UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file Number 811-4471
Value Line Aggressive Income Trust
- ----------------------------------
(Exact name of registrant as specified in charter)
220 East 42nd Street, New York, N.Y. 10017
- ------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 212-907-1500
Date of fiscal year end: January 31, 2006
Date of reporting period: January 31, 2006
Item 1. Reports to Stockholders.
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
Nancy-Beth Sheerr
OFFICERS Jean Bernhard Buttner
Chairman and President
Bradley Brooks
Vice President
Jeffrey Geffen
Vice President
David T. Henigson
Vice President/Secretary
Stephen R. Anastasio
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).
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ANNUAL REPORT
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January 31, 2006
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Value Line
Aggressive
Income Trust
[VALUE LINE LOGO]
Value Line Aggressive Income Trust
To Our Value Line Aggressive
- --------------------------------------------------------------------------------
To Our Shareholders:
For the twelve months ended January 31, 2006, the total return of Value Line
Aggressive Income Trust was 3.32%. Over the same period, the average High
Current Yield Funds returned 4.0% as measured by Lipper Analytical Services(1)
and the Lehman Brothers U.S. Corporate High-Yield Index(2) reported a gain of
4.51%.
Although the economy has posted a solid performance in the past year, the
Federal Reserve's policy of monetary tightening has put some pressure on higher
yielding securities, thus resulting in a subpar year. Looking forward, we
continue to take a relatively conservative investing position given the
historically low level of interest rates and the historically low credit spread
that the market currently offers. Credit spreads are roughly 1% below their
long-term averages due partly to relatively low default rates over the past
twelve-month period. Forecasts are for the default rate to increase in the year
ahead, so we may be able get better investment rates as 2006 progresses. In the
past year, the current yield of the Trust has risen by roughly 0.5% percent, to
the 6.5% level.
Given our cautious investment stance, we are concentrating on the more liquid
and stronger credits available in the high yield sector. In the past six
months, the Trust has decreased its holdings in the energy sector to 23% from
25% 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 recent levels. After energy, the next largest
sector weightings for the Trust are chemicals and the food services at 6.0%
each. Preserving capital in difficult market environments, while allowing for
an attractive dividend yield, remains our goal. We thank you for your continued
investment with us.
Sincerely,
/s/
Jean Bernhard Buttner
Chairman and President
March 2, 2006
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(1) The Lipper High Current Yield 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. An investment cannot be
made in a Peer Group Average.
(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
Income Trust Shareholders
- --------------------------------------------------------------------------------
Economic Observations
The business expansion slowed markedly during the fourth quarter of 2005, with
growth coming in at a well-below-trend 1.6%. This modest rate of improvement
compares with notably stronger 4.1% rate of growth recorded during the
preceding three months. Going forward, we note that growth is stepping strongly
in the current quarter, with the U.S. gross domestic product likely to increase
by as much as 4% in the period. Thereafter, we would expect some renewed
moderation in growth, with GDP growth averaging just over 3%, for the rest of
2006. Our forecast assumes that oil prices will stabilize in the area of $60 a
barrel and that there will be no supply interruptions evolving from a
deterioration on the global scene.
Helping to sustain this moderate economic improvement are likely to be solid
levels of activity in the manufacturing and capital goods sectors and further
selective gains in retailing. Such economic growth is likely to be accompanied
by moderating demand for housing. A severe housing pullback doesn't seem likely
at this point. Once more, inflation should remain relatively subdued.
Moderating gross domestic product growth and accompanying benign rates of
inflation would have positive ramifications for the stock and bond markets.
That's because this combination would logically allow the Federal Reserve to
bring its cycle of monetary tightening to a close by the middle of this year,
or before its series of interest-rate increases brings about a premature end to
the long business expansion.
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3
Value Line Aggressive Income Trust
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The following graph compares the performance of Value Line Aggressive Income
Trust to that of the Lehman Brothers Aggregate Bond Index and the Lehman
Brothers U.S. Corporate High Yield Index. 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*
[LINE CHART]
Value Line Aggressive Income Lehman Brothers Aggregate Lehman Brothers High Yield
Date Trust Bond Index Corp. Bond Index
- ---------- ---------------------------- -------------------------- --------------------------
2/1/1996 $ 10,000 $ 10,000 $ 10,000
4/30/1996 10,356 9,703 10,023
7/31/1996 10,565 9,840 10,214
10/31/1996 11,156 10,216 10,655
1/31/1997 11,812 10,326 11,049
4/30/1997 11,737 10,390 11,182
7/31/1997 12,584 10,899 11,897
10/31/1997 13,086 11,125 12,116
1/31/1998 13,580 11,433 12,561
4/30/1998 13,941 11,524 12,804
7/31/1998 13,947 11,757 12,968
10/31/1998 12,060 12,163 12,056
1/31/1999 12,883 12,357 12,756
4/30/1999 13,594 12,247 13,050
7/31/1999 13,178 12,050 12,898
10/31/1999 12,961 12,228 12,579
1/31/2000 13,805 12,128 12,815
4/30/2000 13,146 12,401 12,590
7/31/2000 12,890 12,768 12,811
10/31/2000 11,371 13,121 12,377
1/31/2001 11,162 13,805 13,024
4/30/2001 10,901 13,937 12,726
7/31/2001 11,106 14,389 12,777
10/31/2001 10,773 15,031 12,357
1/31/2002 11,148 14,849 12,845
4/30/2002 11,400 15,030 13,172
7/31/2002 10,446 15,474 11,608
10/31/2002 10,154 15,916 11,679
1/31/2003 11,193 16,254 12,995
4/30/2003 12,163 16,602 14,337
7/31/2003 12,666 16,311 14,738
10/31/2003 13,330 16,697 15,624
1/31/2004 13,992 17,043 16,529
4/30/2004 14,092 16,905 16,487
7/31/2004 14,200 17,100 16,664
10/31/2004 14,816 17,620 17,549
1/31/2005 15,188 17,751 18,001
4/30/2005 14,891 17,794 17,562
7/31/2005 15,551 17,920 18,543
10/31/2005 15,263 17,820 18,265
1/31/2006 15,692 18,070 18,813
* 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.
Performance Data:**
Average Annual Growth of an Assumed
Total Return Investment of $10,000
---------------- ----------------------
1 year ended 1/31/06 .......... 3.32% $10,332
5 years ended 1/31/06 ......... 7.05% $14,058
10 years ended 1/31/06 ......... 4.61% $15,692
- --------------------------------------------------------------------------------
** 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 Trust distributions or the redemption of Trust
shares.
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4
Value Line Aggressive Income Trust
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TRUST EXPENSES (unaudited):
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, 2005 through January 31,
2006).
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 shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore, the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if transactional
costs were included, your costs would have been higher.
Expenses*
paid during
Beginning Ending period
account account 8/1/05
value value thru
8/1/05 1/31/06 1/31/06
-------------- -------------- ------------
Actual ........................................... $ 1,000.00 $ 1,009.10 $ 7.49
Hypothetical (5% return before expenses) ......... $ 1,000.00 $ 1,017.75 $ 7.52
- --------------------------------------------------------------------------------
* Expenses are equal to the Trust's annualized expense ratio of 1.48%,
multiplied by the average account value over the period, multiplied by
184/365 to reflect the one-half period.
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5
Value Line Aggressive Income Trust
Portfolio Highlights at January 31, 2006 (unaudited)
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Ten Largest Holdings
Par Percentage of
Issue Value Value Net Assets
- ----------------------------------------------------------------------------- -------------- -------------- --------------
Vintage Petroleum, Inc., Senior Subordinated Notes, 7.88%, 5/15/11 .......... $ 1,250,000 $ 1,306,250 2.98%
Western Oil Sands, Inc., Secured Notes, 8.38%, 5/1/12 ....................... 1,000,000 1,122,500 2.57
Bluewater Finance Ltd., Guaranteed Notes, 10.25%, 2/15/12 ................... 1,000,000 1,077,500 2.46
Allegheny Technologies, Inc., Notes, 8.38%, 12/15/11 ........................ 800,000 872,000 1.99
Premcor Refining Group, Senior Subordinated Notes, 7.75%, 2/1/12 ............ 750,000 795,000 1.82
Lone Star Technologies, Inc., Guaranteed Notes, Series B, 9.00%, 6/1/11 ..... 750,000 790,313 1.81
Payless ShoeSource, Inc. Senior Subordinated Notes, 8.25%, 8/1/13 ........... 750,000 789,375 1.80
Consolidation Coal, Notes, Series MTN, 8.25%, 6/1/07 ........................ 750,000 769,618 1.76
Phillips-Van Heusen Corp., Senior Notes, 7.25%, 2/15/11 ..................... 750,000 765,000 1.75
TransMontaigne, Inc., Senior Subordinated Notes, 9.13%, 6/1/10 .............. 750,000 765,000 1.75
- --------------------------------------------------------------------------------
Asset Allocation -- Percentage of Net Assets
[PIE CHART]
Bonds & Notes 84.70%
Cash & Other 10.20%
Common & Preferred Stocks 5.10%
- --------------------------------------------------------------------------------
Sector Weightings -- Percentage of Total Investment Securities
[HORIZONTAL BAR CHART]
Consumer, Cyclical 26.1%
Energy 22.5%
Consumer, Non-Cyclical 14.5%
Basic Materials 13.5%
Financial Services 9.2%
Industrial Materials 9.0%
Communications 3.3%
Technology 1.6%
Utilities 0.3%
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6
Value Line Aggressive Income Trust
Schedule of Investments January 31, 2006
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Principal
Amount Value
- ----------------- ------------------
CONVERTIBLE
CORPORATE BONDS
& NOTES (2.9%)
AIR TRANSPORT (0.5%)
$250,000 ExpressJet Holdings, Inc., 4.25%,
(each note is convertible to
54.9451 shares of Common
Stock at anytime) 8/1/23 .............. $ 208,125
FOOD WHOLESALERS (1.0%)
500,000 Wild Oats Markets, Inc., 3.25%,
(each note is convertible to
56.5099 shares of Common
Stock at anytime) 5/15/34 ............. 451,875
RETAIL -- AUTOMOTIVE (0.2%)
100,000 PEP Boys-Manny Moe & Jack
(The), 4.25%, (each note is
convertible to 44.6484 shares
of Common Stock at anytime)
6/1/07 ................................ 98,125
TOBACCO (1.2%)
500,000 Vector Group Ltd., 6.25%, (each
note is convertible to 42.3279
shares of Common Stock at
anytime) 7/15/08 ...................... 500,000
-----------
TOTAL CONVERTIBLE
CORPORATE
BONDS & NOTES
(Cost $1,270,515) ..................... 1,258,125
-----------
CORPORATE BONDS
& NOTES (81.8%)
AUTO & TRUCK (0.7%)
400,000 General Motors Corp.,
Debentures, 8.25%, 7/15/23 ............ 292,000
AUTO PARTS (1.7%)
500,000 Delphi Corp., Notes,
6.50%, 8/15/13(1) ..................... 278,750
500,000 Lear Corp., Guaranteed Notes,
Series B, 8.11%, 5/15/09 .............. 460,000
-----------
738,750
-----------
CABLE TV (1.7%)
750,000 MediaCom LLC, Senior Notes,
9.50%, 1/15/13 ........................ 744,375
Principal
Amount Value
- ----------------- ------------------
CHEMICAL -- DIVERSIFIED (1.2%)
$500,000 Equistar Chemicals L.P.,
Guaranteed Notes,
10.13%, 9/1/08 ........................ $ 545,000
CHEMICAL -- SPECIALTY (3.8%)
600,000 ARCO Chemical Co., Debentures,
9.80%, 2/1/20 ......................... 670,500
500,000 OM Group, Inc., Guaranteed
Notes, 9.25%, 12/15/11 ................ 500,000
500,000 PolyOne Corp., Senior Notes,
8.88%, 5/1/12 ......................... 487,500
-----------
1,658,000
-----------
COAL (3.5%)
750,000 Consolidation Coal, Notes,
Series MTN, 8.25%, 6/1/07(2) .......... 769,618
750,000 Massey Energy Co., Senior Notes,
6.63%, 11/15/10 ....................... 761,250
-----------
1,530,868
-----------
COMPUTER SOFTWARE &
SERVICES (1.1%)
500,000 Unisys Corp., Senior Notes,
6.88%, 3/15/10 ........................ 476,250
DIVERSIFIED COMPANIES (1.8%)
500,000 Geon Co. (The), Debentures,
7.50%, 12/15/15 ....................... 455,000
300,000 W.H. Holdings Ltd., Senior Notes,
9.50%, 4/1/11 ......................... 323,250
-----------
778,250
-----------
DRUG (1.1%)
$500,000 Elan Finance PLC, Senior Notes,
7.75%, 11/15/11 ....................... 471,875
ELECTRONICS (2.4%)
500,000 Avnet, Inc., Notes,
9.75%, 2/15/08 ........................ 539,247
500,000 Celestica, Inc., Senior
Subordinated Notes,
7.88%, 7/1/11 ......................... 503,750
-----------
1,042,997
-----------
See Notes to Financial Statements.
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7
Value Line Aggressive Income Trust
Schedule of Investments
- --------------------------------------------------------------------------------
Principal
Amount Value
- ----------------- -----------------
ENTERTAINMENT (1.1%)
$500,000 Royal Caribbean Cruises Ltd.,
Properties, Senior Notes,
7.25%, 8/15/06 ........................ $ 505,000
ENVIRONMENTAL (1.2%)
500,000 IMCO Recycling, Inc., Secured
Notes, 10.38%, 10/15/10 ............... 550,000
FINANCIAL SERVICES --
DIVERSIFIED (0.6%)
500,000 Vesta Insurance Group, Inc.,
Debentures, 8.75%, 7/15/25 ............ 249,413
FOOD PROCESSING (5.1%)
600,000 Chiquita Brands International,
Inc., Senior Notes,
7.50%, 11/1/14 ........................ 528,000
600,000 Chiquita Brands International,
Inc., Senior Notes,
8.88%, 12/1/15 ........................ 556,500
30,000 Land O' Lakes, Inc., Senior Notes,
8.75%, 11/15/11 ....................... 31,500
600,000 Smithfield Foods, Inc., Senior
Subordinated Notes,
7.63%, 2/15/08 ........................ 612,750
500,000 Universal Foods Corp., Notes,
6.50%, 4/1/09 ......................... 506,193
-----------
2,234,943
-----------
GROCERY (1.1%)
500,000 Delhaize America, Inc.,
Guaranteed Notes,
7.38%, 4/15/06 ........................ 501,972
HEALTH CARE INFORMATION
SYSTEMS (1.4%)
600,000 Rotech Healthcare, Inc.,
Guaranteed Notes,
9.50%, 4/1/12 ......................... 630,750
Principal
Amount Value
- ----------------- -----------------
HOME BUILDING (5.5%)
$325,000 Gold Kist, Inc., Senior Notes,
10.25%, 3/15/14 ....................... $ 360,750
500,000 Senior Housing Properties Trust,
Senior Notes, 8.63%, 1/15/12 .......... 548,750
500,000 Technical Olympic USA, Inc.,
Subordinated Notes,
7.50%, 3/15/11 ........................ 456,875
500,000 Technical Olympic USA, Inc.,
Guaranteed Notes,
10.38%, 7/1/12 ........................ 506,250
500,000 William Lyon Homes, Inc.,
Guaranteed Notes,
10.75%, 4/1/13 ........................ 517,500
-----------
2,390,125
-----------
HOTEL/GAMING (5.0%)
600,000 American Casino & Entertainment
Properties, Secured Notes,
7.85%, 2/1/12 ......................... 613,500
500,000 Boyd Gaming Corp., Senior
Subordinated Notes,
6.75%, 4/15/14 ........................ 491,250
500,000 Hilton Hotels Corp., Senior Notes,
7.50%, 12/15/17 ....................... 548,245
500,000 Meritage Corp., Guaranteed Notes,
9.75%, 6/1/11 ......................... 528,125
-----------
2,181,120
-----------
INSURANCE -- PROPERTY &
CASUALTY (1.1%)
500,000 PXRE Capital Trust I, Pass Thru
Securities, 8.85%, 2/1/27 ............. 490,000
MACHINERY (0.8%)
325,000 JLG Industries, Inc., Senior
Subordinated Notes,
8.38%, 6/15/12 ........................ 349,375
MARITIME (0.1%)
34,000 Teekay Shipping Corp.,
Guaranteed Notes,
8.32%, 2/1/06 ......................... 34,383
METAL -- ALUMINUM (1.1%)
500,000 Novelis, Inc., Senior Notes,
7.50%, 2/15/15(2) ..................... 472,500
See Notes to Financial Statements.
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8
Value Line Aggressive Income Trust
January 31, 2006
- --------------------------------------------------------------------------------
Principal
Amount Value
- ------------------ -----------------
METALS FABRICATING (1.8%)
$ 750,000 Lone Star Technologies, Inc.,
Guaranteed Notes, Series B,
9.00%, 6/1/11 ......................... $ 790,313
NATURAL GAS --
DIVERSIFIED (4.3%)
600,000 Ferrellgas Escrow LLC/Ferrellgas
Finance Escrow Corp., Senior
Notes, 6.75%, 5/1/14 .................. 577,500
1,250,000 Vintage Petroleum, Inc., Senior
Subordinated Notes,
7.88%, 5/15/11 ........................ 1,306,250
-----------
1,883,750
-----------
OILFIELD SERVICES/
EQUIPMENT (6.4%)
1,000,000 Bluewater Finance Ltd.,
Guaranteed Notes,
10.25%, 2/15/12 ....................... 1,077,500
600,000 Gulfmark Offshore, Inc.,
Guaranteed Notes,
7.75%, 7/15/14 ........................ 627,000
316,000 Newpark Resources, Inc.,
Guaranteed Notes, Series B,
8.63%, 12/15/07 ....................... 316,000
750,000 TransMontaigne, Inc., Senior
Subordinated Notes,
9.13%, 6/1/10 ......................... 765,000
-----------
2,785,500
-----------
PACKAGING & CONTAINER (0.3%)
500,000 Pliant Corp., Senior Subordinated
Notes, 13.00%, 6/1/10(1) .............. 122,500
PETROLEUM -- INTEGRATED (1.8%)
750,000 Premcor Refining Group, Senior
Subordinated Notes,
7.75%, 2/1/12 ......................... 795,000
Principal
Amount Value
- ------------------ -----------------
PETROLEUM -- PRODUCING (5.9%)
$ 500,000 KCS Energy, Inc., Senior Notes,
7.13%, 4/1/12 ......................... $ 501,250
250,000 Petroleum Helicopters, Inc.,
Guaranteed Notes, Series B,
9.38%, 5/1/09 ......................... 263,125
700,000 Stone Energy Corp., Senior
Subordinated Notes,
8.25%, 12/15/11 ....................... 721,000
1,000,000 Western Oil Sands, Inc., Secured
Notes, 8.38%, 5/1/12 .................. 1,122,500
-----------
2,607,875
-----------
R.E.I.T. (0.6%)
250,000 Crescent Real Estate Equities,
Senior Notes, 9.25%, 4/15/09 .......... 260,625
RESTAURANT (1.2%)
500,000 O'Charleys, Inc., Senior
Subordinated Notes,
9.00%, 11/1/13 ........................ 510,000
RETAIL -- SPECIAL LINES (3.4%)
750,000 Broder Brothers, Co., Senior
Notes, 11.25%, 10/15/10 ............... 736,875
750,000 Phillips-Van Heusen Corp., Senior
Notes, 7.25%, 2/15/11 ................. 765,000
-----------
1,501,875
-----------
RETAIL STORE (3.2%)
410,000 Dillard's, Inc., Notes,
7.85%, 10/1/12 ........................ 418,200
500,000 Dollar General Corp., Guaranteed
Notes, 8.63%, 6/15/10 ................. 545,000
500,000 Jo-Ann Stores, Inc., Senior
Subordinated Notes,
7.50%, 3/1/12 ......................... 430,000
-----------
1,393,200
-----------
SHOE (1.8%)
750,000 Payless ShoeSource, Inc., Senior
Subordinated Notes,
8.25%, 8/1/13 ......................... 789,375
STEEL -- GENERAL (3.0%)
800,000 Allegheny Technologies, Inc.,
Notes, 8.38%, 12/15/11 ................ 872,000
421,000 United States Steel Corp., Senior
Notes, 9.75%, 5/15/10 ................. 458,890
-----------
1,330,890
-----------
See Notes to Financial Statements.
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9
Value Line Aggressive Income Trust
Schedule of Investments
- --------------------------------------------------------------------------------
Principal
Amount Value
- ------------------- -------------
TELECOMMUNICATION
SERVICES (2.5%)
$ 500,000 Alamosa Delaware, Inc., Senior
Notes, 8.50%, 1/31/12 ............ $ 541,875
500,000 Citizens Communications Co.,
Notes, 9.25%, 5/15/11 ............ 550,000
----------
1,091,875
----------
TRUCKING (1.2%)
500,000 Roadway Corp., Guaranteed
Notes, 8.25%, 12/1/08 ............ 530,707
VITAMINS AND
NUTRITION PRODUCTS
(1.3%)
600,000 NBTY, Inc., Senior
Subordinated Notes, 7.13%,
10/1/15(2) ....................... 562,500
----------
TOTAL CORPORATE
BONDS & NOTES
(Cost $35,565,093) ............... 35,823,931
----------
Number of
Shares
- --------- ----- ----------
CONVERTIBLE
PREFERRED
STOCK (1.0%)
CHEMICAL -- DIVERSIFIED (0.6%)
6,000 Huntsman Corp., Par $50
(each share is convertible to
1.7674 shares of Common
Stock @ $21.68),
5.00%, 2/16/08 ................... 276,750
MEDICAL SUPPLIES (0.4%)
3,000 Baxter International, Inc.,
Par $50 (each share is
convertible to 1.4011 shares
of Common Stock @
$39.87), 7.00%, 2/16/06 .......... 154,680
----------
TOTAL CONVERTIBLE
PREFERRED STOCK
(Cost $398,100) .................. 431,430
----------
Number of
Shares Value
- ---------- --------------
PREFERRED
STOCK (0.6%)
R.E.I.T. (0.6%)
10,000 Health Care REIT, Inc. Series F,
7.63% .................................. $ 253,300
-----------
TOTAL PREFERRED STOCK
(Cost $250,000) ........................ 253,300
-----------
WARRANTS
(0%)
2,490 XO Communications, Inc.,
Series A, Expiring 1/16/10(3) 747
1,868 XO Communications, Inc.,
Series B, Expiring 1/16/10(3) 373
1,868 XO Communications, Inc.,
Series C, Expiring 1/16/10(3) 299
-----------
TOTAL WARRANTS
(Cost $0) .............................. 1,419
-----------
COMMON
STOCKS
(3.5%)
COMPUTER &
PERIPHERALS (0.2%)
10,000 Quantum Corp.(3) ....................... 35,500
8,000 Unisys Corp.(3) ........................ 53,520
-----------
89,020
-----------
ELECTRICAL UTILITY --
WEST (0.2%)
5,000 Xcel Energy, Inc. ...................... 97,100
ELECTRONICS (0.1%)
8,000 Bookham, Inc.(3) ....................... 53,200
NATURAL GAS --
DISTRIBUTION (0.5%)
4,000 Northern Border Partners L.P. .......... 178,200
4,000 SEMCO Energy, Inc.(3) .................. 22,640
-----------
200,840
-----------
OIL AND GAS TRUST (0.8%)
15,000 Pengrowth Energy Trust
Class A ................................ 374,400
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10
Value Line Aggressive Income Trust
January 31, 2006
- --------------------------------------------------------------------------------
Number of
Shares Value
- ---------- -------------
PETROLEUM -- PRODUCING (0.3%)
10,000 Provident Energy Trust ................ $ 108,200
POWER INDUSTRY (0.8%)
10,000 PrimeWest Energy Trust ................ 324,900
PRECIOUS METALS (0.1%)
12,000 Coeur d'Alene Mines Corp.(3) .......... 62,160
R.E.I.T. (0.5%)
10,000 Crescent Real Estate
Equities Co. .......................... 211,900
RECREATION (0%)
4,000 Meade Instruments Corp.(3) ............ 12,760
----------
TOTAL COMMON STOCKS
(Cost $1,148,220) ..................... 1,534,480
----------
TOTAL INVESTMENT
SECURITIES (89.8%)
(Cost $38,631,928) .................... 39,302,685
----------
Principal
Amount Value
- ----------------------------------- ----------------
REPURCHASE AGREEMENTS (8.7%)
$1,800,000 With Morgan Stanley & Co.,
4.34%, dated 1/31/06, due
2/1/06, delivery value
$1,800,217 (collateralized by
$1,815,000 U.S. Treasury
Notes 7.0%, due 7/15/06,
with a value of $1,839,616) .......... $1,800,000
2,000,000 With UBS Warburg, LLC,
4.33%, dated 1/31/06, due
2/1/06, delivery value
$2,000,241 (collateralized by
$1,889,000 U.S. Treasury
Notes 5.25%, due 11/15/28,
with a value of $2,048,818) .......... 2,000,000
-----------
TOTAL REPURCHASE
AGREEMENTS
(Cost $3,800,000) .................... 3,800,000
-----------
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES (1.5%) ............................................. 657,934
-----------
NET ASSETS (100.0%) ...................................................... $43,760,619
-----------
NET ASSET VALUE OFFERING
AND REDEMPTION PRICE, PER
OUTSTANDING SHARE
($43,760,619 [divided by] 8,743,190
shares outstanding) ...................................................... $ 5.01
-----------
(1) Security currently in default.
(2) 144A Security where certain conditions for public sale may exist.
(3) Non-income producing.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
11
Value Line Aggressive Income Trust Statement of Assets and Liabilities at
January 31, 2006 2006
- --------------------------------------------------------------------------------
(In thousands
except per share
amount)
-----------------
Assets:
Investment securities, at value
(Cost -- $38,632) .................................. $ 39,303
Repurchase agreements
(Cost -- $3,800) .................................. 3,800
Cash .................................................. 44
Interest receivable ................................... 810
Prepaid expenses ...................................... 44
Dividends receivable .................................. 22
---------
Total Assets ..................................... 44,023
---------
Liabilities:
Dividends payable to shareholders ..................... 63
Payable for trust shares repurchased .................. 50
Accrued expenses:
Advisory fee ....................................... 28
Service and distribution plan fees payable ......... 9
Trustees' Fees ..................................... 6
Other .............................................. 106
---------
Total Liabilities ................................ 262
---------
Net Assets ............................................ $ 43,761
---------
Net assets consist of:
Shares of beneficial interest, at $0.01 par
value (authorized unlimited, outstanding
8,743,190 shares) .................................. $ 87
Additional paid-in capital ............................ 107,669
Distributions in excess of net
investment income .................................. (5)
Accumulated net realized loss on investments (64,661)
Unrealized net appreciation of investments
and foreign translations ........................... 671
---------
Net Assets ............................................ $ 43,761
---------
Net Asset Value, Offering and
Redemption Price, Per Outstanding
Share ($43,760,619 [divided by] 8,743,190 shares
of beneficial interest outstanding) ................ $ 5.01
---------
Statement of Operations
for the Year Ended January 31,
(In thousands)
---------------
Investment Income:
Interest ......................................... $ 3,547
Dividends (Net of foreign withholding
tax of $5) .................................... 179
-------
Total Income .................................. 3,726
-------
Expenses:
Advisory fee ..................................... 366
Service and distribution plan fees ............... 122
Auditing and legal fees .......................... 56
Transfer agent fees .............................. 48
Printing ......................................... 33
Trustees' fees and expenses ...................... 21
Custodian fees ................................... 36
Postage .......................................... 12
Insurance ........................................ 7
Telephone ........................................ 6
Other ............................................ 2
-------
Total Expenses Before Custody Credits ......... 709
Less: Custody Credits ......................... (3)
-------
Net Expenses .................................. 706
-------
Net Investment Income ............................ 3,020
-------
Net Realized and Unrealized Gain (Loss)
on Investments and Foreign Exchange
Transactions:
Net Realized Gain ............................. 1,122
Change in Net Unrealized Appreciation/
(Depreciation) .............................. (2,680)
-------
Net Realized Gain and Change in
Net Unrealized Depreciation
on Investments and Foreign Exchange
Transactions .................................. (1,558)
-------
Net Increase in Net Assets
from Operations ............................... $ 1,462
-------
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12
Value Line Aggressive Income Trust
Statement of Changes in Net Assets
for the Year Ended January 31, 2006 and for the Year Ended January 31, 2005
- --------------------------------------------------------------------------------
Year Ended Year Ended
January 31, January 31,
2006 2005
------------- ------------
(In thousands)
Operations:
Net investment income ............................................... $ 3,020 $ 3,829
Net realized gain on investments .................................... 1,122 532
Change in net unrealized appreciation (depreciation) ................ (2,680) 544
--------- ---------
Net increase in net assets from operations .......................... 1,462 4,905
--------- ---------
Distributions to Shareholders:
Net investment income ............................................... (3,042) (3,827)
--------- ---------
Trust Share Transactions:
Proceeds from sale of shares ........................................ 3,587 16,048
Proceeds from reinvestment of distributions to shareholders ......... 2,328 3,044
Cost of shares repurchased* ......................................... (20,493) (24,352)
--------- ---------
Net decrease in net assets from share transactions .................. (14,578) (5,260)
--------- ---------
Total Decrease in Net Assets ......................................... (16,158) (4,182)
Net Assets:
Beginning of year ................................................... 59,919 64,101
--------- ---------
End of year ......................................................... $ 43,761 $ 59,919
--------- ---------
Distributions in excess of net investment income ..................... $ (5) $ (22)
--------- ---------
* Net of redemption fees (see Note 1H and Note 2)
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
13
Value Line Aggressive Income Trust
Notes to Financial Statements
- --------------------------------------------------------------------------------
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, it is the Trust's policy to mark-to-market the
collateral on a daily basis to ensure the adequacy of the collateral. In the
event of default of the obligation to repurchase, the 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.
- --------------------------------------------------------------------------------
14
Value Line Aggressive Income Trust
January 31, 2006
- --------------------------------------------------------------------------------
(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 provision is required.
(E) Foreign Currency Translation. Assets and liabilities which are denominated
in foreign currencies are translated to U.S. dollars at the prevailing rates of
exchange. The Trust does not isolate changes in the value of investments caused
by foreign exchange rate differences from the changes due to other
circumstances.
Income and expenses are translated to U.S. dollars based upon the rates of
exchange on the respective dates of such transactions.
Net realized foreign exchange gains or losses arise from currency gains or
losses realized between the trade and settlement dates on securities
transactions, the differences between the amounts of dividends, interest, and
foreign withholding taxes recorded on the Trust's books, and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in the value of assets and
liabilities, other than investments, at the end of fiscal period, resulting
from changes in the exchange rates.
(F) 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.
(G) Security Transactions. 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. Dividend income is recorded on the ex-dividend date. Dividends received
in excess of income are recorded as a reduction of cost of investments and/or
realized gain on Real Estate Investment Trusts (REITs).
(H) 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 (in
thousands):
Year Year
Ended Ended
January 31, January 31,
2006 2005
------------- ------------
Shares sold ................ 709 3,195
Shares issued to
shareholders in
reinvestment of
dividends ............... 462 602
Shares repurchased ......... (4,047) (4,853)
------ ------
Net decrease ............... (2,876) (1,056)
------ ------
Redemption fees of $10,857 and $59,541 were retained by the Trust for the year
ended January 31, 2006 and the year ended January 31, 2005, respectively.
- --------------------------------------------------------------------------------
15
Value Line Aggressive Income Trust
Notes to Financial Statements
- --------------------------------------------------------------------------------
3. Purchases and Sales of Securities
Purchases and sales of investment securities, excluding short-term securities,
were as follows:
Year
Ended
January 31,
2006
---------------
(In thousands)
Purchases:
Investment Securities ......... $11,899
-------
Sales:
Investment Securities ......... $25,544
-------
4. Income Taxes
At January 31, 2006, information on the tax components of capital is as
follows:
(In thousands)
Cost of investments for tax purposes ......... $ 42,374
--------
Gross tax unrealized appreciation ............ $ 1,734
Gross tax unrealized depreciation ............ (1,005)
--------
Net tax unrealized appreciation on
investments ............................... $ 729
--------
Capital loss carryforward, expires
January 31, 2008 .......................... $(17,461)
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, 2006 .......................... $(64,663)
--------
During the year ended January 31, 2006, the Trust utilized capital loss
carryforwards of approximately $1,044,000.
To the extent future capital gains are offset by capital losses, the Trust does
not anticipate distributing any such gains to the shareholders. It is uncertain
whether the Trust will be able to realize the benefits of the losses before
they expire.
Net unrealized gain (loss) on investments differ for financial statement and
tax purposes primarily due to differing treatment of investments in
partnerships.
The tax composition of dividends to shareholders for the years ended January
31, 2006 and January 31, 2005 were as follows:
2006 2005
--------- ---------
Ordinary Income ......... $3,042 $3,827
------ ------
Permanent book-tax differences relating to the classifications of certain
distributions and income in the current year were reclassified within the
composition of the net asset accounts. The Trust decreased distributions in
excess of net investment income by approximately $39,000, decreased accumulated
net realized loss on investments by approximately $80,000 and decreased
additional paid-in capital by $119,000. Net assets were not affected by this
reclassification.
5. Investment Advisory Fee, Service and Distribution Fees and Transactions With
Affiliates
An advisory fee of $366,156 was paid or payable to Value Line, Inc., the
Trust's investment adviser, (the "Adviser"), for the year ended January 31,
2006. 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.
- --------------------------------------------------------------------------------
16
Value Line Aggressive Income Trust
January 31, 2006
- --------------------------------------------------------------------------------
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 $122,052 were paid or payable to
the Distributor under this Plan for the year ended January 31, 2006.
For the year ended January 31, 2006, the Trust's expenses were reduced by
$3,282 under a custody credit arrangement with the custodian.
Certain officers and trustees of the Adviser are also officers and trustees of
the Trust. At January 31, 2006, the Adviser and certain officers and trustees
as a group owned 2,698 shares of beneficial interest in the Trust, representing
..03% of the outstanding shares.
- --------------------------------------------------------------------------------
17
Value Line Aggressive Income Trust
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
year:
Years Ended January 31,
------------------------------------------------------------------------------------
2006 2005 2004 2003 2002
---------------- ---------------- ---------------- ---------------- ----------------
Net asset value, beginning
of year .................................. $ 5.16 $ 5.06 $ 4.35 $ 4.74 $ 5.24
-------- -------- -------- -------- --------
Income from investment
operations:
Net investment income .................... 0.31 0.33 0.34 0.41 0.49
Net gains or losses on securities
(both realized and unrealized) ......... (0.15) 0.09 0.70 (0.40) (0.50)
-------- -------- -------- -------- --------
Total from investment operations ......... 0.16 0.42 1.04 0.01 ( .01)
-------- -------- -------- -------- --------
Redemption fees .......................... 0.00 (2) 0.01 0.01 0.01 --
Less distributions:
Dividends from net
investment income ........................ (0.31) (0.33) (0.34) (0.41) (0.49)
----------- -------- -------- -------- --------
Net asset value, end of year .............. $ 5.01 $ 5.16 $ 5.06 $ 4.35 $ 4.74
----------- -------- -------- -------- --------
Total return .............................. 3.32% 8.55% 25.01% 0.40% (0.12)%
----------- -------- -------- -------- --------
Ratios/Supplemental Data:
Net assets, end of year
(in thousands) ........................... $ 43,761 $ 59,919 $ 64,101 $ 53,006 $ 95,921
Ratio of expenses to average
net assets ............................... 1.45%(1) 1.39%(1) 1.43%(1) 1.37%(1) 1.23%(1)
Ratio of net investment income
to average net assets .................... 6.19% 6.28% 6.98% 9.12% 9.72%
Portfolio turnover rate ................... 27% 69% 76% 59% 140%
(1) Ratio reflects expenses grossed up for custody credit arrangement. The
ratio of expenses to average net assets, net of custody credits would have
been 1.24% for the year ended January 31, 2002 and would not have changed
for the years ended January 31, 2006, January 31, 2005, January 31, 2004
and January 31, 2003.
(2) Amount is less than $0.01 per share
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
18
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, 2006, 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, 2006 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
March 24, 2006
- --------------------------------------------------------------------------------
19
Value Line Aggressive Income Trust
Federal Tax Status of Distributions (unaudited)
- --------------------------------------------------------------------------------
For corporate taxpayers 1.56% of the ordinary income distributions paid during
the fiscal year ended January 31, 2006 qualify for the corporate dividends
received deduction.
During the fiscal year ended January 31, 2006, 1.51% of the ordinary income
distributions are treated as qualified dividends.
- --------------------------------------------------------------------------------
20
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. 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 Trustee*
- -------------------------
Jean Bernhard Buttner Chairman of the Since 1987 Chairman, President and Chief Value Line, Inc.
Age 71 Board of Trustees Executive Officer of Value Line,
and President Inc. (the "Adviser") and Value
Line Publishing, Inc. Chairman
and President of each of the 14
Value Line Funds and Value
Line Securities, Inc. (the
"Distributor").
- ------------------------- ------------------- ------------- ---------------------------------- -----------------
Non-Interested Trustees*
- -------------------------
John W. Chandler Trustee Since 1991 Consultant, Academic None
18 Victoria Lane Search Consultation Service,
Lanesboro, MA 01237 Inc. 1992-2004; Trustee Emeritus
Age 82 and Chairman (1993-1994) of
the Board of Trustees of Duke
University; President Emeritus,
Williams College.
- ------------------------- ------------------- ------------- ---------------------------------- -----------------
Frances T. Newton Trustee Since 2000 Customer Support Analyst, None
4921 Buckingham Drive Duke Power Company.
Charlotte, NC 28209
Age 64
- ------------------------- ------------------- ------------- ---------------------------------- -----------------
Francis C. Oakley Trustee Since 2000 Professor of History, Williams Berkshire Life
54 Scott Hill Road College, 1961 to 2002; Professor Insurance
Williamstown, MA 01267 Emeritus since 2002; President Company of
Age 74 Emeritus since 1994 and America
President, 1985-1994; Chairman
(1993-1997) and Interim
President (2002-2003) of the
American Council of Learned
Societies. Trustee since 1997
and Chairman of the Board
since 2005, National
Humanities Center.
- ------------------------- ------------------- ------------- ---------------------------------- -----------------
- --------------------------------------------------------------------------------
21
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, None
5 Birch Run Drive Williams College, since 1999;
Saratoga Springs, NY 12866 President Emeritus, Skidmore
Age 70 College since 1999 and President,
1987-1998.
- ---------------------------- ---------------------- ------------- ------------------------------------ -------------------
Paul Craig Roberts Trustee Since 1987 Chairman, Institute for Political A. Schulman Inc.
169 Pompano St. Economy. (plastics)
Panama City Beach, FL 32413
Age 67
- ---------------------------- ---------------------- ------------- ------------------------------------ -------------------
Nancy-Beth Sheerr Trustee Since 1996 Senior Financial Advisor, None
1409 Beaumont Drive Veritable L.P. (investment adviser)
Gladwyne, PA 19035 since 2004; Senior Financial
Age 57 Advisor, Hawthorn, 2001-2004.
- ---------------------------- ---------------------- ------------- ------------------------------------ -------------------
Officers
- ----------------------------
Bradley Brooks Vice President Since 2001 Portfolio Manager with
Age 43 the Adviser.
- ---------------------------- ---------------------- ------------- ------------------------------------ -------------------
Jeffrey Geffen Vice President Since 2004 Portfolio Manager with
Age 56 the Adviser.
- ---------------------------- ---------------------- ------------- ------------------------------------ -------------------
David T. Henigson Vice President, Since 1994 Director, Vice President and
Age 48 Secretary and Compliance Officer of the
Chief Compliance Adviser. Director and Vice
Officer President of the Distributor. Vice
President, Secretary and Chief
Compliance Officer of each of
the 14 Value Line Funds.
- ---------------------------- ---------------------- ------------- ------------------------------------ -------------------
Stephen R. Anastasio Treasurer Since 2005 Controller of the Adviser until
Age 46 2003; Chief Financial Officer of
the Adviser 2003-2005; Treasurer
of the Adviser since 2005.
- ---------------------------- ---------------------- ------------- ------------------------------------ -------------------
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.
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.
- --------------------------------------------------------------------------------
22
Value Line Aggressive Income Trust
- --------------------------------------------------------------------------------
The Trust 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 Trust'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 Trust uses to determine
how to vote proxies relating to portfolio securities, and information regarding
how the Trust voted these proxies during the most recent 12-month period ended
June 30 is available through the Trust'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.
- --------------------------------------------------------------------------------
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 -- Value Line Premier Growth Fund seeks long-term growth of capital. No
consideration is given to current income in the choice of investments.
1972 -- Value Line 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.
- --------------------------------------------------------------------------------
Item 2. Code of Ethics
(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.
(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
(a) Audit Fees 2006 $14,542
(b) Audit-Related fees - None.
(c) Tax Preparation Fees 2006 $6,200.
(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.
(e) (2) Not applicable.
(f) Not applicable.
(g) Aggregate Non-Audit Fees 2006 $6,200
(h) Not applicable.
Item 11. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and
procedures (as defined in rule 30a-2(c) under the Act (17 CFR
270.30a-2(c) ) based on their evaluation of these controls and
procedures as of a date within 90 days of the filing date of this
report, are appropriately designed to ensure that material
information relating to the registrant is made known to such
officers and are operating effectively.
(b) The registrant's principal executive officer and principal financial
officer have determined that there have been no significant changes
in the registrant's internal controls or in other factors that could
significantly affect these controls subsequent to the date of their
evaluation, including corrective actions with regard to significant
deficiencies and material weaknesses.
Item 12. Exhibits.
(a) 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 7, 2006
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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
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Jean B. Buttner, President, Principal Executive Officer
By: /s/ Stephen R. Anastasio
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Stephen R. Anastasio, Treasurer, Principal Financial Officer
Date: April 7, 2006
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