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
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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
Date of fiscal year end: January 31, 2005
Date of reporting period: July 31, 2005
Item I. Reports to Stockholders.
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SEMI-ANNUAL REPORT
----------------------------
July 31, 2005
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Value Line
Aggressive
Income Trust
[LOGO]
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VALUE LINE
No-Load
Mutual
Funds
Value Line Aggressive Income Trust
To Our Value Line Aggressive
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To Our Shareholders:
During the six months ended July 31, 2005 the total return of the Value Line
Aggressive Income Trust was 2.39%. This showing underperformed the Lehman
Brothers High Yield Index(1), a proxy for the overall high-yield market, which
was up 3.01% over the same period.
The last six months have been somewhat volatile for the high yield markets and
the yield spread at which the asset class trades above the Treasury market. When
the rating agencies downgraded two of the major automakers in the spring, it
created an exodus from the sector by some investors. This lead to spreads
widening out from about 3% above Treasury yields at the beginning of the year to
roughly 4.25% at the bottom of the market in the spring. Over the last few
months, however, these spreads have narrowed to the 3.25% area. The recent
optimism is due to the release of stronger economic data over the last few
months, combined with low default rates. Standard & Poor's reported for the
trailing-twelve-month period ending in July that its default rate was 2.13%, a
level below the historical average and it forecast only a slight rise in this
number over the coming year. While the U.S. economy is likely to grow at a solid
3.5% to 4.5% rate in the second half of 2005, we expect economic comparisons to
become more difficult next year due to the lagging effects of the Federal
Reserve's tighter monetary policy and the higher energy prices, which can act as
a tax on consumers.
With the U.S. economy's growth likely to slow, we continue to focus our
investments in the more liquid and stronger credits available in the high yield
sector. During the past six months, we have continued to overweight our position
in the energy-related sector as it currently accounts for roughly 25% of the
fund's holdings. The large increase in oil and natural gas commodity prices
again this year augurs well for continued strong earnings and cash flows by
these companies. While these commodity prices can be volatile, we believe oil
will stay above $50 a barrel in the foreseeable future given the strong global
demand for these resources, especially in the developing countries of Asia. If
this proves true, our investments in this sector should continue to perform
well. Following the various energy segments, we have 5% to 6% weightings of the
fund in the chemical, homebuilding, and food processing sectors. 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
September 7, 2005
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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 economic expansion is likely to move forward at a modest rate of 3%-4%
during the latter stages of this year, a level of activity that should be
sustained by healthy levels of construction spending and capital goods demand.
Moreover, recent trends suggest that the economy will continue to grow at a
stable 3%, or so, in 2006.
Helping to sustain this upturn in 2006 are likely to be solid levels of activity
in the construction, industrial, and service sectors. Such growth will probably
be accompanied by modest rates of inflation. The wild card in this equation, and
one reason that we are not likely to see a higher level of business growth, is
the surging price of oil. Should that pivotal commodity not stabilize in price
over the next several months, the sustainability of the long economic expansion,
as well as the prolonged period of comparative of price stability, would be
threatened. The impact from Hurricane Katrina, and the devastation it has
brought about, could also serve to constrain growth some what in certain
sectors.
A continuing steady rate of gross domestic product growth and the accompanying
stable rates of inflation that we expect would have positive ramifications for
the financial markets. That's because this combination should allow the Federal
Reserve Board to bring its cycle of monetary tightening to a close over the next
several months--if not sooner--without undue harm to the lengthy economic and
corporate earnings up cycles.
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3
Value Line Aggressive Income Trust
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FUND EXPENSES:
Example
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and service (12b-1) fees; and other Fund expenses. This
Example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with the ongoing costs of
investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (February 1, 2005 through July 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 Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses in the table are meant to highlight your ongoing
costs and will not help you determine the relative cost of owning different
funds.
Expenses*
paid during
Beginning Ending period
account account 2/1/05
value value thru
2/1/05 7/31/05 7/31/05
-------------- -------------- ------------
Actual ........................................... $ 1,000.00 $ 1,023.90 $ 7.18
Hypothetical (5% return before expenses) ......... $ 1,000.00 $ 1,017.70 $ 7.15
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* Expenses are equal to the Fund's annualized expense ratio of 1.43%,
multiplied by the average account value over the period, multiplied by
181/365 to reflect the one-half period.
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4
Value Line Aggressive Income Trust
Portfolio Highlights at July 31, 2005 (unaudited)
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Ten Largest Bond and Note Holdings
Par Percentage of
Issue Value Value Net Assets
- -----------------------------------------------------------------------------------------------------------------------------
Vintage Petroleum, Inc., Senior Subordinated Notes, 7 7/8%, 5/15/11 ........ $1,250,000 $1,315,625 2.70%
Western Oil Sands, Inc., Secured Notes, 8 3/8%, 5/1/12 ..................... 1,000,000 1,156,250 2.37
Bluewater Finance Ltd., Guaranteed Notes, 10 1/4%, 2/15/12 ................. 1,000,000 1,080,000 2.22
USEC, Inc., Senior Notes, 6 5/8%, 1/20/06 .................................. 1,000,000 995,000 2.04
Allegheny Technologies, Inc., Notes, 8 3/8%, 12/15/11 ...................... 800,000 840,000 1.72
Titan Corp. (The), Guaranteed Notes, 8%, 5/15/11 ........................... 750,000 825,000 1.69
General Maritime Corp., Senior Notes, 10%, 3/15/13 ......................... 750,000 819,375 1.68
OM Group, Inc., Guaranteed Notes, 9 1/4%, 12/15/11 ......................... 800,000 816,000 1.67
Premcor Refining Group, Senior Subordinated Notes, 7 3/4%, 2/1/12 .......... 750,000 811,875 1.67
Lone Star Technologies, Inc., Guaranteed Notes, Series "B", 9%, 6/1/11 ..... 750,000 800,625 1.64
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Asset Allocation -- Percentage of Net Assets
[The following table was represented as a pie chart in the printed material.]
Bonds & Notes 83.6%
Cash & Other 10.2%
Common & Preferred Stocks 6.2%
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Sector Weightings -- Percentage of Total Investment Securities
[The following table was represented as a bar chart in the printed material.]
Energy 23.8%
Consumer, Cyclical 19.6%
Industrial Materials 14.6%
Basic Materials 14.0%
Consumer, Non-Cyclical 13.1%
Financial Services 9.5%
Communications 3.1%
Technology 1.5%
Utilities 0.8%
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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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CONVERTIBLE BONDS & NOTES (2.6%)
AIR TRANSPORT (0.4%)
$ 250,000 ExpressJet Holdings, Inc., 4 1/4%,
(each note is convertible to
54.9451 shares of Common
Stock at any time) 8/1/23 ..................... $ 213,437
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GROCERY (1.0%)
500,000 Wild Oats Markets, Inc., 3 1/4%,
(each note is convertible to
56.5099 shares of Common
Stock at any time) 5/15/34(1) ................. 483,750
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RETAIL AUTOMOTIVE (0.2%)
100,000 Pep Boys-Manny, Moe & Jack
(The), 4 1/4%, (each note is
convertible to 44.6484 shares
of Common Stock at any
time) 6/1/07 .................................. 96,625
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TOBACCO (1.0%)
500,000 Vector Group Ltd., 6 1/4%, (each
note is convertible to 42.3279
shares of Common Stock at any
time) 7/15/08 ................................. 490,000
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TOTAL CONVERTIBLE
BONDS & NOTES
(Cost $1,268,665) ............................. 1,283,812
==========
CORPORATE BONDS & NOTES (81.0%)
AIR TRANSPORT (0.5%)
250,000 Petroleum Helicopters, Inc.,
Guaranteed Notes, Series "B",
9 3/8%, 5/1/09 ................................ 262,813
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AUTO & TRUCK (0.7%)
400,000 General Motors Corp.,
Debentures, 8 1/4%, 7/15/23 ................... 358,000
----------
CABLE TV (1.6%)
750,000 MediaCom LLC, Senior Notes,
9 1/2%, 1/15/13 ............................... 766,875
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CHEMICAL -- DIVERSIFIED (1.1%)
500,000 Equistar Chemicals L.P.,
Guaranteed Notes,
101/8%, 9/1/08 ................................ 550,000
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CHEMICAL -- SPECIALITY (4.1%)
600,000 ARCO Chemical Co., Debentures,
9.80%, 2/1/20 ................................. 672,000
800,000 OM Group, Inc., Guaranteed
Notes, 9 1/4%, 12/15/11 ....................... 816,000
500,000 PolyOne Corp., Senior Notes,
8 7/8%, 5/1/12 ................................ 501,250
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1,989,250
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COAL (4.6%)
750,000 Consolidation Coal, Notes, Series
MTN, 8 1/4%, 6/1/07(1) ........................ 786,213
650,000 Massey Energy Co., Notes,
6.95%, 3/1/07 ................................. 664,625
750,000 Massey Energy Co., Senior Notes,
6 5/8%, 11/15/10 .............................. 774,375
----------
2,225,213
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COMPUTER SOFTWARE
SERVICES (1.0%)
500,000 Unisys Corp., Senior Notes,
6 7/8%, 3/15/10 ............................... 495,000
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DIVERSIFIED COMPANY (1.6%)
500,000 Geon Co. (The), Debentures,
7 1/2%, 12/15/15 .............................. 460,000
300,000 W.H. Holdings Ltd., Senior Notes,
9 1/2%, 4/1/11 ................................ 321,000
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781,000
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DRUG (0.9%)
500,000 Elan Finance PLC, Senior Notes,
7 3/4%, 11/15/11(1) ........................... 435,000
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ELECTRONICS (2.8%)
500,000 Avnet, Inc., Notes,
9 3/4%, 2/15/08 ............................... 555,000
750,000 Titan Corp. (The), Guaranteed
Notes, 8%, 5/15/11 ............................ 825,000
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1,380,000
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ENTERTAINMENT (1.1%)
500,000 Royal Caribbean Cruises Ltd.,
Properties, Secured Notes,
7 1/4%, 8/15/06 ............................... 512,500
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See Notes to Financial Statements.
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6
Value Line Aggressive Income Trust
July 31, 2005
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Principal
Amount Value
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FINANCIAL SERVICES (0.9%)
$ 43,000 IOS Capital, Inc., Notes,
7 1/4%, 6/30/08 ............................... $ 44,209
500,000 Vesta Insurance Group, Inc.,
Debentures, 8 3/4%, 7/15/25 ................... 388,670
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432,879
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FOOD PROCESSING (4.3%)
600,000 Chiquita Brands International,
Inc., Senior Notes,
7 1/2%, 11/1/14 ............................... 582,000
325,000 Gold Kist, Inc., Guaranteed Notes,
10 1/4%, 3/15/14 .............................. 367,656
500,000 Land O' Lakes, Inc., Senior Notes,
8 3/4%, 11/15/11 .............................. 525,000
600,000 Smithfield Foods, Inc.,
Senior Subordinated Notes,
7 5/8%, 2/15/08 ............................... 627,000
----------
2,101,656
----------
GROCERY (1.0%)
500,000 Delhaize America, Inc.,
Guaranteed Notes,
7 3/8%, 4/15/06 ............................... 509,640
----------
HEALTHCARE INFORMATION
SYSTEMS (1.3%)
600,000 Rotech Healthcare, Inc.,
Guaranteed Notes,
9 1/2%, 4/1/12 ................................ 645,000
----------
HOME BUILDING (5.4%)
500,000 Meritage Homes Corp.,
Guaranteed Notes,
9 3/4%, 6/1/11 ................................ 537,500
600,000 Ply Gem Industries, Inc., Senior
Subordinated Notes,
9%, 2/15/12 ................................... 525,000
500,000 Technical Olympic USA, Inc.,
Guaranteed Notes,
10 3/8%, 7/1/12 ............................... 532,500
500,000 Technical Olympic USA, Inc.,
Subordinated Notes,
7 1/2%, 3/15/11 ............................... 480,000
500,000 William Lyon Homes, Inc.,
Guaranteed Notes,
10 3/4%, 4/1/13 ................................. 553,750
----------
2,628,750
----------
HOTEL/GAMING (3.6%)
600,000 American Casino & Entertainment
Properties, Secured Notes,
7.85%, 2/1/12 ................................. 639,000
500,000 Boyd Gaming Corp., Senior
Subordinated Notes,
6 3/4%, 4/15/14 ............................... 516,875
500,000 Hilton Hotels Corp., Senior Notes,
7 1/2, 12/15/17 ............................... 576,635
----------
1,732,510
----------
INSURANCE -- PROPERTY
CASUALTY (1.1%)
500,000 PXRE Capital Trust I, Pass Thru
Securities, 8.85%, 2/1/27 ..................... 518,461
----------
MACHINERY (0.7%)
325,000 JLG Industries, Inc., Senior
Subordinated Notes,
8 3/8%, 6/15/12 ............................... 344,500
----------
MARITIME (3.0%)
750,000 General Maritime Corp., Senior
Notes, 10%, 3/15/13 ........................... 819,375
600,000 GulfMark Offshore, Inc., Senior
Notes, 7 3/4%, 7/15/14 ........................ 636,750
----------
1,456,125
----------
MEDICAL SERVICES (1.1%)
500,000 Res-Care, Inc., Guaranteed Notes,
10 5/8%, 11/15/08 ............................. 533,750
----------
METAL FABRICATING (1.6%)
750,000 Lone Star Technologies, Inc.,
Guaranteed Notes, Series "B",
9%, 6/1/11 .................................... 800,625
----------
METALS & MINING (5.8%)
500,000 Aleris International, Inc., Secured
Notes, 10 3/8%, 10/15/10 ...................... 551,250
800,000 Allegheny Technologies, Inc.,
Notes, 8 3/8%, 12/15/11 ....................... 840,000
1,000,000 USEC, Inc., Senior Notes,
6 5/8%, 1/20/06 ............................... 995,000
500,000 Wolverine Tube, Inc., Guaranteed
Notes, 10 1/2%, 4/1/09 ........................ 455,000
----------
2,841,250
----------
See Notes to Financial Statements.
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7
Value Line Aggressive Income Trust
Schedule of Investments (unaudited)
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Principal
Amount Value
- --------------------------------------------------------------------------------
NATURAL GAS --
DIVERSIFIED (2.7%)
$1,250,000 Vintage Petroleum, Inc., Senior
Subordinated Notes,
7 7/8%, 5/15/11 ............................... $1,315,625
----------
OILFIELD SERVICES/
EQUIPMENT (7.3%)
1,000,000 Bluewater Finance Ltd.,
Guaranteed Notes,
10 1/4%, 2/15/12 .............................. 1,080,000
316,000 Newpark Resources, Inc.,
Guaranteed Notes, Series "B",
8 5/8%, 12/15/07 .............................. 315,605
600,000 Petroleum Geo-Services, Notes,
10%, 11/5/10 .................................. 678,000
610,000 Sonat, Inc., Notes, 7 5/8%, 7/15/11 ............. 628,300
34,000 Teekay Shipping Corp.,
Guaranteed 1st Preferred
Shipping Mortgage Notes,
8.32%, 2/1/06 ................................. 34,383
750,000 TransMontaigne, Inc., Senior
Subordinated Notes,
9 1/8%, 6/1/10 ................................ 798,750
----------
3,535,038
----------
PACKAGING & CONTAINER (1.3%)
500,000 Pliant Corp., Senior Subordinated
Notes, 13%, 6/1/10 ............................ 405,000
300,000 Tekni-Plex, Inc., Guaranteed
Notes, 12 3/4%, 6/15/10 ....................... 220,500
----------
625,500
----------
PETROLEUM -- INTEGRATED (1.7%)
750,000 Premcor Refining Group, Senior
Subordinated Notes,
7 3/4%, 2/1/12 ................................ 811,875
----------
PETROLEUM -- PRODUCING (3.9%)
700,000 Stone Energy Corp., Senior
Subordinated Notes,
8 1/4%, 12/15/11 .............................. 740,250
1,000,000 Western Oil Sands, Inc., Secured
Notes, 8 3/8%, 5/1/12 ........................... 1,156,250
----------
1,896,500
----------
R.E.I.T. (1.7%)
250,000 Crescent Real Estate Equities,
Senior Notes, 9 1/4%, 4/15/09 ................. 266,250
500,000 Senior Housing Properties Trust,
Senior Notes, 8 5/8%, 1/15/12 ................. 561,250
----------
827,500
----------
RETAIL -- SPECIAL LINES (3.6%)
250,000 Blockbuster, Inc., Senior
Subordinated Notes,
9%, 9/1/12(1) ................................. 226,875
750,000 Broder Brothers, Co., Senior
Notes, 11 1/4%, 10/15/10 ...................... 738,750
750,000 Phillips-Van Heusen Corp., Senior
Notes, 7 1/4%, 2/15/11 ........................ 789,375
----------
1,755,000
----------
RETAIL STORE (2.0%)
410,000 Dillard's, Inc., Notes,
7.85%, 10/1/12 ................................ 428,450
500,000 Dollar General Corp., Guaranteed
Notes, 8 5/8%, 6/15/10 ........................ 566,250
----------
994,700
----------
SHOE (1.6%)
750,000 Payless ShoeSource, Inc.,
Senior Subordinated Notes,
8 1/4%, 8/1/13 ................................ 792,188
----------
STEEL (1.0%)
421,000 United States Steel Corp., Senior
Notes, 9 3/4%, 5/15/10 ........................ 463,100
----------
TELECOMMUNICATION
SERVICES (2.2%)
500,000 Alamosa Delaware, Inc., Senior
Notes, 8 1/2%, 1/31/12 ........................ 541,250
500,000 Syniverse Technologies, Inc.,
Guaranteed Notes, Series "B",
12 3/4%, 2/1/09 ............................... 555,000
----------
1,096,250
----------
TRUCKING (1.1%)
500,000 Roadway Corp., Guaranteed
Notes, 8 1/4%, 12/1/08 ........................ 543,740
----------
See Notes to Financial Statements.
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8
Value Line Aggressive Income Trust
July 31, 2005
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Principal
Amount Value
- --------------------------------------------------------------------------------
UNIVERSAL GOODS (1.1%)
$500,000 Sensient Technologies Corp.,
Notes, 6 1/2%, 4/01/09 ........................ $ 512,828
----------
TOTAL CORPORATE
BONDS & NOTES
(Cost $37,822,680) ............................ 39,470,641
==========
Number
of Shares Value
- --------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS (0.8%)
CHEMICAL -- DIVERSIFIED (0.4%)
4,000 Huntsman Corporation, Par $50
(each share is convertible to
1.7674 shares of Common
Stock @ $21.68) 5%, 2/16/08 ................... 199,000
----------
MEDICAL SUPPLIES (0.4%)
3,000 Baxter International, Inc., Par $50
(each share is convertible to
1.4011 shares of Common
Stock @ $39.87) 7%, 2/16/06.................... 168,960
----------
TOTAL CONVERTIBLE
PREFERRED STOCKS
(Cost $308,990) ............................... 367,960
==========
PREFERRED STOCKS (0.5%)
R.E.I.T. (0.5%)
10,000 Health Care REIT, Inc.,
Series "F", 7 5/8% ............................ 254,100
----------
TOTAL PREFERRED STOCKS
(Cost $250,000) ............................... 254,100
==========
WARRANTS (0.0%)
TELECOMMUNICATION
SERVICES (0.0%)
2,490 XO Communications, Inc., Series
"A", Expiring 1/16/10(2) ...................... 871
1,868 XO Communications, Inc., Series
"B", Expiring 1/16/10(2) ...................... 514
1,868 XO Communications, Inc., Series
"C", Expiring 1/16/10(2) ...................... 448
----------
TOTAL WARRANTS
(Cost $0) ..................................... 1,833
==========
COMMON STOCKS (4.9%)
AEROSPACE/DEFENSE (0.3%)
3,300 United Industrial Corp. ......................... $ 122,034
----------
BIOTECHNOLOGY (0.1%)
10,000 Savient Pharmaceuticals, Inc.(2) ................ 45,000
----------
COMPUTER & PERIPHERALS (0.3%)
10,000 Identix, Inc.(2) ................................ 53,900
10,000 Quantum Corp.(2) ................................ 27,800
25,000 Silicon Graphics, Inc.(2) ....................... 17,750
8,000 Unisys Corp.(2) ................................. 51,760
----------
151,210
----------
ELECTRICAL UTILITY --
WEST (0.2%)
5,000 Xcel Energy, Inc. ............................... 97,050
----------
ELECTRONICS (0.1%)
8,000 Bookham, Inc.(2) ................................ 25,360
10,000 Valence Technology, Inc.(2) ..................... 31,100
----------
56,460
----------
ENVIRONMENTAL (0.0%)
5,000 Perma-Fix Environmental
Services, Inc.(2) ............................. 9,450
----------
INSURANCE -- LIFE (0.2%)
6,000 Phoenix Companies, Inc. (The) ................... 75,600
----------
NATURAL GAS --
DISTRIBUTION (1.2%)
5,000 Nicor Inc. ...................................... 204,100
4,000 Northern Border Partners L.P. ................... 202,600
8,000 SEMCO Energy, Inc.(2) ........................... 53,840
4,000 Vintage Petroleum, Inc. ......................... 140,520
----------
601,060
----------
See Notes to Financial Statements.
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9
Value Line Aggressive Income Trust
Schedule of Investments (unaudited)
- --------------------------------------------------------------------------------
Number
of Shares Value
- --------------------------------------------------------------------------------
PETROLEUM -- INTEGRATED (1.2%)
4,000 Marathon Oil Corp. .............................. $ 233,440
15,000 Pengrowth Energy Trust,
Class "A" ..................................... 351,000
-----------
584,440
-----------
PRECIOUS METALS (0.2%)
5,000 Agnico-Eagle Mines Ltd. ......................... 61,100
12,000 Coeur d'Alene Mines Corp.(2) .................... 42,600
-----------
103,700
-----------
R.E.I.T. (0.9%)
10,000 Crescent Real Estate Equities Co. 195,200
15,000 GMH Communities Trust ........................... 224,850
-----------
420,050
-----------
RECREATION (0.0%)
4,000 Meade Instruments Corp.(2) ...................... 10,440
-----------
SEMICONDUCTOR (0.1%)
10,000 ANADIGICS, Inc.(2) .............................. 25,100
-----------
TELECOMMUNICATION
EQUIPMENT (0.0%)
5,000 Captaris, Inc.(2) ............................... 18,350
-----------
WIRELESS NETWORKING (0.1%)
5,000 Alvarion Ltd.(2) ................................ 47,600
-----------
TOTAL COMMON STOCKS
(Cost $1,975,953) ............................. 2,367,544
===========
TOTAL INVESTMENT
SECURITIES (89.8%)
(Cost $41,626,288) ............................ 43,745,890
===========
Principal
Amount Value
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT (8.4%)
(including accrued interest)
$ 1,800,000 Collateralized by $1,810,000
U.S. Treasury Bonds 4.25%
due 11/15/13, with a value
of $1,839,253 (with Morgan
Stanley Dean Witter & Co.,
3.21%, dated 7/29/05, due
8/1/05 delivery value
$1,800,482) ................................... $ 1,800,482
2,300,000 Collateralized by $1,685,000
U.S. Treasury Bonds 7.50%
due 11/15/24, with a value
of $2,363,693 (with UBS
Warburg LLC., 3.21%, dated
7/29/05, due 8/1/05 delivery
value $2,300,615) ............................. 2,300,615
-----------
TOTAL REPURCHASE
AGREEMENTS
(Cost $4,101,097) ........................... 4,101,097
-----------
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES (1.8%) ................................ 891,928
-----------
NET ASSETS (100.0%) ........................................... $48,738,915
===========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE,
PER OUTSTANDING SHARE
($48,738,915 [divided by] 9,519,809
shares of beneficial interest
outstanding) ................................................ $ 5.12
===========
(1) 144A Security where certain conditions for public sale may exist.
(2) Non-income producing security.
See Notes to Financial Statements.
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10
Value Line Aggressive Income Trust
Statement of Assets and Liabilities
at July 31, 2005 (unaudited)
- --------------------------------------------------------------------------------
(In thousands
except per share
amount)
----------------
Assets:
Investment securities, at value
(Cost -- $41,626) ........................................ $ 43,746
Repurchase agreements
(Cost -- $4,101) ......................................... 4,101
Cash ........................................................ 76
Interest receivable ......................................... 895
Prepaid expense ............................................. 57
Receivable for trust shares sold ............................ 47
Dividends receivable ........................................ 17
---------
Total Assets ........................................... 48,939
---------
Liabilities:
Dividends payable to shareholders ........................... 58
Payable for trust shares repurchased ........................ 24
Accrued expenses:
Advisory fee ............................................. 31
Service and distribution plan fees payable ............... 10
Other .................................................... 77
---------
Total Liabilities ...................................... 200
---------
Net Assets .................................................. $ 48,739
=========
Net Assets
Shares of beneficial interest, at $.01 par
value (authorized unlimited, outstanding
9,519,809) ............................................... $ 95
Additional paid-in capital .................................. 111,654
Distributions in excess of net
investment income ........................................ (22)
Accumulated net realized loss
on investments ........................................... (65,108)
Unrealized net appreciation of investments .................. 2,120
---------
Net Assets .................................................. $ 48,739
=========
Net Asset Value, Offering and Redemption
Price, per Outstanding Share
($48,738,915 [divided by] 9,519,809 shares of
beneficial interest outstanding) ......................... $ 5.12
=========
Statement of Operations
for the Six Months Ended July 31, 2005 (unaudited)
- ------------------------------------------------------------------------------
(In thousands)
--------------
Investment Income:
Dividends (net of withholding taxes of $3) .................. $ 118
Interest (net of withholding taxes of $2) ................... 1,857
---------
Total Income ............................................. 1,975
---------
Expenses:
Advisory fee ................................................ 191
Service and distribution plan fee ........................... 64
Audit and legal fees ........................................ 28
Transfer agent fees ......................................... 24
Printing .................................................... 16
Custodian fees .............................................. 11
Trustees' fees and expenses ................................. 10
Quote charge ................................................ 7
Insurance and other ......................................... 7
Postage ..................................................... 6
---------
Total expenses before custody credits .................... 364
Less: custody credits .................................... (1)
---------
Net Expenses ............................................. 363
---------
Net Investment Income ....................................... 1,612
---------
Realized and Unrealized Gain (Loss)
on Investments:
Net realized gain ........................................ 755
Change in Net Unrealized Appreciation .................... (1,231)
---------
Net Realized Gain and Change in
Net Unrealized Appreciation
on Investments ........................................... (476)
---------
Net Increase in Net Assets
from Operations .......................................... $ 1,136
=========
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
11
Value Line Aggressive Income Trust
Statement of Changes in Net Assets for the
Six Months Ended July 31, 2005 (unaudited)
and for the Year Ended January 31, 2005
- --------------------------------------------------------------------------------
Six Months Ended Year Ended
July 31, 2005 January 31,
(unaudited) 2005
------------------------------
(In thousands)
Operations:
Net investment income ..................................... $ 1,612 $ 3,829
Net realized gain on investments .......................... 755 532
Change in net unrealized appreciation (depreciation) ...... (1,231) 544
--------------------------
Net increase in net assets from operations .............. 1,136 4,905
--------------------------
Distributions to Shareholders:
Net investment income ..................................... (1,612) (3,827)
--------------------------
Trust Share Transactions:
Net proceeds from sale of shares .......................... 2,409 16,048
Proceeds from reinvestment of distributions to shareholders 1,242 3,044
--------------------------
3,651 19,092
Cost of shares repurchased ................................ (14,355) (24,352)
--------------------------
Net decrease in net assets from share transactions ........ (10,704) (5,260)
--------------------------
Total Decrease in Net Asset ................................ (11,180) (4,182)
Net Assets:
Beginning of period ....................................... 59,919 64,101
--------------------------
End of period ............................................. $ 48,739 $ 59,919
==========================
Distributions in excess of net investment income ........... $ (22) $ (22)
==========================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12
Value Line Aggressive Income Trust
Notes to Financial Statements (unaudited) July 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.
- --------------------------------------------------------------------------------
13
Value Line Aggressive Income Trust
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
(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 is 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:
Six Months
Ended Year
July 31, Ended
2005 January 31,
(unaudited) 2005
----------------------------
Shares sold ........................ 472 3,195
Shares issued to shareholders
in reinvestment of
dividends ....................... 245 602
------------------------
717 3,797
Shares repurchased ................. (2,816) (4,853)
------------------------
Net increase (decrease) ............ (2,099) (1,056)
========================
Redemption fees of $7,692 and $59,541 were retained by the Trust for the six
months ended July 31, 2005 and the year ended January 31, 2005, respectively.
3. Purchases and Sales of Securities
Purchases and sales of investment securities, excluding short-term securities,
were as follows:
Six Months Ended
July 31, 2005
(unaudited)
----------------
(in thousands)
Purchases:
Investment Securities ........................... $ 6,049
=======
Sales:
Investment Securities ........................... $16,404
=======
- --------------------------------------------------------------------------------
14
Value Line Aggressive Income Trust
July 31, 2005
- --------------------------------------------------------------------------------
4. Income Taxes (unaudited)
At July 31, 2005, information on the tax components of capital is as follows:
(in thousands)
--------------
Cost of investments for tax purposes ..................... $ 45,727
========
Gross tax unrealized appreciation ........................ $ 2,720
Gross tax unrealized depreciation ........................ $ (600)
--------
Net tax unrealized appreciation
on investments ........................................ $ 2,120
========
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)
========
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.
5. Investment Advisory Contract, Management Fees and Transactions With
Affiliates
An advisory fee of $190,921 was paid or payable to Value Line, Inc., the Trust's
investment adviser, (the "Adviser"), for the six months ended July 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 $63,640 were paid or payable to the Distributor under
this Plan for the six months ended July 31, 2005.
For the six months ended July 31, 2005, the Trust's expenses were reduced by
$1,421 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 July 31, 2005, the Adviser and
certain officers and Trustees owned 2,405 shares of beneficial interest in the
Trust, representing .025% of the outstanding shares.
- --------------------------------------------------------------------------------
15
Value Line Aggressive Income Trust
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
year:
Six Months
Ended
July 31, 2005
(unaudited)
-------------
Net asset value, beginning
of period ........................................ $ 5.16
----------
Income from investment
operations:
Net investment income ............................ 0.18
Net gains or losses on securities
(both realized and unrealized) ................. (0.04)
----------
Total from investment operations ................. 0.14
----------
Redemption fees .................................. --
----------
Less distributions:
Dividends from net
investment income .............................. (0.18)
----------
Net asset value, end of period .................... $ 5.12
==========
Total return ...................................... 2.39%(4)
==========
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) ................................... $ 48,739
Ratio of expenses to average
net assets ....................................... 1.43%(2)(3)
Ratio of net investment income to
average net assets ............................... 6.33%(3)
Portfolio turnover rate ........................... 13%(4)
Years Ended January 31,
-----------------------------------------------------------------------------------
2005 2004 2003 2002 2001
-----------------------------------------------------------------------------------
Net asset value, beginning
of period .............................. $ 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 period .......... $ 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 period
(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 1.42% for the six months ended July 31, 2005, 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.
(3) Annualized
(4) Not Annualized
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
16
Value Line Aggressive Income Trust
- --------------------------------------------------------------------------------
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available on the SEC's website at
http://www.sec.gov and may be reviewed and copied at the SEC's Public Reference
Room in Washington, D.C. Information on the operation of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities, and information regarding how
the Fund voted these proxies during the most recent 12-month period ended June
30 is available through the Fund's website at http://www.vlfunds.com and on the
SEC's website at http://www.sec.gov. The description of the policies and
procedures is also available without charge, upon request, by calling
1-800-243-2729.
- --------------------------------------------------------------------------------
17
Value Line Aggressive Income Trust
Factors Considered by the Independent Trustees
in Approving the Agreement (unaudited)
- --------------------------------------------------------------------------------
The Investment Company Act of 1940 requires that the Fund's Agreement be
approved annually by both the Board of Trustees (collectively "the Trustees")
and a majority of the Trustees who are not affiliated with Value Line, Inc. the
Fund's investment adviser ("Value Line") (the "Independent Trustees") voting
separately. The Trustees have determined that the terms of the Fund's investment
advisory agreement (the "Agreement") are fair and reasonable and that renewal of
the contract is in the best interests of the Fund and its shareholders. In
making such determinations, the Independent Trustees relied upon the assistance
of counsel to the Independent Trustees. Throughout the year, including the
meeting specifically focused upon the review of the Agreement, the Independent
Trustees met in executive sessions separately from the Interested Trustees of
the Fund and any officers of Value Line.
Both in meetings specifically addressed to renewal of the Agreement and at other
meetings during the course of the year, the Trustees, including the Independent
Trustees, received materials relating to Value Line's investment and management
services under the Agreement. These materials included (i) information on the
investment performance of the Fund, a peer group of funds and an index, (ii)
sales and redemption data in respect of the Fund, (iii) the general investment
outlook in the markets in which the Fund invests, (iv) arrangements in respect
of the distribution of the Fund's shares, (v) the allocation of the Fund's
brokerage, and (vi) the record of compliance with the Fund's investment policies
and restrictions and with the Fund's Code of Ethics, and the structure and
responsibilities of Value Line's compliance department.
As part of the review of the Agreement, the Independent Trustees requested and
Value Line provided additional information in order to evaluate the quality of
Value Line's services and the reasonableness of the fee under the Agreement.
Among other items, this information included data or analyses of (1) management
and other fees incurred by a peer group of funds selected by an independent
evaluation service (the "Peer Group"), (2) expense ratios for the Fund and the
Peer Group, (3) the investment performance for the Fund and its Peer Group, (4)
Value Line's financial results and condition, including its and certain of its
affiliates' profitability from services performed for the Fund, (5) investment
management staffing, and (6) the potential for achieving further economies of
scale.
The following summarizes matters considered by the Trustees in connection with
their renewal of the Agreement. However, the Trustees did not identify any
single factor as all-important or controlling, and the summary does not detail
all the matters that were considered.
Compliance and Investment Performance. The Trustees determined that Value Line
had policies and systems reasonably designed to achieve compliance with the
Fund's investment objective and regulatory requirements. The Trustees also
reviewed the Fund's investment performance, as well as the Fund's performance
compared to both the performance of a peer group and the results of an index.
The Fund outperformed its Peer Group average for the one-year and three-year
periods ended December 31, 2004. Although the Fund underperformed its Peer Group
for the five-year and 10-year periods ended December 31, 2004, the Trustees
concluded that the Fund's overall performance supported the continuation of the
Agreement.
Value Line's Personnel and Methods. The Trustees reviewed the background of
members of the team responsible for the daily management of the Fund and the
Fund's investment objective and discipline. The Independent Trustees also
engaged in discussions with senior management of Value Line responsible for
investment operations. The Trustees
- --------------------------------------------------------------------------------
18
Value Line Aggressive Income Trust
Factors Considered by the Independent Trustees
in Approving the Agreement (unaudited)
- --------------------------------------------------------------------------------
concluded that Value Line has the quality and depth of personnel and the
well-developed methods essential to performing its duties under the Agreement.
Nature and Quality of Other Services. The Trustees considered the nature,
quality, cost and extent of other services provided to shareholders of the Fund.
The Trustees also considered the nature and extent of the other services
provided by Value Line's affiliates under other contracts and its supervision of
third party service providers. Based on these considerations, the Trustees
concluded that the nature, quality, cost and extent of such services are
satisfactory and reliable and serve the shareholders of the Fund well.
Management Fee and Expenses. The Trustees considered Value Line's fee under the
Agreement relative to the management fees charged by the Peer Group. Although
the Fund's management fee was higher than the average management fee of the Peer
Group, the Trustees concluded that the Adviser's fee was reasonable in light of
the services and expertise provided to the Fund by the Adviser's management team
and the Adviser's proprietary ranking system. While the total expenses of the
Fund exceeded the average expenses of the Peer Group, the Board concluded that
the Fund's expense ratio reflects the smaller size of the Fund relative to the
other funds in its Peer Group as well as the fact that the majority of the funds
in its Peer Group did not have rule 12b-1 plans.
Profitability. The Trustees considered the level of Value Line's profits with
respect to the management of the Fund. This consideration included a review of
Value Line's methodology in allocating certain of its costs to the management of
each Fund. The Trustees concluded that Value Line's profits from management of
the Funds, including the financial results derived from the Fund, bear a
reasonable relationship to the services rendered and are fair for the management
of the Fund in light of the business risks involved.
Economies of Scale. The Trustees noted that, given the current and anticipated
size of the Fund, any perceived and potential economies of scale were not yet a
relevant consideration for the Fund.
Other Benefits to Value Line. The Trustees also considered the character and
amount of fees paid by the Fund, other than under the Agreement, and by the
Fund's shareholders for services provided by Value Line and affiliates.
Conclusion. The Trustees, in light of Value Line's overall performance,
considered it appropriate to continue to retain the management services of Value
Line. Based on their evaluation of all material factors deemed relevant and the
advice of independent counsel, the Trustees concluded that the Agreement with
the Fund is fair and reasonable and voted to approve the continuation of the
Agreement for another year.
- --------------------------------------------------------------------------------
19
Value Line Aggressive Income Trust
Management of the Fund
- --------------------------------------------------------------------------------
MANAGEMENT INFORMATION
The business and affairs of the Fund are managed by the Fund's officers under
the direction of the Board of Directors. The following table sets forth
information on each Director and Officer of the Fund. Each Director serves as a
director or trustee of each of the 14 Value Line Funds and oversees a total of
14 portfolios. Each Director 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 Director
- -----------------------------------------------------------------------------------------------------------------
Interested Directors*
- ---------------------
Jean Bernhard Buttner Chairman of the Since 1987 Chairman, President and Chief Value Line, Inc.
Age 70 Board of Directors Executive Officer of Value Line,
and President Inc. (the "Adviser") and Value
Line Publishing, Inc. Chairman
and President of each of the 15
Value Line Funds and Value
Line Securities, Inc. (the
"Distributor").
- -----------------------------------------------------------------------------------------------------------------
Marion N. Ruth Director Since 2000 Real Estate Executive: None
5 Outrider Road President, Ruth Realty (real
Rolling Hills, CA 90274 estate broker).
Age 70
- -----------------------------------------------------------------------------------------------------------------
Non-Interested Directors*
- -------------------------
John W. Chandler Director Since 1991 Consultant, Academic None
1611 Cold Spring Rd. Search Consultation Service,
Williamstown, MA 01267 Inc.; Trustee Emeritus and
Age 81 Chairman (1993-1994) of
the Board of Trustees of Duke
University; President Emeritus,
Williams College.
- -----------------------------------------------------------------------------------------------------------------
Frances T. Newton Director Since 2000 Customer Support Analyst, None
4921 Buckingham Drive Duke Power Company.
Charlotte, NC 28209
Age 64
- -----------------------------------------------------------------------------------------------------------------
Francis C. Oakley Director Since 2000 Professor of History, Berkshire Life
54 Scott Hill Road Williams College, 1961 to Insurance
Williamstown, MA 01267 present. President Emeritus Company of
Age 74 since 1994 and President, America
1985-1994; Chairman
(1993-1997) and Interim
President (2002) of the American
Council of Learned Societies.
- --------------------------------------------------------------------------------
20
Value Line Aggressive Income Trust
Management of the Fund
- --------------------------------------------------------------------------------
Principal
Occupation Other
Length of During the Directorships
Name, Address, and Age Position Time Served Past 5 Years Held by Director
- --------------------------------------------------------------------------------------------------------------------------
David H. Porter Director Since 1997 Visiting Professor of Classics, None
5 Birch Run Drive Williams College, since 1999;
Saratoga Springs, NY 12866 President Emeritus, Skidmore
Age 69 College since 1999 and President,
1987-1998.
- --------------------------------------------------------------------------------------------------------------------------
Paul Craig Roberts Director Since 1987 Chairman, Institute for Political A. Schulman Inc.
169 Pompano St. Economy. (plastics)
Panama City Beach, FL 32413
Age 66
- --------------------------------------------------------------------------------------------------------------------------
Nancy-Beth Sheerr Director Since 1996 Senior Financial Advisor, None
1409 Beaumont Drive Veritable L.P. (investment adviser)
Gladwyne, PA 19035 since April 1, 2004; Senior
Age 56 Financial Advisor, Hawthorne,
2001-2004.
- --------------------------------------------------------------------------------------------------------------------------
Officers
- --------
Bradley Brooks Vice President Since 2001 Portfolio Manager with
Age 43 the Adviser.
- --------------------------------------------------------------------------------------------------------------------------
David T. Henigson Vice President, Since 1994 Director, Vice President and
Age 47 Secretary and Compliance Officer of the
Treasurer Adviser. Director and Vice
President of the Distributor. Vice
President, Secretary, Treasurer
and Chief Compliance Officer of
each of the 14 Value Line Funds.
- --------------------------------------------------------------------------------------------------------------------------
Howard A. Brecher Assistant Secretary/ Since 2005 Director, Vice President and
Age 51 Assistant Treasurer Secretary of the Adviser. Director
and Vice President of the
Distributor.
- --------------------------------------------------------------------------------------------------------------------------
* Mrs. Buttner is an "interested person" as defined in the Investment
Company Act of 1940 by virtue of her positions with the Adviser and her
indirect ownership of a controlling interest in the Adviser; Mrs. Ruth is
an interested person by virtue of having been a director of the Adviser.
Unless otherwise indicated, the address for each of the above is 220 East 42nd
Street, New York, NY 10017.
- --------------------------------------------------------------------------------
The Fund's Statement of Additional Information (SAI) includes additional
information about the Fund's directors and is available, without charge, upon
request by calling 1-800-243-2729.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
21
Value Line Aggressive Income Trust
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
22
Value Line Aggressive Income Trust
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
23
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 may be subject to state and local taxes and the Alternative
Minimum Tax (if applicable).
1985 -- Value Line Convertible Fund seeks high current income together with
capital appreciation primarily from convertible securities ranked 1 or 2 for
year-ahead performance by the Value Line Convertible Ranking System.
1986 -- Value Line Aggressive Income Trust seeks to maximize current income.
1987 -- Value Line New York Tax Exempt Trust seeks to provide New York
taxpayers with the maximum income exempt from New York State, New York City and
federal income taxes while avoiding undue risk to principal. The Trust may be
subject to state and local taxes and the Alternative Minimum Tax (if
applicable).
1987 -- Value Line Strategic Asset Management Trust* seeks to achieve a high
total investment return consistent with reasonable risk.
1993 -- Value Line Emerging Opportunities Fund invests primarily in common
stocks or securities convertible into common stock, with its primary objective
being long-term growth of capital.
1993 -- Value Line Asset Allocation Fund seeks high total investment return,
consistent with reasonable risk. The Fund invests in stocks, bonds and money
market instruments utilizing quantitative modeling to determine the asset mix.
* Only available through the purchase of Guardian Investor, a tax deferred
variable annuity, or ValuePlus, a variable life insurance policy.
For more complete information about any of the Value Line Funds, including
charges and expenses, send for a prospectus from Value Line Securities, Inc.,
220 East 42nd Street, New York, New York 10017-5891 or call 1-800-243-2729, 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.
- --------------------------------------------------------------------------------
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
DIRECTORS Jean Bernhard Buttner
John W. Chandler
Frances T. Newton
Francis C. Oakley
David H. Porter
Paul Craig Roberts
Marion N. Ruth
Nancy-Beth Sheerr
OFFICERS Jean Bernhard Buttner
Chairman and President
Bradley Brooks
Vice President
David T. Henigson
Vice President
Secretary/Treasurer
Howard A. Brecher
Assistant Secretary/
Assistant Treasurer
This report is issued for information of shareholders. It is not authorized for
distribution to prospective investors unless preceded or accompanied by a
currently effective prospectus of the Trust (obtainable from the Distributor).
#533551
Item 2. Code of Ethics
Not Applicable
Item 3. Audit Committee Financial Expert.
Not Applicable
Item 4. Principal Accountant Fees and Services
Not Applicable
Item 11. Controls and Procedures.
Not Applicable
Item 12. Exhibits.
(a) Not Applicable
(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: 09/30/2005
----------------------
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: 09/30/2005
----------------------