================================================================================
- --------------------------------------------------------------------------------
ANNUAL REPORT
- --------------------------------------------------------------------------------
February 28, 1998
- --------------------------------------------------------------------------------
Value Line
New York
Tax Exempt
Trust
[LOGO]
VALUE LINE
No-Load
Mutual
Funds
<PAGE>
Value Line New York Tax Exempt Trust
To Our Value Line
================================================================================
To Our Shareholders:
The primary objective of the Value Line New York Tax Exempt Trust is to provide
investors with maximum income exempt from New York State, New York City and
Federal personal income taxes, without undue risk to principal. During the year
ended February 28, 1998, the Trust's total return was 9.31%. Since its inception
in July, 1987, the total return for the Trust, assuming the reinvestment of all
dividends over that period, was 117.32%. This is equivalent to an average annual
total return of 7.55%. The Trust's SEC yield as of February 28, 1998 was 3.71%,
slightly below the average SEC yield of 3.89% for all New York State municipal
debt funds ranked by Lipper Analytical Services.
Your Trust's total return for the year ended February 28, 1998 was 9.31% and
exceeded the 9.14% total return for the Lehman Brothers Municipal Bond Index
during the same time period.
During the year ended February 28, 1998, 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, dropped from 5.76% on February 28,
1997 to 5.24% on February 28, 1998. During this same period, long-term taxable
rates, as measured by the 30-year Treasury bond, declined from 6.80% to 5.92%.
Benign inflation in spite of continued economic growth is the major factor
contributing to this decline in interest rates. Expectations of slower economic
growth and continued modest inflation due to the Asian crisis is keeping rates
low. Also, the Federal Reserve has held rates constant since March 25, 1997 when
it increased the Federal Funds rate to 5.50%.
During the past year, taxable bonds have outperformed tax-exempt bonds. For the
twelve months ended February 28, 1998, the Lehman Aggregate Index increased
10.37% compared to 9.14% for the Lehman Municipal Index. Contributing to this
disparity in performance has been the large worldwide demand for U.S. government
and corporate bonds, the increasing supply of tax-exempt bonds due to
refinancings, and the declining demand for tax-exempt issues from individuals as
yields have declined and as the stock market continues to draw investors away
from bonds. Currently, the ratio of tax-exempt yields to Treasury yields is at
the high end of its historical range. A 30-year triple A rated municipal bond
yields 5.05% which is 85.2% of the 5.93% yield of the 30-year Treasury bond. A
5.05% tax-exempt yield is equivalent to an 8.36% taxable yield for individuals
in the 39.6% tax bracket. At these levels, municipal bonds are very attractive
compared to taxable securities.
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, 1998, the market value of the Trust's
portfolio consisted of 69% AAA, 20% AA, 3% A, 2% MIG1, and 6% 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 rated bonds while decreasing holdings
of lower rated bonds. In addition, 14% of the portfolio is invested in
high-coupon, non-callable bonds. The portfolio's highest concentrations of
investments are in the insured, hospital-revenue, housing-revenue, and
transportation-revenue sectors respectively.
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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
smalldollar amounts. In addition to these features, Value Line Tax Exempt New
York 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 2, 1998
Economic Observations
The economic expansion remains alive and well, as we make our way through the
first few months of 1998. To be sure, the uptrend is not proceeding at 1997's
frenetic pace, when growth averaged better than 3.5% for the full 12 months.
But, with most of the key consumer and industrial markets continuing to show
surprising resiliency, and with jobs still being created at a strong pace, the
economy now looks as though it will expand by 2.5%-3.0% during the opening six
months of the year.
Meanwhile, the difficulties in Asia seem as though they will have only a
moderate effect on this nation's business uptrend going forward. Obviously, the
problems afflicting that part of the globe will lead to selective reductions in
demand for goods and services produced in the United States. Nevertheless,
assuming that the affected nations take the remedial steps recommended by the
leading international monetary authorities and the situation there begins to
stabilize, the likely opening-half rate of growth could well be maintained for
the balance of the year. That's a slightly better showing than we would have
forecast several months earlier.
This suggests that the Federal Reserve will keep interest rates about where they
are for the time being. That, in fact, would seem to be the sensible approach.
The economy is still too strong and the labor markets too tight (thereby keeping
alive the threat of higher inflation) for the Fed to think of relaxing the
credit reins at this point. At the same time, the situation in Asia is still
unresolved. And despite some hopeful signs there, at least a modest threat to
our economic well being is still present. Thus, to raise rates with that
uncertainty still around would likewise probably be counterproductive.
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3
<PAGE>
Value Line New York Tax Exempt Trust
================================================================================
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT
IN VALUE LINE NEW YORK TAX EXEMPT TRUST AND THE
LEHMAN BROAD BASED MUNI INDEX
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Value Line New York Lehman Braod Based
Tax Exempt Trust Muni Index
---------------- ----------
2/1/88 ....................... 10,000 10,000
5/31/88 ....................... 9,919 9,930
8/31/88 ....................... 10,181 10,150
11/30/88 ....................... 10,411 10,452
2/28/89 ....................... 10,656 10,662
5/31/89 ....................... 10,978 11,073
8/31/89 ....................... 11,163 11,265
11/30/89 ....................... 11,327 11,567
2/28/90 ....................... 11,390 11,711
5/31/90 ....................... 11,541 11,883
8/31/90 ....................... 11,644 11,988
11/30/90 ....................... 11,864 12,458
2/28/91 ....................... 12,074 12,790
5/31/91 ....................... 12,410 13,081
8/31/91 ....................... 12,886 13,401
11/30/91 ....................... 13,197 13,736
2/28/92 ....................... 13,423 14,068
5/31/92 ....................... 13,929 14,365
8/31/92 ....................... 14,556 14,898
11/30/92 ....................... 14,682 15,114
2/28/93 ....................... 15,782 16,004
5/31/93 ....................... 15,863 16,084
8/31/93 ....................... 16,586 16,716
11/30/93 ....................... 16,544 16,789
2/28/94 ....................... 16,726 16,890
5/31/94 ....................... 16,136 16,481
8/31/94 ....................... 16,335 16,739
11/30/94 ....................... 15,249 15,907
2/28/95 ....................... 16,628 17,209
5/31/95 ....................... 17,323 17,983
8/31/95 ....................... 17,396 18,223
11/30/95 ....................... 18,151 18,914
2/28/96 ....................... 18,292 19,109
5/31/96 ....................... 17,757 18,805
8/31/96 ....................... 18,110 19,177
11/30/96 ....................... 18,923 20,025
2/28/97 ....................... 18,974 20,182
5/31/97 ....................... 19,189 20,362
8/31/97 ....................... 19,746 20,950
11/30/97 ....................... 20,175 21,461
2/28/98 ....................... 20,741 22,005
(Period covered is 3/1/88 to 2/28/98)
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4
<PAGE>
Value Line New York Tax Exempt Trust
================================================================================
Performance Data:
Average Annual
Total return
12/31/97 2/28/98
------- ------
1 year ended...................................... 9.34% 9.31%
5 years ended..................................... 6.64% 5.62%
10 years ended..................................... 7.99% 7.57%
The performance data quoted represents 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.
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5
<PAGE>
Value Line New York Tax Exempt Trust
<TABLE>
<CAPTION>
Schedule of Investments
==========================================================================================================
Principal Rating
Amount (Unaudited) Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG-TERM MUNICIPAL SECURITIES (94.1%)
NEW YORK STATE (77.3%)
$1,000,000 Albany County, General Obligations, 5.75%, 6/1/11.................. Aaa $ 1,074,080
300,000 Battery Park City Authority, Revenue, Ser. A, 5.40%, 11/1/09....... Aaa 320,676
Dormitory Authority, Revenue:
500,000 Albany County, State Service Contract, 5.25%, 4/1/11............. Baa1 508,945
1,000,000 Bishop Henry B. Hucles Nursing Home, 5.625%, 7/1/18.............. Aa2 1,031,660
500,000 Champlain Valley Hospitals, 6.00%, 7/1/10........................ AAA* 565,840
500,000 City University System, Ser. I, 5.00%, 7/1/10.................... Aaa 513,935
1,000,000 Eger Health Center, 4.90%, 2/1/13................................ AAA* 981,900
635,000 Hebrew Home for the Aged, Riverdale, 5.625%, 2/1/17.............. AA* 661,016
625,000 Lakeside Nursing Home, 5.15%, 2/1/07............................. AAA* 654,575
555,000 Long Island University, Asset Guaranty, 5.50%, 9/1/10............ AA* 590,070
30,000 Rochester Hospital, 5.55%, 8/1/12................................ AAA* 30,675
1,500,000 Rochester Institute of Technology, 5.30%, 7/1/17................. Aaa 1,527,825
1,295,000 Southside Hospital, Secured Hospital Bonds, 5.00%, 2/15/12....... Aaa 1,296,127
500,000 St. Barnabas Hospital, 5.35%, 8/1/17............................. Aaa 508,940
1,000,000 State University Educational Facilities, 5.00%, 5/15/12.......... A3 999,920
500,000 W.K. Nursing Home Corp., 5.75%, 2/1/10........................... AAA* 539,445
700,000 East Rochester, Housing Authority, Mortgage Revenue,
St. Johns Meadows, Ser. A, 5.05%, 8/1/07......................... AAA* 726,565
1,000,000 Environmental Facilities Corp., Pollution Control Revenue,
Water, Revolving Fund, Ser. E, 4.90%, 6/15/10.................... Aaa 1,017,910
1,730,000 Local Government Assistance Corp.,
Refunding, Ser. B, 4.80%, 4/1/11................................. Aaa 1,734,342
Medical Care Facilities Finance Agency,
Revenue, Refunding, Presbyterian Hospital, Ser. A:
170,000 5.10%, 8/15/10................................................. Aa2 175,156
1,025,000 5.25%, 8/15/14................................................. Aa2 1,043,676
700,000 Saint Mary's Hospital, Ser. A, 6.00%, 11/1/09.................... Aaa 769,216
1,000,000 Metropolitan Transportation Authority,
Commuter Facilities Revenue, Ser. E, 5.00%, 7/1/10............... Aaa 1,026,970
Mortgage Agency, Revenue Refunding, Homeowner Mortgage:
525,000 Ser. 61, 5.60%, 10/1/11.......................................... Aa2 540,881
1,000,000 Ser. 55, 5.95%, 10/1/17.......................................... Aa2 1,058,270
850,000 Ser. 30-A, 4.375%, 10/1/23....................................... Aa2 827,110
300,000 Nassau County, General Improvements, Ser. X, 5.10%, 11/1/10........ Aaa 311,163
1,000,000 Niagara Falls, Water Treatment Plant, 7.25%, 11/1/11............... Aaa 1,252,740
890,000 Onondaga County, General Obligations, Ser. A, 5.85%, 5/1/10........ Aa2 966,291
1,000,000 Syracuse, Housing Authority, Mortgage Revenue,
Loretto Rest Home, Ser. A, 5.60%, 8/1/17......................... AAA* 1,030,510
</TABLE>
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6
<PAGE>
Value Line New York Tax Exempt Trust
<TABLE>
<CAPTION>
February 28, 1998
==========================================================================================================
Principal Rating
Amount (Unaudited) Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Thruway Authority:
$1,000,000 General Revenue, Ser. D, 5.30%, 1/1/09........................... Aa3 $ 1,060,940
520,000 Highway & Bridge Trust Fund, Ser. B, 5.00%, 4/1/10............... Aaa 533,796
320,000 Triborough Bridge and Tunnel Authority, Revenue,
General Purpose, Refunding, Ser. Y, 6.00%, 1/1/12................ Aa3 361,264
500,000 Urban Development Corp., Refunding,
Corporate Purpose, Senior Lien, 5.125%, 1/1/09................... Aaa 523,060
-----------
TOTAL NEW YORK STATE .............................................. 26,765,489
-----------
NEW YORK CITY (13.6%)
General Obligation:
80,000 Ser. F, 6.50%, 2/15/08........................................... A3 88,646
1,000,000 Ser. G, 5.00%, 8/1/10............................................ Aaa 1,022,530
1,500,000 Housing Development Corp., Multi-Family Housing Revenue,
Ser. A, 5.625%, 5/1/12........................................... Aa 1,550,970
Industrial Development Agency:
Civic Facilities Revenue:
420,000 New School for Social Research Project, 6.00%, 9/1/09.......... Aaa 465,780
500,000 USTA National Tennis Center Project, 6.40%, 11/15/08........... Aaa 567,225
250,000 Industrial Development Revenue, Brooklyn Navy Yard,
Cogen Partners, 6.20%, 10/1/22................................... Baa3 284,838
740,000 Transitional Finance Authority, Revenue,
Future Tax, Ser. B, 4.60%, 11/15/11.............................. Aa3 721,359
-----------
TOTAL NEW YORK CITY ............................................... 4,701,348
-----------
PUERTO RICO (3.2%)
1,000,000 Electric Power Authority, Power Revenue,
Ser. T, 6.125%, 7/1/09........................................... Baa1 1,093,660
-----------
TOTAL LONG-TERM MUNICIPAL SECURITIES
(Cost $31,094,380) ............................................. 32,560,497
-----------
</TABLE>
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7
<PAGE>
Value Line New York Tax Exempt Trust
<TABLE>
<CAPTION>
Schedule of Investments February 28, 1998
==========================================================================================================
Principal Rating
Amount (Unaudited) Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES (4.6%)
NEW YORK STATE (2.9%)
$1,000,000 Energy Research & Development Authority, Pollution Control Revenue,
Niagara Mohawk Power, Ser. A, 3.95%, 12/1/23..................... A2(1) $ 1,000,000
-----------
NEW YORK CITY (1.7%)
300,000 General Obligations, Subser. B-7, 3.75%, 8/15/18................... VMIG1(1) 300,000
300,000 Municipal Water Finance Authority,
Water and Sewer System Revenue, Ser. C, 3.00%, 6/15/22........... VMIG1(1) 300,000
-----------
TOTAL NEW YORK CITY ............................................... 600,000
-----------
TOTAL SHORT-TERM MUNICIPAL SECURITIES
(Cost $1,600,000) ............................................... 1,600,000
-----------
TOTAL MUNICIPAL SECURITIES (98.7%)
(Cost $32,694,380) .............................................. 34,160,497
EXCESS OF CASH AND OTHER ASSETS
OVER LIABILITIES (1.3%) ......................................... 436,283
-----------
NET ASSETS (100.0%) ............................................... $34,596,780
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE,
PER OUTSTANDING SHARE ........................................... $ 10.51
===========
</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, 1998.
See Notes to Financial Statements
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8
<PAGE>
Value Line New York Tax Exempt Trust
Statement of Assets
and Liabilities at February 28, 1998
================================================================================
Dollars
(in thousands
except per share
amount)
----------------
Assets:
Investment securities, at value
(Cost $32,694) .......................................... $34,160
Cash ...................................................... 44
Interest receivable ....................................... 404
Receivable for securities sold ............................ 75
Receivable for capital shares sold ........................ 9
-------
Total Assets ........................................ 34,692
-------
Liabilities:
Dividends payable to shareholders ......................... 38
Payable for Trust shares repurchased ...................... 1
Accrued expenses:
Advisory fee ............................................ 16
Other ................................................... 40
-------
Total Liabilities ................................... 95
-------
Net Assets ................................................ $34,597
=======
Net Assets:
Capital stock, at $.01 par value
(authorized unlimited,
outstanding 3,291,173
shares of beneficial interest) .......................... $ 33
Additional paid-in capital ................................ 32,058
Accumulated net realized gain
on investments .......................................... 1,040
Net unrealized appreciation of
investments ............................................. 1,466
-------
Net Assets .......................................... $34,597
=======
Net Asset Value, Offering and
Redemption Price, per
Outstanding Share ................................. $ 10.51
=======
See Notes to Financial Statements.
Statement of Operations
for the Year Ended February 28, 1998
================================================================================
Dollars
(in thousands)
--------------
Investment Income:
Interest .................................................. $ 1,759
-------
Expenses:
Advisory fee .............................................. 201
Auditing and legal fees ................................... 39
Printing and stationery ................................... 19
Trustees' fees and expenses ............................... 15
Custodian fees ............................................ 14
Transfer agent fees ....................................... 13
Other ..................................................... 5
-------
Total Expenses before
custody credits ................................... 306
Less: custody credits ............................... (3)
-------
Net Expenses ........................................ 303
-------
Net Investment Income ..................................... 1,456
-------
Net Realized and Unrealized Gain on
Investments:
Net Realized Gain ..................................... 1,147
Change in Unrealized
Appreciation ........................................ 380
-------
Net Realized Gain and Change in
Unrealized Appreciation on
Investments ............................................. 1,527
-------
Net Increase in Net Assets from
Operations .............................................. $ 2,983
=======
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9
<PAGE>
Value Line New York Tax Exempt Trust
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
for the Years Ended February 28, 1998 and 1997
======================================================================================================
1998 1997
-------------------------
(Dollars in thousands)
<S> <C> <C>
Operations:
Net investment income .............................................. $ 1,456 $ 1,734
Net realized gain (loss) on investments ............................ 1,147 (108)
Change in unrealized appreciation .................................. 380 (358)
------------------------
Net increase in net assets from operations ......................... 2,983 1,268
------------------------
Distributions to Shareholders:
Net investment income ............................................... (1,451) (1,734)
Net realized gains ................................................. -- (488)
------------------------
Net decrease in net assets from distributions ...................... (1,451) (2,182)
------------------------
Trust Share Transactions:
Net proceeds from sale of shares ................................... 3,531 2,172
Net proceeds from reinvestment of distributions to shareholders...... 986 1,570
Cost of shares repurchased ......................................... (4,197) (10,252)
------------------------
Net increase (decrease) in net assets from Trust share transactions 320 (6,510)
------------------------
Total Increase (Decrease) in Net Assets .............................. 1,852 (7,424)
Net Assets:
Beginning of year .................................................. 32,745 40,169
------------------------
End of year ........................................................ $34,597 $32,745
========================
</TABLE>
See Notes to Financial Statements.
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10
<PAGE>
Value Line New York Tax Exempt Trust
Notes to Financial Statements February 28, 1998
================================================================================
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 Valuation: 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 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 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" differencs are either considered temporary or permanent in
nature, such amounts are reclassified within the capital accounts based on their
federal tax-basis treatment. In the current year, distributions in excess of net
investment income of $19,632 were reclassified to paid-in capital. Net
investment income, net realized gains/losses and net assets were not affected by
this reclassification. 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
- --------------------------------------------------------------------------------
11
<PAGE>
Value Line New York Tax Exempt Trust
Notes to Financial Statements February 28, 1998
================================================================================
from settlement date and recognized on the accrual basis. Additionally, when
appropriate, the Trust recognizes market discount when the securities are
disposed.
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:
1998 1997
----------------------
Shares sold .................................... 345 218
Shares issued to shareholders in
reinvestment of distributions ................ 96 156
----------------------
441 374
Shares repurchased ............................. (410) (1,022)
----------------------
Net increase (decrease) ........................ 31 (648)
======================
3. Purchases and Sales of Securities
Purchases and sales of municipal securities were as follows:
1998
(in thousands)
--------------
PURCHASES:
Long-term obligations ................................... $36,759
Short-term obligations .................................. 14,700
-------
$51,459
-------
MATURITIES OR SALES:
Long-term obligations ................................... $36,034
Short-term obligations .................................. 17,200
-------
. ......................................................... $53,234
=======
At February 28, 1998, the aggregate cost of investments for federal income-tax
purposes was $32,696,774. The aggregate appreciation and depreciation of
investments at February 28, 1998, based on a comparison of investment values and
their costs for federal income-tax purposes, was $1,502,443 and $38,720,
respectively, resulting in a net appreciation of $1,463,723. During the year
ended February 28, 1998, the Trust utilized $107,675 of capital loss carry
overs.
4. Investment Advisory Contract and Transactions With Affiliates
An advisory fee of $200,703 was paid or payable to Value Line, Inc. (the
Adviser) for the year ended February 28, 1998. 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 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.
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, 1998, the Adviser owned 109,765 shares of beneficial interest in
the Trust, representing 3.3% of the outstanding shares. In addition, certain
officers and Trustees owned 20,696 shares of beneficial interest in the Trust,
representing 0.6% 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
----------------------------------------------------------
1998 1997 1996 1995 1994
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ........ $ 10.04 $ 10.28 $ 9.81 $ 10.49 $ 10.84
-----------------------------------------------------------
Income from investment operations:
Net investment income.................. .445 .480 .491 .523 .570
Net gains or losses on securities
(both realized and unrealized)....... .469 (.113) .470 (.611) .062
-----------------------------------------------------------
Total from investment operations .... .914 .367 .961 (.088) .632
-----------------------------------------------------------
Less distributions:
Dividends from net investment income .. (.444) (.480) (.491) (.523) (.570)
Distributions from capital gains ...... -- (.127) -- (.069) (.412)
-------------------------------------------------------
Total distributions ................. (.444) (.607) (.491) (.592) (.982)
-----------------------------------------------------------
Net asset value, end of year .............. $ 10.51 $ 10.04 $ 10.28 $ 9.81 $ 10.49
===========================================================
Total return .............................. 9.31% 3.73% 10.00% (.58)% 5.98%
===========================================================
Ratios/Supplemental Data:
Net assets, end of year (in thousands) .... $34,597 $32,745 $40,169 $39,139 $44,190
Ratio of expenses to average net assets.... .92%(1) .92%(1) .92% .86% .87%
Ratio of net investment income
to average net assets.................... 4.35% 4.79% 4.87% 5.36% 5.21%
Portfolio turnover rate ................... 116% 86% 119% 105% 54%
</TABLE>
(1) Before offset of 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, 1998, 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, 1998, 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, 1998
- --------------------------------------------------------------------------------
FEDERAL TAX NOTICE (unaudited)
During the year ended February 28, 1998, the Trust paid to shareholders $0.444
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
<PAGE>
Value Line New York Tax Exempt Trust
Shareholders Meeting Results (unaudited)
================================================================================
A special meeting of shareholders of The Value Line New York Tax Exempt Trust
was held on October 30, 1997. The matters voted upon by the shareholders and the
resulting votes for each matter are presented below.
1. The election of six Trustees to serve until their successors are duly
elected and qualified.
Directors For Withheld Broker Non-Votes*
-------- -------- -------- ----------------
Jean Bernhard Buttner 2,123,104 43,193 0
John W. Chandler 2,115,400 50,897 0
Leo R. Futia 2,112,651 53,646 0
David H. Porter 2,113,314 52,984 0
Paul Craig Roberts 2,116,221 50,077 0
Nancy-Beth Sheerr 2,116,221 50,077 0
2. Ratification of the selection of Price Waterhouse LLP as independent
accountants for the fiscal year ending February 28, 1998.
For Against Abstain Broker Non-Votes*
-------- ------- ------- ----------------
2,124,607 10,008 31,682 0
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary
power to vote on a particular matter.
- --------------------------------------------------------------------------------
15
<PAGE>
Value Line New York Tax Exempt Trust
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.
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16
<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
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
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).
VLF803015
