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
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Value Line Aggressive Income Trust
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(Exact name of registrant as specified in charter)
220 East 42nd Street, New York, N.Y. 10017
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 212-907-1500
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Date of fiscal year end: January 31, 2005
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Date of reporting period: January 31, 2005
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Item I. Reports to Stockholders.
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ANNUAL REPORT
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January 31, 2005
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Value Line
Aggressive
Income Trust
[LOGO]
VALUE LINE
----------
No-Load
Mutual
Funds
Value Line Aggressive Income Trust
To Our Value Line Aggressive Income Trust Shareholders
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To Our Shareholders:
For the twelve months ended January 31, 2005, the total return of the Value Line
Aggressive Income Trust was 8.6%. Over the same period, the average high-yield
bond fund returned 8.0% (as measured by Lipper Analytical Services1) and the
Lehman Brothers U.S. Corporate High-Yield Index reported a gain of 8.9%.2
High Yield securities continued to post solid returns over the past twelve
months. The asset class has benefited from strong economic growth in the U.S.
and the continuation of historically low Federal Funds rates (currently 2.50%).
As a result of this favorable economic backdrop, the corporate default rate fell
to 2.6% for the twelve month trailing period as of January 31, 2005 from over
5.0% the previous year according to Moody's. The low level of default rates,
combined with solid economic growth, has resulted in continued spread narrowing
between high-yield securities and U.S Treasuries, despite the relatively low
rates offered by U.S Government securities. This has led to a situation where we
believe most of the good news has been priced into this asset class at this
point. Given the corporate bond spread narrowing of the past year, the Value
Line Aggressive Income Trust's yield has declined to a little over 6%. However,
as interest rates seem poised to move higher this spring, due to the Federal
Reserve's tighter monetary policy, we expect to be able to invest some of our
current cash holdings at higher yields to increase the overall yield of the
Trust through the year ahead.
Given our cautious investment stance, we are concentrating on the stronger and
more liquid credits available in the high-yield sector. In the past six months,
the Trust has increased its holdings in the energy sector to a little over 25%,
from 18% six months ago. We continue to have a favorable outlook for earnings
and cash flow for these companies, even if the rather volatile underlying
commodity prices pull back from their current levels. After energy, the next
largest sector weightings for the Trust are homebuilding at 4.4% and hotel and
gaming at 3.8%. Preserving capital in difficult market environments, while
allowing for an attractive dividend yield, remains our goal. Thank you for your
continued investment with us.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
March 15, 2005
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(1) Lipper High Current Yield Funds - Funds aim at high (relative) current
yield from fixed income securities, have no quality or maturity
restrictions, and tend to invest in lower grade debt issues.
(2) 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
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Economic Observations
The maturing business expansion continues to move along at a healthy 3% plus
pace, a level of growth that is being underpinned by moderate and steady levels
of consumer spending and industrial activity. Moreover, recent trends suggest
that the present rate of improvement on the economic front will be sustained
over the next couple of quarters.
Helping the expansion along should be comparatively high levels of activity in
the housing, retail, manufacturing, and service sectors. This steady growth is
likely to be accompanied by modest levels of inflation for the most part. The
wild card in the equation and the reason that we are not forecasting a higher
level of economic growth is the near-record price of oil. High oil prices
threaten the sustainability of the long-running business expansion as well as
the level of price stability.
The continuing moderate pace of gross domestic product growth and accompanying
modest inflation should have positive ramifications. That's because this
combination probably will allow the Federal Reserve Board to pursue a measured
monetary tightening course over the next year. Our feeling is that the Fed will
increase rates sufficiently to keep inflation subdued but will not raise rates
aggressively enough to derail the business expansion.
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3
Value Line Aggressive Income Trust
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The following graph compares the performance of the Value Line Aggressive Income
Trust to that of the Lehman Brothers Aggregate Bond Index and the Lehman
Brothers U.S. Corporate High Yield Index. The Value Line Aggressive Income Trust
is a professionally managed mutual fund, while the Index is not available for
investment and is unmanaged. The comparison is shown for illustrative purposes
only.
Comparison of a Change in Value of a $10,000 Investment in the
Value Line Aggressive Income Trust and the Lehman Brothers Aggregate Bond Index*
and the Lehman Brothers U.S. Corporate High Yield Index*
(From 2/1/95 to 1/31/05)
[The following was depicted by a line chart in the printed material.]
Value Line Aggressive Lehman Brothers Lehman Brothers
Date Income Trust Aggregate Bond Index U.S. Corp. High Yield Index
---- ------------ -------------------- ---------------------------
2/1/1995 10,000 10,000 10,000
4/30/1995 10,508 10,444 10,720
7/31/1995 10,949 10,904 11,231
10/31/1995 11,545 11,288 11,475
1/31/1996 12,379 11,695 11,965
4/30/1996 12,820 11,347 11,993
7/31/1996 13,078 11,508 12,221
10/31/1996 13,810 11,948 12,748
1/31/1997 14,622 12,076 13,221
4/30/1997 14,529 12,151 13,379
7/31/1997 15,577 12,746 14,235
10/31/1997 16,199 13,010 14,497
1/31/1998 16,810 13,371 15,030
4/30/1998 17,257 13,477 15,320
7/31/1998 17,265 13,749 15,516
10/31/1998 14,929 14,225 14,424
1/31/1999 15,947 14,451 15,263
4/30/1999 16,828 14,322 15,614
7/31/1999 16,313 14,092 15,432
10/31/1999 16,044 14,300 15,051
1/31/2000 17,089 14,184 15,333
4/30/2000 16,273 14,503 15,063
7/31/2000 15,956 14,932 15,329
10/31/2000 14,077 15,345 14,809
1/31/2001 13,818 16,145 15,583
4/30/2001 13,494 16,299 15,227
7/31/2001 13,749 16,827 15,288
10/31/2001 13,336 17,579 14,785
1/31/2002 13,801 17,366 15,369
4/30/2002 14,112 17,577 15,761
7/31/2002 12,931 18,096 13,889
10/31/2002 12,570 18,613 13,974
1/31/2003 13,856 19,009 15,548
4/30/2003 15,057 19,416 17,154
7/31/2003 15,679 19,075 17,633
10/31/2003 16,501 19,526 18,694
1/31/2004 17,321 19,931 19,777
4/30/2004 17,444 19,770 19,726
7/31/2004 17,579 19,998 19,938
10/31/2004 18,341 20,606 20,997
1/31/2005 18,801 20,760 21,539
Performance Data:**
Growth of an Assumed Average Annual
Investment of $10,000 Total Return
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1 year ended 1/31/05 ...... $10,855 8.55%
5 years ended 1/31/05 ..... $11,002 1.93%
10 years ended 1/31/05 .... $18,801 6.52%
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* The Lehman Brothers Aggregate Bond 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.
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.
** The performance data quoted represent past performance and are no
guarantee of future performance. The average annual total returns and
growth of an assumed investment of $10,000 include dividends reinvested
and capital gains distributions accepted in shares. The investment return
and principal value of an investment will fluctuate so that an investment,
when redeemed, may be worth more or less than its original cost. The
performance data and graph do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
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4
Value Line Aggressive Income Trust
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TRUST EXPENSES:
Example
As a shareholder of the Trust, you incur ongoing costs, including management
fees; distribution and service (12b-1) fees; and other Trust expenses. This
Example is intended to help you understand your ongoing costs (in dollars) of
investing in the Trust and to compare these costs with the ongoing costs of
investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (August 1, 2004 through January 31, 2005).
Actual Expenses
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example an $8,600
account value divided by $1,000=8.6), then multiply the result by the number in
the first line under the heading "Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Trust's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Trust's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Trust and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses in the table are meant to highlight your ongoing
costs and will not help you determine the relative total cost of owning
different funds.
Expenses*
Beginning Ending paid during
account account period
value value 8/1/04
8/1/04 1/31/05 thru 1/31/05
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Actual ......................................... $1,000.00 $1,069.60 $7.07
Hypothetical (5% return before expenses) ....... $1,000.00 $1,018.30 $6.90
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* Expenses are equal to the Trust's annualized expense ratio of 1.36%
multiplied by the average account value over the period, multiplied by
184/366 to reflect the one-half period.
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5
Value Line Aggressive Income Trust
Portfolio Highlights at January 31, 2005 (unaudited)
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Ten Largest Bond and Note Holdings
Par Percentage of
Issue Value Value Net Assets
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Vintage Petroleum, Inc., Senior Subordinated Notes, 7 7/8%, 5/15/11 ............... $1,250,000 $1,334,375 2.23%
Western Oil Sands Inc., Secured Notes, 8 3/8%, 5/1/12 ............................. 1,000,000 1,170,000 1.95%
Rotech Healthcare Inc., Senior Subordinated Notes, 9 1/2%, 4/1/12 ................. 1,000,000 1,105,000 1.84%
Bluewater Finance Ltd., Senior Subordinated Notes, 10 1/4%, 2/15/12 ............... 1,000,000 1,100,000 1.84%
Dow Jones CDX NA HY Trust, Pass-thru Certificates, Series 3-1, 7 3/4%, 12/29/09 ... 1,000,000 1,016,250 1.70%
Dow Jones CDX NA NY Trust, Pass-thru Certificates, Series 3-3, 8%, 12/29/09 ....... 1,000,000 1,013,750 1.69%
Allegheny Technologies, Inc., Notes, 8 3/8%, 12/15/11 ............................. 800,000 876,000 1.46%
BRL Universal Equipment, Secured Notes, 8 7/8%, 2/15/08 ........................... 835,000 873,619 1.46%
OM Group, Inc., Senior Subordinated Notes, 9 1/4%, 12/15/11 ....................... 800,000 852,000 1.42%
Premcor Refining Group, Inc., Senior Subordinated Notes, 7 3/4%, 2/1/12 ........... 750,000 815,625 1.36%
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Asset Allocation
[The following was depicted by a pie chart in the printed material.]
Bonds & Notes 83.9%
Cash & Other 8.9%
Common & Preferred Stocks 7.2%
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Sector Weightings
[The following was depicted by a bar chart in the printed material.]
Energy 25%
Consumer Service 24%
Financial Services 18%
Industrial Materials 12%
Telecommunication 10%
Consumer Goods 7%
Health Care 4%
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6
Value Line Aggressive Income Trust
Schedule of Investments January 31, 2005
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Principal
Amount Value
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CONVERTIBLE BONDS & NOTES (3.4%)
AUTO & TRUCK (0.7%)
$ 400,000 Navistar Financial Corp., Subordinated Notes, 4 3/4%, (each note is convertible to 17.9437 of Common
Stock at anytime) 4/1/09 .......................................................................... $ 403,500
DRUG (0.8%)
500,000 Enzon, Inc., Subordinated Notes, 4 1/2%, (each note is convertible to 14.0884 shares of Common
Stock at anytime) 7/1/08 .......................................................................... 469,375
ENTERTAINMENT (0.3%)
250,000 Liberty Media Corp., Senior Subordinated Notes, 3 1/2%, (each note is convertible to 36.8189 shares of
Common Stock at any time) 1/15/31 ................................................................. 223,750
GROCERY (0.7%)
500,000 Wild Oats Markets, Inc., Senior Notes, 3 1/4%, (each note is convertible to 56.5099 shares of Common
Stock at anytime) 5/15/34 (1) ..................................................................... 415,625
RETAIL AUTOMOTIVE (0.2%)
100,000 Pep Boys-Manny Moe & Jack (The), Company Guarantee, 4 1/4%, (each note is convertible to 44.6484
shares of Common Stock at anytime) 6/1/07 ......................................................... 103,375
TOBACCO (0.7%)
500,000 Vector Group, Ltd., Subordinated Notes, 6 1/4%, (each note is convertible to 29.7089 shares of Common
Stock at any time) 7/15/08 ........................................................................ 444,375
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TOTAL CONVERTIBLE BONDS & NOTES
(Cost $1,987,602) ................................................................................. 2,060,000
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CORPORATE BONDS AND NOTES (80.5%)
AUTO PARTS (1.3%)
750,000 Cummins Engine, Inc., Notes, 6.45%, 3/1/05 .......................................................... 750,000
BUILDING MATERIALS (0.8%)
500,000 Goodman Global Holdings Inc., Senior Subordinated Notes, 7 7/8%, 12/15/12 (1) ....................... 482,500
CABLE TV (1.6%)
250,000 Charter Communications Holdings, Senior Notes, 9 5/8%, 11/15/09 ..................................... 203,750
750,000 MediaCom LLC, Senior Notes, 9 1/2%, 1/15/13 ......................................................... 748,125
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951,875
CANADIAN ENERGY (0.8%)
500,000 Technical Olympic USA, Inc., Notes, 7 1/2%, 3/15/11 ................................................. 500,000
CHEMICAL -- DIVERSIFIED (1.0%)
500,000 Equistar Chemicals, LP, Senior Notes, 10 1/8%, 9/1/08 ............................................... 570,000
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7
Value Line Aggressive Income Trust
Schedule of Investments
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Principal
Amount Value
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CHEMICAL -- SPECIALTY (3.5%)
$600,000 Arco Chemical Co., Debentures, 9.80%, 2/1/20 ........................................................ $ 678,000
800,000 OM Group, Inc., Senior Subordinated Notes, 9 1/4%, 12/15/11 ......................................... 852,000
500,000 Polyone Corp., Senior Notes, 8 7/8%, 5/1/12 ......................................................... 537,500
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2,067,500
COAL (3.7%)
750,000 Consolidation Coal Co., Notes, Series MTN, 8 1/4%, 6/1/07 (1) ....................................... 786,985
650,000 Massey Energy Co., Notes, 6.95%, 3/1/07 ............................................................. 682,500
750,000 Massey Energy Co., Senior Notes, 6 5/8%, 11/15/10 ................................................... 772,500
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2,241,985
DIVERSIFIED COMPANY (5.7%)
500,000 American Standard, Inc., Senior Notes, 8 1/4%, 6/1/09 ............................................... 575,485
1,000,000 Dow Jones CDX NA HY Trust, Pass-thru Certificates, Series 3-1, 7 3/4%, 12/29/09 (1) ................. 1,016,250
1,000,000 Dow Jones CDX NA NY Trust, Pass-thru Certificates, Series 3-3, 8%, 12/29/09 (1) ..................... 1,013,750
500,000 Geon Co., Debentures, 7 1/2%, 12/15/15 .............................................................. 483,125
300,000 WH Holdings, Ltd., Senior Notes, 9 1/2%, 4/1/11 ..................................................... 330,375
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3,418,985
ELECTRICAL EQUIPMENT (2.8%)
835,000 BRL Universal Equipment, Secured Notes, 8 7/8%, 2/15/08 ............................................. 873,619
750,000 Thomas & Betts Corp., Notes, 6.39%, 2/10/09 ......................................................... 789,449
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1,663,068
ELECTRONICS (2.2%)
750,000 Avnet, Inc., Notes, 7 7/8%, 2/15/05 ................................................................. 753,750
500,000 Avnet, Inc., Notes, 9 3/4%, 2/15/08 ................................................................. 571,250
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1,325,000
ENTERTAINMENT (0.9%)
500,000 Royal Caribbean Cruises Ltd., Senior Notes, 7 1/4%, 8/15/06 ......................................... 523,750
ENVIRONMENTAL (0.9%)
500,000 IMCO Recycling, Inc., Secured Notes, 10 3/8%, 10/15/10 .............................................. 562,500
FINANCIAL SERVICES (0.8%)
43,000 IOS Capital LLC, Senior Notes, 7 1/4%, 6/30/08 ...................................................... 45,473
500,000 Vesta Insurance Group, Inc., Senior Debentures, 8 3/4%, 7/15/25 ..................................... 421,830
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467,303
FOOD PROCESSING (2.7%)
500,000 Land O Lakes Inc., Senior Notes, 8 3/4%, 11/15/11 ................................................... 492,500
600,000 Smithfield Foods, Inc., Senior Subordinated Notes, 7 5/8%, 2/15/08 .................................. 636,000
500,000 Universal Foods Corp., Notes, 6 1/2%, 4/1/09 ........................................................ 522,097
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1,650,597
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8
Value Line Aggressive Income Trust
January 31, 2005
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Principal
Amount Value
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GROCERY (0.9%)
$ 500,000 Delhaize America, Inc., Guaranteed Notes, 7 3/8%, 4/15/06 ........................................... $ 519,090
HEALTHCARE INFORMATION SYSTEMS (2.6%)
500,000 Curative Health Services Inc., Senior Notes, 10 3/4%, 5/1/11 ........................................ 450,000
1,000,000 Rotech Healthcare Inc., Senior Subordinated Notes, 9 1/2%, 4/1/12 ................................... 1,105,000
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1,555,000
HOME APPLIANCES (0.8%)
500,000 Windmere-Durable Holdings, Inc., Senior Subordinated Notes, 10%, 7/31/08 ............................ 498,750
HOME BUILDING (4.4%)
325,000 Gold Kist Inc., Company Guarantee, 10 1/4%, 3/15/14 ................................................. 377,000
600,000 Ply Gem Industries, Inc., Senior Subordinated Notes, 9%, 2/15/12 (1) ................................ 597,000
500,000 Senior Housing Properties Trust, Senior Notes, 8 5/8%, 1/15/12 ...................................... 568,750
500,000 Technical Olympic USA, Inc., Senior Subordinated Notes, 10 3/8%, 7/1/12 ............................. 557,500
500,000 William Lyon Homes, Inc., Senior Subordinated Notes, 10 3/4%, 4/1/13 ................................ 561,250
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2,661,500
HOTEL/GAMING (3.8%)
600,000 American Casino & Entertainment Properties, Secured Notes, 7.85%, 2/1/12 ............................ 636,750
500,000 Boyd Gaming Corp., Senior Subordinated Notes, 6 3/4%, 4/15/14 ....................................... 512,500
500,000 Hilton Hotels Corp., Senior Notes, 7 1/2%, 12/15/17 ................................................. 585,737
500,000 Meritage Corp., Senior Notes, 9 3/4%, 6/1/11 ........................................................ 552,500
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2,287,487
INFORMATION SERVICES (1.3%)
750,000 Titan Corp., Senior Subordinated Notes, 8%, 5/15/11 ................................................. 802,500
INSURANCE -- PROPERTY CASUALTY (0.8%)
500,000 PXRE Capital Trust I, Pass Thru Securities, 8.85%, 2/1/27 ........................................... 500,000
MACHINERY (0.9%)
500,000 JLG Industries, Inc., Senior Subordinated Notes, 8 3/8%, 6/15/12 .................................... 522,500
MARITIME (0.5%)
300,000 Teekay Shipping Corp., Guaranteed 1st Preferred Shipping Mortgage Notes, 8.32%, 2/1/06 .............. 303,000
MEDICAL SERVICES (0.9%)
500,000 Res-Care, Inc., Senior Notes, 10 5/8%, 11/15/08 ..................................................... 546,250
METALS & MINING (2.1%)
700,000 USEC, Inc., Senior Notes, 6 5/8%, 1/20/06 ........................................................... 707,000
500,000 Wolverine Tube, Inc., Senior Subordinated Notes, Series "B", 10 1/2%, 4/1/09 ........................ 532,500
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1,239,500
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9
Value Line Aggressive Income Trust
Schedule of Investments
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Principal
Amount Value
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NATURAL GAS -- DIVERSIFIED (3.4%)
$ 726,000 Energy Corp. of America, Senior Subordinated Notes, Series "A", 9 1/2%, 5/15/07 ..................... $ 696,960
1,250,000 Vintage Petroleum, Inc., Senior Subordinated Notes, 7 7/8%, 5/15/11 ................................. 1,334,375
-----------
2,031,335
OILFIELD SERVICES/EQUIPMENT (8.2%)
1,000,000 Bluewater Finance Ltd., Senior Subordinated Notes, 10 1/4%, 2/15/12 ................................. 1,100,000
167,000 Compagnie Generale de Geophysique, Inc., Senior Subordinated Notes, 10 5/8%, 11/15/07 ............... 175,976
600,000 Gulfmark Offshore, Inc., Senior Notes, 7 3/4%, 7/15/14 (1) .......................................... 630,000
750,000 Lone Star Technologies, Inc., Senior Subordinated Notes, 9%, 6/1/11 ................................. 810,000
316,000 Newpark Resources, Inc., Senior Subordinated Notes, Series "B", 8 5/8%, 12/15/07 .................... 319,160
600,000 Pertoleum Geo-Services, Senior Notes, 10%, 11/5/10 .................................................. 685,500
610,000 Sonat, Inc., Notes, 7 5/8%, 7/15/11 ................................................................. 626,775
500,000 Transmontaigne, Inc., Senior Subordinated Notes, 9 1/8%, 6/1/10 ..................................... 537,500
-----------
4,884,911
PACKAGING & CONTAINER (2.7%)
500,000 Caraustar Industries, Inc., Senior Subordinated Notes, 9 7/8%, 4/1/11 ............................... 548,750
500,000 Pliant Corp., Senior Subordinated Notes, 13%, 6/1/10 ................................................ 490,000
600,000 Tekni-Plex, Inc., Senior Subordinated Notes, 12 3/4%, 6/15/10 ....................................... 553,500
-----------
1,592,250
PERTOLEUM -- INTEGRATED (1.4%)
750,000 Premcor Refining Group, Inc., Senior Subordinated Notes, 7 3/4%, 2/1/12 ............................. 815,625
PETROLEUM -- PRODUCING (5.2%)
571,000 Paramount Resources Ltd., Senior Notes, 7 7/8%, 11/1/10 ............................................. 650,940
260,000 Paramount Resources Ltd., Senior Notes, 8 7/8%, 7/15/14 ............................................. 319,800
250,000 Petroleum Helicopters, Inc., Senior Notes, Series "B", 9 3/8%, 5/1/09 ............................... 271,250
700,000 Stone Energy Corp., Senior Subordinated Notes, 8 1/4%, 12/15/11 ..................................... 752,500
1,000,000 Western Oil Sands Inc., Secured Notes, 8 3/8%, 5/1/12 ............................................... 1,170,000
-----------
3,164,490
R.E.I.T. (0.5%)
250,000 Crescent Real Estate Equities, Senior Notes, 9 1/4%, 4/15/09 ........................................ 271,250
RETAIL -- SPECIAL LINES (2.6%)
750,000 Broder Bros. Co., Senior Notes, 11 1/4%, 10/15/10 ................................................... 800,625
750,000 Phillips Van Heusen Corp., Senior Notes, 7 1/4%, 2/15/11 ............................................ 783,750
-----------
1,584,375
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10
Value Line Aggressive Income Trust
January 31, 2005
- --------------------------------------------------------------------------------
Principal
Amount or
Number
of Shares Value
- ----------------------------------------------------------------------------------------------------------------------------
RETAIL STORE (1.7%)
$ 410,000 Dillard Department Stores, Inc., Notes, 7.85%, 10/1/12 .............................................. $ 443,825
500,000 Dollar General Corp., Guaranteed Notes, 8 5/8%, 6/15/10 ............................................. 580,000
-----------
1,023,825
SHOE (1.3%)
750,000 Payless Shoesource, Inc., Senior Subordinated Notes, 8 1/4%, 8/1/13 ................................. 761,250
STEEL (3.1%)
500,000 Allegheny Ludlum Corp., Debentures, 6.95%, 12/15/25 ................................................. 482,500
800,000 Allegheny Technologies, Inc., Notes, 8 3/8%, 12/15/11 ............................................... 876,000
421,000 United States Steel Corp., Senior Notes, 9 3/4%, 5/15/10 ............................................ 480,992
-----------
1,839,492
TELECOMMUNICATIONS SERVICES (1.8%)
500,000 Alamosa Delaware, Inc., Senior Notes, 8 1/2%, 1/31/12 ............................................... 532,500
500,000 TSI Telecommunication Services Inc., Senior Subordinated Notes, 12 3/4%, 2/1/09 ..................... 570,000
-----------
1,102,500
TRUCKING (0.9%)
500,000 Roadway Corp., Senior Notes, 8 1/4%, 12/1/08 ........................................................ 560,049
-----------
TOTAL CORPORATE BONDS & NOTES
(Cost $45,496,763) ................................................................................ 48,241,992
-----------
CONVERTIBLE PREFERRED STOCKS (1.5%)
BEVERAGE (1.2%)
17,000 Constellation Brands, Inc., Par $25 (each share is convertible to .7319 shares of Common Stock @
$24.38) 5 3/4%, 9/1/06 ............................................................................ 689,860
MEDICAL SUPPLIES (0.3%)
3,000 Baxter International, Inc., Par $50 (each share is convertible to 1.4011 shares of Common Stock @
$71.93) 7%, 2/16/06 ............................................................................... 163,800
-----------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $567,158) ................................................................................... 853,660
-----------
PREFERRED STOCKS (0.4%)
R.E.I.T. (0.4%)
10,000 Health Care REIT, Inc. .............................................................................. 255,000
-----------
TOTAL PREFERRED STOCKS
(Cost $250,000) ................................................................................... 255,000
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11
Value Line Aggressive Income Trust
Schedule of Investments
- --------------------------------------------------------------------------------
Number
of Shares Value
- ----------------------------------------------------------------------------------------------------------------------------
WARRANTS (0%)
TELECOMMUNICATION SERVICES (0%)
2,490 XO Communications, Inc., Series "A", Expiring 1/16/10 (2) ............................................ $ 1,071
1,868 XO Communications, Inc., Series "B", Expiring 1/16/10 (2) ............................................ 785
1,868 XO Communications, Inc., Series "C", Expiring 1/16/10 (2) ............................................ 504
-----------
2,360
-----------
TOTAL WARRANTS
(Cost $0) .......................................................................................... 2,360
-----------
COMMON STOCKS (5.3%)
AEROSPACE/DEFENSE (0.2%)
3,300 United Industrial Corp. ............................................................................. 111,573
BIOTECHNOLOGY (0.1%)
10,000 Savient Pharmaceuticals, Inc. (2) ................................................................... 32,200
COMPUTER & PERIPHERALS (0.3%)
6,000 Identix, Inc. (2) ................................................................................... 38,040
15,000 Quantum Corp. (2) ................................................................................... 44,550
25,000 Silicon Graphics, Inc. (2) .......................................................................... 33,000
6,000 Unisys Corp. (2) .................................................................................... 47,100
-----------
162,690
COMPUTER SOFTWARE SERVICES (0.1%)
10,000 Compuware Corp. (2) ................................................................................. 69,000
ELECTRICAL UTILITY -- WEST (0.1%)
5,000 XCEL Energy Inc. .................................................................................... 90,950
ELECTRONICS (0.1%)
8,000 Bookham, Inc. (2) ................................................................................... 28,240
5,000 Valence Technology, Inc. (2) ........................................................................ 15,500
-----------
43,740
ENVIRONMENTAL (0%)
5,000 Perma Fix Environmental Services, Inc. (2) .......................................................... 9,450
HOME APPLIANCES (0%)
4,000 Fedders Corp. ....................................................................................... 12,880
INSURANCE -- LIFE (0.1%)
6,000 Phoenix Companies, Inc. ............................................................................. 78,420
- --------------------------------------------------------------------------------
12
Value Line Aggressive Income Trust
January 31, 2005
- --------------------------------------------------------------------------------
Number
of Shares Value
- ----------------------------------------------------------------------------------------------------------------------------
MARITIME (0.5%)
6,000 Frontline Ltd. ...................................................................................... $ 304,500
METALS & MINING (0.1%)
4,000 Noranda, Inc. ....................................................................................... 67,480
NATURAL GAS -- DISTRIBUTION (0.7%)
5,000 Nicor Inc. .......................................................................................... 184,600
4,000 Northern Border Partners LP. ........................................................................ 199,200
8,000 SEMCO Energy Inc. ................................................................................... 43,680
-----------
427,480
PAPER & FOREST PRODUCTS (0.3%)
6,000 Delta & Pine Land Co. ............................................................................... 176,640
PETROLEUM -- INTEGRATED (1.4%)
5,000 BP Prudhoe Bay Royalty Trust ........................................................................ 264,250
6,000 ChevronTexaco Corp. ................................................................................. 326,400
6,000 Marathon Oil Corp. .................................................................................. 232,380
-----------
823,030
PRECIOUS METALS (0.3%)
10,000 Agnico-Eagle Mines Ltd. ............................................................................. 127,400
12,000 Coeur D'Alene Mines Corp. ........................................................................... 42,360
-----------
169,760
PRECISION INSTRUMENT (0.1%)
6,000 RAE Systems, Inc. (2) ............................................................................... 40,680
R.E.I.T. (0.8%)
10,000 Crescent Real Estate Equities Co. ................................................................... 165,700
15,000 Pengrowth Energy Trust .............................................................................. 311,250
-----------
476,950
RECREATION (0%)
4,000 Meade Instruments Corp. (2) ......................................................................... 13,160
SEMICONDUCTOR (0.1%)
10,000 ANADIGICS, Inc. (2) ................................................................................. 29,800
TELECOMMUNICATION EQUIPMENT (0%)
5,000 Captaris, Inc. (2) .................................................................................. 24,550
-----------
TOTAL COMMON STOCKS
(Cost $2,925,579) ................................................................................. 3,164,933
-----------
TOTAL INVESTMENT SECURITIES (91.1%)
(Cost $51,227,102) ................................................................................ 54,577,945
-----------
- --------------------------------------------------------------------------------
13
Value Line Aggressive Income Trust
Schedule of Investments
- --------------------------------------------------------------------------------
Principal
Amount Value
- ----------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (7.3%)
(including accrued interest)
$2,200,000 Collateralized by $1,818,000 U.S. Treasury Bonds 6.125% due 8/15/29, with a value of $2,251,770
(with UBS Warburg LLC., 2.43% dated 1/31/05, due 2/1/05 delivery value $2,200,149) ............... $ 2,200,149
2,200,000 Collateralized by $1,490,000 U.S. Treasury Bonds 9.875% due 11/15/15, with a value of $2,244,180
(with Morgan Stanley Dean Witter & Co., Inc., 2.38%, dated 1/31/05, due 2/1/05 delivery value
$2,200,145) ...................................................................................... 2,200,145
-----------
TOTAL REPURCHASE AGREEMENTS
(Cost $4,400,294) ................................................................................ 4,400,294
-----------
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES (1.6%) .............................................. 940,618
-----------
NET ASSETS (100.0%) ................................................................................ $59,918,857
===========
NET ASSET VALUE OFFERING AND REDEMPTION PRICE, PER OUTSTANDING SHARE ($59,918,857 / 11,619,397
shares of beneficial interest outstanding) ....................................................... $ 5.16
===========
(1) 144A Security where certain conditions for public sale may exist
(2) Non-income producing security
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14
Value Line Aggressive Income Trust
Statement of Assets and Liabilities
at January 31, 2005
- --------------------------------------------------------------------------------
(in thousands
except per
share amount)
-------------
Assets:
Investment securities, at value
(Cost - $51,227) ............................................ $ 54,578
Repurchase agreements
(Cost - $4,400) ............................................. 4,400
Cash .......................................................... 55
Receivable for securities sold ................................ 225
Interest receivable ........................................... 1,030
Dividend receivable ........................................... 15
Receivable for trust shares sold .............................. 8
---------
Total Assets ............................................ 60,311
---------
Liabilities:
Payable for securities purchased .............................. 178
Payable for trust shares repurchased .......................... 23
Dividends payable to shareholders ............................. 63
Accrued expenses:
Advisory fee ............................................... 38
Service and distribution plan fees ......................... 13
Other ...................................................... 77
---------
Total Liabilities ....................................... 392
---------
Net Assets .................................................... $ 59,919
=========
Net Assets consist of:
Shares of beneficial interest, at $.01 par value
(authorized unlimited, outstanding 11,619,397) .............. $ 116
Additional paid-in capital .................................... 122,337
Distributions in excess of net investment income .............. (22)
Accumulated net realized loss on investments .................. (65,863)
Unrealized net appreciation of investments .................... 3,351
---------
Net Assets .................................................... $ 59,919
=========
Net Asset Value, Offering and Redemption Price,
per Outstanding Share ($59,918,857 / 11,619,397 shares of
beneficial interest outstanding) ............................ $ 5.16
=========
Statement of Operations for the
Year Ended January 31, 2005
- --------------------------------------------------------------------------------
(in thousands)
--------------
Investment Income:
Interest (Net of foreign withholding taxes of $7) ............. $ 4,432
Dividends ..................................................... 148
Other ......................................................... 97
-------
Total Income ............................................... 4,677
-------
Expenses:
Advisory fee .................................................. 457
Service and distribution plan fee ............................. 152
Transfer agent fees ........................................... 44
Audit and legal fees .......................................... 57
Printing ...................................................... 33
Postage ....................................................... 12
Custodian fees ................................................ 35
Registration and filing fees .................................. 19
Trustees' fees and expenses ................................... 22
Insurance and other ........................................... 19
-------
Total expenses before custody credits ...................... 850
Less: custody credits ...................................... (2)
-------
Net Expenses ............................................ 848
-------
Net Investment Income ......................................... 3,829
-------
Realized and Unrealized Gain on Investments
Net realized gain .......................................... 532
Change in Net Unrealized Appreciation (Depreciation) ....... 544
-------
Net Realized Gain and Change in Net Unrealized Appreciation
(Depreciation) on Investments ............................... 1,076
-------
Net Increase in Net Assets from Operations .................... $ 4,905
=======
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
15
Value Line Aggressive Income Trust
Statements of Changes in Net Assets
for the Years Ended January 31, 2005 and 2004
- --------------------------------------------------------------------------------
2005 2004
----------------------
(Dollars in thousands)
Operations:
Net investment income ......................................... $ 3,829 $ 4,183
Net realized gain (loss) on investments ....................... 532 1,678
Change in net unrealized (depreciation) appreciation .......... 544 7,292
----------------------
Net increase (decrease) in net assets from operations ......... 4,905 13,153
----------------------
Distributions to Shareholders
Net investment income ......................................... (3,827) (4,192)
Trust Share Transactions:
Net proceeds from sale of shares .............................. 16,048 33,109
Net proceeds from reinvestment of distributions to shareholders 3,044 3,262
----------------------
19,092 36,371
Cost of shares repurchased .................................... (24,352) (34,237)
----------------------
Net increase (decrease) in net assets from share transactions . (5,260) 2,134
----------------------
Total Increase (Decrease) in Net Assets .......................... (4,182) 11,095
Net Assets:
Beginning of year ............................................. 64,101 53,006
----------------------
End of year ................................................... $ 59,919 $ 64,101
======================
Distributions in excess of net investment income ................. $ (22) $ (21)
======================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
16
Value Line Aggressive Income Trust
Notes to Financial Statements January 31, 2005
- --------------------------------------------------------------------------------
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. In addition, the Trust may use the fair value of a
security when the closing price on the primary exchange where the security is
traded no longer reflects the value of a security due to factors affecting one
or more relevant securities markets or the specific issuer. 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.
- --------------------------------------------------------------------------------
17
Value Line Aggressive Income Trust
Notes to Financial Statements January 31, 2005
- --------------------------------------------------------------------------------
(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 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) Representations and Indemnifications. In the normal course of business the
Trust enters into contracts that contain a variety of representations and
warranties which provide general indemnifications. The Trust's maximum exposure
under these arrangements in unknown as this would involve future claims that
maybe made against the Trust that have not yet occurred. However, based on
experience, the Trust expects the risk of loss to be remote.
(F) 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
and premium, is earned from settlement date and recognized on the accrual basis.
(G) Redemption Fees. 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:
Year Ended Year Ended
January 31, January 31,
2005 2004
-----------------------
Shares sold ......................................... 3,195 7,070
Shares issued to shareholders in
reinvestment of dividends ......................... 602 686
----------------------
3,797 7,756
Shares repurchased .................................. (4,853) (7,269)
----------------------
Net increase (decrease) ............................. (1,056) 487
======================
Redemption fees of $59,541 and $97,633 were retained by the Trust for the years
ended January 31, 2005 and 2004.
3. Purchases and Sales of Securities
Purchases and sales of investment securities, excluding short-term securities,
were as follows:
Year Ended
January 31,
2005
----------
(in thousands)
Purchases:
Investment Securities ..................................... $37,380
=======
Sales:
Investment Securities ..................................... $41,447
=======
4. Income Taxes
At January 31, 2005, information on the tax components of capital is as follows:
(in thousands)
Cost of investments for tax purposes ........................ $ 55,609
========
Gross tax unrealized appreciation ........................... $ 3,689
Gross tax unrealized depreciation ........................... $ (320)
--------
Net tax unrealized appreciation on investments .............. $ 3,369
========
Undistributed ordinary income ............................... $23
========
Capital loss carryforward, expires January 31, 2007 ......... $ (1,007)
Capital loss carryforward, expires January 31, 2008 ......... (17,496)
Capital loss carryforward, expires January 31, 2009 ......... (20,923)
Capital loss carryforward, expires January 31, 2010 ......... (20,654)
Capital loss carryforward, expires January 31, 2011 ......... (5,625)
--------
Capital loss carryforward, at January 31, 2005 .............. $(65,705)
========
- --------------------------------------------------------------------------------
18
Value Line Aggressive Income Trust
Notes to Financial Statements January 31, 2005
- --------------------------------------------------------------------------------
During the year ended January 31, 2005, the Trust utilized capital loss
carryforwards of $684,350.
During the year ended January 31, 2005, as permitted under Federal income tax
regulation, the Trust elected to defer $159,658 of post-October net capital
losses to the next taxable year.
To the extent future capital gains are offset by capital losses, the Trust does
not anticipate distributing any such gains to the shareholders.
Net investment income and net realized gain (loss) differ for financial
statement and tax purposes primarily due to differing treatment of bond premiums
and income from limited partnerships.
The tax composition of dividends to shareholders for the years ended January 31,
2005 and 2004 were as follows:
2005 2004
--------------------
(in thousands)
Ordinary Income ................................... $3,827 $4,192
5. Investment Advisory Contract, Management Fees and Transactions With
Affiliates
An advisory fee of $456,978 was paid or payable to Value Line, Inc., the Trust's
investment adviser, (the "Adviser"), for the year ended January 31, 2005. This
was computed at an annual rate of 0.75 of 1% per year on the first $100 million
of the Trust's average daily net assets for the year, and 0.50 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 $152,326 were paid or payable to the Distributor under
this Plan for the year ended January 31, 2005.
For the year ended January 31, 2005, the Trust's expenses were reduced by $1,644
under a custody credit arrangement with the custodian.
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 January 31, 2005, the Adviser and
certain officers and Trustees owned 3,011 shares of beneficial interest in the
Trust, representing .03% of the outstanding shares.
- --------------------------------------------------------------------------------
19
Value Line Aggressive Income Trust
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
year:
Years ended January 31,
--------------------------------------------------------
2005 2004 2003 2002 2001
========================================================
Net asset value, beginning of year .................................. $5.06 $4.35 $4.74 $5.24 $7.22
--------------------------------------------------------
Income from investment operations:
Net investment income ............................................ 0.33 0.34 0.41 0.49(1) 0.66
Net gains or losses on securities (both realized and unrealized) . 0.09 0.70 (0.40) (0.50)(1) (1.98)
--------------------------------------------------------
Total from investment operations ................................. 0.42 1.04 0.01 (0.01) (1.32)
--------------------------------------------------------
Redemption fees .................................................. 0.01 0.01 0.01 -- --
--------------------------------------------------------
Less distributions:
Dividends from net investment income ............................. (0.33) (0.34) (0.41) (0.49) (0.66)
========================================================
Net asset value, end of year ........................................ $5.16 $5.06 $4.35 $4.74 $5.24
========================================================
Total return ........................................................ 8.55% 25.01% 0.40% (0.12)% (19.14)%
========================================================
Ratios/Supplemental Data:
Net assets, end of year (in thousands) .............................. $59,919 $64,101 $53,006 $95,921 $116,924
Ratio of expenses to average net assets ............................. 1.39%(2) 1.43%(2) 1.37%(2) 1.23%(2) 1.04%(2)
Ratio of net investment income to average net assets ................ 6.28% 6.98% 9.12% 9.72%(1) 10.61%
Portfolio turnover rate ............................................. 69% 76% 59% 140% 184%
(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 income
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 year prior to February 1, 2001 have not been restated to
reflect this change in accounting policy.
(2) 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% for the year ended January 31, 2002 and would not have changed
for the years ended January 31, 2005, January 31, 2004, January 31, 2003
and January 31, 2001.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
20
Value Line Aggressive Income Trust
Report of Independent Registered Public Accounting Firm
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareholders of
Value Line Aggressive Income Trust
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 Aggressive Income Trust
(the "Trust") at January 31, 2005, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Trust'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 the standards of the
Public Company Accounting Oversight Board (United States). Those standards
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 January 31, 2005 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
March 31, 2005
- --------------------------------------------------------------------------------
21
Value Line Aggressive Income Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Federal Tax Status of Distributions (unaudited)
For corporate taxpayers 2.63% of the ordinary income distributions paid during
the calendar year 2004 qualify for the corporate dividends received deductions.
During the calendar year 2004, 2.54% of the ordinary income distributions are
treated as qualified dividends.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
22
Value Line Aggressive Income Trust
Management of the Trust
- --------------------------------------------------------------------------------
MANAGEMENT INFORMATION
The business and affairs of the Trust are managed by the Trust's officers under
the direction of the Board of Trustees. The following table sets forth
information on each Trustee and Officer of the Trust. Each Trustee serves as a
director or trustee of each of the 14 Value Line Funds and oversees a total of
15 portfolios. Each Trustee serves until his or her successor is elected and
qualified.
Principal
Occupation Other
Length of During the Directorships
Name, Address, and Age Position Time Served Past 5 Years Held by Trustee
- ----------------------------------------------------------------------------------------------------------------------------
Interested Directors*
- ---------------------
Jean Bernhard Buttner Chairman of Since 1986 Chairman, President and Chief Executive Officer Value Line, Inc.
Age 70 the Board of of Value Line, Inc. (the "Adviser") and Value
Trustees and Line Publishing, Inc.; Chairman and President of
President each of the 15 Value Line Funds and Value Line
Securities, Inc. (the "Distributor").
- ----------------------------------------------------------------------------------------------------------------------------
Marion N. Ruth Trustee Since 2000 Real Estate Executive: President, Ruth Realty Value Line, Inc.
5 Outrider Road (real estate broker); Director of the Adviser
Rolling Hills, CA 90274 from October 2000 to October 2004.
Age 69
- ----------------------------------------------------------------------------------------------------------------------------
Non-Interested Trustees
- -----------------------
John W. Chandler Trustee Since 1991 Consultant, Academic Search Consultation None
1611 Cold Spring Rd. Service, Inc.; Trustee Emeritus and Chairman
Williamstown, MA 01267 (1993-1994) of the Board of Trustees of Duke
Age 81 University; President Emeritus, Williams
College.
- ----------------------------------------------------------------------------------------------------------------------------
Frances T. Newton Trustee Since 2000 Customer Support Analyst, Duke Power Company. None
4921 Buckingham Drive
Charlotte, NC 28209
Age 63
- ----------------------------------------------------------------------------------------------------------------------------
Francis C. Oakley Trustee Since 2000 Professor of History, Williams College, 1961 to Berkshire Life
54 Scott Hill Road 2002. President Emeritus since 1994 and Insurance Company
Williamstown, MA 01267 President, 1985-1994; Chairman (1993- 1997) and of America
Age 73 Interim President (2002) of the American Council
of Learned Societies.
- --------------------------------------------------------------------------------
23
Value Line Aggressive Income Trust
Management of the Trust
- --------------------------------------------------------------------------------
Principal
Occupation Other
Length of During the Directorships
Name, Address, and Age Position Time Served Past 5 Years Held by Trustee
- ----------------------------------------------------------------------------------------------------------------------------
David H. Porter Trustee Since 1997 Visiting Professor of Classics, Williams None
5 Birch Run Drive College, since 1999; President Emeritus,
Saratoga Springs, NY Skidmore College since 1999 and President,
12866 1987-1998.
Age 69
- ----------------------------------------------------------------------------------------------------------------------------
Paul Craig Roberts Trustee Since 1986 Chairman, Institute for Political Economy. A. Schulman Inc.
169 Pompano St. (plastics)
Panama City Beach, FL
32413
Age 65
- ----------------------------------------------------------------------------------------------------------------------------
Nancy-Beth Sheerr Trustee Since 1996 Senior Financial Advisor, Hawthorne, since None
1409 Beaumont January 2001; Chairman, Radcliffe College Board
DriveGladwyne, PA 19035 of Trustees, 1990-1999.
Age 55
- ----------------------------------------------------------------------------------------------------------------------------
Officers
- --------
Bradley Brooks Vice President Since 2001 Portfolio Manager with the Adviser since 1999; --
Age 42 Securities Analyst with the Adviser 1997-1999.
- ----------------------------------------------------------------------------------------------------------------------------
David T. Henigson Vice Since 1994 Director, Vice President and Compliance Officer --
Age 47 President, of the Adviser; Director and Vice President of
Secretary and the Distributor; Vice President, Secretary,
Treasurer Treasurer and Chief Compliance Officer of each
of the 14 Value Line Funds.
- ----------------------------------------------------------------------------------------------------------------------------
* Mrs. Buttner is an "interested person" as defined in the Investment
Company Act of 1940 by virtue of her positions with the Adviser and her
indirect ownership of a controlling interest in the Adviser; Mrs. Ruth is
an interested person by virtue of having been a director of the Adviser
within the last 2 years.
Unless otherwise indicated, the address for each of the above is 220 East 42nd
Street, New York, NY 10017.
- --------------------------------------------------------------------------------
The Trust's Statement of Additional Information (SAI) includes additional
information about the Trust's trustees and is available, without charge, upon
request by calling 1-800-243-2729.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
24
Value Line Aggressive Income Trust
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Value Line Aggressive Income Trust
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26
Value Line Aggressive Income Trust
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27
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 fund may be subject to
state and local taxes and the Alternative Minimum Tax (if applicable).
1985 -- Value Line Convertible Fund seeks high current income together with
capital appreciation primarily from convertible securities ranked 1 or 2 for
year-ahead performance by the Value Line Convertible Ranking System.
1986 -- Value Line Aggressive Income Trust seeks to maximize current income.
1987 -- Value Line New York Tax Exempt Trust seeks to provide New York taxpayers
with the maximum income exempt from New York State, New York City and federal
income taxes while avoiding undue risk to principal. The Trust may be subject to
state and local taxes and the Alternative Minimum Tax (if applicable).
1987 -- Value Line Strategic Asset Management Trust* seeks to achieve a high
total investment return consistent with reasonable risk.
1993 --Value Line Emerging Opportunities Fund invests primarily in common stocks
or securities convertible into common stock, with its primary objective being
long-term growth of capital.
1993 -- Value Line Asset Allocation Fund seeks high total investment return,
consistent with reasonable risk. The Fund invests in stocks, bonds and money
market instruments utilizing quantitative modeling to determine the asset mix.
* Only available through the purchase of Guardian Investor, a tax deferred
variable annuity, or ValuePlus, a variable life insurance policy.
For more complete information about any of the Value Line Funds, including
charges and expenses, send for a prospectus from Value Line Securities, Inc.,
220 East 42nd Street, New York, New York 10017-5891 or call 1-800-223-0818, 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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28
INVESTMENT ADVISER Value Line, Inc.
220 East 42nd Street
New York, NY 10017-5891
DISTRIBUTOR Value Line Securities, Inc.
220 East 42nd Street
New York, NY 10017-5891
CUSTODIAN BANK State Street Bank and Trust Co.
225 Franklin Street
Boston, MA 02110
SHAREHOLDER State Street Bank and Trust Co.
SERVICING AGENT c/o BFDS
P.O. Box 219729 Kansas
City, MO 64121-9729
INDEPENDENT PricewaterhouseCoopers LLP
REGISTERED PUBLIC 300 Madison Avenue
ACCOUNTING FIRM New York, NY 10017
LEGAL COUNSEL Peter D. Lowenstein, Esq.
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
Jeffrey Geffen
Vice President
Sigourney B. Romaine
Vice President
David T. Henigson
Vice President and
Secretary/Treasurer
Sherwood P. Larkin
Assistant Treasurer,
Assistant Secretary
Howard A. Brecher
Assistant Treasurer,
Assistant Secretary
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 Trust (obtainable from the Distributor).
#532850
Item 2. Code of Ethics
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(a) The Registrant has adopted a Code of Ethics that applies to its
principal executive officer, and principal financial officer and principal
accounting officer.
(f) Pursuant to item 12(a), the Registrant is attaching as an
exhibit a copy of its Code of Ethics that applies to its principal executive
officer, and principal financial officer and principal accounting officer.
Item 3. Audit Committee Financial Expert.
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(a)(1) The Registrant has an Audit Committee Financial Expert serving
on its Audit Committee.
(2) The Registrant's Board has designated John W. Chandler, a member
of the Registrant's Audit Committee, as the Registrant's Audit Committee
Financial Expert. Mr. Chandler is an independent director who is a senior
consultant with Academic Search Consultation Service. He spent most of his
professional career at Williams College, where he served as a faculty member,
Dean of the Faculty, and President (1973-85). He also served as President of
Hamilton College (1968-73), and as President of the Association of American
Colleges and Universities (1985-90). He has also previously served as Trustee
Emeritus and Chairman of the Board of Trustees of Duke University.
A person who is designated as an "audit committee financial expert" shall not
make such person an "expert" for any purpose, including without limitation under
Section 11 of the Securities Act of 1933 or under applicable fiduciary laws, as
a result of being designated or identified as an audit committee financial
expert. The designation or identification of a person as an audit committee
financial expert does not impose on such person any duties, obligations, or
liabilities that are greater than the duties, obligations, and liabilities
imposed on such person as a member of the audit committee and Board of Trustees
in the absence of such designation or identification.
Item 4. Principal Accountant Fees and Services
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(a) Audit Fees 2005 - $30,579
Audit Fees 2004 - $29,140.
(b) Audit-Related fees - None.
(c) Tax Preparation Fees 2005 - $5,400
Tax Preparation Fees 2004 - $6,840.
(d) All Other Fees - None
(e)(1) Audit Committee Pre-Approval Policy. All services to be
performed for the Registrant by PricewaterhouseCoopers LLP must
be pre-approved by the audit committee. All services performed
during 2005 and 2004 were pre-approved by the committee.
(e)(2) Not applicable.
(f) Not applicable.
(g) Aggregate Non-Audit Fees 2005 - $5,400
Aggregate Non-Audit Fees 2004 - $$6,840.
(h) Not applicable.
Item 11. 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 12. Exhibits.
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(a) Code of Business Conduct and Ethics for Principal Executive and
Senior Financial Officers attached hereto as Exhibit 100.COE
(b)(1) Certification pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2) attached hereto as
Exhibit 99.CERT.
(2) Certification pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
By /s/ Jean B. Buttner
---------------------------------
Jean B. Buttner, President
Date: April 5, 2005
------------------
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: April 5, 2005
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