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Value Line’s Growth/Income objective group is comprised of funds that place equal emphasis on capital growth and current income or growth of income, mainly through investments in common stocks. 

One fund with a relatively high year-to-date return through the four months ended April 30, 2010 is Olstein Strategic Opportunities Fund (OFSAX). This fund’s investment objective is long-term capital appreciation. Its secondary objective is income. 

To achieve its objectives, under normal circumstances, the fund invests primarily in common stocks of small- and mid-sized companies that management believes are selling at a significant discount to their cash flow-based calculation of private market value. 

The fund believes that undervalued small- and mid-cap stocks can offer good investment opportunities, especially when a company’s conservative accounting practices hide their ability to generate future free cash flow.

The fund sometimes takes an active role when taking a significant position in an undervalued stock. Management will approach such a company and suggest implementing strategies such as liquidation of non-core assets, share repurchases, a dividend of excess cash, a changed management team, material changes in management policies, or a merger or sale of the company. 

The fund may also invest in convertible securities and exchange traded funds. It may also invest up to 20% of its assets in ADRs of foreign companies, but limited to developed countries. 

Another fund with a very good year-to-date return is Hotchkis and Wiley Large Cap Value Fund (HWLAX). This fund seeks current income and long-term growth of income, as well as capital appreciation. 

To achieve these objectives, under normal circumstances, the fund invests at least 80% of its assets in common stocks of large-capitalization companies. Management considers large-cap companies to be those with market capitalizations similar to those found in the Russell 1000 Index.  As of June 30, 2009, the range was from $0.6 billion to $341.1 billion. The fund also invests in stocks with high cash dividends or payout yields relative to the market.  Management often invests in stocks whose prospects management believes are misunderstood or not fully recognized by the market. 

Management believes that a value-investing strategy provides greater risk-adjusted returns than growth investment strategies. Moreover, it believes that investors are better served owning low-expectation stocks that trade at discounts to the value of their future cash flows than high-expectation stocks that trade at premiums. The fund employs a disciplined, bottom-up research process to determine expected future cash flows. 

A third fund with a very good return through the first four months of 2010 is Royce Dividend Value Fund (RYDVX). This fund’s investment goals are long-term growth of capital and current income. 

To achieve these objectives, under normal circumstances, management invests at least 80% of its assets in dividend-paying securities of micro-cap, small-cap and/or mid-cap companies with market capitalizations up to $5 billion, and that are believed to be trading below their estimated current net worth. The fundamental analysis used to reach this conclusion is chiefly based on balance sheet quality and cash flow levels. 

The fund normally invests at least 80% of its assets in securities that produce dividend income. Also, it may invest up to 25% of total assets in foreign securities. 

In the table below, we have listed 10 top-performing funds through April 30, 2010 that we follow in our Fund Advisor database.

10 Top Growth/Income Funds Performance

Fund Name

Ticker

% Year-to-date

Total Return

% 1 Month

Total

Return

% 3

Month

Total

Return

% 6 Month

Total

Return

% 5 Year

Total

Return

Annualized

Olstein Strategic Opportunities A

OFSAX 

15.27

3.30

18.44

 

26.10

 

 

Hotchkis and Wiley Large Cap Value A

HWLAX 

13.95

2.92

15.91

19.85

-2.09

Royce Dividend Value

RYDVX 

13.06

3.98

15.88

20.96

7.72

Wright Selected Blue Chip Equities

WSBEX 

12.25

2.61

16.55

22.77

4.57

JPMorgan Value Advantage A

JVAAX 

12.05

3.57

12.71

22.03

6.30

Fidelity Advisor Strategic Dividend & Income A

FASDX 

10.72

3.84

13.95

21.02

3.23

Meridian Equity Income

MEIFX 

10.75

3.68

14.59

18.41

4.05

Goldman Sachs Structured Large Cap Value A

GCVAX 

10.11

3.03

13.26

17.98

0.13

Ivy Core Equity A

WCEAX 

10.08

2.92

14.48

17.67

4.84

Vantagepoint Select Value

VPSVX 

9.94

3.78

13.80

21.57

 

Growth/Income Objective Group

 

6.46

1.41

9.94

14.17

2.47