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, 2005
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Date of reporting period: August 31, 2004
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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
8/31/04 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 10. 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 11. 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
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Jean B. Buttner, President
Date: October 26, 2004
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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 26, 2004
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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
REGISTERED PUBLIC 300 Madison Avenue
ACCOUNTING FIRM New York, NY 10017
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).
#531312
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SEMI-ANNUAL REPORT
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AUGUST 31, 2004
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VALUE LINE
NEW YORK
TAX EXEMPT
TRUST
[VALUE LINE 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).
Management continues to concentrate on less risky, more conservative
investments. We 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 31, 2004, the market value of the Trust's portfolio
consisted of 61% AAA, 29% AA, 4% A, and 6% Baa or BBB rated bonds. In addition,
24% of the portfolio is 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(2) and expects to maintain
the duration within a range which is close to the Lehman Brothers Municipal Bond
Index.
Your Trust's total return for the six months ended August 31, 2004 of -0.10% was
less than the Lehman Brothers Municipal Bond Index's(3) return of 0.55% during
the same time period. The Index does not reflect expenses, which are deducted
from the Trust's total return.
During the six months ended August 31, 2004 prices of fixed-income securities
were very volatile. Prices fell as yields rose until the middle of June. Then,
prices increased as yields declined until August 31, 2004. There was net decline
in prices and increase in yields from February 27th to August 31st. Long-term,
tax-exempt interest rates, as measured by the Bond Buyer's 40-Bond Index(4),
rose from 4.72% on February 27, 2004 to 4.94% on August 31, 2004. During this
same period, long-term taxable rates, as measured by the 30-year Treasury bond,
also increased from 4.84% to 4.93%. The increase in interest rates was the
result of stronger economic growth, a growing U.S. government deficit, and a
rising Federal Funds rate. The Federal Reserve increased the Federal Funds rate
three times this year from 1.00% on June 4th to 1.75% on September 21st.
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(1) INCOME MAY BE SUBJECT 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) DURATION (HERE REFERRING TO THE 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
A MODIFIED 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.
(3) 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.
(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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Currently, a 30-year triple A rated municipal bond yields 4.73%, which is 95% of
the 4.97% yield of the 30-year Treasury bond. A 4.73% tax-exempt yield is
equivalent to a 7.28% 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.
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 added 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 6, 2004
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3
VALUE LINE NEW YORK TAX EXEMPT TRUST
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Economic Observations
The economic expansion, which proceeded at a vigorous pace from the middle of
2003 through the early months of 2004, showed definite signs of slowing during
the middle months of this year. More recently, though, reports point to a modest
improvement in the business outlook. The economy is hardly booming. However
housing, employment, and capital goods demand are all firming, if still
selectively, which suggests that the nation's gross domestic product, which rose
by a sluggish 2.8% in the second quarter, will expand by a somewhat stronger
3.5%, or so, over the final two quarters of this year and into the early part of
2005.
This continuing moderate, but likely sustainable, pace of growth and
accompanying modest inflation, have positive ramifications, as they will
probably encourage the Federal Reserve Board, which has raised interest rates
three times this year, to pursue a measured and cautious monetary tightening
program over the next several quarters to a year. Our sense is that the Fed will
increase borrowing costs sufficiently to keep inflation subdued, but not
aggressively enough to derail the business expansion.
Our current economic forecast, meantime, excludes allowances for a further
escalation in global military conflict, a new incidence of global terrorism, or
an additional significant runup in oil prices, none of which can be predicted
with any degree of accuracy as to scope or timing.
Performance Data:*
GROWTH OF
AVERAGE AN ASSUMED
ANNUAL INVESTMENT OF
TOTAL RETURN $10,000
-------------- --------------
1 year ended 8/31/04 .......... 6.80% $10,680
5 years ended 8/31/04 ......... 5.72% $13,209
10 years ended 8/31/04 ......... 5.51% $17,099
* 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. THE PERFORMANCE DATA DOES NOT REFLECT THE DEDUCTION OF TAXES
THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND
SHARES. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA
QUOTED. CALL 1-800-243-2729 TO OBTAIN PERFORMANCE DATA CURRENT TO THE MOST
RECENT MONTH-END.
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4
VALUE LINE NEW YORK TAX EXEMPT TRUST
Tax Exempt Trust Shareholders
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Fund Expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management
fees; distribution and service (12b-1) fees; and other Fund expenses. This
Example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with the ongoing costs of
investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (March 1, 2004 through August 31, 2004).
Actual Expenses
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading Expenses Paid During Period to estimate the
expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
EXPENSES*
PAID DURING
BEGINNING ENDING PERIOD
ACCOUNT ACCOUNT 3/1/2004
VALUE VALUE THRU
3/1/2004 8/31/2004 8/31/2004
-------------- ------------- ------------
Actual $ 1,000.00 $ 999.00 $ 7.05
Hypothetical (5% return
before expenses) $ 1,000.00 $ 1,018.15 $ 7.12
*Expenses are equal to the Funds annualized expense ratio of 1.40% multiplied by
the average account value over the period, multiplied by 184/365 to reflect the
one-half period.
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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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LONG-TERM MUNICIPAL SECURITIES (87.2%) NEW YORK STATE (29.5%)
Dormitory Authority, Revenue:
$1,070,000 Montefiore Medical Center, 5.25%, 8/1/19 ........................... Aaa $1,143,295
500,000 N.Y. Presbyterian Hospital, Ser. A, 5.25%, 8/15/19 ................. Aaa 548,320
500,000 White Plains Hospital Medical Center, 4.625%, 2/15/18 .............. AAA* 521,685
250,000 Housing Finance Agency Revenue, Multi-Family Secured
Mortgage, 4.50%, 8/1515 ............................................. Aa1 261,820
500,000 Islip, Resource Recovery Agency, 1985 Facility,
Ser. E, 5.00%, 7/1/13 ............................................... Aaa 532,275
Mortgage Agency, Revenue Refunding, Homeowner Mortgage:
5,000 Ser. 26, 5.85%, 4/1/17 ............................................. Aaa 5,278
750,000 Ser. 98, 5.05%, 10/1/17 ............................................ Aa1 790,627
900,000 Ser. 110, 3.80%, 10/1/12 ........................................... Aa1 918,846
100,000 Nassau County, General Improvement, Ser. C, 5.125%, 1/1/14 .......... Aaa 110,739
500,000 Syracuse, Housing Authority, Mortgage Revenue, Loretto Rest
Home, Ser. A, 5.60%, 8/1/17 ......................................... AAA* 536,325
500,000 Tollway Authority Highway and Bridge, Revenue Bonds, Ser. A,
5.50%, 4/1/15 ....................................................... AAA* 557,000
500,000 Thruway Authority, Personal Income Tax Revenue Bonds, Ser. A,
5.50%, 3/15/20 ...................................................... AA* 556,640
500,000 Urban Development Corp. Personal, Income Tax Revenue Bonds,
Ser. A, 5.375%, 3/15/16 ............................................. AA* 550,160
600,000 Voorheesville, Central School District, General Obligations
Unlimited, 5.00%, 6/15/17 ........................................... Aaa 652,044
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TOTAL NEW YORK STATE ................................................ 7,685,054
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6
VALUE LINE NEW YORK TAX EXEMPT TRUST
August 31, 2004
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PRINCIPAL
AMOUNT RATING VALUE
- ------------- -------- -------------
NEW YORK CITY (41.3%) General Obligation Unlimited:
$1,000,000 Ser. A, 5.25%, 11/1/16 ............................................... Aaa $ 1,098,470
1,385,000 Ser. C, 5.25%, 8/15/15 ............................................... Aaa 1,556,255
500,000 Ser. J, 5.50%, 6/1/21 ................................................ A2 543,335
Health and Hospital Corp., Health System Revenue Bonds
200,000 Ser. A, 5.50%, 2/15/19 ............................................... Aaa 221,982
700,000 Ser. A, 5.25%, 2/15/22 ............................................... Aaa 748,762
Metropolitan Transportation Authority, Revenue Bonds:
500,000 Ser. A, 5.00%, 11/15/12 .............................................. Aaa 557,030
1,500,000 Metropolitan Transportation Authority, Service Contract Revenue
Bonds, 5.75%, 1/1/18 .................................................. A3 1,742,100
2,135,000 Transit Authority Training Facilities Revenue, 5.40%, 1/1/18 .......... Aaa 2,421,005
Transitional Finance Authority, Revenue, Future Tax Secured:
500,000 Ser. A, 5.375%, 5/1/16 ............................................... Aa2 546,275
750,000 Ser. A, 5.375%, 2/15/18 .............................................. Aa2 809,573
Triborough Bridge & Tunnel Authority, General Purpose Revenue
Bonds:
500,000 Ser. B, 5.00%, 11/15/22 .............................................. Aa3 522,195
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TOTAL NEW YORK CITY ................................................... 10,766,982
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PUERTO RICO (12.0%)
495,000 Industrial Tourist, Educational Medical and Environmental Control
Facilities Revenue Bonds, 6.625%, 6/1/26 .............................. Baa2 529,487
Public Buildings Authority, Government Facilities Revenue Bonds,
355,000 Ser. C, 5.50%, 7/1/16 ................................................ Baa1 404,068
2,000,000 Ser. J, 5.00%, 7/1/36 ................................................ Aaa 2,201,740
-----------
3,135,295
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VIRGIN ISLANDS (4.4%)
1,000,000 Public Finance Authority, Revenue, Gross Receipts Taxes, Ser. A,
6.375%, 10/1/19 ....................................................... BBB-* 1,135,520
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TOTAL LONG-TERM MUNICIPAL SECURITIES
(COST $21,487,394) ................................................... 22,722,851
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7
VALUE LINE NEW YORK TAX EXEMPT TRUST
Schedule of Investments (unaudited) August 31, 2004
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PRINCIPAL
AMOUNT RATING VALUE
- ------------ ----------- ----------------
SHORT-TERM MUNICIPAL SECURITIES (12.6%)
$ 430,000 Monroe County, N.Y., Airport Authority, Greater Rochester
International Airport Revenue Refunding,
Ser. 2004, 2%, 1/1/05 .......................................... Aaa $ 430,762
1,400,000 Nassau County, N.Y., Interim Finance Authority, Sale Tax Secured
Revenue Bonds, Ser. A, 1.33%, 11/15/22 ......................... VM1G-1(2) 1,400,000
New York City General Obligations:
800,000 Sub. Ser. A8, 1.32%, 8/1/17 ................................... VM1G-1(1) 800,000
650,000 Ser. B-Sub Ser. B4, 1.32%, 8/15/23 ............................ VM1G-1(1) 650,000
------------
TOTAL SHORT-TERM MUNICIPAL SECURITIES
(COST $3,280,762).............................................. 3,280,762
------------
TOTAL MUNICIPAL SECURITIES (99.8%)
(COST $24,768,156)............................................. 26,003,613
------------
CASH AND OTHER ASSETS IN EXCESS
OF LIABILITIES (0.2%) .......................................... 51,768
------------
NET ASSETS (100.0%) ............................................ $ 26,055,381
============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE, PER OUTSTANDING SHARE ................................... $ 10.25
============
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, 2004.
SEE NOTES TO FINANCIAL STATEMENTS
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8
VALUE LINE NEW YORK TAX EXEMPT TRUST
Statement of Assets and Liabilities Statement of Operations
at August 31, 2004 (unaudited) for the Six Months Ended August 31, 2004 (unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS
EXCEPT PER SHARE
AMOUNT) (IN THOUSANDS)
----------------- ---------------
ASSETS: INVESTMENT INCOME:
Investment securities, at value Interest .................................. $ 575
(cost $24,768) ......................... $26,004 -----
Interest receivable ....................... 237 EXPENSES:
Receivable for trust shares sold .......... 10 Advisory fee .............................. 81
------- Service and distribution plan fee ......... 34
TOTAL ASSETS ............................ 26,251 Audit and legal fees ...................... 29
------- Printing and stationary ................... 13
LIABILITIES: Trustees' fees and expenses ............... 11
Trust shares repurchased .................. 9 Transfer agent fees ....................... 9
Dividends payable to shareholders ......... 22 Custodian fees ............................ 7
Due to custodian .......................... 101 Other ..................................... 5
Accured expenses: ......................... -----
Advisory fee ............................ 13 Total Expenses before custody
Service and distribution plan fees credits ........................... 189
payable .............................. 6 Less: Custody credits ................ (1)
Other ................................... 45 --------
------- NET EXPENSES ......................... 188
TOTAL LIABILITIES ....................... 196 -------
------- NET INVESTMENT INCOME ..................... $ 387
NET ASSETS ................................ $26,055 -------
======= REALIZED AND UNREALIZED GAIN (LOSS)
NET ASSETS ON INVESTMENTS
Shares of beneficial interest at $.01 Net Realized Gain .................... 100
par value (authorized unlimited, Change in Net Unrealized
outstanding 2,541,721 shares) .......... $ 25 Apppreciation ..................... (581)
Additional paid-in capital ................ 24,585 -------
Distributions in excess of net NET REALIZED GAIN AND CHANGE IN NET
investment income ...................... (19) UNREALIZED APPRECIATION ON
Accumulated net realized gain on INVESTMENTS ............................ (481)
investments ............................ 229 -------
Unrealized appreciation of investments 1235 NET DECREASE IN NET ASSETS FROM
------- OPERATIONS ............................. $ (94)
NET ASSETS ................................ $26,055 =======
=======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE, PER
OUTSTANDING SHARE
($26,055,381-2,541,721 SHARES
OUTSTANDING) ........................... $ 10.25
=======
SEE NOTES TO FINANCIAL STATEMENTS.
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9
VALUE LINE NEW YORK TAX EXEMPT TRUST
Statements of Changes in Net Assets
for the Six Months Ended August 31, 2004 (unaudited) and for the Year Ended
February 29, 2004
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SIX MONTHS
ENDED YEAR ENDED
AUGUST 31, 2004 FEBRUARY 29,
(UNAUDITED) 2004
----------------- -------------
(IN THOUSANDS)
OPERATIONS:
Net investment income ................................................... $ 387 $ 885
Net realized gain on investments ........................................ 100 129
Change in unrealized appreciation ....................................... (581) 296
-------- ---------
Net (decrease)increase in net assets from operations .................... (94) 1,310
-------- ---------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income ................................................... (387) (885)
Net realized gains ...................................................... -- (565)
-------- ---------
Net decrease in net assets from distributions ........................... (387) (1,450)
-------- ---------
TRUST SHARE TRANSACTIONS:
Net proceeds from sale of shares ........................................ 725 10,332
Net proceeds from reinvestment of distributiions to shareholders ........ 246 982
Cost of shares repurchased .............................................. (3,447) (11,594)
-------- ---------
Net decrease in net assets from Trust share transactions ................ (2,476) (280)
-------- ---------
TOTAL DECREASE IN NET ASSETS ............................................. (2,957) (420)
NET ASSETS:
Beginning of period ..................................................... 29,012 29,432
-------- ---------
End of period ........................................................... $ 26,055 $ 29,012
======== =========
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME ......................... $ (19) $ (19)
======== =========
SEE NOTES TO FINANCIAL STATEMENTS.
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10
VALUE LINE NEW YORK TAX EXEMPT TRUST
Notes to Financial Statements (unaudited) August 31, 2004
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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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11
VALUE LINE NEW YORK TAX EXEMPT TRUST
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
(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, 2004 FEBRUARY 29,
(UNAUDITED) 2004
--------------- ------------
(IN THOUSANDS)
Shares sold ................ 72 994
Shares issued to
shareholders in
reinvestment of
distributions ........... 24 96
-- ---
96 1,090
Shares repurchased ......... (342) (1,113)
---- ------
Net decrease ............... (246) (23)
==== ======
3. Purchases and Sales of Securities
Purchases and sales of municipal securities were as follows:
SIX MONTHS
ENDED
AUGUST 31, 2004
(UNAUDITED)
---------------
(IN THOUSANDS)
PURCHASES:
Long-term obligations .......... $ 8,445
Short-term obligations ......... 8,050
-------
$16,495
MATURITIES OR SALES:
Long-term obligations .......... $12,388
Short-term obligations ......... 6,800
-------
$19,188
4. Income Taxes
At August 31, 2004, information on the tax components of capital is as follows:
(IN THOUSANDS)
Cost of investments for tax purposes .......... $24,768
-------
Gross tax unrealized appreciation ............. $ 1,244
Gross tax unrealized depreciation ............. $ (8)
-------
Net tax unrealized appreciation on
investments ................................ $ 1,236
=======
Undistributed long-term capital gains ......... $ 129
=======
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12
VALUE LINE NEW YORK TAX EXEMPT TRUST
August 31, 2004
- --------------------------------------------------------------------------------
The tax composition of distributions to shareholders for the the six months
ended August 31, 2004 and the fiscal year ended February 29, 2004 were as
follows:
SIX MONTHS
ENDED YEAR ENDED
AUGUST 31, 2004 FEBRUARY 29,
(UNAUDITED) 2004
----------------- -------------
(IN THOUSANDS)
Tax exempt income ............... $387 $884
Taxable ordinary
income ....................... -- 29
---- ----
387 913
==== ====
Long-term capital gains ......... $ -- $531
==== ====
5. Investment Advisory Contract and Transactions With Affiliates
An advisory fee of $80,922 was paid or payable to Value Line, Inc. (the
"Adviser") for the six months ended August 31, 2004. 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, 2004, the Trust's expenses were reduced by
$692 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 $33,718 were paid or payable to the Distributor under
this Plan for the six months ended August 31, 2004.
Certain officers and directors of the Adviser and Value Line Securities, Inc.,
are also officers and trustees of the Trust.
At August 31, 2004 the Adviser did not own shares of beneficial interest in the
Trust.
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13
VALUE LINE NEW YORK TAX EXEMPT TRUST
Financial Highlights
- --------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
SIX MONTHS
ENDED YEARS ENDED ON LAST DAY OF FEBRUARY,
AUGUST 31, 2004 ----------------------------------------------------------------------
(UNAUDITED) 2004 2003 2002 2001 2000
---------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD ............................ $ 10.41 $ 10.47 $ 10.25 $ 10.08 $ 9.37 $ 10.33
--------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income ............... 0.15 0.31 0.35 0.38 0.42 0.42
Net gains or losses on securities
(both realized and
unrealized) ....................... (0.16) 0.14 0.39 0.17 0.71 ( 0.82)
---------- --------- --------- --------- --------- ---------
Total from investment operations ...... (0.01) 0.45 0.74 0.55 1.13 ( 0.40)
---------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment
income ............................ (0.15) ( 0.31) ( 0.35) ( 0.38) ( 0.42) ( 0.42)
Distributions from net realized
gains ............................. -- ( 0.20) ( 0.17) -- -- ( 0.14)
---------- --------- --------- --------- --------- ---------
Total distributions ................... (0.15) ( 0.51) ( 0.52) ( 0.38) ( 0.42) ( 0.56)
---------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD ........ $ 10.25 $ 10.41 $ 10.47 $ 10.25 $ 10.08 $ 9.37
========== ========= ========= ========= ========= =========
TOTAL RETURN .......................... (0.10)%+ 4.51% 7.38% 5.54% 12.28% ( 3.97)%
========== ========= ========= ========= ========= =========
RATIOS/SUPPLEMENTAL DATA:
Net assets,end of period
(in thousands) ....................... $ 26,055 $ 29,012 $ 29,432 $ 29,202 $ 29,388 $ 28,409
Ratio of expenses to average
net assets ........................... 1.40%(1)* 1.37%(1) 1.29%(1) 1.28%(1) 1.13%(1) 1.05%(1)
Ratio of net investment income
to average net assets ................ 2.87%* 3.03% 3.39% 3.76% 4.29% 4.21%
Portfolio turnover rate ............... 37% 61% 53% 66% 49% 100%
(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
1.39%*, 1.37%, 1.28%, 1.27%, 1.12% AND 1.04%, RESPECTIVELY, AS OF AUGUST 31,
2004, FEBRUARY 29, 2004, FEBRUARY 28, 2003, FEBRUARY 28, 2002, FEBRUARY 29,
2001 AND FEBRUARY 29, 2000.
+ NOT ANNUALIZED
* ANNUALIZED
SEE NOTES TO FINANCIAL STATEMENTS.
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14
VALUE LINE NEW YORK TAX EXEMPT TRUST
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Proxy Voting Policies and Procedures
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge
upon request by calling 1-800-243-2729 or on the SEC's web site (http://
www.sec.gov). Information regarding how the fund voted proxies relating to
portfolio securities during the most recent 12-month period ended August 31 is
also available on the SEC's web site at http://www.sec.gov or on the Fund's web
site at http://vlfunds.com.
Shareholder Reports and Quarterly Portfolio Disclosure
The Fund will be required to file its complete schedule of portfolio holdings
with the SEC for its first and third fiscal quarters on Form N-Q for fiscal
quarters ending on or after July 9, 2004. Once filed, the Fund's Forms N-Q will
be available without charge, upon request on the SEC's website
(http://www.sec.gov) and may be available by calling Value Line at
1-800-243-2729. You can also obtain copies of Form N-Q by (i) visiting the SEC's
Public Reference Room in Washington, DC (information on the operation of the
Public Reference Room may be obtained by calling 1-800-SEC-0330); (ii) sending
your request and a duplicating fee to the SEC's Public Reference Room,
Washington, DC 20549-0102; or (iii) sending your request electronically to
publicinfo@sec.gov.
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15
VALUE LINE NEW YORK TAX EXEMPT TRUST
The Value Line Family of Funds
- --------------------------------------------------------------------------------
1950 -- THE VALUE LINE FUND seeks long-term growth of capital. Current income is
a secondary objective.
1952 -- VALUE LINE INCOME AND GROWTH FUND'S primary investment objective is
income, as high and dependable as is consistent with reasonable risk. Capital
growth to increase total return is a secondary objective.
1956 -- THE VALUE LINE SPECIAL SITUATIONS FUND seeks long-term growth of
capital. No consideration is given to current income in the choice of
investments.
1972 -- VALUE LINE LEVERAGED GROWTH INVESTORS' sole investment objective is to
realize capital growth.
1979 -- THE VALUE LINE CASH FUND, a money market fund, seeks to secure as high a
level of current income as is consistent with maintaining liquidity and
preserving capital. 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 Trust may be subject to
state and local taxes and the Alternative Minimum Tax (if applicable).
1987 -- VALUE LINE STRATEGIC ASSET MANAGEMENT TRUST* seeks to achieve a high
total investment return consistent with reasonable risk.
1993 -- VALUE LINE EMERGING OPPORTUNITIES FUND invests primarily in common
stocks or securities convertible into common stock, with its primary objective
being long-term growth of capital.
1993 -- VALUE LINE ASSET ALLOCATION FUND seeks high total investment return,
consistent with reasonable risk. The Fund invests in stocks, bonds and money
market instruments utilizing quantitative modeling to determine the asset mix.
* ONLY AVAILABLE THROUGH THE PURCHASE OF GUARDIAN INVESTOR, A TAX DEFERRED
VARIABLE ANNUITY, OR VALUEPLUS, A VARIABLE LIFE INSURANCE POLICY.
FOR MORE COMPLETE INFORMATION ABOUT ANY OF THE VALUE LINE FUNDS, INCLUDING
CHARGES AND EXPENSES, SEND FOR A PROSPECTUS FROM VALUE LINE SECURITIES, INC.,
220 EAST 42ND STREET, NEW YORK, NEW YORK 10017-5891 OR CALL 1-800-243-2729, 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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16