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Q1 2024 : Portfolio Manager Q&A

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Would you please comment on the Fund’s performance relative to the Morningstar Large Growth Funds category average in the first quarter?

For the quarter ended March 31, 2024, the Fund delivered a positive total return of 7.80%, although it underperformed the Morningstar Large Growth Funds category average of 11.92% for the same period. While the Fund lagged on a relative basis, we believe that a long-term approach emphasizing steady risk and reward is more important to investors. Our long-term approach features companies with a track record of 10+ years of consistent growth in both stock price and earnings.

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

Would you please describe the types of companies the Fund owns?

Our portfolio features only our “best ideas” that meet our disciplined investment criteria emphasizing consistent growth in both stock price and earnings over 10 years or more. Generally, the Fund holds between 25 and 50 companies. As of March 31, 2024, the Fund held 29 companies.

We favor companies with healthy balance sheets, strong market share, and capable, experienced management teams. The types of companies we own typically are not headline grabbers. Rather, these companies have demonstrated consistent growth during a variety of economic conditions.

Among large-cap companies, we seek those that not only have a history of consistent growth, but also those that we believe are well positioned for future growth. As we look for companies with ample room for growth, we generally own companies that are on the smaller side of the large-cap spectrum. In fact, the Fund’s average market capitalization was $118B, compared to the Morningstar Large Growth Category average of $492B, as of March 31, 2024.

What are some examples of long-term Fund holdings?

Given the Fund’s emphasis on consistent, long-term growth, we often hold companies for a multi-year period. Two examples of long-term holdings include the following companies:

  • Costco Wholesale Corp. (COST): Costco offers a membership-based retail warehouse model with over 600 warehouses in the U.S. and holds a dominant market share in the warehouse club industry. The company also operates over 270 warehouses in international markets. The Fund has owned shares in Costco for over 10 years.
  • Roper Technologies Inc. (ROP): The Fund has owned a position in Roper for nearly 20 years. Roper provides technology and software for a wide range of niche markets including medical diagnostics, optical and electromagnetic measurement systems, contactless card readers, and many others.

How does the Fund’s risk/reward approach compare to other large-cap growth funds?

The Fund’s risk mitigation approach is inherent in our investment process, as we believe investors appreciate “smoother” growth-oriented investing with fewer swings of volatility. As a result, the Fund’s risk-adjusted return, as measured by Sharpe ratio, is higher compared to the Morningstar Large Growth Category average, for the 3, 5 and 10-year periods ended March 31, 2024. The Fund also has earned Morningstar’s “Below Average” Risk rating for the same time periods.

Source: Morningstar as of 3/31/24

As of 03/31/24, the Fund’s Top 10 Holdings were as follows: Cintas Corp (7.67%), TransDigm Group Inc (6.99%), Costco Wholesale Corp (5.63%), Accenture PLC Class A (5.53%), Mastercard Inc Class A (4.61%), Cadence Design Systems Inc (4.18%), ServiceNow Inc (4.10%), Union Pacific Corp (4.07%), Thermo Fisher Scientific Inc (3.89%), Stryker Corp (3.88%)

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