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SEMI-ANNUAL REPORT
------------------
July 31, 1999
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Value Line
Aggressive
Income Trust
[LOGO]
----------
VALUE LINE
No-Load
Mutual
Funds
<PAGE>
Value Line Aggressive Income Trust
To Our Value Line
- --------------------------------------------------------------------------------
TO OUR SHAREHOLDERS:
During the six months ended July 31,1999, the total return of the Value Line
Aggressive Income Trust was 2.30%. The Lehman Brothers High Yield Index, a proxy
for the overall high yield market, returned 1.11%. The average high yield bond
fund's return, as measured by Lipper Analytical Services, was 2.03% over the
same period.
In our last letter, for the period ended January 31, 1999, the financial markets
were just beginning to recover from last fall's "liquidity shock" brought on by
the emerging markets meltdown and the hedge fund crisis. With the Federal Open
Market Committee ("FOMC") easing aggressively, both the equity and credit
markets began to return to more normal functionality. In fact, the high yield
bond market began the year with relatively strong performance. New issuance was
comparatively brisk as companies attempted to take advantage of low borrowing
rates. This issuance was absorbed by strong demand from mutual funds experience
substantial inflows. As the year progressed, however, it became increasingly
clear that the domestic economy was still exceptionally vibrant. Treasury rates
began to rise in anticipation of potential FOMC action, taking all bond prices
lower. In the face of this economic strength, and signs of recovery in the
economies of Asia, Latin America, and Western Europe, the FOMC felt compelled to
move, raising the fed funds rate by 25 basis points in June in order to preempt
any nascent inflationary pressures. Concerns of whether this would be an
isolated tightening, or only one of a series, continued to limit equity and
fixed income gains into the summer.
The Fund continues to favor the telecommunications and entertainment industries,
as it has for the past several years. Positive regulatory events, as well as
mergers and acquisition ("m & a") activity continue to provide catalysts for
credit improvement in these sectors. Outdoor advertising, television and radio
broadcasting, and cable television are areas in which the Fund maintains
significant exposure. The management team also favors several new competitive
carriers in both the wireline and wireless telecommunications industries. In
addition to the regulatory and m&a activity mentioned above, these players also
enjoy technological platforms which should allow them to win substantial share
away from the incumbent providers in these rapidly growing markets. The
developing global recovery referenced earlier has provided a spark for commodity
producers. Rising realizations, along with capacity reductions, have allowed the
bonds of paper, chemical, and metals producers to rebound dramatically from last
year's lows. The energy sector in particular has enjoyed sharply increased
prices in recent months, and the Fund has benefited through moderate exposure to
this sector. There are always areas for concern, however. Although most credit
market participants have now re-engaged, the high yield market must still deal
with occasionally bouts of less than optimal liquidity. Defaults have been
rising in recent months, and many industries have struggled. Certain sectors of
the healthcare industry, for example, have recently underperformed. Regulatory
changes have worked to many high yield issuers' disadvantage, particularly the
long term care providers which depend on now drastically reduced government
outlays. Though our exposure here was limited, it is deteriorating industry
fundamentals like these that we will seek to avoid.
We thank you for your continued confidence in the Value Line Aggressive Income
Trust and look forward to serving your investment needs in the future.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
September 17, 1999
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2
<PAGE>
Value Line Aggressive Income Trust
Aggressive Income Trust Shareholders
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ECONOMIC OBSERVATIONS
The economy is picking up some renewed strength as we head into the final months
of 1999. Evidence of this increased business activity can be found in the
accelerating rate of consumer spending, the ongoing strength in the housing
market, booming auto sles, and a modest uptick in manufacturing. Overall, this
recent firming in the key consumer and industrial markets suggests that GDP
growth, which slowed to a very modest 1.8% in the second quarter, will average
better than 3% during the final six months of the year, unless serious Year 2000
dislocations develop.
Inflationary pressures, meanwhile, are now starting to build, although, as yet,
we are not forecasting a dramatic change in trends. Nevertheless, the sharp
runup in oil prices in recent months, the escalation in wage costs, and the
runup in mortgage rates all indicate that the cost of living is increasing. A
gradual uptrend in pricing now seems likely over the next several quarters. The
Federal Reserve, taking note of these rising cost pressures, is likely to
maintain a somewhat restrictive monetary stance in the months ahead, with
perhaps an additional interest rate boost in the cards for early next year.
PERFORMANCE DATA:*
1 year ended 5 years ended 10 years ended
6/30/99 6/30/99 6/30/99
------------------------------------------------
Average Annual Total Return* -3.60% 10.18% 9.66%
1 year ended 5 years ended 10 years ended
7/31/99 7/31/99 7/31/99
------------------------------------------------
Average Annual Total Return* -5.51% 10.08% 9.54%
* The performance data quoted represent past performance and are no guarantee
of future performance. The average annual total return 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.
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3
<PAGE>
Value Line Aggressive Income Trust
Schedule of Investments
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<TABLE>
<CAPTION>
Principal
Amount Value
- --------------------------------------------------------------------------------------------------------
<S> <C>
UNITS (0.7%)
FOREIGN TELECOMMUNICATION (0.7%)
$ 1,000,000 Telei Europe B.V. (consisting of 13%, Senior Notes and Warrants to purchase
40.403 shares of Common Stock, @ $.01/share, Warrants expire 5/15/09)
due 5/15/09(1)............................................................ $ 1,060,000
-----------
TOTAL UNITS (Cost $1,000,000) .............................................. 1,060,000
-----------
CONVERTIBLE BONDS & NOTES (0.9%)
OILFIELD SERVICES/EQUIPMENT (0.9%)
4,000,000 Pride International, Inc. Zero Coupon Subordinated Debentures (each debenture
is convertible to 13.974 shares of Common Stock at anytime) 4/24/18....... 1,290,000
-----------
TOTAL CONVERTIBLE BONDS & NOTES (Cost $1,266,198) .......................... 1,290,000
-----------
CORPORATE BONDS & NOTES (76.3%)
ADVERTISING (0.7%)
1,000,000 Adams Outdoor Advertising Ltd., Senior Notes, 10 3/4%, 3/15/06.............. 1,065,000
AUTO PARTS (ORIGINAL EQUIPMENT)(1.3%)
2,000,000 Federal-Mogul Corp., Notes, 7 3/4%, 7/1/06.................................. 1,909,560
CABLE TV (8.5%)
1,500,000 Charter Communications Holdings., Senior Notes, 8 5/8%, 4/1/09 (1).......... 1,451,250
6,500,000 Knology Holdings Inc., Senior Discount Notes, (zero coupon until 10/15/02,
11 7/8% thereafter) 10/15/07.............................................. 3,883,750
2,000,000 Mediacom LLC, Capital Corp., Senior Notes, 7 7/8%, 2/15/11 (1).............. 1,810,000
7,000,000 21st Century Telecom Group, Senior Discount Notes, (zero coupon until 2/15/03,
12 1/4% thereafter) 2/15/08............................................... 3,141,250
1,500,000 United Pan-Europe Communications, N.V., Senior Notes, 10 7/8%, 8/1/09 (1)... 1,481,250
1,500,000 United Pan-Europe Communications, N.V., Senior Discount Notes,
(zero coupon until 8/1/04, 12 1/2% thereafter) 8/1/09 (1)................. 817,500
-----------
12,585,000
-----------
ENTERTAINMENT (12.5%)
4,000,000 Big City Radio Inc., Senior Discount Notes, (zero coupon until 3/15/01,
11 1/4% thereafter) 3/15/05............................................... 2,855,000
2,000,000 Chancellor Media Corp., Senior Sub. Notes, Series "B", 8 1/8%, 12/15/07..... 1,945,000
5,000,000 Radio Unica Corp., Senior Discount Notes, (zero coupon unitl 8/1/02,
11 3/4% thereafter) 8/1/06................................................ 3,187,500
</TABLE>
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4
<PAGE>
Value Line Aggressive Income Trust
July 31, 1999 (unaudited)
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<TABLE>
<CAPTION>
Principal
Amount Value
- --------------------------------------------------------------------------------------------------------
<S> <C>
$ 2,000,000 Regal Cinemas Inc., Senior Sub. Notes, 9 1/2%, 6/1/08....................... $ 1,810,000
2,000,000 Star Choice Communications, Inc., Senior Secured Notes, 13%, 12/15/05....... 2,065,000
4,000,000 TVN Entertainment Corp., Senior Notes, 14%, 8/1/08 (1)...................... 2,600,000
4,000,000 Telemundo Holdings Inc., Senior Discount Notes, Series "B",
(zero coupon until 8/15/03, 11 1/2% thereafter) 8/15/08................... 2,070,000
3,000,000 United Artists Theatre Co., Senior Sub. Notes, Series "B", 9 3/4%, 4/15/08.. 1,942,500
-----------
18,475,000
ENVIRONMENTAL (0.6%)
1,000,000 Allied Waste North America, Inc., Senior Notes, Series "B", 7 7/8%, 1/1/09.. 922,500
FOREIGN TELECOMMUNICATIONS (12.6%)
2,000,000 Clearnet Communications Inc., Senior Discount Notes,
(zero coupon until 12/15/00, 14 3/4%, thereafter) 12/15/05................ 1,817,500
8,000,000 Dolphin Telecom PLC, Senior Discount Notes, (zero coupon until 6/1/03,
11 1/2% thereafter), 6/1/08............................................... 3,830,000
4,000,000 Econophone Inc., Senior Discount Notes, (zero coupon until 2/15/03,
11%, thereafter), 2/15/08................................................. 2,230,000
4,000,000 Facilicom International Inc., Senior Notes, 10 1/2%, 1/15/08................ 2,810,000
2,000,000 Hermes Europe Railtel BV., Senior Notes, 11 1/2%, 8/15/07................... 2,075,000
3,500,000 Microcell Telecommunications, Inc., Senior Discount Notes,
(zero coupon until 6/1/04, 12% thereafter), 6/1/09 (1).................... 2,086,875
2,000,000 RSL Communications PLC., Senior Notes, 10 1/2%, 11/15/08.................... 1,967,500
1,250,000 Viatel Inc., Senior Notes, 11 1/4%, 4/15/08................................. 1,250,000
1,000,000 Viatel Inc., Senior Discount Notes, (zero coupon until 4/15/03,
12 1/2% thereafter) 4/15/08............................................... 628,750
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18,695,625
HOME APPLIANCE (1.3%)
2,000,000 Windmere-Durable Holdings, Inc., Senior Sub. Notes, 10%, 7/31/08............ 1,912,500
HOTEL/GAMING (5.1%)
2,000,000 Hilton Hotel Corp., Senior Notes, 7.95%, 4/15/07............................ 2,023,280
2,000,000 ITT Corp., Notes, 6 3/4%, 11/15/05.......................................... 1,821,560
2,000,000 Park Place Entertainment Corp., Senior Sub. Notes, 7 7/8%, 12/15/05......... 1,890,000
2,000,000 Trump Atlantic City Associates/Funding Inc., Secured First Mortgage Notes,
11 1/4%, 5/1/06........................................................... 1,815,000
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7,549,840
MACHINERY (2.6%)
2,000,000 Columbus McKinnon Corp., Senior Sub. Notes, 8 1/2%, 4/1/08.................. 1,930,000
2,000,000 Terex Corp., Senior Sub. Notes, Series "C" 8 7/8%, 4/1/08 (1)............... 1,932,500
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3,862,500
</TABLE>
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5
<PAGE>
Value Line Aggressive Income Trust
Schedule of Investments
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<TABLE>
<CAPTION>
Principal
Amount Value
- --------------------------------------------------------------------------------------------------------
<S> <C>
MEDICAL SERVICES (1.4%)
$ 1,000,000 Mariner Post-Acute Network, Inc., Senior Sub. Notes, 9 1/2%, 11/1/07........ $ 145,000
2,000,000 Tenet HealthCare Corp., Senior Sub. Notes, 8%, 1/15/05...................... 1,925,100
-----------
2,070,100
NATURAL GAS--DIVERSIFIED (1.2%)
3,500,000 Ram Energy, Inc., Senior Notes, 11 1/2%, 2/15/08............................ 1,811,250
OILFIELD SERVICES/EQUIPMENT (1.4%)
1,000,000 Key Energy Services Inc., Senior Sub. Notes, Series "B", 14%, 1/15/09....... 1,042,500
1,000,000 Pride International, Inc. Senior Notes, 10%, 6/1/09......................... 1,022,500
-----------
2,065,000
PAPER & FOREST PRODUCTS (0.6%)
1,000,000 Repap New Brunswick, Inc., Second Priority Senior
Secured Notes, 10 5/8%, 4/15/05 ............................................ 862,500
PETROLEUM--PRODUCING (2.0%)
1,000,000 Coho Energy Inc., Senior Sub. Notes, 8 7/8%, 10/15/07....................... 527,500
2,000,000 Ocean Energy Inc., Senior Notes, Series "B", 7 5/8%, 7/1/05................. 1,923,720
1,000,000 Southwest Royalties Inc., Senior Notes, Series "B", 10 1/2%, 10/15/04....... 467,500
-----------
2,918,720
RETAIL STORE (3.4%)
2,000,000 Ames Department Stores, Inc., Senior Notes, 10%, 4/15/06 (1)................ 1,960,000
1,000,000 Just For Feet, Inc., Senior Sub. Notes, 11%, 5/1/09 (1)..................... 297,500
2,250,000 Kmart Corp., Debentures, 12 1/2%, 3/1/05.................................... 2,700,180
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4,957,680
TELECOMMUNICATION SERVICES (19.8%)
2,000,000 American Cellular Corp., Senior Notes, 10 1/2%, 5/15/08..................... 2,042,500
2,000,000 Cencall Communications Corp., Senior Discount Notes, 10 1/8%, 1/15/04....... 2,037,500
2,500,000 Centennial Cellular Operating Co., Senior Sub. Notes, 10 3/4%, 12/15/08 (1). 2,593,750
12,250,000 DTI Holdings Inc., Senior Discount Notes, Series "B",
(zero coupon until 3/1/03, 12 1/2% thereafter) 3/1/08..................... 4,517,188
1,000,000 Dobson Communications Corp., Senior Notes, 11 3/4%, 4/15/07................. 1,052,500
3,000,000 GST Network Funding, Inc., Senior Secured Discount Notes,
(zero coupon until 5/1/03, 10 1/2% thereafter) 5/1/08 (1)................. 1,811,250
2,000,000 Hyperion Telecommunications Inc., Senior Secured Notes,
Series "B", 12 1/4%, 9/1/04............................................... 2,115,000
2,000,000 Iridium LLC/Capital Corp., Senior Notes, Series "B", 14%, 7/15/05........... 365,000
3,000,000 KMC Telecom Holdings Inc., Senior Discount Notes,
(zero coupon until 2/15/03, 12 1/2% thereafter) 2/15/08................... 1,601,250
</TABLE>
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6
<PAGE>
Value Line Aggressive Income Trust
July 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
- --------------------------------------------------------------------------------------------------------
<S> <C>
$ 2,000,000 MGC Communications Inc., Senior Secured Notes, Series "B", 13%, 10/1/04..... $ 1,895,000
2,000,000 Nextlink Communications, Inc., Senior Notes, 10 3/4%, 6/1/09................ 2,030,000
2,000,000 Omnipoint Corp., Senior Notes, Series "A", 11 5/8%, 8/15/06................. 2,050,000
750,000 Orbital Imaging Corp., Senior Notes, 11 5/8%, 3/1/05 (1).................... 682,500
4,500,000 Orion Network Systems, Inc., Senior Discount Notes,
(zero coupon until 1/15/02, 12 1/2%, thereafter) 1/15/07.................. 2,430,000
2,000,000 Powertel Inc., Senior Notes, 11 1/4%, 6/1/07................................ 2,072,500
-----------
29,295,938
TEXTILE (1.3%)
2,000,000 Westpoint Stevens Inc., Senior Notes, 7 7/8%, 6/15/08....................... 1,925,000
-----------
TOTAL CORPORATE BONDS & NOTES (Cost $122,120,319) .......................... 112,883,713
-----------
CONVERTIBLE PREFERRED STOCK (3.1%)
CABLE TV (0.2%)
5,000 Unitedglobalcom, Series "C", Par $50. (convertible to .5931 shares of
Common Stock @$84.30 beginning 12/31/00), 7%, 12/31/49 (1)................ 277,500
FOREIGN TELECOMMUNICATION (0.4%)
10,000 Global Telesystems Group, Inc., Par $50. (convertible to 1.4492 shares of
Common Stock @$34.50 beginning 4/23/99), 7 1/4%, 12/31/49 (1)............. 555,625
INTERNET (0.3%)
10,000 Psinet Inc., Series "C", Par $50. (convertible to .8017 shares of
Common Stock @$62.3675 at any time), 6 3/4%, 12/1/49...................... 513,125
TELECOMMUNICATION SERVICES (2.2%)
40,000 IXC Communications, Inc., Par $50. (each share is convertible to 0.6874
shares of Common Stock @$72.73, at any time), 6 3/4%, 12/31/49 (1)
65,000 Intermedia Communications, Inc., Par $25.
(each share is convertible to 0.5942 ..................................... 1,777,500
shares of Common Stock @$42.075, beginning 11/16/98), 7%, 12/31/49 (1).... 1,409,688
-----------
3,187,188
TOTAL CONVERTIBLE PREFERRED STOCK
(Cost $4,343,125) ........................................................ 4,533,438
-----------
</TABLE>
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7
<PAGE>
Value Line Aggressive Income Trust
Schedule of Investments
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
- --------------------------------------------------------------------------------------------------------
<S> <C>
PREFERRED STOCK (8.1%)
ENTERTAINMENT (5.4%)
2,288 Cumulus Media, Inc., 13 3/4%, each share is exchangeable one for one into
Senior Notes Series "A", Par $1000 7/1/09 (3)............................. $ 2,574,043
2,726 Paxson Communications Corp., 12 1/2%, each share is exchangeable one for
one into Debentures, Par $1000, 10/31/06 (3).............................. 2,521,550
2,620 Spanish Broadcasting Systems, Inc., 14 1/4%, each share is exchangeable
one for one into Debentures, Par $1000, 3/15/05 (3)....................... 2,803,347
---------
7,898,940
TELECOMMUNICATION EQUIPMENT (1.4%)
2,000 Crown Castle International Corp., 12 3/4%, each share is exchangeable
one for one into Debentures, Par $1,000, 12/15/10 (3)..................... 2,100,000
TELECOMMUNICATION SERVICES (1.3%)
2,000 Dobson Communications Corp., 13%, each share is exchangeable
one for one into Debentures, Par $1,000, 5/1/09 (1)(3).................... 1,920,000
TOTAL PREFERRED STOCK
(Cost $11,781,869) ....................................................... 11,918,940
-----------
COMMON STOCKS (1.8%)
CABLE TV (0.0%)
2,000 Optel Inc. (non-voting) (1)................................................. 10,000
ENTERTAINMENT (0.3%)
856 Spanish Broadcasting Systems, Inc., (1)..................................... 513,600
FOREIGN TELECOMMUNICATION (0.1%)
5,235 Primus Telecom Group Inc. .................................................. 84,413
TELECOMMUNICATION EQUIPMENT (0.5%)
948 Loral Space & Communications Inc. .......................................... 17,893
20,515 Viatel Inc. ................................................................ 759,055
-----------
776,948
TELECOMMUNICATION SERVICES (0.9%)
6,001 Advance Radio Telecom Corp. ................................................ 71,262
4,376 Allegiance Telecom Inc. .................................................... 220,168
17,657 GST Telecommunications Inc. ................................................ 264,855
3,030 Hyperion Telecommunications, Inc. (1)....................................... 62,494
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</TABLE>
8
<PAGE>
Value Line Aggressive Income Trust
July 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares or
Warrants Value
- --------------------------------------------------------------------------------------------------------
<S> <C>
4,125 ICG Telecommunications Inc. ................................................ $ 93,328
6,515 Intermedia Communications Inc. ............................................. 179,570
10,758 MGC Communications, Inc. ................................................... 250,124
2,361 Nextel Communications Inc. ................................................. 126,461
-----------
1,268,260
-----------
TOTAL COMMON STOCK (Cost $718,250) ......................................... 2,653,223
-----------
WARRANTS (0.9%)
ENTERTAINMENT (0.0%)
4,000 TVN Entertainment Corp., (to purchase 10.777 shares of Common Stock,
@ $.01/share, expire 8/1/08) (1)(2)....................................... 40
FOREIGN TELECOMMUNICATION (0.8%)
6,600 Clearnet Communication Inc. (to purchase class "A" non-voting shares,
@$16.36/share, expire 9/15/05) (1)(2)..................................... 33,000
1,750 Colt Telecom Group PLC (to purchase 31.2 ordinary shares,
@(pound).75625/share, expires 12/31/06) (1)(2)............................ 1,156,750
2,095 Ionica PLC (to purchase 34.7 shares of Common Stock,
@(pound).10/share, expires 8/15/06)(1)(2)................................. 21
4,000 Microcell Telecommunications Inc. "Conditional" (to purchase 3.072
class "B", non-voting shares, @ $.01/share, expires 6/1/06) (1) (2)....... 80,052
-----------
1,269,823
OILFIELD SERVICES/EQUIPMENT (0.0%)
1,000 Key Energy Services Inc., (to purchase 13.55 shares of Common Stock,
@$4.88125/share expire 1/15/09 (1) (2).................................... 10
TELECOMMUNICATION SERVICES (0.1%)
76,250 DTI Holdings Inc. (to purchase 7.76 shares of Common Stock,
@$.01/share, expires 3/1/08)(1)(2)........................................ 762
3,000 HighwayMaster Communication Inc. (to purchase 6.566 shares of Common Stock,
@$9.625/share, expires 9/15/05) (1) (2)................................... 6,000
3,000 KMC Telecom Holdings Inc. (to purchase .21785 shares of Common Stock,
@$.01/share, expires 4/15/08) (1)(2)...................................... 75,000
-----------
81,762
-----------
TOTAL WARRANTS (Cost $512,248) ............................................. 1,351,635
-----------
</TABLE>
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9
<PAGE>
Value Line Aggressive Income Trust
Schedule of Investments July 31,1999 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares or
Principal
Amount Value
- --------------------------------------------------------------------------------------------------------
<S> <C>
COMMON STOCK CANADIAN (0.1%)
ENTERTAINMENT (0.1%)
69,480 Star Choice Communications, Inc. ........................................... $ 161,560
-----------
TOTAL COMMON STOCK CANADIAN (Cost $48,196) ................................. 161,560
-----------
TOTAL INVESTMENT SECURITIES (91.9%)
(Cost $141,790,205) ...................................................... 135,852,509
REPURCHASE AGREEMENTS (5.7%)
(including accrued interest)
$ 4,200,000 Collateralized by $3,995,000 U.S. Treasury Notes, 87/8%, due 8/15/00 with a
value of $4,286,664 (With State Street Bank & Trust Co., N.V. 5.03%,
dated 7/30/99, due 8/1/99 delivery value $4,200,587....................... 4,200,587
4,300,000 Collateralized by $3,895,000 U.S. Treasury Bonds, 71/8%, due 2/15/23 with a
value of $4,382,781 (With Warburg Dillon Read LLC, 5.02%,
dated 7/30/99, due 8/1/99 delivery value $4,300,599....................... 4,300,599
-----------
8,501,186
-----------
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES (2.4%) ..................................... 3,503,590
-----------
NET ASSETS (100.0%) ....................................................................... $147,857,285
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE,
PER OUTSTANDING SHARE ................................................................ $ 7.24
===========
</TABLE>
(1) 144A Security where certain conditions for public sale may exist.
(2) Non-income producing security.
(3) PIK (Payment-in-kind). Interest payment is made with additional securities.
See Notes to Financial Statements
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10
<PAGE>
Value Line Aggressive Income Trust
Statement of Assets and Liabilities
at July 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
Dollars
(in thousands
except
per share
amount)
------------
Assets:
Investment securities, at value
(cost-- $141,790) ........................................ $ 135,852
Repurchase agreement (cost $8,501) ......................... 8,501
Cash ....................................................... 69
Interest receivable ........................................ 2,476
Receivable for securities sold ............................. 3,753
Receivable for trust shares sold ........................... 276
---------
Total Assets ........................................... 150,927
Liabilities:
Payable for securities purchased ........................... 333
Payable for trust shares repurchased ....................... 2,147
Dividends payable to shareholders .......................... 416
Accrued expenses:
Advisory fee ............................................. 88
Other .................................................... 86
---------
Total Liabilities ...................................... 3,070
---------
Net Assets: ................................................ $ 147,857
=========
Net Assets:
Capital Stock, at $.01 par value
(authorized unlimited,
outstanding 20,422,082 shares
of beneficial interest) .................................. $ 204
Additional paid-in capital ................................. 171,403
Accumulated net realized loss
on investments ........................................... (17,855)
Undistributed net investment income ........................ 43
Unrealized net depreciation
of investments ........................................... (5,938)
---------
Net Assets ............................................. $ 147,857
=========
Net Asset Value, Offering and
Redemption Price
per Outstanding Share .................................... $ 7.24
=========
Statement of Operations
for the Six Months Ended July 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
Dollars
(in thousands)
--------------
Investment Income:
Interest income ............................................ $ 8,953
Other income ............................................... 28
---------
8,981
---------
Expenses:
Advisory fee ............................................... 529
Transfer agent fees ........................................ 28
Auditing and legal fees .................................... 23
Custodian fees ............................................. 21
Printing, checks and stationery ............................ 19
Registration and filing fees ............................... 16
Taxes and other expenses ................................... 16
Trustees' fees and expenses ................................ 8
---------
Total Expenses before
custody credits ...................................... 660
Less: custody credits .................................. (4)
---------
Net Expenses ........................................... 656
---------
Net Investment Income ...................................... 8,325
---------
Realized and unrealized Gain (Loss)
on Investments
Realized Loss-Net ........................................ (9,677)
Change in Unrealized
Depreciation--Net ...................................... 5,327
---------
Net Realized Gain and Change in
Net Unrealized Depreciation
on Investments ........................................... (4,350)
---------
Net Increase in Net Assets
from Operations .......................................... $ 3,975
=========
See Notes to Financial Statements.
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11
<PAGE>
Value Line Aggressive Income Trust
Statement of Changes in Net Assets
for the Six Months Ended July 31, 1999 and for the year Ended January 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
July 31, 1999 January 31,
(unaudited) 1999
-------------------------------
(Dollars in thousands)
<S> <C> <C>
Operations:
Net investment income .................................................... $ 8,325 $ 15,677
Realized loss on investments-Net ......................................... (9,677) (5,192)
Change in net unrealized depreciation .................................... 5,327 (17,830)
-------------------------------
Net increase/decrease in net assets from operations ...................... 3,975 (7,345)
Distributions to Shareholders:
Net investment income .................................................... (8,380) (15,605)
Trust Share Transactions:
Net proceeds from sale of shares ......................................... 83,271 164,217
Net proceeds from reinvestment of distribution to shareholders ........... 5,516 10,593
-------------------------------
88,787 174,810
Cost of shares repurchased ............................................... (111,330) (123,767)
---------
Decrease/increase from share transactions ................................ (22,543) 51,043
-------------------------------
Total Decrease/Increase in Net Assets ...................................... (26,948) 28,093
Net Assets:
Beginning of period ...................................................... 174,805 146,712
-------------------------------
End of period ............................................................ $ 147,857 $ 174,805
===============================
Undistributed net investment income at end of period ....................... $ 43 $ 98
===============================
</TABLE>
See Notes to Financial Statements.
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12
<PAGE>
Value Line Aggressive Income Trust
Notes to Financial Statements July 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Value Line Aggressive Income Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The primary investment objective of the Trust is
to maximize current income through investment in a diversified portfolio of
high-yield fixed-income securities. As a secondary investment objective, the
Trust will seek capital appreciation but only when consistent with its primary
objective. Lower rated or unrated (i.e. high-yield) securities are more likely
to react to developments affecting market risk (general market liquidity) and
credit risk (issuers inability to meet principal and interest payments on their
obligations) than are more highly rated securities, which react primarily to
movements in the general level of interest rates. The ability of issuers of debt
securities held by the Trust to meet their obligations may be affected by
economic developments in a specific industry. The following significant
accounting policies are in conformity with generally accepted accounting
principles for investment companies. Such policies are consistently followed by
the Trust in the preparation of its financial statments. 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. Short term instruments with maturities of 60 days or
less, at the date of purchase, are valued at amortized cost which approximates
market.
(B) Repurchase Agreements. In connection with transacting in repurchase
agreements, the Trust's custodian takes possession of the underlying collateral
securities, the value of which exceeds the principal amount of the repurchase
transaction, including accrued interest. To the extent that any repurchase
transaction exceeds one business day, the value of the collateral is
marked-to-market on a daily basis to ensure the adequacy of the collateral. In
the event of default of the obligation to repurchase, the Trust has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral or proceeds may be subject to legal proceedings.
(C) Distributions. It is the policy of the Trust to distribute all of its net
investment income to shareholders. Dividends from net investment income will be
declared daily and paid monthly. Net realized capital gains, if any, are
distributed to shareholders annually or more frequently if necessary to comply
with the Internal Revenue Code. Income dividends and capital gains distributions
are automatically reinvested in additional shares of the Trust unless the
shareholder has requested otherwise. Income earned by the Trust on weekends,
holidays and other days on which the Trust is closed for business is declared as
a dividend on the next day on which the Trust is open for business.
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13
<PAGE>
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 shareholder. Therefore,
no federal income tax or excise tax provision is required.
(E) Investments. Securities transactions are recorded on a trade date basis.
Realized gain and loss from securities transactions are recorded on the
identified-cost basis. Interest income, adjusted for amortization of discount,
including original-issue discount required for federal income tax purposes on
investments, is earned from settlement date and recognized on the accrual basis.
(F) Amortization. Discounts on debt securities are amortized to interest income
over the life of the security with a corresponding increase to the security's
cost basis; premiums on debt securities are not amortized.
2. TRUST SHARE TRANSACTIONS
Transactions in shares of beneficial interest in the Trust were as follows:
Six Months
Ended Year Ended
July 31, 1999 January 31,
(unaudited) 1999
---------------------------
(in thousands)
Shares sold .................................. 11,195 20,676
Shares issued to shareholders
in reinvestment
of dividends ............................... 745 1,330
-------------------------
11,940 22,006
Shares repurchased ........................... (14,968) (15,498)
-------------------------
Net decrease/increase ........................ (3,028) 6,508
=========================
3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities, excluding short-term securities,
were as follows:
Six Months Ended
July 31, 1999
(unaudited)
--------------
(in thousands)
PURCHASES:
Investment Securities ............. $126,010
========
SALES:
Investment Securities.............. $146,522
========
At July 31, 1999, the aggregate cost of investments in securities including
repurchase agreements for Federal income tax purposes was $150,291,391. The
aggregate appreciation and depreciation of investments at July 31, 1999 based on
a comparison of investment values and their costs for Federal income tax
purposes, was $5,461,799 and $11,399,495, respectively, resulting in a net
depreciation of $5,937,696.
For Federal income tax purposes, the Trust had a capital loss carryover at
January 31, 1999 of approximately $5,516,205, of which $599,408 will expire in
2000, $2,386,247 in 2003 and $2,530,550 in 2007. To the extent future capital
gains are offset by such capital losses, the Trust does not anticipate
distributing any such gains to the shareholders.
For the year ended January 31, 1999, permanent book tax differences due to the
expiration of capital loss carryovers of $3,439,000 were classified from
accumulated net realized loss on investments to additional paid-in capital.
During the year ended January 31, 1999, as permitted under Federal income tax
regulations, the Trust has elected to defer $2,049,896 of Post-October net
capital losses to the next taxable year.
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14
<PAGE>
Value Line Aggressive Income Trust
July 31,1999 (unaudited)
- --------------------------------------------------------------------------------
4. INVESTMENT ADVISORY CONTRACT, MANAGEMENT FEES AND TRANSACTIONS WITH
AFFILIATES
An advisory fee of $528,846 was paid or payable to Value Line, Inc.,
the Trust's investment advisor, (the "Adviser"), for the six months ended July
31, 1999. This was computed at an annual rate of .75 of 1% per year on the first
$100 million of the Trust's average daily net assets for the period, and .50 of
1% on the average net assets in excess thereof. The Adviser provides research,
investment programs and supervision of the investment portfolio and pays costs
of administrative services and office space. The Adviser also provides persons,
satisfactory to the Trust's Trustees, to act as officers of the Trust and pays
their salaries and wages. The Trust bears all other costs and expenses.
Certain officers and directors of the Adviser and its subsidiary, Value Line
Securities, Inc. (the Trust's distributor and a registered broker/dealer), are
also officers and a Trustee of the Trust.
At July 31, 1999, the Adviser owned 458,904 shares of beneficial interest in the
Trust, representing 2.25% of the outstanding shares. In addition, certain
officers and trustees owned 93,463 shares of beneficial interest in the Trust,
representing .46% of the outstanding shares.
- --------------------------------------------------------------------------------
15
<PAGE>
Financial Highlights
Selected data for a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Six Months Ended Year Ended January 31,
July 31, 1999 -----------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ........... $ 7.45 $ 8.66 $ 8.21 $ 7.64 $ 6.80 $ 8.00
--------------------------------------------------------------------
Income from investment operations:
Net investment income ......... .38 .78 .72 .75 .69 .68
Net gains or losses on
securities (both realized
and unrealized).............. (.21) (1.21) .45 .57 .85 (1.20)
--------------------------------------------------------------------
Total from investment
operations................... .17 (.43) 1.17 1.32 1.54 (.52)
--------------------------------------------------------------------
Less distributions:
Dividends from net
investment income ........... (.38) (.78) (.72) (.75) (.70) (.68)
--------------------------------------------------------------------
Change in net assets .......... (.21) (1.21) .45 .57 .84 (1.20)
--------------------------------------------------------------------
Net asset value, end of period .. $7.24 $7.45 $8.66 $8.21 $7.64 $6.80
====================================================================
Total return .................... 2.30%+ (5.13%) 14.97% 18.12% 23.79% ( 6.66%)
====================================================================
Ratios/Supplemental Data
Net assets, end of period
(in thousands) ................ $147,857 $174,805 $146,712 $83,765 $41,776 $29,760
Ratio of expenses to
average net assets............. .81%*(1) .81%(1) .95%(1) 1.10%(1) 1.22%(1) 1.27%(1)
Ratio of net investment income
to average net assets.......... 10.28%* 9.81% 8.60% 9.70% 9.67% 9.23%
Portfolio turnover rate ......... 85%+ 140% 251% 276% 284% 221%
</TABLE>
(1) After offset for custody credits. Excluding the custody credits would not
have changed the expense ratio.
* Annualized.
+ Not annualized, for six months period only.
See Notes to Financial Statements
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16
<PAGE>
Value Line Aggressive Income Trust
Other Information (unaudited)
- --------------------------------------------------------------------------------
Year 2000. Like other mutual funds, the Trust could be adversely affected if the
computer systems used by the Adviser and other service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. This is commonly known as the "Year 2000 Problem." The Adviser is
taking steps that it believes are reasonably designed to address in Year 2000
Problem with respect to the computer systems that it uses and to obtain
satisfactory assurances that comparable steps are being taken by the Trust's
other major service providers. At this time, however, there can be no assurance
that these steps will be sufficient to avoid any adverse impact to the Trust.
The Year 2000 Problem is expected to impact corporations, which may include
insurers of portfolio securities held by the Trust, to varying degrees based
upon various factors, including, but not limited to, the corporation's industry
sector and degree of technological sophistication. The Trust is unable to
predict what impact, if any, the Year 2000 Problem will have on issuers of the
portfolio securities held by the Trust.
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Value Line Aggressive Income Trust
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Value Line Aggressive Income Trust
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<PAGE>
Value Line Aggressive Income Trust
The Value Line Family of Funds
- --------------------------------------------------------------------------------
1950--The Value Line Fund seeks long-term growth of capital. Current income is a
secondary objective.
1952--Value Line Income and Growth Fund's primary investment objective is
income, as high and dependable as is consistent with reasonable risk. Capital
growth to increase total return is a secondary objective.
1956--The Value Line Special Situations Fund seeks long-term growth of capital.
No consideration is given to current income in the choice of investments.
1972--Value Line Leveraged Growth Investors' sole investment objective is to
realize capital growth.
1979--The Value Line Cash Fund, a money market fund, seeks to secure as high a
level of current income as is consistent with maintaining liquidity and
preserving capital.
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 offers investors a choice of two portfolios: The Money Market Portfolio
and The National Bond Portfolio.
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.
1987--Value Line Strategic Asset Management Trust* seeks to achive a high total
investment return consistent with reasonable risk.
1993--Value Line Small-Cap Growth 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.
1995--Value Line U.S. Multinational Company Fund's investment objective is
maximum total return. It invests primarily in securities of U.S. companies that
have significant sales from international operations.
* 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 1-800-223-0818, 24
hours a day, 7 days a week, or visit us at www.valueline.com. Read the
prospectus carefully before you invest or send money.
- --------------------------------------------------------------------------------
20
<PAGE>
================================================================================
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 NFDS
P.O. Box 419729
Kansas City, MO 64141-6729
INDEPENDENT PricewaterhouseCoopers LLP
ACCOUNTANTS 1177 Avenue of the Americas
New York, NY 10036-2798
LEGAL COUNSEL Peter D. Lowenstein, Esq.
Two Greenwich Plaza, Suite 100
Greenwich, CT 06830
TRUSTEES Jean Bernhard Buttner
John W. Chandler
David H. Porter
Paul Craig Roberts
Nancy-Beth Sheerr
OFFICERS Jean Bernhard Buttner
Chairman and President
Nathan N. J. Grant
Vice President
Bruce H. Alston
Vice President
David T. Henigson
Vice President and
Secretary/Treasurer
Jack M. Houston
Assistant Secretary/Treasurer
Stephen La Rosa
Assistant Secretary/Treasurer
The financial statements included herein have been taken from the records of the
Trust without examination by the independent accountants and, accordingly, they
do not express an opinion thereon.
This unaudited report is issued for information of shareholders. It is not
authorized for distribution to prospective investors unless preceded or
accompanied by a currently effective prospectus of the Trust (obtainable from
the Distributor).
508817
