================================================================================
---------------------------------------------------
ANNUAL REPORT
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August 31, 2000
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Value Line
U.S. Government
Securities
Fund, Inc.
[LOGO]
VALUE LINE
No-Load
Mutual
Funds
================================================================================
<PAGE>
Value Line U.S. Government Securities Fund, Inc.
To Our Value Line
--------------------------------------------------------------------------------
To Our Shareholders
Your Fund returned 6.53% for the fiscal year ended August 31, 2000, which
compares favorably to the 6.19% return of the unmanaged Lehman Brothers
Intermediate U.S. Government Bond Index, a proxy for the Fund's government
investment strategy.
This fiscal year was characterized by strong economic growth, low unemployment,
and a strong stock market. The Federal Reserve raised interest rates several
times in its effort to cool economic growth and keep the rate of inflation low.
The Fed normally is concerned that strong economic growth, while good for
corporate earnings, will lead to higher wages and, consequently, to an
accelerating rate of inflation.
In this hostile interest-rate environment, 30-year Treasury bond yields rose
from 6% in September to nearly 7% in January. But rates fell as the bond market
anticipated that the restrictive policy of the Fed (to raise short-term
interest) would slow economic growth. Coupled with a U.S. Treasury debt pay down
and buyback program, interest rates on the 30-year bond reversed course and fell
to a low of 5.66% in April, only to bounce back over to 6% on perceptions of
economic strength in May. By June, evidence became clear that economic growth
was slowing as the Fed had been expecting and rates on the 30-year bond fell
back to the 5.75% area for a time.
Your Fund benefited from the improving bond market in the second half of the
fiscal year. The Fund enjoyed modest price gains that augmented interest income
and produced solid total returns resulting from an emphasis on intermediate bond
maturities and U.S. Agency securities with higher yields.
Your Fund's long-term strategy is to generate high income consistent with safety
of principal by investing primarily in U.S. Government securities, representing
the highest level of safety. Additionally, we control risk by limiting the
portfolio's average maturity to 10 years, and by maintaining a well-diversified
portfolio. These measures, we believe, will protect the Fund from dramatic
swings in value caused by gyrating interest rates and produce more stable and
consistent performance.
We continue to emphasize intermediate-term maturity structure in our bond
selection to provide a competitive performance going forward. We appreciate your
continued support.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
September 28, 2000
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2
<PAGE>
Value Line U.S. Government Securities Fund, Inc.
U.S. Government Securities Fund Shareholders
--------------------------------------------------------------------------------
Economic Observations
The U.S. economy is now clearly proceeding along a slower growth track as we
move through the final months of the year. Evidence of this deceleration in
business activity can be found in the most recent figures on manufacturing,
retail spending, and employment. Overall, we estimate that GDP growth will
average 3.0%, or so, over the balance of the year. Thereafter, we would expect
the pace of economic activity to hold at these comparatively restrained levels
through 2001, as the succession of interest-rate hikes voted for by the Federal
Reserve Board over the past year and a half continues to have the hoped-for
effect of stabilizing the economy at comfortably lower growth levels.
Inflationary pressures, meanwhile, continue to be held in check for the most
part, with sustained increases in productivity and ongoing technological
innovations being at least partially responsible for this comparative pricing
stability. Nevertheless, a moderate increase in cost pressures could still
evolve over the next few quarters, particularly if energy prices continue their
uncontrolled ascent for several months and the aforementioned moderation in
economic growth fails to continue into 2001, two events that we do not currently
expect to take place.
Meanwhile, the Federal Reserve, taking note of the current slower pace of
business activity and the comparatively muted inflation figures, is likely to
maintain a relatively stable monetary stance over the next several quarters.
Indeed, should oil prices reverse course and move back down to the
$25-$30-a-barrel level, as seems logical given the expected moderation in
underlying demand, it is conceivable that the central bank's next move could be
to lower interest rates sometime next year.
Performance Data:*
Growth of
an Assumed Average
Investment of Annual
$10,000 Total Return
--------------------------------
1 year ended 6/30/00.............. $10,360 3.60%
5 years ended 6/30/00............. $13,001 5.39%
10 years ended 6/30/00............. $18,422 6.30%
* The average annual total returns for the one, five and ten year periods
ended August 31, 2000, were 6.53%, 5.67% and 6.44%, respectively. 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.
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3
<PAGE>
Value Line U.S. Government Securities Fund, Inc.
--------------------------------------------------------------------------------
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*
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIALS.]
Value Line U.S. Lehman Brothers
Government Securities Lehman Brothers Intermediate U.S.
Fund, Inc. Aggregate Bond Index Government Bond Index
9/90 $10,000.00 $10,000.00 $10,000.00
11/90 10,388.19 10,431.00 10,384.00
2/91 10,774.08 10,816.00 10,700.00
5/91 11,017.49 11,072.00 10,932.00
8/91 11,396.11 11,463.00 11,269.00
11/91 11,842.92 11,934.00 11,728.00
2/92 12,114.31 12,200.00 11,935.00
5/92 12,329.75 12,449.00 12,173.00
8/92 12,890.49 13,009.00 12,714.00
11/92 12,848.50 12,991.00 12,682.00
2/93 13,451.89 13,686.00 13,277.00
5/93 13,691.43 13,857.00 13,394.00
8/93 14,318.01 14,436.00 13,818.00
11/93 14,284.98 14,406.00 13,838.00
2/94 14,305.98 14,425.00 13,840.00
5/94 13,140.54 13,955.00 13,559.00
8/94 13,191.34 14,218.00 13,780.00
11/94 12,755.35 13,966.00 13,608.00
2/95 13,284.35 14,681.00 14,142.00
5/95 13,950.68 15,557.00 14,791.00
8/95 14,163.19 15,825.00 15,015.00
11/95 14,531.12 16,429.00 15,467.00
2/96 14,593.87 16,479.00 15,585.00
5/96 14,436.35 16,239.00 15,461.00
8/96 14,597.09 16,475.00 15,684.00
11/96 15,399.76 17,427.00 16,342.00
2/97 15,332.43 17,361.00 16,343.00
5/97 15,468.19 17,590.00 16,562.00
8/97 15,911.46 18,123.00 16,946.00
11/97 16,537.07 18,743.00 17,368.00
2/98 16,803.32 19,160.00 17,719.00
5/98 17,043.72 19,510.00 17,982.00
8/98 17,548.07 20,038.00 18,517.00
11/98 17,854.21 20,514.00 18,922.00
2/99 17,680.71 20,361.00 18,819.00
5/99 17,694.37 20,360.00 18,879.00
8/99 17,518.76 20,198.00 18,935.00
11/99 17,794.49 20,506.00 19,148.00
2/00 17,761.17 20,586.00 19,181.00
5/00 17,843.30 20,788.00 19,444.00
8/00 18,662.51 21,724.00 20,107.00
From 9/1/90 to 8/31/00.
* 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
<PAGE>
Value Line U.S. Government Securities Fund, Inc.
Schedule of Investments August 31, 2000
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<TABLE>
<CAPTION>
Principal Maturity
Amount Rate Date Value
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. TREASURY OBLIGATIONS (11.1%)
$ 15,756,150 U.S. Treasury Inflation Indexed Notes......................... 3.88% 1/15/09 $ 15,578,893
------------
15,756,150 TOTAL U.S. TREASURY OBLIGATIONS (Cost $15,563,579)........... 15,578,893
------------
U.S. GOVERNMENT AGENCY OBLIGATIONS (85.3%)
FEDERAL NATIONAL MORTGAGE ASSOCIATION (60.9%)
7,590,322 Federal National Mortgage Association Pool #313031............ 6.83 7/01/03 7,516,790
10,000,000 Federal National Mortgage Association......................... 5.75 6/15/05 9,587,670
8,354,361 Federal National Mortgage Association Pool #313032............ 7.04 7/01/06 8,338,696
5,000,000 Federal National Mortgage Association......................... 7.13 3/15/07 5,085,205
10,214,533 Federal National Mortgage Association Pool #375667............ 6.02 2/01/08 9,630,390
10,000,000 Federal National Mortgage Association Pool #380188............ 6.45 4/01/08 9,618,750
10,000,000 Federal National Mortgage Association......................... 6.63 9/15/09 9,837,520
10,000,000 Federal National Mortgage Association......................... 7.25 1/15/10 10,277,230
8,329,203 Federal National Mortgage Association Pool #412682............ 6.00 3/01/28 7,809,714
4,105,812 Federal National Mortgage Association Pool #424691............ 6.50 4/01/28 3,942,058
4,011,786 Federal National Mortgage Association Pool #425239............ 6.50 4/01/28 3,854,068
------------
87,606,017 TOTAL FEDERAL NATIONAL MORTGAGE ASSOCIATION
(Cost $87,551,918) ......................................... 85,498,091
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (13.4%)
10,000,000 Federal Home Loan Mortgage Corporation........................ 5.00 1/15/04 9,474,210
5,000,000 Federal Home Loan Mortgage Corporation........................ 6.25 7/15/04 4,909,175
5,000,000 Federal Home Loan Mortgage Corporation........................ 5.13 10/15/08 4,441,555
------------
20,000,000 TOTAL FEDERAL HOME LOAN MORTGAGE CORPORATION
(Cost $19,484,737) ......................................... 18,824,940
------------
PRIVATE EXPORT FUNDING
CORPORATION SECURITIES (11.0%)
5,000,000 Private Export Funding Corporation Series "J"................. 7.65 5/15/06 5,198,485
10,000,000 Private Export Funding Corporation Series "I"................. 7.20 1/15/10 10,200,280
------------
15,000,000 TOTAL PRIVATE EXPORT FUNDING CORPORATION
SECURITIES (Cost $15,047,800) .............................. 15,398,765
------------
122,606,017 TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $122,084,455) ........................................ 119,721,796
------------
138,362,167 TOTAL INVESTMENT SECURITIES (96.4%)
(Cost $137,648,034) ........................................ 135,300,689
------------
</TABLE>
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5
<PAGE>
Value Line U.S. Government Securities Fund, Inc.
Schedule of Investments August 31, 2000
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<TABLE>
<CAPTION>
Principal
Amount Value
-------------------------------------------------------------------------------------------------------------
<S> <C>
REPURCHASE AGREEMENT (2.5%) (including accrued interest)
$ 3,500,000 Collateralized by $3,450,000 U.S. Treasury Notes 7.50% due 11/15/01,
with a value of $3,571,219 (with Morgan Stanley Dean Witter & Co.
6.55%, dated 8/31/00, due 9/1/00, delivery value $3,500,637) $ 3,500,637
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES (1.1%)......................... 1,606,428
------------
NET ASSETS (100.0%) .......................................................... $140,407,754
------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER OUTSTANDING SHARE ($140,407,754 / 12,912,480
shares of capital stock outstanding) ....................................... $ 10.87
------------
</TABLE>
See Notes to Financial Statements.
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6
<PAGE>
Value Line U.S. Government Securities Fund, Inc.
Statement of Assets and Liabilities
at August 31, 2000
--------------------------------------------------------------------------------
Assets:
Investment securities at value
(Cost-- $137,648,034) ....................................... $ 135,300,689
Repurchase agreement
(Cost-- $3,500,637) ......................................... 3,500,637
Cash .......................................................... 77,941
Interest receivable ........................................... 1,661,926
Receivable for capital shares sold ............................ 167,550
-------------
Total Assets .............................................. 140,708,743
-------------
Liabilities:
Payable for capital shares repurchased ........................ 87,558
Accrued expenses:
Advisory fee ................................................ 59,347
Service and distribution plan fee ........................... 29,673
Other ....................................................... 124,411
-------------
Total Liabilities ......................................... 300,989
-------------
Net Assets .................................................... $ 140,407,754
-------------
Net Assets consist of:
Capital stock, at $1 par value
(authorized 100,000,000,
outstanding 12,912,480 shares) .............................. $ 12,912,480
Additional paid-in capital .................................... 180,334,657
Undistributed net investment income ........................... 1,628,982
Accumulated net realized loss
on investments .............................................. (52,121,020)
Net unrealized depreciation
of investments .............................................. (2,347,345)
-------------
Net Assets .................................................... $ 140,407,754
-------------
Net Asset Value, Offering and
Redemption Price per
Outstanding Share
($140,407,754 / 12,912,480
shares outstanding) ......................................... $ 10.87
-------------
Statement of Operations
for the year ended August 31, 2000
Investment Income:
Interest income ............................................... $ 10,024,528
------------
Expenses:
Advisory fee .................................................. 762,198
Transfer agent fees ........................................... 90,766
Service and distribution plan fees ............................ 59,122
Telephone, insurance, dues and other .......................... 49,222
Auditing and legal fees ....................................... 36,648
Printing ...................................................... 35,225
Custodian fees ................................................ 25,680
Postage ....................................................... 25,137
Registration and filing fees .................................. 22,622
Directors' fees and expenses .................................. 14,951
------------
Total Expenses Before
Custody Credits ......................................... 1,121,571
Less: Custody Credits ..................................... (3,563)
------------
Net Expenses .............................................. 1,118,008
------------
Net Investment Income ......................................... 8,906,520
------------
Net Realized and Unrealized Gain
(Loss) on Investments:
Net Realized Loss ........................................... (2,843,907)
Change in Net Unrealized
(Depreciation) Appreciation ............................... 3,336,412
------------
Net Realized Loss and Change in
Net Unrealized (Depreciation)
Appreciation on Investments ................................. 492,505
------------
Net Increase in Net Assets
from Operations ............................................. $ 9,399,025
------------
See Notes to Financial Statements.
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7
<PAGE>
Value Line U.S. Government Securities Fund, Inc.
Statement of Changes in Net Assets
for the years ended August 31, 2000 and 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
August 31, August 31,
2000 1999
-----------------------------
<S> <C> <C>
Operations:
Net investment income ............................................ $ 8,906,520 $ 9,659,103
Net realized loss on investments ................................. (2,843,907) (232,408)
Change in net unrealized appreciation (depreciation) ............. 3,336,412 (9,439,773)
-----------------------------
Net increase (decrease) in net assets from operations............. 9,399,025 (13,078)
-----------------------------
Dividends to Shareholders:
Net investment income ............................................ (8,917,356) (9,846,476)
-----------------------------
Capital Share Transactions:
Proceeds from sale of shares ..................................... 13,933,468 22,704,158
Proceeds from reinvestment of distributions to shareholders....... 7,227,428 8,073,713
Cost of shares repurchased ....................................... (48,465,333) (38,981,549)
-----------------------------
Net decrease from capital share transactions...................... (27,304,437) (8,203,678)
-----------------------------
Total Decrease in Net Assets ....................................... (26,822,768) (18,063,232)
Net Assets:
Beginning of year ................................................ 167,230,522 185,293,754
-----------------------------
End of year ...................................................... $140,407,754 $167,230,522
-----------------------------
Undistributed net investment income, at end of year ................ $ 1,628,982 $ 1,639,818
=============================
</TABLE>
See Notes to Financial Statements.
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8
<PAGE>
Value Line U.S. Government Securities Fund, Inc.
Notes to Financial Statements August 31, 2000
--------------------------------------------------------------------------------
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. Where market quotations are readily available, portfolio
securities are valued at the midpoint between the latest available and
representative asked and bid prices, or when stock exchange valuations are used,
at the latest quoted sale price as of the close of business of the New York
Stock Exchange on the valuation date. The Fund values mortgage-backed securities
other than GNMA's (Government National Mortgage Association) 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 GNMA's, U.S. Treasury
and U.S. Government Agency notes and debentures are determined on the valuation
date by reference to valuations obtained from an independent pricing service
which determines valuations for normal institutional-size trading units of debt
securities, without exclusive reliance upon quoted prices. This 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, 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.
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9
<PAGE>
Value Line U.S. Government Securities Fund, Inc.
Notes to 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 and interest income is accrued as earned. In computing net investment
income, the Fund amortizes premiums and discounts on securities owned. The Fund
purchases stripped mortgage-backed securities at premiums and discounts. The
Fund amortizes such premiums on interest-only securities using the
yield-to-maturity method. Cash is received based on the stated coupon rate and
interest income is earned based on the security's effective yield-to-maturity.
When the Fund purchases principal-only securities, although no interest payments
are received, the discounts are accrued using the yield-to-maturity method based
on the effective yield-to-maturity of the security.
2. Capital Share Transactions and Dividends to Shareholders
Transactions in capital stock were as follows:
Year Year
Ended Ended
August 31, August 31,
2000 1999
-------------------------
Shares sold ...................................... 1,299,064 2,015,642
Shares issued to shareholders in
reinvestment of dividends ...................... 677,261 720,630
-------------------------
1,976,325 2,736,272
Shares repurchased ............................... (4,531,756) (3,467,790)
-------------------------
Net decrease ..................................... (2,555,431) (731,518)
=========================
Dividends per share .............................. $ .62 $ .62
=========================
Dividends and distributions to shareholders are recorded on the ex-dividend
date.
On September 21, 2000 the Fund's Board of Directors declared a quarterly
dividend from net investment income of $.155 per share payable on September 26,
2000 to shareholders of record on September 22, 2000.
3. Purchases and Sales of Securities
Purchases and sales of investment securities, excluding short-term investments,
were as follows:
Year Ended
August 31, 2000
---------------
PURCHASES:
U.S. Treasury Obligations ................................. $ 5,543,488
U.S. Government Agency
Obligations and Other
Investment Securities ................................... 66,404,910
-----------
$71,948,398
-----------
SALES AND REDEMPTIONS:
U.S. Treasury Obligations ................................. $ 8,775,781
U.S. Government Agency
Obligations and Other
Investment Securities ................................... 89,783,434
===========
$98,559,215
===========
At August 31, 2000, the aggregate cost of investment securities and repurchase
agreement for federal income tax purposes was $141,148,671. The aggregate
appreciation and depreciation of investments at August 31, 2000, based on a
comparison of investment values and their costs for federal income tax purposes,
was $691,753 and $3,039,098 respectively, resulting in a net depreciation of
$2,347,345.
For federal income tax purposes, the Fund had a net capital loss carryover at
August 31, 2000 of approximately $49,865,984 of which approximately $35,928,048
will expire in 2003, $8,976,510 will expire in 2004, $2,829,335 will expire in
2005 and $2,132,091 will expire in 2008.
During the year ended August 31, 2000, as permitted under federal income tax
regulations, the Fund has elected to defer $2,255,036 of post-October net
capital losses to the next taxable year.
--------------------------------------------------------------------------------
10
<PAGE>
Value Line U.S. Government Securities Fund, Inc.
August 31, 2000
--------------------------------------------------------------------------------
4. Investment Advisory Contract, Management Fees and Transactions With
Affiliates
An advisory fee of $762,198 was paid or payable to Value Line, Inc., the Fund's
investment adviser ("Adviser"), for the year ended August 31, 2000. This was
computed at the annual rate of 1/2 of 1% of the Fund's average daily net assets
during the period 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.
At a special meeting of shareholders held on June 15, 2000, the shareholders
approved the adoption of a Service and Distribution Plan (the "Plan") effective
July 1, 2000. The Plan, adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940, provides for the payment of certain expenses incurred by
Value Line Securities, Inc. (the "Distributor"), a wholly-owned subsidiary of
the Adviser, in advertising, marketing and distributing the Fund's shares and
for servicing the Fund's shareholders at an annual rate of 0.25% of the Fund's
average daily net assets. Fees amounting to $59,122 were paid or payable to the
Distributor under this Plan for the period from July 1 to August 31, 2000.
Certain officers and directors of the Adviser and the Distributor are also
officers and a director of the Fund.
The Adviser and/or affiliated companies and the Value Line, Inc. Profit Sharing
and Savings Plan at August 31, 2000 owned 166,907 shares of the Fund's capital
stock, representing 1.30% of the outstanding shares. In addition, officers and
directors owned 815 shares of capital stock, representing less than 1% of the
outstanding shares.
--------------------------------------------------------------------------------
11
<PAGE>
Value Line U.S. Government Securities Fund, Inc.
Financial Highlights
--------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Years Ended August 31,
---------------------------------------------------------
2000 1999 1998 1997 1996
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ......... $ 10.81 $ 11.44 $ 11.04 $ 10.85 $ 11.28
---------------------------------------------------------
Income (loss) from investment operations:
Net investment income .................. .64 .61 .69 .74 .77
Net gains or losses on securities
(both realized and unrealized)........ .04 (.62) .41 .21 (.43)
---------------------------------------------------------
Total income (loss) from ...............
investment operations................. .68 (.01) 1.10 .95 .34
---------------------------------------------------------
Less distributions:
Dividends from net investment income.... (.62) (.62) (.70) (.76) (.77)
Distributions from capital gains........ -- -- -- -- --
---------------------------------------------------------
Total distributions ................... (.62) (.62) (.70) (.76) (.77)
---------------------------------------------------------
Net asset value, end of year ............... $ 10.87 $ 10.81 $ 11.44 $ 11.04 $ 10.85
---------------------------------------------------------
Total return .............................. 6.53% (0.17%) 10.28% 9.01% 3.06%
---------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of year (in thousands)...... $140,408 $167,231 $185,294 $185,004 $214,889
Ratio of operating expenses to
average net assets........................ .73%(2) .67%(2) .66%(1) .65%(1) .65%(1)
Ratio of net investment income to
average net assets........................ 5.82% 5.40% 6.07% 6.52% 6.74%
Portfolio turnover rate ................... 49% 125% 159% 255% 158%
</TABLE>
(1) Before offset of custody credits.
(2) Ratios reflect expenses grossed up for custody credit arrangement. The
ratios of expenses to average net assets net of custody credits would have
been .73% for the year ended August 31, 2000 and .66% for the year ended
August 31, 1999.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
12
<PAGE>
Value Line U.S. Government Securities Fund, Inc.
Report of Independent Accountants
--------------------------------------------------------------------------------
To the Board of Directors and Shareholders 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 Fund,
Inc. (the "Fund") at August 31, 2000, 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 Unites 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, 2000 by correspondence with the custodian, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
October 9th, 2000
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Value Line U.S. Government Securities Fund, Inc.
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Value Line U.S. Government Securities Fund, Inc.
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Value Line U.S. Government Securities Fund, Inc.
The Value Line Family of Funds
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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 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.
1995 -- Value Line U.S. Multinational Company Fund's investment objective is
maximum total return. It invests primarily in securities of U.S. companies that
have significant sales from international operations.
* Only available through the purchase of Guardian Investor, a tax deferred
variable annuity, or ValuePlus, a variable life insurance policy.
For more complete information about any of the Value Line Funds, including
charges and expenses, send for a prospectus from Value Line Securities, Inc.,
220 East 42nd Street, New York, New York 10017-5891 or call 1-800-223-0818, 24
hours a day, 7 days a week, or visit us at www.valueline.com. Read the
prospectus carefully before you invest or send money.
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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
ACCOUNTANTS 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
Bruce H. Alston
Vice President
Charles Heebner
Vice President
David T. Henigson
Vice President,
Secretary/Treasurer
Joseph Van Dyke
Secretary/Treasurer
Stephen La Rosa
Assistant Secretary/Treasurer
This report is issued for information of shareholders. It is not authorized for
distribution to prospective investors unless preceded or accompanied by a
currently effective prospectus of the Fund (obtainable from the Distributor).
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