MATTHEW 25 FUND, INC.
NOTICE OF SPECIAL MEETING
TO BE HELD
June 14, 1996
Notice is hereby given that a Special Meeting of Shareholders of the Matthew 25
Fund, Inc. will be held June 18, 1996, at 8:00 PM at 1375 Anthony Wayne Drive,
Wayne, Pennsylvania, for the following purposes:
1 - To elect six new directors to serve until until the next Annual Meeting
or until their successors are elected and qualified.
2 - To approve or disapprove a new Investment Advisory Agreement with a new
Investment Adviser, the Matthew 25 Management Corp.
3 - To consider and act upon any other matters that may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business June 3, 1996 as the re-
cord date for determination of the shareholders entitled to notice of and to
vote at the meeting.
IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON,
PLEASE FILL IN, SIGN AND RETURN THE ENCLOSED PROXY.
PROMPT RETURN OF THE PROXY WILL BE APPRECIATED.
MATTHEW 25 FUND, INC.
1375 Anthony Wayne Dr.
Wayne, PA 19087
PROXY STATEMENT
FOR SPECIAL MEETING OF SHAREHOLDERS
June 18, 1996
Enclosed herewith is a Notice of Special Meeting of Shareholders of the Matthew
25 Fund (the "Fund") and a Proxy form solicited by the majority shareholders of
the Fund. The Proxy may be revoked at any time before it is exercised either by
mail notice to the Fund, a later dated Proxy or in person at the meeting, and
any shareholder attending the meeting in person may vote at the Meeting whether
or not he has previously filed the Proxy.
You are requested to insert your instructions on the enclosed Proxy and then
sign, date and return it. The cost of soliciting Proxies will be borne by the
Fund.
There is one class of capital stock of the Fund with equal voting rights. On
June 3, 1996, the date of record, there were four shareholders and 42,609.608
shares outstanding. In all matters each share has one vote per share and frac-
tional shares will have an equivalent fractional vote. The shareholders as of
June 3, 1996 were as follows:
NAME SHARES PERCENT
---- ------ -------
Mark & Ann Mulholland 42,516.150 99.78%
Bernard B. Klawans 46.729 0.11%
Nancy W. Klawans 46.729 0.11%
---------- -------
42,609.608 100.00%
ELECTION OF DIRECTORS
There are six (6) nominees listed below who consent to serve as directors, if so
elected, until the next Annual Meeting of Shareholders.
Nominees for Election of Directors for Matthew 25 Fund
Principal Occupation Fund Shares Percent
Name Age Past Five Years Owned 4/30/96 of class
Steven D. Buck 36 Partner Stevens & Lee 0 0.00%
Esq. Reading, PA
Dr.Philip J. Cinelli 36 Physician Family Practice 0 0.00%
D.O. Bangor, PA
Samuel B. Clement 38 Stockbroker Legg Mason 0 0.00%
Bryn Mawr, PA
Linda Guendelsberger 36 Partner Fishbein & Co P.C. 0 0.00%
CPA Elkins Park, PA
Mark Mulholland* 36 Stockbroker Paine Webber 42,516.150** 99.78%
Jenkintown, PA
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Scott A. Satell 34 Partner BPI 0 0.00%
Manufacture's Rep Bala Cynwyd, PA
* Director of the Fund who would be considered "interested persons" as defined
by the Investment Company Act of 1940. Mark Mulholland will be an interested
person insofar as he is President and owner of the Fund's proposed Investment
Adviser.
** Mark Mulholland owns his stock jointly with his wife Ann Mulholland.
Shareholders have one vote, per each share they own, for each of the six direc-
tors . All Proxies returned to the Fund, except those specifically marked to
indictate abstention, will be cast for the nominees listed above. A majority of
the votes cast, when a quorum is present, will be required to elect each direc-
tor.
Directors and Officers of the Fund who are not affiliated with Valley Forge Man-
agreement Co.("VFMC"), the Fund's current Investment Adviser, received fees to-
taling $1,188 for the current year as of June 3, 1996. No Officer or Director
affiliated with VFMC received fees apart from the Investment Adviser Fees.
The Fund does not intend to pay fees to the proposed directors until such time
that the Fund's assets exceed $ 2,500,000.00, although the Fund will reimburse
directors for their traveling expenses. Mark Mulholland will receive benefit
from the investment advisory fees payable to Matthew 25 Management Corp. and
therefore will not be eligible to receive directors fees as long as his firm
acts as the Investment Adviser.
PROPOSAL TO RATIFY NEW INVESTMENT ADVISORY AGREEMENT
To consider and act upon a proposal to initiate a new Investment Advisory Agree-
ment with Matthew 25 Management (the 'Adviser') Corp. and to simultaneously ter-
minate the current Investment Advisory Agreement with Valley Forge Management
Corp. Matthew 25 Management Corp. is a Pennsylvania Corporation formed on April
28, 1995. The Adviser was formed for the primary purpose of advising the Fund.
Mark Mulholland is the President of the Adviser as well as the largest share-
holder. Mr. Mulholland intends to work as a Stockbroker with Paine Webber Inc.
while acting as President of the Fund and the Adviser. He has been a Stockbrok-
er with Advest Inc. or Paine Webber Inc. since February 14, 1983. Since Decem-
ber 23, 1992 he also acted as the General Partner of XXV Matthew Limited Patner-
ship, an investment partnership, however this partnership will become inactive
shortly after the acceptance of this Proxy.
VFMC and the Fund's Officers and Directors agreed to perform all required duties
from initiation of the Fund until a proxy could be filed and voted to elect the
proposed Directors and Adviser. This change is being done prior to allowing the
general public to purchase shares in the Fund.
This new Advisory Agreement, if accepted, will continue until the Annual Meeting
and then will be on a annual basis provided that approval is voted at least an-
nually by specific approval of the Board of Directors of the Fund or by vote of
the holders of a majority of the outstanding voting securities of the Fund, but,
in either event, it must also be approved by a majority of the directors of the
Fund who are neither parties to the agreement nor interested persons as defined
in the Investment Company Act of 1940 at a meeting called for the purpose of
voting on such approval. Under the Agreement, the Matthew 25 Management Corpor-
ation will furnish investment advice to the Fund & continually review the port-
folio in order to recommend to the Fund when and what should be purchased, held
or sold. The Agreement may be terminated at any time, without the payment of
any penalty, by the Board of Directors or by vote of a majority of the outstand-
ing voting shares of the Fund on not more than sixty days written notice to the
Matthew 25 Management Corp. In the event of its assignment, the Agreement will
terminate automatically. Ultimate decisions as to the investment policy and as
to specific purchases and sales of securities are made by the Fund's Officers
and Directors. For these services the Fund agrees to pay the Adviser a fee of
1% per year on the net assets of the Fund. All fees are computed daily on the
closing net asset value of the Fund and are payable monthly. The Investment Ad-
viser will forgo sufficient fees in order to hold total expenses of the Fund to
less than 2% of the first $10,000,000.00 in averaged assets and 1.5% of the next
$20,000,000.00. These ratios were selected by the Board of Directors because
they are believed to meet the most restrictive state requirements.
Pursuant to its contract with the Fund, the Adviser is required to render re-
search and Advisory services to the Fund; to make specific recommendations based
on the Fund's investment requirements; and to pay the salaries of the Fund's em-
ployees who are officers, directors or employees of the Adviser as well. Fees,
if any, of the custodian, registar, or tranfer agents shall be paid by the Fund.
The Fund pays all other expenses, including fees and expenses of directors not
affiliated with the Adviser; legal and accounting fees; interest, taxes and bro-
kerage commissions, bookkeeping and the expenses of operating its offices. The
Matthew 25 Management Corp. has paid the initial organization costs of the Fund.
BROKERAGE
The Fund requires all brokers to effect transactions in portfolio securities in
such a manner as to get prompt execution of the orders at the most favorable
price. The Fund will place all orders for purchases and sales of its portfolio
securities through the Fund's President who is answerable to the Fund's Board of
Directors. If the Fund's President is also a registered representative of a New
York Stock Exchange or NASDAQ Member Firm he may place orders through his con-
cern as long as the commission rates are as low as any other national brokerage
firm. He may select other brokers who meet the primary requirements of execu-
tion and price. The Board of Directors will evaluate and review the reasona-
bleness of brokerage commissions paid on a monthly basis initially and after
the first year of operation at least semiannually.
OTHER MATTERS
Management knows of no other matters to be presented at the Meeting other than
those mentioned above. Should other business come before the Meeting, the prox-
ies will be voted in accordance with the view of Management.
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PROXY - SOLICITED BY MAJORITY SHAREHOLDERS
MATTHEW 25 FUND INC. SPECIAL MEETING OF SHAREHOLDERS
June 14, 1996
The Special Meeting of the Matthew 25 Fund will be held June 14, 1996 at 1375
Anthony Wayne Dr., Wayne, PA at 12:00 AM. The undersigned hereby appoints Mark
Mulholland as proxy to represent and to vote all shares of the undersigned at
the Special Meeting of Shareholders and all adjournments thereof, with all pow-
ers the undersigned would posses if personally present, upon the matters speci-
fied below.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED: IF NO DIRECTION IS
INDICATED AS TO A PROPOSAL, THE PROXY SHALL VOTE FOR SUCH PROPOSAL. THE PROXY
MAY VOTE AT HIS DISCRETION ON ANY MATTER WHICH MAY PROPERLY COME BEFORE THE
MEETING.
The former Board of Directors recommends that you vote FOR on all items.
1. Election of Directors
____ FOR all nominees except as marked to the contrary below.
____ WITHHOLD AUTHORITY to vote for all nominees.
To withhold authority to vote for nominees, strike a line through his/
their name(s)
Mark Mulholland Steven D. Buck Dr. Philip J. Cinelli
Samuel B. Clement Linda Guendelsberger Scott A. Satell
2. Proposal to initiate a new Investment Advisory Agreement with Matthew 25 Man-
agement Corp. and to simultaneously terminate the current Investment Advisory
Agreement with Valley Forge Management Corp.
____ FOR ____AGAINST ____ABSTAIN
Please mark, date, sign and return the proxy promptly. For joint registrations,
both parties should sign.
Dated__________________, 1996
_________________________________________
Shareholder's Signature
_____________________________
No. of shares as of 5/15/96
_________________________________________
Shareholder's Signature
