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 06/30/26, the Fund’s Top 10 Holdings were as follows:
Micron Technology Inc (7.29%),
Advanced Micro Devices Inc (6.43%),
NVIDIA Corp (3.74%),
Alphabet Inc Class A (3.53%),
Amazon.com Inc (2.88%),
Meta Platforms Inc Class A (2.78%),
Broadcom Inc (2.63%),
ARM Holdings PLC ADR (2.08%),
Exelixis Inc (2.03%),
Microsoft Corp (1.67%)
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 / 3 stars / 522 funds; 5 Year / 4 stars / 499 funds; 10 Year / 4 stars / 401 funds; )
VLIFX (3 Year / 2 stars / 459 funds; 5 Year / 4 stars / 441 funds; 10 Year / 4 stars / 377 funds; )
VALLX (3 Year / 4 stars / 978 funds; 5 Year / 2 stars / 928 funds; 10 Year / 2 stars / 751 funds; )
VALSX (3 Year / 1 stars / 978 funds; 5 Year / 2 stars / 928 funds; 10 Year / 1 stars / 751 funds; )
VLAAX (3 Year / 1 stars / 460 funds; 5 Year / 1 stars / 440 funds; 10 Year / 2 stars / 375 funds; )
VALIX (3 Year / 5 stars / 460 funds; 5 Year / 3 stars / 440 funds; 10 Year / 5 stars / 375 funds; )
Source: Morningstar Direct
Would you please discuss the market environment in Q2 2026 and how the Fund performed?
After a volatile start to the year, financial markets rebounded strongly during the second quarter as investor confidence improved and concerns surrounding inflation and energy prices began to ease. Equity markets led the recovery, with growth stocks outperforming value stocks as companies benefiting from artificial intelligence (AI), cloud computing, and digital infrastructure continued to report strong operating results. In the second quarter, the S&P 500 Index gained 15.20% and the blended 60% S&P 500 Index / 40% Bloomberg US Aggregate Bond Index gained 9.31%.
Against this backdrop, the Fund returned 20.00%, significantly outperforming the Morningstar Moderate Allocation Category average return of 8.22% during the quarter. The Fund also continued to deliver strong long-term results, ranking in the top decile (10% or better) for the 1, 3 and 10-year periods of the Morningstar Moderate Allocation Category as of June 30, 2026.
Please visit the Fund’s performance page for complete performance information.
Source: Morningstar as of 6/30/26
Within the Fund’s equity portfolio, what were the key drivers of performance relative to the S&P 500 Index?
Within the equity portfolio, relative performance was driven primarily by stock selection, with Information Technology (IT) providing the largest positive contribution. The Fund’s IT holdings benefited from continued investment in AI infrastructure and strong earnings results. The Fund’s IT stocks returned approximately 64%, widely outperforming the S&P’s IT sector return of 32%.
Several holdings made meaningful contributions during the quarter. Micron Technology Inc. (MU, +242%), Advanced Micro Devices Inc. (AMD, +186%), and ARM Holdings (ARM, +134%) were among the strongest performers as demand for memory, semiconductors, and AI-related computing infrastructure remained robust. The Fund also benefited from strong returns in CrowdStrike Holdings Inc. (CRWD, +95%), reflecting continued demand for cybersecurity solutions.
The primary detractors to performance were the Communication Services and Health Care sectors, where holdings such as Netflix Inc. (NFLX, -26%) and Insmed Inc. (INSM, -35%) were under significant pressure this quarter. While these companies weighed on relative results, we remain confident in their long-term competitive positions and growth prospects.
How was the Fund allocated at quarter-end?
As of June 30, 2026, the Fund was allocated approximately 65% to equities, 30% to fixed income, and 5% to cash. The Fund’s equity allocation is up from 63% as of the end of the prior quarter, driven by strong equity returns.
The fixed income portfolio continues to emphasize high-quality, investment-grade securities, with approximately 99% rated AAA through BBB.
What are the forward revenue and earnings growth rates of the Fund’s equity portfolio, and how do they compare to the S&P 500?
As of June 30, 2026, the Fund’s equity portfolio had a 3-year projected average annual sales growth rate of 35%, compared with 18% for the S&P 500 Index. The portfolio’s 3- to 5-year estimated forward earnings growth rate was 35%, versus 21% for the Index.
The Fund combines an above-market growth profile with attractive valuations. At quarter-end, the equity portfolio traded at approximately 19x forward price/earnings (P/E) multiple, below the S&P 500’s 20x forward P/E multiple. The portfolio’s strong projected longer term earnings growth rate resulted in a price/earnings to growth (PEG) ratio of just 0.54, compared with 0.98 for the Index. We believe this combination of faster expected growth and lower relative valuation positions the Fund well for long-term oriented investors.