================================================================================
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SEMI-ANNUAL REPORT
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July 31, 2000
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Value Line
Aggressive
Income Trust
[LOGO]
VALUE LINE
No-Load
Mutual
Funds
================================================================================
<PAGE>
Value Line Agressive Income Trust
To Our Value Line
--------------------------------------------------------------------------------
To Our Shareholders:
During the six months ended July 31, 2000, the total return of the Value Line
Aggressive Income Trust was -6.63%. The average high yield bond fund's return as
measured by Lipper Analytical Services was -1.04% during the same period.
The year 2000 is shaping up to be the third consecutive year of subdued returns
for high yield bonds. An important reason for the sluggish performance has been
the significant redemptions experienced by high yield bond mutual funds. Many
investors have been exposing more of their assets to the equity markets at the
expense of high yield, as many stocks' recent outperformance of high yield has
been much greater than historical averages. The Investment Company Institute, a
fund industry data source, reports that equity mutual funds in the aggregate
have received over $200 billion in net new share purchases just in the first six
months of 2000. In contrast, high-yield mutual funds have experienced $6 billion
in outflows over the same period. These redemptions force managers to sell
securities, which depresses bond prices, and therefore returns. In addition,
business failures, as measured by their default rate, remain stubbornly high.
According to Moody's Investors Service, a corporate credit rating agency, this
figure is over 6%, much higher than the historical average of 3.3%. One reason
for this increase is a deterioration of overall credit quality in the market.
Just as important, however, is the significantly increased level of new
high-yield bond issuance we have experienced in recent years. Both 1997 and 1998
broke records for new issuance, and historical studies suggest that new issues
are most at risk for default between two and three years after coming to market.
Going forward, we believe that if equity performance returns to more normal
levels, investors may begin shifting more of their assets to high yield, which
may support improved returns going forward. In addition, new high yield bond
issuance has decreased dramatically in 1999 and 2000, which suggests the
possibility that the default rate may subside going forward -- also a potential
positive for the high yield market.
This period was a particularly challenging one from an industry perspective, as
it appeared that almost no sectors of the economy were safe from negative credit
events. Across industries, many of the weaker companies were threatened by
competitive pressures, and from restricted access to capital from bankers and
from bond and equity investors. In addition, many of the stronger players in
certain industries became targets for leveraged buyouts -- also a negative for a
company's creditworthiness. The trust benefited from its exposure to the energy
sector, as strong energy prices buoyed the securities of hydrocarbon producers,
as well as the companies that service them. The strong economy also drove
improving performance in the outdoor advertising, lodging and gaming sectors.
Sectors that resulted in a more mixed performance include the
telecommunications, media, industrial manufacturing, and retail industries. The
fund maintains a substantial exposure to the entertainment industry, in which we
include radio and tv broadcasters and cable television. Radio and cable are
particularly poised for strong cash flow growth in the near term. And while we
still believe many tele-communications companies are creating significant value
and strategic assets, that environment has become more competitive, both for
customers and funding. We have reduced our exposure here, and are continuing to
avoid other highly competitive industries such as supermarkets and restaurants,
as well as commodity producers in the metals, mining and chemicals industries.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
August 16, 2000
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2
<PAGE>
Value Line Agressive Income Trust
Aggressive Income Trust Shareholders
--------------------------------------------------------------------------------
Economic Observations
The American economy has, by all appearances, moved onto a slower growth track
as we move through the early stages of the second half of calendar 2000.
Evidence of this deceleration in business activity can be found in recent
surveys on manufacturing, housing, auto sales, and employment. Overall, we now
estimate that GDP growth will average 3.0%-3.5% during the third and fourth
quarters. Thereafter, we would expect the pace of economic activity to hold at
these comparatively restrained levels through at least the first half of 2001,
as the succession of interest-rate hikes voted for by the Federal Reserve Board
over the past year, or so, continues to have the hoped-for effect of stabilizing
the economy at comfortable growth levels.
Inflationary pressures, meanwhile, continue to be held in check for the most
part, with sustained increases in productivity and ongoing technological
innovations being at least partially responsible for this comparative pricing
stability. Nevertheless, a moderate increase in cost pressures could still
evolve over the next few quarters, particularly if energy prices resume their
earlier climb and the aforementioned moderation in second-half GDP growth fails
to continue as we expect it will. The Federal Reserve, taking note of this
potential for higher prices, is likely to keep a vigilant eye on the monetary
situation, standing ready to raise interest rates further should it deem
inflation to be a problem. Absent an unexpected price flareup, we believe the
recent credit tightening cycle may have run its course.
Performance Data:*
1 year ended 5 years ended 10 years ended
6/30/00 6/30/00 6/30/00
------------------------------------------------
Average Annual Total Return*... -1.81% 8.33% 9.54%
1 year ended 5 years ended 10 years ended
7/31/00 7/31/00 7/31/00
------------------------------------------------
Average Annual Total Return*... -2.19% 7.82% 9.26%
* The performance data quoted represent past performance and are no guarantee
of future performance. The average annual total returns 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 Agressive Income Trust
Schedule of Investments
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONVERTIBLE BONDS & NOTES (1.1%)
FOREIGN TELECOMMUNICATIONS (0.3%)
$ 750,000 Global TeleSystems, Inc., Senior Subordinated Debentures
5 3/4%, (each debenture is convertible to 36.3306 shares of
Common Stock at any time) 7/1/10 .......................................... $ 358,125
------------
OILFIELD SERVICES/EQUIPMENT (0.8%)
3,000,000 Pride International, Inc. Zero Coupon Subordinated Debentures
(each debenture is convertible to 13.974 shares of
Common Stock at anytime) 4/24/18 .......................................... 1,170,000
------------
TOTAL CONVERTIBLE BONDS & NOTES (Cost $1,706,782) ........................... 1,528,125
------------
CORPORATE BONDS & NOTES (80.9%)
ADVERTISING (4.1%)
2,580,000 Adams Outdoor Advertising Ltd., Senior Notes, 10 3/4%, 3/15/06 .............. 2,650,950
1,000,000 Lamar Media Corp., Senior Sub. Notes, 9 1/4%, 8/15/07 ....................... 980,000
2,000,000 Lamar Media Corp., Senior Sub. Notes, 8 5/8%, 9/15/07 ....................... 1,937,500
------------
5,568,450
------------
AUTO PARTS--REPLACEMENT (1.2%)
2,000,000 Federal-Mogul Corp., Notes, 7 3/4%, 7/1/06 .................................. 1,609,902
------------
CABLE TV (7.5%)
5,500,000 Knology Holdings Inc., Senior Discount Notes, (zero coupon until 10/15/02,
11 7/8% thereafter) 10/15/07 .............................................. 2,915,000
2,000,000 Telewest Communications PLC, Senior Discount Debentures, (zero coupon
until 10/1/00, 11% thereafter) 10/1/07 .................................... 1,925,000
4,000,000 United International Holdings, Inc., Senior Secured Discount Notes,
Series "B", (zero coupon until 2/15/03, 10 3/4% thereafter) 2/15/08 ....... 2,910,000
3,000,000 United Pan-Europe Communications N.V., Senior Notes, Series "B",
11 1/2%, 2/1/10 .......................................................... 2,565,000
------------
10,315,000
------------
ENTERTAINMENT (10.2%)
2,000,000 Benedek Communications Corp., Senior Sub. Discount Notes, (zero coupon
until 5/15/01, 13 1/4% thereafter) 5/15/06 ................................ 1,560,000
6,000,000 Big City Radio, Inc., Senior Discount Notes, (zero coupon until 3/15/01,
11 1/4% thereafter) 3/15/05 ............................................... 3,270,000
2,000,000 Chancellor Media Corp., Senior Sub. Notes, Series "B", 8 1/8%, 12/15/07 ..... 2,020,000
</TABLE>
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4
<PAGE>
Value Line Agressive Income Trust
July 31, 2000 (unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
$ 2,200,000 Granite Broadcasting Corp., Senior Sub. Notes, 9 3/8%, 12/1/05 .............. $ 1,980,000
2,000,000 Pegasus Communications Corp., Senior Notes, 9 3/4%, 12/1/06 ................. 1,945,000
4,000,000 Radio Unica Corp., Senior Discount Notes, (zero coupon until 8/1/02, 11 3/4%
thereafter) 8/1/06 ........................................................ 2,660,000
3,000,000 Regal Cinemas, Inc., Senior Sub. Notes, 9 1/2%, 6/1/08 ...................... 570,000
------------
14,005,000
------------
ENVIRONMENTAL (2.2%)
2,500,000 Allied Waste North America, Inc., Senior Notes, Series "B",
7 7/8%, 1/1/09 ............................................................ 2,206,250
1,000,000 Browning-Ferris Industries, Inc., Debentures, 9 1/4%, 5/1/21 ................ 829,755
------------
3,036,005
------------
FOREIGN TELECOMMUNICATIONS (9.8%)
5,000,000 Dolphin Telecom PLC, Senior Discount Notes, (zero coupon until 6/1/03,
11 1/2% thereafter), 6/1/08 ............................................... 1,800,000
3,000,000 Esprit Telecom Group PLC , Senior Notes, 11 1/2%, 12/15/07 .................. 2,040,000
2,000,000 Global Crossing Holdings Ltd., Senior Notes, 9 1/2%, 11/15/09 ............... 1,940,000
3,500,000 Orion Network Systems, Inc., Senior Discount Notes, (zero coupon until
1/15/02, 12 1/2% thereafter) 1/15/07 ...................................... 1,540,000
1,000,000 Primus Telecommunications Inc., Senior Notes, 12 3/4%, 10/15/09 ............. 600,000
5,000,000 Viatel, Inc., Senior Discount Notes, (zero coupon until 4/15/03, 12 1/2%
thereafter) 4/15/08 ....................................................... 1,900,000
4,000,000 World Access, Inc., Senior Notes, 13 1/4%, 1/15/08 .......................... 3,560,000
------------
13,380,000
------------
HOTEL/GAMING (8.8%)
3,000,000 Aladdin Gaming Holdings, Senior Discount Notes, Series "B",
(zero coupon until 3/1/03, 13 1/2% thereafter) 3/1/10 ..................... 1,770,000
2,000,000 Hilton Hotels Corp., Senior Notes, 7.95%, 4/15/07 ........................... 1,895,482
1,000,000 Hilton Hotels Corp., Senior Notes, 7 1/2%, 12/15/17 ......................... 853,352
2,000,000 ITT Corp., Notes, 6 3/4%, 11/15/05 .......................................... 1,868,262
2,000,000 Park Place Entertainment Corp., Senior Sub. Notes, 7 7/8%, 12/15/05 ......... 1,900,000
1,000,000 Park Place Entertainment Corp., Senior Sub. Notes, 9 3/8%, 2/15/07 .......... 1,007,500
4,000,000 Trump Atlantic City Associates Funding Inc., Secured First Mortgage
Notes, 11 1/4%, 5/1/06 .................................................... 2,740,000
------------
12,034,596
------------
</TABLE>
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5
<PAGE>
Value Line Agressive Income Trust
Schedule of Investments
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
INTERNET (4.6%)
$ 1,000,000 Exodus Communications Inc., Senior Notes, 11 5/8% 7/15/10 (1) ................ $ 1,005,000
2,000,000 Globix Corporation, Senior Notes, 12 1/2%, 2/1/10 ............................ 1,580,000
1,000,000 PSINet, Inc., Senior Sub. Notes, Series "B", 10%, 2/15/05 .................... 810,000
2,000,000 PSINet, Inc., Senior Sub. Notes, 10 1/2%, 12/1/06 ............................ 1,610,000
2,000,000 Rhythms Netconnections Inc., Senior Sub. Notes, 14%, 2/15/10 ................. 1,340,000
------------
6,345,000
------------
MACHINERY (3.8%)
2,500,000 Columbus McKinnon Corp., Senior Sub. Notes, 8 1/2%, 4/1/08 ................... 2,200,000
1,500,000 Mark IV Industries, Inc., Senior Sub. Notes, 7 1/2%, 9/1/07 .................. 1,151,250
2,000,000 Terex Corp., Senior Sub. Notes, Series "D" 8 7/8%, 4/1/08 .................... 1,800,000
------------
5,151,250
------------
MEDICAL SERVICES (1.4%)
2,000,000 Tenet HealthCare Corp., Senior Notes, 8%, 1/15/05 ............................ 1,945,000
------------
OILFIELD SERVICES/EQUIPMENT (3.1%)
2,000,000 Key Energy Services, Inc., Senior Sub. Notes, Series "B", 14%, 1/15/09 ....... 2,260,000
640,000 RBF Finance Co., Senior Secured Notes, 11 3/8%, 3/15/09 ...................... 694,400
1,500,000 R & B Falcon Corp., Senior Notes, Series "B", 6.95%, 4/15/08 ................. 1,305,000
------------
4,259,400
------------
PACKAGING & CONTAINER (0.8%)
1,000,000 Tekni-Plex Inc., Senior Sub. Notes, 12 3/4%, 6/15/10 (1) ..................... 1,020,000
------------
PAPER & FOREST PRODUCTS (2.0%)
1,000,000 Repap New Brunswick, Inc., First Priority
Senior Secured Notes, 9%, 6/1/04 ........................................... 965,000
2,000,000 Repap New Brunswick, Inc., Second Priority
Senior Secured Notes, 10 5/8%, 4/15/05 ..................................... 1,810,000
------------
2,775,000
------------
PETROLEUM--PRODUCING (6.7%)
3,000,000 Bellwether Exploration Co., Senior Sub. Notes, 10 7/8%, 4/1/07 ............... 2,850,000
1,000,000 Chesapeake Energy Corp., Senior Notes, Series "B" , 9 5/8%, 5/1/05 ........... 975,000
2,000,000 Chesapeake Energy Corp., Senior Notes, Series "B", 8 1/2%, 3/15/12 ........... 1,740,000
2,000,000 Denbury Management Inc, Senior Sub. Notes, 9%, 3/1/08 ........................ 1,810,000
2,000,000 Lomak Petroleum, Inc, Senior Sub. Notes, 8 3/4%, 1/15/07 ..................... 1,810,000
------------
9,185,000
------------
</TABLE>
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6
<PAGE>
Value Line Agressive Income Trust
July 31, 2000 (unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
RETAIL STORE (2.2%)
$ 1,000,000 Ames Department Stores, Inc., Senior Notes, 10%, 4/15/06 ..................... $ 630,000
2,250,000 Kmart Corp., Debentures, 12 1/2%, 3/1/05 ..................................... 2,421,513
------------
3,051,513
------------
TELECOMMUNICATIONS EQUIPMENT (3.6%)
1,000,000 Crown Castle International Corp., Senior Notes, 10 3/4%, 8/1/11 .............. 1,022,500
6,500,000 SpectraSite Holdings, Inc., Senior Discount Notes, (zero coupon until
4/15/04, 11 1/4% thereafter) 4/15/09 ....................................... 3,835,000
------------
4,857,500
------------
TELECOMMUNICATION SERVICES (7.6%)
2,000,000 Covad Communications Group, Inc., Senior Notes, 12 1/2%, 2/15/09 ............. 1,540,000
5,000,000 DTI Holdings Inc., Senior Discount Notes, Series "B", (zero coupon
until 3/1/03, 12 1/2% thereafter) 3/1/08 ................................... 2,000,000
500,000 Dobson/Sygnet Communications, Senior Notes, 12 1/4%, 12/15/08 ................ 515,000
3,500,000 GST Network Funding, Inc., Senior Secured Discount Notes,
(zero coupon until 5/1/03, 10 1/2% thereafter) 5/1/08 ..................... 1,627,500
980,000 ICG Services Inc., Senior Discount Notes, (zero coupon until 2/15/03,
10% thereafter) 2/15/08 ................................................... 509,600
1,130,000 ICG Services Inc., Senior Discount Notes, (zero coupon until 5/1/03,
9 7/8% thereafter) 5/1/08 ................................................. 565,000
3,000,000 KMC Telecom Holdings Inc., Senior Discount Notes, (zero coupon until 2/15/03,
12 1/2% thereafter) 2/15/08 ............................................... 1,650,000
2,000,000 NEXTLINK Communications, Inc., Senior Notes, 10 3/4%, 6/1/09 ................. 1,940,000
------------
10,347,100
------------
TEXTILE (1.3%)
2,000,000 WestPoint Stevens Inc., Senior Notes, 7 7/8%, 6/15/05 ........................ 1,742,500
------------
TOTAL CORPORATE BONDS & NOTES (Cost $121,676,761) ............................ 110,628,216
------------
</TABLE>
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7
<PAGE>
Value Line Agressive Income Trust
Schedule of Investments
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Value
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONVERTIBLE PREFERRED STOCKS (2.5%)
CABLE TV (1.1%)
5,000 Adelphia Communications Corp., Series "D", Par $200 (each share is
convertible to 2.45549 shares of Common Stock @ $81.45), 5 1/2%, 12/31/49 .. $ 606,563
5,000 UnitedGlobalCom, Inc. Series "144A", Par $50 (each share is convertible to
1.1862 shares of Common Stock @ $42.15), 7%, 12/31/49 (1) .................. 323,125
10,000 UnitedGlobalCom, Inc. Series "D", Par $50 (each share is convertible to
.7838 shares of Common Stock @ $63.79), 7%, 12/31/49 ....................... 504,375
------------
1,434,063
------------
FOREIGN TELECOMMUNICATIONS (0.1%)
10,000 Global TeleSystems Group, Inc., Par $50 (each share is convertible to 1.4492
shares of Common Stock @ $34.50), 7 1/4%, 12/31/49 (1) ..................... 193,750
------------
INTERNET (0.6%)
10,000 PSINet, Inc., Series "C", Par $50 (each share is convertible to 1.6034
shares of Common Stock @ $31.1837), 6 3/4%, 12/31/49........................ 370,000
15,000 PSINet, Inc., Series "D", Par $50 (each share is convertible to .9352
shares of Common Stock @ 53.465), 7%, 12/31/49 (1).......................... 416,250
------------
786,250
------------
PETROLEUM--PRODUCING (0.2%)
10,000 Nuevo Energy Co., Series "A", Par $50 (each share is convertible to 0.8421
shares of Common Stock @ $59.375), 5 3/4%, 12/15/26 ........................ 265,500
------------
TELECOMMUNICATION SERVICES (0.5%)
45,000 Intermedia Communications, Inc., Series "F" Par $25 (each share is
convertible to 0.5942 shares of Common Stock @ $42.075), 7%, 12/31/49 ...... 700,312
------------
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $4,234,514) ......................... 3,379,875
------------
PREFERRED STOCKS (10.0%)
ENTERTAINMENT (4.0%)
2,791 Cumulus Media, Inc., 13 3/4%, each share is exchangeable one for one
into Senior Notes Series "A", Par $1,000, 7/1/09 (3)........................ 2,344,440
1,191 Granite Broadcasting Corp., 12 3/4%, each share is exchangeable one
for one into Debentures, Par $1,000, 4/1/09 (3)............................. 1,140,622
2,000 Paxson Communications Corp., 12 1/2%, each share is exchangeable
one for one into Debentures, Par $1,000, 10/31/06 (3)....................... 2,010,000
------------
5,495,062
------------
</TABLE>
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8
<PAGE>
Value Line Agressive Income Trust
July 31, 2000 (unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Value
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS EQUIPMENT (1.7%)
2,300 Crown Castle International Corp., 12 3/4%, each share is exchangeable one for
one into Debentures, Par $1,000, 12/15/10 (3) .............................. $ 2,346,340
------------
TELECOMMUNICATION SERVICES (4.3%)
2,349 Dobson Communications Corp., 13%, each share is exchangeable one for one
into Debentures, Par $1,000, 5/1/09 (3) .................................... 2,348,875
1,065 e.Spire Communications, Inc., 12 3/4%, each share is exchangeable one for one
into Debentures, Par $1,000, 10/15/09 (3) .................................. 266,224
2,681 ICG Holdings Inc., 14 1/4%, each share is exchangeable one for one into
Debentures, Par $1,000, 5/1/07 (3) ......................................... 2,279,092
20,700 NEXTLINK Communications, Inc., 14%, each share is exchangeable one for
one into Debentures, Par $ 50, 2/1/09 (3) .................................. 988,425
------------
5,882,616
------------
TOTAL PREFERRED STOCKS (Cost $15,130,552) .................................... 13,724,018
------------
COMMON STOCKS (1.1%)
CABLE TV (0.0%)
2,000 OpTel, Inc. (non-voting) (2) ................................................. 20
------------
ENTERTAINMENT (0.3%)
42,800 Spanish Broadcasting System, Inc., Class "B" (2) ............................. 476,150
------------
FOREIGN TELECOMMUNICATIONS (0.6%)
16,600 Clearnet Communications Inc. (2) ............................................. 466,875
8,586 Microcell Telecommunications Inc. Class "B" (2) .............................. 273,142
12,568 World Access, Inc. (2) ....................................................... 113,112
------------
853,129
------------
OILFIELD SERVICES/EQUIPMENT (0.1%)
14,489 Key Energy Services, Inc. (2) ................................................ 110,479
------------
TELECOMMUNICATION SERVICES (0.1%)
6,001 Advanced Radio Telecom Corp. (2) ............................................. 68,636
17,657 GST Telecommunications, Inc. (2) ............................................. 1,655
------------
70,291
------------
TOTAL COMMON STOCKS (Cost $1,340,377) ........................................ 1,510,069
------------
</TABLE>
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9
<PAGE>
Value Line Agressive Income Trust
Schedule of Investments July 31, 2000 (unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Warrants or
Principal
Amount Value
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
WARRANTS (0.1%)
FOREIGN TELECOMMUNICATION (0.0%)
2,095 Ionica Group PLC (to purchase 34.7 shares of Common Stock, @(pound).10/share,
expires 8/15/06) (1) (2) .................................................. $ 21
------------
HOTEL/GAMING (0.0%)
30,000 Aladdin Gaming Enterprises Inc. (to purchase 10 shares of
Common Stock @ $.001/share, expires 3/1/10) (1) (2) ....................... 300
------------
TELECOMMUNICATION SERVICES (0.1%)
40,000 DTI Holdings Inc. (to purchase 1.552 shares of Common Stock, @ $.01/share,
expires 3/1/08) (1) (2) .................................................... 400
3,000 KMC Telecom Holdings Inc. (to purchase .21785 shares of
Common Stock, @ $.21785/share, expires 4/15/08) (1) (2) .................... 30
2,000 Metricom, Inc. (to purchase 4.75 shares of
Common Stock @ $87/share, expires 2/15/10) (1) (2) ......................... 160,000
------------
160,430
------------
TOTAL WARRANTS (Cost $577,520) .............................................. 160,751
------------
TOTAL INVESTMENT SECURITIES (95.7%) (Cost $144,666,506) ...................... 130,931,054
------------
REPURCHASE AGREEMENT (1.2%)
(including accrued interest)
$ 1,700,000 Collateralized by $1,755,000 U.S. Treasury Notes 5 5/8% due 12/31/02,
with a value of $1,735,346 (with State Street Bank and Trust Company,
6.51%, dated 7/31/00, due 8/1/00 delivery value $1,700,307) ................ 1,700,307
------------
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES (3.1%) ...................................... 4,220,967
------------
NET ASSETS (100.0%) ........................................................................ $136,852,328
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE,
PER OUTSTANDING SHARE ($136,852,328 / 21,385,232
shares of beneficial interest outstanding) ............................................. $ 6.40
============
</TABLE>
(1) 144A Security where certain conditions for public sale may exist.
(2) Non-income producing security.
(3) PIK (Payment-in-kind). Dividend or interest payment is made with additional
securities.
See Notes to Financial Statements
--------------------------------------------------------------------------------
10
<PAGE>
Value Line Agressive Income Trust
Statement of Assets and Liabilities
at July 31, 2000 (unaudited)
--------------------------------------------------------------------------------
(in thousands
except
per share
amount)
------------
Assets:
Investment securities, at value
(cost -- $144,666) ....................................... $ 130,931
Repurchase agreement (cost $1,700) ......................... 1,700
Cash ....................................................... 22
Receivable for securities sold ............................. 2,704
Interest and dividend receivable ........................... 2,317
Receivable for trust shares sold ........................... 341
---------
Total Assets .......................................... 138,015
---------
Liabilities:
Payable for trust shares repurchased ....................... 363
Dividends payable to shareholders .......................... 356
Payable for securities purchased ........................... 266
Accrued expenses:
Advisory fee ............................................. 81
Other .................................................... 97
---------
Total Liabilities ...................................... 1,163
---------
Net Assets: ................................................ $ 136,852
=========
Net Assets:
Shares of beneficial interest, at $.01
par value (authorized unlimited,
outstanding 21,385,232) .................................. $ 214
Additional paid-in capital ................................. 176,360
Accumulated net realized loss
on investments ........................................... (25,987)
Unrealized net depreciation of
investments .............................................. (13,735)
---------
Net Assets ................................................. $ 136,852
=========
Net Asset Value, Offering and
Redemption Price per
Outstanding Share
($136,852,328 / 21,385,232
shares of beneficial interest
outstanding) ............................................. $ 6.40
=========
Statement of Operations for the
Six Months Ended July 31, 2000 (unaudited)
--------------------------------------------------------------------------------
(in thousands)
--------------
Investment Income:
Interest income ............................................ $ 8,185
Dividend & other income .................................... 191
--------
8,376
--------
Expenses:
Advisory fee ............................................... 499
Taxes and other expenses ................................... 35
Transfer agent fees ........................................ 30
Service and distribution plan fee .......................... 30
Registration and filing fees ............................... 21
Printing, checks and stationery ............................ 19
Custodian fees ............................................. 18
Auditing and legal fees .................................... 15
Trustees' fees and expenses ................................ 9
--------
Total Expenses before
custody credits ........................................ 676
Less: custody credits .................................... (6)
--------
Net Expenses ............................................. 670
--------
Net Investment Income ...................................... 7,706
--------
Realized and Unrealized Gain (Loss)
on Investments
Net Realized Gain ........................................ 644
Change in Net Unrealized
Depreciation ........................................... (17,421)
--------
Net Realized Gain and Change in
Net Unrealized Depreciation on
Investments .............................................. (16,777)
--------
Net Decrease in Net Assets
from Operations .......................................... $ (9,071)
--------
See Notes to Financial Statements.
--------------------------------------------------------------------------------
11
<PAGE>
Value Line Agressive Income Trust
Statement of Changes in Net Assets
for the Six Months Ended July 31, 2000 (unaudited) and for the Year Ended
January 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
July 31, 2000 January 31,
(unaudited) 2000
---------------------------
(In thousands)
<S> <C> <C>
Operations:
Net investment income .............................................. $ 7,706 $ 15,844
Net realized gain (loss) on investments ............................. 644 (19,054)
Change in net unrealized depreciation .............................. (17,421) 14,971
--------------------------
Net (decrease) increase in net assets from operations ............... (9,071) 11,761
--------------------------
Distributions to Shareholders:
Net investment income .............................................. (7,706) (15,942)
--------------------------
Trust Share Transactions:
Net proceeds from sale of shares ................................... 99,786 176,284
Net proceeds from reinvestment of distribution to shareholders ...... 5,578 10,772
--------------------------
105,364 187,056
Cost of shares repurchased ......................................... (121,321) (188,094)
--------------------------
Net decrease from share transactions ............................... (15,957) (1,038)
--------------------------
Total Decrease in Net Assets ......................................... (32,734) (5,219)
Net Assets:
Beginning of period ................................................ 169,586 174,805
--------------------------
End of period........................................................ $ 136,852 $ 169,586
==========================
</TABLE>
See Notes to Financial Statements.
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12
<PAGE>
Value Line Agressive Income Trust
Notes to Financial Statements July 31, 2000 (unaudited)
--------------------------------------------------------------------------------
1. Significant Accounting Policies
Value Line Aggressive Income Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The primary investment objective of the Trust is
to maximize current income through investment in a diversified portfolio of
high-yield fixed income securities. As a secondary investment objective, the
Trust will seek capital appreciation but only when consistent with its primary
objective. Lower rated or unrated (i.e., high-yield) securities are more likely
to react to developments affecting market risk (general market liquidity) and
credit risk (issuers' inability to meet principal and interest payments on their
obligations) than are more highly rated securities, which react primarily to
movements in the general level of interest rates. The ability of issuers of debt
securities held by the Trust to meet their obligations may be affected by
economic developments in a specific industry. The following significant
accounting policies are in conformity with generally accepted accounting
principles for investment companies. Such policies are consistently followed by
the Trust in the preparation of its financial statements. Generally accepted
accounting principles may require management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results may differ from those estimates.
(A) Security Valuation. The Trustees have determined that the value of bonds and
other fixed income corporate securities be calculated on the valuation date by
reference to valuations obtained from an independent pricing service that
determines valuations for normal institutional-size trading units of debt
securities, without exclusive reliance upon quoted prices. This service takes
into account appropriate factors such as institutional-size trading in similar
groups of securities, yield, quality, coupon rate, maturity, type of issue,
trading characteristics and other market data in determining valuations.
Securities, other than bonds and other fixed income securities, not priced in
this manner are valued at the midpoint between the latest available and
representative bid and asked prices or, when stock exchange valuations are used,
at the latest quoted sale price as of the regular close of business of the New
York Stock Exchange on the valuation date. Other assets and securities for which
market valuations are not readily available are valued at their fair value as
the Trustees may determine. Short-term instruments with maturities of 60 days or
less, at the date of purchase, are valued at amortized cost which approximates
market value.
(B) Repurchase Agreements. In connection with repurchase agreements, the Trust's
custodian takes possession of the underlying collateral securities, the value of
which exceeds the principal amount of the repurchase transaction, including
accrued interest. To the extent that any repurchase transaction exceeds one
business day, 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.
--------------------------------------------------------------------------------
13
<PAGE>
Value Line Agressive 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 or excise tax provision is required.
(E) Investments. Securities transactions are recorded on a trade date basis.
Realized gains and losses from securities transactions are recorded on the
identified cost basis. Interest income, adjusted for amortization of discount,
including original issue discount on investments required for federal income tax
purposes, 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, 2000 January 31,
(unaudited) 2000
----------------------------
(in thousands)
Shares sold ............................ 14,462 24,277
Shares issued to shareholders
in reinvestment
of dividends ......................... 827 1,485
----------------------------
15,289 25,762
Shares repurchased ..................... (17,393) (25,723)
----------------------------
Net (decrease) increase ................ (2,104) 39
============================
3. Purchases and Sales of Securities
Purchases and sales of investment securities, excluding short-term securities,
were as follows:
Six Months Ended
July 31, 2000
(unaudited)
--------------
(in thousands)
PURCHASES:
Investment Securities .................................... $104,822
========
SALES:
Investment Securities..................................... $120,108
========
At July 31, 2000, the aggregate cost of investments in securities including
repurchase agreements for federal income tax purposes was $146,366,813. The
aggregate appreciation and depreciation of investments at July 31, 2000 based on
a comparison of investment values and their costs for federal income tax
purposes, was $2,170,630 and $15,906,077, respectively, resulting in a net
depreciation of $13,735,447.
For federal income tax purposes, the Trust had a capital loss carryover at
January 31, 2000 of $22,413,197, of which $2,386,247 will expire in 2003,
$2,530,550 in 2007 and $17,496,400 in 2008. To the extent future capital gains
are offset by such capital losses, the Trust does not anticipate distributing
any such gains to the shareholders.
--------------------------------------------------------------------------------
14
<PAGE>
Value Line Agressive Income Trust
July 31, 2000 (unaudited)
--------------------------------------------------------------------------------
4. Investment Advisory Contract, Management Fees and Transactions With
Affiliates
An advisory fee of $498,827 was paid or payable to Value Line, Inc., the Trust's
investment adviser, (the "Adviser"), for the six months ended July 31, 2000.
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 daily net assets in excess thereof. The Adviser provides research,
investment programs and supervision of the investment portfolio and pays costs
of administrative services and office space. The Adviser also provides persons,
satisfactory to the Trust's Trustees, to act as officers of the Trust and pays
their salaries and wages. The Trust bears all other costs and expenses.
At a special meeting of shareholders held on June 15, 2000, the shareholders
approved the adoption of a Service and Distribution Plan (the "Plan") effective
July 1, 2000. The Plan, adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940, provides for the payment of certain expenses incurred by
the distributor in 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. For the period July 1 to July 31, 2000 the
Trust paid $30,009 to the distributor.
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, 2000, the Adviser owned
3,491 shares of beneficial interest in the Trust, representing .02% of the
outstanding shares. In addition, certain officers and trustees owned 2,718
shares of beneficial interest in the Trust, representing .01% of the outstanding
shares.
--------------------------------------------------------------------------------
15
<PAGE>
Value Line Agressive Income Trust
Financial Highlights
--------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Six Months Ended Years Ended January 31,
July 31, 2000 --------------------------------------------------------
(unaudited) 2000 1999 1998 1997 1996
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ........... $ 7.22 $ 7.45 $ 8.66 $ 8.21 $ 7.64 $ 6.80
---------------------------------------------------------------------------
Income from
investment operations:
Net investment income ......... .35 .73 .78 .72 .75 .69
Net gains or losses on
securities (both realized
and unrealized).............. (.82) (.23) (1.21) .45 .57 .85
---------------------------------------------------------------------------
Total from investment
operations................... (.47) .50 (.43) 1.17 1.32 1.54
---------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income ........... (.35) (.73) (.78) (.72) (.75) (.70)
---------------------------------------------------------------------------
Net asset value, end of period .. $ 6.40 $ 7.22 $ 7.45 $ 8.66 $ 8.21 $ 7.64
===========================================================================
Total return .................... (6.63%)# 7.16% (5.13%) 14.97% 18.12% 23.79%
===========================================================================
Ratios/Supplemental Data
Net assets, end of period
(in thousands) ................ $136,852 $169,586 $174,805 $146,712 $83,765 $41,776
Ratio of expenses to
average net assets............. .93%(2)* .82%(2) .81%(1) .95%(1) 1.10%(1) 1.22%(1)
Ratio of net investment income
to average net assets.......... 10.58%* 10.04% 9.81% 8.60% 9.70% 9.67%
Portfolio turnover rate ......... 78%# 154% 140% 251% 276% 284%
</TABLE>
(1) Before offset for custody credits.
(2) Ratio reflects expenses grossed up for custody credit arrangement. The ratio
of expenses to average net assets net of custody credits would not have
changed in the year ended 1/31/2000. In the period ended 7/31/2000 the ratio
would have been 0.92%.
* Annualized
# Not annualized -- for six month period only.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
16
<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 219729
Kansas City, MO 64141-9729
INDEPENDENT PricewaterhouseCoopers LLP
ACCOUNTANTS 1177 Avenue of the Americas
New York, NY 10036-2798
LEGAL COUNSEL Peter D. Lowenstein, Esq.
Two Sound View Drive, Suite 100
Greenwich, CT 06830
TRUSTEES Jean Bernhard Buttner
John W. Chandler
Frances T. Newton
Francis C. Oakley
David H. Porter
Paul Craig Roberts
Marion N. Ruth
Nancy-Beth Sheerr
OFFICERS Jean Bernhard Buttner
Chairman and President
Bruce H. Alston
Vice President
David T. Henigson
Vice President and
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).
#514046
