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SEMI-ANNUAL REPORT
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August 31, 2000
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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:
National Bond Portfolio
The primary objective of the Value Line Tax Exempt National Bond 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, 2000, the fund's
total return was 6.82% which was higher than the 6.79% for the Lehman Municipal
Bond Index. Since its inception in March 1984, the total return for the national
bond portfolio, assuming the reinvestment of all dividends over that period, was
234.25%. This is equivalent to an average annual total return of 7.62%. The
Fund's SEC yield was 4.85% as of August 31, 2000.
Your fund's management continues to maintain a predominantly high grade
portfolio to minimize risk. Over 78% of the Fund's bonds are rated AA or better
by the major credit agencies, such as Moody's Investors Service and Standard and
Poor's Corporation, 10% are rated A, 8% are rated Baa or BBB, and 4% are not
rated. Your management continues to emphasize call protection in order to
maintain a high level of tax-free income over time for the shareholder.
Specifically, over 25% of the portfolio is invested in non-callable bonds. The
fund's highest concentrations of investments are in the insured,
housing-revenue, and industrial-revenue sectors respectively.
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 that have a high
degree of liquidity so as to ensure a constant net asset value of $1.00 per
share. The portfolio only consists of securities that carry the highest two
ratings of the major credit-rating agencies. The annualized yield was 2.84% as
of August 31, 2000, which is equivalent to a 4.70% taxable yield for those in
the 39.6% tax bracket. The average maturity of the portfolio was 10 days. It is
management's intention to maintain a short average maturity until there are no
concerns that the Federal Reserve Board will raise interest rates.
Short-term tax-exempt rates, as measured by the Bond Buyer's One-year Note
Index, rose from 4.02% on February 24th to 4.20% on August 31st. During this
same period of time, the yield on one-year taxable Treasury bills rose from
6.19% to 6.21%. Two increases in the Federal Funds rate by the Federal Reserve
Board, totaling 0.75% in the last six-months, have forced short-term interest
rates higher.
During the six months ended August 31, 2000, prices of fixed-income securities
increased as interest rates declined. Long-term, tax-exempt interest rates, as
measured by the Bond Buyer's 40-Bond Index, declined from 6.17% on February 29th
to 5.72% on August 31st. During this same period, long-term taxable rates, as
measured by the 30-year Treasury bond, dropped from 6.15% to 5.67%. The U.S.
government's surplus and the subsequent reduction of its publicly held debt has
driven long-term interest rates lower. The U.S. Treasury has reduced this debt
by issuing fewer new bonds and buying back long-term bonds in the secondary
market. The declining supply and the continued strong demand for Treasury bonds
has contributed to the drop in long-term yields.
In addition, the amount of new tax-exempt bonds issued so far this year is 20%
below the amount issued in the first eight months of 1999.This decline in supply
coupled with the strong demand from individual investors has contributed to the
drop in tax-exempt yields. As a result, the rally in the bond market over the
past six months has driven interest rates to levels below those of a year
earlier. As of August 31st, the Bond Buyer's 40-Bond Index was 5.72% compared to
5.78% a year ago and the 30-year Treasury bond was 5.67% compared to 6.06% a
year ago.
Year-to-date, tax-exempt bonds, as measured by the Lehman Municipal Bond Index,
have out performed taxable bonds, as measured by the Lehman U.S. Aggregate Bond
Index. For the eight months ended August 31st, the Lehman Municipal Bond Index
was up 7.56% compared to 6.45% for the Lehman U.S. Aggregate Bond
--------------------------------------------------------------------------------
2
<PAGE>
The Value Line Tax Exempt Fund, Inc.
Tax Exempt Fund Shareholders
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Index. The ratio of tax-exempt yields to Treasury yields remains high. Recently,
the yield of a triple-A rated 30-year tax-exempt bond was 5.48% which is 95.8%
of the 5.72% yield of the 30-year Treasury bond. This high ratio offers
investors a great opportunity to benefit from high tax-exempt income.
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 of fund
shares 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.
We thank you for your continued confidence in Value Line, and we look forward to
serving your investment needs in the future.
* Investment-grade bonds are rated Baa or higher by Moody's or BBB or higher by
Standard & Poor's.
Sincerely,
/s/ Jean Bernhard Buttner
Jean Bernhard Buttner
Chairman and President
September 28, 2000
Income from the Portfolio's may be subject to State and Local Taxes and the
Alternative Minimum Tax.
Economic Observations
The U.S. economy is now clearly proceeding along a slower growth track as we
move through the final months of the year. Evidence of this deceleration in
business activity can be found in the most recent figures on manufacturing,
retail spending, and employment. Overall, we estimate that GDP growth will
average 3.0%, or so, over the balance of the year. Thereafter, we would expect
the pace of economic activity to hold at these comparatively restrained levels
through 2001, as the succession of interest-rate hikes voted for by the Federal
Reserve Board over the past year and a half continues to have the hoped-for
effect of stabilizing the economy at comfortably lower growth levels.
Inflationary pressures, meanwhile, continue to be held in check for the most
part, with sustained increases in productivity and ongoing technological
innovations being at least partially responsible for this comparative pricing
stability. Nevertheless, a moderate increase in cost pressures could still
evolve over the next few quarters, particularly if energy prices continue their
uncontrolled ascent for several months and the aforementioned moderation in
economic growth fails to continue into 2001, two events that we do not currently
expect to take place.
Meanwhile, the Federal Reserve, taking note of the current slower pace of
business activity and the comparatively muted inflation figures, is likely to
maintain a relatively stable monetary stance over the next several quarters.
Indeed, should oil prices reverse course and move back down to the
$25-$30-a-barrel level, as seems logical given the expected moderation in
underlying demand, it is conceivable that the central bank's next move could be
to lower interest rates sometime next year.
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3
<PAGE>
The Value Line Tax Exempt Fund, Inc.
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Performance Data:*
National Bond Portfolio
Average Growth of
Annual an Assumed
Total Investement
Return of $10,000
------- ----------
1 year ended 6/30/00.......... .92% $10,092
5 years ended 6/30/00......... 4.78% $12,630
10 years ended 6/30/00......... 6.04% $17,971
Money Market Portfolio
Average Growth of
Annual an Assumed
Total Investement
Return of $10,000
------- -----------
1 year ended 6/30/00............. 2.65% $10,265
5 years ended 6/30/00............ 2.57% $11,351
10 years ended 6/30/00............ 2.73% $13,087
*The performance data quoted represent past performance and are no guarantee of
future performance. The average annual total return and growth of an assumed
investment of $10,000 includes dividends reinvested and capital gains
distributions accepted in shares. The investment return and principal value of
an investment will fluctuate so that an investment, when redeemed, may be worth
more or less than its original cost. The average annual total returns for the
one-year, five-year, and ten-year periods ended August 31, 2000, for the
National Bond Portfolio and the Money Market Portfolio were 5.59%, 5.04%, and
6.40% and 2.72%. 2.56% and 2.68%, respectively.
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4
<PAGE>
The Value Line Tax Exempt Fund, Inc.
Schedule of Investments August 31, 2000 (unaudited)
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<TABLE>
<CAPTION>
Principal
Amount National Bond Portfolio Rating Value
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG-TERM MUNICIPAL SECURITIES (94.9%)
Alabama (.8%)
$1,250,000 Colbert County-Northwest, Health Care Authority, Hospital Revenue
Refunding, Helen Keller Hospital, 8.75%, 6/1/09............................. Baa $ 1,289,300
Alaska (7.8%)
3,115,000 Energy Authority, Power Revenue Refunding, Bradley Lake,
Third Ser., 6.00%, 7/1/14 ................................................. Aaa 3,342,457
Housing Finance Corp.:
1,490,000 Collateralized Veteran's Mortgage Revenue, 1st Ser., 6.00%, 6/1/15. ........ Aaa 1,535,296
3,500,000 General Mortgage Revenue, Ser. A, 6.00%, 6/1/49 ............................ Aaa 3,514,210
1,930,000 Mortgage Revenue, Refunding, Ser. A-1, 5.50%, 12/1/17....................... Aaa 1,910,758
2,145,000 Valdez, Marine Terminal Revenue, Refunding BP Pipeline Inc. Project,
Ser. B, 5.50%, 10/1/28...................................................... AA* 2,048,496
------------
12,351,217
Arizona (7.4%)
4,800,000 Greenlee County, Industrial Development Authority, Pollution
Control Revenue, Refunding, Phelps Dodge Corp.
Project, 5.45%, 6/1/09 ..................................................... A 4,720,032
Maricopa County, Industrial Development Authority:
3,355,000 Multi-Family Housing, Multi-Family Housing Revenue,
Ser. A, 5.10%, 1/1/33....................................................... Aaa 2,995,713
3,895,000 Single-Family Housing, Single-Family Housing Revenue,
Ser. B, 6.20%, 12/1/30...................................................... Aaa 4,016,173
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11,731,918
California (1.1%)
1,755,000 Pleasant Hill, Redevelopment Agency, Residential Mortgage Revenue,
Refunding, 5.75%, 8/1/11.................................................... AA* 1,749,279
Colorado (3.0%)
3,880,000 Denver, City & County, Single Family Mortgage Revenue,
7.00%, 8/1/10+.............................................................. Aaa 4,296,169
500,000 Housing Finance Corp., Single Family Housing Revenue, Ser.,
D-3, 5.15%, 4/1/11++........................................................ Aa2 500,020
------------
4,796,189
Florida (1.1%)
1,640,000 Miami-Dade County, Housing Finance Authority Revenue, Home
Ownership Mortgage, Ser. A-1, 6%, 10/1/32................................... Aaa 1,688,183
</TABLE>
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5
<PAGE>
The Value Line Tax Exempt Fund, Inc.
Schedule of Investments
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<TABLE>
<CAPTION>
Principal
Amount National Bond Portfolio Rating Value
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Hawaii (2.6%)
$4,000,000 Department of Budget and Finance, Special Purpose Mortgage Revenue,
Kapiolani Health Care System, 6.40%, 7/1/13................................. Aaa $ 4,188,880
Illinois (6.5%)
Chicago:
2,380,000 Metropolitan Housing Development Corp. Mortgage Revenue,
Housing Development, Refunding, Ser. A, 6.85%, 7/1/22....................... AA* 2,476,033
1,490,000 Single Family Mortgage Revenue, Collateralized,
Ser. C-1, 6.30%, 9/1/29..................................................... Aaa 1,557,363
960,000 Development Finance Authority, Pollution Control Revenue,
Commonwealth Edison Project, 5.85%, 1/15/14................................. AAA* 1,019,530
2,000,000 Development Finance Authority, Solid Waste Disposal Revenue,
Waste Management Inc. Project, 5.05%, 1/1/10................................ Ba1 1,754,560
3,000,000 Metropolitan Pier & Exposition Authority, Hospitality Facilities Revenue,
McCormick Place Convention Center, 7.00%, 7/1/26............................ Aaa 3,573,570
------------
10,381,056
Indiana (2.3%)
3,000,000 Office Building Commission, Capital Complex, Revenue,
Ser. B, 7.40%, 7/1/15....................................................... Aaa 3,662,880
Iowa (2.4%)
3,380,000 Muscatine, Electric Revenue, 6.70%, 1/1/13.................................... Aaa 3,764,644
Kentucky (1.3%)
2,000,000 Housing Corp., Housing Revenue, Ser., B, 5.40%, 7/1/14........................ Aaa 2,003,520
Louisiana (1.3%)
1,900,000 Local Government Environmental Facilities and Community
Development Authority, Revenue, Capital Projects & Equipment
Acquisition, A, 6.30%, 7/1/30............................................... Aaa 2,106,435
Maine (2.5%)
4,000,000 Housing Authority, Mortgage Purchase Revenue, Ser., D-1,
5 1/4%, 11/15/15............................................................ Aa2 3,980,200
Maryland (1.0%)
1,605,000 Northeast Waste Disposal Authority, Solid Waste Revenue,
Montgomery County Project A, 6.30%, 7/1/16.................................. A2 1,652,669
Massachusetts (2.9%)
4,500,000 State Devolpment Finance Agency, Revenue, Boston University,
Ser. P, 6.00%, 5/15/59...................................................... A3 4,566,375
</TABLE>
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6
<PAGE>
The Value Line Tax Exempt Fund, Inc.
August 31, 2000 (unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount National Bond Portfolio Rating Value
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Michigan (2.5%)
$2,000,000 Housing Development Authority,Single Family Mortgage Revenue,
Ser. C, 5.95%, 12/1/14...................................................... AA* $ 2,011,460
1,995,000 Industrial Pollution Control Revenue, Northern Industrial Public
Services Co., Project, 5.70%, 10/1/03....................................... A 1,996,495
------------
4,007,955
Mississippi (.6%)
1,000,000 Home Corporation, Single Family Revenue, AMT, Mortgage, Ser. A-2%,
5.45%, 6/1/24++............................................................. Aaa 1,000,300
Nebraska (.5%)
755,000 Investment Finance Authority, Single Family Mortgage Revenue,
Ser. A, 5.977%, 11/27/16.................................................... Aaa 756,027
New York (2.3%)
1,000,000 Dormitory Authority, Montefiore Medical Center, FHA-Insured
Mortgage Hospital Revenue, Series 2000, 5.8%, 8/1/30........................ Aa2 1,003,530
2,505,000 Medical Care Facilities Finance Agency, Hospital and Nursing Home,
Insured Mortgage, Ser. D, 6.35%, 2/15/12 ................................... Aa2 2,664,293
------------
3,667,823
North Dakota (.7%)
1,140,000 Housing Finance Agency, Housing Finance Program, Home Mortgage
Finance Program 2000 Series A, Refunding, 6.20%, 7/1/14..................... Aa3 1,185,999
Ohio (1.3%)
2,000,000 Housing Finance Agency Residential Mortgage Revenue, 2000 Series F,
5 5/8%, 9/1/16.............................................................. Aaa 2,020,340
Oregon (3.5%)
Klamath Falls, Senior Lien Electric Revenue Refunding, Klamath Cogen:
3,000,000 5.50%,1/1/07................................................................ NR 2,840,010
2,900,000 5.75%,1/1/13 ............................................................... NR 2,661,795
------------
5,501,805
Pennsylvania (1.9%)
1,055,000 Allegheny County Residential Finance Authority, Single Family Mortgage
Revenue and Refunding, 1993 Series W, 4 7/8%, 11/1/14....................... Aaa 1,049,809
2,000,000 Carbon County Industrial Development Authority, Resource Recovery
Revenue Refunding, 2000 Series, (Panther Creek Partners Project),
6.65%, 5/1/10............................................................... BBB 2,026,340
------------
3,076,149
</TABLE>
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7
<PAGE>
The Value Line Tax Exempt Fund, Inc.
Schedule of Investments
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<TABLE>
<CAPTION>
Principal
Amount National Bond Portfolio Rating Value
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Rhode Island (1.3%)
$2,000,000 Economic Development Corp., Revenue Note Obligations (Providence
Place Mall Project), Senior Obligation Series, 6 1/8%, 7/1/20............... AA* $ 2,021,620
120,000 Housing and Mortgage Finance Corp., Homeownership Opportunity,
Ser. 3-A, 7.80%, 10/1/10.................................................... Aa2 122,528
------------
2,144,148
South Carolina (2.9%)
1,350,000 Piedmont Municipal Power Agency, Electric Revenue,
Refunding, 6.75%, 1/1/19.................................................... Aaa 1,558,575
1,000,000 Piedmont Municipal Power Agency, Electric Revenue,
Refining 6.25%, 10/1/21..................................................... Aaa 1,097,510
1,995,000 Three Rivers Solid Waste Authority, Solid Waste Disposal Facilities
Revenue, Series 1997, 5.30%, 1/1/27......................................... Aaa 1,891,898
------------
4,547,983
South Dakota (2.6%)
970,000 Housing Development Authority, Homeownership Mortgage, Ser. A,
5.40%, 5/1/14............................................................... Aa1 973,065
985,000 Housing Development Authority, Homeownership Mortgage, Ser. B,
Remarketable, 5.25%, 5/1/17................................................. Aa1 946,851
2,000,000 Housing Development Authority, Homeownership Mortgage, 2000 Ser. E,
6 1/4%, 5/1/21.............................................................. Aa1 2,055,260
------------
3,975,176
Texas (21.1%)
2,330,000 Austin, Hotel Occupancy Tax Revenue, Refunding, 5.625%, 11/15/19.............. Aaa 2,348,920
1,500,000 Bexar County Housing Finance Corp. Multi-Family Revenue,
Dymaxion & Marrach Park Apts. Series 2000A, 5.95%, 8/1/20................... Aaa 1,508,820
3,000,000 Brazos River Authority, Pollution Control Revenue, Refunding,
Utilities Electric Co., Ser. C, 5.55%, 6/1/30............................... Baa1 2,691,570
5,025,000 Brownsville, Utility Systems Priority Revenue, Refunding Ser. 1992,
6.25%, 9/1/14............................................................... Aaa 5,534,585
5,065,000 Harris County Hospital District, Revenue Refunding, Series 1990,
7.40%, 2/15/10.............................................................. Aaa 5,785,547
3,000,000 Lubbock, Housing Finance Corp., Single Family Mortgage Revenue,
Refunding, Ser. A, 8.00%, 10/1/21........................................... AAA* 3,925,770
3,000,000 Matagorda County Navigation District No. 1, Revenue Refunding,
(Reliant Energy Project), Ser. 1999B, 5.95%, 5/1/30......................... Baa1 2,749,080
1,865,000 Midlothian Water Distributors, General Obligation Unlimited,
5 1/4%, 9/1/14++............................................................ Aaa 1,852,225
700,000 Travis County, Health Facilities Development Corp., Hospital Revenue,
Daughters of Charity, 5.90%, 11/15/07....................................... Aa 738,388
6,025,000 Tyler Health Facilities Development Corp., Hospital Revenue,
East Texas Medical Center, Ser. 1997D, 5.375%, 11/1/27...................... Aaa 5,725,317
705,000 Veterans' Housing Assistance Program, (General Obligation),
5.4%, 12/1/14............................................................... Aa1 701,200
------------
33,561,422
</TABLE>
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8
<PAGE>
The Value Line Tax Exempt Fund, Inc.
August 31, 2000 (unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount National Bond Portfolio Rating Value
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Utah (.7%)
Housing Finance Agency, Single Family Mortgage:
$1,100,000 1999 Ser. F-2 Class 1, 5.875%, 7/1/29....................................... Aaa $ 1,112,551
Vermont (2.5%)
4,050,000 Educational & Health Buildings Finance Agency, Revenue, Middlebury
College Project, 5.00%, 11/1/38............................................. Aa3 3,616,245
305,000 Public Power Supply Authority, Revenue, McNeil Project,
Ser. C, 5%, 7/1/15.......................................................... Aaa 295,661
------------
3,911,906
Virginia (1.2%)
1,980,000 Pocahontas Parkway Association, Route 895 Connector, Toll Road
Revenue, Ser. A, 5.25%, 8/15/09............................................. Baa3 1,846,984
Wisconsin (5.3%)
Health and Educational Facilities Authority, Revenue,
(Aurora Health Care Inc.);
2,000,000 Ser. 1997, 5.25%, 8/15/17................................................... Aaa 1,926,060
4,050,000 Ser. 1999A, 5.60%, 2/15/29.................................................. A-* 3,408,480
3,080,000 Housing and Economic Development Authority, Housing Revenue,
Refunding, Ser. C, 5.80%, 11/1/13........................................... Aaa 3,124,136
------------
8,458,676
------------
TOTAL LONG-TERM MUNICIPAL SECURITIES
(Cost $150,387,881) ........................................................ 150,687,989
------------
</TABLE>
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9
<PAGE>
The Value Line Tax Exempt Fund, Inc.
Schedule of Investments
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount National Bond Portfolio Rating Value
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES (5.2%)
$2,500,000 Louisville and Jefferson County Regional Airport Authority Special
Facilities Revenue, Worldwide Forwarding Project, 4.35%, 1/1/29............. VMIG-1(1) $ 2,500,000
1,700,000 Maricopa County, Arizona, Pollution Control Revenue, Arizona Public
Service Co., Ser. D, 4.25%, 5/1/29.......................................... P1-1 (1) 1,700,000
2,500,000 New York City Municipal Water Finance Authority, Water & Sewer
System Revenue, Ser. C, 4.15%, 6/15/23...................................... VM1G-1(1) 2,500,000
1,500,000 Port Authority, Texas Industrial Development Corp. Pollution Control
Revenue, American Petrofina Inc., 4.30%, 5/1/03............................. P-1 (1) 1,500,000
------------
TOTAL SHORT-TERM MUNICIPAL SECURITIES
(Cost $8,200,000) ......................................................... 8,200,000
------------
TOTAL MUNICIPAL SECURITIES (100.1%)
(Cost $158,587,881) ....................................................... 158,887,989
LIABILITIES LESS CASH AND OTHER ASSETS (-.1%) ................................ (251,165)
------------
NET ASSETS (100.0%) .......................................................... $158,636,824
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE,
PER OUTSTANDING SHARE ...................................................... $ 10.20
============
</TABLE>
Rated by Moody's Investors Service except for those marked by an asterisk (*)
which are rated by Standard & Poor's.
(1) Variable rate notes are considered short-term obligations. Interest rates
change every 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, 2000.
+ A portion of this security has been segregated as collateral for when
issued securities. This collateral has a market value of $4,207,588.
++ When issued security.
See Notes to Financial Statements.
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10
<PAGE>
The Value Line Tax Exempt Fund, Inc.
August 31, 2000 (unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Money Market Portfolio Rating Value
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES (94.5%)
Alabama (3.8%)
$ 500,000 500,000 Industrial Development Authority Solid Waste Disposal Revenue,
Tuscaloosa Steel Corp. Project, 4.25%, 9/1/20........................... Aaa(2) $ 500,000
Alaska (3.8%)
500,000 Housing Finance Corp., State Capital Project, 1999 Ser. B,
4.00%, 12/1/00 .......................................................... Aaa 500,000
Arizona (3.8%)
500,000 Maricopa County, Pollution Control Revenue, Refunding, Arizona
Public Service Co., 1994 Ser B, 4.30%, 5/1/29............................ P-1(1) 500,000
California (5.2%)
700,000 Higher Education Loan Authority, Incoming Student Loan Revenue,
Ser. A, 4.30%, 6/1/01 ................................................... VMIG-(1) 700,000
Colorado (3.8%)
500,000 Housing Finance Authority, Refunding, Multifamily, Greenwood
Point, Ser. D, 4.25%, 10/15/16 ......................................... A1+*(2) 500,000
District of Columbia (4.5%)
600,000 General Obligation, Refunding, Ser. 1992A-1, 4.35%, 10/1/07................. VMIG-1(1) 600,000
Florida (4.5%)
600,000 Dade County Health Facilities Authority, Hospital Revenue Miami
Children's Hospital Project, 4.30%, 9/1/25............................... Aaa(2) 600,000
Georgia (4.5%)
600,000 Hapeville, Development Authority, Adjustable Tender Industrial
Development Revenue, (Hapeville Hotel Ltd.), 4.25% 11/1/15............... P-1(1) 600,000
Illinois (17.6%)
250,000 Chicago, Metropolitan Water, Reclamation District, 4.20%, 12/1/00........... Aa1 250,090
500,000 Development Financing Authority Revenue, Glenwood School for Boys,
4.20%, 2/1/33............................................................ AA-(2) 500,000
500,000 Educational Facilities Authority, Revenue, Northwestern Project,
4.25%, 12/1/25........................................................... VMIG-1(2) 500,000
600,000 Village of Schaumburg, General Obligation Variable Rate Demand,
Series 2000B, 4.25%, 5/12/15............................................. VMIG-1(2) 600,000
500,000 Village of South Barrington, Cook County, General Obligation Varable Rate
Demand, Series 1998, 4.20%, 12/1/27...................................... AA-*(2) 500,000
-----------
2,350,090
</TABLE>
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11
<PAGE>
The Value Line Tax Exempt Fund, Inc.
Schedule of Investments
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Money Market Portfolio Rating Value
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Indiana (4.5%)
$ 600,000 Health Facilities Financing Authority Revenue, Ascension Health Credit,
Ser. B, 4.60%, 11/15/39.................................................. Aa2(2) $ 600,000
Kentucky (2.2%)
300,000 Louisville and Jefferson County, Regional Airport Authority, Special
Facilities Revenue 4.35%, 1/1/29......................................... AAA*(1) 300,000
Louisiana (8.2%)
500,000 Public Facilities Authority Revenue, Industrial Development,
Kenner Hotel Limited Project, 4.25%, 12/01/15............................ Aa3(1) 500,000
600,000 Saint Charles Parish, Pollution Control Revenue, (Shell Oil Co. Project),
Ser. 1992A, 4.45%, 10/1/22............................................... VMIG-1(1) 600,000
-----------
1,100,000
Massachusetts (4.5%)
600,000 State Health and Educational Facilities Authority Revenue,
Bentley College issue K, 7.50%, 7/1/30................................... AA*(2) 600,000
New York (1.5%)
200,000 New York City, General Obligations, Subser B-2, 4.15%, 8/15/03.............. VMIG-1(1) 200,000
South Carolina (4.5%)
600,000 Berkley County, Exempt Facilities, Industrial Revenue, Amoco
Chemical Co. Project, 4.45%, 4/1/27...................................... A1+*(1) 600,000
Tennessee (4.9%)
650,000 Rutherford County Industrial Development Board, Industrial Development
Revenue, Series 1994, (Square D Co. Project), 4.20%. 4/1/17............. AA-*(2) 650,000
Texas (9.0%)
Harris County:
600,000 Health Facilities Development Corp., Revenue, Texas Childrens Hospital,
4.30%, 10/1/29........................................................... VMIG-1(2) 600,000
600,000 Trinity River Authority, Pollution Control Revenue, Texas Utilities
Electric Co. Project, Ser. A, 4.45%, 3/1/26.............................. VMIG-1(1) 600,000
-----------
1,200,000
Utah (3.7%)
500,000 Emery County, Pollution Control Revenue, Refunding, Pacificorp Project,
4.30%, 11/1/24........................................................... VMIG-1(1) 500,000
-----------
</TABLE>
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12
<PAGE>
The Value Line Tax Exempt Fund, Inc.
August 31, 2000 (unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Money Market Portfolio Rating Value
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL SHORT-TERM MUNICIPAL SECURITIES (94.5%)
(Cost $12,600,090) ...................................................... $12,600,090
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES (5.5%) ...................................................... 736,138
-----------
NET ASSETS (100.0%) ........................................................ $13,336,228
===========
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, 2000.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
13
<PAGE>
The Value Line Tax Exempt Fund, Inc.
Statement of Assets and Liabilities
at August 31, 2000 (unaudited)
--------------------------------------------------------------------------------
Portfolio
--------------------------
National Money
Bond Market
--------------------------
(In thousands
except per share
amount)
Assets:
Investment securities at value
(Cost $158,588 and
amortized cost $12,600) .................... $ 158,888 $ 12,600
Cash ......................................... 604 (31)
Receivable for securities sold ............... 300 600
Interest Receivable .......................... 1,937 78
Receivable for Trust shares sold ............. 690 140
--------- ---------
Total Assets ........................... 162,419 13,387
--------- ---------
Liabilities:
Payable for securities
purchased .................................. 3,362 --
Dividends payable to
shareholders ............................... 200 --
Payable for Trust shares
repurchased ................................ -- 9
Accrued expenses:
Advisory fee ............................... 66 6
Other ...................................... 154 36
--------- ---------
Total Liabilities ...................... 3,782 51
--------- ---------
Net Assets ................................... $ 158,637 $ 13,336
========= =========
Net Assets:
Capital stock at $.01 par value
(Authorized 65,000,000 shares
and 125,000,000 shares
respectively; outstanding
15,548,685 shares and
13,374,032 shares,
respectively) .............................. $ 155 $ 134
Additional paid-in capital ................... 163,277 13,212
Accumulated net realized loss
on investments ............................. (5,095) (10)
Net unrealized appreciation of
investments ................................ 300 --
--------- ---------
Net Assets ................................... $ 158,637 $ 13,336
========= =========
Net Asset Value, Offering and
Redemption Price, per
Outstanding Share .......................... $ 10.20 $ 1.00
========= =========
Statement of Operations
for the Six Months Ended August 31, 2000 (unaudited)
--------------------------------------------------------------------------------
Portfolio
-------------------------
National Money
Bond Market
-------------------------
(In thousands)
Investment Income:
Interest ..................................... $ 4,374 $ 275
-------- --------
Expenses:
Advisory fee ................................. 381 33
Service and distribution
plan fee ................................... 65 6
Transfer agent fees .......................... 39 12
Audit and legal fees ......................... 14 10
Printing and stationery ...................... 17 6
Registration and filing fees ................. 12 11
Custodian fees ............................... 12 1
Postage ...................................... 7 2
Directors' fees and expenses ................. 4 4
Other ........................................ 31 9
-------- --------
Total expenses before fees
waived and custody
credits .............................. 582 94
Less: service and
distribution plan fee
waived ............................... -- (6)
Less: custody credits .................. (7) (1)
-------- --------
Net Expenses ........................... 575 87
-------- --------
Net Investment Income ........................ 3,799 188
-------- --------
Net Realized and Unrealized
Gain (Loss) on Investments:
Net Realized Loss .......................... (73) --
Change in Unrealized
Appreciation
(Depreciation) ........................... 6,362 --
-------- --------
Net Realized Loss and Change
in Unrealized Appreciation
(Depreciation) on
Investments ................................ 6,289 --
-------- --------
Net Increase in Net
Assets from Operations ..................... $ 10,088 $ 188
======== ========
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, 2000 (unaudited),
and the Year Ended February 29, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
National Bond Money Market
Portfolio Portfolio
------------------------------------------------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
August 31, February 29, August 31, February 29,
2000 2000 2000 2000
------------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C>
Operations:
Net investment income ........................................ $ 3,799 $ 7,960 $ 188 $ 340
Net realized loss on investments ............................. (73) (5,005) -- --
Change in unrealized appreciation (depreciation) ............. 6,362 (10,525) -- --
------------------------------------------------------------
Net increse (decrease) in net assets from operations ......... 10,088 (7,570) 188 340
------------------------------------------------------------
Distributions to Shareholders:
Net investment income ........................................ (3,799) (8,009) (188) (341)
Net realized gains ........................................... -- (941) -- --
------------------------------------------------------------
Net decrease in net assets from distributions ................ (3,799) (8,950) (188) (341)
------------------------------------------------------------
Capital Share Transactions:
Net proceeds from sale of shares ............................. 17,355 13,685 6,573 7,406
Net proceeds from reinvestment of
distributions to shareholders .............................. 2,507 5,923 188 341
Cost of shares repurchased ................................... (18,028) (34,591) (6,881) (9,546)
------------------------------------------------------------
Net increase (decrease) in net assets from capital
share transactions ......................................... 1,834 (14,983) (120) (1,799)
------------------------------------------------------------
Total Increase (Decrease) in Net Assets ........................ 8,123 (31,503) (120) (1,800)
Net Assets:
Beginning of period .......................................... 150,514 182,017 13,456 15,256
------------------------------------------------------------
End of period ................................................ $ 158,637 $ 150,514 $ 13,336 $ 13,456
============================================================
Undistributed Net Investment Income
at end of period ............................................. $ -- $ -- $ -- $ --
============================================================
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
15
<PAGE>
The Value Line Tax Exempt Fund, Inc.
Notes to Financial Statements
--------------------------------------------------------------------------------
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 National Bond (formerly the
High-Yield Portfolio) and Money Market Portfolios. The primary investment
objective of the National Bond 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: National Bond Portfolio -- The investments are valued
each business day by an independent pricing service (the "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 market 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 National Bond Portfolio are paid 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, 2000 (unaudited)
--------------------------------------------------------------------------------
(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.
(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, in accordance with federal income-tax
regulations, is earned from settlement date and recognized on the accrual basis.
Additionally, 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:
National Bond
Portfolio
---------------------
Six
Months Year
Ended Ended
August 31, February
2000 29,
(unaudited) 2000
---------------------
(in thousands)
Shares sold .................................... 1,741 1,344
Shares issued to shareholders in
reinvestment of distributions ................ 251 582
---------------------
1,992 1,926
Shares repurchased ............................. (1,818) (3,403)
---------------------
Net increase (decrease) ........................ 174 (1,477)
=====================
Money Market
Portfolio
---------------------
Six
Months Year
Ended Ended
August 31, February
2000 29,
(unaudited) 2000
---------------------
(in thousands)
Shares sold .................................... 6,573 7,406
Shares issued to shareholders in
reinvestment of distributions ................ 188 341
---------------------
6,761 7,747
Shares repurchased ............................. (6,881) (9,546)
---------------------
Net decrease ................................... (120) (1,799)
=====================
3. Purchases and Sales of Securities
Purchases and sales of municipal securities were as follows:
National Bond
Portfolio
---------------
Six Months
Ended
August 31, 2000
(unaudited)
---------------
(in thousands)
PURCHASES:
Long-term obligations ............................ $47,416
Short-term obligations ........................... 19,700
-------
$67,116
=======
MATURITIES OR SALES:
Long-term obligations ............................ $17,500
Short-term obligations ........................... 47,935
-------
$65,435
=======
Money Market
Portfolio
---------------
Six Months
Ended
August 31, 2000
(unaudited)
---------------
(in thousands)
PURCHASES:
Municipal short-term obligations ................. $11,249
-------
MATURITIES OR SALES:
Municipal short-term obligations ................. $11,987
=======
--------------------------------------------------------------------------------
17
<PAGE>
The Value Line Tax Exempt Fund, Inc.
Notes to Financial Statements August 31, 2000 (unaudited)
--------------------------------------------------------------------------------
At August 31, 2000, the aggregate cost of investments for federal income-tax
purposes was $158,590,109 for the National Bond Portfolio and $12,600,090 for
the Money Market Portfolio.
The aggregate appreciation and depreciation of investments in the National Bond
Portfolio at August 31, 2000, based on a comparison of investment values and
their costs for federal income-tax purposes, was $2,735,485 and $2,435,377,
respectively, resulting in a net unrealized appreciation of $300,108. There was
no unrealized appreciation or depreciation in the Money Market Portfolio.
At February 29, 2000, for federal income-tax purposes the National Bond
Portfolio had a capital-loss carryover of approximately $4,285,227 which will
expire in 2008, and the Money Market Portfolio had a capital-loss carryover of
$10, 140 of which $998 will expire in 2004, $1,285 in 2005, $2,067 in 2006 and
$5,267 in 2007 and $523 in 2008. To the extent future capital gains are offset
by such capital losses, the Portfolios do not anticipate distributing any such
gains to shareholders.
For the year ended February 29, 2000 permanent book tax differences due to the
expiration of capital-loss carryovers of $27,649 in the Money Market Portfolio
were reclassified from accumulated net realized loss on investments to
additional paid-in-capital.
The National Bond Portfolio elected to defer post October capital losses of
$470,486.
4 Investment Advisory Contract and Transactions With Affiliates
An advisory fee of $380,941 and $33,318 was paid or payable by the National Bond
Portfolio and the Money Market Portfolio, respectively, to Value Line, Inc. (the
"Adviser") for the six months ended August 31, 2000. This was computed at an
annual rate of .50% of the average daily net assets of the portfolios of the
Fund. 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.
For the six months ended August 31, 2000, the Fund's expenses were reduced by
$6,983 and $1,053 for the National Bond Portfolio and Money Market Portfolio,
respectively, under a custody credit arrangement with the custodian.
At a special meeting of shareholders held on June 15, 2000, the shareholders
approved the adoption of a Service and Distribution Plan (the "Plan") effective
July 1, 2000. The Plan, adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940, provides for the payment of certain expenses incurred by
Value Line Securities, Inc. (the "Distributor"), a wholly-owned subsidiary of
the Adviser, in advertising, marketing and distributing the Fund's shares and
for servicing the Fund's shareholders at an annual rate of 0.25% of the Fund's
average daily net assets. Fees amounting to $65,364 were paid or payable to the
Distributor by the National Bond Portfolio under this Plan for the period from
July 1 to August 31, 2000. Fees amounting to $5,617 payable to the Distributor
by the Money Market Portfolio under this Plan for the period from July 1 to
August 31, 2000, were voluntarily waived by the Distributor.
Certain officers and directors of the Adviser and the Distributor are also
officers and a Director of the Fund.
At August 31, 2000, the Adviser and/or affiliated companies owned 278,405 shares
of the National Bond Portfolio common shares, representing 1.79% of the
outstanding shares and 1,013 shares of the Money Market Portfolio representing
.01% of the outstanding shares. In addition, certain officers and directors of
the Fund owned 100,506 shares of the National Bond Portfolio, representing .65%
of the outstanding shares and 7,725 shares of the Money Market Portfolio,
representing .06% 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>
For the Six National Bond Portfolio(3)
Months Ended Years Ended on Last Day of February,
August 31, 2000 ------------------------------------------------------------------
(unaudited) 2000 1999 1998 1997 1996
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $ 9.79 $ 10.80 $ 11.04 $ 10.78 $ 10.82 $ 10.40
--------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income....................... .25 .49 .52 .54 .55 .55
Net gains or losses on securities
(both realized and unrealized)............ .41 (.95) .03 .36 (.04) .42
--------------------------------------------------------------------------------
Total from investment operations ......... .66 (.46) .55 .90 .51 .97
--------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income ....... (.25) (.49) (.52) (.54) (.55) (.55)
Distributions from capital gains ........... -- (.06) (.27) (.10) -- --
--------------------------------------------------------------------------------
Total distributions ...................... (.25) (.55) (.79) (.64) (.55) (.55)
--------------------------------------------------------------------------------
Net asset value, end of period ................. $ 10.20 $ 9.79 $ 10.80 $ 11.04 $ 10.78 $ 10.82
================================================================================
Total return ................................... 6.82%+ (4.30)% 4.88% 8.56% 4.86% 9.55%
================================================================================
Ratios/Supplemental Data:
Net assets, end of period (in thousands) ....... $158,637 $150,514 $182,017 $188,109 $193,641 $222,760
Ratio of expenses to average net assets......... .76%(2)* .64%(2) .63%(2) .63%(1) .60%(1) .62%
Ratio of net investment income
to average net assets......................... 4.98%* 4.77% 4.71% 4.98% 5.13% 5.22%
Portfolio turnover rate ........................ 33% 163% 192% 119% 73% 95%
</TABLE>
+ Not annualized for six month period only.
* Annualized.
(1) Before offset of custody credits.
(2) Ratio reflects expenses grossed up for custody credit arrangement. The ratio
of expenses to average net assets net of custody credits would have been .75%*
for the six months ended August 31, 2000 and .63% for the year ended February
29, 2000.
(3) Formerly the High-Yield Portfolio.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
19
<PAGE>
The Value Line Tax Exempt Fund, Inc.
Financial Highlights
--------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
For the Six Money Market Portfolio
Months Ended Years Ended on Last Day of February,
August 31, 2000 -----------------------------------------------------------------
(unaudited) 2000 1999 1998 1997 1996
------- ------- ------- ------- ------- -------
<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...................... .01 .02 .02 .03 .03 .03
---------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income ...... (.01) (.02) (.02) (.03) (.03) (.03)
---------------------------------------------------------------------------------
Net asset value, end of period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=================================================================================
Total return .................................. 1.43%+ 2.38% 2.39% 2.65% 2.56% 2.92%
=================================================================================
Ratios/Supplemental Data:
Net assets, end of period (in thousands) ...... $13,336 $13,456 $15,256 $16,758 $19,668 $21,777
Ratio of expenses to average net assets........ 1.32%(2)(3)* 1.15%(2) 1.18%(2) 1.03%(1) 1.00%(1) 1.01%
Ratio of net investment income
to average net assets........................ 2.82%(3) 2.33% 2.38% 2.63% 2.54% 2.89%
</TABLE>
+ Not annualized for six month period only.
* Annualized.
(1) Before offset of custody credits.
(2) Ratio reflects expenses grossed up for custody credit arrangement. The ratio
of expenses to average net assets net of custody credits would have been 1.30%
for the six months ended August 31, 2000 and 1.14% for the year ended February
29, 2000.
(3) Net of waived service and distribution plan fee. Had the expense been paid
by the Money Market Portfolio for the six months ended August 31, 2000, the
ratio of expense to average net assets would have been 1.40%* and the ratio of
net investment income to average daily net assets would have been 2.74%*.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
20
<PAGE>
================================================================================
INVESTMENT ADVISER Value Line, Inc.
220 East 42nd Street
New York, NY 10017-5891
DISTRIBUTOR Value Line Securities, Inc.
220 East 42nd Street
New York, NY 10017-5891
CUSTODIAN BANK State Street Bank and Trust Co.
225 Franklin Street
Boston, MA 02110
SHAREHOLDER State Street Bank and Trust Co.
SERVICING AGENT c/o NFDS
P.O. Box 219729
Kansas City, MO 64121-9729
INDEPENDENT PricewaterhouseCoopers LLP
ACCOUNTANTS 1177 Avenue of the Americas
New York, NY 10036
LEGAL COUNSEL Peter D. Lowenstein, Esq.
Two Sound View Drive, Suite 100
Greenwich, CT 06830
DIRECTORS Jean Bernhard Buttner
John W. Chandler
Frances T. Newton
Francis C. Oakley
David H. Porter
Paul Craig Roberts
Marion N. Ruth
Nancy-Beth Sheerr
OFFICERS Jean Bernhard Buttner
Chairman and President
Bruce H. Alston
Vice President
Charles Heebner
Vice President
David T. Henigson
Vice President,
Secretary/Treasurer
Joseph Van Dyke
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 opinion thereon.
This 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).
#514733
