---------------
ANNUAL REPORT
---------------
March 31, 1999
---------------
Value Line
U.S.
Multinational
Company
Fund, Inc.
[LOGO]
---------------
VALUE LINE
No-Load
Mutual
Funds
<PAGE>
Value Line U.S. Multinational Company Fund, Inc.
To Our Value Line
- --------------------------------------------------------------------------------
To Our Shareholders:
We are pleased to report positive recent results for the Value Line U.S.
Multinational Company Fund. The full-year total return for the Fund (including
reinvested dividends) is nearly three full percentage points better than the
return of the unmanaged benchmark Standard & Poor's 500 Index. Performance in
the second half of the fiscal year (which ended March 31, 1999) was even more
impressive, beating the index by almost ten percentage points. The actual six-
and twelve-month returns are as follows:
Periods ending
March 31, 1999
------------------------
Six One
Months Year
------ ------
Value Line
U.S. Multinational Company
Fund.......................................... 36.96% 21.39%
Standard & Poor's 500 Index....................... 27.34 18.46
The second-half numbers are so much better than the full year because of the
very difficult market environment that lasted from July through early October,
1998, sparked by the devaluation of the Russian ruble and the financial troubles
of some high-profile hedge funds. The decline in stock prices during this period
was so severe that some commentators declared it a bear market. When the market
came back to life in October, the rally was powerful, and it lasted well into
1999.
In terms of sector performance, we have had the most success in the past year
with technology stocks, especially the big blue-chip names like IBM, Dell
Computer, EMC Corp., Cisco Systems, Microsoft, and Intel. While the technology
sector can be volatile, the earnings visibility and consistency that companies
of this nature provide are prized in the investment community, and justify their
high prices.
In the climate of low and stable rates of interest and inflation we have enjoyed
over the past year, we have also done well with the stocks of financial services
companies. Those operating multinationally include Citigroup, American
International Group, State Street Corp., and American Express. Finally, a third
performance boost came from the health care sector, encompassing both large
pharmaceutical companies (Schering-Plough, Merck, and Lilly, among others) and
medical devices (Medtronic, Johnson & Johnson, and Guidant).
Looking at economic conditions around the world, the regions that serve as large
markets for U.S. multinationals demonstrate a mixed bag. On the plus side, it
appears that Japanese officials are taking steps to improve some of the
structural conditions that have resulted in that country's long recession, and
the economies of certain of the Pacific Rim countries that started the
emerging-market weakness almost two years ago show definite signs of bottoming
out in their down cycles. On the other hand, Latin America is still very weak in
the wake of last year's Brazilian devaluation, and, though recession is probably
not at hand, Western Europe is sluggish (the efforts to digest the new Euro
currency, which was launched on January 1st, are likely impeding economic
stimulus).
However, the U.S. economy remains vibrant (see our observations on this subject
in our "Economic Observations"), and since most of our investments do most of
their business here at home, we think there's still plenty of upside potential
in this portfolio. To the extent that overseas economies perk up over the next
year, they should provide incremental growth opportunities for U.S. business.
As always, we appreciate your confidence in Value Line and wish you the best for
investment success for the rest of the year.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
May 18, 1999
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2
<PAGE>
Value Line U.S. Multinational Company Fund, Inc.
U.S. Multinational Company Fund Shareholders
- --------------------------------------------------------------------------------
Economic Observations
For now, at least, our economy continues to move ahead at a brisk pace. Evidence
of this ongoing strength can be found in the first quarter's 4.5% increase in
gross domestic product, as well as in reports showing further modest gains in
manufacturing, retailing, and employment. In fact, the only area of major
concern currently is our widening international trade deficit, as faltering
business overseas continues to limit demand for American exports. Even with this
bleak trade situation, though, it appears unlikely that economic growth will
fall short of 3% in the second quarter or 2%-3% in the second half.
Inflation reports take on increasing significance in this setting. That's
because the persistence of solid levels of economic growth, along with the
continuing increases in oil and gas prices, has the potential to introduce
pricing pressures for the first time in years. For now, such fears have not been
realized to any sustainable degree. Indeed, many corporations continue to have
limited pricing power. Even so, with the economy still moving ahead solidly,
with energy prices retaining most of their recent increases, with labor markets
still tightening, and with the tab for the war in Kosovo mounting, it is
realistic to expect at least a moderately higher rate of inflation in the coming
months.
At this juncture, though, we do not see a compelling reason for the Federal
Reserve to push interest rates materially higher. We note, however, that as the
economic situation starts to improve globally, the temptation for the Fed--which
has already signaled that it is now more likely to raise interest rates than to
lower them in the weeks ahead--to push up interest rates would increase.
COMPARISON OF THE CHANGE IN VALUE OF A $10,000
INVESTMENT IN THE VALUE LINE U.S. MULTINATIONAL COMPANY FUND, INC.
AND THE S&P 500 INDEX
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Value Line U.S.
Multinational
Company Fund, Inc. S&P 500 Index
11/95 10,000.00 10,000.00
12/95 9,890.29 10,323.46
3/96 10,593.15 10,876.9
6/96 11,436.59 11,363.88
9/96 12,500.92 11,712.44
12/96 13,106.49 12,687.53
3/97 12,537.53 13,029.92
6/97 14,711.78 15,299.73
9/97 16,428.83 16,444
12/97 15,592.87 16,914.44
3/98 17,448.14 19,268.86
6/98 17,877.11 19,903.21
9/98 15,464.18 17,927.17
12/98 19,592.97 21,738.56
3/99 21,180.14 22,819.98
From November 17, 1995+ to March 31, 1999
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:*
Average
Annual
Total
Return
------
1 year ended March 31, 1999............................. 21.39%
3 years ended March 31, 1999............................ 25.98%
From November 17, 1995+ to
March 31, 1999........................................ 24.94%
+ Commencement of operations.
* The performance data quoted represent past performance and are no guarantee
of future performance. The average annual total return and growth of an
assumed investment of $10,000 include dividends reinvested and capital
gains distributions accepted in shares. The investment return and principal
value of an investment will fluctuate so that an investment, when redeemed,
may be worth more or less than its original cost.
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3
<PAGE>
Value Line U.S. Multinational Company Fund, Inc.
Schedule of Investments
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS (89.7%)
ADVERTISING (2.2%)
9,200 Omnicom Group, Inc.................................... $ 735,425
AUTO & TRUCK (0.9%)
3,700 General Motors Corp. ................................. 321,438
BANK (1.0%)
4,300 State Street Corporation.............................. 353,406
BEVERAGE --
SOFT DRINK (1.3%)
15,000 Coca-Cola Enterprises, Inc............................ 453,750
COAL/ALTERNATE
ENERGY (1.0%)
9,000 AES Corp.*............................................ 335,250
COMPUTER &
PERIPHERALS (14.7%)
12,000 Cisco Systems, Inc.*.................................. 1,314,750
30,000 Dell Computer Corp.*.................................. 1,226,250
12,000 EMC Corp.*............................................ 1,533,000
4,000 International Business
Machines Corp..................................... 709,000
10,000 3Com Corp.*........................................... 233,125
-----------
5,016,125
COMPUTER SOFTWARE &
SERVICES (6.6%)
15,750 Computer Associates
International, Inc. .............................. 560,109
12,000 Microsoft Corp.*...................................... 1,075,500
8,250 Network Associates, Inc.*............................. 253,172
13,500 Oracle Corp.*......................................... 356,063
-----------
2,244,844
DIVERSIFIED
COMPANIES (1.8%)
5,000 AlliedSignal Inc...................................... 245,937
5,000 Tyco International, Ltd............................... 358,750
-----------
604,687
DRUG (10.4%)
4,000 Amgen Inc.*........................................... 299,500
2,000 Biogen, Inc.*......................................... 228,625
3,200 Genzyme Corp.--
General Division*................................. 161,400
6,500 Lilly (Eli) & Co...................................... 551,688
6,000 Merck & Co., Inc...................................... 481,125
6,000 Pfizer, Inc........................................... 832,500
14,000 Schering-Plough Corp.................................. 774,375
3,500 Warner-Lambert Co..................................... 231,656
-----------
3,560,869
ELECTRICAL
EQUIPMENT (1.8%)
5,500 General Electric Co................................... 608,437
ENTERTAINMENT (1.2%)
6,000 Clear Channel
Communications, Inc.*............................. 402,375
FINANCIAL
SERVICES (3.2%)
6,000 American Express Co................................... 705,000
6,250 Citigroup Inc......................................... 399,219
-----------
1,104,219
HOUSEHOLD
PRODUCTS (3.5%)
2,500 Clorox Co. (The)...................................... 292,969
5,000 Colgate-Palmolive Co.................................. 460,000
4,400 Procter & Gamble Co................................... 430,925
-----------
1,183,894
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4
<PAGE>
Value Line U.S. Multinational Company Fund, Inc.
March 31, 1999
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
INSURANCE--
DIVERSIFIED (1.9%)
5,400 American International
Group, Inc........................................ $ 651,375
INTERNET (4.3%)
10,000 America Online, Inc.*................................. 1,460,000
MACHINERY (0.8%)
5,200 Ingersoll-Rand Co..................................... 258,050
MEDICAL SUPPLIES (8.3%)
7,500 Centocor, Inc.*....................................... 277,500
18,000 Guidant Corp.......................................... 1,089,000
8,000 Johnson & Johnson..................................... 749,500
10,000 Medtronic, Inc........................................ 717,500
-----------
2,833,500
METAL FABRICATING
(0.7%)
6,000 SPS Technologies, Inc.*............................... 235,500
OILFIELD SERVICES/
EQUIPMENT (1.0%)
12,000 Transocean Offshore, Inc.............................. 345,750
PACKAGING &
CONTAINER (0.9%)
12,000 Owens-Illinois, Inc.*................................. 300,000
PRECISION
INSTRUMENT (0.8%)
4,000 Eastman Kodak Co...................................... 255,500
RECREATION (0.9%)
6,300 Electronic Arts Inc.*................................. 299,250
RETAIL-SPECIAL
LINES (2.2%)
10,000 Tiffany & Co.......................................... 747,500
RETAIL STORE (1.2%)
4,500 Costco Companies, Inc.*............................... 412,031
SEMICONDUCTOR (2.6%)
7,500 Intel Corp............................................ 893,438
TELECOMMUNICATIONS
EQUIPMENT (4.8%)
10,000 ADC Telecommunications,
Inc.*............................................. 476,875
10,000 Loral Space &
Communications Ltd.*.............................. 144,375
3,700 Lucent Technologies Inc............................... 398,675
6,400 Tellabs, Inc.*........................................ 625,600
-----------
1,645,525
TELECOMMUNICATION
SERVICES (8.0%)
6,000 AT & T Corp........................................... 478,875
10,000 AirTouch Communications
Inc.*............................................. 966,250
14,400 MCI WorldCom, Inc.*................................... 1,275,300
-----------
2,720,425
TOBACCO (1.2%)
12,000 Philip Morris
Companies, Inc.................................... 422,250
TRUCKING/
TRANSPORTATION
LEASING (0.5%)
4,500 CNF Transportation Inc................................ 170,156
-----------
TOTAL COMMON STOCKS
& TOTAL INVESTMENT
SECURITIES (89.7%)
(Cost $16,181,695) ................................. 30,574,969
-----------
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5
<PAGE>
Value Line U.S. Multinational Company Fund, Inc.
Schedule of Investments March 31, 1999
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT (10.5%)
(including accrued interest)
$3,600,000 Collateralized by $3,350,000
U.S. Treasury Notes 6.50%,
due 10/15/06, with a value
of $3,664,511 (with State
Street Bank & Trust Company,
4.87%, dated 3/31/99,
due 4/1/99, delivery
value $3,600,487)................................... $ 3,600,487
EXCESS OF LIABILITIES OVER
CASH AND OTHER
ASSETS (-0.2%) ................................................ (72,372)
-----------
NET ASSETS (100%) ............................................... $34,103,084
===========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE,
PER OUTSTANDING SHARE
($34,103,084 / 1,726,446
shares outstanding) ........................................... $ 19.75
===========
* Non-income producing.
See Notes to Financial Statements.
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6
<PAGE>
Value Line U.S. Multinational Company Fund, Inc.
Statement of Assets and Liabilities
at March 31, 1999
- --------------------------------------------------------------------------------
Assets:
Investment securities, at value
(Cost-$16,181,695) ...................................... $30,574,969
Repurchase agreement
(Cost-$3,600,487) ....................................... 3,600,487
Cash ...................................................... 79,009
Dividends receivable ...................................... 15,762
Receivable for capital shares sold ........................ 3,721
Deferred organization costs (note 2) ...................... 16,964
-----------
Total Assets .......................................... 34,290,912
-----------
Liabilities:
Payable for securities purchased .......................... 136,195
Accrued expenses:
Advisory fee payable .................................... 21,237
Service and distribution plan
fee payable ........................................... 7,084
Other ................................................... 23,312
-----------
Total Liabilities ..................................... 187,828
-----------
Net Assets ................................................ $34,103,084
===========
Net Assets consist of:
Capital stock, at $.01 par value
(authorized 50,000,000,
outstanding 1,726,446 shares) ........................... $ 17,265
Additional paid-in capital ................................ 18,945,387
Undistributed net realized gain on
investments ............................................. 747,158
Net unrealized appreciation of
investments ............................................. 14,393,274
-----------
Net Assets ................................................ $34,103,084
===========
Net Asset Value, Offering and
Redemption Price, per
Outstanding Share
($34,103,084 / 1,726,446
shares outstanding) ..................................... $ 19.75
===========
Statement of Operations
for the year ended March 31, 1999
- --------------------------------------------------------------------------------
Investment Income:
Interest income .......................................... $ 121,526
Dividend income (Net of foreign
withholding taxes of $81) .............................. 120,384
-----------
Total Income ......................................... 241,910
-----------
Expenses:
Advisory fee ............................................. 220,277
Service and distribution plan fee ........................ 73,426
Auditing and legal fees .................................. 37,139
Accounting and bookkeeping fees .......................... 32,400
Custodian fees ........................................... 27,153
Directors' fees and expenses ............................. 23,140
Registration and filing fees ............................. 17,276
Printing ................................................. 15,754
Amortization of deferred organization
costs (note 2) ......................................... 10,398
Insurance, dues and other ................................ 6,329
Transfer agent ........................................... 3,724
-----------
Total Expenses before
custody credits .................................... 467,016
Less: custody credits ................................ (2,361)
-----------
Net Expenses ......................................... 464,655
-----------
Net Investment Loss ...................................... (222,745)
-----------
Net Realized and Unrealized Gain
on Investments:
Net Realized Gain .................................... 747,158
Change in Net Unrealized
Appreciation ....................................... 5,358,747
-----------
Net Realized Gain and Change in
Net Unrealized Appreciation
on Investments ......................................... 6,105,905
-----------
Net Increase in Net Assets from
Operations ............................................. $ 5,883,160
===========
See Notes to Financial Statements.
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7
<PAGE>
Value Line U.S. Multinational Company Fund, Inc.
Statement of Changes in Net Assets
for the years ended March 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
March 31, March 31,
1999 1998
-----------------------------
<S> <C> <C>
Operations:
Net investment loss ....................................... $ (222,745) $ (149,728)
Net realized gain on investments .......................... 747,158 378,803
Change in net unrealized appreciation ..................... 5,358,747 7,314,985
-----------------------------
Net increase in net assets from operations ................ 5,883,160 7,544,060
-----------------------------
Distributions to Shareholders:
Net investment income ..................................... -- --
Net realized gain from investment transactions ............ -- (1,344,034)
-----------------------------
Total distributions ....................................... -- (1,344,034)
-----------------------------
Capital Share Transactions:
Proceeds from sale of shares .............................. 1,820,458 5,038,730
Proceeds from reinvestment of distributions to shareholders -- 1,339,403
Cost of shares repurchased ................................ (3,275,754) (983,899)
-----------------------------
Net (decrease) increase from capital share transactions ... (1,455,296) 5,394,234
-----------------------------
Total Increase in Net Assets ................................ 4,427,864 11,594,260
Net Assets:
Beginning of year ......................................... 29,675,220 18,080,960
-----------------------------
End of year ............................................... $ 34,103,084 $ 29,675,220
=============================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
8
<PAGE>
Value Line U.S. Multinational Company Fund, Inc.
Notes to Financial Statements March 31, 1999
- --------------------------------------------------------------------------------
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.
Permanent book-tax differences relating to shareholder distributions have been
reclassified. Net investment loss, net realized gain (loss), and net assets are
not affected. In the current year the net investment loss of $222,745 was
reclassified within the composition of net assets to additional paid-in capital.
(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.
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9
<PAGE>
Value Line U.S. Multinational Company Fund, Inc.
Notes to Financial Statements March 31, 1999
- --------------------------------------------------------------------------------
2. Organization Costs
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.
3. Capital Share Transactions Transactions in capital stock were as follows:
Year Ended Year Ended
March 31, March 31,
1999 1998
-----------------------------
Shares sold ........................... 106,930 328,824
Shares issued in reinvestment of
dividends and distributions ......... -- 94,724
-----------------------------
106,930 423,548
Shares repurchased .................... 204,594 65,153
-----------------------------
Net (decrease) increase ............... (97,664) 358,395
=============================
4. Purchases and Sales of Securities
Purchases and sales of securities, excluding short-term investments, were as
follows:
Year Ended
March 31, 1999
--------------
PURCHASES:
Investment Securities ........................ $ 9,802,315
===========
SALES:
Investment Securities ........................ $11,685,745
===========
At March 31, 1999, the aggregate cost of investment securities and short-term
investments for federal income tax purposes was $19,782,182. The aggregate
appreciation and depreciation of investments at March 31, 1999, based on a
comparison of investment values and their costs for federal income tax purposes
was $14,937,944 and $544,670 respectively, resulting in a net appreciation of
$14,393,274.
5. Advisory Fees, Service and Distribution Plan Fees and Transactions With
Affiliates
An advisory fee of $220,277 was paid or payable to Value Line, Inc. the Fund's
investment adviser (the "Adviser") for the year ended March 31, 1999. The fee
was computed at the annual rate of .75 of 1% of the daily net assets during the
year and was paid 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.
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. For the year ended
March 31, 1999, fees amounting to $73,426 were paid or payable to the
Distributor under this Plan.
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, 1999, the
Fund paid brokerage commissions totaling $10,509 to the Distributor, a
registered broker/dealer, which clears its transactions through unaffiliated
brokers.
At March 31, 1999, the Adviser, and/or affiliated companies and the Value Line,
Inc. Profit Sharing and Savings Plan owned 1,432,756 shares of the Fund's
capital stock, representing 83.0% of the outstanding shares. In addition,
certain officers and directors of the Fund owned 119,228 shares of capital
stock, representing 6.9% of the outstanding shares.
- --------------------------------------------------------------------------------
10
<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
Years Ended March 31, (Commencement of
---------------------------------------------- Operations) to
1999 1998 1997 March 31, 1996
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period .... $ 16.27 $ 12.34 $ 10.55 $ 10.00
-------------------------------------------------------------------
Income (loss) from investment operations:
Net investment (loss) income .......... (.13) (.08) .12(1) .07(1)
Net gains on securities (both
realized and unrealized) ............ 3.61 4.80 1.82 .52
-------------------------------------------------------------------
Total from investment operations ...... 3.48 4.72 1.94 .59
-------------------------------------------------------------------
Less distributions:
Dividends from net investment income .. -- -- (.14) (.04)
Distributions from capital gains ...... -- (.79) (.01) --
-------------------------------------------------------------------
Total distributions ................... -- (.79) (.15) (.04)
-------------------------------------------------------------------
Net asset value, end of period .......... $ 19.75 $ 16.27 $ 12.34 $ 10.55
===================================================================
Total return ............................ 21.39% 39.17% 18.36% 5.93%+
===================================================================
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $ 34,103 $ 29,675 $ 18,081 $ 12,448
Ratio of expenses to average
net assets ............................ 1.58%(4) 1.69%(4) 1.97%(2)(3) 2.45%*(2)(3)
Ratio of net investment (loss) income to
average net assets .................... (0.76)% (0.60)% (0.64)%(2)(3) (0.32)%*(2)(3)
Portfolio turnover rate ................. 36% 49% 56% 17%+
</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, net investment loss per share would have
been $(.07) and $(.001), respectively.
(2) Due to the reimbusement of expenses and waiver of fees by the Adviser, data
are not indicative of future periods.
(3) 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.
(4) Before offset of custody credits. The ratio of expenses to average net
assets would not have changed net of custody credits
* Annualized.
+ Not annualized.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
11
<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, 1999, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended and the financial highlights for each of the three
years in the period 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, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
May 17, 1999
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Other Information (unaudited)
Year 2000. Like other mutual funds, the Fund could be adversely affected if the
computer systems used by the Adviser and other service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. This is commonly known as the "Year 2000 Problem." The Adviser is
taking steps that it believes are reasonably designed to address the Year 2000
Problem with respect to the computer systems that it uses and to obtain
satisfactory assurances that comparable steps are being taken by the Fund's
other major service providers. At this time, however, there can be no assurance
that these steps will be sufficient to avoid any adverse impact to the Fund.
The Year 2000 Problem is expected to impact corporations, which may include
issuers of portfolio securities held by the Fund, to varying degrees based upon
various factors, including, but not limited to, the corporation's industry
sector and degree of technological sophistication. The Fund is unable to predict
what impact, if any, the Year 2000 Problem will have on issuers of the portfolio
securities held by the Fund.
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12
<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 PricewaterhouseCoopers 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
Nancy Bendig
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).
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