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------------------
SEMI-ANNUAL REPORT
------------------
August 31, 1998
------------------
The
Value Line
Tax Exempt
Fund, Inc.
[LOGO]
----------
VALUE LINE
No-Load
Mutual
Funds
<PAGE>
The Value Line Tax Exempt Fund, Inc.
To Our Value Line
- --------------------------------------------------------------------------------
To Our Shareholders:
During the past six months (ended August 31, 1998), prices of fixed-income
securities have increased as interest rates have plummeted to record lows in
some cases. Long-term, tax-exempt interest rates, as measured by the Bond
Buyer's 40-Bond Index, declined from 5.24% on February 27, 1998 to 5.11% on
August 31, 1998. During this same period, long-term taxable rates, as measured
by the 30-year Treasury bond, declined from 5.92% to 5.27%. The subdued
inflationary environment, the Federal surplus and the Asian crisis have
contributed to the decline in interest rates.
With fewer bonds being issued by the Treasury, long-term Treasury yields have
declined to new lows. At the same time, the numbers of new issues of tax-exempt
bonds has increased to near record levels. Hence, Treasury bonds have
significantly outperformed tax-exempt bonds during the past six months.
Year-to-date ending August 31, 1998, the Lehman Treasury Bond Index was up 7.20%
compared to 4.54% for the Lehman Municipal Bond Index.
High-Yield Portfolio
The primary objective of the Value Line Tax Exempt High-Yield Portfolio is to
provide investors with maximum income exempt from federal income taxes, without
undue risk to principal. During the six-months ended August 31, 1998, the fund's
total return was up 3.01%. Since its inception in March, 1984, the total return
for the High-Yield Portfolio, assuming the reinvestment of all dividends over
that period, has been 221.11%, which is equivalent to an average annual total
return of 8.41%. The Fund's yield as of August 31, 1998 was 4.58%, significantly
higher than the average yield of 3.94% for all general municipal bond funds
ranked by Lipper Analytical Services.
The Fund's total return for the January 1, 1998 through August 31, 1998 period
was 3.93% compared to 4.54% for the Lehman Brothers Municipal Bond Index* during
the same time period. Investors are reminded that your Fund's performance is
calculated after management fees and expenses are taken out, while the index has
no such charges.
Your Fund's management continues to focus on bonds with high credit ratings and
which can not be redeemed by the issuer prior to maturity for at least ten
years. Over 98% of your Fund's bonds are rated A or better by Moody's Investors
Service a Standard and Poor's Corporation. The difference in yields between
high-grade and lower rated bonds has been narrow and management does not believe
that purchasing lower grade securities warrants the risk. The portfolio's
highest concentrations of investments are in the insured and housing-revenue
sectors.
Money Market Portfolio
The objective of the Tax Exempt Money Market Portfolio is to preserve principal
by investing in high-quality, tax-exempt short-term securities which have a high
degree of liquidity so as to ensure a constant net asset value of $1.00 per
share. The portfolio consists only of securities which carry the highest two
ratings by Moody's Investor Services or Standard and Poor's Corporation. The
annualized yield was 2.52% as of August 31, 1998, equivalent to a 4.17% taxable
yield for those in the 39.6% tax bracket.
Short-term tax-exempt rates, as measured by the Bond Buyer's One-year Note
Index, decreased from 3.56% on February 27, 1998 to 3.28% on August 31, 1998.
During this same period of time, the yield on one-year taxable Treasury bills
declined from 5.40% to 4.85%.
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 investing in 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 Fund has the additional advantage of carrying no sales or redemption
fees; it is a true no-load fund.
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2
<PAGE>
The Value Line Tax Exempt Fund, Inc.
Tax Exempt Fund Shareholders
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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 16, 1998
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* 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
expenses, which are deducted from the Fund's returns.
Economic Observations
The U.S. economy has slowed considerably since the early part of this year,
principally as a result of the fallout from the series of financial crises now
engulfing the Pacific Rim, Russia, and parts of Latin America. As such, this
nation's gross domestic product, which expanded at better than at a 5% rate
early in the year, is currently proceeding at just about a third of that pace.
Moreover, the figures released in recent weeks, including those relating to
manufacturing, housing, retailing, and employment do not suggest that we'll see
any appreciable strengthening in economic activity over the next three to six
months.
At this point, though, we do not believe that this slower pace of economic
activity is the opening act in a serious domestic business downturn. Our sense
is that the global crisis will gradually recede over the next 12 to 18 months
and that the continuing modest level of inflation in this country will encourage
the Federal Reserve Board, which has already reduced short-term interest rates
in recent weeks, to relax the credit reins again--perhaps before year-end.
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3
<PAGE>
The Value Line Tax Exempt Fund, Inc.
To Our Value Line Tax Exempt Fund Shareholders
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Performance Data:*
HIGH-YIELD PORTFOLIO
Growth of
Average an Assumed
Annual Investment of
Total Return $10,000
------------ -------------
1 year ended 6/30/98 ........................ 8.07% $10,807
5 years ended 6/30/98 ....................... 5.46% $13,043
10 years ended 6/30/98 ....................... 7.38% $20,388
MONEY MARKET PORTFOLIO
Growth of
Average an Assumed
Annual Investment of
Total Return $10,000
------------ -------------
1 year ended 6/30/98 ........................ 2.69% $10,269
5 years ended 6/30/98 ....................... 2.46% $11,293
10 years ended 6/30/98 ....................... 3.35% $13,898
* The performance data quoted represent past performance and are no guarantee
of future performance. The average annual total returns and growth of an
assumed investment of $10,000 include dividends reinvested and capital
gains distributions accepted in shares. The investment return and principal
value of an investment will fluctuate so that an investment, when redeemed,
may be worth more or less than its original cost. The average annual total
returns for the one-year, five-year, and ten-year periods ended August 31,
1998, for the High-Yield Portfolio and the Money Market Portfolio were
7.97%, 5.35%, and 7.46% and 2.68%, 2.49% and 3.30%, respectively.
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4
<PAGE>
The Value Line Tax Exempt Fund, Inc.
Schedule of Investments (unaudited) August 31, 1998
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<TABLE>
<CAPTION>
Principal
Amount High-Yield Portfolio Rating Value
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<S> <C> <C> <C>
LONG-TERM MUNICIPAL SECURITIES (94.7%)
Alabama (.7%)
$1,250,000 Colbert County-Northwest, Health Care Authority, Hospital
Revenue Refunding, Helen Keller Hospital, 8.75%, 6/1/09 ......... Baa $ 1,354,538
Alaska ( 9%)
Housing Finance Corp :
165,000 Collateral Mortgage Obligation, Veteran's 1st Ser., Veteran's
Mortgage Program, 7.45%, 12/1/29 ............................... Aaa 170,572
1,500,000 Mortgage Revenue, Refunding, Ser. A-1, 5.50%, 12/1/17............ Aaa 1,546,860
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1,717,432
Arizona (1.8%)
3,355,000 Maricopa County, Industrial Development Authority,
Multi Family Housing, Revenue, Ser. A, 5.10%, 1/1/33 ........... Aaa 3,338,594
California (2.2%)
3,670,000 Pleasant Hill, Redevelopment Agency, Residential Mortgage Revenue,
Refunding, 5.75%, 8/1/11 ....................................... AA* 3,804,249
350,000 Yuba County, Water Agency, Revenue, Yuba River Development,
Pacific Gas & Electric, Ser. A, 4.00%, 3/1/16 .................. A 333,613
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4,137,862
Colorado (2.5%)
4,055,000 Denver, City & County, Single Family Mortgage Revenue,
7.00%, 8/1/10 .................................................. Aaa 4,721,804
Florida (1.5%)
2,790,000 Miami-Dade County, Solid Waste System, Revenue,
4.875%, 10/1/13 ................................................ Aaa 2,829,367
Georgia (.3%)
545,000 Residential Finance Authority, Single Family Insured Mortgage,
Revenue, Subser C, 8.00%, 12/1/16 .............................. Aa 563,094
Hawaii (4.1%)
4,000,000 Department of Budget and Finance, Special Purpose Mortgage Revenue,
Kapiolani Health Care System, 6.40%, 7/1/13 .................... Aaa 4,663,760
2,955,000 Housing Finance & Development Corp., Single Family Mortgage
Revenue, Ser. A, 5.40%, 7/1/30 ................................. Aa1 2,970,159
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7,633,919
</TABLE>
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5
<PAGE>
The Value Line Tax Exempt Fund, Inc.
Schedule of Investments (unaudited)
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<TABLE>
<CAPTION>
Principal
Amount High-Yield Portfolio Rating Value
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<S> <C> <C> <C>
Illinois (6.5%)
Chicago:
$3,000,000 General Obligation, Project & Refunding, 5.25%, 1/1/28.......... Aaa $ 3,039,390
2,500,000 Sales Tax Revenue, Refunding, 5.25%, 1/1/28..................... Aaa 2,532,825
1,500,000 Educational Facilities Authority,
Northwestern University, 5.25%, 11/1/32 ........................ Aa1 1,575,210
4,500,000 Housing Development Authority, Multi Family,
Ser. 91-A, 8.25%, 7/1/16 ....................................... A1 4,872,510
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12,019,935
Indiana (4.0%)
Office Building Commission, Capital Complex, Revenue:
2,875,000 Ser. D, 6.90%, 7/1/11........................................... Aaa 3,907,800
3,000,000 Ser. B, 7.40%, 7/1/15........................................... Aaa 3,511,582
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7,419,382
Iowa (2.4%)
1,475,000 Finance Authority, Single Family, Revenue Mortgage,
Ser. B, 7.45%, 7/1/23 .......................................... Aaa 1,559,090
2,500,000 Muscatine, Electric Revenue, 6.70%, 1/1/13........................ Aaa 2,912,775
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4,471,865
Louisiana (1.1%)
2,000,000 East Baton Rouge, Mortgage Finance Authority, Single Family,
Revenue Refunding, Ser. B-2, 5.00%, 4/1/21 ..................... Aaa 2,000,820
Maine (2.6%)
1,000,000 Finance Authority, Revenue, Electric Rate Stabilization,
Ser. B, 5.20%, 7/1/18, Ser. A, 7.50%, 1/1/19 ................... Aaa 1,009,790
Housing Authority, Mortgage Purchase Program:
285,000 Ser. D-3, 8.15%, 11/15/11....................................... Aa2 291,906
2,800,000 Ser. D-4, 7.55%, 11/15/19....................................... Aa2 2,959,292
500,000 State Street Housing Preservation Corp., Multifamily Housing
Revenue, 100 State Street Project, Ser. A, 7.50%, 1/1/19 ....... A* 539,960
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4,800,948
Massachusetts (5.8%)
Housing Finance Agency:
4,500,000 Housing Development, Ser. A, 5.375%, 6/1/16..................... Aaa 4,560,300
3,300,000 Housing Revenue, Single Family, Ser. 63, 5.15%, 12/1/12......... Aaa 3,326,862
2,710,000 Residential Development, Ser. H, 6.75%, 5/15/15................. Aaa 2,931,597
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10,818,759
</TABLE>
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6
<PAGE>
The Value Line Tax Exempt Fund, Inc.
August 31, 1997
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<TABLE>
<CAPTION>
Principal
Amount High-Yield Portfolio Rating Value
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<S> <C> <C> <C>
Michigan (1.7%)
Housing Development Authority:
$1,000,000 Ser. D, 5.55%, 12/1/12.......................................... Aaa $ 1,036,340
2,000,000 Ser. C, 5.95%, 12/1/14.......................................... AA+* 2,105,860
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3,142,200
Minnesota (1.5%)
2,660,000 Housing Finance Agency, Refunding, Rental Housing,
Ser. D, 5.80%, 8/1/11 .......................................... Aaa 2,793,426
Nebraska (1.5%)
2,660,000 Investment Finance Authority, Single Family Mortgage,
Revenue, Ser. A, 5.977%, 9/30/16 ............................... Aaa 2,807,098
New Hampshire (.1%)
170,000 Housing Finance Authority, Single Family Residential Mortgage,
Ser. B, 7.75%, 7/1/23 .......................................... Aa 181,188
New York (4.7%)
New York City:
630,000 General Obligations, Ser. F, 8.20%, 11/15/04.................... A3 715,907
New York State:
2,000,000 Dormitory Authority, Revenue, Bishop Henry B. Hucles
Nursing Home, 5.625%, 7/1/18 ................................. Aa1 2,092,860
Medical Care Facilities Finance Agency:
3,480,000 Hospital and Nursing Home, Mortgage Revenue,
Ser. D, 6.35%, 2/15/12 ..................................... Aa2 3,888,691
2,000,000 Presbyterian Hospital, Revenue Ser. A, 5.375%, 2/15/25 ....... Aaa 2,039,920
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8,737,378
North Carolina (.6%)
1,130,000 Housing Finance Agency, Ser. U, 6.375%, 9/1/22 ................... Aa 1,171,143
Ohio (4.1%)
7,595,000 Housing Finance Agency, Residential Mortgage, Revenue, Ser. B,
5.40%, 9/1/29................................................... AAA* 7,641,709
Oklahoma (1.9%)
3,000,000 McGee Creek Authority, Water Revenue, 6.00%, 1/1/23 .............. Aaa 3,470,550
Oregon (2.0%)
3,695,000 Eugene, Trojan Nuclear Project, Revenue, 5.90%, 9/1/09............ Aa1 3,700,690
</TABLE>
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7
<PAGE>
The Value Line Tax Exempt Fund, Inc.
Schedule of Investments (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount High-Yield Portfolio Rating Value
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pennsylvania (3.5%)
$3,000,000 Housing Finance Agency, Refunding, Multifamily, 8.20%, 7/1/24 .... Aa $ 3,283,440
3,000,000 Lancaster County, Solid Waste Management Authority, Resource
Recovery System Revenue, Ser. A, 5.25%, 12/15/11................ Aaa 3,161,820
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6,445,260
Rhode Island (4.1%)
4,000,000 Economic Development Corp , Airport Revenue, Ser. B, 5.00%, 7/1/28 Aaa 3,920,720
Housing and Mortgage Finance Corp., Homeownership Opportunity:
1,000,000 Ser. 3-A, 7.80%, 10/1/10........................................ Aa2 1,062,280
2,500,000 Ser. 21-C, 5.65%, 10/1/20....................................... Aa2 2,570,300
-----------
7,553,300
South Carolina (1.9%)
2,000,000 Housing Finance and Development Authority, Single Family Mortgage,
5.00%, 7/1/34 .................................................. Aaa 1,976,840
1,450,000 Three Rivers, Solid Waste Authority, Solid Waste Disposal Facilities,
Revenue, 5.30%, 1/1/27 ......................................... Aaa 1,487,018
-----------
3,463,858
South Dakota (2.1%)
Housing Development Authority, Homeownership Mortgage:
1,405,000 Ser. A, 5.40%, 5/1/14........................................... Aa1 1,450,606
2,425,000 Ser. J, 5.70%, 5/1/10........................................... Aa1 2,487,808
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3,938,414
Texas (8.6%)
1,300,000 Austin, Higher Education Authority Inc., Revenue, Saint Edwards
University Project, 5.25%, 8/1/23 .............................. Baa3 1,294,566
5,000,000 Harris County, Hospital District, Mortgage Revenue, 7.40%, 2/15/10 Aaa 6,029,450
3,000,000 Lubbock, Housing Finance Corp., Single Family Mortgage Revenue,
Refunding, Ser. 1989A, 8.00%, 10/1/21 .......................... AAA* 4,257,480
900,000 Travis County, Health Facilities Development Corp., Hospital
Revenue, Daughters of Charity, 5.90%, 11/15/07 ................. Aa 976,536
Veterans Housing Assistance:
665,000 Ser. B-4, 6.20%, 12/1/14........................................ Aa2 691,307
2,590,000 Ser. II-D, 5.65%, 12/1/14....................................... Aa2 2,679,769
-----------
15,929,108
</TABLE>
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8
<PAGE>
The Value Line Tax Exempt Fund, Inc.
August 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount High-Yield Portfolio Rating Value
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Utah (5.0%)
$2,500,000 Associated Municipal Power System, Revenue Refunding,
San Juan Project, 5.00%, 6/1/22 ................................ Aaa $ 2,455,475
Housing Finance Agency, Single Family Mortgage:
255,000 Ser. C-3, 7.55%, 7/1/23......................................... AAA* 269,441
630,000 Ser. D-3, 7.55%, 7/1/23......................................... AAA* 666,521
2,250,000 Ser. E-1, 5.45%, 7/1/20......................................... Aa2 2,267,393
3,700,000 Intermountain Power Agency, Power Supply Revenue, Refunding,
Ser. A, 5.00%, 7/1/20 .......................................... Aaa 3,646,572
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9,305,402
Virginia (1.7%)
3,000,000 Housing Development Authority, Commonwealth Mortgage,
Subser. H-2, 6.85%, 7/1/14 .................................... Aa1 3,092,820
Wisconsin (11.8%)
Health and Educational Facilities Authority, Revenue:
2,000,000 Aurora Health Care Inc., 5.25%, 8/15/17......................... Aaa 2,036,660
3,100,000 United Health Group Inc., 5.25%, 12/15/27....................... Aaa 3,140,579
2,600,000 Wausau Hospital Inc., Ser. A, 5.125%, 8/15/20 .................. Aaa 2,584,686
Housing and Economic Development Authority:
Home Ownership Revenue:
1,785,000 Refunding, Ser. A, 6.00%, 3/1/17.............................. Aa2 1,887,584
4,490,000 Ser. D, 5.45%, 9/1/27......................................... Aa2 4,528,614
7,595,000 Housing Revenue, Refunding, Ser. C, 5.80%, 11/1/13 ............. Aaa 7,875,939
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22,054,062
Wyoming (1.5%)
2,750,000 Community Development Authority, Housing Revenue, Ser. 4,
5.70%, 6/1/17 .................................................. Aa2 2,856,342
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TOTAL LONG-TERM MUNICIPAL SECURITIES ............................. 176,112,267
-----------
</TABLE>
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9
<PAGE>
The Value Line Tax Exempt Fund, Inc.
Schedule of Investments (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount High-Yield Portfolio Rating Value
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES (4.8%)
$2,500,000 Brazos River Authority, Texas, Pollution Control Revenue,
Refunding, Ser. A, 3.50%, 3/1/26 ............................... VMIG1(1) $ 2,500,000
1,000,000 East Baton Rouge Parish, Louisiana, Pollution Control Revenue,
Refunding, Exxon Project, 3.30%, 11/1/19 ....................... P1(1) 1,000,000
Gulf Coast Waste Disposal Authority, Texas,
Solid Waste Disposal Revenue, Amoco Oil Company Project:
800,000 3.50%, 8/1/23 ............................................... VMIG1(1) 800,000
1,500,000 3.50%, 7/1/27................................................. VMIG1(1) 1,500,000
2,000,000 Maricopa County, Arizona, Pollution Control Revenue, Refunding,
Arizona Public Service Co., Ser. B, 3.30%, 5/1/29 .............. P1(1) 2,000,000
1,200,000 Saint Charles Parish, Louisiana, Pollution Control Revenue,
Shell Oil Co. Project, Ser. B, 3.30%, 10/1/22 .................. VMIG1(1) 1,200,000
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TOTAL SHORT-TERM MUNICIPAL SECURITIES ............................ 9,000,000
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TOTAL MUNICIPAL SECURITIES (99.5%)
(Cost $178,583,795) ............................................ 185,112,267
EXCESS OF CASH AND OTHER ASSETS
OVER LIABILITIES (.5%) ......................................... 910,456
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NET ASSETS (100.0%) .............................................. $186,022,723
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE,
PER SHARE OUTSTANDING .......................................... $ 11.12
============
</TABLE>
Rated by Moody's Investors Service except for those marked by an asterisk (*)
which are rated by Standard & Poor's.
Variable rate notes are considered short-term obligations. Interest rates change
periodically every (1) 1 day. 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, 1998.
See Notes to Financial Statements
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10
<PAGE>
The Value Line Tax Exempt Fund, Inc.
August 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Money Market Portfolio Rating Value
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES (103.0%)
Alabama (3.1%)
$ 500,000 General Obligations, Refunding, 5.70%, 9/1/98..................... Aa $ 500,000
Alaska (3.4%)
540,000 Housing Finance Corporation, Refunding, Ser. A-1, 3.90%, 12/1/98 . Aaa 540,000
Arizona (5.0%)
800,000 Maricopa County, Pollution Control Revenue, Refunding, Arizona
Public Service Co., Ser B, 3.30%, 5/1/29 ....................... P1(1) 800,000
District of Columbia (5.0%)
800,000 General Obligation, Refunding, Ser. A-1, 3.45%, 10/1/07........... VMIG1(1) 800,000
Florida (3.8%)
600,000 Tampa, Sports Authority, Revenue, Stadium Project, 4.50%, 1/1/99 . Aaa 603,324
Georgia (2.2%)
350,000 General Obligation, Ser. B, 6.30%, 3/1/99......................... Aaa 354,234
Louisiana (11.3%)
500,000 General Obligation, Ser. A, 6.25%, 8/1/99......................... Aaa 510,935
700,000 Lake Charles Parish, Harbor and Terminal District, Port Facilities
Revenue, Refunding, 3.35%, 11/1/11 ............................. Aa1(1) 700,000
600,000 Saint Charles Parish, Pollution Control Revenue, Shell Oil Co.
Project, Ser. A, 3.45%, 10/1/22................................. VMIG1(1) 600,000
----------
1,810,935
Maryland (4.6%)
745,000 Baltimore, Certificates of Participation, Emergency Telecommunications,
Ser. A, 4.00%, 10/1/98.......................................... Aaa 745,174
Michigan (4.9%)
775,000 Detroit, Building Authority Revenue, Parking & Arena System,
Ser. A, 4.50%, 7/1/99 .......................................... Aaa 780,324
Mississipi (4.4%)
700,000 Jackson County, Port Facility Revenue, Refunding,
Chevron USA, Inc. Project, 3.30%, 6/1/23 ....................... P1(2) 700,000
</TABLE>
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11
<PAGE>
The Value Line Tax Exempt Fund, Inc.
Schedule of Investments (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Money Market Portfolio Rating Value
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
New York (7.5%)
New York City:
$ 500,000 General Obligation, Subser. B-2, 3.30%, 8/15/03................. VMIG1(1) $ 500,000
700,000 Municipal Water Finance Authority, Water & Sewer System
Revenue, Ser. C, 3.30%, 6/15/22 .............................. VMIG1(1) 700,000
----------
1,200,000
North Carolina (2.0%)
325,000 Charlotte, General Obligation, Public Improvements,
6.40%, 2/1/99 .................................................. Aaa 328,554
Ohio (4.4%)
700,000 Franklin County, Hospital Revenue, Holy Cross Health System Corp.,
4.25%, 6/1/99 .................................................. Aaa 702,279
Oregon (7.5%)
500,000 General Obligation, Pollution Control, 5.10%, 11/1/98............. Aa2 501,063
700,000 Housing and Community Services Department, Mortgage Revenue,
Single Family Mortgage Program, Ser. F, 3.65%, 8/31/99 ......... MIG1 700,000
----------
1,201,063
South Carolina (5.3%)
500,000 Educational Assistance Authority, Revenue, 6.10%, 9/1/98.......... AA* 500,000
350,000 North Charleston, Certificates of Participation, Refunding,
Coliseum & Convention, 3.90%, 9/1/98 ........................... Aaa 350,000
----------
850,000
Texas (18.0%)
400,000 Austin, Public Property Finance Contractual Obligation,
4.30%, 5/1/99 .................................................. Aa2 401,205
300,000 Brazos River Authority, Pollution Control Revenue, Refunding,
Ser. A, 3.50%, 3/1/26........................................... VMIG1(1) 300,000
485,000 Denton, General Obligations, Refunding, 5.40%, 2/15/99............ Aaa 488,528
500,000 General Obligations, Refunding, Ser. A, 4.90%, 10/1/98............ Aa2 500,418
600,000 Harris County, Health Facilities Development Corp.,
Special Facilities Revenue, Texas Medical
Center Project, 3.85%, 2/15/22 .................................. VMIG1(1) 600,000
600,000 Trinity River Authority, Pollution Control Revenue, Texas
Utilities Electric Co. Project, Ser. A, 3.50%, 3/1/26 .......... VMIG1(1) 600,000
----------
2,890,151
</TABLE>
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12
<PAGE>
The Value Line Tax Exempt Fund, Inc.
August 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Money Market Portfolio Rating Value
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Utah (3.1%)
$ 500,000 Emery County, Pollution Control Revenue, Refunding,
Pacificorp Project, 3.35%, 11/1/24.............................. VMIG1(1) $ 500,000
Wyoming (7.5%)
Lincoln County, Pollution Control Revenue, Exxon Project:
400,000 Ser. B, 3.30%, 11/1/14.......................................... P1(1) 400,000
800,000 Ser. C, 3.30%, 7/1/17........................................... Aaa(1) 800,000
-----------
1,200,000
-----------
TOTAL SHORT-TERM MUNICIPAL SECURITIES (103.0%)
(Cost $16,506,038) ............................................. 16,506,038
EXCESS OF LIABILITIES OVER CASH AND
OTHER ASSETS (-3.0%) ........................................... (473,217)
-----------
NET ASSETS (100.0%) ............................................. $16,032,821
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE,
PER OUTSTANDING SHARE .......................................... $ 1.00
===========
</TABLE>
Rated by Moody's Investors Service except for those marked by an asterisk (*)
which are rated by Standard & Poor's.
Variable rate notes are considered short-term obligations. Interest rates change
periodically every (1) 1 day (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, 1998.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
13
<PAGE>
The Value Line Tax Exempt Fund, Inc.
Statement of Assets and Liabilities
at August 31, 1998 (unaudited)
- --------------------------------------------------------------------------------
Portfolio
----------------------
High- Money
Yield Market
----------------------
(Dollars in thousands
except per share amount)
Assets:
Investment securities, at value
(Cost $178,584 and amortized
cost $16,506) ................................ $185,112 $ 16,506
Cash ........................................... 77 151
Receivable for securities sold ................. 8,576 --
Interest receivable ............................ 1,969 147
Receivable for capital shares sold ............. 74 --
-------- --------
Total Assets ............................... 195,808 16,804
-------- --------
Liabilities:
Payable for securities purchased ............... 9,319 700
Dividends payable to shareholders .............. 276 --
Payable for capital shares
repurchased .................................. 32 29
Accrued expenses:
Advisory fee ................................. 78 7
Other ........................................ 80 35
-------- --------
Total Liabilities .......................... 9,785 771
-------- --------
Net Assets ..................................... $186,023 $ 16,033
======== ========
Net Assets:
Capital stock, at $.01 par value (Authorized
65,000,000 shares and 125,000,000
shares, respectively; outstanding
16,732,216 shares and 16,070,091 shares
respectively) ................................. $ 167 $ 161
Additional paid-in capital ...................... 175,151 15,909
Accumulated net realized gain (loss)
on investments ................................ 4,177 (37)
Unrealized net appreciation of
investments ................................... 6,528 --
-------- --------
Net Assets ...................................... $186,023 $ 16,033
======== ========
Net Asset Value, Offering and
Redemption Price per
Outstanding Share ............................. $ 11.12 $ 1.00
======== ========
Statement of Operations
for the Six Months Ended August 31, 1998 (unaudited)
- --------------------------------------------------------------------------------
Portfolio
---------------------
High- Money
Yield Market
---------------------
Dollars
(in thousands)
Investment Income:
Interest income ................................ $ 5,099 $ 310
------- -------
Expenses:
Advisory fee ................................... 468 42
Auditing and legal fees ........................ 28 18
Transfer agent fees ............................ 25 10
Custodian fees ................................. 21 2
Postage ........................................ 12 3
Printing and stationery ........................ 10 2
Registration and filing fees ................... 5 7
Directors' fees and expenses ................... 4 4
Other .......................................... 15 5
------- -------
Total expenses before custody
credits .................................. 588 93
Less: custody credits ...................... (9) (1)
------- -------
Net Expenses ............................... 579 92
------- -------
Net Investment Income .......................... 4,520 218
------- -------
Net Realized and Unrealized Gain
(Loss) on Investments:
Net Realized Gain (Loss) ................... 1,758 (5)
Change in Unrealized
Appreciation ............................. (445) --
------- -------
Net Realized Gain (Loss) and
Change in Unrealized
Appreciation on Investments .................. 1,313 (5)
------- -------
Net Increase in Net Assets
from Operations .............................. $ 5,833 $ 213
======= =======
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14
<PAGE>
The Value Line Tax Exempt Fund, Inc.
Statement of Changes in Net Assets
for the Six Months Ended August 31, 1998 (unaudited), and for the Year Ended
February 28, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
High-Yield Portfolio Money Market Portfolio
---------------------------------------------------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
August 31, 1998 February 28, August 31,1998 February 28,
(unaudited) 1998 (unaudited) 1998
---------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Operations:
Net investment income ................................... $ 4,520 $ 9,430 $ 218 $ 494
Net realized gain (loss) on investments ................. 1,758 3,346 (5) (1)
Change in net unrealized appreciation ................... (445) 2,806 -- --
---------------------------------------------------------------------
Net increase in net assets from operations .............. 5,833 15,582 213 493
---------------------------------------------------------------------
Distributions to Shareholders:
Net investment income ................................... (4,520) (9,430) 219 (493)
Net realized gains ...................................... -- (1,654) -- --
---------------------------------------------------------------------
Net decrease in net assets from distributions ........... (4,520) (11,084) (219) (493)
---------------------------------------------------------------------
Capital Share Transactions:
Net proceeds from sale of shares ........................ 4,991 28,198 4,787 8,000
Net proceeds from reinvestment of distribution
to shareholders ....................................... 2,898 7,231 219 493
Cost of shares repurchased .............................. (11,288) (45,459) (5,725) (11,403)
---------------------------------------------------------------------
Net decrease in net assets from capital
share transactions .................................... (3,399) (10,030) (719) (2,910)
---------------------------------------------------------------------
Total Decrease in Net Assets .............................. (2,086) (5,532) (725) (2,910)
Net Assets:
Beginning of period ..................................... 188,109 193,641 16,758 19,668
---------------------------------------------------------------------
End of period ........................................... $ 186,023 $ 188,109 $ 16,033 $ 16,758
=====================================================================
Net Undistributed Investment
Income at end of period ................................. $ -- $ -- $ -- $ 1
=====================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
15
<PAGE>
The Value Line Tax Exempt Fund,Inc.
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
1 Significant Accounting Policies
The Value Line Tax Exempt Fund, Inc. (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company, comprised of the High-Yield and Money Market
Portfolios. The primary investment objective of the High-Yield Portfolio is to
provide investors with the maximum income exempt from federal income taxes while
avoiding undue risk to principal by investing primarily in investment-grade
municipal securities. The primary objective of the Money Market Portfolio is to
preserve principal and provide income by investing in high-quality, tax-exempt
money market instruments. The ability of the issuers of the securities held by
the Fund to meet their obligations may be affected by economic or political
developments in a specific state or region. The following significant accounting
policies are in conformity with generally accepted accounting principles for
investment companies. Such policies are consistently followed by the Fund 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: High-Yield Portfolio -- The investments are valued each
business day by an independent pricing service ("Service") approved by the Board
of Directors. 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 value. Other assets and securities for which
no quotations are readily available will be valued in good faith at their fair
value using methods determined by the Board of Directors.
Money Market Portfolio--Securities are valued on the basis of amortized cost,
which approximates market value and does not take into account unrealized
capital gains or losses. This involves valuing an instrument at cost and
thereafter assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. The valuation of securities based upon their amortized
cost is permitted by Rule 2a-7 under the Investment Company Act of 1940. The
rule requires that the Portfolio maintain a dollar-weighted average portfolio
maturity of 90 days or less, purchase instruments that have remaining maturities
of 13 months or less only, and invest only in securities determined by the Board
of Directors to be of good quality, with minimal credit risks. The Directors
have established procedures designed to achieve these objectives.
(B) Distributions: It is the policy of the Fund to declare dividends daily from
net investment income. In the Money Market Portfolio, dividends are
automatically reinvested each day in additional shares. Dividends credited to a
shareholder's account in the High-Yield Portfolio are distributed monthly.
Income earned by the Fund on weekends, holidays, and other days on which the
Fund is closed for business is declared as a dividend on the next day on which
the Fund is open for business. The Fund expects to distribute any net realized
capital gains in either Portfolio at least annually.
The amount of dividends and distributions from net investment income and net
realized capital 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. To the extent these differences are permanent in nature, such amounts
are reclassified within the capital accounts based on their federal tax-basis
treatment. Temporary differences do not require reclassification.
- --------------------------------------------------------------------------------
16
<PAGE>
The Value Line Tax Exempt Fund, Inc.
August 31, 1998
- --------------------------------------------------------------------------------
(C) Federal Income Taxes: It is the policy of the Fund 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 provision
for federal income tax or excise tax is required in the accompanying financial
statements.
(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 original-issue discounts, when appropriate, in accordance with
federal income-tax regulations, is earned from settlement date and recognized on
the accrual basis. Additionally, when appropriate, the Fund recognizes market
discount when the securities are disposed. Securities purchased or sold on
when-issued or delayed-delivery basis may be settled a month or more after the
trade date.
(E) Expenses: Expenses directly attributable to each Portfolio are charged to
that Portfolio's operations; expenses that are applicable to both Portfolios are
allocated between them.
2. Capital Share Transactions
Transactions in capital stock were as follows:
High-Yield Portfolio
--------------------------
Six Months
Ended Year
August 31, Ended
1998 February 28,
(unaudited) 1998
--------------------------
(in thousands)
Shares sold ............................... 453 2,576
Shares issued to shareholders in
reinvestment of distributions ........... 263 663
-----------------------
716 3,239
Shares repurchased ........................ (1,025) (4,160)
----------------------
Net decrease .............................. (309) (921)
=======================
Money Market Portfolio
---------------------------
Six Months
Ended Year
August 31, Ended
1998 February 28,
(unaudited) 1998
---------------------------
(in thousands)
Shares sold .............................. 4,787 8,000
Shares issued to shareholders in
reinvestment of distributions .......... 219 493
-----------------------
5,006 8,493
Shares repurchased ....................... (5,725) (11,403)
-----------------------
Net decrease ............................. (719) (2,910)
=======================
3. Purchases and Sales of Securities
Purchases and sales of municipal securities were as follows:
High-Yield Portfolio
--------------------
Six Months Ended
August 31, 1998
(unaudited)
--------------------
(in thousands)
Purchases:
Long-term obligations .................. $168,195
Short-term obligations ................. 33,906
--------
$202,101
========
Maturities or Sales:
Long-term obligations .................. $171,700
Short-term obligations ................. 38,983
--------
$210,683
========
Money Market
Portfolio
------------------
Six Months Ended
August 31, 1998
(unaudited)
------------------
(in thousands)
Purchases:
Municipal short-term obligations ........ $12,014
=======
maturities or Sales:
Municipal short-term obligations ........ $13,251
=======
- --------------------------------------------------------------------------------
17
<PAGE>
The Value Line Tax Exempt Fund, Inc.
Notes to Financial Statements (unaudited) August 31, 1998
- --------------------------------------------------------------------------------
At August 31, 1998, the aggregate cost of investments for federal income-tax
purposes was $178,583,795 for the High-Yield Portfolio and $16,506,038 for the
Money Market Portfolio.
The aggregate appreciation and depreciation of investments in the
High-Yield Portfolio at August 31, 1998, based on a comparison of investment
values and their costs for federal income-tax purposes, was $6,885,183 and
$356,711, respectively, resulting in a net unrealized appreciation of
$6,528,472. There was no unrealized appreciation or depreciation in the Money
Market Portfolio.
For federal income-tax purposes the Money Market Portfolio had a capital-loss
carryover at February 28, 1998, of $31,999, of which $27,649 will expire in
2000, $998 in 2004, $1,285 in 2005 and $2,067 in 2006. To the extent future
capital gains are offset by such capital losses, the Portfolio does not
anticipate distributing any such gains to its shareholders.
4. Investment Advisory Contract and Transactions With Affiliates
An advisory fee of $468,491 and $41,553 was paid or payable by the High-Yield
Portfolio and the Money Market Portfolio, respectively, to Value Line, Inc. (the
Adviser) for the six months ended August 31, 1998. This was computed at the
annual rate of 1/2 of 1% of the average daily net asset values of the portfolios
of the Fund for the year. The Adviser provides research, investment programs,
and supervision of the investment portfolio and pays costs of administrative
services, office space, equipment, and compensation of administrative,
bookkeeping, and clerical personnel necessary for managing the affairs of the
Fund. The Adviser also provides persons, satisfactory to the Fund's Board of
Directors, to act as officers of the Fund and pays their salaries and wages. The
Fund bears all other costs and expenses of its organization and operation.
Certain officers and directors of the Adviser and its subsidiary, Value Line
Securities, Inc. (the Fund's distributor and a registered broker/dealer), are
also officers and a Director of the Fund.
At August 31, 1998, the Adviser and/or affiliated companies owned 114,782 shares
of the High-Yield Portfolio common shares, representing .69% of the outstanding
shares. In addition, certain officers and directors of the Fund owned 160,261
shares of the High-Yield Portfolio, representing .96% of the outstanding shares
and 2,548 shares of the Money Market Portfolio, representing .02% of the
outstanding shares.
- --------------------------------------------------------------------------------
18
<PAGE>
The Value Line Tax Exempt Fund, Inc.
Financial Highlights
- --------------------------------------------------------------------------------
Selected Data for a Share of Capital Stock Outstanding Throughout Each Period:
<TABLE>
<CAPTION>
HIGH-YIELD PORTFOLIO
For the Six Years Ended on Last Day of February,
Months Ended ---------------------------------------------------------------
August 31, 1998
(unaudited) 1998 1997 1996 1995 1994
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ..................................... $11.04 $10.78 $10.82 $10.40 $10.97 $11.29
---------------------------------------------------------------------------------
Income from investment
operations:
Net investment income ....................... .268 .543 .547 .552 .568 .598
Net gains or losses on securities
(both realized and unrealized) ............ .080 .354 (.040) .420 (.528) (.112)
---------------------------------------------------------------------------------
Total from investment
operations ................................ .348 .897 .507 .972 .040 .486
---------------------------------------------------------------------------------
Less distributions:
Dividends from net investment
income .................................... (.268) (.541) (.547) (.552) (.568) (.602)
Distributions from capital gains ............ -- (0.96) -- -- (.042) (.204)
---------------------------------------------------------------------------------
Total distributions ....................... (.268) (.637) (.547) (.552) (.610) (.806)
---------------------------------------------------------------------------------
Net asset value, end of period .................. $11.12 $11.04 $10.78 $10.82 $10.40 $10.97
=================================================================================
Total return .................................... 3.01%+ 8.56% 4.86% 9.55% .64% 4.37%
=================================================================================
Ratios/Supplemental Data
Net assets, end of period
(in thousands) ................................ $186,023 $188,109 $193,641 $222,760 $241,467 $237,888
Ratio of expenses to
average net assets ............................ .63%(1)* .63%(1) .60%(1) .62% .61% .58%
Ratio of net investment income to
average net assets ............................ 4.82%* 4.98% 5.13% 5.22% 5.54% 5.30%
Portfolio turnover rate ......................... 95%+ 119% 73% 95% 60% 55%
</TABLE>
* Annualized
+ Not annualized, for six month period only.
(1) Before offset for custody credits.
See Notes to Financial Statements
- --------------------------------------------------------------------------------
19
<PAGE>
The Value Line Tax Emempt Fund, Inc.
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Selected Data for a Share of Capital Stock Outstanding Throughout Each Period:
MONEY MARKET PORTFOLIO
For the Six
Months Ended Years Ended on Last Day of February,
August 31, 1998 -----------------------------------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ..................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income ....... .013 .026 .025 .029 .022 .016
-------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment
income .................... (.013) (0.26) (.025) (.029) (.022) (.016)
-------------------------------------------------------------------------------------------------
Net asset value, end of period .. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
=================================================================================================
Total return .................... 1.34%+ 2.65% 2.56% 2.92% 2.22% 1.58%
=================================================================================================
Ratios/Supplemental Data
Net assets, end of period
(in thousands) ................ $16,033 $16,758 $19,688 $21,777 $25,681 $1,707
Ratio of expenses to
average net assets ............ 1.12%(1)* 1.03%(1) 1.00%(1) 1.01% .89% .86%
Ratio of net investment income to
average net assets ............ 2.62%* 2.63% 2.54% 2.89% 2.17% 1.56%
</TABLE>
* Annualized
+ Not annualized, for six month period only.
(1) Before offset for custody credits.
See Notes to Financial Statements
- --------------------------------------------------------------------------------
20
<PAGE>
The Value Line Tax Exempt Fund, Inc.
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
21
<PAGE>
The Value Line Tax Exempt Fund, Inc.
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
22
<PAGE>
The Value Line Tax Exempt Fund, Inc.
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
23
<PAGE>
The Value LIne Tax Exempt Fund, Inc.
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 Investors' 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 to
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.
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 corporate 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
individual 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.
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.
1995--Value Line U.S. Multinational Company Fund's investment objective is
maximum total return. It invests primarily in securities of U.S. companies that
have significant sales from international operations.
* Only available through the purchase of Guardian Investor, a tax deferred
variable annuity, or ValuePlus, a variable life insurance policy.
For more complete information about any of the Value Line Funds, including
charges and expenses, send for a prospectus from Value Line Securities, Inc.,
220 East 42nd Street, New York, New York 10017-5891 or call 1-800-223-0818, 24
hours a day, 7 days a week. Read the prospectus carefully before you invest or
send money.
- --------------------------------------------------------------------------------
24
<PAGE>
================================================================================
INVESTMENT ADVISER Value Line, Inc.
220 East 42nd Street
New York, NY 10017-5891
DISTRIBUTOR Value Line Securities, Inc.
220 East 42nd Street
New York, NY 10017-5891
CUSTODIAN BANK State Street Bank and Trust Co.
225 Franklin Street
Boston, MA 02110
SHAREHOLDER State Street Bank and Trust Co.
SERVICING AGENT c/o NFDS
P.O. Box 419729
Kansas City, MO 64141-6729
INDEPENDENT PricewaterhouseCoopers LLP
ACCOUNTANTS 1177 Avenue of the Americas
New York, NY 10036-2798
LEGAL COUNSEL Peter D. Lowenstein, Esq.
Two Greenwich Plaza, Suite 100
Greenwich, CT 06830
BOARD OF Directors Jean Bernhard Buttner
John W. Chandler
Leo R. Futia
David H. Porter
Paul Craig Roberts
Nancy-Beth Sheerr
OFFICERS Jean Bernhard Buttner
Chairman and President
Raymond S. Cowen
Vice President
Charles Heebner
Vice President
David T. Henigson
Vice President and
Secretary/Treasurer
Jack M. Houston
Assistant Secretary/Treasurer
Stephen La Rosa
Assistant Secretary/Treasurer
An investment in The Value Line Tax Exempt Fund, Inc. Money Market Portfolio is
not guaranteed or insured by the U.S. government, and there is no assurance that
this portfolio will maintain its $1.00 per-share net asset value.
The financial statements included herein have been taken from the records of the
Fund 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).
501966
