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Q1 2024 : Portfolio Manager Q&A

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How did the Fund perform relative to the Morningstar Large Growth Category and the S&P 500 Index in the three months and the one-year period as of March 31, 2024?

The Fund returned 11.80% in the first quarter, which slightly trailed the Morningstar Large Growth Category average return of 11.92%. However, the Fund performed better when compared to the S&P 500 Index and outperformed the Index’s return of 10.56%. Over the one-year period, the Fund’s 47.38% return surpassed both the Morningstar category average and the S&P 500 returns of 36.45% and 29.88%, respectively, by a wide margin.

Please visit the Fund’s performance page for complete performance information.

What drove the Fund’s performance in the first quarter of 2024 compared to the S&P 500 Index?

In the first quarter of 2024, the Fund’s outperformance was driven by a combination of stock selection and sector allocation. The Fund’s biggest contributing sector was Information Technology (IT), while the Consumer Discretionary sector was the biggest detractor.

The Fund’s IT companies gained 22%, nicely ahead of the S&P 500’s sector return of 13%. The Fund’s strongest performing stock was Nvidia Corp. (NVDA), a leading developer of artificial intelligence graphics processing units, which rose 82% in the quarter. The Fund also benefited from owning CrowdStrike Holdings Inc. (CRWD), a cloud-based cybersecurity company that rose 26% in the quarter.

In the Consumer Discretionary sector, the Fund’s companies declined 6%, underperforming the S&P sector’s 5% return. Rivian Automotive Inc. (RIVN), a leading designer and developer of electric trucks and sport utility vehicles, was the Fund’s biggest detractor.

Would you please describe the Fund’s three-prong growth allocation and provide some examples?

We like to invest in companies in varying stages of their growth life cycles. We believe this is a good way to diversify the Fund across a range of long-term opportunities, including early stage growth through later stages of growth.

The majority of the companies owned in the Fund are what we consider to be Established Growth Companies. These are leading large-cap growth companies that typically have dominant brands, competitive advantages, operate in industries with high barriers to entry, and have very profitable business models. Visa Inc. (V), Nvidia, Meta Platforms Inc. (META), and Amazon. com Inc. (AMZN) are just a few examples of the holdings in the Fund that we consider to be market leading established growth companies.

The Fund also invests a smaller portion of the Fund in what we consider to be Next-Gen Growth Companies. These companies are typically smaller in market capitalization and are faster growing than their established growth company peers. For example, the Fund owns Coinbase Global Inc. (COIN), a leading cryptocurrency exchange platform, which we believe is still in the earlier stages of its growth potential.

A smaller segment of the Fund may be invested in what we consider to be Opportunistic Growth Companies. Both cyclical growth companies and out-of-favor growth companies are considered as opportunistic growth for the Fund. Diamondback Energy Inc. (FANG) is what we consider to be a cyclical growth company and it has been owned in the Fund for several years. Diamondback is a low-cost oil production company with a leading position in the Permian Basin.

How do the Fund’s growth characteristics compare to the S&P 500 Index?

We believe that sales and earnings growth drive share price appreciation over the longer term. Our goal for the Fund is to own a portfolio of companies that can collectively grow their future sales and earnings at faster rates relative to the broader market. As of March 31, 2024, the Fund’s equity portfolio had a 3-year projected average annual sales growth rate, as well as a 3- to 5-year estimated forward earnings growth rate, that were nearly double those of the S&P 500.

* EULAV Asset Management (the “Adviser”) has contractually agreed to waive through June 30, 2020 certain Fund-wide fees and further assume certain Fund-wide expenses to the extent necessary to limit such expenses (excluding brokerage commissions, interest, taxes, and certain non-routine Fund-wide expenses) to 0.90% of the average daily net assets of each class (the “Fund-level Expense Limitation”). In addition, the Adviser and EULAV Securities LLC (the “Distributor”) have contractually agreed to permanently waive certain class-specific fees and assume certain class-specific expenses so that the Institutional Class bears its class-specific fees and expenses at the same percentage of its average daily net assets as the Investor Class’s class-specific fees and expenses (excluding 12b-1 fees and certain non-routine class-specific expenses) (the “Class Expense Limitation,” together with the Fund-level Expense Limitation, the “Expense Limitations”). Each Expense Limitation can be terminated with the agreement of the Fund’s Board. The Adviser and the Distributor may subsequently recover from a class any fees waived and expenses assumed within three years from the month in which the waiver or assumption occurred for such class, to the extent its expense ratio is less than the applicable Expense Limitation or, if lower, the expense limitation in effect when the waiver or assumption occurred. The Fund’s performance would be lower in the absence of such waivers.

As of 03/31/24, the Fund’s Top 10 Holdings were as follows: NVIDIA Corp (8.61%), Uber Technologies Inc (7.34%), Meta Platforms Inc Class A (6.22%), Inc (4.77%), Advanced Micro Devices Inc (4.37%), Exact Sciences Corp (3.95%), Alphabet Inc Class A (3.91%), Salesforce Inc (3.86%), Microsoft Corp (3.72%), CrowdStrike Holdings Inc Class A (3.41%)

There are risks associated with investing in small and mid cap stocks, which tend to be more volatile and less liquid than stocks of large companies, including the risk of price fluctuations.

The performance data quoted herein represents past performance and does not guarantee future results. Market volatility can dramatically impact the fund's short term performance. Current performance may be lower or higher than figures shown. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than their original cost. Past performance data through the most recent month end is available at or by calling 800.243.2729.

You should carefully consider investment objectives, risks, charges and expenses of Value Line Funds before investing. This and other information can be found in the fund's prospectus and summary prospectus, which can be obtained free of charge from your investment representative, by calling 800.243.2729, or by clicking on the applicable fund at Please read it carefully before you invest or send money. Value Line Funds are distributed by EULAV Securities LLC. Past performance is no guarantee of future results.

Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell securities. Current and future portfolio holdings are subject to risk.

The average annual returns shown above are historical and reflect changes in share price, reinvested dividends and are net of expenses. Investment results and the principal value of an investment will vary.

The Morningstar Rating™ for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three- year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. VLIFX (3 Year / 5 stars / 510 funds; 5 Year / 5 stars / 476 funds; 10 Year / 5 stars / 382 funds; ) VALLX (3 Year / 1 stars / 1100 funds; 5 Year / 1 stars / 1026 funds; 10 Year / 2 stars / 798 funds; ) VLEOX (3 Year / 5 stars / 552 funds; 5 Year / 5 stars / 523 funds; 10 Year / 5 stars / 399 funds; ) VALSX (3 Year / 4 stars / 1100 funds; 5 Year / 2 stars / 1026 funds; 10 Year / 3 stars / 798 funds; ) VLAAX (3 Year / 4 stars / 680 funds; 5 Year / 3 stars / 642 funds; 10 Year / 5 stars / 485 funds; ) VALIX (3 Year / 1 stars / 680 funds; 5 Year / 3 stars / 642 funds; 10 Year / 4 stars / 485 funds; ) VAGIX (3 Year / 2 stars / 426 funds; 5 Year / 2 stars / 382 funds; 10 Year / 2 stars / 270 funds; )

Source: Morningstar Direct