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 811-4471
--------
Value Line Aggressive Income Trust
- ------------------------------------------------
(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: January 31, 2004
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Date of reporting period: July 31, 2003
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Item I. Reports to Stockholders.
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A copy of the Semi-Annual Report to Stockholders for the period ended
is included with this Form.
Item 2. Code of Ethics
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Not applicable.
Item 3. Audit Committee Financial Expert.
- ------- ---------------------------------
Not applicable.
Item 9. Controls and Procedures.
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(a) The registrant's principal executive officer and principal
financial officer have concluded that the registrant's
disclosure controls and procedures (as defined in rule
30a-2(c) under the Act (17 CFR 270.30a-2(c) ) based on their
evaluation of these controls and procedures as of a date
within 90 days of the filing date of this report, are
appropriately designed to ensure that material information
relating to the registrant is made known to such officers and
are operating effectively.
(b) The registrant's principal executive officer and principal
financial officer have determined that there have been no
significant changes in the registrant's internal controls or
in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including
corrective actions with regard to significant deficiencies and
material weaknesses.
Item 10. Exhibits.
- -------- ---------
(a) Not applicable.
(b) (1) Certification pursuant to Rule 30a-2 under the Investment
Company Act of 1940 (17 CFR 270.30a-2) attached hereto as
Exhibit 99.CERT.
(2) Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 attached hereto as
Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
By /s/ Jean B. Buttner
----------------------------
Jean B. Buttner, President
Date: September 19, 2003
----------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ Jean B. Buttner
----------------------------
Jean B. Buttner, President, Principal Executive Officer
By /s/ David T. Henigson
----------------------------
David T. Henigson, Vice President, Treasurer, Principal Financial Officer
Date: September 19, 2003
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SEMI-ANNUAL REPORT
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JULY 31, 2003
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VALUE LINE
AGGRESSIVE
INCOME TRUST
[VALUE LINE LOGO]
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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
TRUSTEES 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
Bradley T. Brooks
Vice President
David T. Henigson
Vice President and
Secretary/Treasurer
Joseph Van Dyke
Assistant Secretary/Treasurer
Stephen La Rosa
Assistant Secretary/Treasurer
THE FINANCIAL STATEMENTS INCLUDED HEREIN HAVE BEEN TAKEN FROM THE RECORDS OF
THE TRUST WITHOUT EXAMINATION BY THE INDEPENDENT ACCOUNTANTS, AND, ACCORDINGLY,
THEY DO NOT EXPRESS AN OPINION THEREON.
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 TRUST (OBTAINABLE FROM
THE DISTRIBUTOR).
#527645
VALUE LINE AGGRESSIVE INCOME TRUST
TO OUR VALUE LINE AGGRESSIVE
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TO OUR SHAREHOLDERS:
During the six months ended July 31, 2003 the total return of the Value Line
Aggressive Income Trust was 13.16%. This record closely matched the Lehman
Brothers U.S. Corporate High Yield Index(1), a proxy for the overall high-yield
market, which was up 13.41% over the same period.
The last six-month period has been one of the strongest returns periods for the
high yield sector in over a decade. In fact, the recent rally started last fall
as the market began to factor in better economic times ahead. With economic
stimulus from both fiscal and monetary policy, the economy is finally starting
to perk up. We expect GDP for the third quarter to be up significantly from the
first half of the year. With the economy improving, the U.S. Corporate default
rate continues to decline to just over 5.0% in the trailing twelve-month
period, according to Moody's, down from the low double digits last year. Much
of this good news, however, has been factored into the high yield market as
yields have dropped over 3% in the past year and returns have been in excess of
20%. Although yield spreads between high yield and U.S. Treasuries have
tightened significantly, the ratio of U.S. Corporate ratings downgrades by
Moody's continues to be at a relatively high level. Also, while many of the
more distressed companies have been able to refinance some of their debt in
2003, very few have actually begun to de-leverage their balance sheets. Given
this situation, and the fact that the current yield of the Value Line
Aggressive Income Trust has fallen to roughly the 7.5% range, we look for more
moderate returns over the next twelve month period, versus the strong showing
of the past year.
We continue to focus our investments in the more liquid and stronger credits
available in the High Yield sector. Additionally, the portfolio is broadly
diversified to lessen exposure to any one industry. No one sector accounts for
more than 10% of the portfolio. Currently, Hotel and Gaming account for the
largest sector weighting at 7.5%, followed by Energy related securities, Cable,
Retailers and Packaging, which all account for between 4% and 7% sector
weightings. Preserving capital in difficult market environments, while allowing
for an attractive dividend yield, remains our goal. Thank you for your
continued investment.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
September 16, 2003
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(1) THE LEHMAN BROTHERS U.S. CORPORATE HIGH YIELD INDEX IS REPRESENTATIVE OF
THE BROAD BASED FIXED-INCOME MARKET. IT INCLUDES NON-INVESTMENT GRADE
CORPORATE BONDS. THE RETURNS FOR THE INDEX DO NOT REFLECT CHARGES,
EXPENSES, OR TAXES, AND IT IS NOT POSSIBLE TO DIRECTLY INVEST IN THIS
UNMANAGED INDEX.
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2
VALUE LINE AGGRESSIVE INCOME TRUST
INCOME TRUST SHAREHOLDERS
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ECONOMIC OBSERVATIONS
The U.S. economic recovery, which had been proceeding at an uninspiring pace
for the better part of two years, showed a bit more spirit in the second
quarter of this year, as the nation's gross domestic product increased at a
3.1% rate, pushed forward by a selective recovery in manufacturing, by strong
housing demand, and by improving retail sales. True, there were still pockets
of weakness around, most notably in the employment area, where non-farm
payrolls declined further and the unemployment rate climbed above 6%. Overall,
though, the economic picture at the end of the opening half was a lot brighter
than it had been at the start of the year, when talk of a possible double-dip
recession was still being heard.
Now, as we make our way through the second half of 2003, we are starting to see
evidence of a further improvement in business activity, with both the retail
and manufacturing sectors strengthening even more, albeit still selectively,
while housing remains resilient. The weak link in the recovery chain is still
the employment situation, which, at best, is starting to show signs of
stability following months of steady erosion. The ongoing support of the
Federal Reserve, which continues to maintain its low-interest-rate policies,
along with the earlier passage of a tax cut and fiscal stimulus package, should
provide the additional help needed by the economy to push GDP growth up into
the 3.5% to 4% range during the second half of the year.
Inflation, meantime, remains muted, thanks, in part, to subdued labor costs.
Adequate supplies of raw materials are also helping to keep the costs of
production low. We caution, though, that as the U.S. economy moves further
along the recovery trail over the next several years, some increase in pricing
pressures may emerge. Absent a stronger long-term business recovery than we now
envision, or a resumption of the earlier sharp rise in oil and gas prices
stemming from a surprisingly long conflict in the Middle East, inflation should
remain in check through the latter years of this decade. Long-term interest
rates, which have moved higher recently, as the economy has perked up, should
stabilize at modestly higher levels over the next several years.
PERFORMANCE DATA:*
1 YEAR ENDED 5 YEARS ENDED 10 YEARS ENDED
6/30/03 6/30/03 6/30/03
-------------- --------------- ---------------
Average Annual Total Return* ......... 16.08% -1.53% 4.95%
1 YEAR ENDED 5 YEARS ENDED 10 YEARS ENDED
7/31/03 7/31/03 7/31/03
-------------- --------------- ---------------
Average Annual Total Return* ......... 21.26% -1.91% 4.79%
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* THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND ARE NO GUARANTEE
OF FUTURE PERFORMANCE. THE AVERAGE ANNUAL TOTAL RETURNS 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
VALUE LINE AGGRESSIVE INCOME TRUST
SCHEDULE OF INVESTMENTS (UNAUDITED)
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PRINCIPAL
AMOUNT VALUE
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CONVERTIBLE BONDS & NOTES (7.7%)
AIR TRANSPORT (0.4%)
$500,000 Mesa Air Group, Inc. Senior Subordinated Notes, 2.48%, (each note is convertible to 39.727
shares of Common Stock at any time) 6/16/23(1) ................................................... $ 271,250
----------
BIOTECHNOLOGY (0.7%)
500,000 Human Genome Sciences, Inc., Subordinated Notes, 33|M/4%, (each note is convertible to 9.1324
shares of Common Stock at any time) 3/15/07 ...................................................... 427,500
----------
COMPUTER SOFTWARE & SERVICES (0.9%)
500,000 Mentor Graphics Corp. Subordinated Notes, 67|M/8%, (each note is convertible to 42.970 shares of
Common Stock at any time) 6/15/07 ................................................................ 559,375
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DRUG (3.3%)
500,000 Enzon, Inc., Subordinated Notes, 41|M/2% (each note is convertible to 14.0884 shares of Common
Stock at anytime) 7/1/08 ......................................................................... 423,125
500,000 Inhale Therapeutic Systems, Inc., Subordinated Notes, 31|M/2% (each note is convertible to 19.8177
shares of Common Stock at anytime) 10/17/07 ...................................................... 385,625
500,000 IVAX Corp., Senior Subordinated Notes, 41|M/2% (each note is convertible to 24.9688 shares of
Common Stock at anytime) 5/15/08 ................................................................. 494,375
500,000 Medarex, Inc Subordinated Notes, 41|M/2% (each note is convertible to 34.6789 shares of Common
Stock at anytime) 7/1/06 ......................................................................... 420,000
250,000 Protein Design Labs, Inc. Subordinated Notes, 23|M/4% (each note is convertible to 49.6618 shares of
Common Stock at anytime) 8/16/23(1) .............................................................. 224,688
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1,947,813
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E-COMMERCE (0.6%)
500,000 Manugistics Group, Inc., Subordinated Notes, 5% (each note is convertible to 22.695 shares of
Common Stock at anytime) 11/1/07 ................................................................. 382,500
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FOOD WHOLESALERS (0.0%)
500,000 Fleming Cos., Inc., Senior Subordinated Notes, 51|M/4% (each note is convertible to 33.036 shares of
Common Stock at anytime) 3/15/09 ................................................................. 8,750
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MEDIA (0.6%)
500,000 Liberty Media Corp., Senior Subordinated Notes, 31|M/2%, (each note is convertible to 36.8189
shares of Common Stock at any time) 1/15/31 ...................................................... 337,500
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RETAIL STORE (0.4%)
250,000 Penney (J.C.) Co., Inc. Subordinated Notes, 5% (each note is convertible to 35.0877 shares of
Common Stock at anytime) 10/15/08 ................................................................ 249,062
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TELECOMMUNICATION SERVICES (0.1%)
118,934 Gilat Satellite Network, Ltd., Subordinated Notes, 41|M/4%, (each note is convertible to 5.371
shares of Common Stock at anytime) 3/15/05 ....................................................... 32,707
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4
VALUE LINE AGGRESSIVE INCOME TRUST
JULY 31, 2003
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PRINCIPAL
AMOUNT VALUE
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TOBACCO (0.7%)
$ 500,000 Vector Group, Ltd., Subordinated Notes, 61|M/4%, (each note is convertible to 29.7089 shares of
Common Stock at anytime) 7/15/08 ................................................................ $ 397,500
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TOTAL CONVERTIBLE BONDS & NOTES
(Cost $4,724,086) ............................................................................... 4,613,957
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CORPORATE BONDS & NOTES (77.5%)
AUTO PARTS (2.2%)
750,000 Cummins Engine, Inc., Notes, 6.45%, 3/1/05 ........................................................ 763,125
500,000 Dana Corp. Notes, 9%, 8/15/11 ..................................................................... 535,000
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1,298,125
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CABLE TV (6.8%)
1,000,000 Adelphia Communications Corp. Senior Notes, 101|M/4%, 11/1/06(3) .................................. 650,000
1,250,000 Charter Communications Holdings, Senior Notes, 95|M/8%, 11/15/09 .................................. 943,750
1,000,000 Insight Communications, Inc., Senior Discount Notes, (zero coupon until 2/15/06, 121|M/4%
thereafter) 2/15/11 ............................................................................. 812,500
1,000,000 MediaCom LLC, Senior Notes, 91|M/2%, 1/15/13 ...................................................... 990,000
1,500,000 RCN Corp., Senior Discount Notes, (zero coupon until 10/15/02, 111|M/8% thereafter) 10/15/07 ...... 622,500
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4,018,750
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CHEMICAL -- DIVERSIFIED (0.8%)
500,000 Equistar Chemicals, LP, Senior Notes, 101|M/8%, 9/1/08 ............................................ 495,000
----------
CHEMICAL -- SPECIALTY (2.1%)
600,000 Arco Chemical Co., Debentures, 9.80%, 2/1/20 ...................................................... 516,000
750,000 OM Group, Inc., Senior Subordinated Notes, 91|M/4%, 12/15/11 ...................................... 735,000
----------
1,251,000
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COAL -- ALTERNATE ENERGY (1.0%)
650,000 Massey Energy Co., Notes, 6.95%, 3/1/07 ........................................................... 622,375
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DIVERSIFIED COMPANIES (1.8%)
600,000 American Standard, Inc., Senior Notes, 81|M/4%, 6/1/09 ............................................ 681,000
500,000 Holmes Products Corp., Senior Subordinated Notes, Series 97|M/8%, 11/15/07 ........................ 443,125
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1,124,125
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ELECTRICAL EQUIPMENT (1.2%)
750,000 Thomas & Betts Corp., Notes, 6.39%, 2/10/09 ....................................................... 727,500
----------
ELECTRIC UTILITY -- EAST (1.1%)
600,000 Sithe Independent Funding Corp. Guaranteed Secured Notes, Series "A", 9%, 12/30/13 ................ 648,000
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5
VALUE LINE AGGRESSIVE INCOME TRUST
SCHEDULE OF INVESTMENTS (UNAUDITED)
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PRINCIPAL
AMOUNT VALUE
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ELECTRIC UTILITY -- WEST (1.1%)
$ 400,000 Allegheny Generating Co., Debentures, 55|M/8%, 9/11/03 ............................ $ 394,000
500,000 PG&E National Energy Group, Inc., Senior Notes, 103|M/8%, 5/16/11(3) .............. 282,500
----------
676,500
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ELECTRONICS (1.3%)
750,000 Avnet, Inc. Notes, 77|M/8%, 2/15/05 ............................................... 780,000
----------
ENTERTAINMENT (1.8%)
500,000 Royal Caribbean Cruises Ltd., Senior Notes, 71|M/4%, 8/15/06 ...................... 513,750
750,000 XM Satellite Radio, Inc. Senior Secured Notes, (zero coupon until 12/31/05, 14%
thereafter) 12/31/09 .............................................................. 543,750
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1,057,500
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FINANCIAL SERVICES (1.5%)
600,000 IOS Capital LLC, Senior Notes, 71|M/4%, 6/30/08 ................................... 552,000
500,000 Vesta Insurance Group, Inc., Senior Debentures, 83|M/4%, 7/15/25 .................. 320,000
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872,000
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FOOD PROCESSING (1.7%)
500,000 Land O Lakes Inc., Senior Notes, 83|M/4%, 11/15/11 ................................ 417,500
600,000 Smithfield Foods, Inc., Senior Subordinated Notes, 75|M/8%, 2/15/08 ............... 600,000
----------
1,017,500
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FOOD WHOLESALERS (0.9%)
500,000 Herbalife International, Inc. Senior Subordinated Notes, 113|M/4%, 7/15/10 ........ 557,500
----------
FOREIGN TELECOMMUNICATIONS (0.0%)
500,000 World Access, Inc., Senior Notes, 131|M/4%, 1/15/08(2)(3) ......................... 25,000
----------
GROCERY (2.6%)
500,000 Delhaize America, Inc. Guranteed Notes, 73|M/8%, 4/15/06 .......................... 512,500
1,000,000 Winn Dixie Stores, Inc., Senior Notes, 87|M/8%, 4/1/08 ............................ 1,057,500
----------
1,570,000
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HEALTHCARE INFORMATION SYSTEMS (4.6%)
1,000,000 AdvancePCS, Senior Notes, 81|M/2%, 4/1/08 ......................................... 1,070,000
500,000 Iasis Healthcare Corp., Senior Subordinated Notes, 13%, 10/15/09 .................. 555,000
500,000 Matria Healthcare Inc., Senior Notes, 11%, 5/1/08 ................................. 515,000
500,000 Rotech Healthcare Inc., Senior Subordinated Notes, 91|M/2%, 4/1/12 ................ 520,000
----------
2,660,000
----------
HOME BUILDING (4.4%)
500,000 Senior Housing Properties Trust, Senior Notes, 85|M/8%, 1/15/12 ................... 527,500
500,000 Technical Olympic USA, Inc., Senior Subordinated Notes, 103|M/8%, 7/1/12 .......... 535,000
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6
VALUE LINE AGGRESSIVE INCOME TRUST
JULY 31, 2003
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
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$1,000,000 Toll Corp., Senior Subordinated Notes, 81|M/8%, 2/1/09 ..................................... $1,040,000
500,000 William Lyon Homes Inc., Senior Subordinated Notes, 103|M/4%, 4/1/13 ....................... 537,500
----------
2,640,000
----------
HOTEL/GAMING (7.7%)
1,000,000 Eldorado Resorts LLC, Senior Subordinated Notes, 101|M/2%, 8/15/06 ......................... 1,020,000
1,000,000 Hilton Hotels Corp., Senior Notes, 71|M/2%, 12/15/17 ....................................... 985,000
1,000,000 Isle of Capri Casinos, Inc., Senior Subordinated Notes, 83|M/4%, 4/15/09 ................... 1,037,500
500,000 Meristar Hospitality Corp., Senior Notes, 9%, 1/15/08 ...................................... 490,000
1,000,000 Meritage Corp., Senior Notes, 93|M/4%, 6/1/11 .............................................. 1,085,000
----------
4,617,500
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INSURANCE -- LIFE (1.7%)
500,000 Liberty Mutual Insurance Co., Surplus Notes, 8.20%, 5/4/07(1) .............................. 505,634
500,000 MONY Group Inc., Senior Notes, 8.35%, 3/15/10 .............................................. 527,278
----------
1,032,912
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MACHINERY (1.7%)
500,000 Briggs & Stratton Corp., Senior Notes, 87|M/8%, 3/15/11 .................................... 570,000
500,000 JLG Industries, Inc., Senior Subordinated Notes, 83|M/8%, 6/15/12 .......................... 460,000
----------
1,030,000
----------
MARITIME (0.9%)
500,000 General Maritime Corp., Senior Subordinated Notes, 10%, 3/15/13(1) ......................... 547,500
----------
MEDICAL SERVICES (1.7%)
500,000 Res-Care, Inc., Senior Notes, 105|M/8%, 11/15/08 ........................................... 475,000
500,000 U.S. Oncology Inc., Senior Notes, 95|M/8%, 2/1/12 .......................................... 525,000
----------
1,000,000
----------
METALS & MINING (0.9%)
500,000 Wolverine Tube, Inc., Senior Subordinated Notes, Series "B", 101|M/2%, 4/1/09 .............. 527,500
----------
NATURAL GAS -- DIVERSIFIED (0.9%)
750,000 Energy Corp., of America, Senior Subordinated Notes, Series "A", 91|M/2%, 5/15/07 .......... 528,750
----------
OILFIELD SERVICES/EQUIPMENT (5.1%)
500,000 Bluewater Finance Ltd., Senior Subordinated Notes, 101|M/4%, 2/15/12 ....................... 495,000
250,000 Compagnie Generale de Geophysics, Inc., Senior Subordinated. Notes, 105|M/8%, 11/15/07 ..... 258,750
1,000,000 Lone Star Technologies, Inc., Senior Subordinated Notes, 9%, 6/1/11 ........................ 960,000
316,000 Newpark Resources, Inc. Senior Subordinated Notes, Series "B", 85|M/8%, 12/15/07 ........... 319,160
610,000 Sonat, Inc., Notes, 75|M/8%, 7/15/11 ....................................................... 484,950
500,000 Transmontaigne, Inc., Senior Subordinated Notes, 91|M/8%, 6/1/10(1) ........................ 515,000
----------
3,032,860
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7
VALUE LINE AGGRESSIVE INCOME TRUST
SCHEDULE OF INVESTMENTS (UNAUDITED)
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PRINCIPAL
AMOUNT VALUE
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PACKAGING & CONTAINER (4.5%)
$ 600,000 Caraustar Industries, Inc., Senior Subordinated Notes, 97|M/8%, 4/1/11 ............ $ 600,000
690,000 Four M Corp., Senior Secured Notes, Series "B", 12%, 6/1/06 ....................... 690,000
500,000 Pliant Corp., Senior Subordinated Notes, 13%, 6/1/10 .............................. 435,000
1,000,000 Tekni-Plex, Inc., Senior Subordinated Notes, 123|M/4%, Series "B", 6/10/10 ........ 965,000
----------
2,690,000
----------
PAPER & FOREST PRODUCTS (0.3%)
181,000 Georgia-Pacific Corp., Debentures, 91|M/2%, 12/1/11 ............................... 189,145
----------
PETROLEUM -- INTEGRATED (0.8%)
500,000 Clark Refining & Marketing Inc., Senior Subordinated Notes, 87|M/8%, 11/15/07 ..... 502,500
----------
PETROLEUM -- PRODUCING (2.8%)
1,000,000 Belden & Blake Corp., Senior Subordinated Notes, Series "B", 97|M/8%, 6/15/07 ..... 930,000
500,000 Giant Industries, Inc., Senior Subordinated Noted, 9%, 9/1/07 ..................... 470,000
250,000 Petroleum Helicopters, Inc., Senior Notes, Series "B", 93|M/8%, 5/1/09 ............ 273,750
----------
1,673,750
----------
R.E.I.T. (1.8%)
1,000,000 LNR Property Corp., Senior Subordinated Notes, 101|M/2%, 1/15/09 .................. 1,075,000
----------
RECREATION (0.9%)
500,000 P & O Princess Cruises Plc Guaranteed Debentures, 77|M/8%, 6/1/27 ................. 508,850
----------
RESTAURANT (0.6%)
500,000 Advantica Restaurant Group, Inc., Senior Notes, 111|M/4%, 1/15/08 ................. 335,000
----------
RETAIL -- BUILDING SUPPLY (0.4%)
250,000 Crescent Real Estate Equities, Senior Notes, 91|M/4%, 4/15/09 ..................... 259,300
----------
RETAIL STORE (4.7%)
500,000 Dillard Department Stores, Inc., Notes, 7.85%, 10/11/12 ........................... 480,000
500,000 Dillards, Inc., Notes, 6.43%, 8/1/04 .............................................. 502,500
500,000 Dollar General Corp., Guaranteed Notes, 85|M/8%, 6/15/10 .......................... 556,875
757,000 J.C. Penney Co., Inc., Notes, 93|M/4%, 6/15/21 .................................... 760,785
496,000 J.C. Penney Co., Inc. Debentures, 81|M/4%, 8/15/22 ................................ 473,680
----------
2,773,840
----------
STEEL (1.2%)
750,000 United States Steel Corp., Senior Notes, 93|M/4%, 5/15/10 ......................... 720,000
----------
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8
VALUE LINE AGGRESSIVE INCOME TRUST
JULY 31, 2003
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT OR
NUMBER OF
SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES (2.0%)
$1,000,000 Global Crossing Holdings Ltd., Senior Notes, 91|M/8%, 11/15/06(3) ............................. $ 35,000
1,000,000 Global Crossing Holdings Ltd., Senior Notes, 8.70%, 8/1/07(3) ................................. 35,000
320,000 Qwest Services Corp., Senior Subordinated Securied Notes, 131|M/2%, 12/15/10(1) ............... 344,000
500,000 TSI Telecommunication Services Inc., Senior Subordinated Notes, 123|M/4%, 2/1/09 .............. 497,500
1,000,000 WorldCom Inc., Notes, 71|M/2%, 5/1/11(3) ...................................................... 263,750
-----------
1,175,250
-----------
TOTAL CORPORATE BONDS & NOTES
(Cost $45,157,258) .......................................................................... 46,260,532
-----------
MUNICIPAL SECURITIES (0.4%)
250,000 Tobacco Settlement Funding Corporation New Jersey, Asset Backed Revenue, 5.75%, 6/1/32 ........ 214,200
-----------
TOTAL MUNICIPAL SECURITIES
(Cost $210,590) ............................................................................. 214,200
-----------
CONVERTIBLE PREFERRED STOCKS (1.1%)
BEVERAGE (0.8%)
17,000 Constellation Brands, Inc., Par $25 (each share is convertible to .7319 shares of Common
Stock @ $26.10) 53|M/4%, 9/1/06 ............................................................. 447,100
-----------
MEDICAL (0.3%)
3,000 Baxter International, Inc., Par $50 (each share is convertible to 1.4011 shares of Common
Stock @ $28.00) 7%, 6/16/06 ................................................................. 152,670
-----------
TELECOMMUNICATION SERVICES (0.0%)
2,500 Sprint Corp., Par $25 (each share is convertible to .8364 shares of Common Stock @ $6.10)
71|M/8%, 8/17/04 ............................................................................ 19,750
-----------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $603,508) ............................................................................. 619,520
-----------
PREFERRED STOCKS (0.1%)
CABLE (0.0%)
10,000 Adelphia Communications Corp., Series "B", 13%, each share is exchangeable one for one into
Debentures, Par $100, 7/15/09(3) ............................................................ 50,000
-----------
TOTAL PREFERRED STOCKS
(Cost $244,875) ............................................................................. 50,000
-----------
- --------------------------------------------------------------------------------
9
VALUE LINE AGGRESSIVE INCOME TRUST
SCHEDULE OF INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------------------------------
WARRANTS (0.0%)
TELECOMMUNICATION SERVICES (0.0%)
2,490 XO Communications, Inc., Series "A", Expiring 1/16/10(2) .......... $ 6,972
1,868 XO Communications, Inc. Series "B", Expiring 1/16/10(2) ........... 5,417
1,868 XO Communications, Inc. Series "C", Expiring 1/16/10(2) ........... 3,176
--------
TOTAL WARRANTS
(Cost $0) ......................................................... 15,565
--------
COMMON STOCKS (3.4%)
BANK (0.2%)
5,000 KeyCorp ........................................................... 134,550
--------
COMPUTER PERIPHERALS (0.1%)
6,000 Identix, Inc.(2) .................................................. 42,660
--------
COMPUTER SOFTWARE & SERVICES (0.2%)
5,000 Electronic Data Systems Corp ...................................... 111,350
7,000 Novell Inc.(2) .................................................... 24,850
--------
136,200
--------
ELECTRICAL UTILITY -- CENTRAL (0.2%)
5,000 Alliant Energy Corp ............................................... 101,550
5,000 Centerpoint Energy Inc. ........................................... 40,350
--------
141,900
--------
ELECTRICAL UTILITY -- EAST (0.7%)
5,000 PPL Corp .......................................................... 197,950
8,000 Pepco Holdings, Inc. .............................................. 138,560
4,500 Teco Energy Inc. .................................................. 55,800
--------
392,310
--------
ELECTRICAL UTILITY (WEST) (0.1%)
5,000 XCEL Energy Inc. .................................................. 72,400
--------
ELECTRONICS (0.1%)
5,000 Titan Corp.(2) .................................................... 76,700
--------
FOOD PROCESSING (0.5%)
5,000 ConAgra, Inc ...................................................... 112,650
5,000 Unilever Plc. ..................................................... 164,950
--------
277,600
--------
- --------------------------------------------------------------------------------
10
VALUE LINE AGGRESSIVE INCOME TRUST
JULY 31, 2003
- --------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------------------------------------
GROCERY (0.2%)
5,000 Albertsons, Inc.(2) ................................................ $ 94,300
-----------
METALS & MINING (DIVERSIFIED) (0.2%)
4,000 Apex Silver Mines Ltd.(2) .......................................... 67,400
5,000 Gold Fields Ltd. ................................................... 59,900
-----------
127,300
-----------
PETROLEUM - INTEGRATED (0.2%)
4,000 PetroChina Co., Ltd ................................................ 120,320
-----------
PETROLEUM PRODUCING (0.1%)
17,000 Abraxas Petroleum Corp.(2) ......................................... 15,300
6,000 Methanex Corp. ..................................................... 55,560
-----------
70,860
-----------
R.E.I.T. (0.3%)
10,000 Nationwide Health Properties, Inc .................................. 171,200
-----------
TELECOMMUNICATION SERVICES (0.3%)
14,434 Gilat Satellite Networks Ltd.(2) ................................... 69,427
6,000 Western Wireless Corp. Class "A" (2) ............................... 87,900
1,245 XO Communications Inc.(2) .......................................... 7,968
-----------
165,295
-----------
TOTAL COMMON STOCKS
(Cost $2,627,128) ................................................ 2,023,595
-----------
TOTAL INVESTMENT SECURITIES (90.2%)
(Cost $53,567,445) ............................................... 53,797,369
-----------
- --------------------------------------------------------------------------------
11
VALUE LINE AGGRESSIVE INCOME TRUST
SCHEDULE OF INVESTMENTS (UNAUDITED) JULY 31, 2003
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT (7.7%)
(INCLUDING ACCRUED INTEREST)
$3,000,000 Collateralized by $2,983,000 U.S. Treasury Bonds 5.25% due 2/15/29, with a value of
$2,972,782 (with UBS Warburg LLC., 1.06%, dated 7/31/03, due 8/1/03 delivery value
$3,000,088) ............................................................................ $ 3,000,088
1,600,000 Collateralized by $1,355,000 U.S. Treasury Notes 113|M/4% due 2/15/10, with a value of
$1,635,070 (with Morgan Stanley Dean Witter & Co., Inc., 0.99%, dated 7/31/03, due
8/1/03 delivery value $1,600,044) ...................................................... 1,600,044
------------
TOTAL REPURCHASE AGREEMENTS
(Cost $4,600,132) ...................................................................... 4,600,132
------------
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES (2.1%) .................................... 1,236,296
------------
NET ASSETS (100.0%) ...................................................................... $ 59,633,797
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE, PER OUTSTANDING SHARE
$(59,633,797 divided by 12,578,351 shares of beneficial interest outstanding) .......... $ 4.74
============
(1) 144A SECURITY WHERE CERTAIN CONDITIONS FOR PUBLIC SALE MAY EXIST.
(2) NON-INCOME PRODUCING SECURITY.
(3) DEFAULTED SECURITY.
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
12
VALUE LINE AGGRESSIVE INCOME TRUST
STATEMENT OF ASSETS AND LIABILITIES STATEMENT OF OPERATIONS FOR THE
AT JULY 31, 2003 (UNAUDITED) SIX MONTHS ENDED JULY 31, 2003 (UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------------------
DOLLARS
(IN THOUSANDS
EXCEPT PER SHARE DOLLARS
AMOUNT) (IN THOUSANDS)
---------------- --------------
ASSETS: INVESTMENT INCOME:
Investment securities, at value Interest (Net of foreign withholding taxes
(Cost - $53,567) .......................... $53,797 of $1) ................................... $2,520
Repurchase agreements Dividends ................................... 70
(Cost - $4,600) ........................... 4,600 Other ....................................... 4
Cash ......................................... 38 ------
Receivable for securities sold ............... 1,902 Total Income ........................... 2,594
Interest receivable .......................... 1,135 ------
Receivable for trust shares sold ............. 17 EXPENSES:
Dividend receivable .......................... 8 Advisory fee ................................ 238
------- Service and distribution plan fee ........... 75
TOTAL ASSETS ............................ 61,497 Transfer agent fees ......................... 28
------- Audit and legal fees ........................ 26
LIABILITIES: Custodian fees .............................. 20
Payable for trust shares repurchased ......... 1,687 Printing, checks and stationary ............. 16
Dividends payable to shareholders ............ 78 Registration and filing fees ................ 16
Accured expenses: ............................ Trustees' fees and expenses ................. 10
Advisory fee .............................. 41 Other ....................................... 9
Service and distribution plan fees ------
payable ................................ 15 Total expenses before
Other ..................................... 42 custody credits ..................... 438
------- Less: custody credits .................. (1)
TOTAL LIABILITIES ....................... 1,863 ------
------- Net Expenses ........................... 437
NET ASSETS ................................... $59,634 ------
======= NET INVESTMENT INCOME ....................... 2,157
NET ASSETS ------
Shares of beneficial interest, at $.01 REALIZED AND UNREALIZED LOSS ON
par value (authorized unlimited, INVESTMENTS
outstanding 12,578,351) ................... $ 126 Net realized Gain ...................... 452
Additional paid-in capital ................... 129,261 Net Change in Net Unrealized
Accumulated net realized loss Appreciation (Depreciation) ......... 4,715
on investments ............................ (69,983) ------
Unrealized net appreciation NET REALIZED GAIN AND CHANGE IN
of investments ............................ 230 NET UNREALIZED APPRECIATION
------- (DEPRECIATION) ON INVESTMENTS ............ 5,167
NET ASSETS ................................... $59,634 ------
======= NET INCREASE IN NET ASSETS FROM
NET ASSET VALUE, OFFERING AND OPERATIONS ............................... $7,324
REDEMPTION PRICE, PER ======
OUTSTANDING SHARE
($59,633,797 DIVIDED BY 12,578,351
SHARES OF BENEFICAL INTEREST
OUTSTANDING) .............................. $ 4.74
=======
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
13
VALUE LINE AGGRESSIVE INCOME TRUST
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JULY 31, 2003 (UNAUDITED) AND FOR THE YEAR ENDED JANUARY 31, 2003
- ------------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED
JULY 31, 2003 JANUARY 31,
(UNAUDITED) 2003
--------------- ------------
DOLLARS
(IN THOUSANDS)
OPERATIONS:
Net investment income ................................................... $ 2,157 $ 5,295
Net realized gain (loss) on investments ................................. 452 (4,038)
Change in net unrealized (depreciation) appreciation .................... 4,715 (1,566)
--------- ---------
Net increase (decrease) in net assets from operations ................... 7,324 (309)
--------- ---------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income ................................................... (2,157) (5,325)
TRUST SHARE TRANSACTIONS:
Net proceeds from sale of shares ........................................ 19,541 26,376
Net proceeds from reinvestment of distributions to shareholders ......... 1,684 4,167
--------- ---------
21,225 30,543
Cost of shares repurchased .............................................. (19,764) (67,824)
--------- ---------
Net increase (decrease) in net assets from share transactions ........... 1,461 (37,281)
--------- ---------
TOTAL INCREASE (DECREASE) IN NET ASSETS .................................. 6,628 (42,915)
NET ASSETS:
Beginning of period ..................................................... 53,006 95,921
--------- ---------
End of period ........................................................... $ 59,634 $ 53,006
========= =========
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME ......................... $ -- $ (30)
========= =========
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
14
VALUE LINE AGGRESSIVE INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) JULY 31, 2003
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Value Line Aggressive Income Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The primary investment objective of the Trust is
to maximize current income through investment in a diversified portfolio of
high-yield fixed-income securities. As a secondary investment objective, the
Trust will seek capital appreciation but only when consistent with its primary
objective. Lower rated or unrated (i.e., high-yield) securities are more likely
to react to developments affecting market risk (general market liquidity) and
credit risk (issuers' inability to meet principal and interest payments on
their obligations) than are more highly rated securities, which react primarily
to movements in the general level of interest rates. The ability of issuers of
debt securities held by the Trust to meet their obligations may be affected by
economic developments in a specific industry. The following significant
accounting policies are in conformity with generally accepted accounting
principles for investment companies. Such policies are consistently followed by
the Trust in the preparation of its financial statements. Generally accepted
accounting principles may require management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results may differ from those estimates.
(A) SECURITY VALUATION. The Trustees have determined that the value of bonds
and other fixed income corporate securities be calculated on the valuation date
by reference to valuations obtained from an independent pricing service that
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.
Securities, other than bonds and other fixed income securities, not priced in
this manner are valued at the midpoint between the latest available and
representative bid and asked prices or, when stock exchange valuations are
used, at the latest quoted sale price as of the regular close of business of
the New York Stock Exchange on the valuation date. Other assets and securities
for which market valuations are not readily available are valued at their fair
value as the Trustees may determine. Short term instruments with maturities of
60 days or less, at the date of purchase, are valued at amortized cost which
approximates market value.
(B) REPURCHASE AGREEMENTS. In connection with repurchase agreements, the
Trust'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 Trust 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) DISTRIBUTIONS. It is the policy of the Trust to distribute all of its net
investment income to shareholders. Dividends from net investment income will be
declared daily and paid monthly. Net realized capital gains, if any, are
distributed to shareholders annually or more frequently if necessary to comply
with the Internal Revenue Code. Income dividends and capital gains
distributions are automatically reinvested in additional shares of the Trust
unless the shareholder has requested otherwise. Income earned by the Trust on
weekends, holidays and other days on which the Trust is closed for business is
declared as a dividend on the next day on which the Trust is open for business.
(D) FEDERAL INCOME TAXES. It is the Trust'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
- --------------------------------------------------------------------------------
15
VALUE LINE AGGRESSIVE INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
Act of 1986, and to distribute all of its taxable income to its shareholders.
Therefore, no federal income tax or excise tax provision is required.
(E) INVESTMENTS. Securities transactions are recorded on a trade date basis.
Realized gain and loss from securities transactions are recorded on the
identified-cost basis. Interest income, adjusted for amortization of discount,
including original-issue discount required for federal income tax purposes on
investments, is earned from settlement date and recognized on the accrual
basis.
(F) The Trust charges a 1% redemption fee on shares held for less than 120
days. Such fees are retained by the Trust and accounted for as paid in capital.
2. TRUST SHARE TRANSACTIONS
Transactions in shares of beneficial interest in the Trust were as follows:
SIX MONTHS YEAR
ENDED ENDED
JULY 31, 2003 JANUARY 31,
(UNAUDITED) 2003
--------------- ------------
Shares sold ............................... 4,285 5,944
Shares issued to
shareholders in
reinvestment of
dividends .............................. 365 941
----- -----
4,650 6,885
Shares repurchased ........................ (4,260) (14,928)
------ -------
Net increase (decrease) ................... 390 (8,043)
====== =======
Redemption fees of $69,000 were retained by the Trust for the six months ended
July 31, 2003.
3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities, excluding short-term securities,
were as follows:
SIX MONTHS ENDED
JULY 31, 2003
(UNAUDITED)
-----------------
(IN THOUSANDS)
PURCHASES:
Investment Securities .............................. $24,696
=======
SALES:
Investment Securities .............................. $17,056
=======
4. INCOME TAXES
At July 31, 2003, information on the tax components of capital is as follows:
(UNAUDITED)
(IN THOUSANDS)
--------------
Cost of investments for tax purposes ................... $58,224
=======
Gross tax unrealized appreciation ...................... $ 3,743
Gross tax unrealized depreciation ...................... $(3,570)
-------
Net tax unrealized depreciation on
investments ......................................... $ (173)
=======
Net realized gain (loss) differ for financial statement and tax purposes
primarily due to differing treatments of bond premiums and wash sales.
- --------------------------------------------------------------------------------
16
VALUE LINE AGGRESSIVE INCOME TRUST
JULY 31, 2003
- --------------------------------------------------------------------------------
5. INVESTMENT ADVISORY CONTRACT, MANAGEMENT FEES AND TRANSACTIONS
WITH AFFILIATES
An advisory fee of $237,643 was paid or payable to Value Line, Inc., the
Trust's investment adviser, (the "Adviser"), for the six months ended July 31,
2003. This was computed at an annual rate of .75 of 1% per year on the first
$100 million of the Trust's average daily net assets for the period, and .50 of
1% on the average daily net assets in excess thereof. The Adviser provides
research, investment programs and supervision of the investment portfolio and
pays costs of administrative services and office space. The Adviser also
provides persons, satisfactory to the Trust's Trustees, to act as officers of
the Trust and pays their salaries and wages. The Trust bears all other costs
and expenses.
The Trust has a Service and Distribution Plan (the "Plan"). The Plan, adopted
pursuant to Rule 12b-1 under the Investment Company Act of 1940, compensates
Value Line Securities, Inc., a subsidiary of the Adviser (the "Distributor")
for advertising, marketing and distributing the Trust's shares and for
servicing the Trust's shareholders at an annual rate of 0.25% of the Trust's
average daily net assets. Fees amounting to $75,244 were paid or payable to the
Distributor under this Plan for the six months ended July 31, 2003.
Certain officers and directors of the Adviser and its subsidiary, Value Line
Securities, Inc. (the Trust's distributor and a registered broker/dealer), are
also officers and a Trustee of the Trust. At July 31, 2003, the Adviser and
certain officers and Trustees owned 2,283 shares of beneficial interest in the
Trust, representing .02% of the outstanding shares.
- --------------------------------------------------------------------------------
17
VALUE LINE AGGRESSIVE INCOME TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each period:
SIX MONTHS
ENDED YEARS ENDED JANUARY 31,
JULY 31, 2003 ---------------------------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
------------- ------- ------- -------- -------- --------
NET ASSET VALUE, BEGINNING OF
PERIOD ........................... $ 4.35 $ 4.74 $ 5.24 $ 7.22 $ 7.45 $ 8.66
------- ------- ------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income ........... 0.16 0.41 0.49 (1) 0.66 0.73 0.78
Net gains or losses on
securities (both realized
and unrealized) ............... 0.38 (0.40) (0.50)(1) ( 1.98) (0.23) (1.21)
------- ------- ------- -------- -------- --------
Total from investment
operations ....................... 0.54 0.01 (0.01) ( 1.32) 0.50 (0.43)
------- ------- ------- -------- -------- --------
Redemption fees ................... 0.01 0.01 -- -- -- --
------- ------- ------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net
investment income ................ (0.16) (0.41) (0.49) ( 0.66) (0.73) (0.78)
------- ------- ------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD .... $ 4.74 $ 4.35 $ 4.74 $ 5.24 $ 7.22 $ 7.45
======= ======= ======= ======== ======== ========
TOTAL RETURN ...................... 13.16%+ 0.40% (0.12)% (19.14)% 7.16% (5.13)%
======= ======= ======= ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) ................... $59,634 $53,006 $95,921 $116,924 $169,586 $174,805
Ratio of expenses to average
net assets ....................... 1.45%(3)* 1.37%(3) 1.23%(3) 1.04%(3) 0.82%(3) 0.81%(2)
Ratio of net investment income
to average net assets ............ 7.16%* 9.12% 9.72%(1) 10.61% 10.04% 9.81%
Portfolio turnover rate ........... 36% 59% 140% 184% 154% 140%
(1) AS REQUIRED, EFFECTIVE FEBRUARY 1, 2001, THE TRUST HAS ADOPTED THE
PROVISIONS OF THE AICPA AUDIT AND ACCOUNTING GUIDE FOR INVESTMENT
COMPANIES AND BEGAN AMORTIZING PREMIUM ON DEBT SECURITIES. THE EFFECT OF
THIS CHANGE FOR THE YEAR ENDED JANUARY 31, 2002 ON NET INVESTMENT AND NET
REALIZED AND UNREALIZED GAINS AND LOSSES WAS LESS THAN $.01 PER SHARE. THE
EFFECT OF THIS CHANGE WAS TO DECREASE THE RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS FROM 9.79% TO 9.72%. PER SHARE AND RATIOS FOR THE
PERIOD PRIOR TO FEBRUARY 1, 2001 HAVE NOT BEEN RESTATED TO REFLECT THIS
CHANGE IN ACCOUNTING POLICY.
(2) BEFORE OFFSET OF CUSTODY CREDITS.
(3) RATIO REFLECTS EXPENSES GROSSED UP FOR CUSTODY CREDIT ARRANGEMENT. THE
RATIO OF EXPENSES TO AVERAGE NET ASSETS NET OF CUSTODY CREDITS WOULD HAVE
BEEN 1.24% AS OF JANUARY 31, 2002 AND WOULD NOT HAVE CHANGED AS OF JULY
31, 2003, JANUARY 31, 2003, JANUARY 31, 2001 AND JANUARY 31, 2000.
+ NOT ANNUALIZED
* ANNUALIZED
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
18
VALUE LINE AGGRESSIVE INCOME TRUST
- --------------------------------------------------------------------------------
(This page has been left blank intentionally.)
- --------------------------------------------------------------------------------
19
VALUE LINE AGGRESSIVE INCOME TRUST
THE VALUE LINE FAMILY OF FUNDS
- --------------------------------------------------------------------------------
1950 -- THE VALUE LINE FUND seeks long-term growth of capital. Current income is
a secondary objective.
1952 -- VALUE LINE INCOME AND GROWTH FUND'S primary investment objective is
income, as high and dependable as is consistent with reasonable risk. Capital
growth to increase total return is a secondary objective.
1956 -- THE VALUE LINE SPECIAL SITUATIONS FUND seeks long-term growth of
capital. No consideration is given to current income in the choice of
investments.
1972 -- VALUE LINE LEVERAGED GROWTH INVESTORS' sole investment objective is to
realize capital growth.
1979 -- THE VALUE LINE CASH FUND, a money market fund, seeks to secure as high a
level of current income as is consistent with maintaining liquidity and
preserving capital. An investment in the Fund is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.
Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.
1981 -- VALUE LINE U.S. GOVERNMENT SECURITIES FUND seeks maximum income without
undue risk to capital. Under normal conditions, at least 80% of the value of its
net assets will be invested in securities issued or guaranteed by the U.S.
Government and its agencies and instrumentalities.
1983 -- VALUE LINE CENTURION FUND* seeks long-term growth of capital.
1984 -- THE VALUE LINE TAX EXEMPT FUND seeks to provide investors with the
maximum income exempt from federal income taxes while avoiding undue risk to
principal. The Fund offers investors a choice of two portfolios: The Money
Market Portfolio and The National Bond Portfolio. The Trust 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 1-800-223-0818, 24
HOURS A DAY, 7 DAYS A WEEK, OR VISIT US AT WWW.VALUELINE.COM. READ THE
PROSPECTUS CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
- --------------------------------------------------------------------------------
20