UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file Number 811-4471
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Value Line Aggressive Income Trust
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(Exact name of registrant as specified in charter)
220 East 42nd Street, New York, N.Y. 10017
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 212-907-1500
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Date of fiscal year end: January 31, 2007
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Date of reporting period: January 31, 2007
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Item I. Reports to Stockholders.
A copy of the Annual Report to Stockholders for the period ended 1/31/07
is included with this Form.
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ANNUAL REPORT
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January 31, 2007
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Value Line
Aggressive Income Trust
[LOGO]
----------
VALUE LINE
No-Load
Mutual
Funds
Value Line Aggressive Income Trust
To Our Value Line Aggressive
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To Our Shareholders:
For the twelve months ended January 31, 2007, the total return of the Value
Line Aggressive Income Trust was 7.80%. Over the same period, the High Current
Yield Bond Funds Average returned 9.77% as measured by Lipper Analytical
Services(1) and the Lehman Brothers U.S. Corporate High Yield Index(2) reported
a gain of 11.32%.
Although the U.S. economy started to slow in the second half of 2006, high
yield securities had a strong year as default rates remained at record low
levels of only 1.3% -- more than three percentage points below historical
average of 4.5% according to S&P. This in turn helped maintain the
below-average yield spread between U.S. Treasury securities and lower-rated
high yield securities, which are more than one percentage point below their
long-term average and the lowest level in a decade. While the Federal Reserve's
policy of monetary tightening looks to be over, the full effects of the past
rate increases have not fully taken effect as demonstrated by the recent
problems in the sub-prime mortgage area. Given our outlook for continued
subdued economic output in 2007, we continue to take a relatively conservative
investing position given the historically low level of interest rates that the
market currently offers.
Due to our cautious investment stance, we continue to concentrate on the more
liquid and stronger credits available in the high yield sector. The Trust
continues to hold roughly a quarter of its assets in energy-related holdings
since we are maintaining 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 (9.0%) and retailers (8.0%). Unfortunately, our
conservative stance has hurt returns in the past year, since we were
underweight in the lowest rated (CCC) and riskiest sectors (Airlines and
Autos), which provided above-average returns in 2006. However, 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
Jean Bernhard Buttner
Chairman and President
March 4, 2007
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(1) The Lipper High Current Yield Bond Funds Average aims at high (relative)
current yield from fixed income securities, has no quality or maturity
restrictions, and tends 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
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Economic Observations
The economy slowed markedly over the middle two periods of 2006, with growth
decelerating from 5.6% in the opening quarter to 2.6% in the second three
months, and to just 2.0% during the July-through-September period. Continued
Federal Reserve monetary tightening and soaring oil prices were initially
responsible for the sharp moderation in the nation's gross domestic product
growth. Later on it was a downward spiral in the housing market that proved to
be the culprit. However, growth picked up nicely during the final period,
rising to 3.5%, as the Fed stopped raising interest rates, oil prices backed
off from their mid-summer highs, and the decline in the housing market
moderated in certain geographic locales.
Now, as we start a new year, we find that the Fed is still on hold; oil has
stabilized in the $55-$60-a-barrel range; and there are signs that the
still-depressed housing market may be in the final stages of its downturn. This
is not to say that the pace of economic improvement will strengthen
appreciably. It's just that the economy once more seems to be on a sound
footing, with GDP growth likely to be in the range of 3% through at least the
opening quarter. In our view, such a rate of growth should prove to be adequate
to keep corporate earnings moving modestly higher, but not strong enough to
push inflation up sharply.
Helping to sustain this stable pace of economic improvement should be solid
levels of activity in the retail sector, stable oil prices, and a steady
monetary course at the Federal Reserve. Reining in the nation's gross domestic
product improvement is likely to be still weak, but gradually stabilizing,
housing demand and sluggishness in the auto sector.
Gross domestic product growth along these lines and accompanying subdued
inflation should have positive ramifications for the stock and bond markets.
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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 (August 1, 2006 through January 31,
2007).
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 8/1/06
value value thru
8/1/06 1/31/07 1/31/07
-------------- -------------- ------------
Actual ........................................... $ 1,000.00 $ 1,069.40 $ 4.64
Hypothetical (5% return before expenses) ......... $ 1,000.00 $ 1,020.71 $ 4.53
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* Expenses are equal to the Trust's annualized expense ratio of 0.89%,
multiplied by the average account value over the period, multiplied by
184/365 to reflect the one-half period. This expense ratio may differ
from the expense ratio shown in the Financial Highlights.
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4
Value Line Aggressive Income Trust
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The following graph compares the performance of the Value Line Aggressive
Income Trust to that of the Lehman Brothers Aggregate Bond Index and the Lehman
Brothers U.S. Corporate High Yield Index. The Value Line Aggressive Income
Trust is a professionally managed mutual fund, while the Indices are not
available for investment and are unmanaged. The returns for the Indices do not
reflect charges, expenses or taxes but do include the reinvestment of
dividends. 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*
[THE FOLLOWING WAS DEPICTED BY A LINE CHART IN THE PRINTED MATERIAL]
Value Line Lehman Brothers Lehman Brothers U.S.
Aggressive Aggregate Corporate High
Income Trust Bond Index Yield Index
2/1 10,000 10,000 10,000
4/30 9,936 10,120 10,062
7/31 10,653 10,767 10,555
10/31 11,079 10,965 10,773
1/31 11,497 11,368 11,072
4/30 11,802 11,588 11,160
7/31 11,807 11,736 11,386
10/31 10,210 10,911 11,779
1/31 10,907 11,545 11,966
4/30 11,509 11,811 11,860
7/31 11,157 11,673 11,669
10/31 10,973 11,384 11,842
1/31 11,687 11,598 11,745
4/30 11,129 11,394 12,010
7/31 10,912 11,595 12,365
10/31 9,627 11,201 12,707
1/31 9,450 11,787 13,369
4/30 9,228 11,517 13,497
7/31 9,403 11,564 13,934
10/31 9,120 11,184 14,557
1/31 9,438 11,625 14,380
4/30 9,651 11,921 14,555
7/31 8,843 10,506 14,985
10/31 8,597 10,570 15,413
1/31 9,476 11,761 15,741
4/30 10,297 12,975 16,078
7/31 10,723 13,338 15,796
10/31 11,285 14,140 16,169
1/31 11,846 14,959 16,505
4/30 11,930 14,921 16,371
7/31 12,022 15,081 16,560
10/31 12,544 15,882 17,064
1/31 12,858 16,292 17,191
4/30 12,607 15,894 17,231
7/31 13,165 16,782 17,353
10/31 12,922 16,530 17,257
1/31 13,285 17,027 17,499
4/30 13,436 17,349 17,354
7/31 13,392 17,455 17,607
10/31 13,719 18,234 18,153
1/31 14,322 18,954 18,249
* 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, which are deducted from the Trust's returns, 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, which
are deducted from the Trust's returns, 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
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1 year ended 1/31/07 .......... 7.80% $10,780
5 years ended 1/31/07 ......... 8.70% $15,174
10 years ended 1/31/07 ......... 3.66% $14,322
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** 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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5
Value Line Aggressive Income Trust
Portfolio Highlights at January 31, 2007 (unaudited)
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Ten Largest Holdings
Percentage of
Issue Par Value Value Net Assets
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Gulfmark Offshore, Inc., Guaranteed Notes, 7.75%, 7/15/14 ................ $ 1,100,000.00 $ 1,111,000 2.98%
Western Oil Sands, Inc., Secured Notes, 8.38%, 5/1/12 .................... $ 1,000,000.00 $ 1,100,000 2.95%
Bluewater Finance Ltd., Guaranteed Notes, 10.25%, 2/15/12 ................ $ 1,000,000.00 $ 1,047,500 2.81%
Williams Cos., Inc., Notes, 7.13%, 9/1/11 ................................ $ 1,000,000.00 $ 1,037,500 2.78%
Allegheny Technologies, Inc., Notes, 8.38%, 12/15/11 ..................... $ 800,000.00 $ 850,000 2.28%
Payless ShoeSource, Inc., Senior Subordinated Notes, 8.25%, 8/1/13 ....... $ 750,000.00 $ 781,875 2.09%
MediaCom LLC, Senior Notes, 9.50%, 1/15/13 ............................... $ 750,000.00 $ 772,500 2.07%
Phillips-Van Heusen Corp., Senior Notes, 7.25%, 2/15/11 .................. $ 750,000.00 $ 765,000 2.05%
EL Paso Corp., Senior Notes, 6.75%, 5/15/09 .............................. $ 750,000.00 $ 761,250 2.04%
Consolidation Coal Notes, Series MTN, 8.25%, 6/1/07 ...................... $ 750,000.00 $ 752,526 2.02%
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Asset Allocation -- Percentage of Net Assets
[THE FOLLOWING WAS DEPICTED BY A PIE CHART IN THE PRINTED MATERIAL]
Common & Preferred Stocks 3.5% 3.50%
Bonds & Notes 88.9% 88.90%
Cash & Other 7.6% 7.60%
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Sector Weightings -- Percentage of Total Investment Securities
[THE FOLLOWING WAS DEPICTED BY A BAR CHART IN THE PRINTED MATERIAL]
Consumer, Cyclical 25.4%
Energy 20.5%
Basic Materials 16.2%
Consumer, Non-Cyclical 10.0%
Financial Services 9.3%
Industrial Materials 8.9%
Communications 4.6%
Technology 3.2%
Utilities 1.9%
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6
Value Line Aggressive Income Trust
Schedule of Investments January 31, 2007
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Principal
Amount Value
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CONVERTIBLE CORPORATE BONDS & NOTES (0.9%)
AIR TRANSPORT (0.6%)
$ 250,000 ExpressJet Holdings, Inc.,
4.25%, 8/1/23 ................................. $ 235,000
RETAIL -- AUTOMOTIVE (0.3%)
100,000 PEP Boys-Manny, Moe & Jack
(The), 4.25%, 6/1/07 ........................... 99,250
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TOTAL CONVERTIBLE CORPORATE BONDS &
NOTES (Cost $340,835) .......................... 334,250
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CORPORATE BONDS & NOTES (88.0%)
AIR TRANSPORT (1.6%)
600,000 CHC Helicopter Corp.,
Senior Subordinated Notes,
7.38%, 5/1/14 .................................. 584,250
AUTO & TRUCK (2.1%)
500,000 Ford Motor Co., Global Landmark
Securities, 7.45%, 7/16/31 ..................... 405,625
400,000 General Motors Corp., Debentures,
8.25%, 7/15/23 ................................. 379,000
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784,625
CABLE TV (2.1%)
750,000 MediaCom LLC, Senior Notes,
9.50%, 1/15/13 ................................. 772,500
CHEMICAL -- DIVERSIFIED (4.1%)
500,000 Equistar Chemicals L.P., Guaranteed
Notes, 10.13%, 9/1/08 .......................... 530,000
500,000 Georgia Gulf Corp., Senior Notes,
9.50%, 10/15/14 (1) ............................ 495,000
500,000 Mosaic Co. (The), Senior Notes,
7.38%, 12/1/14 (1) ............................. 506,250
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1,531,250
CHEMICAL -- SPECIALTY (4.6%)
600,000 ARCO Chemical Co., Debentures,
9.80%, 2/1/20 .................................. 690,000
500,000 OM Group, Inc., Guaranteed Notes,
9.25%, 12/15/11 ................................ 519,375
500,000 PolyOne Corp., Senior Notes,
8.88%, 5/1/12 .................................. 496,250
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1,705,625
COAL (5.5%)
500,000 Alpha Natural Resources LLC/Alpha
Natural Resources Capital Corp.,
Senior Notes, 10.00%, 6/1/12 ................... 541,250
750,000 Consolidation Coal, Notes, Series
MTN, 8.25%, 6/1/07 (1) ......................... 752,526
750,000 Massey Energy Co., Senior Notes,
6.63%, 11/15/10 ................................ 746,250
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2,040,026
COMPUTER & PERIPHERALS (1.3%)
500,000 Unisys Corp., Senior Notes,
6.88%, 3/15/10 ................................. 498,750
DRUG (1.3%)
500,000 Elan Finance PLC, Senior Notes,
7.75%, 11/15/11 ................................ 480,000
ELECTRICAL UTILITY -- CENTRAL (1.4%)
500,000 Reliant Energy, Inc., Senior Secured
Notes, 9.25%, 7/15/10 .......................... 525,000
ELECTRONICS (1.3%)
500,000 Celestica, Inc., Senior Subordinated
Notes, 7.88%, 7/1/11 ........................... 488,750
FOOD PROCESSING (5.8%)
600,000 Chiquita Brands International, Inc.,
Senior Notes, 7.50%, 11/1/14 ................... 540,000
30,000 Land O'Lakes, Inc., Senior Notes,
8.75%, 11/15/11 ................................ 31,313
500,000 Pilgrim's Pride Corp.,
Senior Subordinated Notes,
8.38%, 5/1/17 .................................. 492,500
500,000 Sensient Technologies Corp.,
6.50%, 4/1/09 .................................. 495,833
600,000 Smithfield Foods, Inc.,
Senior Subordinated Notes,
7.63%, 2/15/08 ................................. 607,500
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2,167,146
HOME BUILDING (1.1%)
400,000 Beazer Homes USA, Inc.,
Senior Notes, 8.13%, 6/15/16 ................... 416,000
HOTEL/GAMING (4.3%)
600,000 American Casino & Entertainment
Properties, Secured Notes,
7.85%, 2/1/12 .................................. 612,750
500,000 Boyd Gaming Corp.,
Senior Subordinated Notes,
6.75%, 4/15/14 ................................. 490,000
500,000 Hilton Hotels Corp., Senior Notes,
7.50%, 12/15/17 ................................ 512,500
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1,615,250
See Notes to Financial Statements.
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7
Value Line Aggressive Income Trust
Schedule of Investments
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Principal
Amount Value
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METALS FABRICATING (1.4%)
$ 500,000 Novelis, Inc., Senior Notes,
7.25%, 2/15/15 ................................. $ 512,500
NATURAL GAS -- DISTRIBUTION (4.2%)
500,000 Berry Petroleum Co.,
Senior Subordinated Notes,
8.25%, 11/1/16 ................................. 492,500
600,000 Ferrellgas Escrow LLC/Ferrellgas
Finance Escrow Corp., Senior
Notes, 6.75%, 5/1/14 ........................... 577,500
500,000 Regency Energy Partners LP, Senior
Notes, 8.38%, 12/15/13 (1) ..................... 501,250
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1,571,250
NATURAL GAS -- DIVERSIFIED (4.8%)
750,000 El Paso Corp., Senior Notes,
6.75%, 5/15/09 ................................. 761,250
1,000,000 Williams Cos, Inc., Notes,
7.13%, 9/1/11 .................................. 1,037,500
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1,798,750
OILFIELD SERVICES/EQUIPMENT (8.2%)
500,000 Basic Energy Services, Inc., Senior
Notes, 7.13%, 4/15/16 .......................... 485,000
1,000,000 Bluewater Finance Ltd., Guaranteed
Notes, 10.25%, 2/15/12 ......................... 1,047,500
1,100,000 Gulfmark Offshore, Inc., Guaranteed
Notes, 7.75%, 7/15/14 .......................... 1,111,000
400,000 Stallion Oilfield Services, Senior
Notes, 9.75%, 2/1/15 (1) ....................... 402,000
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3,045,500
PETROLEUM -- PRODUCING (6.0%)
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 ................................ 684,250
1,000,000 Western Oil Sands, Inc., Secured
Notes, 8.38%, 5/1/12 ........................... 1,100,000
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2,261,750
R.E.I.T. (2.0%)
250,000 Crescent Real Estate Equities, Senior
Notes, 9.25%, 4/15/09 .......................... 256,250
500,000 William Lyon Homes, Inc.,
Guaranteed Notes,
10.75%, 4/1/13 ................................. 492,500
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748,750
RESTAURANT (1.4%)
500,000 O'Charleys, Inc., Senior
Subordinated Notes,
9.00%, 11/1/13 ................................. 525,000
RETAIL -- AUTOMOTIVE (1.2%)
500,000 PEP Boys-Manny Moe & Jack,
Senior Subordinated Notes,
7.50%, 12/15/14 ................................ 467,500
RETAIL -- SPECIAL LINES (6.3%)
500,000 Blyth, Inc., Notes, 7.90%, 10/1/09 ............... 507,500
500,000 Broder Brothers, Co., Senior Notes,
11.25%, 10/15/10 ............................... 500,000
600,000 NBTY, Inc., Senior Subordinated
Notes, 7.13%, 10/1/15 .......................... 598,500
750,000 Phillips-Van Heusen Corp., Senior
Notes, 7.25%, 2/15/11 .......................... 765,000
-------------
2,371,000
RETAIL STORE (3.8%)
410,000 Dillard's, Inc., Notes,
7.85%, 10/1/12 ................................. 424,862
500,000 Dollar General Corp.,
8.63%, 6/15/10 ................................. 528,750
500,000 Jo-Ann Stores, Inc., Senior
Subordinated Notes,
7.50%, 3/1/12 .................................. 465,000
-------------
1,418,612
SEMICONDUCTOR (2.3%)
500,000 Advanced Micro Devices, Inc.,
Senior Notes, 7.75%, 11/1/12 ................... 511,250
350,000 AGY Holding Corp., Senior 2nd
Lien Notes, 11.00%, 11/15/14 (1) 361,375
-------------
872,625
SHOE (2.1%)
750,000 Payless ShoeSource, Inc.,
Senior Subordinated Notes,
8.25%, 8/1/13 .................................. 781,875
STEEL -- GENERAL (3.5%)
800,000 Allegheny Technologies, Inc., Notes,
8.38%, 12/15/11 ................................ 850,000
See Notes to Financial Statements.
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8
Value Line Aggressive Income Trust
January 31, 2007
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
$ 421,000 United States Steel Corp., Senior
Notes, 9.75%, 5/15/10 .......................... $ 445,208
-------------
1,295,208
TELECOMMUNICATION SERVICES (2.9%)
500,000 Alamosa Delaware, Inc., Senior
Notes, 8.50%, 1/31/12 .......................... 530,111
500,000 Citizens Communications Co.,
Notes, 9.25%, 5/15/11 .......................... 553,750
-------------
1,083,861
TRUCKING (1.4%)
500,000 Roadway Corp., Guaranteed Notes,
8.25%, 12/1/08 ................................. 519,722
-------------
TOTAL CORPORATE BONDS &
NOTES (Cost $32,144,703) ....................... 32,883,075
-------------
Shares Value
- --------------------------------------------------------------------------------
PREFERRED STOCKS (0.7%)
R.E.I.T. (0.7%)
10,000 Health Care REIT, Inc.
Series F, 7 5/8% ............................... $ 257,200
-------------
TOTAL PREFERRED STOCKS
(Cost $250,000) ................................ 257,200
-------------
WARRANTS (0.0%)
3,334 XO Holdings, Inc., Series A,
Expiring 1/16/10 * ............................. 2,168
2,500 XO Holdings, Inc., Series B,
Expiring 1/16/10 * ............................. 975
2,500 XO Holdings, Inc., Series C,
Expiring 1/16/10 * ............................. 475
-------------
TOTAL WARRANTS (Cost $0) ......................... 3,618
-------------
COMMON STOCKS (2.8%)
COMPUTER & PERIPHERALS (0.2%)
8,000 Unisys Corp. * ................................... 68,960
ELECTRICAL UTILITY -- WEST (0.3%)
5,000 Xcel Energy, Inc. ................................ 116,650
ELECTRONICS (0.1%)
8,000 Bookham, Inc. * .................................. 23,200
FOREIGN TELECOMMUNICATIONS (0.7%)
10,000 Telecom Corporation of New
Zealand Ltd. ADR ............................... 274,800
MEDICAL SUPPLIES (0.6%)
4,203 Baxter International, Inc. ....................... 208,720
PRECIOUS METALS (0.2%)
12,000 Coeur d'Alene Mines Corp. * ...................... 52,560
R.E.I.T. (0.5%)
10,000 Crescent Real Estate Equities Co. ................ 200,600
RECREATION (0.0%)
4,000 Meade Instruments Corp. * ........................ 11,040
RETAIL STORE (0.2%)
5,000 Dollar General Corp. ............................. 84,700
-------------
TOTAL COMMON STOCKS
(Cost $862,392) ................................ 1,041,230
-----------
TOTAL INVESTMENT SECURITIES (92.4%)
(Cost $33,597,930) ............................. 34,519,373
-------------
See Notes to Financial Statements.
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9
Value Line Aggressive Income Trust
Schedule of Investments January 31, 2007
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (7.5%)
$ 1,500,000 With Morgan Stanley & Co.,
5.10%, dated 1/31/07, due
2/1/07, delivery value
$1,500,213(collateralized by
$1,185,000 U.S. Treasury
Notes 7.63%, due 11/15/22,
with a value of $1,540,648) .................... $ 1,500,000
1,300,000 With State Street Bank & Trust,
4.70%, dated 1/31/07, due
2/1/07, delivery value
$1,300,170 (collateralized by
$1,295,000 U.S. Treasury
Notes 5.13%, due 5/15/16, with
a value of $1,338,457) ......................... 1,300,000
------------
TOTAL REPURCHASE
AGREEMENTS
(Cost $2,800,000) .............................. 2,800,000
-------------
CASH AND OTHER ASSETS IN EXCESS
OF LIABILITIES (0.1%) $ 21,072
-------------
NET ASSETS (100%) $ 37,340,445
-------------
NET ASSET VALUE
OFFERING AND REDEMPTION
PRICE, PER OUTSTANDING SHARE
($37,340,445/7,379,897 shares
outstanding) $ 5.06
-------------
* 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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10
Value Line Aggressive Income Trust
Statement of Assets and Liabilities
at January 31, 2007
- --------------------------------------------------------------------------------
Assets:
Investment securities, at value
(Cost -- $33,597,930) .................................. $ 34,519,373
Repurchase agreements
(Cost -- $2,800,000) ................................... 2,800,000
Cash ...................................................... 45,758
Interest receivable ....................................... 675,363
Dividends receivable ...................................... 3,750
Receivable for trust shares sold .......................... 3,483
Receivable for securities sold ............................ 1,802
-------------
Total Assets ......................................... 38,049,529
-------------
Liabilities:
Payable for securities purchased .......................... 495,931
Dividends payable to shareholders ......................... 59,193
Payable for trust shares repurchased ...................... 44,500
Accrued expenses:
Advisory fee ........................................... 11,319
Service and distribution plan fees payable ............. 4,835
Trustees' fees and expenses ............................ 993
Other .................................................. 92,313
-------------
Total Liabilities .................................... 709,084
-------------
Net Assets ................................................ $ 37,340,445
=============
Net assets consist of:
Shares of beneficial interest, at $0.01 par
value (authorized unlimited, outstanding
7,379,897 shares) ...................................... $ 73,799
Additional paid-in capital ................................ 100,907,038
Distributions in excess of net investment
income ................................................. (57,038)
Accumulated net realized loss on
investments ............................................ (64,504,797)
Unrealized net appreciation of investments
and foreign currency translations ...................... 921,443
-------------
Net Assets ................................................ $ 37,340,445
=============
Net Asset Value, Offering and
Redemption Price, Per Outstanding
Share ($37,340,445/7,379,897 shares
of beneficial interest outstanding) .................... $ 5.06
=============
Statement of Operations
for the Year Ended January 31, 2007 Investment Income:
- --------------------------------------------------------------------------------
Interest .................................................. $ 2,911,578
Dividends (Net of foreign withholding tax
of $2,533) ............................................. 101,885
-------------
Total Income ........................................... 3,013,463
-------------
Expenses:
Advisory fee .............................................. 298,526
Service and distribution plan fees ........................ 99,509
Registration and filing fees .............................. 75,626
Printing and postage ...................................... 32,349
Custodian fees ............................................ 31,142
Transfer agent fees ....................................... 30,969
Auditing and legal fees ................................... 18,209
Insurance ................................................. 5,381
Telephone ................................................. 1,882
Other ..................................................... 2,744
-------------
Total Expenses Before Custody Credits
and Fees Waived ...................................... 596,337
Less: Advisory Fee Waived .............................. (143,156)
Less: Service and Distribution Plan Fees
Waived ............................................... (35,789)
Less: Custody Credits .................................. (5,133)
-------------
Net Expenses ........................................... 412,259
-------------
Net Investment Income ..................................... 2,601,204
-------------
Net Realized and Unrealized Gain/(Loss)
on Investments and Foreign Exchange
Transactions:
Net Realized Gain ...................................... 107,473
Change in Net Unrealized
Appreciation/(Depreciation) .......................... 250,607
-------------
Net Realized Gain and Change in Net
Unrealized Appreciation/(Depreciation)
on Investments and Foreign Exchange
Transactions ........................................... 358,080
-------------
Net Increase in Net Assets from
Operations ............................................. $ 2,959,284
=============
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
11
Value Line Aggressive Income Trust
Statement of Changes in Net Assets
for the Year Ended January 31, 2007 and for the Year Ended January 31, 2006
- --------------------------------------------------------------------------------
Year Ended Year Ended
January 31, 2007 January 31, 2006*
--------------------------------------
Operations:
Net investment income ............................................... $ 2,601,204 $ 3,019,733
Net realized gain on investments .................................... 107,473 1,122,495
Change in net unrealized appreciation/(depreciation) ................ 250,607 (2,680,007)
--------------------------------------
Net increase in net assets from operations .......................... 2,959,284 1,462,221
--------------------------------------
Distributions to Shareholders:
Net investment income ............................................... (2,610,682) (3,042,227)
--------------------------------------
Trust Share Transactions:
Proceeds from sale of shares ........................................ 2,367,483 3,587,482
Proceeds from reinvestment of distributions to shareholders ......... 1,949,954 2,327,995
Cost of shares repurchased** ........................................ (11,086,213) (20,493,709)
--------------------------------------
Net decrease in net assets from Trust share transactions ............ (6,768,776) (14,578,232)
--------------------------------------
Total Decrease in Net Assets .......................................... (6,420,174) (16,158,238)
Net Assets:
Beginning of year ................................................... 43,760,619 59,918,857
--------------------------------------
End of year ......................................................... $ 37,340,445 $ 43,760,619
======================================
Distributions in excess of net investment income, at end of year ...... $ (57,038) $ (5,968)
======================================
* Amounts were previously presented rounded to thousands.
** Net of redemption fees (see Note 1H and Note 2).
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12
Value Line Aggressive Income Trust
Notes to Financial Statements January 31, 2007
- --------------------------------------------------------------------------------
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.
In September 2006, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 157, "Fair Value Measurements"
(SFAS No. 157). SFAS No. 157 defines fair value, establishes a framework for
measuring fair value in accordance with generally accepted accounting
principles and expands disclosure about fair value measurements. SFAS No. 157
is effective for fiscal years beginning after November 15, 2007. Management is
currently evaluating the impact the adoption of SFAS No. 157 will have on the
Trust's financial statement disclosures.
(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.
- --------------------------------------------------------------------------------
13
Value Line Aggressive Income Trust
Notes to Financial Statements
- --------------------------------------------------------------------------------
(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.
In July 2006, the Financial Accounting Standards Board issued Interpretation
No. 48, "Accounting for Uncertainty in Income Taxes -- an Interpretation of
FASB Statement No. 109" (the "Interpretation"). The Interpretation establishes
for all entities, including pass-through entities such as the Trust, a minimum
threshold for financial statement recognition of the benefit of positions taken
in filing tax returns (including whether an entity is taxable in a particular
jurisdiction), and requires certain expanded tax disclosures. The
Interpretation is effective for fiscal years beginning after December 15, 2006,
and is to be applied to all open tax years as of the date of effectiveness.
Management has recently begun to evaluate the application of the Interpretation
to the Trust, and is not in a position at this time to estimate the
significance of its impact, if any, on the Trust's financial statements.
(E) Foreign Currency Translation. The books and records of the Trust are
maintained in U.S. dollars. 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 fluctuations
realized between the trade and settlement dates on securities transactions, the
differences between the U.S. dollar amounts of dividends, interest, and foreign
withholding taxes recorded by the Trust 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. The effect of the change in foreign exchange rates on the value
of investments is included in realized gain/loss on investments and change in
net unrealized appreciation/(depreciation) on investments.
(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.
- --------------------------------------------------------------------------------
14
Value Line Aggressive Income Trust
January 31, 2007
- --------------------------------------------------------------------------------
2. Trust Share Transactions and Distributions to Shareholders
Transactions in shares of beneficial interest in the Trust were as follows:
Year Ended Year Ended
January 31, 2007 January 31, 2006
-------------------------------------
Shares sold .......................... 477,167 709,286
Shares issued to
shareholders in
reinvestment of
dividends ......................... 393,013 461,658
Shares repurchased ................... (2,233,473) (4,047,051)
-------------------------------------
Net decrease ......................... (1,363,293) (2,876,107)
=====================================
Dividends per
share from net
investment
income ............................ $ 0.3245 $ 0.3139
=====================================
Redemption fees of $3,979 and $10,857 were retained by the Trust for the year
ended January 31, 2007 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:
Year Ended
January 31, 2007
----------------
Purchases:
Investment Securities ................................. $ 10,958,284
=============
Sales:
Investment Securities ................................. $ 15,456,806
=============
4. Income Taxes
At January 31, 2007, information on the tax components of capital is as
follows:
Cost of investments for tax
purposes .............................................. $ 36,395,776
-------------
Gross tax unrealized appreciation ........................ $ 1,200,596
Gross tax unrealized depreciation ........................ (276,999)
-------------
Net tax unrealized depreciation on
investments ........................................... $ 923,597
=============
Capital loss carryforward, expires
January 31, 2008 ...................................... $ (17,303,550)
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, 2007 ...................................... $ (64,504,796)
=============
During the year ended January 31, 2007, the Trust utilized capital loss
carryforwards of $160,069.
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 real estate
investment trusts.
- --------------------------------------------------------------------------------
15
Value Line Aggressive Income Trust
Notes to Financial Statements January 31, 2007
- --------------------------------------------------------------------------------
The tax composition of dividends to shareholders for the years ended January
31, 2007 and January 31, 2006 were as follows:
2007 2006
------------------------------
Ordinary Income ........................ $ 2,610,682 $ 3,042,227
------------------------------
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 increased distributions in
excess of net investment income by $41,592, decreased accumulated net realized
gain/loss on investments by $48,341 and decreased additional paid-in capital by
$6,749. Net assets were not affected by this reclassification. These reclasses
are primarily due to differing treatments of investments in partnerships for
tax purposes.
5. Investment Advisory Fee, Service and Distribution Fees and Transactions With
Affiliates
An advisory fee of $298,526 was paid or payable to Value Line, Inc., the
Trust's investment adviser, (the "Adviser"), for the year ended January 31,
2007. 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. Direct expenses of the Trust are
charged to the Trust while common expenses of the Value Line Funds, are
allocated proportionately based upon the Funds' respective net assets. 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
$143,156 for the year ended January 31, 2007. 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 $99,509 were accrued under this
Plan for the year ended January 31, 2007. Effective March 7, 2006, the
Distributor voluntarily waived 0.10% of the service and distribution plan fee.
The fee waiver amounted to $35,789 for the year ended January 31, 2007. The
Distributor has no right to recoup previously waived amounts.
For the year ended January 31, 2007, the Trust's expenses were reduced by
$5,133 under a custody credit arrangement with the custodian.
Certain officers and a director of the Adviser and Value Line Securities, Inc.,
are also officers and a Trustee of the Trust. At January 31, 2007, the officers
and trustee as a group owned 1,556 shares of beneficial interest in the Trust,
representing less than 1% of the outstanding shares.
- --------------------------------------------------------------------------------
16
Value Line Aggressive Income Trust
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
year:
Years Ended January 31,
-------------------------------------------------------------------------
2007 2006 2005 2004 2003
-------------------------------------------------------------------------
Net asset value, beginning of year ................... $ 5.01 $ 5.16 $ 5.06 $ 4.35 $ 4.74
------------------------------------------------------------------------
Income from investment operations:
Net investment income ............................... 0.32 0.31 0.33 0.34 0.41
Net gains or losses on securities (both realized
and unrealized) ................................... 0.05 (0.15) 0.09 0.70 (0.40)
------------------------------------------------------------------------
Total from investment operations .................... 0.37 0.16 0.42 1.04 0.01
------------------------------------------------------------------------
Redemption fees ..................................... 0.00(3) 0.00(3) 0.01 0.01 0.01
------------------------------------------------------------------------
Less distributions:
Dividends from net investment income ................. (0.32) (0.31) (0.33) (0.34) (0.41)
------------------------------------------------------------------------
Net asset value, end of year ......................... $ 5.06 $ 5.01 $ 5.16 $ 5.06 $ 4.35
========================================================================
Total return ......................................... 7.80% 3.32% 8.55% 25.01% 0.40%
========================================================================
Ratios/Supplemental Data:
Net assets, end of year (in thousands) ............... $ 37,340 $ 43,761 $ 59,919 $ 64,101 $ 53,006
Ratio of expenses to average net assets (1) .......... 1.50%(2) 1.45% 1.39% 1.43% 1.37%
Ratio of net investment income to average net
assets ............................................. 6.54% 6.19% 6.28% 6.98% 9.12%
Portfolio turnover rate .............................. 31% 27% 69% 76% 59%
(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 1.49% for the year ended January 31, 2007 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 fees 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 1.05% as of January 31, 2007.
(3) Amount is less than $0.01 per share.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
17
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, Inc.
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, 2007, 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, 2007 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
March 29, 2007
- --------------------------------------------------------------------------------
18
Value Line Aggressive Income Trust
Federal Tax Status of Distributions (unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
For corporate taxpayers, 0.91% of the ordinary income distributions paid during
the fiscal year ended January 31, 2007 qualify for the corporate dividends
received deduction.
During the fiscal year ended January 31, 2007, 1.35% of the ordinary income
distributions are treated as qualified dividends.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
19
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 72 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
416 North Hemlock Lane Consultation Service, Inc.
Williamstown, MA 01267 1992-2004; Trustee Emeritus and
Age 83 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 65
- -------------------------------------------------------------------------------------------------------------------------------
Francis C. Oakley Trustee Since 2000 Professor of History, Williams None
54 Scott Hill Road College, 1961 to 2002; Professor
Williamstown, MA 01267 Emeritus since 2002; President
Age 75 Emeritus since 1994 and 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.
- -------------------------------------------------------------------------------------------------------------------------------
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 71 College since 1999 and President,
1987-1998.
- -------------------------------------------------------------------------------------------------------------------------------
Paul Craig Roberts Trustee Since 1987 Chairman, Institute for Political None
169 Pompano St. Economy.
Panama City Beach, FL 32413
Age 68
- -------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
20
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 58 Hawthorn, 2001-2004.
- -------------------------------------------------------------------------------------------------------------------------------
Officers
- --------
David T. Henigson Vice President, Since 1994 Director, Vice President and
Age 49 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 53 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.
- --------------------------------------------------------------------------------
21
Value Line Aggressive Income Trust
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
22
Value Line Aggressive Income Trust
- --------------------------------------------------------------------------------
[This page is intentionally left blank.]
- --------------------------------------------------------------------------------
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 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.
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24
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.
496 Valley Road
Cos Cob, CT 06807
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
David T. Henigson
Vice President/Secretary/
Chief Compliance Officer
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).
#539206
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 2007 $11,875
(b) Audit-Related fees - None.
(c) Tax Preparation Fees 2007 $5,060.
(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 2007 $3,825
(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 2, 2007
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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 2, 2007
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