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, 2007
Date of reporting period: July 31, 2006
Item I. Reports to Stockholders.
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SEMI-ANNUAL REPORT
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July 31, 2006
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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, 2006, the total return of the Value Line
Aggressive Income Trust was 0.81%. This showing underperformed the Lehman
Brothers U.S. Corporate High Yield Index(1), a proxy for the overall high-yield
market, which was up 2.52% over the same period.
The last six-month period has provided solid U.S. economic growth along with
strong corporate earnings. The performance of the high yield sector has
benefited from this situation because the spread at which the asset class
trades above the Treasury market has remained relatively low at just over 3%.
While the Federal Reserve looks to be reaching the end of its two-year
tightening cycle, this may not be good news for the high yield asset class.
Higher energy costs combined with the lagging effects of the recent monetary
rate hikes may cause a slowdown in the U.S. economy in the latter part of 2006
into 2007. In fact, if history is a guide, high yield securities do poorly in
the 12-month periods following the end of a rising rate cycle. This was the
case in 1984, 1989, 1995, and 2000. In addition, the relatively low U.S.
corporate default rate of 1.72% for the past twelve-month period ending in
July, as calculated by Moody's, is expected to pick up in the year ahead. If
this scenario plays out we may be able to get better investment rates as the
year progresses. In the last six months, the current yield of the Fund has
risen by roughly 0.25% to the 6.75% level.
With the U.S. economy's growth rate likely slowing, we continue to take a
conservative investing stance and 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, but it has fallen to roughly 22% of the Fund's holdings from 23% six
months ago because some of our positions were called before their maturity. We
continue to have a favorable outlook for the earnings and cash flows for these
companies, even if the rather volatile underlying commodity prices pull back
from their recent levels. Following the various energy segments, our next
largest weighting is the 6% holding in the Fund in the chemical sector.
Preserving capital in difficult market environments, while allowing for an
attractive dividend yield, remains our goal. Thank you for your continued
investment.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
September 7, 2006
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(1) The Lehman Brothers U.S. Corporate High Yield Index is representative of
the broad based fixed-income market. It includes non-investment grade
corporate bonds. The returns for the Index do not reflect charges,
expenses, or taxes, and it is not possible to directly invest in this
unmanaged Index.
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2
Value Line Aggressive Income Trust
Income Trust Shareholders
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Economic Observations
The U.S. economy slowed abruptly during the second quarter, with the rate of
gross domestic product growth moderating from the opening quarter's 5.6% to
just 2.5% in the most recent three months. Slower increases in personal
consumption expenditures and a disappointing showing in the critical housing
market were significant contributors to the decelerating rate of GDP growth.
Meanwhile, a measured pace of business activity is likely to be maintained over
the next several quarters, if recent data trends are sustained as we believe
they will be. Such trends are highlighted by surveys showing a modest rise in
consumer confidence, mixed retail sales numbers, solid industrial production
and factory usage, and a decline in housing activity that is thus far somewhat
less precipitous than many have been fearing. We think this uneven flow of data
will be the rule for the balance of this year and into the early months of
2007, with the prospective rate of quarterly GDP growth averaging 2.5% to 3.0%.
Such moderate economic growth should keep inflationary excesses at bay, as the
less aggressive consumption of such raw materials as oil and gas, and
industrial metals like copper and zinc should help to limit shortages in these
areas. Overall, we expect inflation to average just 2% to 3% though most of
2007.
The case for additional monetary tightening by the Federal Reserve is
weakening. Indeed, with economic growth on a much slower track and with
inflationary shortages of labor and raw materials looking less likely now, the
Fed could be looking to keep interest rates at stable levels for at least the
next few months.
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3
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 (February 1, 2006 through July 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 2/1/06
value value thru
2/1/06 7/31/06 7/31/06
-------------- -------------- ------------
Actual ........................................... $ 1,000.00 $ 1,008.10 $ 7.87
Hypothetical (5% return before expenses) ......... $ 1,000.00 $ 1,016.96 $ 7.90
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* Expenses are equal to the Trust's annualized expense ratio of 1.58%,
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, 2006 (unaudited)
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Ten Largest Holdings
Principal Percentage of
Issue Amount Value Net Assets
- ---------------------------------------------------------------------------------------------------------------------
Gulfmark Offshore, Inc., Guaranteed Notes, 7.75%, 7/15/14 ................ $1,100,000 $1,069,750 2.72%
Western Oil Sands, Inc., Secured Notes, 8.38%, 5/1/12 .................... $1,000,000 $1,060,000 2.70%
Bluewater Finance Ltd., Guaranteed Notes, 10.25%, 2/15/12 ................ $1,000,000 $1,017,500 2.59%
Williams Cos., Inc., Notes, 7.13%, 9/1/11 ................................ $1,000,000 $1,007,500 2.56%
Allegheny Technologies, Inc., Notes, 8.38%, 12/15/11 ..................... $ 800,000 $ 844,000 2.15%
TransMontaigne, Inc., Senior Subordinated Notes, 9.13%, 6/1/10 ........... $ 750,000 $ 798,750 2.03%
Payless ShoeSource, Inc., Senior Subordinated Notes, 8.25%, 8/1/13 ....... $ 750,000 $ 767,813 1.95%
MediaCom LLC, Senior Notes, 9.50%, 1/15/13 ............................... $ 750,000 $ 759,375 1.93%
Consolidation Coal, Notes, Series MTN, 8.25%, 6/1/07 ..................... $ 750,000 $ 756,468 1.93%
Massey Energy Co., Senior Notes, 6.63%, 11/15/10 ......................... $ 750,000 $ 750,000 1.91%
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Asset Allocation -- Percentage of Net Assets
[PIE CHART]
Cash & Other 11.0%
Common & Preferred Stocks 3.4%
Bond & Notes 85.6%
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Sector Weightings -- Percentage of Total Investment Securities
[LINE CHART]
Consumer, Cyclical 25.3%
Energy 21.8%
Basic Materials 15.0%
Consumer, Non-Cyclical 11.9%
Industrial Materials 10.1%
Financial Services 8.2%
Communications 4.3%
Utilities 1.8%
Technology 1.6%
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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 CORPORATE BONDS & NOTES (2.1%)
AIR TRANSPORT (0.6%)
$ 250,000 ExpressJet Holdings, Inc., 4.25%,
(each note is convertible to
54.9451 shares of Common Stock
at anytime) 8/1/23 .......................... $ 223,750
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 ...................................... 98,875
TOBACCO (1.3%)
500,000 Vector Group Ltd. 6.25%, (each note
is convertible to 42.3279 shares
of Common Stock at anytime)
7/15/08 ..................................... 501,250
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TOTAL CONVERTIBLE
CORPORATE BONDS &
NOTES (Cost $840,430) ....................... 823,875
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CORPORATE BONDS & NOTES (83.5%)
AUTO & TRUCK (1.8%)
500,000 Ford Motor Co., Global Landmark
Securities, 7.45%, 7/16/31 .................. 367,500
400,000 General Motors Corp., Debentures,
8.25%, 7/15/23 .............................. 330,000
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697,500
CABLE TV (1.9%)
750,000 MediaCom LLC, Senior Notes,
9.50%, 1/15/13 .............................. 759,375
CHEMICAL - DIVERSIFIED (1.3%)
500,000 Equistar Chemicals L.P., Guaranteed
Notes, 10.13%, 9/1/08 ....................... 526,250
CHEMICAL -
SPECIALTY (4.4%)
600,000 ARCO Chemical Co., Debentures,
9.80%, 2/1/20 ............................... 693,000
500,000 OM Group, Inc., Guaranteed Notes,
9.25%, 12/15/11 ............................. 517,500
500,000 PolyOne Corp, Senior Notes,
8.88%, 5/1/12 ............................... 499,375
---------
1,709,875
COAL (5.2%)
500,000 Alpha Natural Resources LLC/Alpha
Natural Resources Capital Corp.,
Senior Notes, 10.00%, 6/1/12 ................ 531,250
750,000 Consolidation Coal, Notes, Series
MTN, 8.25%, 6/1/07(1) ....................... 756,468
750,000 Massey Energy Co., Senior Notes,
6.63%, 11/15/10 ............................. 750,000
---------
2,037,718
COMPUTER SOFTWARE &
SERVICES (1.2%)
500,000 Unisys Corp., Senior Notes,
6.88%, 3/15/10 .............................. 461,875
DIVERSIFIED COMPANIES (2.0%)
500,000 Geon Co. (The), Debentures,
7.50%, 12/15/15 ............................. 453,125
300,000 W.H. Holdings Ltd., Senior Notes,
9.50%, 4/1/11 ............................... 329,250
---------
782,375
DRUG (1.2%)
500,000 Elan Finance PLC, Senior Notes,
7.75%, 11/15/11 ............................. 480,000
ELECTRONICS (2.6%)
500,000 Avnet, Inc., Notes, 9.75%, 2/15/08 ............ 527,044
500,000 Celestica, Inc., Senior Subordinated
Notes, 7.88%, 7/1/11 ........................ 495,000
---------
1,022,044
ENTERTAINMENT (1.3%)
500,000 Royal Caribbean Cruises Ltd.,
Properties, Senior Notes,
7.25%, 8/15/06 .............................. 500,250
ENVIRONMENTAL (1.4%)
500,000 IMCO Recycling, Inc, Secured
Notes, 10.38%, 10/15/10 ..................... 546,250
FINANCIAL SERVICES -
DIVERSIFIED (0.2%)
500,000 Vesta Insurance Group, Inc.,
Debentures, 8.75%, 7/15/25 .................. 97,500
FOOD PROCESSING (4.2%)
600,000 Chiquita Brands International, Inc.,
Senior Notes, 7.50%, 11/1/14 ................ 510,000
See Notes to Financial Statements.
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6
Value Line Aggressive Income Trust
July 31, 2006
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Principal
Amount Value
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$ 30,000 Land O' Lakes, Inc., Senior Notes,
8.75%, 11/15/11 ............................. $ 30,975
600,000 Smithfield Foods, Inc., Senior
Subordinated Notes,
7.63%, 2/15/08 .............................. 603,000
500,000 Universal Foods Corp., Notes,
6.50%, 4/1/09 ............................... 494,880
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1,638,855
HEALTH CARE INFORMATION
SYSTEMS (1.2%)
600,000 Rotech Healthcare, Inc., Guaranteed
Notes, 9.50%, 4/1/12 ........................ 474,000
HOME BUILDING (4.6%)
400,000 Beazer Homes USA, Inc., Senior
Notes, 8.13%, 6/15/16(1) .................... 380,000
500,000 Senior Housing Properties Trust,
Senior Notes, 8.63%, 1/15/12 ................ 525,000
500,000 Technical Olympic USA, Inc.,
Guaranteed Notes,
10.38%, 7/1/12 .............................. 435,000
500,000 William Lyon Homes, Inc.,
Guaranteed Notes,
10.75%, 4/1/13 .............................. 460,000
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1,800,000
HOTEL/GAMING (4.0%)
600,000 American Casino & Entertainment
Properties, Secured Notes,
7.85%, 2/1/12 ............................... 601,500
500,000 Boyd Gaming Corp., Senior
Subordinated Notes,
6.75%, 4/15/14 .............................. 468,750
500,000 Hilton Hotels Corp., Senior Notes,
7.50%, 12/15/17 ............................. 513,828
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1,584,078
MACHINERY (0.9%)
325,000 JLG Industries, Inc., Senior
Subordinated Notes,
8.38%, 6/15/12 .............................. 344,500
METALS & MINING
DIVERSIFIED (1.2%)
500,000 Novelis, Inc., Senior Notes,
7.25%, 2/15/15(1) ........................... 483,750
NATURAL GAS -
DISTRIBUTION (2.6%)
1,000,000 Williams Cos, Inc., Notes,
7.13%, 9/1/11 ............................... 1,007,500
NATURAL GAS -
DIVERSIFIED (1.5%)
600,000 Ferrellgas Escrow LLC/Ferrellgas
Finance Escrow Corp., Senior
Notes, 6.75%, 5/1/14 ........................ 570,000
OILFIELD SERVICES/
EQUIPMENT (9.3%)
500,000 Basic Energy Services, Inc., Senior
Notes, 7.13%, 4/15/16(1) .................... 466,250
1,000,000 Bluewater Finance Ltd., Guaranteed
Notes, 10.25%, 2/15/12 ...................... 1,017,500
1,100,000 Gulfmark Offshore, Inc., Guaranteed
Notes, 7.75%, 7/15/14 ....................... 1,069,750
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 ............................... 798,750
----------
3,668,250
PETROLEUM -
PRODUCING (7.6%)
750,000 El Paso Corp., Senior Notes,
6.75%, 5/15/09 .............................. 744,375
500,000 KCS Energy, Inc., Senior Notes,
7.13%, 4/1/12 ............................... 477,500
700,000 Stone Energy Corp., Senior
Subordinated Notes,
8.25%, 12/15/11 ............................. 715,750
1,000,000 Western Oil Sands, Inc., Secured
Notes, 8.38%, 5/1/12 ........................ 1,060,000
----------
2,997,625
POWER (1.3%)
500,000 Reliant Energy, Inc., Senior Secured
Notes, 9.25%, 7/15/10 ....................... 512,500
R.E.I.T. (0.7%)
250,000 Crescent Real Estate Equities, Senior
Notes, 9.25%, 4/15/09 ....................... 258,750
RESTAURANT (1.3%)
500,000 O'Charleys, Inc., Senior
Subordinated Notes,
9.00%, 11/1/13 .............................. 510,000
RETAIL - SPECIAL LINES (4.3%)
500,000 Blyth, Inc., Notes, 7.90%, 10/1/09 ............ 497,500
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
- --------------------------------------------------------------------------------
$ 500,000 Broder Brothers, Co., Senior Notes,
11.25%, 10/15/10 ................... $ 465,000
750,000 Phillips-Van Heusen Corp., Senior
Notes, 7.25%, 2/15/11 .............. 744,375
----------
1,706,875
----------
RETAIL STORE (5.0%)
410,000 Dillard's, Inc., Notes,
7.85%, 10/1/12 ..................... 422,300
$ 500,000 Dollar General Corp., Guaranteed
Notes,, 8.63%, 6/15/10 ............. 528,750
500,000 Jo-Ann Stores, Inc., Senior
Subordinated Notes,
7.50%, 3/1/12 ...................... 450,000
600,000 NBTY, Inc., Senior Subordinated
Notes, 7.13%, 10/1/15 .............. 564,000
----------
1,965,050
SHOE (2.0%)
750,000 Payless ShoeSource, Inc., Senior
Subordinated Notes,
8.25%, 8/1/13 ...................... 767,813
STEEL - GENERAL (3.3%)
800,000 Allegheny Technologies, Inc., Notes,
8.38%, 12/15/11 .................... 844,000
421,000 United States Steel Corp., Senior
Notes, 9.75%, 5/15/10 .............. 448,365
----------
1,292,365
TELECOMMUNICATION
SERVICES (2.7%)
500,000 Alamosa Delaware, Inc., Senior
Notes, 8.50%, 1/31/12 .............. 530,000
500,000 Citizens Communications Co.,
Notes, 9.25%, 5/15/11 .............. 542,500
----------
1,072,500
TRUCKING (1.3%)
500,000 Roadway Corp, Guaranteed Notes,
8.25%, 12/1/08 ..................... 520,226
----------
TOTAL CORPORATE BONDS &
NOTES (Cost $32,990,092) ........... 32,795,649
----------
Number
of Shares Value
- --------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCK (0.6%)
CHEMICAL - DIVERSIFIED (0.6%)
6,000 Huntsman Corp., Par $50 (each
share is convertible to 1.7674
shares of Common Stock at
$18.06), 5.00%, 2/16/08 ................... $ 214,500
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TOTAL CONVERTIBLE
PREFERRED STOCK
(Cost $265,650) ........................... 214,500
--------
PREFERRED STOCK (0.6%)
R.E.I.T. (0.6%)
10,000 Health Care REIT, Inc. Series F* ............ 252,800
----------
TOTAL PREFERRED STOCK
(Cost $250,000) ........................... 252,800
----------
WARRANTS (0.0%)
TELECOMMUNICATION
SERVICES (0.0%)
3,334 XO Holdings, Inc., Series A,
Expiring 1/16/10* ......................... 1,834
2,500 XO Holdings, Inc., Series B,
Expiring 1/16/10* ......................... 1,062
2,500 XO Holdings, Inc., Series C,
Expiring 1/16/10* ......................... 625
----------
TOTAL WARRANTS (Cost $0) .................. 3,521
----------
COMMON STOCKS (2.2%)
COMPUTER & PERIPHERALS (0.2%)
10,000 Quantum Corp. * ............................. 21,500
8,000 Unisys Corp.* ............................... 40,960
----------
62,460
ELECTRICAL UTILITY -
WEST (0.3%)
5,000 Xcel Energy, Inc. ........................... 100,200
ELECTRONICS (0.1%)
8,000 Bookham, Inc. * ............................. 23,840
See Notes to Financial Statements.
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8
Value Line Aggressive Income Trust
July 31, 2006
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Number
of Shares Value
- --------------------------------------------------------------------------------
FOREIGN
TELECOMMUNICATIONS (0.5%)
10,000 Telecom Corporation of New
Zealand Ltd. ADR ............................ $ 203,000
MARITIME (0.0%)
500 Ship Finance International Ltd. ............... 9,720
MEDICAL SUPPLIES (0.4%)
4,203 Baxter International, Inc. .................... 176,526
NATURAL GAS -
DISTRIBUTION (0.1%)
4,000 SEMCO Energy, Inc. * .......................... 24,600
PRECIOUS METALS (0.1%)
12,000 Coeur d'Alene Mines Corp. * ................... 57,360
R.E.I.T. (0.5%)
10,000 Crescent Real Estate Equities Co. ............. 195,200
RECREATION (0.0%)
4,000 Meade Instruments Corp. * ..................... 8,640
TELECOMMUNICATION
SERVICES (0.0%)
421 XO Holdings, Inc. * ........................... 1,663
-----------
TOTAL COMMON STOCKS
(Cost $864,068) ............................. 863,209
-----------
TOTAL INVESTMENT
SECURITIES (89.0%)
(Cost $35,210,240) .......................... 34,953,554
-----------
Principal
Amount Value
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (11.4%)
REPURCHASE AGREEMENTS (11.4%)
$2,200,000 With Morgan Stanley & Co., 5.17%,
dated 7/31/06, due 8/1/06,
delivery value $2,200,316
(collateralized by $2,245,000 U.S.
Treasury Notes 4.25%, due
10/31/07, with a value of
$2,247,105)......................... $ 2,200,000
2,300,000 With UBS Warburg, LLC, 5.12%,
dated 7/31/06, due 8/1/06,
delivery value $2,300,327
(collateralized by $2,032,000 U.S.
Treasury Notes 6.13%, due
8/15/29, with a value of
$2,355,773) ........................ 2,300,000
-----------
TOTAL REPURCHASE
AGREEMENTS
(Cost $4,500,000)................... 4,500,000
-----------
EXCESS OF LIABILITIES OVER CASH
AND OTHER ASSETS (-0.4%) (168,961)
-----------
NET ASSETS (100%) $39,284,593
===========
NET ASSET VALUE OFFERING AND
REDEMPTION PRICE, PER
OUTSTANDING SHARE
($39,284,593 divided by 8,036,520
shares outstanding) $ 4.89
===========
* Non-income producing.
(1) Pursuant to Rule 144A under the Securities Act of 1933, this security
can only be sold to qualified institutional investors.
ADR American Depositary Receipt
See Notes to Financial Statements.
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9
Value Line Aggressive Income Trust
Statement of Assets and Liabilities
at July 31, 2006 (unaudited)
- --------------------------------------------------------------------------------
Assets:
Investment securities, at value
(Cost - $35,210,240) .................................... $ 34,953,554
Repurchase agreements
(Cost - $4,500,000) ..................................... 4,500,000
Cash ....................................................... 60,359
Interest receivable ........................................ 731,878
Prepaid expenses ........................................... 20,291
Dividends receivable ....................................... 8,340
Receivable for trust shares sold ........................... 329
-------------
Total Assets ............................................ 40,274,751
-------------
Liabilities:
Payable for securities purchased ........................... 760,031
Dividends payable to shareholders .......................... 54,502
Payable for trust shares repurchased ....................... 47,221
Accrued expenses:
Advisory fee ............................................ 11,925
Trustees' Fees .......................................... 11,753
Service and distribution plan fees payable .............. 5,095
Other ................................................... 99,631
-------------
Total Liabilities .................................. 990,158
-------------
Net Assets ................................................. $ 39,284,593
=============
Net assets consist of:
Shares of beneficial interest, at $0.01 par
value (authorized unlimited, outstanding
8,036,520 shares) ....................................... 80,365
Additional paid-in capital ................................. 104,169,142
Distributions in excess of net investment
income .................................................. (5,968)
Accumulated net realized loss on
investments ............................................. (64,702,260)
Unrealized net depreciation of investments
and foreign translations ................................ (256,686)
-------------
Net Assets ................................................. $ 39,284,593
=============
Net Asset Value, Offering and Redemp-
tion Price, Per Outstanding Share
($39,284,593 \d 8,036,520 shares of
beneficial interest outstanding) ........................ $ 4.89
=============
Statement of Operations
for the Six Months Ended July 31, 2006 (unaudited)
- --------------------------------------------------------------------------------
Investment Income:
Interest ................................................... $ 1,500,278
Dividends (Net of foreign withholding
tax of $780) ............................................ 76,035
-------------
Total Income ............................................ 1,576,313
-------------
Expenses:
Advisory fee ............................................... 153,857
Service and distribution plan fees ......................... 51,286
Registration and filing fees ............................... 25,785
Auditing and legal fees .................................... 21,835
Transfer agent fees ........................................ 19,754
Custodian fees ............................................. 18,244
Printing ................................................... 17,066
Trustees' fees and expenses ................................ 6,955
Postage .................................................... 3,935
Insurance .................................................. 3,015
Telephone .................................................. 2,095
Other ...................................................... 1,250
-------------
Total Expenses Before Custody Credits
and Fees Waived ....................................... 325,077
Less: Advisory Fee Waived ............................... (65,999)
Less: Service and Distribution Plan Fees
Waived ................................................ (16,500)
Less: Custody Credits ................................... (2,897)
-------------
Net Expenses ............................................ 239,681
-------------
Net Investment Income ...................................... 1,336,632
-------------
Net Realized and Unrealized Loss on
Investments and Foreign Exchange
Transactions:
Net Realized Loss ....................................... (41,649)
Change in Net Unrealized Appreciation/
(Depreciation) on Investment and
Foreign Exchange Transactions ......................... (927,522)
-------------
Net Realized Loss and Change in Net
Unrealized Depreciation on Investments
and Foreign Exchange Transactions ....................... (969,171)
-------------
Net Increase in Net Assets from
Operations .............................................. $ 367,461
=============
See Notes to Financial Statements.
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10
Value Line Aggressive Income Trust
Statement of Changes in Net Assets
for the Six Months Ended July 31, 2006 (unaudited)
and for the Year Ended January 31, 2006
- --------------------------------------------------------------------------------
Six Months
Ended
July 31, 2006 Year Ended
(unaudited) January 31, 2006*
-----------------------------------
Operations:
Net investment income .......................................... $ 1,336,632 $ 3,019,733
Net realized gain (loss) on investments ........................ (41,649) 1,122,495
Change in net unrealized appreciation (depreciation) ........... (927,522) (2,680,007)
---------------------------------
Net increase in net assets from operations ..................... 367,461 1,462,221
---------------------------------
Distributions to Shareholders:
Net investment income .......................................... (1,336,632) (3,042,227)
---------------------------------
Trust Share Transactions:
Proceeds from sale of shares ................................... 1,192,665 3,587,482
Proceeds from reinvestment of distributions to shareholders .... 1,003,522 2,327,995
Cost of shares repurchased** ................................... (5,703,042) (20,493,709)
---------------------------------
Net decrease in net assets from share transactions ............. (3,506,855) (14,578,232)
---------------------------------
Total Decrease in Net Assets ..................................... (4,476,026) (16,158,238)
Net Assets:
Beginning of period ............................................ 43,760,619 59,918,857
---------------------------------
End of period .................................................. $ 39,284,593 $ 43,760,619
=================================
Distributions in excess of net investment income, at end of period $ (5,968) $ (5,968)
=================================
* Amounts were previously presented rounded to thousands.
** Net of redemption fees (see Note 1H and Note 2)
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
11
Value Line Aggressive Income Trust
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
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.
(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
- --------------------------------------------------------------------------------
12
Value Line Aggressive Income Trust
July 31, 2006
- --------------------------------------------------------------------------------
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 2% 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 and Distributions to Shareholders
Transactions in shares of beneficial interest in the Trust were as follows:
Six Months
Ended Year Ended
July 31, 2006 January 31,
(unaudited) 2006
---------- ----------
Shares sold ...................... 240,072 709,286
Shares issued to
shareholders in
reinvestment of
dividends ..................... 202,579 461,658
Shares repurchased ............... (1,149,321) (4,047,051)
---------- ----------
Net decrease ..................... (706,670) (2,876,107)
========== ==========
Dividends per share from
net investment income ......... $ .1604 $ .3139
========== ==========
Redemption fees of $2,193 and $10,857 were retained by the Trust for the six
months ended July 31, 2006 and the year ended January 31, 2006, 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, 2006
(unaudited)
----------
Purchases:
Investment Securities ....................................... $5,753,136
==========
Sales:
Investment Securities ....................................... $8,849,465
==========
- --------------------------------------------------------------------------------
13
Value Line Aggressive Income Trust
Notes to Financial Statements (unaudited) July 31, 2006
- --------------------------------------------------------------------------------
4. Income Taxes (unaudited)
At July 31, 2006, information on the tax components of capital is as follows:
Cost of investments for tax
purposes ................................................... $ 39,710,240
------------
Gross tax unrealized appreciation ............................. $ 968,848
Gross tax unrealized depreciation ............................. (1,225,534)
------------
Net tax unrealized depreciation on
investments ................................................ $ (256,686)
============
Capital loss carryforward, expires
January 31, 2008 ........................................... $(17,461,302)
Capital loss carryforward, expires
January 31, 2009 ........................................... (20,922,783)
Capital loss carryforward, expires
January 31, 2010 ........................................... (20,653,696)
Capital loss carryforward, expires
January 31, 2011 ........................................... (5,624,767)
------------
Capital loss carryforward, at
January 31, 2006 ........................................... $(64,662,548)
============
During the year ended January 31, 2006, the Trust utilized capital loss
carryforwards of $1,044,446.
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.
5. Investment Advisory Fee, Service and Distribution Fees and Transactions With
Affiliates
An advisory fee of $153,857 was paid or payable to Value Line, Inc., the
Trust's investment adviser, (the "Adviser"), for the six months ended July 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. Effective March 7, 2006, the Adviser voluntarily waived 0.40% of
the advisory fee. The fee waiver amounted to $65,999. The Adviser has no right
to recoup previously waived amounts.
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 $51,286 were paid or payable to the
Distributor under this Plan for the six months ended July 31, 2006. Effective
March 7, 2006, the Distributor voluntarily waived 0.10% of the service and
distribution plan fee. The fee waiver amounted to $16,500. The Distributor has
no right to recoup previously waived amounts.
For the six months ended July 31, 2006, the Trust's expenses were reduced by
$2,897 under a custody credit arrangement with the custodian.
Certain officers and a Trustee of the Adviser and Value Line Securities, Inc.,
are also officers and a Trustee of the Trust. At July 31, 2006, the Adviser and
certain officers and trustees as a group owned 2,287 shares of beneficial
interest in the Trust, representing less than 1% of the outstanding shares.
- --------------------------------------------------------------------------------
14
Value Line Aggressive Income Trust
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each period:
Six Months Ended Years Ended January 31,
July 31, 2006 ------------------------------------------------------------------
(unaudited) 2006 2005 2004 2003 2002
-------------------------------------------------------------------------------------
Net asset value, beginning of period ..... $ 5.01 $ 5.16 $ 5.06 $ 4.35 $ 4.74 $ 5.24
-------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ................... 0.16 0.31 0.33 0.34 0.41 0.49
Net gains or losses on securities
(both realized and unrealized) ......... (0.12) (0.15) 0.09 0.70 (0.40) (0.50)
-------------------------------------------------------------------------------------
Total from investment operations ........ 0.04 0.16 0.42 1.04 0.01 (0.01)
-------------------------------------------------------------------------------------
Redemption fees ......................... 0.00(3) 0.00(3) 0.01 0.01 0.01 --
-------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income ..... (0.16) (0.31) (0.33) (0.34) (0.41) (0.49)
-------------------------------------------------------------------------------------
Net asset value, end of period ........... $ 4.89 $ 5.01 $ 5.16 $ 5.06 $ 4.35 $ 4.74
=====================================================================================
Total return ............................. 0.81%(4) 3.32% 8.55% 25.01% 0.40% (0.12)%
=====================================================================================
Ratios/Supplemental Data:
Net assets, end of period (in thousands) . $ 39,285 $ 43,761 $ 59,919 $ 64,101 $ 53,006 $ 95,921
Ratio of expenses to average net assets(1) 1.58%(2)(5) 1.45% 1.39% 1.43% 1.37% 1.23%
Ratio of net investment income to average
net assets .............................. 6.52%(5) 6.19% 6.28% 6.98% 9.12% 9.72%
Portfolio turnover rate .................. 16%(4) 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 1.57% for the six months ended July 31, 2006, 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) Ratio reflects expenses grossed up for the voluntary fee waivers of a
portion of the advisory fee by the Adviser and the service and
distribution plan by the Distributor. The ratio of expenses to average
net assets net of the voluntary fee waivers but exclusive of the custody
credit arrangement, would have been 1.18% as of July 31, 2006.
(3) Amount is less than $0.01 per share.
(4) Not annualized
(5) Annualized
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
15
Value Line Aggressive Income Trust
- --------------------------------------------------------------------------------
FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN APPROVING THE
INVESTMENT ADVISORY AGREEMENT FOR VALUE LINE AGGRESSIVE INCOME TRUST
The Investment Company Act of 1940 requires that the Fund's investment advisory
agreement (the "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 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 which specifically addressed the approval 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 information
on: (i) the investment performance of the Fund compared to a peer group of funds
("Performance Universe") and its benchmark index, each as classified by Lipper,
Inc., an independent evaluation service ("Lipper"); (ii) sales and redemption
data with respect to the Fund; (iii) the general investment outlook in the
markets in which the Fund invests; (iv) arrangements with respect to the
distribution of the Fund's shares; (v) the allocation of the Fund's brokerage;
and (vi) the overall quality and scope of services provided by Value Line.
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 its fees under the Agreement. In
a separate executive session, the Independent Trustees engaged in an extensive
review of the following information, which included data comparing: (i) the
Fund's average management fees, transfer agent/custodian fees, service fees
(including 12b-1 fees), and other non-management fees, to those incurred by a
peer group of funds consisting of the Fund and 11 other retail no-load high
current yield funds, as classified by Lipper ("Expense Group") and a peer group
of funds consisting of the Fund, the Expense Group and all other retail no-load
high current yield funds, excluding outliers ("Expense Universe"); (ii) the
Fund's average expense ratio to those of its Expense Group and Expense Universe;
(iii) the Fund's investment performance to the average performance of the
Performance Universe as well as the Lipper Index; (iv) Value Line's financial
results and conditions, including Value Line's and certain of its affiliates'
profitability from the services that have been performed for the Fund as well as
the Value Line family of funds; (v) the Fund's current investment management
staffing; and (vi) the Fund's potential for achieving 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.
Investment Performance. The Trustees reviewed the Fund's overall investment
performance and compared it to its Performance Universe and the Lipper Index.
The Trustees noted that, although the Fund's performance for the one-year and
10-year periods ended December 31, 2005 were below the Performance Universe
Average and the Lipper Index, the Fund's performance for the three-year period
ended December 31, 2005 exceeded the Performance Universe Average, and the
Fund's performance for the five-year period ended December 31, 2005 exceeded
both the Performance Universe Average and Lipper Index.
Value Line's Personnel and Methods. The Trustees reviewed the background of the
portfolio manager responsible for the daily management of the Fund, achieving
the Fund's investment objective and adhering to the Fund's investment strategy.
The Independent Trustees also engaged in discussions with Value Line's senior
management who are responsible for the overall functioning of the Fund's
investment operations. Based on this review, the Trustees concluded that the
Fund's portfolio management and Value Line's overall resources were well
developed and that Value Line had investment management capabilities and
personnel essential to performing its duties under the Agreement.
- --------------------------------------------------------------------------------
16
Value Line Aggressive Income Trust
- --------------------------------------------------------------------------------
Management Fee and Expenses. The Trustees considered Value Line's fee under the
Agreement relative to the management fees charged by its Expense Group and
Expense Universe averages. The Trustees noted that the Fund's management fee and
total expense ratio for the most recent fiscal year were higher than those of
the Expense Group and Expense Universe averages. In an effort to reduce the
Fund's higher total expense ratio, which was primarily due to the Fund's small
asset size, Value Line voluntarily agreed to reduce its management fee from an
annual rate of 0.75% of the Fund's average daily net assets to 0.35% of the
Fund's average daily net assets on a temporary basis, which is below both the
Expense Group and Expense Universe averages. In addition, the Fund agreed to
reduce its Rule 12b-1 fees from 0.25% to 0.15% of the Fund's average daily net
assets. These voluntary reductions went into effect at the beginning of March
2006. The Trustees noted that, as a result of this action, the Fund's projected
total expense ratio is anticipated to decrease to an amount that is below both
the Expense Group and Expense Universe averages.
Nature and Quality of Other Services. The Trustees considered the nature,
quality, cost and extent of other services provided by Value Line and its
affiliates under various other contracts, and their overall supervision of third
party service providers. Based on this review, the Trustees concluded that the
nature, quality, cost and extent of such other services provided by Value Line
and its affiliates were satisfactory, reliable and beneficial to the Fund's
shareholders.
Profitability. The Trustees considered the level of Value Line's profits with
respect to the management of the Fund, including the impact of certain actions
taken during 2004 and 2005. This consideration included a review of Value Line's
methodology in allocating certain of its costs to the management of each Fund,
Value Line's voluntary reduction of management and/or Rule 12b-1 fees for
certain Funds, Value Line's termination of the use of soft dollar research, and
the cessation of trading through its affiliate, Value Line Securities, Inc. 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 and the addition of break points was
determined not to be necessary at this time.
Conclusion. The Trustees, in light of Value Line's overall performance,
considered it appropriate to continue to retain Value Line as the Fund's
investment adviser. Based on their evaluation of all material factors deemed
relevant, and with the advice of independent counsel, the Trustees concluded
that the Fund's Agreement is fair and reasonable and voted to approve the
continuation of the Agreement for another year.
- --------------------------------------------------------------------------------
17
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.
Other
Length of Principal Occupation Directorships
Name, Address, and Age Position Time Served During the 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 Search None
18 Victoria Lane Consultation Service, Inc.
Lanesboro, MA 01237 1992-2004; Trustee Emeritus and
Age 82 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 President, America
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.
- -------------------------------------------------------------------------------------------------------------------------
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
- -------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
18
Value Line Aggressive Income Trust
Management of the Trust
- --------------------------------------------------------------------------------
Other
Length of Principal Occupation Directorships
Name, Address, and Age Position Time Served During the Past 5 Years Held by Trustee
- ----------------------------------------------------------------------------------------------------------------------------
Nancy-Beth Sheerr Trustee Since 1996 Senior Financial Advisor, Veritable None
1409 Beaumont Drive L.P. (investment adviser) since
Gladwyne, PA 19035 2004; Senior Financial Advisor,
Age 57 Hawthorn, 2001-2004.
- ----------------------------------------------------------------------------------------------------------------------------
Officers
- ------------------------
David T. Henigson Vice President, Since 1994 Director, Vice President and
Age 48 Secretary and Chief Compliance Officer of the Adviser.
Compliance Officer Director and Vice 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 47 2003; Chief Financial Officer of
the Adviser 2003-2005; Treasurer
of the Adviser since 2005.
Treasurer 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.
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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
19
Value Line Aggressive Income Trust
The Value Line Family of Funds
- --------------------------------------------------------------------------------
1950 - The Value Line Fund seeks long-term growth of capital. Current income is
a secondary objective.
1952 - Value Line Income and Growth Fund's primary investment objective is
income, as high and dependable as is consistent with reasonable risk. Capital
growth to increase total return is a secondary objective.
1956 - 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 Larger Companies Fund's 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, 9am
- - 5pm CST, Monday - Friday or visit us at www.valueline.com. Read the prospectus
carefully before you invest or send money.
- --------------------------------------------------------------------------------
20
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
Nancy-Beth Sheerr
OFFICERS Jean Bernhard Buttner
Chairman and President
David T. Henigson
Vice President/Secretary/
Chief Compliance Officer
Stephen R. Anastasio
Treasurer
Howard A. Brecher
Assistant Secretary/
Assistant Treasurer
This unaudited report is issued for information of shareholders. It is not
authorized for distribution to prospective investors unless preceded or
accompanied by a currently effective prospectus of the Trust (obtainable from
the Distributor).
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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) (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
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Jean B. Buttner, President
Date: 10/09/2006
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: 10/09/2006