Investment Objective and Strategy

The primary investment objective of the Fund is to provide investors with the maximum income exempt from federal income taxes while avoiding undue risk to principal. Capital appreciation is a secondary objective.

To achieve the Fund's investment objectives, under normal conditions, the Adviser invests at least 80% of the Fund's assets in securities the income of which is exempt from regular federal income taxation and will not subject non-corporate shareholders to the alternative minimum tax. The Fund invests primarily in investment grade municipal bonds and expects to maintain an average maturity of between 7 and 20 years.

Average Annual Returns as of 08/31/17

YTD 1 Yr 3 Yr 5 Yr 10 Yr
transparent Value Line Tax Exempt Fund 3.98% 0.05% 2.34% 2.12% 3.09%
transparent Bloomberg Barclays Capital Municipal Bond Index 5.20% 0.88% 3.40% 3.23% 4.73%
transparent Morningstar Muni. National Long Funds 4.99% 0.16% 3.41% 3.12% 4.28%
Morningstar Muni. National Long Funds Ranking - 98/156 126/140 120/131 97/104
Percentile Rank as of 08/31/17 - 64% 92% 93% 94%
VLHYX Gross / Net Expense Ratio*: 0.99% / 0.74%
Morningstar rates funds based on enhanced Morningstar risk-adjusted returns.
VLHYX BC Muni Bond Index MMNLF
YTD 3.98% 5.20% 4.99%
1 Yr 0.05% 0.88% 0.16%
3 Yr 2.34% 3.40% 3.41%
5 Yr 2.12% 3.23% 3.12%
10 Yr 3.09% 4.73% 4.28%
VLHYX Gross / Net Expense Ratio*: 0.99% / 0.74%
Morningstar rates funds based on enhanced Morningstar risk-adjusted returns.

Quarterly Economic Highlights as of 08/31/17

The S&P 500 began the second quarter at 2059, edging up to 2168 by the end of the third quarter. This moderate increase was posted against a backdrop of generally disappointing economic growth both at home as well as globally.

U.S. Gross Domestic Product (GDP) rose 1.2% in Q2 which was less than half the anticipated growth. Significant improvement in consumer spending was responsible for most of the increase, due in large part to continued tightening in the labor market. This robust pace of consumer spending did not extend to home sales over the summer months. Existing home sales eased despite mortgage rates near record lows. Higher home prices and limited inventory kept some potential buyers on the sidelines.

Investors have kept a keen focus on the Fed for clues as to when it would continue its long anticipated increase in short rates. While a mid-year rate increase had been seen as likely, the Fed resumed its dovish stance after a disappointing jobs report in May, and the global uncertainty resulting from Great Britain’s passage of BREXIT. Additionally, inflation continues to fall short of the Fed’s target, and wage growth remains modest. While there has been some retracement in energy prices, it has not been enough to push inflation to the Fed’s 2% threshold. However, more recent economic data continues to underscore robust employment patterns, leading to wider investor expectations for a single rate hike before the end of the year.

The U.S. economy continues to be the world’s largest and seemingly most robust. While U.S. interest rates remain low, several countries, including Germany, France and Japan, face a challenging environment of negative interest rates. This disparity in rates has fostered a strong appetite for U.S. bonds with their relatively more attractive rates. The specter of BREXIT followed by its unexpected passage provided additional luster to the U.S. Treasury market. The increased global uncertainty sparked a strong rally in risk-free assets, pushing the thirty-year U.S. Treasury bond to total returns in excess of 6% for the period.

Morningstar as of 08/31/17

Category Muni National Long
3 Year of 140 Funds
5 Year of 131 Funds
10 Year of 104 Funds
Overall of 140 Funds

* For the period July 1, 2014 through June 30, 2018, EULAV Securities LLC (the “Distributor”) contractually agreed to waive the Fund’s 12b-1 fee in an amount equal to 0.25% of the Fund’s average daily net assets. The waiver cannot be modified or terminated before June 30, 2017 without the approval of the Fund’s Board of Directors. There is no assurance that the Distributor will extend the fee waiver beyond June 30, 2017. . The Fund's performance would be lower in the absence of such waivers.

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 1-800-243-2729.

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. The inception dates of Value Line Mutual Funds range from 1950 to 2017. 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 / 576 funds; 5 Year / 4 stars / 498 funds; 10 Year / 2 stars / 369 funds; ) VALLX (3 Year / 5 stars / 1258 funds; 5 Year / 5 stars / 1124 funds; 10 Year / 3 stars / 790 funds; ) VLEOX (3 Year / 4 stars / 600 funds; 5 Year / 4 stars / 531 funds; 10 Year / 4 stars / 394 funds; ) VALSX (3 Year / 4 stars / 576 funds; 5 Year / 3 stars / 498 funds; 10 Year / 4 stars / 369 funds; ) VLAAX (3 Year / 5 stars / 723 funds; 5 Year / 4 stars / 652 funds; 10 Year / 4 stars / 452 funds; ) VALIX (3 Year / 5 stars / 328 funds; 5 Year / 5 stars / 285 funds; 10 Year / 5 stars / 206 funds; ) VAGIX (3 Year / 2 stars / 849 funds; 5 Year / 3 stars / 762 funds; 10 Year / 2 stars / 531 funds; ) VLHYX (3 Year / 1 stars / 140 funds; 5 Year / 1 stars / 131 funds; 10 Year / 1 stars / 104 funds; )

Source: Morningstar Direct