UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file Number 811-3171
--------
Value Line US Government Securities Fund,Inc.
- --------------------------------------------------
(Exact name of registrant as specified in charter)
220 East 42nd Street, New York, N.Y. 10017
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 212-907-1500
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Date of fiscal year end: August 31, 2003
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Date of reporting period: August 31, 2003
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Item 1. Reports to Stockholders.
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A copy of the Annual Report to Stockholders for the period ended is
included with this Form.
Item 2. Code of Ethics
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(a)The Registrant has adopted a Code of Ethics that applies to it's
Principal Executive Officers and Principal Financial and Accounting Officer.
(f)Pursuant to item 10(a),the Registrant is attaching as an exhibit a
copy of it's Code of Ethics that applies to it's Principal Executive Officers
and Principal Financial and Accounting Officer.
Item 3. Audit Committee Financial Expert.
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(a)(1)The Registrant has an Audit Committee Financial Expert serving on
it's Audit Committee.
(2) The Registrant's Board has designated John W. Chandler, a member
of the Registrant's Audit Committee, as the Registrant's Audit Committee
Financial Expert. Mr. Chandler is an independent director who is a senior
consultant with Academic Search Consultation Service. He spent most of his
professional career at Williams College, where he served as a faculty member,
Dean of the Faculty, and President (1973-85). He also served as President of
Hamilton
College (1968-73), and as President of the Association of American Colleges and
Universities (1985-90). He has also previously served as Trustee Emeritus and
Chairman of the Board of Trustees of Duke University.
A person who is designated as an "audit committee financial expert" shall not
make such person an "expert" for any purpose, including without limitation under
Section 11 of the Securities Act of 1933 or under applicable fiduciary laws, as
a result of being designated or identified as an audit committee financial
expert. The designation or identification of a person as an audit committee
financial expert does not impose on such person any duties, obligations, or
liabilities that are greater than the duties, obligations, and liabilities
imposed on such person as a member of the audit committee and Board of Trustees
in the absence of such designation or identification.
Item 9. Controls and Procedures.
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(a) The registrant's principal executive officer and principal
financial officer have concluded that the registrant's
disclosure controls and procedures (as defined in rule
30a-2(c) under the Act (17 CFR 270.30a-2(c) ) based on their
evaluation of these controls and procedures as of a date
within 90 days of the filing date of this report, are
appropriately designed to ensure that material information
relating to the registrant is made known to such officers and
are operating effectively.
(b) The registrant's principal executive officer and principal
financial officer have determined that there have been no
significant changes in the registrant's internal controls or
in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including
corrective actions with regard to significant deficiencies and
material weaknesses.
Item 10. Exhibits.
- ------- --------
a) Code of Ethics for Principal Executive and Senior Financial
Officers attached hereto as Exhibit 100.COE
(b)(1) Certification pursuant to Rule 30a-2 under the Investment
Company Act of 1940 (17 CFR 270.30a-2) attached hereto as
Exhibit 99.CERT.
(2) Certification pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
By /s/ Jean B. Buttner
-------------------
Jean B. Buttner, President
Date: October 31, 2003
----------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ Jean B. Buttner
-------------------
Jean B. Buttner, President, Principal Executive Officer
By: /s/ David T. Henigson
---------------------
David T. Henigson, Vice President, Treasurer, Principal Financial Officer
Date: October 31, 2003
----------------
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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 219729
Kansas City, MO 64121-9729
INDEPENDENT PricewaterhouseCoopers LLP
AUDITORS 1177 Avenue of the Americas
New York, NY 10036
LEGAL COUNSEL Peter D. Lowenstein, Esq.
Two Sound View Drive, Suite 100
Greenwich, CT 06830
DIRECTORS Jean Bernhard Buttner
John W. Chandler
Frances T. Newton
Francis C. Oakley
David H. Porter
Paul Craig Roberts
Marion N. Ruth
Nancy-Beth Sheerr
OFFICERS Jean Bernhard Buttner
CHAIRMAN AND PRESIDENT
Jeffrey D. Geffen
VICE PRESIDENT
Charles Heebner
VICE PRESIDENT
Bradley T. Brooks
VICE PRESIDENT
David T. Henigson
VICE PRESIDENT,
SECRETARY/TREASURER
Joseph Van Dyke
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).
#527647
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ANNUAL REPORT
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AUGUST 31, 2003
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VALUE LINE
U.S. GOVERNMENT SECURITIES
FUND, INC.
[LOGO]
VALUE LINE U.S. GOVERNMENT SECURITIES FUND, INC.
TO OUR VALUE LINE U.S. GOVERNMENT
- --------------------------------------------------------------------------------
TO OUR SHAREHOLDERS:
This fiscal year was marked by uncertainty over the strength of the economy as
well as geopolitical tensions brought about by the conflict with Iraq. Economic
growth followed a sluggish path as labor markets were poor, capital spending was
weak and global economies did not produce meaningful growth. Consumer spending
did hold up as housing was strong and interest rates were low allowing
individuals to refinance their mortgages and increase their purchasing power.
However, the period of uncertainty leading up to the war with Iraq caused
consumers to pull back their spending, slowing the economy during that time.
Throughout the year the Federal Reserve Board continued its expansionary
monetary policy, lowering rates to stimulate the economy. The Board was not only
worried about the slow economy but was also concerned about the low, declining
inflation rate and was committed to preventing deflation, which they considered
a low possibility, but one that is difficult to counteract once it begins. To
this end, the Fed dropped the Federal Funds rate from 1.75% to 1.00%, bringing
the rate to its lowest level in decades. The combination of this monetary
stimulus, the successful resolution of the war with Iraq and fiscal stimulus
through tax cuts eventually brought about a strengthening of the economy. By the
second quarter of 2003 growth had vastly improved over the subpar performance of
the first quarter of 2003 and the final quarter of 2002.
The yield on the benchmark 10-year Treasury note began the period at 4.14% and
rose to 4.47% at its end. This masked greater volatility during the course of
the year. The yield on the 10-year note fell as low as 3.11% in June, its lowest
level in decades. But as the economy began to grow beyond consensus
expectations, equities rallied and interest rates rose sharply, rising over 136
basis points from its low of 3.11%, ending the period at 4.47%.
Because of the rise in yields, bond prices declined for the period. Your Fund
managed a positive return as a result of its investment in intermediate
maturities, which provided favorable income, exceeding the price decline. We
attempt to control price risk by limiting the portfolio's average maturity to a
7- to 10-year maturity range and by maintaining a well-diversified portfolio of
U.S. government securities, representing the highest level of safety. Your Fund
returned 2.35% for the fiscal year ended August 31, 2003, compared to the 3.04%
return of the unmanaged Lehman Brothers Intermediate U.S. Government Bond
Index(1), a proxy for the Fund's government investment strategy.
We will continue to maintain a portfolio emphasizing an intermediate-term
maturity structure, which we believe will provide competitive performance going
forward. We appreciate your continued support.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
CHAIRMAN and PRESIDENT
October 14, 2003
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(1) THE LEHMAN BROTHERS INTERMEDIATE U.S. GOVERNMENT BOND INDEX REPRESENTS THE
INTERMEDIATE MATURITIES (1-10 YEARS) OF THE U.S. TREASURY AND U.S. AGENCY
SEGMENT OF THE FIXED-INCOME MARKET. THE RETURNS FOR THE INDEX DO NOT REFLECT
CHARGES, EXPENSES, OR TAXES, AND IT IS NOT POSSIBLE TO DIRECTLY INVEST IN
THIS INDEX. A U.S. TREASURY SECURITY IS ISSUED BY THE TREASURY DEPARTMENT OF
THE U.S. GOVERNMENT. U.S. AGENCY SECURITIES ARE ISSUED BY OTHER GOVERNMENT
AGENCIES SUCH AS THE FEDERAL HOME LOAN BANK, FEDERAL NATIONAL MORTGAGE
ASSOCIATION AND FEDERAL HOME LOAN MORTGAGE CORPORATION.
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2
VALUE LINE U.S. GOVERNMENT SECURITIES FUND, INC.
SECURITIES FUND SHAREHOLDERS
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ECONOMIC OBSERVATIONS
The U.S. economic recovery, which had been proceeding at an uninspiring pace for
the better part of two years, has started to exhibit more spirit. Indeed, the
U.S. gross domestic product, underpinned by a selective recovery in
manufacturing, generally strong housing demand, and healthy retail spending
levels now seems poised to increase by 4%, or so, in the second half of this
year. There are pockets of weakness around, most notably in the employment area
where jobless totals remain quite high. Overall, though, the economic picture is
materially brighter than it was earlier in 2003 when talk of a possible
double-dip recession was still being heard.
Meanwhile, the ongoing support of the Federal Reserve Board, which continues to
maintain its low-interest-rate policies, along with the earlier passage of a tax
cut and fiscal stimulus package, should provide the help needed for the U.S.
economy to continue pushing forward nicely in 2004, when we expect GDP growth to
average upwards of 4%.
Inflation, meantime, remains muted, thanks, in part, to subdued labor costs.
Adequate supplies of raw materials are also helping to keep the costs of
production low. We caution that as the U.S. economy moves further along the
recovery trail over the next several years, some increase in pricing pressures
may emerge. Absent a stronger long-term business recovery than we now envision,
or a sharp rise in oil and gas prices stemming from a further serious conflict
in the Middle East or severe production cutbacks by the Organization of
Petroleum Exporting Countries (OPEC), inflation should remain in check through
the latter years of this decade. Long-term interest rates, which moved higher
for a time during the past several months, as the economy perked up, should
stabilize at just modestly higher levels over the next several years.
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3
VALUE LINE U.S. GOVERNMENT SECURITIES FUND, INC.
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The following graph compares the performance of the Value Line U.S. Government
Securities Fund, Inc. to that of the Lehman Brothers Aggregate Bond Index and
the Lehman Brothers Intermediate U.S. Government Bond Index. The Value Line
U.S. Government Securities Fund, Inc. is a professionally managed mutual fund,
while the Indices are not available for investment and are not managed. The
comparison is shown for illustrative purposes only.
COMPARISON OF A CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
VALUE LINE U.S. GOVERNMENT SECURITIES FUND, INC.,
THE LEHMAN BROTHERS AGGREGATE BOND INDEX**,
AND THE LEHMAN BROTHERS INTERMEDIATE U.S. GOVERNMENT BOND INDEX**
[GRAPH]
FROM 9/1/93 TO 8/31/03
Performance Data:*
GROWTH OF AN ASSUMED AVERAGE ANNUAL
INVESTMENT OF $10,000 TOTAL RETURN
----------------------- ---------------
1 year ended 8/31/03 .......... $10,235 2.35%
5 years ended 8/31/03 ......... $13,249 5.79%
10 years ended 8/31/03 ......... $16,238 4.97%
* THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND ARE NO GUARANTEE
OF FUTURE PERFORMANCE. THE AVERAGE ANNUAL TOTAL RETURNS 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. THE PERFORMANCE DATA AND GRAPH DO
NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
** THE LEHMAN BROTHERS AGGREGATE BOND INDEX IS REPRESENTATIVE OF THE BROAD
FIXED-INCOME MARKET. IT INCLUDES GOVERNMENT, INVESTMENT-GRADE CORPORATE,
AND MORTGAGE BACKED BONDS. THE LEHMAN BROTHERS INTERMEDIATE U.S. GOVERNMENT
BOND INDEX REPRESENTS THE INTERMEDIATE MATURITY (1-10 YEAR) OF THE U.S.
TREASURY AND U.S. AGENCY SEGMENT OF THE FIXED-INCOME MARKET. THE RETURNS
FOR THE INDICES DO NOT REFLECT EXPENSES WHICH ARE DEDUCTED FROM THE FUND'S
RETURNS.
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4
VALUE LINE U.S. GOVERNMENT SECURITIES FUND, INC.
SCHEDULE OF INVESTMENTS AUGUST 31, 2003
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PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
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U.S. TREASURY OBLIGATIONS (10.8%)
$ 1,000,000 U.S. Treasury Notes .................................. 2.00% 5/15/06 $ 992,540
4,000,000 U.S. Treasury Notes .................................. 6.50 10/15/06 4,466,876
2,000,000 U.S. Treasury Notes .................................. 6.25 2/15/07 2,230,314
3,000,000 U.S. Treasury Notes .................................. 6.13 8/15/07 3,347,463
1,000,000 U.S. Treasury Notes .................................. 6.00 8/15/09 1,120,469
1,000,000 U.S. Treasury Bonds .................................. 7.25 8/15/22 1,232,657
1,000,000 U.S. Treasury Bonds .................................. 6.25 8/15/23 1,110,352
1,000,000 U.S. Treasury Bonds .................................. 6.38 8/15/27 1,134,454
- ------------ -----------
14,000,000 TOTAL U.S. TREASURY OBLIGATIONS (COST $15,618,618) ... 15,635,125
- ------------ -----------
U.S. GOVERNMENT AGENCY OBLIGATIONS (73.9%)
FEDERAL NATIONAL MORTGAGE ASSOCIATION (41.5%)
1,000,000 Federal National Mortgage Association ................ 2.25 5/15/06 991,055
6,253,312 Federal National Mortgage Association Pool #313032 ... 7.04 7/01/06 6,657,462
4,000,000 Federal National Mortgage Association ................ 4.75 1/02/07 4,186,908
1,000,000 Federal National Mortgage Association ................ 3.25 1/29/07 1,007,622
9,800,168 Federal National Mortgage Association Pool #375667 ... 6.02 2/01/08 10,563,791
10,000,000 Federal National Mortgage Association Pool #380188 ... 6.45 4/01/08 10,756,250
314,124 Federal National Mortgage Association Pool #254243 ... 6.00 2/01/09 321,516
487,051 Federal National Mortgage Association Pool #254273 ... 5.00 3/01/09 495,052
2,000,000 Federal National Mortgage Association ................ 6.38 6/15/09 2,230,002
1,000,000 Federal National Mortgage Association ................ 5.00 4/16/15 978,093
518,317 Federal National Mortgage Association Pool #511823 ... 5.50 5/01/16 530,377
1,361,488 Federal National Mortgage Association Pool #622373 ... 5.50 12/01/16 1,393,166
525,356 Federal National Mortgage Association Pool #615289 ... 5.50 12/01/16 537,579
869,368 Federal National Mortgage Association Pool #623503 ... 6.00 2/01/17 901,165
468,560 Federal National Mortgage Association Pool #631328 ... 5.50 2/01/17 479,026
55,539 Federal National Mortgage Association Pool #643277 ... 5.50 4/01/17 56,779
63,818 Federal National Mortgage Association Pool #638247 ... 5.50 5/01/17 65,244
866,096 Federal National Mortgage Association Pool #669613 ... 5.00 10/01/17 870,996
945,349 Federal National Mortgage Association Pool #685183 ... 5.00 3/01/18 949,867
886,872 Federal National Mortgage Association Pool #254684 ... 5.00 3/01/18 891,109
958,509 Federal National Mortgage Association Pool #695828 ... 5.00 4/01/18 963,089
971,256 Federal National Mortgage Association Pool #703936 ... 5.00 5/01/18 975,897
1,000,100 Federal National Mortgage Association Pool #713379 ... 5.00 7/01/18 1,004,879
924,909 Federal National Mortgage Association REMIC Trust
Series 2003-38 Class TC .............................. 5.00 3/25/23 928,178
887,312 Federal National Mortgage Association Pool #412682 ... 6.00 3/01/28 903,684
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5
VALUE LINE U.S. GOVERNMENT SECURITIES FUND, INC.
SCHEDULE OF INVESTMENTS
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PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
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$ 547,151 Federal National Mortgage Association Pool #424691 .... 6.50% 4/01/28 $ 567,530
317,081 Federal National Mortgage Association Pool #425239 .... 6.50 4/01/28 328,890
1,000,000 Federal National Mortgage Association ................. 7.25 5/15/30 1,184,893
1,000,000 Federal National Mortgage Association ................. 6.63 11/15/30 1,102,575
241,566 Federal National Mortgage Association Pool #571090 .... 7.50 1/01/31 256,881
11,622 Federal National Mortgage Association Pool #568625 .... 7.50 1/01/31 12,358
14,286 Federal National Mortgage Association Pool #573935 .... 7.50 3/01/31 15,191
1,712,107 Federal National Mortgage Association Pool #626440 .... 7.50 2/01/32 1,820,349
330,976 Federal National Mortgage Association Pool #629297 .... 6.50 2/01/32 342,679
493,506 Federal National Mortgage Association Pool #254383 .... 7.50 5/01/32 524,707
300,186 Federal National Mortgage Association Pool #634996 .... 6.50 5/01/32 310,817
1,828,071 Federal National Mortgage Association Pool #254476 .... 5.50 9/01/32 1,822,311
1,000,002 Federal National Mortgage Association Pool #726889 .... 5.50 7/01/33 996,867
998,559 Federal National Mortgage Association Pool #650386 .... 5.00 7/01/33 967,344
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56,952,617 TOTAL FEDERAL NATIONAL MORTGAGE ASSOCIATION
----------- (COST $57,684,280) ................................... 59,892,178
-----------
FEDERAL HOME LOAN MORTGAGE CORPORATION (12.4%)
2,000,000 Federal Home Loan Mortgage Corporation ................ 1.50 8/15/05 1,975,804
1,500,000 Federal Home Loan Mortgage Corporation ................ 3.00 12/16/05 1,518,309
1,000,000 Federal Home Loan Mortgage Corporation ................ 5.95 1/19/06 1,081,478
1,000,000 Federal Home Loan Mortgage Corporation ................ 3.55 6/29/07 1,004,138
4,500,000 Federal Home Loan Mortgage Corporation ................ 5.88 3/21/11 4,712,288
1,000,000 Federal Home Loan Mortgage Corporation ................ 4.50 5/14/12 962,045
1,000,000 Federal Home Loan Mortgage Corporation ................ 4.75 5/06/13 953,403
55,846 Federal Home Loan Mortgage Corporation Gold PC Pool
#E92226 ............................................... 5.00 11/01/17 56,107
801,510 Federal Home Loan Mortgage Corporation Gold PC Pool
#E93499 ............................................... 5.00 12/01/17 805,257
59,500 Federal Home Loan Mortgage Corporation Gold PC Pool
#E92829 ............................................... 5.00 12/01/17 59,779
818,117 Federal Home Loan Mortgage Corporation REMIC Trust
Series 2597 Class KJ .................................. 4.50 7/15/22 817,843
978,021 Federal Home Loan Mortgage Corporation Gold PC Pool
#C90684 ............................................... 4.50 5/01/23 935,673
1,000,000 Federal Home Loan Mortgage Corporation ................ 6.75 3/15/31 1,120,145
997,274 Federal Home Loan Mortgage Corporation REMIC Trust
Series 2645 Class NA .................................. 3.50 9/15/31 959,010
982,005 Federal Home Loan Mortgage Corporation REMIC Trust
----------- Series 2594 Class OR .................................. 4.25 6/15/32 978,630
-----------
17,692,273 TOTAL FEDERAL HOME LOAN MORTGAGE CORPORATION
----------- (COST $17,861,573) ................................... 17,939,909
-----------
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6
VALUE LINE U.S. GOVERNMENT SECURITIES FUND, INC.
AUGUST 31, 2003
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PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
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FEDERAL HOME LOAN BANK (9.2%)
$ 1,000,000 Federal Home Loan Bank ................................ 4.13% 5/13/05 $ 1,036,972
1,000,000 Federal Home Loan Bank ................................ 4.88 8/15/05 1,055,216
1,500,000 Federal Home Loan Bank ................................ 4.88 5/15/07 1,583,872
500,000 Federal Home Loan Bank ................................ 3.50 11/15/07 498,549
1,000,000 Federal Home Loan Bank ................................ 6.01 4/22/08 1,096,019
1,000,000 Federal Home Loan Bank ................................ 5.25 11/14/08 1,059,744
1,000,000 Federal Home Loan Bank ................................ 6.21 6/02/09 1,107,900
1,000,000 Federal Home Loan Bank ................................ 3.88 6/14/13 919,651
1,000,000 Federal Home Loan Bank ................................ 6.63 6/30/14 1,132,113
3,000,000 Federal Home Loan Bank ................................ 7.45 2/03/20 3,735,966
------------ ------------
12,000,000 TOTAL FEDERAL HOME BANK (COST $13,063,349) ............ 13,226,002
------------ ------------
FEDERAL FARM CREDIT BANK (5.2%)
2,000,000 Federal Farm Credit Bank .............................. 6.03 5/7/08 2,193,938
1,000,000 Federal Farm Credit Bank .............................. 6.82 3/16/09 1,134,975
1,000,000 Federal Farm Credit Bank .............................. 4.85 10/25/12 995,578
3,000,000 Federal Farm Credit Bank .............................. 5.70 7/03/17 3,109,839
------------ ------------
7,000,000 TOTAL FEDERAL FARM CREDIT BANK (COST $7,495,142) ...... 7,434,330
------------ ------------
PRIVATE EXPORT FUNDING CORPORATION (4.3%)
5,000,000 Private Export Funding Corporation Series "J" ......... 7.65 5/15/06 5,659,315
500,000 Private Export Funding Corporation Series "L" ......... 5.75 1/15/08 542,328
------------ ------------
5,500,000 TOTAL PRIVATE EXPORT FUNDING CORPORATION
------------ (COST $5,500,000) .................................... 6,201,643
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (1.3%)
504,869 Government National Mortgage Association REMIC Trust
Series 2003-35 Class VB ............................... 5.00 12/16/15 506,323
31,838 Government National Mortgage Association Pool #541349 . 6.00 4/15/31 32,538
59,596 Government National Mortgage Association Pool #557681 . 6.00 8/15/31 60,907
668,201 Government National Mortgage Association Pool #548880 . 6.00 12/15/31 682,900
533,242 Government National Mortgage Association Pool #551762 . 6.00 4/15/32 545,004
------------ ------------
1,797,746 TOTAL GOVERNMENT NATIONAL MORTGAGE
------------ ASSOCIATION (COST $1,803,808) ........................ 1,827,672
------------
100,942,636 TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
------------ (COST $103,408,152) .................................. 106,521,734
------------
114,942,636 TOTAL INVESTMENT SECURITIES (84.7%)
------------ (COST $119,026,770) .................................. 122,156,859
------------
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7
VALUE LINE U.S. GOVERNMENT SECURITIES FUND, INC.
SCHEDULE OF INVESTMENTS AUGUST 31, 2003
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PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (14.0%) (INCLUDING ACCRUED INTEREST)
$ 7,200,000 Collateralized by $7,206,000 U.S. Treasury Bonds 5.500%, due 8/15/28, with a value of
$7,326,916 (with UBS Warburg LLC, 1.00%, dated 8/29/03, due 9/02/03, delivery value
$7,200,800) ........................................................................... $ 7,200,600
7,200,000 Collateralized by $6,365,000 U.S. Treasury Notes 6.500%, due 2/15/10, with a value of
$7,331,511 (with Morgan Stanley, 0.88%, dated 8/29/03, due 9/02/03, delivery value
$7,200,704) ........................................................................... 7,200,528
5,800,000 Collateralized by $5,685,000 U.S. Treasury Notes 3.625%, due 3/31/04, with a value of
- ------------ $5,852,731 (with State Street Bank and Trust Company, 0.87%, dated 8/29/03, due
9/02/03, delivery value $5,800,561) ................................................... 5,800,421
-------------
20,200,000 TOTAL REPURCHASE AGREEMENTS (14.0%)
- ------------ (COST $20,201,549) ................................................................... 20,201,549
-------------
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES (1.3%) 1,905,422
-------------
NET ASSETS (100.0%) ................................................................... $ 144,263,830
=============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER OUTSTANDING
SHARE ($144,263,830 DIVIDED BY 12,183,601 SHARES OF CAPITAL STOCK OUTSTANDING) ........ $ 11.84
=============
SEE NOTES TO FINANCIAL STATEMENTS.
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8
VALUE LINE U.S. GOVERNMENT SECURITIES FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
AT AUGUST 31, 2003
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ASSETS:
Investment securities, at value
(Cost - $119,026,770) ....................... $122,156,859
Repurchase agreements
(Cost - $20,201,549) ........................ 20,201,549
Cash ........................................... 37,898
Interest receivable ............................ 1,297,334
Receivable for capital shares sold ............. 893,548
------------
TOTAL ASSETS ............................. 144,587,188
------------
LIABILITIES:
Payable for capital shares repurchased ......... 171,551
Accrued expenses:
Advisory fee ................................. 59,019
Service & distribution plan fee .............. 31,510
Other ........................................ 61,278
------------
TOTAL LIABILITIES ........................ 323,358
------------
NET ASSETS ..................................... $144,263,830
============
NET ASSETS CONSIST OF:
Capital stock, at $1 par value
(authorized 100,000,000, outstanding
12,183,601 shares) .......................... $ 12,183,601
Additional paid-in capital ..................... 142,065,763
Undistributed net investment income ............ 822,313
Accumulated net realized loss
on investments .............................. (13,937,936)
Net unrealized appreciation
of investments .............................. 3,130,089
------------
NET ASSETS ..................................... $144,263,830
============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER OUTSTANDING
SHARE ($144,263,830 DIVIDED BY 12,183,601
SHARES OUTSTANDING) ......................... $ 11.84
============
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2003
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest income ................................ $ 7,089,995
------------
EXPENSES:
Advisory fee ................................... 782,249
Service & distribution plan fees ............... 391,124
Transfer agent fees ............................ 87,698
Auditing and legal fees ........................ 61,270
Custodian fees ................................. 40,088
Printing ....................................... 39,182
Registration and filing fees ................... 28,788
Insurance ...................................... 23,191
Directors' fees and expenses ................... 19,800
Postage ........................................ 18,264
Telephone, dues and other ...................... 9,652
------------
Total Expenses Before
Custody Credits ....................... 1,501,306
Less: Custody Credits .................... (979)
------------
Net Expenses ............................. 1,500,327
------------
NET INVESTMENT INCOME .......................... 5,589,668
------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net Realized Gain ........................ 1,821,513
Change in Net Unrealized
Appreciation (Depreciation) ........... (3,569,894)
------------
NET REALIZED GAIN AND CHANGE IN
NET UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENTS ............... (1,748,381)
------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS ............................. $ 3,841,287
============
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
9
VALUE LINE U.S. GOVERNMENT SECURITIES FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED AUGUST 31, 2003 AND AUGUST 31, 2002
- --------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
AUGUST 31, AUGUST 31,
2003 2002
----------------------------------
OPERATIONS:
Net investment income ............................................... $ 5,589,668 $ 6,204,297
Net realized gain on investments .................................... 1,821,513 2,935,615
Change in net unrealized appreciation (depreciation) ................ (3,569,894) 3,368,375
----------------------------------
Net increase in net assets from operations .......................... 3,841,287 12,508,287
----------------------------------
DIVIDENDS TO SHAREHOLDERS:
Net investment income ............................................... (5,766,950) (6,332,607)
----------------------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares ........................................ 248,802,569 133,951,436
Proceeds from reinvestment of distributions to shareholders ......... 4,930,910 5,359,856
Cost of shares repurchased .......................................... (263,202,861) (140,421,110)
----------------------------------
Net decrease from capital share transactions ........................ (9,469,382) (1,109,818)
----------------------------------
TOTAL (DECREASE) INCREASE IN NET ASSETS .............................. (11,395,045) 5,065,862
NET ASSETS:
Beginning of year ................................................... 155,658,875 150,593,013
----------------------------------
End of year ......................................................... $ 144,263,830 $ 155,658,875
==================================
UNDISTRIBUTED NET INVESTMENT INCOME, AT END OF YEAR .................. $ 822,313 $ 954,806
==================================
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
10
VALUE LINE U.S. GOVERNMENT SECURITIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2003
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Value Line U.S. Government Securities 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 to obtain
maximum income without undue risk to principal. Capital preservation and
possible capital appreciation are secondary objectives.
The following significant accounting principles 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. The Fund utilizes an independent pricing service (the
"Service") approved by the Board of Directors. Where market quotations are
readily available, portfolio securities are valued at the midpoint between the
latest available and representative asked and bid prices on the basis of
valuations provided by dealers in such securities. Some of the general factors
which may be considered by the dealers in arriving at such valuations include
the fundamental analytic data relating to the security and an evaluation of the
forces which influence the market in which these securities are purchased and
sold. Determination of values may involve subjective judgment, as the actual
market value of a particular security can be established only by negotiation
between the parties in a sales transaction. The values for other portfolio
securities are determined on the valuation date by reference to valuations
obtained from the Service which determines valuations for normal
institutional-size trading units of debt securities, without exclusive reliance
upon quoted prices. The Service takes into account appropriate factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data in determining valuations. Short-term instruments with maturities of 60
days or less at the date of purchase are valued at amortized cost, which
approximates market value. Other assets and securities for which market
valuations are not readily available will be valued at fair value as the Board
of Directors may determine in good faith.
(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 and capital gains to its
shareholders. Therefore, no federal income tax or excise tax provision is
required.
(D) SECURITY TRANSACTIONS AND RELATED INCOME.
Security transactions are accounted for on the date the securities are purchased
or sold. Realized gains and losses on securities transactions are determined
using the identified cost method. Interest income, adjusted for amortization of
discount and premium, is earned from settlement date and recognized on the
accrual basis.
- --------------------------------------------------------------------------------
11
VALUE LINE U.S. GOVERNMENT SECURITIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(E) REPRESENTATIONS AND INDEMNIFICATIONS. In the normal course of business the
Fund enters into contracts that contain a variety of representations and
warranties which provide general indemnifications. The Fund's maximum exposure
under these arrangements is unknown as this would involve future claims that may
be made against the Fund that have not yet occurred. However, based on
experience, the Fund expects the risk of loss to be remote.
2. CAPITAL SHARE TRANSACTIONS AND DIVIDENDS TO SHAREHOLDERS
Transactions in capital stock were as follows:
YEAR ENDED YEAR ENDED
AUGUST 31, AUGUST 31,
2003 2002
--------------------------------
Shares sold ................. 20,615,131 11,548,967
Shares issued to
shareholders in
reinvestment of
dividends ................ 407,998 468,856
--------------------------------
21,023,129 12,017,823
Shares repurchased .......... (21,812,007) (12,129,138)
--------------------------------
Net decrease ................ (788,878) (111,315)
================================
Dividends per share ......... $ .445 $ .495
================================
Dividends and distributions to shareholders are recorded on the ex-dividend
date.
On September 18, 2003 the Fund's Board of Directors declared a quarterly
dividend from net investment income of $.105 per share payable on September 25,
2003 to shareholders of record on September 22, 2003.
3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities, excluding short-term investments,
were as follows:
YEAR ENDED
AUGUST 31,
2003
--------------
PURCHASES:
U.S. Treasury Obligations .................. $ 11,144,677
U.S. Government Agency Obligations
and Other Investment Securities ......... 77,778,009
------------
$ 88,922,686
============
SALES AND REDEMPTIONS:
U.S. Treasury Obligations .................. $ 14,494,375
U.S. Government Agency Obligations
and Other Investment Securities ......... 87,617,542
------------
$102,111,917
============
4. INCOME TAXES
At August 31, 2003, information on the tax basis of investments is follows:
Cost of investments for tax purposes ......... $139,408,877
============
Gross tax unrealized appreciation ............ $ 4,118,151
Gross tax unrealized depreciation ............ $ (1,168,620)
------------
Net tax unrealized appreciation on
investments ............................... $ 2,949,531
============
Undistributed ordinary income ................ $ 1,002,871
============
Capital loss carryforward, expires
August 31, 2004 ........................... $ 8,976,510
Capital loss carryforward, expires
August 31, 2005 ........................... 2,829,335
Capital loss carryforward, expires
August 31, 2008 ........................... 2,132,091
------------
Capital loss carryforward, at
August 31, 2003 ........................... $ 13,937,936
============
During the year-ended August 31, 2003 the Fund utilized a capital loss
carryforward of approximately $1,761,906. In addition, $30,413,465 of the
capital loss carryforward expired.
- --------------------------------------------------------------------------------
12
VALUE LINE U.S. GOVERNMENT SECURITIES FUND, INC.
AUGUST 31, 2003
- --------------------------------------------------------------------------------
To the extent future capital gains are offset by capital losses, the Fund does
not anticipate distributing any such gains to shareholders.
Net investment income and net realized gain (loss) differ for financial
statement and tax purposes primarily due to differing treatment of bond premiums
and wash sales.
The tax composition of dividends paid during the years ending August 31, 2003
and August 31, 2002 is as follows:
AUGUST 31, AUGUST 31,
2003 2002
-------------------------
Ordinary Income ......... $5,766,950 $6,332,607
=========================
5. INVESTMENT ADVISORY CONTRACT, MANAGEMENT FEES AND TRANSACTIONS WITH
AFFILIATES
An advisory fee of $782,249 was paid or payable to Value Line, Inc., the Fund's
investment adviser ("Adviser"), for the year ended August 31, 2003. This was
computed at the rate of 1/2 of 1% of the Fund's average 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 administrative services, office space,
equipment and compensation of administrative, bookkeeping, and clerical
personnel necessary for managing the affairs of the Fund. The Adviser also
provides persons, satisfactory to the Fund's Board of Directors, to act as
officers and employees 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. The Plan compensates Value
Line Securities, Inc., a wholly-owned subsidiary of the Adviser (the
"Distributor"), for advertising, marketing and distributing the Fund's shares
and for servicing the Fund's shareholders at an annual rate of 0.25% of the
Fund's average daily net assets. Fees amounting to $391,124 were paid or payable
to the Distributor under this Plan for the year ended August 31, 2003.
For the year ended August 31, 2003, the Fund's expenses were reduced by $979
under a custody credit arrangement with the Custodian.
Certain officers and directors of the Adviser and the Distributor are also
officers and directors of the Fund.
The Adviser and/or affiliated companies and the Value Line, Inc. Profit Sharing
and Savings Plan at August 31, 2003 owned 157,858 shares of the Fund's capital
stock, representing 1.30% of the outstanding shares. In addition, officers and
directors owned 935 shares of capital stock, representing less than 1% of the
outstanding shares.
- --------------------------------------------------------------------------------
13
VALUE LINE U.S. GOVERNMENT SECURITIES FUND, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR:
YEARS ENDED AUGUST 31,
----------------------------------------------------------------------------
2003 2002 2001 2000 1999
----------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR ......... $ 12.00 $ 11.51 $ 10.87 $ 10.81 $ 11.44
----------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income .................... .44 .50 .58 .64 .61
Net gains or losses on securities
(both realized and unrealized) ......... (.15) .49 .67 .04 (.62)
----------------------------------------------------------------------------
Total income (loss) from
investment operations .................. .29 .99 1.25 .68 (.01)
----------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net
investment income ...................... (.45) (.50) (.61) (.62) (.62)
Distributions from net realized
gains .................................. -- -- -- -- --
----------------------------------------------------------------------------
Total distributions ...................... (.45) (.50) (.61) (.62) (.62)
----------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR ............... $ 11.84 $ 12.00 $ 11.51 $ 10.87 $ 10.81
============================================================================
TOTAL RETURN ............................... 2.35% 8.84% 11.82% 6.53% (0.17)%
============================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(in thousands) ............................ $144,264 $155,659 $150,593 $140,408 $167,231
Ratio of operating expenses
to average net assets ..................... 0.96%(1) .92%(1) .92%(1) .73%(1) .67%(1)
Ratio of net investment income
to average net assets ..................... 3.57% 4.17%(2) 5.17% 5.82% 5.40%
Portfolio turnover rate .................... 65% 168% 140% 49% 125%
(1) RATIOS REFLECT EXPENSES GROSSED UP FOR CUSTODY CREDIT ARRANGEMENT. THE
RATIOS OF EXPENSES TO AVERAGE NET ASSETS NET OF CUSTODY CREDITS WOULD HAVE
BEEN UNCHANGED FOR THE YEARS ENDED AUGUST 31, 2003, AUGUST 31, 2002, AUGUST
31, 2001 AND AUGUST 31, 2000, AND WOULD HAVE BEEN 0.66% FOR THE YEAR ENDED
AUGUST 31, 1999.
(2) AS REQUIRED, EFFECTIVE SEPTEMBER 1, 2001, THE FUND HAS ADOPTED THE
PROVISIONS OF THE AICPA AUDIT AND ACCOUNTING GUIDE FOR INVESTMENT COMPANIES
AND BEGAN AMORTIZING PREMIUM AND DISCOUNT ON DEBT SECURITIES. THE EFFECT OF
THIS CHANGE FOR THE YEAR ENDED AUGUST 31, 2002 ON NET INVESTMENT INCOME AND
NET REALIZED AND UNREALIZED GAINS AND LOSSES WAS LESS $.01 PER SHARE. THE
EFFECT OF THIS CHANGE WAS TO DECREASE THE RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS FROM 4.24% TO 4.17%.
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
14
VALUE LINE U.S. GOVERNMENT SECURITIES FUND, INC.
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF
VALUE LINE U.S. GOVERNMENT SECURITIES 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. Government
Securities Fund, Inc. (the "Fund") at August 31, 2003, 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 five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America. 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 auditing
standards generally accepted in
the United States of America, 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 August 31, 2003 by
correspondence with the custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
October 15, 2003
- --------------------------------------------------------------------------------
15
VALUE LINE U.S. GOVERNMENT SECURITIES FUND, INC.
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
MANAGEMENT INFORMATION
The business and affairs of the Fund are managed by the Fund's officers under
the direction of the Board of Directors. The following table sets forth
information on each Director and officer of the Fund. Each Director serves as a
director or trustee of each of the 14 Value Line Funds and oversees a total of
15 portfolios. Each Director serves until his or her successor is elected and
qualified.
PRINCIPAL
OCCUPATION
LENGTH OF DURING THE OTHER DIRECTORSHIPS
NAME, ADDRESS, AND AGE POSITION TIME SERVED PAST 5 YEARS HELD BY DIRECTOR
===============================================================================================================
INTERESTED DIRECTORS*
- ---------------------
Jean Bernhard Buttner Chairman of the Since 1985 Chairman, President and Value Line, Inc.
Age 68 Board of Directors Chief Executive Officer of
and President Value Line, Inc. (the
"Adviser") and Value Line
Publishing, Inc., Chairman
and President of each of the
14 Value Line Funds and
Value Line Securities, Inc.
(the "Distributor").
Marion N. Ruth Director Since 2000 Real Estate Executive: Value Line, Inc.
5 Outrider Road President, Ruth Realty (real
Rolling Hills, CA 90274 estate broker); Director of
Age68 the Adviser since 2000.
NON-INTERESTED DIRECTORS
- ------------------------
John W. Chandler Director Since 1991 Consultant, Academic Search None
1611 Cold Spring Rd. Consultation Service, Inc.
Williamstown, MA 01267 Trustee Emeritus and
Age 79 Chairman (1993-1994) of the
Board of Trustees of Duke
University; President
Emeritus, Williams College.
Frances T. Newton Director Since 2000 Customer Support Analyst, None
4921 Buckingham Drive Duke Power Company.
Charlotte, NC 28209
Age 62
- --------------------------------------------------------------------------------
16
VALUE LINE U.S. GOVERNMENT SECURITIES FUND, INC.
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
PRINCIPAL
OCCUPATION
LENGTH OF DURING THE OTHER DIRECTORSHIPS
NAME, ADDRESS, AND AGE POSITION TIME SERVED PAST 5 YEARS HELD BY DIRECTOR
============================================================================================================
Francis Oakley Director Since 2000 Professor of History, Berkshire Life
54 Scott Hill Road Williams College, 1961 to Insurance Company.
Williamstown, MA 01267 present. President Emeritus
Age 71 since 1994 and President,
1985-1994; Chairman
(1993-1997) and Interim
President (2002) of the
American Council of
Learned Societies.
David H. Porter Director Since 1997 Visiting Professor of None
5 Birch Run Drive Classics, Williams College,
Saratoga Springs, NY12866 since 1999; President
Age 67 Emeritus, Skidmore College
since 1999 and President,
1987-1998.
Paul Craig Roberts Director Since 1985 Chairman, Institute for A. Schulman Inc.
169 Pompano St. Political Economy. (plastics)
Panama City Beach, FL 32413
Age 64
Nancy-Beth Sheerr Director Since 1996 Senior Financial Advisor, None
1409 Beaumont Drive Hawthorne, since 2001;
Gladwyne, PA 19035 Chairman, Radcliffe College
Age 54 Board of Trustees.
1990-1999.
OFFICERS
- --------
Jeffrey D. Geffen Vice President Since 2001 Portfolio Manager with the --
Age 54 Adviser since 2001; Vice
President Investments,
Morgan Stanley Dean Witter
Advisors, 1989-2001.
Bradley T. Brooks Vice President Since 2001 Portfolio Manager with the --
Age 40 Adviser since 1999;
Securities Analyst with the
Adviser, 1997-1999.
Charles Heebner Vice President Since 2000 Senior Portfolio Manager --
Age 67 with the Adviser.
- --------------------------------------------------------------------------------
17
VALUE LINE U.S. GOVERNMENT SECURITIES FUND, INC.
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
PRINCIPAL
OCCUPATION
LENGTH OF DURING THE OTHER DIRECTORSHIPS
NAME, ADDRESS, AND AGE POSITION TIME SERVED PAST 5 YEARS HELD BY DIRECTOR
============================================================================================================
David T. Henigson Vice President, Since 1994 Director, Vice President
Age 46 Secretary and and Compliance Officer of --
Treasurer the Adviser. Director and
Vice President of the
Distributor. Vice
President, Secretary and
Treasurer of each of the
14 Value Line Funds.
* MRS. BUTTNER IS AN "INTERESTED PERSON" AS DEFINED IN THE INVESTMENT COMPANY
ACT OF 1940 BY VIRTUE OF HER POSITIONS WITH THE ADVISER AND HER INDIRECT
OWNERSHIP OF A CONTROLLING INTEREST IN THE ADVISER; MRS. RUTH IS AN INTERESTED
PERSON BY VIRTUE OF BEING A DIRECTOR OF THE ADVISER.
UNLESS OTHERWISE INDICATED, THE ADDRESS FOR EACH OF THE ABOVE IS 220 EAST 42ND
STREET, NEW YORK, NY 10017.
- --------------------------------------------------------------------------------
18
VALUE LINE U.S. GOVERNMENT SECURITIES FUND, INC.
- --------------------------------------------------------------------------------
(This page intentionally left blank.)
- --------------------------------------------------------------------------------
19
VALUE LINE U.S. GOVERNMENT SECURITIES FUND, INC.
THE VALUE LINE FAMILY OF FUNDS
- --------------------------------------------------------------------------------
1950 -- THE VALUE LINE FUND seeks long-term growth of capital. Current income is
a secondary objective.
1952 -- VALUE LINE INCOME AND GROWTH FUND'S primary investment objective is
income, as high and dependable as is consistent with reasonable risk. Capital
growth to increase total return is a secondary objective.
1956 -- THE VALUE LINE SPECIAL SITUATIONS FUND seeks long-term growth of
capital. No consideration is given to current income in the choice of
investments.
1972 -- VALUE LINE LEVERAGED GROWTH INVESTORS' sole investment objective is to
realize capital growth.
1979 -- THE VALUE LINE CASH FUND, a money market fund, seeks to secure as high a
level of current income as is consistent with maintaining liquidity and
preserving capital. An investment in the Fund is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.
Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.
1981 -- VALUE LINE U.S. GOVERNMENT SECURITIES FUND
seeks maximum income without undue risk to capital. Under normal conditions, at
least 80% of the value of its net assets will be invested in securities issued
or guaranteed by the U.S. Government and its agencies and instrumentalities.
1983 -- VALUE LINE CENTURION FUND* seeks long-term growth of capital.
1984 -- THE VALUE LINE TAX EXEMPT FUND seeks to provide investors with the
maximum income exempt from federal income taxes while avoiding undue risk to
principal. The Fund offers investors a choice of two portfolios: The Money
Market Portfolio and The National Bond Portfolio. The fund may be subject to
state and local taxes and the Alternative Minimum Tax (if applicable).
1985 -- VALUE LINE CONVERTIBLE FUND seeks high current income together with
capital appreciation primarily from convertible securities ranked 1 or 2 for
year-ahead performance by the Value Line Convertible Ranking System.
1986 -- VALUE LINE AGGRESSIVE INCOME TRUST seeks to maximize current income.
1987 -- VALUE LINE NEW YORK TAX EXEMPT TRUST seeks to provide New York taxpayers
with the maximum income exempt from New York State, New York City and federal
income taxes while avoiding undue risk to principal. The fund may be subject to
state and local taxes and the Alternative Minimum Tax (if applicable).
1987 -- VALUE LINE STRATEGIC ASSET MANAGEMENT TRUST* seeks to achieve a high
total investment return consistent with reasonable risk.
1993 -- VALUE LINE EMERGING OPPORTUNITIES FUND invests primarily in common
stocks or securities convertible into common stock, with its primary objective
being long-term growth of capital.
1993 -- VALUE LINE ASSET ALLOCATION FUND seeks high total investment return,
consistent with reasonable risk. The Fund invests in stocks, bonds and money
market instruments utilizing quantitative modeling to determine the asset mix.
* ONLY AVAILABLE THROUGH THE PURCHASE OF GUARDIAN INVESTOR, A TAX DEFERRED
VARIABLE ANNUITY, OR VALUEPLUS, A VARIABLE LIFE INSURANCE POLICY.
FOR MORE COMPLETE INFORMATION ABOUT ANY OF THE VALUE LINE FUNDS, INCLUDING
CHARGES AND EXPENSES, SEND FOR A PROSPECTUS FROM VALUE LINE SECURITIES, INC.,
220 EAST 42ND STREET, NEW YORK, NEW YORK 10017-5891 OR CALL 1-800-223-0818, 24
HOURS A DAY, 7 DAYS A WEEK, OR VISIT US AT WWW.VALUELINE.COM. READ THE
PROSPECTUS CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
- --------------------------------------------------------------------------------
20