<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 Price Waterhouse LLP
ACCOUNTANTS 1177 Avenue of the Americas
New York, NY 10036
LEGAL COUNSEL Peter D. Lowenstein, Esq.
Two Greenwich Plaza, Suite 100
Greenwich, CT 06830
TRUSTEES Jean Bernhard Buttner
John W. Chandler
Leo R. Futia
Charles E. Reed
Paul Craig Roberts
Nancy-Beth Scheerr
OFFICERS Jean Bernhard Buttner
CHAIRMAN AND 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
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 TRUST
(OBTAINABLE FROM THE DISTRIBUTOR).
VLF702100
------------------------------------
ANNUAL REPORT
------------------------------------
FEBRUARY 28, 1997
----------------------------------------
VALUE LINE
NEW YORK
TAX EXEMPT
TRUST
[LOGO]
<PAGE>
VALUE LINE NEW YORK TAX EXEMPT TRUST
To Our Value Line
- -------------------------------------------
TO OUR SHAREHOLDERS:
The primary objective of Value Line New York Tax Exempt Trust is to provide
investors with maximum income exempt from New York State, New York City and
Federal personal income taxes, without undue risk to principal. During the year
ended February 28, 1997, the Trust's total return was up 3.73%. Since its
inception in July, 1987, the total return for the Trust, assuming the
reinvestment of all dividends over that period, was 98.81%. This is equivalent
to an average annual total return of 7.37%. The Trust's SEC yield as of February
28, 1997 was 4.49%, slightly below the average SEC yield of 4.51% for all New
York State municipal debt funds ranked by Lipper Analytical Services.
During the year ended February 28, 1997, prices of fixed-income securities
declined as interest rates rose. Long-term, tax-exempt interest rates, as
measured by the Bond Buyer's 40-Bond Index, rose slightly from 5.71% on February
29, 1996 to 5.76% on February 28, 1997. During this same period, long-term
taxable rates, as measured by the 30-year Treasury bond, increased from 6.47% to
6.80%. The yield of the 30-year Treasury bond rose to 6.99% on March 19, 1997
and the yield of the Bond Buyer 40-Bond Index rose to 5.88% on January 27, 1997.
On March 25, 1997, the Fed increased the Federal Funds rate from 5.25% to 5.50%
which appears to be the first step in the Fed's pre-emptive move to keep
inflation contained. The future direction of interest rates will be influenced
by the strength of the economy and the actions taken by the Federal Reserve.
During the past year, tax-exempt bonds have outperformed government bonds. For
the twelve months ended February 28, 1997, the Lehman Municipal Bond Index
increased 5.51% compared to 4.53% for the Lehman Government Index. The low
supply of new issues and the continuing demand from investors for tax-exempt
income contributed to this superior performance. This relative performance is
more significant after taxes since the income on most tax-exempt bonds is free
from Federal income taxes whereas the return on government bonds is taxable. The
most volatile time of the year for tax-exempt bonds, when yields rose, came
during the 1996 election campaign. Uncertainties concerning tax proposals,
specifically the flat tax and tax cuts, temporarily reduced the attractiveness
of tax-exempt securities. These concerns subsided after the elections.
Management continues to avoid securities rated below investment grade (defined
as Baa or higher by Moody's Investors Service and as BBB or higher by Standard &
Poor's Corporation). As of February 28, 1997, the market value of the Trust's
portfolio consisted of 39% AAA bonds, 31% AA bonds, 7% MIG1 rated bonds, and 21%
Baa or BBB rated bonds. During the past twelve months, the yield differential,
or spread, between high-grade and low-grade bonds has narrowed. As a result,
your Trust's management has increased holdings of AAA and AA rated bonds while
decreasing holdings of Baa or BBB rated bonds. In addition, 21% of the portfolio
is invested in high-coupon, non-callable bonds. The portfolio's highest
concentrations of investments are in the insured, housing-revenue,
education-revenue, general obligation, electric-revenue, and hospital-revenue
sectors.
- --------------------------------------------------------------------------------
2
<PAGE>
VALUE LINE NEW YORK TAX EXEMPT TRUST
NEW YORK TAX EXEMPT TRUST SHAREHOLDERS
- -------------------------------------------
The municipal bond market is one of the most fragmented and complex sectors of
the American capital markets. We believe that most investors seeking tax-free
income are best served by a mutual fund, whose advantages include professional
management, diversification, liquidity, low transaction costs, accurate
record-keeping, automatic reinvestment of dividends, and availability in
small-dollar amounts. In addition to these features, Value Line New York Tax
Exempt Trust has the additional advantage of carrying no sales or redemption
fees; it is a true no-load fund.
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
April 28, 1997
ECONOMIC OBSERVATIONS
The current economic expansion is now entering its seventh year. Although this
does not yet qualify as the longest peacetime period of growth on record (both
the 1960s and the 1980s experienced somewhat longer upcycles), it is still quite
noteworthy, especially since there are as yet few signs that this lengthy run of
uninterrupted prosperity is about to draw to a close. In fact, recent reports
show that there is still a good deal of strength around, with high doses of
consumer confidence, continuing solid job growth, and healthy levels of retail,
housing, and manufacturing activity pointing to economic growth that will likely
stay above 2% for most, if not all, of 1997.
Inflation, meanwhile, continues to be under control, with prices at both the
producer (or wholesale) and consumer levels either falling or going up only
modestly. This healthy inflation trend, which is remarkable given the longevity
of the business expansion, is, moreover, showing few signs of running its
course. Underscoring our optimism in this area is the fact that there is still a
lack of serious shortages on either the labor or the raw materials fronts,
although we do note that the recent pickup in wage pressures could, if
unchecked, pose some threat down the road.
Interest rates, meanwhile, reflecting the likely moderate pace of upcoming
economic growth and the benign nature of inflation, are unlikely to change all
that much over the next year. Nevertheless, we caution that recent remarks by
Federal Reserve Chairman Alan Greenspan, in which he indicated that the Fed has,
in the past, occasionally raised rates before higher inflation actually took
hold, and the subsequent one-quarter of a percentage point increase in
short-term interest rates, would seem to suggest that the central bank will not
be shy about tightening the credit reins further this year, if it sees the need.
An additional upward move in rates, if sufficiently pronounced, would not be
good news for either the stock or the bond markets, or, ultimately, for the U.S.
economy.
- --------------------------------------------------------------------------------
3
<PAGE>
VALUE LINE NEW YORK TAX EXEMPT TRUST
- -------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LEHMAN MUNI NEW YORK TAX
<S> <C> <C>
7/2/1987 $10,000 $10,000
2/28/1988 $10,662 $10,477
1989 $11,324 $11,165
1990 $12,486 $11,954
1991 $13,637 $12,651
1992 $14,999 $14,064
1993 $17,063 $16,536
1994 $18,008 $17,525
1995 $18,347 $17,423
1996 $20,374 $19,166
1997 $21,496 $19,881
</TABLE>
(Period covered is from 7/2/87 to 2/28/97)
* The Lehman Brothers Aggregate Bond Index is representative of the broad
fixed-income market. It includes government, investment-grade corporate, and
mortgage-backed bonds. The returns for the Index do not reflect expenses,
which are deducted from the Trust's returns.
- --------------------------------------------------------------------------------
4
<PAGE>
VALUE LINE NEW YORK TAX EXEMPT TRUST
- -------------------------------------------
PERFORMANCE DATA:
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN
12/31/96 2/28/97
--------------------
<S> <C> <C>
1 year ended.................. 2.35% 3.73%
5 years ended................. 6.68% 7.17%
From 7/2/87* to............... 7.39% 7.37%
* Commencement of operations.
</TABLE>
THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND ARE NO GUARANTEE OF
FUTURE PERFORMANCE. THE AVERAGE ANNUAL TOTAL RETURN INCLUDES DIVIDENDS
REINVESTED AND CAPITAL GAINS DISTRIBUTIONS ACCEPTED IN SHARES. THE INVESTMENT
RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN
INVESTMENT, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN ITS ORIGINAL COST.
- --------------------------------------------------------------------------------
5
<PAGE>
VALUE LINE NEW YORK TAX EXEMPT TRUST
Schedule of Investments
- -------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL RATING
AMOUNT (UNAUDITED) VALUE
<C> <S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
LONG-TERM MUNICIPAL SECURITIES (92.5%)
NEW YORK STATE (74.1%)
$ 1,000,000 Albany County, General Obligations, 5.75%, 6/1/11........... Aaa $ 1,031,020
300,000 Battery Park City Authority, Revenue, Ser. A, 5.40%,
11/1/09................................................... Aaa 304,233
Dormitory Authority, Revenue:
City University System:
1,990,000 Crossover Refunding, Ser. D, 5.75%, 7/1/07.............. Baa1 2,033,402
1,000,000 Revenue Refunding, 3rd General Resolution, 5.50%,
7/1/24.................................................. Aaa 972,380
Court Facilities Lease, Ser. A:
1,000,000 5.50%, 5/15/10.......................................... Baa1 982,420
1,000,000 5.625%, 5/15/13......................................... Baa1 978,590
555,000 Long Island University, Asset Guaranty, 5.50%, 9/1/10..... AA* 559,706
1,000,000 Montefiore Medical Center, 6.00%, 2/1/09.................. Aaa 1,069,470
150,000 Rochester Hospital, 5.55%, 8/1/12......................... AAA* 148,158
500,000 St. John's University, 5.20%, 7/1/09...................... Aaa 498,565
1,000,000 State University Educational Facilities, Ser. C, 5.40%,
5/15/23................................................... Baa1 917,440
1,250,000 Upstate Community Colleges, Ser. A, 6.20%, 7/1/15......... Baa1 1,266,050
500,000 W.K. Nursing Home Corp., 5.75%, 2/1/10.................... AAA* 513,895
1,500,000 Hempstead, Industrial Development Agency, Resource Recovery
Revenue, Refunding, American Fuel Co. Project, 4.875%,
12/1/06+.................................................. Aaa 1,482,135
1,090,000 Housing Finance Agency, Revenue, Multi-Family, Mortgage
Housing, Ser. C, Refunding, 6.45%, 8/15/14................ Aa 1,131,060
Medical Care Facilities Finance Agency, Revenue, Refunding:
1,000,000 Mental Health Service, 5.375%, 2/15/14.................... Aaa 971,280
1,000,000 Presbyterian Hospital, Ser. A, 5.25%, 8/15/14............. Aa 959,150
700,000 Saint Mary's Hospital, Ser. A, 6.00%, 11/1/09............. Aaa 738,143
Mortgage Agency, Revenue Refunding, Homeowner Mortgage:
525,000 Ser. 61, 5.60%, 10/1/11................................... Aa2 523,005
1,000,000 Ser. 55, 5.95%, 10/1/17................................... Aa2 1,021,110
960,000 Ser. 30-A, 4.375%, 10/1/23................................ Aa2 926,304
1,000,000 Niagara Falls, Water Treatment Plant, 7.25%, 11/1/11........ Aaa 1,182,930
890,000 Onondaga County, General Obligations, Ser. A, 5.85%,
5/1/10.................................................... Aa 932,542
500,000 Power Authority, Revenue and General Purpose Refunding, Ser.
W, 6.50%, 1/1/08.......................................... Aa 559,030
500,000 Thruway Authority, Highway and Bridge Trust Fund, Ser. A,
6.00%, 4/1/07+............................................ Aaa 539,060
1,500,000 Triborough Bridge and Tunnel Authority, Revenue, Convention
Center Project, Ser. E, 6.00%, 1/1/11..................... Baa1 1,538,205
500,000 Urban Development Corp., Refunding, Corporate Purpose,
Senior Lien, 5.125%, 1/1/09............................... Aaa 496,590
---------------
TOTAL NEW YORK STATE........................................ 24,275,873
---------------
</TABLE>
+ WHEN ISSUED SECURITY.
- --------------------------------------------------------------------------------
6
<PAGE>
VALUE LINE NEW YORK TAX EXEMPT TRUST
FEBRUARY 28, 1997
- -------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL RATING
AMOUNT (UNAUDITED) VALUE
<C> <S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
NEW YORK CITY (13.6%)
General Obligation:
$ 400,000 Ser. F, 6.50%, 2/15/08.................................... Baa1 $ 423,592
500,000 Ser. E, 6.20%, 8/1/08..................................... Aaa 551,260
1,000,000 Ser. H, Refunding, 6.125%, 8/1/25......................... Baa1 991,300
1,500,000 Housing Development Corp., Multi-Family Housing Revenue,
Ser. A, 5.625%, 5/1/12.................................... Aa 1,487,040
Industrial Development Agency:
Civic Facilities Revenue:
420,000 New School for Social Research Project, 6.00%, 9/1/09... Aaa 444,629
500,000 USTA National Tennis Center Project, 6.40%, 11/15/08.... Aaa 549,105
---------------
TOTAL NEW YORK CITY......................................... 4,446,926
---------------
PUERTO RICO (4.8%)
1,500,000 Electric Power Authority, Power Revenue, Ser. T, 6.125%,
7/1/09.................................................... Baa1 1,577,145
---------------
TOTAL LONG-TERM MUNICIPAL SECURITIES........................ $ 30,299,944
---------------
</TABLE>
- --------------------------------------------------------------------------------
7
<PAGE>
VALUE LINE NEW YORK TAX EXEMPT TRUST
SCHEDULE OF INVESTMENTS FEBRUARY 28, 1997
- -------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL RATING
AMOUNT (UNAUDITED) VALUE
<C> <S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL SECURITIES (12.6%)
NEW YORK STATE (3.1%)
$ 1,000,000 Energy Research & Development Authority, Pollution Control
Revenue, Niagara Mohawk Power, Ser. A, 3.55%, 7/1/15...... A1+(1) $ 1,000,000
---------------
NEW YORK CITY (9.5%)
General Obligation:
200,000 Subser. A-8, 3.45%, 8/1/17................................ VMIG1(1) 200,000
800,000 Subser. B-2, 3.55%, 8/15/18............................... VMIG1(1) 800,000
300,000 Subser. B-7, 3.45%, 8/15/18............................... VMIG1(1) 300,000
700,000 Ser. B, 3.55%, 10/1/20.................................... VMIG1(1) 700,000
400,000 Ser. C, 3.55%, 10/1/23.................................... VMIG1(1) 400,000
700,000 Municipal Water Finance Authority, Water and Sewer System
Revenue, Ser. C, 3.45%, 6/15/23........................... VMIG1(1) 700,000
---------------
TOTAL NEW YORK CITY......................................... 3,100,000
---------------
TOTAL SHORT-TERM MUNICIPAL SECURITIES....................... 4,100,000
---------------
TOTAL MUNICIPAL SECURITIES (105.1%)
(COST $33,314,086)........................................ 34,399,944
EXCESS OF LIABILITIES OVER CASH AND OTHER ASSETS (-5.1%).... (1,654,933)
---------------
NET ASSETS (100.0%)......................................... $ 32,745,011
---------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE,
PER OUTSTANDING SHARE..................................... $ 10.04
---------------
</TABLE>
RATED BY MOODY'S INVESTORS SERVICE EXCEPT FOR THOSE MARKED BY AN ASTERISK (*)
WHICH ARE RATED BY STANDARD & POOR'S.
VARIABLE RATE DEMAND NOTES ARE CONSIDERED SHORT-TERM OBLIGATIONS. INTEREST RATES
CHANGE EVERY (1) DAY. THESE SECURITIES ARE SECURED BY EITHER LETTERS OF CREDIT
OR OTHER CREDIT SUPPORT AGREEMENTS FROM BANKS. THE RATES LISTED ARE AS OF
FEBRUARY 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
8
<PAGE>
VALUE LINE NEW YORK TAX EXEMPT TRUST
STATEMENT OF ASSETS AND LIABILITIES
AT FEBRUARY 28, 1997
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
DOLLARS
(IN THOUSANDS
EXCEPT
PER-SHARE
AMOUNT)
---------------
<S> <C>
ASSETS:
Investment securities, at value
(Cost $33,314)............................................ $ 34,400
Cash........................................................ 93
Interest receivable......................................... 375
Receivable for securities sold.............................. 40
Receivable for Trust shares sold............................ 12
---------------
TOTAL ASSETS............................................ 34,920
---------------
LIABILITIES:
Payable for securities purchased............................ 2,033
Dividends payable to shareholders........................... 51
Payable for Trust shares repurchased........................ 20
Accrued expenses:
Advisory fee.............................................. 15
Other..................................................... 56
---------------
TOTAL LIABILITIES....................................... 2,175
---------------
NET ASSETS.............................................. $ 32,745
---------------
NET ASSETS:
Capital stock, at $.01 par value (authorized unlimited,
outstanding 3,260,615 shares of beneficial interest)...... $ 33
Additional paid-in capital.................................. 31,758
Distribution in excess of net investment income............. (25)
Accumulated net realized loss on investments................ (107)
Unrealized net appreciation of
investments............................................... 1,086
---------------
NET ASSETS.............................................. $ 32,745
---------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE, PER
OUTSTANDING SHARE...................................... $ 10.04
---------------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
DOLLARS
(IN THOUSANDS)
---------------
<S> <C>
INVESTMENT INCOME:
Interest income............................................. $ 2,063
---------------
EXPENSES:
Advisory fee................................................ 217
Auditing and legal fees..................................... 37
Printing and stationary..................................... 14
Custodian fees.............................................. 14
Transfer agent fees......................................... 13
Trustees' fees and expenses................................. 13
Other....................................................... 24
---------------
Total Expenses before custody credits................... 332
Less: custody credits................................... (3)
---------------
NET EXPENSES............................................ 329
---------------
NET INVESTMENT INCOME....................................... 1,734
---------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net Realized Loss......................................... (108)
Change in Unrealized Appreciation......................... (358)
---------------
NET REALIZED LOSS AND CHANGE IN UNREALIZED APPRECIATION ON
INVESTMENTS............................................... (466)
---------------
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 1,268
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
9
<PAGE>
VALUE LINE NEW YORK TAX EXEMPT TRUST
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED FEBRUARY 28, 1997 AND FEBRUARY 29, 1996
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996
-----------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
OPERATIONS:
Net Investment income..................................... $ 1,734 $ 1,932
Net Realized (loss) gain on investments................... (108) 1,405
Change in net unrealized appreciation..................... (358) 430
-----------------------------
Net increase in net assets from operations................ 1,268 3,767
-----------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income..................................... (1,734) (1,932)
Net realized gains........................................ (448) --
-----------------------------
Net decrease in net assets from distributions............. (2,182) (1,932)
-----------------------------
TRUST SHARE TRANSACTIONS:
Net proceeds from sale of shares.......................... 2,172 3,247
Net proceeds from reinvestment of distributions to
shareholders............................................ 1,570 1,393
Cost of shares repurchased................................ (10,252) (5,445)
-----------------------------
Net decrease in net assets from Trust share
transactions............................................ (6,510) (805)
-----------------------------
TOTAL (DECREASE) INCREASE IN NET ASSETS..................... (7,424) 1,030
NET ASSETS:
Beginning of year......................................... 40,169 39,139
-----------------------------
End of year............................................... $ 32,745 $ 40,169
-----------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
10
<PAGE>
VALUE LINE NEW YORK TAX EXEMPT TRUST
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1997
- -------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Value Line New York Tax Exempt Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended, as a non-diversified, open-end
management investment company. The investment objective of the Trust is to
provide New York taxpayers with the maximum income exempt from New York State,
New York City, and federal individual income taxes, while avoiding undue risk to
principal. The Trust will invest primarily in New York State municipal and
public-authority debt obligations. The ability of the issuers of the securities
held by the Trust to meet their obligations may be affected by economic or
political developments in New York State and New York City. The following
significant accounting policies are in conformity with generally accepted
accounting principles for investment companies. Such policies are consistently
followed by the Trust in the preparation of its financial statements. Generally
accepted accounting principles may require management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results may differ from those estimates.
(A) SECURITY VALUATIONS: The Trust's investments are valued each business day by
an independent pricing service ("Service") approved by the Trustees. Investments
for which quoted bid prices in the judgement 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 are valued in good faith at their fair value using methods
determined by the Trustees.
(B) DISTRIBUTIONS: It is the policy of the Trust to distribute all of its
investment income to shareholders. Dividends from net investment income are
declared daily and paid monthly. Net realized capital gains, if any, are
distributed to shareholders annually. Income dividends and capital-gains
distributions are automatically reinvested in additional shares of the Trust
unless the shareholder has requested otherwise. Income earned by the Trust on
weekends, holidays, and other days on which the Trust is closed for business is
declared as a dividend on the next day on which the Trust is open for business.
The amount of dividends and distributions from net investment income and net
realized 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.
(C) FEDERAL INCOME TAXES: It is the policy of the Trust to qualify as a
regulated investment company, which can distribute tax-exempt dividends, by
complying with the provisions available to certain investment companies, as
defined in applicable sections of the Internal Revenue Code, and to distribute
all of its investment income and capital gains to its shareholders. Therefore,
no federal income-tax or excise-tax provision is required.
(D) INVESTMENTS: Securities transactions are recorded on a trade-date basis.
Realized gains and losses from securities transactions are recorded on the
identified-cost basis. Interest income, adjusted for amortization of premium and
accretion of original- issue discounts on investments in accordance with federal
income-tax regulations, is earned from settlement date and recognized on the
accrual basis. Additionally, when appropriate, the Trust recognizes market
discount when the securities are disposed.
- --------------------------------------------------------------------------------
11
<PAGE>
VALUE LINE NEW YORK TAX EXEMPT TRUST
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1997
- -------------------------------------------
Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date.
2. TRUST SHARE TRANSACTIONS
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
1997 1996
-------------------
(IN THOUSANDS)
<S> <C> <C>
Shares sold............................. 218 322
Shares issued to shareholders in
reinvestment of distributions......... 156 138
-------------------
374 460
Shares repurchased...................... (1,022) (539)
-------------------
Net decrease............................ (648) (79)
-------------------
</TABLE>
3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of municipal securities were as follows:
<TABLE>
<CAPTION>
1997
------------
(IN
THOUSANDS)
<S> <C>
PURCHASES:
Long-term obligations................. $ 28,710
Short-term obligations................ 34,006
------------
$ 62,716
------------
MATURITIES OR SALES:
Long-term obligations................. $ 35,376
Short-term obligations................ 32,353
------------
$ 67,729
------------
</TABLE>
At February 28, 1997, the aggregate cost of investments for federal income-tax
purposes was $33,314,086. The aggregate appreciation and depreciation of
investments at February 28, 1997, based on a comparison of investment values and
their costs for federal income-tax purposes, was $1,116,646 and $30,788,
respectively, resulting in a net appreciation of $1,085,858.
For federal income-tax purposes the Trust had a capital loss carryover at
February 28, 1997, of $107,675 which will expire in 2005. To the extent future
capital gains are offset by such capital losses, the Trust does not anticipate
distributing any such gains to its shareholders.
4. INVESTMENT ADVISORY CONTRACT AND TRANSACTIONS WITH AFFILIATES
An advisory fee of $217,260 was paid or payable to Value Line, Inc. (the
Adviser) for the year ended February 28, 1997. This was computed at the rate of
0.6 of 1% per year of the Trust's average daily net assets for the period. The
Adviser provides research, investment programs, and supervision of the
investment portfolio and pays the costs of administrative services, office
space, and compensation of administrative, bookkeeping, and clerical personnel
necessary for managing the affairs of the Trust. The Adviser also provides
persons, satisfactory to the Trustees, to act as officers of the Trust and pays
their salaries and wages. The Trust bears all other costs and expenses in its
operation. During the year ended February 28, 1997, $2,880 was paid to the
Adviser for printing services.
Certain officers and directors of the Adviser and its subsidiary, Value Line
Securities, Inc. (the Trust's distributor and a registered broker/dealer), are
also officers and a Trustee of the Trust.
At February 28, 1997, the Adviser owned 105,118 shares of beneficial interest in
the Trust, representing 3.2% of the outstanding shares.
- --------------------------------------------------------------------------------
12
<PAGE>
VALUE LINE NEW YORK TAX EXEMPT TRUST
Financial Highlights
- -------------------------------------------
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD:
<TABLE>
<CAPTION>
YEARS ENDED ON LAST DAY OF FEBRUARY
----------------------------------------------------
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
----------------------------------------------------
Net asset value, beginning of year...... $ 10.28 $ 9.81 $ 10.49 $ 10.84 $ 9.90
----------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............. .480 .491 .523 .570 .596
Net gains or losses on securities
(both realized and
unrealized).................... (.113) .470 (.611) .062 1.080
----------------------------------------------------
Total from investment
operations.................. .367 .961 (.088) .632 1.676
----------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income............................ (.480) (.491) (.523) (.570) (.596)
Distributions from capital
gains............................. (.127) -- (.069) (.412) (.140)
----------------------------------------------------
Total distributions............ (.607) (.491) (.592) (.982) (.736)
----------------------------------------------------
Net asset value, end of year............ $ 10.04 $ 10.28 $ 9.81 $ 10.49 $ 10.84
----------------------------------------------------
Total return............................ 3.73% 10.00% (.58%) 5.98% 17.56%
----------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in
thousands)............................ $32,745 $40,169 $39,139 $44,190 $41,528
Ratio of expenses to average net
assets................................ .92%(1) .92% .86% .87% .85%
Ratio of net investment income to
average net assets.................... 4.79% 4.87% 5.36% 5.21% 5.82%
Portfolio turnover rate................. 86% 119% 105% 54% 137%
</TABLE>
(1) BEFORE OFFSET FOR CUSTODY CREDITS.
SEE NOTES TO FINANCIAL STATEMENTS.
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13
<PAGE>
VALUE LINE NEW YORK TAX EXEMPT TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
- -------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
VALUE LINE NEW YORK TAX EXEMPT TRUST
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Value Line New York Tax Exempt
Trust (the "Trust") at February 28, 1997, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
February 28, 1997 by correspondence with the custodian and brokers and the
application of alternative auditing procedures where confirmations from brokers
were not received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
April 21, 1997
FEDERAL TAX NOTICE (unaudited)
During the year ended February 28, 1997, the Trust paid to shareholders $0.480
per share from net investment income. Substantially all of the Trust's
dividends from net investment income were exempt-interest dividends,
excludable from gross income for regular Federal income-tax purposes.
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14
