<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 Company
225 Franklin Street, Boston, MA 02110
SHAREHOLDER SERVICING AGENT
State Street Bank and Trust Company c/o NFDS
P.O. Box 419729, Kansas City, MO 64141-6729
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas, New York, NY 10036
LEGAL COUNSEL
Peter D. Lowenstein, Esq.
Two Greenwich Plaza, Suite 100
Greenwich, CT 06830
TRUSTEES
Jean Bernhard Buttner Leo R. Futia
Charles E. Reed Paul Craig Roberts
John W. Chandler
OFFICERS
Jean Bernhard Buttner
CHAIRMAN AND PRESIDENT
David T. Henigson
VICE PRESIDENT, SECRETARY/TREASURER
Charles Heebner John W. Risner
VICE PRESIDENT VICE PRESIDENT
Jack M. Houston Stephen La Rosa
ASSISTANT ASSISTANT
SECRETARY/TREASURER 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 the 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).
VLF #50689
------------------
SEMI-ANNUAL REPORT
JULY 31, 1995
------------------
VALUE LINE AGGRESSIVE INCOME TRUST
[Logo]
VALUE LINE MUTUAL FUNDS
<PAGE>
[Logo] TO OUR VALUE LINE AGGRESSIVE INCOME TRUST SHAREHOLDERS
- --------------------------------------------------------------------------------
DEAR SHAREHOLDER:
We are pleased to send you this semi-annual report of the Value Line Aggressive
Income Trust (the 'Trust') for the six months ended July 31, 1995. Your Trust
posted a total return of 9.49% for the six-month period. Over the same time
span, the Lehman Brothers Aggregate Bond Index returned 9.04%, and the Merrill
Lynch High Yield Master Index returned 12.46%.
The interest-rate climate for bonds was positive during the first half of 1995.
Although the Federal Reserve Board hiked short-term rates one-half percentage
point in late January, this proved to be the last increase since the Fed began
raising rates almost one year earlier--in February 1994. The economy responded
to the rise in interest rates by slowing sharply in the second quarter of 1995.
As a consequence, the Federal Reserve reversed course and lowered short-term
rates by one-quarter percent on July 6, 1995.
Present conditions--a slowing but nonetheless growing economy, with low
inflation--provide an ideal backdrop for most high-yield issuers. In turn, the
high-yield market has delivered more-than-respectable results, though it has not
been able to match the torrid returns posted by stocks this year.
Some specific reasons for your Trust's strong performance include the profitable
tender offers affecting several of our holdings. Card Establishment Services,
Olympic Financial, and Dial Page were tendered for. Also helping out were our
positions in broadcasting, cable TV, and telecommunications services. While the
composition of our holdings in these sectors has changed somewhat, we believe
that these companies continue to offer good risk-adjusted returns. As a
consequence, the Trust's portfolio is comparatively overweighted in those
sectors. Others in which we have been underinvested, whose prospects have been
less promising, include supermarkets, retailing, and restaurants.
While this year's returns have been solidly positive, they have been tempered by
our cautious interest-rate posture. In making specific bond selections, we have
focused on price stability and current yield--at the expense of total return in
the event of falling interest rates. Because rates have fallen substantially,
bonds in our portfolio, in some instances, have underperformed others (with
longer maturities and/or lower coupons) issued by the same company. Given the
Trust's primary investment objective, however--high current income--we intend to
maintain our focus on price stability and current yield.
We thank you for your continued confidence in the Value Line Aggressive Income
Trust, and we look forward to serving your investment needs in the future.
Sincerely,
/S/ JEAN BERNHARD BUTTNER
Jean Bernhard Buttner
CHAIRMAN AND PRESIDENT
August 20, 1995
2
<PAGE>
ECONOMIC OBSERVATIONS
The economy is giving off mixed signals. Consumer sentiment, for example,
remains quite positive, and housing activity, benefiting from earlier reductions
in mortgage rates, is showing a fair amount of strength. Conversely, orders for
large-ticket durable goods (such as industrial machinery) are weakening; a
number of retailers are reporting soft sales; and average employment growth
remains somewhat below the levels one would normally associate with a vigorous
business expansion.
On balance, though, we look for more positive economic developments than
negative ones over the next several months, largely because of the relatively
high degree of consumer confidence and the more favorable interest-rate
structure vis-a-vis earlier in the year. Meanwhile, this projected strengthening
in business activity--which we believe will be moderate in scope--should prove
largely sustainable. In all, we sense that the upturn, which faltered in the
second quarter, as the economy expanded by just 1.1%, will gain more momentum
during the final six months of the year. We would then expect this moderate
pickup in activity to continue in 1996.
Such a scenario, however, is probably not conducive to a major relaxation in
Federal Reserve policies. To be sure, this slightly more positive economic tone
should hardly be the lightning rod for a new round of monetary tightening.
Rather, it just seems that the reduction in short-term interest rates announced
by the Federal Reserve at its July Federal Open Market Committee meeting will
not be the opening salvo in a several-step process. At best, we now see one or
two additional rate cuts in the months ahead--barring any sudden reversal in
business fortunes.
PERFORMANCE DATA: *
1 YEAR ENDED 5 YEARS ENDED FROM 2/19/86 + TO
6/30/95 6/30/95 6/30/95
------------------------------------------------
Average Annual Total Return 6.87% 10.77% 7.28%
* THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND ARE NO GUARANTEE
OF FUTURE PERFORMANCE. THE AVERAGE ANNUAL TOTAL RETURN INCLUDES DIVIDENDS
REINVESTED AND CAPITAL GAINS DISTRIBUTIONS ACCEPTED IN SHARES. THE
INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO
THAT AN INVESTMENT, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN ITS
ORIGINAL COST. THE AVERAGE ANNUAL TOTAL RETURN FOR THE ONE-YEAR AND
FIVE-YEAR PERIODS ENDED JULY 31, 1995, AND FROM INCEPTION (2/19/86) THROUGH
JULY 31, 1995, WERE 8.49%, 10.71%, AND 7.38%, RESPECTIVELY.
+ COMMENCEMENT OF OPERATIONS.
3
<PAGE>
SCHEDULE OF INVESTMENTS (UNAUDITED) JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
<C> <S> <C>
UNITS (4.8%)
BROADCASTING/CABLE TV (3.2%)
$2,000,000 People's Choice - TV Corp.
consisting of (zero coupon until June 1, 2000,
13 1/8%, thereafter due 6/01/04 Senior
Discount Notes and Warrants to purchase
common stock) . . . . . . . . . . . . . . . . . $ 995,000
TELECOMMUNICATION SERVICES (1.6%)
500,000 Intermedia Communications of Florida
consisting of (Senior Notes, 13.50%, due
6/01/05, and with Warrants that expire
6/01/00, to purchase common stock). . . . . . . 515,000
-----------
TOTAL UNITS (Cost $1,549,143) . . . . . . . . . . . 1,510,000
-----------
CORPORATE BONDS & NOTES (84.5%)
APPAREL (1.6%)
500,000 Tultex Corp., Senior Notes 10 5/8%, 3/15/05 . . . 513,750
BROADCASTING/CABLE TV (7.8%)
500,000 C.F. Cable T.V. Inc., Senior Secured Notes,
11 5/8%, 2/15/05. . . . . . . . . . . . . . . . 545,625
500,000 Cablevision Industries Corp., Senior Notes,
10 3/4% 1/30/02 . . . . . . . . . . . . . . . . 546,250
250,000 Chancellor Broadcasting Co., Guaranteed Senior
Sub. Notes, 12 1/2%, 10/01/04 . . . . . . . . . 257,500
1,000,000 NWCG Holdings Corp., Senior Secured Notes,
6/15/99 (zero coupon) . . . . . . . . . . . . . 640,000
500,000 Spanish Broadcasting Systems, Inc., Senior Sub.
Notes, 7 1/2%, 6/15/02. . . . . . . . . . . . . 480,625
-----------
2,470,000
BUILDING MATERIALS (2.4%)
750,000 USG Corp. Senior Notes, 10 1/4%, 12/15/02 . . . . 757,500
4
<PAGE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
<C> <S> <C>
CHEMICAL SPECIALTY (2.1%)
$1,000,000 INDSPEC Chemical Corp. (zero coupon until
December 1, 1998, 11 1/2% thereafter), Senior
Sub. Discount Notes, Series "B," 12/01/03 . . . $ 660,000
COAL/ALTERNATE ENERGY (0.8%)
250,000 AES Corp., Senior Notes, 9 3/4%, 6/15/00. . . . . 253,750
COMPUTER & PERIPHERALS (3.1%)
1,000,000 Unisys Corp., Notes, 9 1/2%, 7/15/98. . . . . . . 1,000,000
COMPUTER SOFTWARE & SERVICES (2.7%)
ComputerVision Corp.:
500,000 Senior Notes, 10 7/8%, 8/15/97. . . . . . . . . . 516,875
350,000 Senior Sub. Notes, 11 3/8%, 8/15/99.. . . . . . . 346,500
-----------
863,375
DIVERSIFIED COMPANY (1.7%)
551,000 IMO Industries, Inc., Senior Sub. Notes,
12 1/4%, 8/15/97. . . . . . . . . . . . . . . . 551,000
FINANCIAL SERVICES (3.3%)
1,000,000 Olympic Financial Ltd., Senior Notes, 13%,
5/01/00 . . . . . . . . . . . . . . . . . . . . 1,037,500
FURNITURE/HOME FURNISHINGS (1.5%)
500,000 Cort Furniture Rental Co. Senior Notes, 12%,
9/01/00 . . . . . . . . . . . . . . . . . . . . 492,500
HOMEBUILDING (4.4%)
1,000,000 Continental Homes Holding Corp., Senior Notes,
12%, 8/01/99. . . . . . . . . . . . . . . . . . 1,025,000
500,000 Miles Home Services, Inc., Guaranteed Senior
Notes, 12%, 4/01/01 . . . . . . . . . . . . . . 375,000
-----------
1,400,000
HOTEL/GAMING (2.7%)
320,000 Motels of America, Inc., Senior Sub. Notes,
Series "B," 12%, 4/15/04 . . . . . . . . . . . 322,000
500,000 Stratosphere Corp., Guaranteed First Mortgage
Notes, 14 1/4%, 5/15/02 . . . . . . . . . . . . 521,250
-----------
843,250
METALS & MINING-DIVERSIFIED (4.2%)
1,250,000 Magma Copper Co., Senior Sub. Notes, 11 1/2%,
1/15/02 . . . . . . . . . . . . . . . . . . . . 1,346,875
5
<PAGE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
<C> <S> <C>
NEWSPAPER (1.6%)
$ 500,000 Garden State Newspapers, Inc., Senior Sub. Notes,
12%, 7/01/04. . . . . . . . . . . . . . . . . . $ 501,875
OFFICE EQUIPMENT & SUPPLIES (1.3%)
1,000,000 Mail-Well Holdings, Inc. (zero coupon until
8/15/00, 11 3/4% thereafter), Senior Deferred
Notes, 2/15/06 . . . . . . . . . . . . . . . . 415,000
OILFIELD SERVICES/EQUIPMENT (5.6%)
500,000 Deeptech International, Senior Secured Notes,
12%, 12/15/00 . . . . . . . . . . . . . . . . . 361,875
500,000 Dual Drilling Co., Senior Sub. Notes, 9 7/8%,
1/15/04 . . . . . . . . . . . . . . . . . . . . 472,500
395,000 Energy Ventures Inc., Senior Notes, 10 1/4%,
3/15/04 . . . . . . . . . . . . . . . . . . . . 398,950
500,000 Global Marine Inc., Senior Secured Notes,
12 3/4%, 12/15/99 . . . . . . . . . . . . . . . 554,375
-----------
1,787,700
PACKAGING & CONTAINER (1.6%)
500,000 Calmar Spraying Systems, Inc., Senior Sub.
Discount Notes, 14%, 2/15/99. . . . . . . . . . 510,000
PAPER & FOREST PRODUCTS (8.7%)
750,000 Domtar Inc., Senior Notes, 11 3/4%, 3/15/99 . . . 823,125
500,000 Malette Inc., Senior Secured Notes, 12 1/4%,
7/15/04 . . . . . . . . . . . . . . . . . . . . 556,250
350,000 Repap New Brunswick Inc., First Priority Senior
Secured Notes, 9 1/2%, 7/15/00. . . . . . . . . 351,750
1,000,000 Stone Container Corp., 10 3/4%, 6/15/97.. . . . . 1,040,000
-----------
2,771,125
PETROLEUM-INTEGRATED (2.0%)
1,000,000 Clark R & M Holdings, Inc., Senior Secured Notes,
Series "A," 2/15/00 (zero coupon) . . . . . . . 630,000
PUBLISHING (2.6%)
1,000,000 Western Publishing Group, Inc., Senior Notes,
7.65%, 9/15/02. . . . . . . . . . . . . . . . . 826,250
RECREATION (1.7%)
500,000 Cinemark USA, Inc., Senior Notes, 12%, 6/01/02. . 540,625
RETAIL SPECIAL LINES (3.8%)
500,000 Brylane Capital Corp., Senior Sub. Notes,
Series "B," 10%, 9/01/03. . . . . . . . . . . . 468,750
250,000 Cole National Group, Inc., Senior Notes, 11 1/4%,
10/01/01... . . . . . . . . . . . . . . . . . . 243,125
500,000 Finlay Fine Jewelry Corp., Senior Notes, 10 5/8%,
5/01/03 . . . . . . . . . . . . . . . . . . . . 485,000
-----------
1,196,875
6
<PAGE>
<CAPTION>
PRINCIPAL AMOUNT
OR STOCKS VALUE
- --------------------------------------------------------------------------------
<C> <S> <C>
STEEL (2.8%)
$ 500,000 ACME Metals Inc., Senior Secured Discount Notes
(zero coupon until August 1, 1997, 13 1/4%
thereafter), 8/01/04. . . . . . . . . . . . . . $ 387,500
500,000 WCI Steel Inc., Senior Notes, Series "B,"
10 1/2%, 3/01/02... . . . . . . . . . . . . . . 503,125
-----------
890,625
TELECOMMUNICATION SERVICES (12.8%)
500,000 Centennial Cellular Corp. Senior Notes, 10 1/8%,
5/15/05 . . . . . . . . . . . . . . . . . . . . 500,625
801,000 Dial Page, Inc., Senior Notes, 12 1/4%,
2/15/00 . . . . . . . . . . . . . . . . . . . . 869,085
1,000,000 MFS Communications Corp., Senior Discount Notes
(zero coupon until January 15, 1999, 9 3/8%
thereafter), 1/15/04. . . . . . . . . . . . . . 707,500
500,000 Mobile Telecommunication Tech., Senior Sub.
Discount Notes, 13 1/2%, 2/15/02. . . . . . . . 548,750
250,000 Paging Network, Inc., Senior Sub. Notes, 10 1/8%,
8/01/07 . . . . . . . . . . . . . . . . . . . . 253,125
700,000 PanAmSat L P/PanAmSat Cap. Corp., Senior Sub.
Discount Notes (zero coupon until August 1,
1998, 11 3/8% thereafter), 8/01/03. . . . . . . 512,750
USA Mobile Communications, Inc., II, Senior Notes:
125,000 9 1/2%, 2/01/04 . . . . . . . . . . . . . . . . 111,406
500,000 14%, 11/01/04 . . . . . . . . . . . . . . . . . 549,375
-----------
4,052,616
THRIFT (1.7%)
500,000 Dime Bancorp, Senior Notes, 10 1/2%, 11/15/05 . . 542,500
-----------
TOTAL CORPORATE BONDS & NOTES (Cost $26,591,226). . 26,854,691
-----------
CUMULATIVE CONVERTIBLE PREFERRED STOCKS (0.6%)
TELECOMMUNICATIONS SERVICES (0.6%)
5,000 MFS Communications Co., Inc., Series "A,"
8% Pfd(1) . . . . . . . . . . . . . . . . . . . 191,250
-----------
TOTAL CUMULATIVE CONVERTIBLE PREFERRED STOCKS
(Cost $192,190) . . . . . . . . . . . . . . . . . 191,250
-----------
COMMON STOCKS (0.1%)
OFFICE EQUIPMENT & SUPPLIES (0.1%)
5,000 Mail-Well Holdings, Inc. (2) (3). . . . . . . . . 25,000
-----------
TOTAL COMMON STOCK (Cost $53,500) . . . . . . . . 25,000
-----------
7
<PAGE>
<CAPTION>
WARRANTS OR
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
<C> <S> <C>
WARRANTS (0.4%)
BROADCASTING/CABLE TV (0.2%)
500 Spanish Broadcasting Corp. (to purchase Class "A"
Common Stock, expire 6/30/99) (2).. . . . . . . $ 75,000
HOMEBUILDING (0.0%)
6,000 Miles Home Inc. (to purchase Common Stock, expire
4/01/97) (2). . . . . . . . . . . . . . . . . . . 1,500
HOUSEHOLD PRODUCTS (0.0%)
500 Chattem Inc. (to purchase Common Stock, expire
8/17/99) (2). . . . . . . . . . . . . . . . . . 2,000
PACKAGING & CONTAINER (0.2%)
2,000 Crown Packaging Holdings Ltd. (to purchase class
"A" Common Stock, expire 10/15/13) (2) (3). . . 50,000
TELECOMMUNICATION SERVICES (0.0%)
1,000 Dial Page Inc. (to purchase Common Stock, expire
4/15/97) (2). . . . . . . . . . . . . . . . . . 250
-----------
TOTAL WARRANTS (Cost $171,060) . . . . . . . . . 128,750
-----------
TOTAL INVESTMENT SECURITIES (90.4%)
(Cost $28,557,119) . . . . . . . . . . . . . . . 28,709,691
REPURCHASE AGREEMENT (6.8%)
(including accrued interest)
$2,165,000 Collateralized by U.S. Treasury Notes, due
8/31/96, with a value of $2,209,832 (with
State Street Bank & Trust Co., N.A., 5.83%,
dated 7/31/95, due 8/01/95, delivery value
$2,165,351) . . . . . . . . . . . . . . . . . . 2,165,351
CASH AND OTHER ASSETS OVER LIABILITIES (2.8%) . . . . . . . . . 886,693
-----------
NET ASSETS (100.0%) . . . . . . . . . . . . . . . . . . . . . . $31,761,735
-----------
-----------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER OUTSTANDING SHARE . . . . . . . . . . . . . . . . . . . . . $ 7.09
-----------
-----------
<FN>
(1) PIK (PAYMENT-IN-KIND)
(2) NON-INCOME PRODUCING SECURITY.
(3) ELIGIBLE FOR RESALE PURSUANT TO RULE 144A OF THE SECURITIES ACT OF 1933.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES AT JULY 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DOLLARS
(IN THOUSANDS EXCEPT
PER-SHARE AMOUNT)
--------------------
<S> <C>
ASSETS:
Investment securities, at value
(cost - $28,557). . . . . . . . . . . . . . . . . . . . $ 28,710
Repurchase agreement (cost $2,165) . . . . . . . . . . . . . 2,165
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Receivable for securities sold . . . . . . . . . . . . . . . 1,003
Interest receivable. . . . . . . . . . . . . . . . . . . . . 752
Receivable for trust shares sold . . . . . . . . . . . . . . 25
--------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . 32,657
--------
LIABILITIES:
Payable for securities purchased . . . . . . . . . . . . . . 722
Dividends payable to shareholders. . . . . . . . . . . . . . 82
Payable for trust shares repurchased . . . . . . . . . . . . 15
Accrued expenses:
Advisory fee. . . . . . . . . . . . . . . . . . . . . . 20
Other . . . . . . . . . . . . . . . . . . . . . . . . . 56
--------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . 895
--------
NET ASSETS:
Capital Stock, at $.01 par value (authorized
unlimited, outstanding 4,477,030 shares of
beneficial interest). . . . . . . . . . . . . . . . . . 45
Additional paid-in capital . . . . . . . . . . . . . . . . . 48,874
Accumulated net realized loss on investments . . . . . . . . (17,310)
Unrealized net appreciation of investments . . . . . . . . . 153
--------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . $ 31,762
--------
--------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER OUTSTANDING SHARE . . . . . . . . . . . . . . . . $ 7.09
--------
--------
</TABLE>
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JULY 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DOLLARS
(IN THOUSANDS)
-------------
<S> <C>
INVESTMENT INCOME:
Interest income. . . . . . . . . . . . . . . . . . . . . . . $ 1,791
--------
EXPENSES:
Advisory fee . . . . . . . . . . . . . . . . . . . . . . . . 119
Auditing and legal fees. . . . . . . . . . . . . . . . . . . 20
Transfer agent fees. . . . . . . . . . . . . . . . . . . . . 16
Registration and filing fees . . . . . . . . . . . . . . . . 10
Custodian fees and other . . . . . . . . . . . . . . . . . . 6
Trustees' fees and expenses. . . . . . . . . . . . . . . . . 6
Printing and stationery. . . . . . . . . . . . . . . . . . . 5
Postage . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Telephone and wire charges . . . . . . . . . . . . . . . . . 3
--------
TOTAL EXPENSES . . . . . . . . . . . . . . . . . . . . 189
--------
NET INVESTMENT INCOME . . . . . . . . . . . . . . . . . . . 1,602
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Realized Gain--Net. . . . . . . . . . . . . . . . . . . 196
Change in Unrealized Depreciation--Net. . . . . . . . . 1,173
--------
NET REALIZED GAIN AND CHANGE IN NET
UNREALIZED DEPRECIATION ON INVESTMENTS . . . . . . . . . . . 1,369
--------
NET INCREASE IN NET ASSETS
FROM OPERATIONS . . . . . . . . . . . . . . . . . . . . . . $ 2,971
--------
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS FOR THE SIX MONTHS ENDED JULY 31, 1995,
AND THE YEAR ENDED JANUARY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JULY 31, 1995 JANUARY 31,
(UNAUDITED) 1995
----------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,602 $ 3,017
Realized gain (loss) on investments--Net. . . . . . . . . . . . . . . . 196 (3,199)
Change in net unrealized depreciation . . . . . . . . . . . . . . . . . 1,173 (2,247)
-------- --------
Net increase (decrease) in net assets from operations . . . . . . . . . 2,971 (2,429)
-------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . (1,602) (3,029)
-------- --------
TRUST SHARE TRANSACTIONS:
Net proceeds from sale of shares. . . . . . . . . . . . . . . . . . . . 7,551 16,453
Net proceeds from reinvestment of distribution to shareholders. . . . . 1,054 1,941
Cost of shares repurchased. . . . . . . . . . . . . . . . . . . . . . . (7,972) (29,399)
-------- --------
Increase (Decrease) from share transactions . . . . . . . . . . . . . . 633 (11,005)
-------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS . . . . . . . . . . . . . . . . . 2,002 (16,463)
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . 29,760 46,223
-------- --------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 31,762 $ 29,760
-------- --------
-------- --------
UNDISTRIBUTED NET INVESTMENT INCOME AT END OF PERIOD . . . . . . . . . . . $ -- $ 33
-------- --------
-------- --------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Value Line Aggressive Income Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The primary investment objective of the Trust is
to maximize current income through investment in a diversified portfolio of
high-yield fixed-income securities. As a secondary investment objective, the
Trust will seek capital appreciation but only when consistent with its primary
objective. Lower rated or unrated (i.e. high-yield) securities are more likely
to react to developments affecting market risk (general market liquidity) and
credit risk (issuers' inability to meet principal and interest payments on their
obligations) than are more highly rated securities, which react primarily to
movements in the general level of interest rates. The ability of issuers of debt
securities held by the Trust to meet their obligations may be affected by
economic developments in a specific industry. The following is a summary of
significant accounting policies consistently followed by the Trust in the
preparation of its financial statements.
(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 which
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 transactions 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.
11
<PAGE>
(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 gains and losses 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, 1995 JANUARY 31,
(UNAUDITED) 1995
-------------------------------
(IN THOUSANDS)
Shares sold. . . . . . . . . . . . . . . . . 1,084 2,247
Shares issued to shareholders
in reinvestment of dividends . . . . . . . 150 269
------- -------
1,234 2,516
Shares repurchased . . . . . . . . . . . . (1,136) (3,918)
------- -------
Net increase (decrease). . . . . . . . . . 98 (1,402)
------- -------
------- -------
3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities, excluding repurchase agreements,
were as follows:
SIX MONTHS ENDED
JULY 31, 1995
(UNAUDITED)
----------------
(IN THOUSANDS)
PURCHASES:
U.S. Treasury Obligations. . . . . . . . . . . . . . . $ 15,100
Corporate Bonds and Notes. . . . . . . . . . . . . . . 40,643
--------
$ 55,743
--------
--------
SALES:
U.S. Treasury Obligations. . . . . . . . . . . . . . . $ 17,591
Corporate Bonds and Notes. . . . . . . . . . . . . . . 40,395
--------
$ 57,986
--------
--------
At July 31, 1995, the aggregate cost of investments in securities for Federal
income-tax purposes was $28,557,119. The aggregate appreciation and
depreciation of investments at July 31, 1995, based on a comparison of
investment values and their costs for Federal income-tax purposes, was $729,718
and $577,146, respectively, resulting in a net appreciation of $152,572.
For Federal income-tax purposes the Trust had a capital-loss carryover at
January 31, 1995, of approximately $16,667,000, of which $1,060,000 will expire
in 1996, $6,740,000 in 1997, $2,442,000 in 1998, $3,439,000 in 1999, $600,000 in
2000, and $2,386,000 in 2003. Realized losses incurred after October 31st, if
so elected by the Trust, are deemed to arise on the first day of the following
year. The Trust incurred and elected to defer losses of approximately $781,000.
To the extent future capital gains are offset by such capital losses, the Trust
does not anticipate distributing any such gains to the shareholders.
12
<PAGE>
4. INVESTMENT ADVISORY CONTRACT, MANAGEMENT FEES, AND TRANSACTIONS WITH
AFFILIATES
An advisory fee of $118,633 was paid or payable to Value Line, Inc. (the
Adviser), for the six months ended July 31, 1995. This was computed at the rate
of 3/4 of 1% per year on the first $100 million of the Trust's average daily net
assets for the period and 1/2 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 Trustee, to act
as officers of the Trust and pays their salaries and wages. The Trust bears all
other costs and expenses in its organization and operation. If the aggregate
expenses of the Trust, other than taxes, interest, brokerage commissions, and
extraordinary expenses, exceed the expense limitation imposed by any State in
which the Trust sells its shares, the advisory fee will be reduced by the amount
of such excess, or the amount of such excess will be refunded. Presently, the
most restrictive limitation is 2 1/2% of the first $30 million of the average
daily net assets, 2% of the next 70 million, and 1 1/2% on any excess over $100
million. No such reimbursement was required for the six months ended July 31,
1995. During the six months ended July 31, 1995, $1,960 was paid or payable to
the Adviser for printing services.
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, the Adviser owned 286,097 shares of beneficial interest in the
Trust, representing 6.39% of the outstanding shares.
In addition, certain officers and trustees owned 3,469 shares of beneficial
interest in the Trust, representing .08% of the outstanding shares.
13
<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, 1995 -----------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . . . $6.80 $8.00 $7.35 $7.18 $6.27 $7.10
INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . .34 .68 .67 .67 .74 .77
Net gains or losses on securities
(both realized and unrealized) . . . . . . . . . . .29 (1.20) .65 .17 .91 ( .83)
--------------------------------------------------------------
Total from investment operations . . . . . . . . . . .63 ( .52) 1.32 .84 1.65 ( .06)
--------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income . . . . . . . . ( .34) ( .68) ( .67) ( .67) (.74) ( .77)
--------------------------------------------------------------
Change in net assets . . . . . . . . . . . . . . . . .29 (1.20) .65 .17 .91 ( .83)
--------------------------------------------------------------
Net asset value, end of period . . . . . . . . . . . . . $7.09 $6.80 $8.00 $7.35 $7.18 $6.27
--------------------------------------------------------------
--------------------------------------------------------------
TOTAL RETURN . . . . . . . . . . . . . . . . . . . . . . 9.49%+ (6.66%) 18.74% 12.30% 27.45% ( .73%)
--------------------------------------------------------------
--------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) . . . . . . . . $31,762 $29,760 $46,223 $33,527 $31,404 $23,396
Ratio of expenses to average net assets. . . . . . . . . 1.20%* 1.27% 1.20% 1.15% 1.18% 1.43%
Ratio of net investment income to average net assets . . 9.92%* 9.23% 8.84% 9.40% 10.74% 11.74%
Portfolio turnover rate. . . . . . . . . . . . . . . . . 1.27%+ 221% 320% 148% 59% 36%
<FN>
* Annualized
+ Not annualized, for six-month period only.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
- --------------------------------------------------------------------------------
15
<PAGE>
THE VALUE LINE FAMILY OF FUNDS
- --------------------------------------------------------------------------------
1950 -- THE VALUE LINE FUND seeks long-term growth of capital along with modest
current income by investing substantially all of its assets in common stocks or
securities convertible into common stock.
1952 -- THE VALUE LINE INCOME FUND'S primary investment objective is income, as
high and dependable as is consistent with reasonable growth. Capital growth to
increase total return is a secondary objective.
1956 -- THE VALUE LINE SPECIAL SITUATIONS FUND seeks to obtain long-term growth
of capital by investing not less than 80% of its assets in "special situations".
No consideration is given to achieving current income.
1972 -- VALUE LINE LEVERAGED GROWTH INVESTOR'S sole investment objective is to
realize capital growth by investing substantially all of its assets in common
stocks. The Fund may borrow up to 50% of its net assets to increase its
purchasing power.
1979 -- THE VALUE LINE CASH FUND, a money market fund, seeks high current income
consistent with preservation of capital and liquidity.
1981 -- VALUE LINE U.S. GOVERNMENT SECURITIES FUND seeks maximum income without
undue risk to principal. Under normal conditions, at least 80% of the value of
its assets will be invested in issues of the U.S. Government and its agencies
and instrumentalities.
1983 -- VALUE LINE CENTURION FUND seeks long-term growth of capital as its sole
objective by investing primarily in stocks ranked 1 or 2 by Value Line for
year-ahead relative performance. The Fund is available to investors only through
the purchase of Guardian Investor, a tax deferred variable annuity, or Value
Plus, a variable life insurance policy.
1984 -- THE VALUE LINE TAX EXEMPT FUND seeks to provide investors with maximum
income exempt from federal income taxes while avoiding undue risk to principal.
The Fund offers investors a choice of two portfolios: a Money Market Portfolio
and a High-Yield 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 by
investing in high-yielding, lower-rated, fixed-income securities.
1987 -- VALUE LINE NEW YORK TAX EXEMPT TRUST seeks to provide New York taxpayers
with 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 invests in stocks, bonds and
cash equivalents according to computer trend models developed by Value Line. The
objective is to professionally manage the optimal allocation of these
investments at all times. The Fund is available to investors only through the
purchase of the Guardian Investor, a tax deferred variable annuity, or Value
Plus, a variable life insurance policy.
1992 -- THE VALUE LINE ADJUSTABLE RATE U.S. GOVERNMENT SECURITIES FUND seeks
high current income consistent with low volatility of principal by investing
primarily in adjustable rate U.S. Government securities.
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 correct
asset mix.
- --------------------------------------------------------------------------------
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. READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR
SEND MONEY.
16
