Value Line Capital Appreciation Fund
*EULAV Asset Management (the “Adviser”) and EULAV Securities LLC, the Fund’s principal underwriter (the “Distributor”), have agreed to permanently 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 from the month 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 only with the agreement of the Fund’s board. The Fund’s performance would be lower in the absence of such waivers.
As of 12/31/24, the Fund’s Top 10 Holdings were as follows:
Meta Platforms Inc Class A (4.34%),
NVIDIA Corp (3.57%),
Amazon.com Inc (3.04%),
Uber Technologies Inc (2.93%),
Alphabet Inc Class A (2.69%),
Apple Inc (2.66%),
Strategy Class A (2.24%),
Microsoft Corp (2.21%),
Advanced Micro Devices Inc (2.17%),
Visa Inc Class A (2.14%)
3-Yr Average Projected Annual Sales Growth Rate is the year-over-year average growth rate of holdings based on analysts’ consensus revenue
estimates of holdings.
3-5 Yr Average Estimated Forward Earnings Growth Rate is the year-over-year average growth rate based on analysts’
consensus EPS (earnings per share) estimates. If EPS estimates are available for 5 years forward, it is an average of 5 years; otherwise, it is an avg of 3 years forward EPS estimates.
Morningstar™ Categories based on Investor class shares.
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 vlfunds.com 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 www.vlfunds.com. 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.
VLEOX (3 Year / 5 stars / 535 funds; 5 Year / 4 stars / 520 funds; 10 Year / 5 stars / 395 funds; )
VLIFX (3 Year / 5 stars / 481 funds; 5 Year / 5 stars / 447 funds; 10 Year / 5 stars / 358 funds; )
VALLX (3 Year / 2 stars / 1027 funds; 5 Year / 1 stars / 949 funds; 10 Year / 2 stars / 745 funds; )
VALSX (3 Year / 4 stars / 1027 funds; 5 Year / 3 stars / 949 funds; 10 Year / 3 stars / 745 funds; )
VLAAX (3 Year / 5 stars / 682 funds; 5 Year / 3 stars / 628 funds; 10 Year / 5 stars / 490 funds; )
VALIX (3 Year / 2 stars / 682 funds; 5 Year / 3 stars / 628 funds; 10 Year / 4 stars / 490 funds; )
VAGIX (3 Year / 2 stars / 422 funds; 5 Year / 2 stars / 380 funds; 10 Year / 2 stars / 276 funds; )
Source: Morningstar Direct
How did the Fund perform in the fourth quarter and 1-year periods in 2024 compared to the Morningstar Moderate Allocation Category?
In the fourth quarter of 2024, the Fund’s return of 5.72% outperformed the Morningstar Moderate Allocation Category average return of -0.84%. For the 1-year period ended December 31, 2024, the Fund returned 21.23%, surpassing the category’s average return of 11.39% by almost 1,000 basis points.
In addition, we are pleased that the Fund’s performance ranked in the top 2% among its Morningstar category peers for the 1-year period and ranked in the top decile (10% or better) for the 5 and 10-year periods ended December 31, 2024.
Please visit the Fund’s performance page for complete performance information.
Source: Morningstar as of 12/31/24
What drove the Fund’s equity portfolio performance relative to the S&P 500 Index in 2024?
In 2024, the Fund’s equity portfolio outperformance relative to the S&P 500 was driven by a combination of sector allocation and stock selection. The Fund’s two largest contributing sectors were Information Technology (IT) and Financials.
IT: The Fund’s IT holdings gained 62% compared to the S&P’s IT gain of 37%. Two of the Fund’s biggest positive contributing stocks in the sector were MicroStrategy Inc. (MSTR) and NVIDIA Corp. (NVDA). MicroStrategy (+359%) provides enterprise analytics and mobility software incorporating Artificial Intelligence (AI), and it is one of the largest corporate holders of Bitcoin. NVIDIA (+171%) is the leader in accelerated computing and develops graphics processing units that are used in AI.
Financials: The Fund’s Financial sector companies rose 61% compared to the Index’s Financial companies which rose 31%. The Fund’s two biggest positive contributors in the sector were Robinhood Markets Inc. (HOOD) and Interactive Brokers Group Inc. (IBKR). Robinhood (+192%) is a financial services platform operator focused on retail brokerage. Interactive Brokers (+114%) is an automated global electronic broker providing trading and custody services.
What was the Fund’s allocation of equities and fixed income at year-end?
As of December 31, 2024, the Fund held 66% in equities, 28% in bonds and 6% in cash and equivalents. Within the fixed income portfolio, approximately 99% of the Fund’s debt securities were rated investment grade (rated AAA through BBB) as of December 31, 2024.
Within the Fund’s equity allocation, what do you view as the most important driver for stocks’ performance over time?
We believe that sales and earnings growth drive share price appreciation over time. As such, we strive to own a portfolio of companies that can collectively grow their future sales and earnings at faster rates compared to the S&P 500 Index. As of December 31, 2024, the Fund’s equity portfolio had a 3-year projected average annual sales growth rate, and a 3- to 5-year estimated forward earnings growth rate, that were 1.5X the rates of the S&P 500.