SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __)
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Filed by a Party other than the Registrant [ ]
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[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule 14a-12
Value Line Centurion Fund, Inc.
Value Line Strategic Asset Management Trust
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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[X] No fee required.
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PRELIMINARY PROXY MATERIALS FOR THE INFORMATION OF THE
SECURITIES AND EXCHANGE COMMISSION
VALUE LINE CENTURION FUND, INC.
VALUE LINE STRATEGIC ASSET MANAGEMENT TRUST
220 EAST 42ND STREET,
NEW YORK, NY 10017-5891
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
SEPTEMBER 18, 2002
Notice is hereby given that a Special Meeting of Shareholders of each of
the investment companies set forth above (each, a "Fund" and collectively, the
"Funds") will be held jointly at the offices of Value Line Distribution Center,
Inc., 125 East Union Avenue, East Rutherford, NJ 07073, on September 18, 2002,
at 9:30 a.m., for the following purposes:
1. To approve or disapprove changes to certain fundamental investment
policies of the Funds. (Your Fund's current investment objective will not
change.)
2. To approve or disapprove the adoption of a Service and Distribution Plan
for each Fund.
3. To transact such other business that may properly come before the
meeting or any adjournment thereof.
The close of business on July 24, 2002, has been fixed as the record date
for the determination of shareholders entitled to notice of and to vote at the
meeting or any adjournment(s) or postponement(s) thereof.
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENVELOPE
PROVIDED WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING. YOU MAY REVOKE
YOUR PROXY AT ANY TIME BEFORE IT IS VOTED. NO POSTAGE IS REQUIRED IF THE PROXY
IS MAILED IN THE UNITED STATES.
This is a Joint Notice and Proxy Statement for the above-named Funds. The
shares you own in a particular Fund may only be voted with respect to that
Fund. If you own shares in more than one of the Funds listed, please vote with
respect to each Fund.
By Order of the Boards of Directors
David T. Henigson,
Secretary
July 29, 2002
PRELIMINARY PROXY MATERIALS FOR THE INFORMATION OF THE
SECURITIES AND EXCHANGE COMMISSION
VALUE LINE CENTURION FUND, INC.
VALUE LINE STRATEGIC ASSET MANAGEMENT TRUST
220 EAST 42ND STREET,
NEW YORK, NY 10017-5891
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PROXY STATEMENT
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INTRODUCTION
This document is a joint proxy statement with respect to each of the
above-listed investment companies (each a "Fund" and collectively the "Funds")
in connection with the solicitation of proxies by the Board of Directors or
Trustees of each Fund to be used at the Funds' joint Special Meeting of
Shareholders (the "Meeting") or any adjournment(s) thereof. The Meeting will be
held on September 18, 2002, at 9:30 a.m. local time at the offices of Value
Line Distribution Center, Inc., 125 East Union Avenue, East Rutherford, NJ
07073, for the purposes set forth in the attached Notice of Special Meeting of
Shareholders. This Proxy Statement is being first mailed to shareholders on or
about July 29, 2002.
The individuals named as proxies (or their substitutes) in the enclosed
proxy card (or cards if you own shares of more than one Fund or have multiple
accounts) will vote in accordance with your directions as indicated thereon if
your proxy is received and is properly executed. You may direct the proxy
holders to vote your Fund shares by checking the appropriate "For" or "Against"
box or instruct them not to vote those shares by checking the "Abstain" box.
Alternatively, you may simply sign, date and return your proxy card(s) with no
specific instructions. If you properly execute your proxy and give no voting
instructions with respect to a Proposal, your shares will be voted "For" the
Proposal. The duly appointed proxies may, in their discretion, vote upon such
other matters as may properly come before the Meeting. Approval of proposals 1
and 2 requires an affirmative vote of a majority of the outstanding shares of
the Fund which, as defined by the Investment Company Act of 1940, as amended
(the "1940 Act"), means the vote of (1) 67% or more of the shares present at
the Meeting if the holders or more than 50% of the outstanding shares are
present or represented by proxy; or (2) more than 50% of the outstanding shares
of the Fund, whichever is less.
Shareholders of each Fund will vote separately on each Proposal. For each
Fund, one third of the shares outstanding on July 24, 2002 (the "Record Date"),
represented in person or by proxy, of a Fund must be present for the
transaction of business at that Fund's Meeting. In the event that a quorum is
not present or if a quorum is present at the Meeting but sufficient votes to
approve any of the Proposals are not received, the persons named as proxies may
propose one or more adjournments of the Meeting to permit the further
solicitation of proxies. Any adjournment will require the affirmative vote of a
majority of those shares represented at the Meeting in person or by proxy. The
persons named as proxies will vote those proxies that they are entitled to vote
"For" such Proposal in favor of an adjournment and will vote those proxies
required to be voted "Against" such Proposal against such adjournment. A
shareholder vote may be taken on any one of the Proposals described in this
Proxy Statement prior to any such adjournment if sufficient votes have been
received and it is otherwise appropriate.
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Abstentions and "broker non-votes" (as defined below) are counted for
purposes of determining whether a quorum is present, but do not represent votes
cast with respect to any Proposal. "Broker non-votes" are shares held by a
broker or nominee for which an executed proxy is received by the Fund, but are
not voted as to one or more Proposals because instructions have not been
received from the beneficial owners or persons entitled to vote and the broker
or nominee does not have discretionary voting power. Accordingly, you are urged
to forward your voting instructions promptly.
You may revoke your proxy with respect to a Fund: (a) at any time prior to
its exercise by written notice of its revocation to the Secretary of the Fund
at the above address prior to the Meeting; (b) by the subsequent execution and
return of another proxy prior to the Meeting; or (c) by being present and
voting in person at the Meeting and giving oral notice of revocation to the
Chairman of the Meeting. Attendance at the Meeting will not in and of itself
constitute revocation of your proxy.
Information as to the number of outstanding shares of each Fund as of the
Record Date is set forth in Exhibit A. Each full share is entitled to one vote;
fractional shares are entitled to a proportionate fractional vote. A listing of
the owners of more than 5% of the shares of any Fund as the Record Date is set
forth in Exhibit B.
Shares of the Funds are held exclusively by Guardian Insurance & Annuity
Co. for the purpose of funding variable annuity contracts and variable life
insurance policies. Guardian Insurance & Annuity Co. votes these shares in
accordance with the directions of the contract holders and policy owners. The
number of votes a contract holder or policy owner may direct is equal to the
contract or policy value invested in the Fund's shares on the Record Date,
divided by the net asset value of one share of the Fund on that date. The
number of votes that each contract holder may direct (or for which a
participant may give instructions under group contracts where the contract
holder permits such instructions) or each policy owner may direct, is stated in
the authorizations and furnished with this Proxy Statement. Shares for which no
instructions have been given by participants under a group contract will be
voted in the same proportion as shares for which instructions have been given
under the same contract. Undirected shares of the Fund will be voted in the
same proportion as directed shares. Directions or instructions may be revoked
by written notice to the insurance carrier.
Copies of each Fund's most recent annual report have been sent to
shareholders of that Fund on or before the mailing of this Proxy Statement.
Shareholders of any Fund may obtain, free of charge, copies of that Fund's
annual report by writing to the Fund, at 220 East 42nd Street, New York, NY
10017 or calling (800) 223-0818.
In addition, the Funds are required by federal law to file reports, proxy
statements and other information with the Securities and Exchange Commission
(the "SEC"). The SEC maintains a Web site that contains information about the
Funds (www.sec.gov). Any such proxy material, reports and other information can
be inspected and copied at the public reference facilities of the SEC, 450
Fifth Street, N.W., Washington, DC 20549 and at the SEC's New York Regional
Office. Copies of such materials can be obtained from the Public Reference
Branch, Office of Consumer Affairs and Information Services of the SEC at 450
Fifth Street, N.W., Washington, DC 20549, at prescribed rates.
The cost of preparing, assembling and mailing the proxy material and of
soliciting proxies on behalf of the Boards of Directors or Trustees of the
Funds will be borne by the Funds, allocated on the basis of the number of
shareholder accounts of each Fund. In addition to the solicitation of proxies
by the use of the mails, proxies may be solicited personally or by telephone by
officers of the Funds and by employees of the Funds' investment adviser (for
which solicitation, no compensation will be paid).
2
PROPOSAL 1
APPROVE OR DISAPPROVE CHANGES TO FUNDAMENTAL
INVESTMENT POLICIES
Proposal 1 is a series of proposals to change certain fundamental
investment policies presently applicable to the Funds. We have described each
proposal contained within Proposal 1 separately below.
The 1940 Act requires each Fund to have certain specific investment
policies that can be changed only by vote of a majority of the outstanding
voting securities of a Fund. These policies are often referred to as
"fundamental" investment policies or restrictions. Other policies not
enumerated in the 1940 Act can be designated by a Fund as fundamental. Any
policy designated by a Fund as "fundamental" may only be changed by the vote of
a majority of the outstanding voting securities of that Fund.
Certain fundamental policies have been adopted in the past by the Funds to
reflect regulatory, business or industry conditions that are no longer in
effect. Accordingly, the Funds' investment adviser reviewed all of the
fundamental policies with the following goals: (i) to simplify and modernize
certain of the Funds' policies that are required to be fundamental, (ii) to
make the fundamental policies and restrictions of both Funds consistent to the
extent possible, and (iii) to reclassify as non-fundamental or to eliminate
certain of those policies previously required to be fundamental that are no
longer required to be so classified or that are no longer necessary. The Board
may change non-fundamental policies without shareholder approval, subject to
compliance with applicable disclosure requirements under rules promulgated by
the SEC.
These proposals seek shareholder approval of changes that are intended to
accomplish the foregoing goals. By making the fundamental policies of both
Funds consistent where it is possible to do so, monitoring compliance would be
streamlined and more efficient. Clarifying and modernizing investment
restrictions generally would allow the Funds to operate more efficiently within
the limits of the 1940 Act. These revisions should give the Funds greater
flexibility to take advantage of and react to changes in financial markets and
new investment vehicles. In addition, by reducing to a minimum those policies
that can be changed only by shareholder vote, the Funds in the future may be
able to avoid the costs and delay associated with a shareholder meeting, and
the Boards of Directors/Trustees believe that the investment adviser's ability
to manage the Funds' portfolios in a changing regulatory or investment
environment will be enhanced.
If shareholders approve these investment policy changes at the Meeting,
the Funds will amend or supplement their registration statements to reflect the
elimination, modification and/or reclassification of the investment policies
and restrictions. The Funds will notify shareholders of any future investment
policy changes.
You may vote in favor of, or abstain from voting on, all of the proposed
changes applicable to your Fund or, should you wish to vote against any
particular proposed change, you may so indicate on the proxy card.
ITEM 1a -- BORROWING
Currently, the Funds may borrow no more than 10% of the value of their
assets and then only as a temporary measure to meet unusually heavy redemption
requests or for other extraordinary or emergency purposes.
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"Temporary purposes" is not defined under the 1940 Act. However, it is
presumed that any loan repaid within 60 days and not extended is for temporary
purposes. The Funds need the ability to borrow temporarily for a number of
reasons. Sometimes they borrow money to pay redeeming shareholders when the
number or amount of redemptions exceeds available cash, and it is not a good
time to sell portfolio securities to meet redemptions. Other times, a Fund must
borrow money to pay redeeming shareholders, because the Fund has not yet
received payment for securities it has sold.
The current borrowing policies do not specifically address certain types
of transactions such as when issued and delayed delivery transactions that are
generally considered to be borrowing and in which the Funds may wish to engage.
In addition, there are other transactions such as reverse repurchase agreements
that the Funds, at some time in the future, may wish to utilize. A reverse
repurchase agreement is one in which the Fund agrees to sell a security it owns
in its portfolio to a financial institution and to purchase that security back
at an agreed upon price and time. By doing this, the Fund is able to acquire
immediate cash for a short period of time with the knowledge that it can get
the security back at a known price. Reverse repurchase agreements are important
tools in managing the portfolio during periods of unexpected redemptions. Of
course, the Funds would not engage in any of these transactions unless they
were consistent with their investment objectives and strategies and fully
disclosed in their prospectuses or statements of additional information.
In addition, the Funds would benefit from the flexibility to borrow money
not just for the limited time period covered by a temporary borrowing. The
Funds do not intend to borrow for leverage purposes, which means that a Fund
will not borrow to make investments with the proceeds of the borrowing.
As stated, each Fund's current borrowing policy is as follows:
The Fund may not borrow money in excess of 10% of the value of its assets
and then only as a temporary measure to meet unusually heavy redemption
requests or for other extraordinary or emergency purposes. Securities will
not be purchased while borrowings are outstanding.
REASONS FOR THE CHANGE
For each Fund, the proposed amendment clarifies, modernizes and
standardizes the restriction on borrowing. This change gives each Fund the
flexibility to engage in certain securities transactions, such as reverse
repurchase agreements, that might be construed as "borrowing" transactions, and
permits each Fund to borrow money not in excess of 10% of the value of its
assets for any purpose that does not involve leveraging. Changing this
restriction will permit greater flexibility in managing each Fund's portfolio
and will allow each Fund to borrow to the maximum extent permitted by law when
such borrowings are necessary for the efficient management of each Fund's
assets.
PROPOSED FUNDAMENTAL BORROWING POLICY
The Fund may not borrow money, except that the Fund may (a) enter into
commitments to purchase securities and instruments in accordance with its
investment program, including when-issued and delayed-delivery
transactions, and reverse repurchase agreements, provided that the total
amount of any borrowing does not exceed 10% of the Fund's total assets at
the time of the transaction; and (b) borrow money in an amount not to
exceed 10% of the value of its total assets at the time the loan is made.
Borrowings representing more than 10% of a Fund's total assets must be
repaid before the Fund may make additional investments.
4
NON-FUNDAMENTAL INVESTMENT POLICY ON BORROWING FOR LEVERAGE:
The Fund does not intend to borrow money for leveraging purposes.
ITEM 1b -- DIVERSIFICATION
Under the 1940 Act, each Fund's policy relating to the diversification of
its investments must be fundamental. The 1940 Act prohibits a "diversified"
mutual fund from purchasing securities of any one issuer if, at the time of
purchase, more than 5% of the fund's total assets would be invested in
securities of that issuer or the fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to 25% of the
fund's total assets may be invested without regard to this limitation. The 5%
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities or to securities issued by other
investment companies.
Each Fund's present policy regarding diversification states:
The Fund may not invest more than 5% 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 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.
The Boards of Directors/Trustees are proposing to change the policy of
each Fund to make it consistent with the requirements of the 1940 Act.
REASONS FOR THE CHANGE
In order to afford the Funds' investment adviser maximum flexibility in
managing each Fund's assets, the Directors/Trustees propose to amend each
Fund's diversification policy to be consistent with the definition of a
diversified investment company under the 1940 Act. The restated policy complies
with the SEC's general definition of diversification, and would specifically
add securities of other investment companies to the list of issuers that are
excluded from the 5% limitation to make this policy consistent with the
proposed changes to the policy regarding purchasing shares of other investment
companies (See Item 1c).
PROPOSED DIVERSIFICATION POLICY
With respect to securities comprising 75% of the value of its total assets,
the Fund will not purchase securities of any one issuer (other than cash,
cash items, securities issued or guaranteed by the government of the United
States or its agencies or instrumentalities and repurchase agreements
collateralized by such U.S. government securities, and securities of other
investment companies) if, as a result, more than 5% of the value of its
total assets would be invested in securities of that issuer, or the Fund
would own more than 10% of the outstanding voting securities of that
issuer.
ITEM 1c -- SECURITIES OF OTHER INVESTMENT COMPANIES
Currently, the Funds may not purchase securities issued by other
investment companies, and if the Funds wished to purchase the securities of
another investment company, it would have to obtain shareholders approval. The
Boards of Directors/Trustees are recommending that this policy be changed
5
to a non-fundamental policy permitting the Funds to invest in the securities of
other investment companies under certain circumstances within stated limits.
REASONS FOR THE CHANGE
Under the 1940 Act, open-end investment companies, such as the Funds, are
permitted to purchase the shares of other investment companies, but limited to:
(i) purchasing no more than 3% of the total outstanding voting stock of a
single other investment company; (ii) investing no more than 5% of the Fund's
total assets in the securities of a single other investment company; and (iii)
investing no more than 10% of the Fund's total assets in securities of all
other investment companies. Although the Funds currently have no intention of
purchasing shares of another investment company, the time may arise where it
would be advantageous to do so and in the best interest of shareholders. In
addition, under the current policy, the Funds could not acquire the shares of
another investment company as part of a merger or consolidation.
There is no regulatory requirement that a policy regarding the acquisition
of shares of another investment company be fundamental. Replacing the current
policy with a non-fundamental policy would provide the Funds with much greater
flexibility in managing the portfolios without the expense and delay associated
with a shareholder meeting. The Boards believe that having this flexibility and
allowing the Funds the ability to invest in the securities of other investment
companies to the greatest extent permitted by law is in the best interest of
the Funds and their shareholders. To the extent a Fund invests in shares of
other investment companies, shareholders may indirectly bear a portion of the
expenses of those investment companies. The Funds' investment adviser will take
these expenses into account prior to deciding that such an investment is
suitable for the Fund and its shareholders.
NON-FUNDAMENTAL POLICY REGARDING INVESTING IN OTHER INVESTMENT COMPANIES
Should shareholders approve this proposal, the Funds intend to adopt the
following non-fundamental policy:
The Fund may not purchase shares of other investment companies, except (i)
the Fund may invest up to 5% of its total assets in the securities of any
one investment company, but may not own more than 3% of the securities of
any one investment company or invest more than 10% of its total assets in
the securities of other investment companies or (ii) in connection with a
reorganization, merger or consolidation with another open-end investment
company.
ITEM 1d -- ILLIQUID SECURITIES
Currently, the Funds' fundamental policies prohibit them from entering
into repurchase agreements that mature in more than seven days together with
other illiquid securities in excess of 10% of each Fund's assets.
The Boards of Directors/Trustees are proposing to make this policy
non-fundamental.
REASONS FOR THE CHANGE
At one time, state regulators required an investment company's policy on
acquiring illiquid securities to be fundamental. In 1996, Congress passed the
National Securities Markets Improvement Act of 1996 ("NISMIA") which preempted
state laws and regulations relating to investment companies. As a result, there
is no longer any need to have a fundamental policy related to investing in
illiquid securities.
6
Making the restriction on illiquid securities non-fundamental would give
the Funds more flexibility in responding to changing regulatory requirements.
As an example, a number of years ago, the SEC permitted non-money market funds
to increase the percentage of their assets that could be invested in illiquid
securities from 10% to 15%. Should the SEC change its policy again, or should
market conditions permit a change in this policy, it would be advantageous to
the Funds to be able to make the change without incurring the cost of a
shareholders meeting.
In addition, the current regulatory position is that any limitation on a
mutual fund's acquisition of illiquid securities should be applied to the
fund's net assets. Accordingly, in making each Fund's policy non-fundamental,
the limitation will be applied to each Fund's net assets.
NON-FUNDAMENTAL POLICY REGARDING ILLIQUID SECURITIES
Should shareholders approve changing the policy on acquiring illiquid
securities to non-fundamental, the Funds intend, at the present time, to
continue to limit investments in repurchase agreements maturing in more than
seven days and other illiquid securities to no more than 10%, but the
limitation will now clearly apply to each Fund's net assets. The
non-fundamental policy for each Fund, therefore, will read as follows:
The Fund will not enter into repurchase agreements with maturities in
excess of seven days or purchase other illiquid securities if immediately
after, and as a result of, such purchase the value of such securities would
exceed, in the aggregate, 10% of the Fund's net assets.
ITEM 1e -- WARRANTS (CENTURION FUND ONLY)
Centurion Fund currently is subject to the following fundamental policy
regarding warrants:
The Fund may not invest more than 5% of the value of its total assets in
warrants or more than 2% of such value in warrants which are not listed on
the New York or American Stock Exchanges, except that warrants attached to
other securities are not subject to these limitations.
The Board of Directors of the Fund is proposing to make this policy
non-fundamental.
REASONS FOR THE CHANGE
There is no requirement that the Fund have a fundamental policy regarding
investments in warrants. At the time the policy was put into place, state laws
required that it be fundamental. These laws have been preempted by NISMIA. The
Fund, intends at this time to continue to operate under the policy as stated.
Making the policy non-fundamental will, however, give the Fund maximum
flexibility to modify the policy without incurring the expense of a
shareholders meeting should market circumstance make such a change in the best
interests of the Fund and its shareholders.
ITEM 1f -- INVESTING TO EXERCISE CONTROL
Each Fund's current policy prohibits the acquisition of securities for the
purpose of exercising control over another company. "Control" is defined under
the 1940 Act as owning 25% or more of the voting securities of an issuer. A
controlling ownership is likely to have an effect on the outcome when
shareholders are asked to vote on changes relating to the operations of the
issuing company.
The Directors/Trustees are proposing that this policy be eliminated.
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REASONS FOR THE CHANGE
When the Funds adopted this policy, it was required to be fundamental by
certain state securities regulations. This requirement has been preempted by
NISMIA, and there is currently no requirement that this policy be fundamental.
The elimination of this policy would clarify each Fund's ability to exercise
freely its rights as a shareholder of the companies in which it invests. The
Fund's ability to have a controlling interest in any company, however, would
still be limited by its diversification policy which permits the Fund's assets
to be invested in no more than 10% of the outstanding voting securities, or any
other class of securities, of any one issuer. The Funds have no current
intention of becoming involved in directing or administering the day-to-day
operations of any company.
ITEM 1g -- UNSEASONED ISSUERS
Each Fund currently has a fundamental policy prohibiting it from investing
more than 5% of its total assets in securities of issuers having a record,
together with its predecessors, of less than three years of continuous
operations.
The Directors/Trustees are proposing that this policy be eliminated.
REASONS FOR THE CHANGE
This policy was imposed by state laws at the time the Funds were created.
With the passage of NISMIA, these laws have been preempted, and there is no
comparable requirement under the 1940 Act. Elimination of this policy will
maximize each Funds' investment flexibility, but is not intended to change the
Funds' current operating policies.
ITEM 1h -- INVESTING IN ISSUERS WHEN SECURITIES ARE OWNED BY OFFICERS AND
DIRECTORS/TRUSTEES
Currently, the Funds are prohibited from purchasing the securities of an
issuer if, to the Fund's knowledge, those officers and directors/trustees of
the Fund and of the Fund's investment adviser, who each owns more than 0.5% of
the outstanding securities of that issuer, together own more than 5% of such
securities.
The Directors/Trustees are proposing to eliminate this fundamental policy.
REASONS FOR CHANGE
There is no legal requirement for the Funds to have this policy. It was
imposed by state laws which have been preempted by NISMIA. Moreover, the
Directors/Trustees and the Funds' investment adviser do not believe that this
policy provides any safeguard against conflicts of interest that are not
already effectively covered under the codes of ethics adopted by the Funds and
the investment adviser.
ITEM 1i -- INVESTING IN OIL, GAS OR OTHER MINERAL DEVELOPMENT PROGRAMS OR
LEASES (STRATEGIC ASSET MANAGEMENT ONLY)
The fundamental policy for Strategic Asset Management currently prohibits
it from purchasing oil, gas or other mineral type development programs or
leases. The Fund may invest in securities of companies which invest in or
sponsor such programs.
The Board of Trustees of the Fund is proposing to eliminate this
fundamental investment policy.
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REASONS FOR THE CHANGE
The Fund is not required to have a fundamental policy with respect to
investments in oil, gas or mineral programs. This restriction was imposed by
state laws and is now preempted by NISMIA. Eliminating the fundamental policy
will provide the Fund with maximum flexibility in managing the portfolio. The
Fund, however, does not expect at this time to invest in oil, gas or mineral
exploration or development programs or leases.
THE BOARDS OF DIRECTORS/TRUSTEES RECOMMEND THAT SHAREHOLDERS APPROVE THE
PROPOSED CHANGES TO THE FUNDS' FUNDAMENTAL POLICIES
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PROPOSAL 2
APPROVAL OR DISAPPROVAL OF A
SERVICE AND DISTRIBUTION PLAN FOR EACH FUND
BACKGROUND
On June 17, 2002, the Board of Directors/Trustees of each Fund met to
consider, among other things, the adoption of a Service and Distribution Plan
(the "Plan") pursuant to Rule 12b-1 under the 1940 Act. Rule 12b-1 regulates
the circumstances under which an investment company may, directly or
indirectly, bear the expenses of distributing its shares. The Plan, as more
fully described below, was approved by all of the Directors/Trustees voting in
person, including all of the Directors/Trustees who are not "interested
persons" of their respective Fund (as defined in the 1940 Act) (the
"Independent Directors/Trustees") and who have no direct or indirect financial
interest in the Plan or in any agreements related to the Plan (the "Qualified
Directors/Trustees"). Each Board of Directors/Trustees recommended that the
shareholders of its respective Fund approve the Plan. A copy of the Plan is
included with this Proxy Statement as Exhibit C. In approving the Plan, the
Directors/Trustees determined that the fees payable under the Plan are likely
to facilitate and increase marketing efforts for each Fund, resulting in the
sale of the Fund's shares. There can be no assurance, however, that either Fund
will achieve these goals.
If the Plan is approved by the shareholders, it is contemplated that it
will become effective immediately or shortly after the date of the Meeting. The
Plan may be continued annually after its effective date, provided that such
continuance is specifically approved by the Fund's Board of Directors/Trustees,
including a majority of the Qualified Directors/Trustees, pursuant to a vote
cast in person at a meeting called for that purpose. So long as the Plan
remains in effect, the selection and nomination of the Independent
Directors/Trustees for the Fund shall be committed to the discretion of the
Independent Directors/Trustees then in office. In addition, during this period,
any legal counsel to the Independent Directors/Trustees shall be an independent
legal counsel.
DESCRIPTION OF THE PLAN
The Plan allows each Fund to pay to Value Line Securities, Inc., the
Funds' distributor and a subsidiary of the Funds' investment adviser (the
"Distributor"), distribution and service fees for the sale and distribution of
shares of the Fund to life insurance companies (each a "Life Company") for
allocation
9
to certain of their separate accounts established for the purpose of funding
variable annuity contracts and variable life insurance policies (collectively
referred to as "Variable Contracts") and for services provided to Variable
Contract owners. The Plan permits each Fund to finance the activities of the
Distributor, which are principally intended to result in the sale of the Fund's
shares. These activities include, but are not limited to:
a.) providing incentives and compensation to Life Companies that make the
Fund available to its Variable Contract owners and who provide
personal services to its Variable Contract owners who fund their
Variable Contracts with shares of the Fund;
b.) providing administrative support services to the Fund in connection
with the distribution of the Fund's shares for use by Life Companies
in funding Variable Contracts;
c.) paying costs incurred in conjunction with advertising and marketing
Fund shares, such as the expense incurred by Life Companies, the
Distributor, or affiliates of the Distributor of preparing, printing
and distributing promotional or sales literature in connection with
the funding of Variable Contracts with Fund shares;
d.) printing and distributing prospectuses, statements of additional
information and reports of the Fund to prospective Variable Contract
owners;
e.) holding seminars and sales meetings designed to promote the
distribution of Variable Contracts funded with Fund shares, to the
extent permitted by applicable laws, rules or regulations;
f.) training sales personnel of Life Companies regarding the Fund; and
g.) financing any other activity that the Board or management determines
is primarily intended to result in the sale of Fund shares and support
of services relating to those shares.
The Plan provides that each Fund will pay the Distributor a fee at the
annual rate of 0.40% of the Fund's average daily net assets as compensation for
its service. The Plan also provides that the Fund's investment adviser and the
Distributor may make payments out of their own resources to Life Companies that
provide administrative or distribution services. The fees payable to the
Distributor under the Plan are payable without regard to actual expenses
incurred by the Distributor, which means that the Distributor might make a
profit from these fees. The Distributor reserves the right to waive the fees
payable under the Plan with respect to either Fund.
The Plan provides that the Board of Directors/Trustees will be given, at
least quarterly, a written report of all amounts expended pursuant to the Plan
and the purposes for which such amounts were expended. The Plan also provides
that it may not be amended to increase materially the costs which each Fund may
bear pursuant to the Plan without shareholder approval by a vote of a majority
of the outstanding voting securities of the Fund (as defined in the 1940 Act)
and that any material amendments to the Plan must be approved by the
Directors/Trustees, including a majority of the Qualified Directors/Trustees,
by a vote cast in person at a meeting called for that purpose.
The Plan is terminable without penalty, at any time, by a vote of a
majority of the Directors/ Trustees, including a majority of the Qualified
Directors/Trustees, or by a vote of a majority of the outstanding voting
securities of the Fund (as defined in the 1940 Act).
10
FACTORS CONSIDERED BY THE BOARD OF DIRECTORS
The investment adviser and the Distributor proposed to the appropriate
Board of Directors/Trustees that each Fund adopt the Plan pursuant to Rule
12b-1 under the 1940 Act. The Distributor has acted as distributor for the
Funds since the Funds' inception, under a contract with each Fund pursuant to
which the Distributor currently does not receive compensation.
In considering the Plan, the Board of Directors/Trustees of each Fund took
into account the benefits of marketing, advertising and distribution efforts to
be undertaken by the Distributor in attracting investors. In addition, the
Distributor advised the Board of Directors/Trustees that the ability to make
payments to Life Companies will permit the Funds to compensate these companies
who, in return, provide services to their Variable Contract owners. These
services include assisting Variable Contract owners in considering and
understanding their investment in the Fund. The Directors/Trustees believe that
there is a reasonable likelihood that all of these activities are likely to
stimulate additional sales of each Fund's shares and assist the Funds in
increasing their present asset base in the face of competition from products
used to fund variable annuity contracts and variable life insurance policies.
Such competition, absent an effective and attractive distribution program,
could adversely affect each Fund by making it increasingly difficult to attract
new investors and to retain existing investors.
The Boards of Directors/Trustees also considered the reasons why it is
important for each Fund's assets to grow. It was recognized that it is
desirable for all shareholders that each Fund sustain a flow of new investment
monies, primarily to offset the effects of redemptions. Each Board of
Directors/ Trustees evaluated the potentially adverse effects that might
result from a pattern of net redemptions and the possibility of a net cash
outflow resulting therefrom. Net cash outflow would increase the likelihood of
having to dispose of portfolio securities for other than investment reasons at
unfavorable prices while net cash inflow (1) minimizes the need to sell
securities to meet redemptions when investment considerations would indicate
that they continue to be held, (2) reduces daily liquidity requirements, and
(3) permits a prompt restructuring of a portfolio without the need to dispose
of present holdings. It was also recognized that payments made pursuant to the
Plan might be offset in part by economies of scale associated with the growth
of each Fund's assets.
The Directors/Trustees believe that the fee payable under the Plan is
reasonable in view of distribution, administration and promotion services to be
provided. The Directors/Trustees in voting to approve the Plan, determined that
there is a reasonable likelihood that the Plan will benefit each Fund by
helping to attract new Variable Contract owners to the Funds and encourages
additional investments by existing Variable Contract owners in order to expand
the size of the Funds and thereby achieve greater economies of scale. In this
regard, the Directors/Trustees concluded that adoption of the Plan was
necessary to enable each Fund to remain competitive with similar funds that
seek to reach investors through advertising and marketing efforts and through
offering financial incentives to Life Companies that direct investors to such
funds and provide shareholder servicing and administrative services for the
benefit of those investors who are shareholders of such funds. The
Directors/Trustees believe that the payments made pursuant to the Plan will
facilitate the sale of each Fund's shares and benefit each Fund and its
shareholders. The operating expenses of the Funds will increase under the Plan
by 0.40 of 1%, on an annual basis, of each Fund's average daily net assets (and
each Fund's net yield to shareholders will correspondingly be decreased by 0.40
of 1%). Overall operating expenses of the Funds are anticipated to remain
competitive with those of comparable funds offered to owners of variable
insurance products. In considering the Plan, the Directors/Trustees also took
into account the possible benefits of the Plan to the Funds' investment
adviser, including increased advisory fees payable by the Funds if their assets
increase.
11
The Directors/Trustees believe that were the Plan not to be approved, each
Fund might not be able to attract and retain Life Companies and their Variable
Contract owners and, as a result of the consequent erosion in each Fund's asset
base, the Fund would be burdened with greater relative costs and possibly might
not be capable of the same investment flexibility as would a larger fund. It is
the belief of the Directors/Trustees that adoption of the Plan will enable each
Fund to maintain and possibly enhance the Fund's performance for its Variable
Contract owners and the quality of its services to those Variable Contract
owners.
THE BOARDS OF DIRECTORS/TRUSTEES RECOMMEND THAT SHAREHOLDERS
APPROVE THE PROPOSED SERVICE AND DISTRIBUTION PLAN
-------------------------
OTHER MATTERS
Management knows of no matters to be presented at the Meeting other than
as set forth above. If any other matters should come before the Meeting, it is
understood that the persons named in the proxy intend to vote said proxy in
accordance with their best judgment.
ADDITIONAL INFORMATION
Value Line, Inc., 220 East 42nd Street, New York, NY 10017-5891, is the
investment adviser to each of the Funds and to the other Value Line Mutual
Funds. Value Line Securities, Inc., 220 East 42nd Street, New York, NY
10017-5891, a subsidiary of the investment adviser, acts as principal
underwriter and distributor of each Fund for the sale and distribution of its
shares.
NEXT MEETING OF SHAREHOLDERS
The Funds are not required and do not intend to hold annual or other
periodic meetings of shareholders except as required by the Investment Company
Act of 1940. The next meeting of the shareholders of any of the Funds will be
held at such time as the Board of Directors or Trustees may determine or at
such time as may be legally required. Any shareholder proposal intended to be
presented at such meeting must be received by the Fund at its office a
reasonable time prior to the meeting, as determined by the Board of Directors
or Trustees, to be included in the Fund's proxy statement and form of proxy
relating to such meeting, and must satisfy all other legal requirements.
12
EXHIBIT A
NUMBER OF OUTSTANDING SHARES OF EACH FUND
SHARES OUTSTANDING
AS OF
FUND JULY 24, 2002
- ------------------------------------------------------ -------------------
Value Line Centurion Fund, Inc. ......................
Value Line Strategic Asset Management Trust. .........
A-1
EXHIBIT B
BENEFICIAL OWNERSHIP OF GREATER THAN 5% OF A FUND
AS OF JULY 24, 2002
NUMBER AND PERCENTAGE
OF
NAME AND ADDRESS FUND SHARES OWNED(1)
- ---------------------------------- ---------------------------- --------------------
Guardian Insurance & Annuity Co. Centurion 9999999999 100%
3900 Burgess Place
Bethlehem, PA 18017
Guardian Insurance & Annuity Co. Strategic Asset Management 9999999999 100%
3900 Burgess Place
Bethlehem, PA 18017
- ------------
(1) Of record only.
B-1
EXHIBIT C
VALUE LINE CENTURION FUND, INC.
VALUE LINE STRATEGIC ASSET MANAGEMENT TRUST
SERVICE AND DISTRIBUTION PLAN
This Service and Distribution Plan (the "Plan") is adopted as of this June
17, 2002 by the Board of Directors or Trustees (the "Board") of Value Line
Centurion Fund, Inc. and Value Line Strategic Asset Management Trust (each, a
"Fund" and together, the "Funds").
Section 1. The Funds are open-end management investment companies each issuing either common
stock or shares of beneficial interest (both referred to herein as "Shares"). The Funds may
offer their Shares to life insurance companies (each, a "Life Company") for allocation to
certain of their separate accounts established for the purpose of funding variable annuity
contracts and variable life insurance policies (collectively referred to herein as "Variable
Contracts").
Section 2. The Plan is adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940
(the "Act") so as to allow the Fund to make payments as contemplated herein, in
conjunction with the distribution of Shares.
From time to time, Value Line, Inc., the Funds' investment adviser, or Value Line Securities,
Inc., the Funds' distributor (the "Distributor"), directly or through an affiliate, may use its
own resources to (a) pay promotional and administrative expenses in connection with the
offer and sale of Shares, or (b) make payments to third parties that provide assistance in
selling Shares or that provide support services to Variable Contract owners. To the extent
that any such payments should be deemed to be indirect financing by the Funds of the
distribution of Shares, such payments are deemed to be authorized by this Plan.
Section 3. The Plan is designed to finance activities of the Distributor, principally intended to result in
sale of Shares, including, but not limited to the following:
a.) providing incentives and compensation to Life Companies that make the Fund
available to its Variable Contract owners and who provide personal services to its
Variable Contract owners who fund their Variable Contracts with shares of the Fund;
b.) providing administrative support services to the Fund in connection with the distribution
of the Fund's shares for use by Life Companies in funding Variable Contracts;
c.) paying costs incurred in conjunction with advertising and marketing Fund shares, such
as the expense incurred by Life Companies, the Distributor, or affiliates of the
Distributor of preparing, printing and distributing promotional or sales literature in
connection with the funding of Variable Contracts with Fund shares;
d.) printing and distributing prospectuses, statements of additional information and reports
of the Fund to prospective Variable Contract owners;
e.) holding seminars and sales meetings designed to promote the distribution of Variable
Contracts funded with Fund shares, to the extent permitted by applicable laws, rules or
regulations;
C-1
f.) training sales personnel of Life Companies regarding the Fund; and
g.) financing any other activity that the Board determines is primarily intended to result in
the sale of Fund shares and support of services relating to those shares.
Section 4. Any advertising or sales materials used in conjunction with the marketing of a Fund's
shares may include references to other open-end investment companies or investments,
provided that expenses relating to such advertising and sales material will be allocated
among such other investment companies or investments in an equitable manner, and any
sales personnel so paid are not required to devote their time solely to the sale of Shares.
Section 5. As compensation for the services to be provided under this Plan, Distributor shall be paid
a fee at the annual rate of 0.40% of the Fund's average daily net assets. The value of the
net assets of each Fund shall be determined in accordance with the Fund's prospectus, as
amended from time to time.
Section 6. All payments to Life Companies and other organizations pursuant to the Plan shall be
made solely by the Distributor and such Life Company or organization shall look solely to
the Distributor for compensation for its services and in no event shall such Life Company
or organization seek payment from the Fund.
Section 7. The Plan will become effective at the later of September 18, 2002, or upon approval by (a)
a majority of the outstanding Shares and (b) a majority of the Directors or Trustees who are
not "interested persons" (as defined in the Act) of the Fund (the "Independent Directors/
Trustees") and have no direct or indirect financial interest in the operation of the Plan or in
any agreements entered into in connection with the Plan (the "Qualified Directors/
Trustees"), pursuant to a vote cast in person at a meeting called for the purpose of voting
on the approval of the Plan.
Section 8. The Plan shall continue in effect for as long as such continuance is specifically approved
by the Director or Trustees of the appropriate Fund and the Qualified Directors/Trustees at
least annually in the manner provided in Section 7(b). Each quarter, the Distributor shall
report to the Funds the amounts paid under this Plan and the nature of the services
provided under the Plan. In connection with the annual review and approval of such
continuance, the Distributor shall furnish the Boards with such information as the Boards
may reasonably request in order to enable the Boards to make an informed determination
of whether the Plan should be continued.
Section 9. The Plan may be amended at any time by the Board provided that (a) any amendment to
increase materially the costs which the Fund may bear pursuant to the Plan shall be
effective only upon approval by a vote of a majority of the outstanding voting securities of
the Fund and (b) any material amendments of the terms of the Plan shall become effective
only upon approval as provided in Section 7(b) hereof.
Section 10. The Plan is terminable without penalty at any time by (a) vote of a majority of the Board of
the Fund, including a majority of the Qualified Directors/Trustees, or (b) vote of a majority
of the outstanding voting securities of the Fund.
Section 11. So long as the Plan is in effect, the selection and nomination of the Independent
Directors/Trustees shall be committed to the discretion of the Independent Director/
Trustees then in office, and any person who acts as legal counsel for the Independent
Directors/Trustees shall be an independent legal counsel.
C-2
Section 12. Any agreement related to this Plan shall be in writing and shall provide in substance:
a.) That any such agreement, with respect to a Fund, may be terminated at any time,
without payment of any penalty, by the vote of a majority of the Qualified Directors/
Trustees or by the vote of a majority of the outstanding Shares of that Fund, on not
more than 60 days' written notice to the Distributor; and
b.) That such agreement shall terminate automatically in the event of its assignment.
Section 13. The Fund shall preserve copies of the Plan and any related agreements and all reports
made pursuant to Section 8 hereof, for a period not less than six years from the date
thereof, the first two years in an easily accessible place.
C-3
PRELIMINARY PROXY MATERIALS FOR THE INFORMATION OF
THE SECURITIES AND EXCHANGE COMMISSION.
VALUE LINE STRATEGIC ASSET MANAGEMENT TRUST
220 EAST 42ND STREET,
NEW YORK, NY 10017-5891
SPECIAL MEETING OF SHAREHOLDERS: SEPTEMBER __, 2002 AT 9:30 A.M.
PROXY SOLICITED BY THE BOARD OF TRUSTEES
The undersigned hereby appoints David T. Henigson and Howard A. Brecher,
attorneys with full powers of substitution and revocation, to represent the
undersigned and to vote on behalf of the undersigned all shares of the Trust
that the undersigned is entitled to vote at the Special Meeting of Shareholders
of the Trust to be held at 125 East Union Avenue, East Rutherford, New Jersey at
the date and time indicated above and at any adjournments thereof. The
undersigned hereby acknowledges receipt of the enclosed Notice of Special
Meeting and Proxy Statement and hereby instructs said attorneys and proxies to
vote said shares as indicated herein. Every properly signed proxy will be voted
in the manner specified thereon and, in the absence of specification, will be
treated as GRANTING authority to vote FOR all of the items to come before the
Special Meeting.
The undersigned hereby revokes any proxy previously given.
PLEASE SIGN IN THE BOX BELOW
DATE: ______________________
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THIS
PROXY. IF JOINT OWNERS, EITHER MAY SIGN THE PROXY.
WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE, GUARDIAN OR CORPORATE OFFICER, PLEASE GIVE
YOUR FULL TITLE.
X_____________________________________________
SIGNATURE(S)
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOXES BELOW.
1. To approve changes to the Trust's fundamental investment policies.
(a) Borrowing
(b) Diversification
(c) Securities of other investment companies
(d) Illiquid securities
(e) Not applicable
(f) Investing to exercise control
(g) Unseasoned issuers
(h) Investing in issuers when securities are owned by officers
and trustees
(i) Investing in oil, gas or other mineral development
programs or leases
- -----------------------------
To vote against a particular proposed change, mark "For All Except" and write
the policy's letter on the line above.
FOR ALL ABSTAIN
FOR ALL EXCEPT ALL
|-| |-| |-|
2. To approve or disapprove a Service and Distribution Plan pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended.
FOR AGAINST ABSTAIN
|_| |_| |_|
3. In their discretion, the proxies are authorized to vote on such other
business as may properly come before the Special Meeting. A majority of
the proxies present and acting at the Special Meeting in person or by
substitute (or, if only one shall be so present, then that one) shall
have and may exercise all of the power and authority of said attorneys
or proxies hereunder.
PRELIMINARY PROXY MATERIALS FOR THE INFORMATION OF
THE SECURITIES AND EXCHANGE COMMISSION.
VALUE LINE CENTURION FUND, INC.
220 EAST 42ND STREET,
NEW YORK, NY 10017-5891
SPECIAL MEETING OF SHAREHOLDERS: SEPTEMBER __, 2002 AT 9:30 A.M.
PROXY SOLICITED BY THE BOARD OF TRUSTEES
The undersigned hereby appoints David T. Henigson and Howard A. Brecher,
attorneys with full powers of substitution and revocation, to represent the
undersigned and to vote on behalf of the undersigned all shares of the Fund that
the undersigned is entitled to vote at the Special Meeting of Shareholders of
the Fund to be held at 125 East Union Avenue, East Rutherford, New Jersey at the
date and time indicated above and at any adjournments thereof. The undersigned
hereby acknowledges receipt of the enclosed Notice of Special Meeting and Proxy
Statement and hereby instructs said attorneys and proxies to vote said shares as
indicated herein. Every properly signed proxy will be voted in the manner
specified thereon and, in the absence of specification, will be treated as
GRANTING authority to vote FOR all of the items to come before the Special
Meeting.
The undersigned hereby revokes any proxy previously given.
PLEASE SIGN IN THE BOX BELOW
DATE: ______________________
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THIS
PROXY. IF JOINT OWNERS, EITHER MAY SIGN THE PROXY.
WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE, GUARDIAN OR CORPORATE OFFICER, PLEASE GIVE
YOUR FULL TITLE.
X_____________________________________________
SIGNATURE(S)
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOXES BELOW.
1. To approve changes to the Fund's fundamental investment policies.
(a) Borrowing
(b) Diversification
(c) Securities of other investment companies
(d) Illiquid securities
(e) Warrants
(f) Investing to exercise control
(g) Unseasoned issuers
(h) Investing in issuers when securities are owned by
officers and trustees
- --------------------------------
To vote against a particular proposed change, mark "For All Except" and write
the policy's letter on the line above.
FOR ALL ABSTAIN
FOR ALL EXCEPT ALL
|-| |-| |-|
2. To approve or disapprove a Service and Distribution Plan pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as
amended.
FOR AGAINST ABSTAIN
|_| |_| |_|
3. In their discretion, the proxies are authorized to
vote on such other business as may properly come
before the Special Meeting. A majority of the proxies
present and acting at the Special Meeting in person
or by substitute (or, if only one shall be so
present, then that one) shall have and may exercise
all of the power and authority of said attorneys or
proxies hereunder.