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Q2 2023 : Portfolio Manager Q&A

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Would you please comment on the Fund’s performance relative to the Morningstar Moderate Allocation Funds category for the second quarter and for longer-term periods?

For the quarter ended June 30, 2023, the Fund’s 4.39% return outperformed the Morningstar Moderate Allocation Funds category average return of 3.44%. In addition, the Fund’s 1-year return of 13.81% surpassed the category’s 8.56% average return by over 500 basis points as of June 30, 2023. In fact, the Fund’s performance ranked in the top decile (10% or better) for the 1, 5 and 10-year periods ended June 30, 2023.

We believe the Fund’s outperformance over these long-term periods is primarily due to our investment approach. The Fund’s equity portfolio emphasizes companies with 10+ years of consistent growth in both stock price and earnings, and the fixed income portfolio is comprised of primarily investment grade securities.

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

Source: Morningstar as of 6/30/23

Within the Fund’s equity portfolio, what is the market cap composition?

From a market-cap perspective, the Fund’s equity investment approach is flexible and can invest in companies of any size. However, we focus on companies that are well positioned for long-term, consistent growth. We believe that many mid-sized companies offer attractive potential with a long growth runway. Notably, the Fund did not own any of the 35 largest companies in the world as of June 30, 2023.

Generally, the Fund’s equity portfolio has a larger percentage of mid-cap companies compared to the Morningstar Moderate Allocation Funds category average, and fewer of the giant companies.

Source: Morningstar as of 6/30/23

What is the Fund’s current allocation between equities and fixed income?

The Fund’s allocation between equities and fixed income is flexible, enabling us to dynamically adapt to relative opportunities and risks. During the second quarter, the stock market was becoming too complacent in our view, so we lessened the Fund’s risk profile by slightly reducing the equity allocation. As of June 30, 2023, the Fund was allocated 63% to equities, down from 65% at the end of the prior quarter. The remaining fixed income allocation was approximately 31% in bonds and 6% in cash as of June 30, 2023.

Within the Fund’s fixed income sleeve, the portfolio includes primarily investment grade debt securities (rated AAA through BBB). Approximately 99% of the Fund’s debt securities were rated investment grade as of June 30, 2023.

* EULAV Asset Management (the “Adviser”) and EULAV Securities LLC, the Fund’s principal underwriter (the “Distributor”), have agreed to waive certain class-specific fees and/or pay certain class-specific expenses incurred by the Institutional Class 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 any extraordinary expenses incurred in different amounts by the classes) (the “Expense Limitation”). The Adviser and the Distributor may subsequently recover from assets attributable to the Institutional Class the reimbursed expenses and/or waived fees (within 3 years after the fiscal year end in which the waiver/reimbursement occurred) to the extent that the Institutional Class’s expense ratio is less than the Expense Limitation or, if lower, the expense limitation in effect when the waiver/reimbursement occurred. The Expense Limitation can be terminated or modified before June 30, 2019 only with the agreement of the Fund’s board. The Fund's performance would be lower in the absence of such waivers.

As of 06/30/23, the Fund’s Top 10 Holdings were as follows: Cintas Corp (4.07%), TransDigm Group Inc (3.71%), Republic Services Inc (3.19%), Aon PLC Class A (3.12%), Cadence Design Systems Inc (2.83%), Adobe Inc (2.79%), Tyler Technologies Inc (2.37%), Intercontinental Exchange Inc (2.21%), Thermo Fisher Scientific Inc (2.19%), Fair Isaac Corp (2.18%)

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 / 521 funds; 5 Year / 5 stars / 490 funds; 10 Year / 5 stars / 384 funds; ) VALLX (3 Year / 1 stars / 1122 funds; 5 Year / 1 stars / 1035 funds; 10 Year / 2 stars / 803 funds; ) VLEOX (3 Year / 4 stars / 562 funds; 5 Year / 5 stars / 526 funds; 10 Year / 5 stars / 393 funds; ) VALSX (3 Year / 4 stars / 1122 funds; 5 Year / 4 stars / 1035 funds; 10 Year / 3 stars / 803 funds; ) VLAAX (3 Year / 3 stars / 686 funds; 5 Year / 5 stars / 653 funds; 10 Year / 5 stars / 487 funds; ) VALIX (3 Year / 1 stars / 686 funds; 5 Year / 2 stars / 653 funds; 10 Year / 4 stars / 487 funds; ) VAGIX (3 Year / 2 stars / 415 funds; 5 Year / 2 stars / 379 funds; 10 Year / 2 stars / 277 funds; )

Source: Morningstar Direct