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 811-03171
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Value Line U.S. Government Securities Fund, Inc.
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(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, 2007
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Date of reporting period: February 28, 2007
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Item I. Reports to Stockholders.
A copy of the Semi-Annual Report to Stockholders for the period ended
2/28/07 is included with this Form.
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SEMI-ANNUAL REPORT
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February 28, 2007
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Value Line
U.S. Government Securities Fund, Inc.
[LOGO]
----------
VALUE LINE
No-Load
Mutual
Funds
Value Line U.S. Government Securities Fund, Inc.
To Our Value Line U.S. Government
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To Our Shareholders:
During the six-month period ending in February 2007, interest rates declined
and bond prices rose.
Your Fund benefited from the decline in interest rates. The Fund's total return
for the period was 3.11%, outperforming the 2.91% return of the Fund's index
benchmark, the Lehman Brothers Intermediate U.S. Government Bond Index(1).
The drop in interest rates prevailed throughout the maturity spectrum. The
two-year Treasury note fell from 4.78% to 4.65% and the longer-term 10-year
Treasury note dropped from 4.73% to 4.57%. Most of this decline occurred in
February as U.S. Treasuries and other government bonds experienced a flight to
safety. Investors purchased high-quality bonds as equity markets plunged and
sub-prime residential mortgage, delinquencies rose.
The increased interest in fixed-income securities was further supported by
signs of a slower economy. Weakness in housing and business investment became
drags on economic growth. A number of economists lowered their GDP forecasts to
2%, below last year's growth rate. Inflation, which had been trending higher,
fell over the last six months lifting bond prices. The Consumer Price Index,
which registered a year-over-year reading of 3.8% in August of 2006, dropped to
2.4% in February of 2007.
Looking ahead, bond prices should continue to be supported by a period of
slower economic growth in the U.S. and the commitment of the Federal Reserve
Board to controling inflation. Since the bond yield curve remains essentially
flat, whereby short-term securities yield about the same as longer maturities,
we will selectively concentrate our purchases in the shorter two- to five-year
maturity range. Long maturity bonds carry more price risk and with no
additional yield to compensate the investor, they are a less attractive
investment compared to shorter maturities.
As always, your confidence in Value Line is appreciated and we look forward to
serving your future investment needs.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
April 2, 2007
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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.
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2
Value Line U.S. Government Securities Fund, Inc.
Securities Fund Shareholders
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Economic Observations
The economy slowed markedly during the course of 2006, with the nation's gross
domestic product growth decelerating from 5.6% in the opening quarter to 2.5% by
the final period. Spreading weakness in the housing market and stubbornly high
oil prices combined to put growth on this more restrained pace. These
depressants are still with us, meantime, suggesting that the first half of 2007
will see little aggregate change in GDP growth. What's more, we think the
economy's rate of improvement will stay in a stable 2.0%-2.5% range during the
second half of this year. Inflation, which has been under control for the past
decade, should remain so again this year, even slowing a bit as the economy
continues to proceed at a measured pace.
Meanwhile, we expect the Federal Reserve, which has held interest rates at
current levels since last June, following two years in which it had raised them
steadily, to stay on hold for several more months. Thereafter, we believe that
the combination of slow economic growth and moderating inflation could prompt
the Fed to start lowering rates. Such a downward course in borrowing costs
should help to prevent a recession later this year. In fact, the combination of
somewhat lower interest rates and a reviving housing market should then help to
lift GDP growth up close to 3% in 2008.
Gross domestic product growth along these lines and accompanying subdued
inflation should have positive ramifications for the stock and bond markets.
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3
Value Line U.S. Government Securities Fund, Inc.
Securities Fund Shareholders
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FUND EXPENSES (unaudited):
Example
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and service (12b-1) fees; and other Fund expenses. This
Example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with the ongoing costs of
investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (September 1, 2006 through February 28,
2007).
Actual Expenses
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example an $8,600
account value divided by $1,000=8.6), then multiply the result by the number in
the first line under the heading "Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore, the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if transactional
costs were included your costs would have been higher.
Expenses* paid
Beginning Ending during period
account value account value 9/1/06 thru
9/1/06 2/28/07 2/28/07
--------------- --------------- ---------------
Actual ........................................... $ 1,000.00 $ 1,031.10 $ 4.48
Hypothetical (5% return before expenses) ......... $ 1,000.00 $ 1,020.38 $ 4.46
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* Expenses are equal to the Fund's annualized expense ratio of 0.89%
multiplied by the average account value over the period, multiplied by
181/365 to reflect the one-half period. This expense ratio may differ
from the expense ratio shown in the Financial Highlights.
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4
Value Line U.S. Government Securities Fund, Inc.
Portfolio Highlights at February 28, 2007 (unaudited)
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Ten Largest Holdings
Percentage of
Principal Fund's Net
Issue Amount Value Assets
---------- ---------- -------------
Morgan Stanley & Co., Repurchase Agreement, 5.13%, 3/1/07 ......... $4,400,000 $4,400,000 4.8%
Federal Home Loan Bank, 7.45%, 2/3/20 ............................. $3,000,000 $3,734,958 4.1%
Federal Farm Credit Bank, 5.70%, 7/3/17 ........................... $3,000,000 $3,190,530 3.5%
Federal Home Loan Bank, 4.43%, 4/7/08 ............................. $3,000,000 $2,983,668 3.2%
United States Treasury Notes, 4.63%, 10/31/11 ..................... $2,000,000 $2,009,220 2.2%
Federal Home Loan Mortgage Corporation, 4.50%, 7/15/13 ............ $2,000,000 $1,965,274 2.1%
Federal Home Loan Mortgage Corporation Gold PC, 5.00%, 9/1/21 ..... $1,829,225 $1,805,519 2.0%
Federal Home Loan Mortgage Corporation, 5.50%, 8/15/07 ............ $1,737,532 $1,746,383 1.9%
Federal Home Loan Mortgage Corporation Gold PC, 6.00%, 3/1/33 ..... $1,716,363 $1,740,121 1.9%
Federal Home Loan Mortgage Corporation, 5.50%, 9/15/11 ............ $1,500,000 $1,542,588 1.7%
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Asset Allocation -- Percentage of Fund's Net Assets
[THE FOLLOWING WAS DEPICTED BY A PIE CHART IN THE PRINTED MATERIAL]
U.S.Government Agency Obligations 85.8%
U.S. Treasury Obligations 7.1%
Short-Term, Cash & Other 7.1%
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Coupon Distribution
Percentage of
Fund's
Investments
-------------
Less than 4% ............................................ 5.8%
4 - 4.99% ............................................... 33.1%
5 - 5.99% ............................................... 26.8%
6 - 6.99% ............................................... 24.0%
7 - 7.99% ............................................... 10.3%
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5
Value Line U.S. Government Securities Fund, Inc.
Schedule of Investments (unaudited)
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Principal Maturity
Amount Rate Date Value
- ------------ ---------- ---------- ------------
U.S. TREASURY OBLIGATIONS (7.1%)
$ 2,000,000 U.S. Treasury Notes .................................................. 4.63% 10/31/11 $ 2,009,220
1,000,000 U.S. Treasury Notes .................................................. 4.00 11/15/12 975,821
1,056,790 U.S. Treasury Notes(1) ............................................... 1.63 1/15/15 1,013,941
1,000,000 U.S. Treasury Notes .................................................. 8.75 5/15/17 1,333,829
1,000,000 U.S. Treasury Notes .................................................. 6.25 8/15/23 1,166,954
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6,056,790 TOTAL U.S. TREASURY OBLIGATIONS (Cost $6,464,528) .................... 6,499,765
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U.S. GOVERNMENT AGENCY OBLIGATIONS (85.8%)
FEDERAL FARM CREDIT BANK (6.7%)
1,000,000 Federal Farm Credit Bank ............................................. 6.82 3/16/09 1,038,320
1,000,000 Federal Farm Credit Bank ............................................. 4.85 10/25/12 1,001,821
1,000,000 Federal Farm Credit Bank ............................................. 5.30 6/22/15 989,331
3,000,000 Federal Farm Credit Bank ............................................. 5.70 7/3/17 3,190,530
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6,000,000 TOTAL FEDERAL FARM CREDIT BANK (Cost $6,128,012) 6,220,002
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FEDERAL HOME LOAN BANK (17.6%)
500,000 Federal Home Loan Bank ............................................... 3.50 11/15/07 494,301
1,000,000 Federal Home Loan Bank ............................................... 4.00 3/10/08 990,384
3,000,000 Federal Home Loan Bank ............................................... 4.43 4/7/08 2,983,668
1,000,000 Federal Home Loan Bank ............................................... 4.10 6/13/08 990,552
1,000,000 Federal Home Loan Bank ............................................... 5.25 11/14/08 1,006,819
1,000,000 Federal Home Loan Bank ............................................... 5.35 2/5/09 1,000,652
1,000,000 Federal Home Loan Bank ............................................... 6.21 6/2/09 1,029,466
1,000,000 Federal Home Loan Bank ............................................... 5.38 7/17/09 1,013,001
1,000,000 Federal Home Loan Bank ............................................... 4.38 3/17/10 989,936
1,000,000 Federal Home Loan Bank ............................................... 4.38 9/17/10 987,907
1,000,000 Federal Home Loan Bank ............................................... 4.88 11/18/11 1,003,363
3,000,000 Federal Home Loan Bank ............................................... 7.45 2/3/20 3,734,958
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15,500,000 TOTAL FEDERAL HOME LOAN BANK (Cost $15,938,231) 16,225,007
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FEDERAL HOME LOAN MORTGAGE CORPORATION (36.1%)
1,000,000 Federal Home Loan Mortgage Corporation ............................... 4.25 7/15/09 987,373
1,000,000 Federal Home Loan Mortgage Corporation ............................... 4.00 12/15/09 979,360
1,000,000 Federal Home Loan Mortgage Corporation ............................... 4.13 7/12/10 980,338
1,000,000 Federal Home Loan Mortgage Corporation ............................... 5.25 7/18/11 1,017,822
1,500,000 Federal Home Loan Mortgage Corporation ............................... 5.50 9/15/11 1,542,588
1,000,000 Federal Home Loan Mortgage Corporation ............................... 4.50 5/14/12 976,087
1,000,000 Federal Home Loan Mortgage Corporation ............................... 5.13 7/15/12 1,014,758
1,000,000 Federal Home Loan Mortgage Corporation ............................... 4.75 5/6/13 980,973
See Notes to Financial Statements.
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6
Value Line U.S. Government Securities Fund, Inc.
February 28, 2007
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Principal Maturity
Amount Rate Date Value
- ------------ ---------- ---------- ------------
$ 2,000,000 Federal Home Loan Mortgage Corporation ............................... 4.50% 7/15/13 $1,965,274
1,737,532 Federal Home Loan Mortgage Corporation REMIC Trust
Series 3197 Class AB ............................................... 5.50 8/15/13 1,746,383
817,934 Federal Home Loan Mortgage Corporation REMIC Trust
Series 2849 Class VA ............................................... 5.00 8/15/15 817,240
978,701 Federal Home Loan Mortgage Corporation REMIC Trust
Series R003 Class AG ............................................... 5.13 10/15/15 976,082
24,771 Federal Home Loan Mortgage Corporation Gold PC Pool #E92226 .......... 5.00 11/1/17 24,512
416,225 Federal Home Loan Mortgage Corporation Gold PC Pool #E93499 .......... 5.00 12/1/17 411,870
27,859 Federal Home Loan Mortgage Corporation Gold PC Pool #E92829 .......... 5.00 12/1/17 27,567
641,877 Federal Home Loan Mortgage Corporation REMIC Trust
Series 2892 Class DC ............................................... 4.50 12/15/17 629,028
27,895 Federal Home Loan Mortgage Corporation Gold PC Pool #E98960 .......... 5.00 9/1/18 27,595
58,502 Federal Home Loan Mortgage Corporation Gold PC Pool #B12822 .......... 5.00 3/1/19 57,874
62,607 Federal Home Loan Mortgage Corporation Gold PC Pool #B17398 .......... 4.50 12/1/19 60,735
455,494 Federal Home Loan Mortgage Corporation Gold PC Pool #G18044 .......... 4.50 3/1/20 441,401
259,641 Federal Home Loan Mortgage Corporation Gold PC Pool #B18034 .......... 4.50 4/1/20 251,607
68,607 Federal Home Loan Mortgage Corporation Gold PC Pool #J00118 .......... 5.00 10/1/20 67,718
670,771 Federal Home Loan Mortgage Corporation Gold PC Pool #J00139 .......... 5.00 10/1/20 662,079
63,969 Federal Home Loan Mortgage Corporation Gold PC Pool #G11986 .......... 5.00 4/1/21 63,120
79,537 Federal Home Loan Mortgage Corporation Gold PC Pool #G12319 .......... 5.00 6/1/21 78,507
242,909 Federal Home Loan Mortgage Corporation Gold PC Pool #J03233 .......... 5.00 8/1/21 239,686
1,829,225 Federal Home Loan Mortgage Corporation Gold PC Pool #G12381 .......... 5.00 9/1/21 1,805,519
923,599 Federal Home Loan Mortgage Corporation REMIC Trust
Series 2773 Class DA ............................................... 5.00 6/15/22 918,604
813,782 Federal Home Loan Mortgage Corporation REMIC Trust
Series 2937 Class JC ............................................... 5.00 9/15/22 811,874
675,025 Federal Home Loan Mortgage Corporation Gold PC Pool #C90684 .......... 4.50 5/1/23 645,978
917,748 Federal Home Loan Mortgage Corporation REMIC Trust
Series 3132 Class MA ............................................... 5.50 12/15/23 921,584
976,485 Federal Home Loan Mortgage Corporation REMIC Trust
Series 3147 Class YE ............................................... 5.50 7/15/24 981,851
1,000,000 Federal Home Loan Mortgage Corporation REMIC Trust
Series 2690 Class OE ............................................... 5.00 11/15/28 993,471
1,000,000 Federal Home Loan Mortgage Corporation ............................... 6.75 3/15/31 1,228,077
612,934 Federal Home Loan Mortgage Corporation REMIC Trust
Series 2645 Class NA ............................................... 3.50 9/15/31 583,529
455,945 Federal Home Loan Mortgage Corporation REMIC Trust
Series 2594 Class OR ............................................... 4.25 6/15/32 445,160
See Notes to Financial Statements.
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7
Value Line U.S. Government Securities Fund, Inc.
Schedule of Investments (unaudited)
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Principal Maturity
Amount Rate Date Value
- ------------ ---------- ---------- ------------
$ 1,716,363 Federal Home Loan Mortgage Corporation Gold PC Pool #C77717 .......... 6.00% 3/1/33 $ 1,740,121
976,163 Federal Home Loan Mortgage Corporation Gold PC Pool #A29526 .......... 5.00 1/1/35 948,517
573,876 Federal Home Loan Mortgage Corporation Gold PC Pool #A29633 .......... 5.00 1/1/35 557,624
713,763 Federal Home Loan Mortgage Corporation Pool #783022(2) ............... 4.43 2/1/35 706,950
599,334 Federal Home Loan Mortgage Corporation Gold PC Pool #A56491 .......... 5.00 1/1/37 581,830
399,471 Federal Home Loan Mortgage Corporation Gold PC Pool #G08184 .......... 5.00 1/1/37 387,804
989,498 Federal Home Loan Mortgage Corporation Gold PC Pool #A56061 .......... 5.50 1/1/37 982,236
996,369 Federal Home Loan Mortgage Corporation Gold PC Pool #A56467 .......... 5.50 1/1/37 989,057
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TOTAL FEDERAL HOME LOAN MORTGAGE
33,304,411 CORPORATION (Cost $33,269,723) 33,257,363
- ------------ -----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (23.0%)
47,481 Federal National Mortgage Association Pool #254243 ................... 6.00 2/1/09 47,966
104,028 Federal National Mortgage Association Pool #254273 ................... 5.00 3/1/09 103,950
1,000,000 Federal National Mortgage Association ................................ 4.50 2/15/11 990,983
340,075 Federal National Mortgage Association Pool #255325 ................... 4.50 7/1/11 332,756
1,000,000 Federal National Mortgage Association ................................ 5.00 4/16/15 984,041
147,163 Federal National Mortgage Association Pool #511823 ................... 5.50 5/1/16 148,015
117,025 Federal National Mortgage Association Pool #615289 ................... 5.50 12/1/16 117,702
337,290 Federal National Mortgage Association Pool #622373 ................... 5.50 12/1/16 339,242
154,516 Federal National Mortgage Association Pool #631328 ................... 5.50 2/1/17 155,310
236,953 Federal National Mortgage Association Pool #623503 ................... 6.00 2/1/17 241,037
21,853 Federal National Mortgage Association Pool #643277 ................... 5.50 4/1/17 21,965
22,516 Federal National Mortgage Association Pool #638247 ................... 5.50 5/1/17 22,632
420,827 Federal National Mortgage Association Pool #254684 ................... 5.00 3/1/18 416,407
134,060 Federal National Mortgage Association Pool #685183 ................... 5.00 3/1/18 132,652
144,691 Federal National Mortgage Association Pool #703936 ................... 5.00 5/1/18 143,171
229,164 Federal National Mortgage Association Pool #703617 ................... 5.00 7/1/18 226,757
651,457 Federal National Mortgage Association Pool #790984 ................... 5.00 7/1/19 643,983
703,629 Federal National Mortgage Association Pool #786915 ................... 5.00 8/1/19 695,556
879,027 Federal National Mortgage Association Pool #844207 ................... 5.00 11/1/20 867,957
460,048 Federal National Mortgage Association REMIC Trust
Series 2003-28 Class KA ............................................ 4.25 3/25/22 447,631
429,007 Federal National Mortgage Association REMIC Trust
Series 2003-38 Class TC ............................................ 5.00 3/25/23 424,700
213,708 Federal National Mortgage Association Pool #412682 ................... 6.00 3/1/28 217,294
65,488 Federal National Mortgage Association Pool #424691 ................... 6.50 4/1/28 67,428
189,982 Federal National Mortgage Association Pool #425239 ................... 6.50 4/1/28 195,611
See Notes to Financial Statements.
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8
Value Line U.S. Government Securities Fund, Inc.
February 28, 2007
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Principal Maturity
Amount Rate Date Value
- ------------ ---------- ---------- ------------
$ 1,000,000 Federal National Mortgage Association REMIC Trust
Series 2006-102 Class PB ........................................... 5.00% 4/25/30 $ 989,838
1,000,000 Federal National Mortgage Association ................................ 7.25 5/15/30 1,292,880
1,000,000 Federal National Mortgage Association ................................ 6.63 11/15/30 1,209,081
1,428 Federal National Mortgage Association Pool #568625 ................... 7.50 1/1/31 1,489
101,794 Federal National Mortgage Association Pool #571090 ................... 7.50 1/1/31 106,192
1,924 Federal National Mortgage Association Pool #573935 ................... 7.50 3/1/31 2,008
58,764 Federal National Mortgage Association Pool #629297 ................... 6.50 2/1/32 60,399
511,576 Federal National Mortgage Association Pool #626440 ................... 7.50 2/1/32 532,239
71,691 Federal National Mortgage Association Pool #634996 ................... 6.50 5/1/32 73,633
92,439 Federal National Mortgage Association Pool #254383 ................... 7.50 6/1/32 96,172
376,055 Federal National Mortgage Association Pool #254476 ................... 5.50 9/1/32 374,127
11,072 Federal National Mortgage Association Pool #688539 ................... 5.50 3/1/33 11,012
504,460 Federal National Mortgage Association Pool #650386 ................... 5.00 7/1/33 491,155
556,903 Federal National Mortgage Association Pool #726889 ................... 5.50 7/1/33 553,881
530,425 Federal National Mortgage Association Pool #759028 ................... 5.50 1/1/34 527,547
278,321 Federal National Mortgage Association Pool #761913 ................... 5.50 2/1/34 276,647
288,683 Federal National Mortgage Association Pool #763393 ................... 5.50 2/1/34 287,117
276,681 Federal National Mortgage Association Pool #769862 ................... 5.50 2/1/34 275,017
30,308 Federal National Mortgage Association Pool #769682 ................... 5.00 3/1/34 29,489
24,461 Federal National Mortgage Association Pool #778141 ................... 5.00 5/1/34 23,799
440,918 Federal National Mortgage Association Pool #773586 ................... 5.50 6/1/34 438,267
515,204 Federal National Mortgage Association Pool #255311 ................... 6.00 7/1/34 520,908
29,850 Federal National Mortgage Association Pool #258149 ................... 5.50 9/1/34 29,671
4,458 Federal National Mortgage Association Pool #789150 ................... 5.00 10/1/34 4,337
725,051 Federal National Mortgage Association Pool #255496 ................... 5.00 11/1/34 705,447
75,685 Federal National Mortgage Association Pool #797154 ................... 5.50 11/1/34 75,229
172,946 Federal National Mortgage Association Pool #801063 ................... 5.50 11/1/34 171,906
292,154 Federal National Mortgage Association Pool #803675 ................... 5.50 12/1/34 290,397
356,599 Federal National Mortgage Association Pool #804683 ................... 5.50 12/1/34 354,454
739,962 Federal National Mortgage Association Pool #815813(2) ................ 4.58 2/1/35 730,430
54,691 Federal National Mortgage Association Pool #255580 ................... 5.50 2/1/35 54,362
729,324 Federal National Mortgage Association Pool #735224 ................... 5.50 2/1/35 725,367
940,749 Federal National Mortgage Association Pool #896016 ................... 6.00 8/1/36 949,234
986,842 Federal National Mortgage Association Pool #901561 ................... 5.50 10/1/36 979,316
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TOTAL FEDERAL NATIONAL MORTGAGE ASSOCIATION
20,831,406 (Cost $21,166,569) 21,227,793
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See Notes to Financial Statements.
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9
Value Line U.S. Government Securities Fund, Inc.
Schedule of Investments (unaudited) February 28, 2007
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Principal Maturity
Amount Rate Date Value
- ------------ ---------- ---------- ------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (2.4%)
$ 248,694 Government National Mortgage Association Pool #003645 ................ 4.50% 12/20/19 $ 241,569
14,208 Government National Mortgage Association Pool #541349 ................ 6.00 4/15/31 14,466
25,029 Government National Mortgage Association Pool #557681 ................ 6.00 8/15/31 25,483
181,096 Government National Mortgage Association Pool #548880 ................ 6.00 12/15/31 184,379
144,493 Government National Mortgage Association Pool #551762 ................ 6.00 4/15/32 147,058
56,156 Government National Mortgage Association Pool #582415 ................ 6.00 11/15/32 57,153
324,930 Government National Mortgage Association Pool #604485 ................ 6.00 7/15/33 330,515
203,074 Government National Mortgage Association Pool #622603 ................ 6.00 11/15/33 206,565
9,977 Government National Mortgage Association Pool #429786 ................ 6.00 12/15/33 10,149
11,231 Government National Mortgage Association Pool #626480 ................ 6.00 2/15/34 11,418
441,010 Government National Mortgage Association Pool #605025 ................ 6.00 2/15/34 448,354
114,480 Government National Mortgage Association Pool #610944 ................ 5.50 4/15/34 114,465
125,600 Government National Mortgage Association Pool #605245 ................ 5.50 6/15/34 125,583
293,123 Government National Mortgage Association Pool #583008 ................ 5.50 6/15/34 293,083
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TOTAL GOVERNMENT NATIONAL MORTGAGE
2,193,101 ASSOCIATION (Cost $2,225,266) 2,210,240
- ------------ -----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
77,828,918 (Cost $78,727,801) 79,140,405
- ------------ -----------
TOTAL INVESTMENT SECURITIES (92.9%)
83,885,708 (Cost $85,192,329) 85,640,170
- ------------ -----------
REPURCHASE AGREEMENTS (6.4%)
4,400,000 With Morgan Stanley & Co., 5.13%, dated 2/28/07, due 3/1/07,
delivery value $4,400,505 (collateralized by $4,440,000 U.S.
Treasury Notes 4.375%, due 5/15/07 with a value of $4,489,406) 4,400,000
1,500,000 With State Street Bank & Trust., 4.75%, dated 2/28/07, due 3/1/07,
- ------------ delivery value $1,500,198 (collateralized by $1,525,000 U.S.
Treasury Notes 4.75% due 2/15/10, with a value of $1,535,465) 1,500,000
-----------
5,900,000 TOTAL REPURCHASE AGREEMENTS (Cost $5,900,000) 5,900,000
-----------
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES (0.7%) 653,425
-----------
NET ASSETS (100.0%) $92,193,595
===========
NET ASSET VALUE OFFERING AND REDEMPTION PRICE,
PER OUTSTANDING SHARE ($92,193,595 / 8,034,070
shares outstanding) $ 11.48
===========
(1) Treasury Inflation Protected Security (TIPS).
(2) Adjustable rate security. The rate shown is as of February 28, 2007.
See Notes to Financial Statements.
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10
Value Line U.S. Government Securities Fund, Inc.
Statement of Assets and Liabilities
at February 28, 2007 (unaudited)
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Assets:
Investment securities, at value
(Cost - $85,192,329) .................................. $ 85,640,170
Repurchase agreements
(Cost - $5,900,000) ................................... 5,900,000
Cash ..................................................... 68,300
Interest receivable ...................................... 754,879
Receivable for capital shares sold ....................... 1,626
------------
Total Assets ....................................... 92,364,975
------------
Liabilities:
Payable for capital shares repurchased ................... 16,306
Accrued expenses:
Advisory fee .......................................... 35,210
Service and distribution plan fees .................... 7,162
Directors' fees and expenses .......................... 3,627
Other ................................................. 109,075
------------
Total Liabilities .................................. 171,380
------------
Net Assets ............................................... $ 92,193,595
============
Net assets consist of:
Capital stock, at $1 par value
(authorized 100,000,000, outstanding
8,034,070 shares) ..................................... $ 8,034,070
Additional paid-in capital ............................... 86,025,631
Undistributed net investment income ...................... 588,723
Accumulated net realized loss on
investments ........................................... (2,902,670)
Net unrealized appreciation of invest-
ments ................................................. 447,841
------------
Net Assets ............................................... $ 92,193,595
============
Net Asset Value, Offering and
Redemption Price per
Outstanding Share
($92,193,595 / 8,034,070 shares
outstanding) .......................................... $ 11.48
============
Statement of Operations
Six Months Ended February 28, 2007 (unaudited)
- --------------------------------------------------------------------------------
Investment Income:
Interest income .......................................... $ 2,306,951
------------
Expenses:
Advisory fee ............................................. 233,079
Service and distribution plan fees ....................... 116,540
Transfer agent fees ...................................... 32,404
Printing and postage ..................................... 21,271
Custodian fees ........................................... 20,774
Auditing and legal fees .................................. 19,681
Registration and filing fees ............................. 11,401
Insurance ................................................ 6,283
Directors' fees and expenses ............................. 3,800
Telephone ................................................ 2,979
Other .................................................... 1,112
------------
Total Expenses Before Custody
Credits and Fees Waived ............................ 469,324
Less: Service and Distribution Plan
Fees Waived ........................................ (50,017)
Less: Custody Credits ................................. (2,257)
------------
Net Expenses .......................................... 417,050
------------
Net Investment Income .................................... 1,889,901
------------
Net Realized and Unrealized Gain/
(Loss) on Investments:
Net Realized Loss ..................................... (227,552)
Change in Net Unrealized
Appreciation/(Depreciation) ........................ 1,167,320
------------
Net Realized Loss and Change in Net
Unrealized Appreciation/
(Depreciation) on Investments ......................... 939,768
------------
Net increase in Net Assets from
Operations ............................................ $ 2,829,669
============
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
11
Value Line U.S. Government Securities Fund, Inc.
Statement of Changes in Net Assets for the
Six Months Ended February 28, 2007 (unaudited) and for the Year Ended
August 31, 2006
- --------------------------------------------------------------------------------
Six Months Ended
February 28, 2007 Year Ended
(unaudited) August 31, 2006
----------------- ---------------
Operations:
Net investment income .................................................. $ 1,889,901 $ 4,002,894
Net realized loss on investments ....................................... (227,552) (281,849)
Net change in unrealized appreciation/(depreciation) on investments .... 1,167,320 (2,502,696)
------------- -------------
Net increase in net assets from operations ............................. 2,829,669 1,218,349
------------- -------------
Distributions to Shareholders:
Net investment income .................................................. (1,977,667) (4,699,866)
------------- -------------
Capital Share Transactions:
Proceeds from sale of shares ........................................... 1,152,708 4,191,300
Proceeds from reinvestment of distributions to shareholders ............ 1,690,980 4,047,219
Cost of shares repurchased ............................................. (8,707,436) (19,691,484)
------------- -------------
Net decrease from capital share transactions ........................... (5,863,748) (11,452,965)
------------- -------------
Total Decrease in Net Assets ............................................. (5,011,746) (14,934,482)
Net Assets:
Beginning of period .................................................... 97,205,341 112,139,823
------------- -------------
End of period .......................................................... $ 92,193,595 $ 97,205,341
============= =============
Undistributed net investment income, at end of period .................... $ 588,723 $ 676,489
============= =============
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12
Value Line U.S. Government Securities Fund, Inc.
Notes to Financial Statements (unaudited) February 28, 2007
- --------------------------------------------------------------------------------
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 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's investments are carried at value. With
assistance from an independent pricing service (the "Service"), 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 by the Adviser pursuant to policies and procedures
adopted by the Board of Directors.
In September 2006, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 157, "Fair Value Measurements"
(SFAS No. 157). SFAS No. 157 defines fair value, establishes a framework for
measuring fair value in accordance with generally accepted accounting principles
and expands disclosure about fair value measurements. SFAS No. 157 is effective
for fiscal years beginning after November 15, 2007. Management is currently
evaluating the impact the adoption of SFAS No. 157 will have on the Fund's
financial statement disclosures.
(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, it is the Fund's policy to mark-to-market
the collateral 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 provision is required.
In July 2006, the Financial Accounting Standards Board issued Interpretation No.
48, "Accounting for Uncertainty in Income Taxes -- an Interpretation of FASB
Statement
- --------------------------------------------------------------------------------
13
Value Line U.S. Government Securities Fund, Inc.
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
No. 109" (the "Interpretation"). The Interpretation establishes for all
entities, including pass-through entities such as the Fund, a minimum threshold
for financial statement recognition of the benefit of positions taken in filing
tax returns (including whether an entity is taxable in a particular
jurisdiction), and requires certain expanded tax disclosures. The Interpretation
is effective for fiscal years beginning after December 15, 2006, and is to be
applied to all open tax years as of the date of effectiveness. Management has
recently begun to evaluate the application of the Interpretation to the Fund,
and is not in a position at this time to estimate the significance of its
impact, if any, on the Fund's financial statements.
(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.
The Fund may invest in Treasury Inflation-Protection Securities (TIPS). The
principal value and interest payout of TIPS are periodically adjusted according
to the rate of inflation based on the Consumer Price Index. The adjustments for
principal and income due to the inflation are reflected in interest income in
the Statement of Operations.
(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:
Six Months
Ended
February 28, 2007 Year Ended
(unaudited) August 31, 2006
-----------------------------------
Shares sold ............................ 101,291 370,712
Shares issued in
reinvestment of
dividends ........................... 148,854 357,558
Shares repurchased ..................... (763,994) (1,735,814)
-----------------------------------
Net decrease ........................... (513,849) (1,007,544)
====================================
Dividends per share
from net
investment
income .............................. $ 0.2400 $ 0.5150
-----------------------------------
Dividends and distributions to shareholders are recorded on the ex-dividend
date.
3. Purchases and Sales of Securities
Purchases and sales of investment securities, excluding short-term investments,
were as follows:
Six Months
Ended
February 28, 2007
(unaudited)
-----------------
Purchases:
U.S. Treasury Obligations ............................. $ 5,165,078
U.S. Government Agency Obligations .................... 15,048,347
------------
$ 20,213,425
============
Sales:
U.S. Treasury Obligations ............................. $ 6,838,984
U.S. Government Agency Obligations .................... 23,346,700
------------
$ 30,185,684
============
- --------------------------------------------------------------------------------
14
Value Line U.S. Government Securities Fund, Inc.
February 28, 2007
- --------------------------------------------------------------------------------
4. Income Taxes (unaudited)
At February 28, 2007, information on the tax basis of investments is as
follows:
Cost of investments for tax purposes ..................... $ 91,092,329
============
Gross tax unrealized appreciation ........................ $ 1,230,353
Gross tax unrealized depreciation ........................ (782,512)
------------
Net tax unrealized appreciation on
investments ........................................... $ 447,841
============
Undistributed ordinary income ............................ $ 588,723
============
Capital loss carryforward, expires
August 31, 2008 ....................................... $ 2,132,091
Capital loss carryforward, expires
August 31, 2012 ....................................... 11,348
Capital loss carryforward, expires
August 31, 2013 ....................................... 39,865
------------
Capital loss carryforward, at
August 31, 2006 ....................................... $ 2,183,304
============
During the year ended August 31, 2006, as permitted under federal income tax
regulations, the Fund elected to defer $491,814 of post-October net capital
losses to the next taxable year.
To the extent that current or future capital gains are offset by capital losses,
the Fund does not anticipate distributing any such gains to shareholders.
5. Investment Advisory Fees, Service and Distribution Fees and Transactions With
Affiliates
An advisory fee of $233,079 was paid or payable to Value Line, Inc., the Fund's
investment adviser ("Adviser"), for the six months ended February 28, 2007. 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 Advisor 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. Direct
expenses of the Fund are charged to the Fund while common expenses of the Value
Line Funds, are allocated proportionately based upon the Funds' respective net
assets. 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 $116,540 were accrued under
this Plan for the six months ended February 28, 2007. Effective March 7, 2006,
the Distributor voluntarily waived a portion of the Fund's fee under the Plan
equal to 0.10% of the Fund's average daily net assets. Effective February 20,
2007, the Distributor voluntarily increased the waiver to 0.25% of the Fund's
average daily net assets. The fee waiver amounted to $50,017 for the six months
ended February 28, 2007. The Distributor has no right to recoup previously
waived amounts.
For the six months ended February 28, 2007 the Fund's expenses were reduced by
$2,257 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.
At February 28, 2007, certain officers and directors of the Fund owned 643
shares, representing less than 1% of the outstanding shares.
- --------------------------------------------------------------------------------
15
Value Line U.S. Government Securities Fund, Inc.
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each period:
Six Months Ended Years Ended August 31,
February 28, 2007 ------------------------------------------------------------------------------
(unaudited) 2006 2005 2004 2003 2002
--------------------------------------------------------------------------------------------------
Net Asset Value, beginning
of period ................... $ 11.37 $ 11.74 $ 11.87 $ 11.84 $ 12.00 $ 11.51
--------------------------------------------------------------------------------------------------
Income (loss) from
Investment Operations:
Net investment income ........ 0.23 0.47 0.52 0.41 0.44 0.50
Net gains or (losses) on
securities (both realized
and unrealized) ............. 0.12 (0.32) (0.19) 0.03 (0.15) 0.49
--------------------------------------------------------------------------------------------------
Total income from
investment operations ....... 0.35 0.15 0.33 0.44 0.29 0.99
--------------------------------------------------------------------------------------------------
Less dividends and
distributions:
Dividends from net
investment income ........... (0.24) (0.52) (0.46) (0.41) (0.45) (0.50)
--------------------------------------------------------------------------------------------------
Net Asset Value, end of
period ...................... $ 11.48 $ 11.37 $ 11.74 $ 11.87 $ 11.84 $ 12.00
==================================================================================================
Total return ................. 3.11%(3) 1.33% 2.86% 3.79% 2.35% 8.84%
==================================================================================================
Net assets, end of period
(in thousands) .............. $ 92,194 $ 97,205 $ 112,140 $ 121,444 $ 144,264 $ 155,659
Ratio of operating expenses
to average net assets(1) .... 1.01%(2)(4) 1.05%(2) 1.04% 0.98% 0.96% 0.92%
Ratio of net investment
income to average net
assets ...................... 4.05%(4) 3.88% 3.60% 3.40% 3.57% 4.17%
Portfolio turnover rate ...... 23%(3) 22% 60% 35% 65% 168%
(1) Ratio reflects expenses grossed up for custody credit arrangement. The
ratio of expenses to average net assets, net of custody credits would
have been 1.00% (annualized) for the six months ended February 28, 2007,
1.04% for the year ended August 31, 2006 and would not have changed for
the years ended August 31, 2005, August 31, 2004, August 31, 2003 and
August 31, 2002.
(2) Ratio reflects expenses grossed up for the voluntary waiver of a portion
of the service and distribution plan fees by the Distributor. The ratio
of expenses to average net assets of the voluntary fee waiver, but
exclusive of the custody credit arrangement, would have been 0.90%
(annualized) for the six months ended February 28, 2007 and 1.00% as of
August 31, 2006.
(3) Not annualized.
(4) Annualized.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
16
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. Each Director serves
until his or her successor is elected and qualified.
Other
Length of Principal Occupation Directorships
Name, Address, and Age Position Time Served During the Past 5 Years Held by Director
- ---------------------------------------------------------------------------------------------------------------------------
Interested Director*
- --------------------
Jean Bernhard Buttner Chairman of the Since 1983 Chairman, President and Chief Value Line, Inc.
Age 72 Board of Directors Executive Officer of Value Line,
and President 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").
- ---------------------------------------------------------------------------------------------------------------------------
Non-Interested Directors
- ------------------------
John W. Chandler Director Since 1991 Consultant, Academic Search None
116 North Hemlock Lane Consultation Service, Inc.;
Williamstown, MA 01267 Trustee Emeritus and Chairman
Age 83 (1993-1994) of the Board of
Trustees of Duke University;
President Emeritus, Williams
College.
- ---------------------------------------------------------------------------------------------------------------------------
Frances T. Newton Director Since 2000 Customer Support Analyst, Duke None
4921 Buckingham Drive Power Company.
Charlotte, NC 28209
Age 65
- ---------------------------------------------------------------------------------------------------------------------------
Francis C. Oakley Director Since 2000 Professor of History, None
54 Scott Hill Road Williams College, 1961 to
Williamstown, MA 01267 present. Professor Emeritus since
Age 75 2002. President Emeritus since
1994 and President, 1985-1994;
Chairman (1993-1997) and
Interim President (2002-2003) of
the American Council of Learned
Societies. Trustee since 1997 and
Chairman of the Board since
2005, National Humanities Center.
- ---------------------------------------------------------------------------------------------------------------------------
David H. Porter Director Since 1997 Visiting Professor of Classics, None
5 Birch Run Drive Williams College, since 1999;
Saratoga Springs, NY 12866 President Emeritus, Skidmore
Age 71 College since 1999 and President,
1987-1998.
- ---------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
17
Value Line U.S. Government Securities Fund, Inc.
Management of the Fund
- --------------------------------------------------------------------------------
Other
Length of Principal Occupation Directorships
Name, Address, and Age Position Time Served During the Past 5 Years Held by Director
- ---------------------------------------------------------------------------------------------------------------------------
Paul Craig Roberts Director Since 1983 Chairman, Institute for None
169 Pompano St. Political Economy.
Panama City Beach, FL 32413
Age 68
- ---------------------------------------------------------------------------------------------------------------------------
Nancy-Beth Sheerr Director Since 1996 Senior Financial Advisor, None
1409 Beaumont Drive Veritable L.P. (Investment
Gladwyne, PA 19035 Adviser) since 2004; Senior
Age 58 Financial Advisor, Hawthorn,
2001-2004.
- ---------------------------------------------------------------------------------------------------------------------------
Officers
- --------
David T. Henigson Vice President, Since 1994 Director, Vice President and
Age 49 Secretary and Chief Compliance Officer of the
Compliance Officer Adviser. Director and Vice
President of the Distributor. Vice
President, Secretary and Chief
Compliance Officer of each of the
14 Value Line Funds.
- ---------------------------------------------------------------------------------------------------------------------------
Stephen R. Anastasio Treasurer Since 2005 Controller of the Adviser until
Age 47 2003; Chief Financial Officer of
the Adviser, 2003-2005; Treasurer
of the Adviser since 2005;
Treasurer of each of the 14 Value
Line Funds.
- ---------------------------------------------------------------------------------------------------------------------------
Howard A. Brecher Assistant Treasurer/ Since 2005 Director, Vice President and
Age 53 Assistant Secretary Secretary of the Adviser. Director
and Vice President of the
Distributor.
- ---------------------------------------------------------------------------------------------------------------------------
* 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.
Unless otherwise indicated, the address for each of the above is 220 East 42nd
Street, New York, NY 10017.
- --------------------------------------------------------------------------------
The Fund's Statement of Additional Information (SAI) includes additional
information about the Fund's directors and is available, without charge, upon
request by calling 1-800-243-2729.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
18
Value Line U.S. Government Securities Fund, Inc.
- --------------------------------------------------------------------------------
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available on the SEC's website at
http://www.sec.gov and may be reviewed and copied at the SEC's Public Reference
Room in Washington, D.C. Information on the operation of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
A description of the policies and procedures that the Fund uses to determine
how to vote proxies relating to portfolio securities, and information regarding
how the Fund voted these proxies during the most recent 12-month period ended
June 30 is available through the Fund's website at http://www.vlfunds.com and
on the SEC's website at http://www.sec.gov. The description of the policies and
procedures is also available without charge, upon request, by calling
1-800-243-2729.
- --------------------------------------------------------------------------------
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 -- Value Line Premier Growth Fund seeks long-term growth of capital. No
consideration is given to current income in the choice of investments.
1972 -- Value Line Larger Companies Fund's 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 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 Trust 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 1-800-243-2729,
9am - 5pm CST, Monday - Friday, or visit us at www.valueline.com. Read the
prospectus carefully before you invest or send money.
- --------------------------------------------------------------------------------
20
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 BFDS
P.O. Box 219729
Kansas City, MO 64121-9729
INDEPENDENT PricewaterhouseCoopers LLP
REGISTERED PUBLIC 300 Madison Avenue
ACCOUNTING FIRM New York, NY 10017
LEGAL COUNSEL Peter D. Lowenstein, Esq.
P.O. Box 272
Cos Cob, CT 06807-0272
DIRECTORS Jean Bernhard Buttner
John W. Chandler
Frances T. Newton
Francis C. Oakley
David H. Porter
Paul Craig Roberts
Nancy-Beth Sheerr
OFFICERS Jean Bernhard Buttner
Chairman and President
David T. Henigson
Vice President, Secretary/
Chief Compliance Officer
Stephen R. Anastasio
Treasurer
Howard A. Brecher
Assistant Secretary/
Assistant Treasurer
This unaudited 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).
#539719
Item 11. Controls and Procedures.
(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 12. Exhibits.
(a) (1) Certification pursuant to Rule 30a-2(a) 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: May 3, 2007
-----------
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/ Stephen R. Anastasio
------------------------------------------------------------
Stephen R. Anastasio, Treasurer, Principal Financial Officer
Date: May 3, 2007
-----------