officers and a director of the Fund.
During the year ended March 31, 1997, the Fund paid brokerage commissions
totaling $5,661 to the Distributor, which clears its transactions through
unaffiliated brokers.
At March 31, 1997, the Adviser and/or affiliated companies owned 1,265,969
shares of the Fund's capital stock, representing 86.4% of the outstanding
shares. In addition, an officer and director of the Fund owned 113,036 shares of
capital stock, representing 7.7% of the outstanding shares.
- --------------------------------------------------------------------------------
9
<PAGE>
VALUE LINE U.S. MULTINATIONAL COMPANY FUND, INC.
Financial Highlights
- -------------------------------------------
Selected data for a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
November 17,
1995
(commencement
of
Year Ended operations)
March 31, to March 31,
1997 1996
---------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.55 $ 10.00
---------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................................. .12(1) .07(1)
Net gains or losses on securities (both realized and
unrealized)........................................... 1.82 .52
---------------------------------
Total from investment operations...................... 1.94 .59
---------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income.................. (.14) (.04)
Distributions from realized capital gains............. (.01) --
---------------------------------
Total distributions................................... (.15) .04
---------------------------------
NET ASSET VALUE, END OF PERIOD.............................. $ 12.34 $ 10.55
------------- -------------
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TOTAL RETURN................................................ 18.36% 5.93%+
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RATIOS/SUPPLEMENTAL DATA:
Net assets end of period (in thousands)..................... $18,081 $12,448
Ratio of operating expenses to average net assets........... 1.97%(2)(4) 2.45%*(2)(4)
Ratio of net investment income to average net assets........ (0.64)%(2)(4) (0.32)%*(2)(4)
Portfolio turnover rate..................................... 56% 17%+
Average commission rate paid per share of common stock
investments purchased/sold................................ $ .0495(3) --
</TABLE>
(1)NET OF CUSTODY FEE CREDITS, EXPENSE REIMBURSEMENT AND FEES WAIVED BY THE
ADVISER. HAD THESE EXPENSES BEEN FULLY PAID BY THE FUND FOR THE PERIODS ENDED
MARCH 31, 1997 AND 1996 INVESTMENT LOSS-NET PER SHARE WOULD HAVE BEEN $(.07)
AND $(.001) RESPECTIVELY. SEE NOTE 5.
(2)DUE TO THE REIMBURSEMENT OF EXPENSES AND WAIVER OF FEES BY THE ADVISER, DATA
ARE NOT INDICATIVE OF FUTURE PERIODS.
(3)DISCLOSURE EFFECTIVE FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1,
1995.
(4)BEFORE CUSTODY FEE CREDITS, EXPENSE REIMBURSEMENT AND FEES WAIVED BY THE
ADVISER. AFTER EXPENSE REIMBURSEMENT AND FEES WAIVED FOR THE PERIODS ENDED
MARCH 31, 1997 AND 1996 RATIO OF EXPENSES TO AVERAGE NET ASSETS WAS 0.40% AND
0%+ RESPECTIVELY; AND RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS
WAS 0.93% AND 2.13%* RESPECTIVELY. SEE NOTE 5.
+ NOT ANNUALIZED.
* ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
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10
<PAGE>
VALUE LINE U.S. MULTINATIONAL COMPANY FUND, INC.
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors
of Value Line U.S. Multinational Company Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Value Line U.S. Multinational
Company Fund, Inc. (the "Fund") at March 31, 1997, the results of its operations
for the year then ended, and the changes in its net assets and the financial
highlights for the year then ended and for the period November 17, 1995
(commencement of operations) through March 31, 1996, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at March 31, 1997 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where confirmations from brokers were not received, provide
a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NY 10036
May 14, 1996
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11
<PAGE>
VALUE LINE U.S. MULTINATIONAL COMPANY FUND, INC.
The Value Line Family of Funds
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1950--THE VALUE LINE FUND seeks long-term growth of capital along with modest
current income by investing substantially all of its assets in common stocks or
securities convertible into common stock.
1952--THE VALUE LINE INCOME FUND'S primary investment objective is income, as
high and dependable as is consistent with reasonable growth. Capital growth to
increase total return is a secondary objective.
1956--THE VALUE LINE SPECIAL SITUATIONS FUND seeks to obtain long-term growth of
capital by investing not less than 80% of its assets in "special situations". No
consideration is given to achieving current income.
1972--VALUE LINE LEVERAGED GROWTH INVESTORS' sole investment objective is to
realize capital growth by investing substantially all of its assets in common
stocks. The Fund may borrow up to 50% of its net assets to increase its
purchasing power.
1979--THE VALUE LINE CASH FUND, a money market fund, seeks high current income
consistent with preservation of capital and liquidity.
1981--VALUE LINE U.S. GOVERNMENT SECURITIES FUND seeks maximum income without
undue risk to principal. Under normal conditions, at least 80% of the value to
its assets will be invested in issues of the U.S. Government and its agencies
and instrumentalities.
1983--VALUE LINE CENTURION FUND* seeks long-term growth of capital as its sole
objective by investing primarily in stocks ranked 1 or 2 by Value Line for
year-ahead relative performance.
1984--THE VALUE LINE TAX EXEMPT FUND seeks to provide investors with maximum
income exempt from federal income taxes while avoiding undue risk to principal.
The Fund offers investors a choice of two portfolios: a Money Market Portfolio
and a High-Yield Portfolio.
1985--VALUE LINE CONVERTIBLE FUND seeks high current income together with
capital appreciation primarily from convertible securities ranked 1 or 2 for
year-ahead performance by the Value Line Convertible Ranking System.
1986--VALUE LINE AGGRESSIVE INCOME TRUST seeks to maximize current income by
investing in high-yielding, lower-rated, fixed-income securities.
1987--VALUE LINE NEW YORK TAX EXEMPT TRUST seeks to provide New York taxpayers
with maximum income exempt from New York State, New York City and federal income
taxes while avoiding undue risk to principal.
1987--VALUE LINE STRATEGIC ASSET MANAGEMENT TRUST* invests in stocks, bonds and
cash equivalents according to computer-trend models developed by Value Line. The
objective is to professionally manage the optimal allocation of these
investments at all times.
1992--VALUE LINE INTERMEDIATE BOND FUND seeks high current income consistent
with low volatility of principal by investing primarily in a diversified
portfolio of investment-grade debt securities.
1993--VALUE LINE SMALL-CAP GROWTH FUND invests primarily in common stocks or
securities convertible into common stock, with its primary objective being
long-term growth of capital.
1993--VALUE LINE ASSETS 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 EAST 42ND STREET, NEW YORK, NEW YORK 10017-5891 OR CALL 1-800-223-0818, 24
HOURS A DAY, 7 DAYS A WEEK. READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR
SEND MONEY.
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12
