UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file Number 811-5052
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Value Line New York Tax Exempt Trust
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(Exact name of registrant as specified in charter)
220 East 42nd Street, New York, N.Y. 10017
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 212-907-1500
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Date of fiscal year end: February 28, 2004
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Date of reporting period: August 31, 2003
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Item I. Reports to Stockholders.
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A copy of the Semi-Annual Report to Stockholders for the period ended
is included with this Form.
Item 2. Code of Ethics
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Not applicable.
Item 3. Audit Committee Financial Expert.
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Not applicable.
Item 9. Controls and Procedures.
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(a) The registrant's principal executive officer and principal
financial officer have concluded that the registrant's
disclosure controls and procedures (as defined in rule
30a-2(c) under the Act (17 CFR 270.30a-2(c)) based on their
evaluation of these controls and procedures as of a date
within 90 days of the filing date of this report, are
appropriately designed to ensure that material information
relating to the registrant is made known to such officers and
are operating effectively.
(b) The registrant's principal executive officer and principal
financial officer have determined that there have been no
significant changes in the registrant's internal controls or
in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including
corrective actions with regard to significant deficiencies and
material weaknesses.
Item 10. Exhibits.
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(a) Not applicable.
(b)(1) Certification pursuant to Rule 30a-2 under the Investment
Company Act of 1940 (17 CFR 270.30a-2) attached hereto as
Exhibit 99.CERT.
(2) Certification pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
By /s/ Jean B. Buttner
--------------------------
Jean B. Buttner, President
Date: October 31, 2003
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ Jean B. Buttner
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Jean B. Buttner, President, Principal Executive Officer
By: /s/ David T. Henigson
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David T. Henigson, Vice President, Treasurer, Principal Financial Officer
Date: October 31, 2003
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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 64121-9729
INDEPENDENT PricewaterhouseCoopers LLP
ACCOUNTANTS 1177 Avenue of the Americas
New York, NY 10036
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
Charles Heebner
VICE PRESIDENT
Bradley T. Brooks
VICE PRESIDENT
David T. Henigson
VICE PRESIDENT AND
SECRETARY/TREASURER
Joseph Van Dyke
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 FUND (OBTAINABLE FROM THE
DISTRIBUTOR).
#527648
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SEMI-ANNUAL REPORT
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AUGUST 31, 2003
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VALUE LINE
NEW YORK
TAX EXEMPT
TRUST
[LOGO]
VALUE LINE NEW YORK TAX EXEMPT TRUST
TO OUR VALUE LINE NEW YORK
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TO OUR SHAREHOLDERS:
The primary objective of the Value Line New York Tax Exempt Trust is to provide
investors with maximum income exempt from New York State, New York City and
Federal personal income taxes, without undue risk to principal(1). During the
six months ended August 31, 2003, the Trust's total return was -2.24% versus the
Lehman Brothers Municipal Bond Index's(2) return of -0.21% during the same time
period. Since its inception in July, 1987, the total return for the Trust,
assuming the reinvestment of all dividends over that period, has been 174.02%.
This is equivalent to an average annual total return of 6.43%(3).
During the six months ended August 31, 2003 prices of fixed-income securities
were very volatile. Prices rose as yields fell until the middle of June. Then,
prices fell as yields rose until August 31, 2003. As a result, there was a net
decline in prices and an increase in yields from February 28th to August 31st.
Long-term, tax-exempt interest rates, as measured by the Bond Buyer's 40-Bond
Index(4), rose from 5.04% on February 28, 2003 to 5.19% on August 31, 2003.
During this same period, long-term taxable rates, as measured by the 30-year
Treasury bond, also increased from 4.67% to 5.22%. The increase in interest
rates was the result of stronger economic growth, rising stock prices, and a
growing U.S. government deficit. The Federal Reserve reduced the Federal Funds
rate only once this calendar year from 1.25% to 1.00% on June 25th of this year.
Currently, a 30-year triple A rated municipal bond yields 4.88%, which is 96% of
the 5.10% yield of the 30-year Treasury bond. A 4.88% tax-exempt yield is
equivalent to a 7.51% taxable yield for individuals in the 35% tax bracket. This
high ratio of yields between tax-exempt to taxable bonds makes municipal bonds
extremely attractive as income vehicles for investors.
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(1) INCOME MAY BE SUBJECT TO STATE TO STATE AND LOCAL TAXES, AND SOME INCOME MAY
BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN
INVESTORS. CAPITAL GAINS, IF ANY, ARE FULLY TAXABLE.
(2) THE LEHMAN BROTHERS MUNICIPAL BOND INDEX IS A TOTAL-RETURN PERFORMANCE
BENCHMARK FOR THE LONG-TERM, INVESTMENT-GRADE, TAX-EXEMPT BOND MARKET.
INVESTMENT-GRADE BONDS ARE RATED BAA OR HIGHER BY MOODY'S OR BBB OR HIGHER
BY STANDARD & POOR'S. RETURNS AND ATTRIBUTES FOR THE INDEX ARE CALCULATED
SEMI-MONTHLY USING APPROXIMATELY 25,000 MUNICIPAL BONDS, WHICH ARE PRICED BY
MULLER DATA CORPORATION. THE RETURNS FOR THE INDEX DO NOT REFLECT CHARGES,
EXPENSES, OR TAXES, AND IT IS NOT POSSIBLE TO DIRECTLY INVEST IN THIS INDEX.
(3) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
(4) THE BOND BUYER'S 40-BOND INDEX IS A BENCHMARK INDEX FOR LONG-TERM TAX-EXEMPT
BONDS ONLY. IT HAS AN AVERAGE MATURITY OF ABOUT 30 YEARS AND IS USED IN
COMPARISON TO THE 30-YEAR TAXABLE BOND MARKET AS REPRESENTED BY THE 30-YEAR
TREASURY BOND.
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2
VALUE LINE NEW YORK TAX EXEMPT TRUST
TAX EXEMPT TRUST SHAREHOLDERS
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Management continues to avoid securities rated below investment grade (defined
as Baa or higher by Moody's Investors Service and as BBB or higher by Standard &
Poor's Corporation). As of August 29, 2003, the market value of the Trust's
portfolio consisted of 57% AAA, 29% AA, 7% A, and 7% Baa or BBB rated bonds. Of
these bonds, 20% are invested in non-callable bonds, mostly with high coupons.
The portfolio's highest concentrations of investments were in the insured,
housing-revenue, and transportation-revenue sectors respectively. Management
continually monitors the Trust's duration(5) and expects to maintain the
duration within a range which is close to the Lehman Brothers Municipal Bond
Index.
The municipal bond market is one of the most fragmented and complex sectors of
the American capital markets. We believe that most investors seeking tax-free
income are best served by a mutual fund, whose advantages include professional
management, diversification, liquidity, low transaction costs, accurate
record-keeping, automatic reinvestment of dividends, and availability in
small-dollar amounts. In addition to these features, The Value Line Tax Exempt
New York Trust has the additional advantage of carrying no sales or redemption
fees.
We thank you for your continued confidence in Value Line, and we look forward to
serving your investment needs in the future.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
CHAIRMAN AND PRESIDENT
October 17, 2003
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(5) DURATION (HERE REFERRING TO EFFECTIVE DURATION) IS A STATISTICAL TERM USED
TO MEASURE THE PRICE SENSITIVITY OF A BOND INDEX, OR PORTFOLIO, TO CHANGES
IN INTEREST RATES. THE HIGHER THE DURATION, THE GREATER THE PRICE CHANGE
ACCOMPANYING ANY CHANGE IN INTEREST RATES. FOR EXAMPLE, IF A FUND HAS AN
EFFECTIVE DURATION OF SEVEN (YEARS), THE PRICE OF THE FUND WOULD BE EXPECTED
TO RISE OR FALL 7% FOR EVERY 1.0 PERCENTAGE POINT DROP OR RISE,
RESPECTIVELY, IN INTEREST RATES. PRICES MOVE IN THE OPPOSITE DIRECTION OF
INTEREST RATES.
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3
VALUE LINE NEW YORK TAX EXEMPT TRUST
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ECONOMIC OBSERVATIONS
The U.S. economic recovery, which had been proceeding at an uninspiring pace for
the better part of two years, has started to exhibit more spirit. Indeed, the
U.S. gross domestic product, underpinned by a selective recovery in
manufacturing, generally strong housing demand, and healthy retail spending
levels now seems poised to increase by 4%, or so, in the second half of this
year. There are pockets of weakness around, most notably in the employment area
where jobless totals remain quite high. Overall, though, the economic picture is
materially brighter than it was earlier in 2003 when talk of a possible
double-dip recession was still being heard.
Meanwhile, the ongoing support of the Federal Reserve Board, which continues to
maintain its low-interest-rate policies, along with the earlier passage of a tax
cut and fiscal stimulus package, should provide the help needed for the U.S.
economy to continue pushing forward nicely in 2004, when we expect GDP growth to
average upwards of 4%.
Inflation, meantime, remains muted, thanks, in part, to subdued labor costs.
Adequate supplies of raw materials are also helping to keep the costs of
production low. We caution that as the U.S. economy moves further along the
recovery trail over the next several years, some increase in pricing pressures
may emerge. Absent a stronger long-term business recovery than we now envision,
or a sharp rise in oil and gas prices stemming from a further serious conflict
in the Middle East or severe production cutbacks by the Organization of
Petroleum Exporting Countries (OPEC), inflation should remain in check through
the latter years of this decade. Long-term interest rates, which moved higher
for a time during the past several months, as the economy perked up, should
stabilize at just modestly higher levels over the next several years.
PERFORMANCE DATA:*
GROWTH OF
AVERAGE AN ASSUMED
ANNUAL INVESTMENT OF
TOTAL RETURN $10,000
------------------------------
1 year ended 8/31/03 .......... 1.00% $10,100
5 years ended 8/31/03 ......... 4.08% $12,214
10 years ended 8/31/03 ......... 4.66% $15,767
* THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND ARE NO GUARANTEE
OF FUTURE PERFORMANCE. THE AVERAGE ANNUAL TOTAL RETURN INCUDES 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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4
VALUE LINE NEW YORK TAX EXEMPT TRUST
SCHEDULE OF INVESTMENTS (UNAUDITED) AUGUST 31, 2003
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PRINCIPAL
AMOUNT RATING VALUE
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LONG-TERM MUNICIPAL SECURITIES (88.8%)
NEW YORK STATE (40.0%)
Dormitory Authority, Revenue:
$ 500,000 Court Facility, Lease Revenue, Ser. A, 5.25%, 5/15/10 .............. A3 $ 545,750
1,110,000 Montefiore Medical Center, 5.25%, 8/1/19 ........................... Aaa 1,164,412
845,000 School Districts Funding Program, Ser. J, 5.25%, 10/1/18 ........... Aaa 891,695
500,000 School Districts Funding Program, Ser. E, 5.75%, 10/1/22 ........... Aaa 540,755
500,000 St. Barnabas Hospital, Ser. A, 5.125%, 2/1/22 ...................... Aaa 504,790
Environmental Facilities Corp., Clean Water & Drinking Water
Revenue, Revolving Fund:
500,000 Ser. L, 5%, 11/15/10 ............................................... Aaa 549,215
500,000 NYC Municipal Water Project, 5.25%, 6/15/22 ........................ Aaa 516,675
Mortgage Agency, Revenue Refunding, Homeowner Mortgage:
185,000 Ser. 26, 5.85%, 4/1/17 ............................................. Aaa 190,737
750,000 Ser. 98, 5.05%, 10/1/17 ............................................ Aa1 766,373
760,000 Housing Development Multi Family Revenue, Ser. A,
4.45%, 5/15/23 ...................................................... AAA* 687,572
1,030,000 Nassau County, General Improvement, Ser. C, 5.125%, 1/1/14 .......... Aaa 1,106,075
500,000 Saratoga County, Industrial Development Agency, Revenue Bonds,
Skidmore College Project, Ser. A, 4.00%, 7/1/16 ..................... Aaa 477,395
500,000 Syracuse, Housing Authority, Mortgage Revenue, Loretto Rest
Home, Ser. A, 5.60%, 8/1/17 ......................................... AAA* 532,060
200,000 Tobacco Settlement Financing Corp., Asset Backed Revenue,
Ser. A-1 Callable 5.50%, 6/1/19 ..................................... AA-* 205,763
500,000 Tollway Authority Highway and Bridge, Revenue Bonds, Ser. A,
5.50%, 4/1/15 ....................................................... AAA* 544,815
500,000 Tollway Authority Highway and Bridge, Service Contract Revenue
Bonds, 5.25%, 4/1/15 ................................................ AA-* 534,490
500,000 Thruway Authority, Personal Income Tax Revenue Bonds, Ser. A,
5.50%, 3/15/20 ...................................................... AA* 530,400
500,000 Urban Development Corp. Personal, Income Tax Revenue Bonds,
Ser. A, 5.375%, 3/15/16 ............................................. AA* 535,870
600,000 Voorheesville, Central School District, General Obligations
Unlimited, 5.00%, 6/15/17 ........................................... Aaa 626,808
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TOTAL NEW YORK STATE ................................................ 11,451,650
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5
VALUE LINE NEW YORK TAX EXEMPT TRUST
SCHEDULE OF INVESTMENTS (UNAUDITED)
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PRINCIPAL
AMOUNT RATING VALUE
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NEW YORK CITY (41.8%)
General Obligation Unlimited:
$1,000,000 Ser. A, 5.25%, 11/1/16 ............................................ Aaa $ 1,063,520
1,000,000 Ser. J, 5.50%, 6/1/21 ............................................. A2 1,030,360
Health and Hospital Corp., Health System Revenue Bonds
500,000 Ser. A, 5.50%, 2/15/19 ............................................ Aaa 534,125
700,000 Ser. A, 5.25%, 2/15/22 ............................................ Aaa 717,822
Housing Development Multi Family Revenue Bonds:
1,000,000 Ser. A, 5.375%, 11/1/23 ........................................... Aa2 1,018,300
425,000 Ser. B-2, 3.25%, 11/1/10 .......................................... Aa2 405,611
Industrial Development Agency:
250,000 Brooklyn Navy Yard, Cogen Partners, 6.20%, 10/1/22 ................ Baa3 238,772
650,000 Metropolitan Transportation Authority, Revenue Bonds, Ser. A,
5.50%, 11/15/16 .................................................... Aaa 709,800
1,500,000 Metropolitan Transportation Authority, Service Contract Revenue
Bonds, 5.75%, 1/1/18 ............................................... A3 1,656,240
2,040,000 Transit Authority Training Facilities Revenue, 5.40%, 1/1/18 ....... Aaa 2,239,716
Transitional Finance Authority, Revenue, Future Tax Secured:
500,000 Ser. A, 5.375%, 5/1/16 ............................................ Aa2 532,760
750,000 Ser. A, 5.375%, 2/15/18 ........................................... Aa2 791,190
Triborough Bridge & Tunnel Authority, General Purpose Revenue
Bonds:
500,000 Ser. B, 5.00%, 11/11/22 ........................................... Aa3 501,425
500,000 Ser. E, 5.25%, 11/15/22 ........................................... Aaa 515,430
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TOTAL NEW YORK CITY ................................................ 11,955,071
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PUERTO RICO (3.1%)
500,000 Industrial Tourist, Educational Medical and Environmental Control
Facilities Revenue Bonds, 6.625%, 6/1/26 ........................... Baa2 514,350
355,000 Public Buildings Authority, Government Facilities Revenue Bonds,
Ser. C, 5.50%, 7/1/16 .............................................. Baa1 384,259
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898,609
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VIRGIN ISLANDS (3.9%)
1,000,000 Public Finance Authority, Revenue, Gross Receipts Taxes, Ser. A,
6.375%, 10/1/19 .................................................... BBB-* 1,102,050
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TOTAL LONG-TERM MUNICIPAL SECURITIES
(Cost $24,972,923) ................................................. 25,407,380
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6
VALUE LINE NEW YORK TAX EXEMPT TRUST
AUGUST 31, 2003
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PRINCIPAL
AMOUNT RATING VALUE
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SHORT-TERM MUNICIPAL SECURITIES (8.7%)
$1,000,000 Babylon, N.Y., Industrial Development Agency, Ogden Martin
Project, Revenue Bonds, .88% 1/1/19 ................................ VM1G-1(2) $ 1,000,000
600,000 New York City General Obligation, Subser. A-B, .85%, 8/1/18 ........ VM1G(1) 600,000
New York City Municipal Water Finance Authority, Water & Sewer
System Revenue Bonds:
500,000 Ser. C, .85%, 6/15/22 ............................................. VM1G-1(1) 500,000
400,000 Ser. C, .85%, 6/15/23 ............................................. VM1G-1(1) 400,000
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TOTAL SHORT-TERM MUNICIPAL SECURITIES
(Cost $2,500,000) .................................................. 2,500,000
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TOTAL MUNICIPAL SECURITIES (97.5%)
(Cost $27,472,923) ................................................. 27,907,380
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CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES
(2.5%) ............................................................. 723,796
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NET ASSETS (100.0%) ................................................ $28,631,176
===========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE, PER OUTSTANDING SHARE ....................................... $ 10.08
===========
RATED BY MOODY'S INVESTORS SERVICE EXCEPT FOR THOSE MARKED BY AN ASTERISK (*)
WHICH ARE RATED BY STANDARD & POOR'S.
(1) VARIABLE RATE DEMAND NOTES ARE CONSIDERED SHORT-TERM OBLIGATIONS. INTEREST
RATES CHANGE EVERY (1) 1 OR (2) 7 DAYS. THESE SECURITIES ARE PAYABLE ON
DEMAND ON INTEREST RATE REFIX DATES AND ARE SECURED BY EITHER LETTERS OF
CREDIT OR OTHER CREDIT SUPPORT AGREEMENTS FROM BANKS. THE RATES LISTED ARE
AS OF AUGUST 31, 2003.
SEE NOTES TO FINANCIAL STATEMENTS
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7
VALUE LINE NEW YORK TAX EXEMPT TRUST
STATEMENT OF ASSETS AND LIABILITIES
AT AUGUST 31, 2003 (UNAUDITED)
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(IN THOUSANDS
EXCEPT PER SHARE
AMOUNT)
-----------------
ASSETS:
Investment securities, at value
(cost - $27,473) ....................... $27,907
Cash ...................................... 93
Receivable for trust shares sold .......... 420
Interest receivable ....................... 309
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TOTAL ASSETS ............................ 28,729
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LIABILITIES:
Trust shares repurchased .................. 23
Dividends payable to shareholders ......... 22
Accrued expenses:
Advisory fee ............................ 15
Service and distribution plan fees
payable .............................. 6
Other ................................... 32
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TOTAL LIABILITIES ....................... 98
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NET ASSETS ................................ $28,631
=======
NET ASSETS
Shares of beneficial interest at $.01 par
value (authorized unlimited,
outstanding 2,840,248 shares) .......... $ 28
Additional paid-in capital ................ 27,569
Distributions in excess of net
investment income ...................... (2)
Accumulated net realized gain on
investments ............................ 602
Unrealized appreciation of
investments ............................ 434
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NET ASSETS ................................ $28,631
=======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE, PER
OUTSTANDING SHARE ...................... $ 10.08
=======
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED AUGUST 31, 2003 (UNAUDITED)
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(IN THOUSANDS)
--------------
INVESTMENT INCOME:
Interest .................................. $ 646
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EXPENSES:
Advisory fee .............................. 89
Service and distribution plan fee ......... 37
Audit and legal fees ...................... 32
Printing and stationary ................... 11
Trustees' fees and expenses ............... 10
Transfer agent fees ....................... 8
Custodian fees ............................ 8
Other ..................................... 4
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Total Expenses before custody
credits ........................... 199
Less: custody credits ................ (1)
--------
NET EXPENSES ......................... 198
--------
NET INVESTMENT INCOME ..................... $ 448
--------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net Realized Gain .................... 37
Net change in Net Unrealized
Apppreciation ..................... (1,086)
--------
NET REALIZED GAIN AND CHANGE IN NET
UNREALIZED APPRECIATION ON
INVESTMENTS ............................ (1,049)
--------
NET DECREASE IN NET ASSETS FROM
OPERATIONS ............................. $ (601)
========
SEE NOTES TO FINANCIAL STATEMENTS.
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8
VALUE LINE NEW YORK TAX EXEMPT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED AUGUST 31, 2003 (UNAUDITED)
AND FOR THE YEAR ENDED FEBRUARY 28, 2003
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SIX MONTHS
ENDED YEAR ENDED
AUGUST 31, 2002 FEBRUARY 28,
(UNAUDITED) 2003
--------------------------------
(IN THOUSANDS)
OPERATIONS:
Net investment income ................................................... $ 448 $ 974
Net realized gain on investments ........................................ 37 804
Change in unrealized appreciation ....................................... (1,086) 314
--------------------------
Net (decrease) increase in net assets from operations ................... (601) 2,092
--------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income ................................................... (450) (974)
Net realized gains ...................................................... - (456)
--------------------------
Net decrease in net assets from distributions ........................... (450) (1,430)
--------------------------
TRUST SHARE TRANSACTIONS:
Net proceeds from sale of shares ........................................ 8,816 5,829
Net proceeds from reinvestment of distributiions to shareholders ........ 293 956
Cost of shares repurchased .............................................. (8,859) (7,217)
--------------------------
Net increase (decrease) in net assets from Trust share transactions ..... 250 (432)
--------------------------
TOTAL (DECREASE) INCREASE IN NET ASSETS .................................. (801) 230
Net Assets:
Beginning of period ..................................................... 29,432 29,202
--------------------------
End of period ........................................................... $ 28,631 $ 29,432
==========================
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME ......................... $ (2) $ (19)
==========================
SEE NOTES TO FINANCIAL STATEMENTS.
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9
VALUE LINE NEW YORK TAX EXEMPT TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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1. SIGNIFICANT ACCOUNTING POLICIES
Value Line New York Tax Exempt Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended, as a non-diversified, open-end
management investment company. The investment objective of the Trust is to
provide New York taxpayers with the maximum income exempt from New York State,
New York City, and federal income taxes, while avoiding undue risk to principal.
The Trust will invest primarily in New York State municipal and public authority
debt obligations. The ability of the issuers of the securities held by the Trust
to meet their obligations may be affected by economic or political developments
in New York State and New York City. 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 Trust's investments are valued each business day by
an independent pricing service (the "Service") approved by the Trustees.
Investments for which quoted bid prices in the judgment of the Service are
readily available and are representative of the bid side of the market are
valued at quotations obtained by the Service from dealers in such securities.
Other investments (which constitute a majority of the portfolio securities) are
valued by the Service, based on methods that include consideration of yields or
prices of municipal securities of comparable quality, coupon, maturity, and
type; indications as to values from dealers; and general market conditions.
Short-term instruments maturing within 60 days are valued at amortized cost,
which approximates market value. Other assets and securities for which no
quotations are readily available are valued in good faith at their fair value
using methods determined by the Trustees.
(B) DISTRIBUTIONS: It is the policy of the Trust to distribute all of its
investment income to shareholders. Dividends from net investment income are
declared daily and paid monthly. Net realized capital gains, if any, are
distributed to shareholders annually. 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.
The amount of dividends and distributions from net investment income and net
realized gains are determined in accordance with federal income tax regulations,
which may differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. Permanent
differences are reclassified within the capital accounts based on their federal
tax-basis treatment. Temporary differences do not require reclassification.
(C) FEDERAL INCOME TAXES: It is the policy of the Trust to qualify as a
regulated investment company, which can distribute tax-exempt dividends, by
complying with the provisions available to certain investment companies, as
defined in applicable sections of the Internal Revenue Code, and to distribute
all of its investment income and capital gains to its shareholders. Therefore,
no federal income tax or excise tax provision is required.
(D) 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 premium and
accretion of discounts on investments, is earned from settlement date and
recognized on the accrual basis.
Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date.
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10
VALUE LINE NEW YORK TAX EXEMPT TRUST
AUGUST 31, 2003
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(E) REPRESENTATIONS AND INDEMNIFICATIONS: In the normal course of business the
Trust enters into contracts that contain a variety of representations which
provide general indemnifications. The Trust's maximum exposure under these
arrangements is unknown, as this would involve future claims that may be made
against the Trust that have not yet occurred. However, based on experience, the
Trust expects the risk of loss to be remote.
2. TRUST SHARE TRANSACTIONS
Transactions in shares of beneficial interest were as follows:
SIX MONTHS
ENDED YEAR ENDED
AUGUST 31, 2003 FEBRUARY 28,
(UNAUDITED) 2003
--------------------------------
(IN THOUSANDS)
Shares sold ..................... 847 563
Shares issued to
shareholders in
reinvestment of
distributions ................ 28 93
----------------------
875 656
Shares repurchased .............. (845) (696)
----------------------
Net increase (decrease) ......... 30 (40)
======================
3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of municipal securities were as follows:
SIX MONTHS
ENDED
AUGUST 31, 2003
(UNAUDITED)
---------------
(IN THOUSANDS)
PURCHASES:
Long-term obligations ........... $ 6,699
Short-term obligations .......... 14,210
--------
$ 20,909
MATURITIES OR SALES:
Long-term obligations ........... $ 7,022
Short-term obligations .......... 14,010
--------
$ 21,032
4. INCOME TAXES
At August 31, 2003, information on the tax components of capital is as follows:
(IN THOUSANDS)
Cost of investments for tax purposes ......... $ 27,473
Gross tax unrealized appreciation ............ 713
Gross tax unrealized depreciation ............ 279
--------
Net tax unrealized appreciation on
investments ............................... $ 434
========
Net investment income and net realized gain (loss) differ for financial
statement and tax purposes primarily due to differing treatment of bond
discounts and premiums.
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VALUE LINE NEW YORK TAX EXEMPT TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) AUGUST 31, 2003
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5. INVESTMENT ADVISORY CONTRACT AND TRANSACTIONS WITH AFFILIATES
An advisory fee of $89,275 was paid or payable to Value Line, Inc. (the
"Adviser") for the six months ended August 31, 2003. This was computed at an
annual rate of .60% of the Trust's average daily net assets. The Adviser
provides research, investment programs, and supervision of the investment
portfolio and pays costs of administrative services, office space, and
compensation of administrative, bookkeeping, and clerical personnel necessary
for managing the affairs of the Trust. The Adviser also provides persons,
satisfactory to the Trustees, to act as officers of the Trust and pays their
salaries and wages. The Trust bears all other costs and expenses in its
operation.
For the six months ended August 31, 2003, the Trust's expenses were reduced by
$500 under a custody credit arrangement with the custodian.
The Trust has a Service and Distribution Plan (the "Plan"). The Plan, adopted
pursuant to Rule 12b-1 under the Investment Company Act of 1940, compensates
Value Line Securities, Inc. a subsidiary of the Adviser (the "Distributor"), for
advertising, marketing and distributing the Trust's shares and for servicing the
Trust's shareholders at an annual rate of 0.25% of the Trust's average daily net
assets. Fees amounting to $37,198 were paid or payable to the Distributor under
this Plan for the six months ended August 31, 2003.
Certain officers and directors of the Adviser and Value Line Securities, Inc.,
are also officers and trustees of the Trust.
At August 31, 2003 the Adviser owned 131,537 shares of beneficial interest in
the Trust, representing 4.6% of the outstanding shares.
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VALUE LINE NEW YORK TAX EXEMPT TRUST
FINANCIAL HIGHLIGHTS
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SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
SIX MONTHS
ENDED YEARS ENDED ON LAST DAY OF FEBRUARY,
AUGUST 31, 2003 ------------------------------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
===========================================================================================
NET ASSET VALUE, BEGINNING
OF PERIOD ........................... $ 10.47 $ 10.25 $ 10.08 $ 9.37 $ 10.33 $ 10.51
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .............. 0.16 0.35 0.38 0.42 0.42 0.43
Net gains or losses on securities
(both realized and
unrealized) ...................... (0.39) 0.39 0.17 0.71 (0.82) 0.14
-------- -------- -------- -------- -------- --------
Total from investment operations ..... (0.23) 0.74 0.55 1.13 (0.40) 0.57
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment
income ........................... (0.16) (0.35) (0.38) (0.42) (0.42) (0.42)
Distributions from net realized
gains ............................ -- (0.17) -- -- (0.14) (0.33)
-------- -------- -------- -------- -------- --------
Total distributions .................. (0.16) (0.52) (0.38) (0.42) (0.56) (0.75)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD ....... $ 10.08 $ 10.47 $ 10.25 $ 10.08 $ 9.37 $ 10.33
========================================================================================
TOTAL RETURN ......................... (2.24)%+ 7.38% 5.54% 12.28% (3.97)% 5.56%
========================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) ...................... $ 28,631 $ 29,432 $ 29,202 $ 29,388 $ 28,409 $ 33,403
Ratio of expenses to average
net assets .......................... 1.33%(1)* 1.29%(1) 1.28%(1) 1.13%(1) 1.05%(1) .98%(1)
Ratio of net investment income
to average net assets ............... 3.00%* 3.39% 3.76% 4.29% 4.21% 4.05%
Portfolio turnover rate .............. 28% 53% 66% 49% 100% 56%
(1) RATIO REFLECTS EXPENSES GROSSED UP FOR CUSTODY CREDIT ARRANGEMENT. THE RATIO
OF EXPENSES TO AVERAGE NET ASSETS NET OF CUSTODY CREDITS WOULD HAVE BEEN
1.32%*, 1.28%, 1.27%, 1.12%, 1.04% AND .97%, RESPECTIVELY, AS OF AUGUST 31,
2003, FEBRUARY 28, 2003, FEBRUARY 28, 2002, FEBRUARY 28, 2001, FEBRUARY 29,
2000 AND FEBRUARY 28, 1999.
+ NOT ANNUALIZED
* ANNUALIZED
SEE NOTES TO FINANCIAL STATEMENTS.
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VALUE LINE NEW YORK TAX EXEMPT TRUST
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VALUE LINE NEW YORK TAX EXEMPT TRUST
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VALUE LINE NEW YORK TAX EXEMPT TRUST
THE VALUE LINE FAMILY OF FUNDS
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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. An investment in the Fund is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.
Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.
1981 - VALUE LINE U.S. GOVERNMENT SECURITIES FUND seeks maximum income without
undue risk to capital. Under normal conditions, at least 80% of the value of its
net assets will be invested in securities issued or guaranteed by the U.S.
Government and its agencies and instrumentalities.
1983 - VALUE LINE CENTURION FUND* seeks long-term growth of capital.
1984 - THE VALUE LINE TAX EXEMPT FUND seeks to provide investors with the
maximum income exempt from federal income taxes while avoiding undue risk to
principal. The Fund offers investors a choice of two portfolios: The Money
Market Portfolio and The National Bond Portfolio. The fund may be subject to
state and local taxes and the Alternative Minimum Tax (if applicable).
1985 - VALUE LINE CONVERTIBLE FUND seeks high current income together with
capital appreciation primarily from convertible securities ranked 1 or 2 for
year-ahead performance by the Value Line Convertible Ranking System.
1986 - VALUE LINE AGGRESSIVE INCOME TRUST seeks to maximize current income.
1987 - VALUE LINE NEW YORK TAX EXEMPT TRUST seeks to provide New York taxpayers
with the maximum income exempt from New York State, New York City and federal
income taxes while avoiding undue risk to principal. The fund may be subject to
state and local taxes and the Alternative Minimum Tax (if applicable).
1987 - VALUE LINE STRATEGIC ASSET MANAGEMENT TRUST* seeks to achieve a high
total investment return consistent with reasonable risk.
1993 - VALUE LINE EMERGING OPPORTUNITIES FUND invests primarily in common stocks
or securities convertible into common stock, with its primary objective being
long-term growth of capital.
1993 - VALUE LINE ASSET ALLOCATION FUND seeks high total investment return,
consistent with reasonable risk. The Fund invests in stocks, bonds and money
market instruments utilizing quantitative modeling to determine the asset mix.
* ONLY AVAILABLE THROUGH THE PURCHASE OF GUARDIAN INVESTOR, A TAX DEFERRED
VARIABLE ANNUITY, OR VALUEPLUS, A VARIABLE LIFE INSURANCE POLICY.
FOR MORE COMPLETE INFORMATION ABOUT ANY OF THE VALUE LINE FUNDS, INCLUDING
CHARGES AND EXPENSES, SEND FOR A PROSPECTUS FROM VALUE LINE SECURITIES, INC.,
220 EAST 42ND STREET, NEW YORK, NEW YORK 10017-5891 OR CALL 1-800-223- 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.
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