N-CSR 1 v070764_n-csr.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file Number 811-4471 -------- Value Line Aggressive Income Trust -------------------------------------------------- (Exact name of registrant as specified in charter) 220 East 42nd Street, New York, N.Y. 10017 --------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 212-907-1500 ------------ Date of fiscal year end: January 31, 2007 ---------------- Date of reporting period: January 31, 2007 ---------------- 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. -------------------------------------------------------------------------------- ANNUAL REPORT -------------------------------------------------------------------------------- January 31, 2007 -------------------------------------------------------------------------------- Value Line Aggressive Income Trust [LOGO] ---------- VALUE LINE No-Load Mutual Funds Value Line Aggressive Income Trust To Our Value Line Aggressive -------------------------------------------------------------------------------- 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 -------------------------------------------------------------------------------- (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. -------------------------------------------------------------------------------- 2 Value Line Aggressive Income Trust Income Trust Shareholders -------------------------------------------------------------------------------- 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. -------------------------------------------------------------------------------- 3 Value Line Aggressive Income Trust -------------------------------------------------------------------------------- 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
-------------------------------------------------------------------------------- * 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. -------------------------------------------------------------------------------- 4 Value Line Aggressive Income Trust -------------------------------------------------------------------------------- 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 ---------------- ---------------------- 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
-------------------------------------------------------------------------------- ** 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. -------------------------------------------------------------------------------- 5 Value Line Aggressive Income Trust Portfolio Highlights at January 31, 2007 (unaudited) -------------------------------------------------------------------------------- Ten Largest Holdings
Percentage of Issue Par Value Value Net Assets -------------------------------------------------------------------------- ------------------ ------------- -------------- 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%
-------------------------------------------------------------------------------- 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% -------------------------------------------------------------------------------- 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% -------------------------------------------------------------------------------- 6 Value Line Aggressive Income Trust Schedule of Investments January 31, 2007 -------------------------------------------------------------------------------- Principal Amount Value -------------------------------------------------------------------------------- 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 ------------- TOTAL CONVERTIBLE CORPORATE BONDS & NOTES (Cost $340,835) .......................... 334,250 ------------- 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 ------------- 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 ------------- 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 ------------- 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 ------------- 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 ------------- 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 ------------- 1,615,250 See Notes to Financial Statements. -------------------------------------------------------------------------------- 7 Value Line Aggressive Income Trust Schedule of Investments -------------------------------------------------------------------------------- Principal Amount Value -------------------------------------------------------------------------------- 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 ------------- 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 ------------- 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 ------------- 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 ------------- 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 ------------- 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. -------------------------------------------------------------------------------- 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. -------------------------------------------------------------------------------- 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. -------------------------------------------------------------------------------- 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 -------------------------------------------------------------------------------- [This page is intentionally left blank.] -------------------------------------------------------------------------------- 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. -------------------------------------------------------------------------------- 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 ------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Jean B. Buttner ------------------------------------------------------- Jean B. Buttner, President, Principal Executive Officer By: /s/ Stephen R. Anastasio ------------------------------------------------------------ Stephen R. Anastasio, Treasurer, Principal Financial Officer Date: April 2, 2007 -------------