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[Outside front cover]
VALLEY FORGE FUND, INC.
Prospectus
May 25, 1999
Like all mutual funds, the Securities
and Exchange Commission has not ap-
proved or disapproved of these secur-
ities offered in the Prospectus and
has not passed upon the accuracy or
adequacy of this Prospectus. Any re-
presentation to the contrary is a
criminal offense.
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RISK/RETURN SUMMARY: INVESTMENTS, RISKS AND PERFORMANCE
Fund Investment Objectives/Goals
The Fund seeks to provide appreciation through investment in common stocks and
securities convertible into common stocks.
Principal Investment Strategies of the Fund
Security selections recommended by our Investment Adviser include companies that
have shown a general upturn in earnings accompanied by like dividend increases.
The Adviser also recommends companies that either lead or are in the process of
becomming leaders in their fields of endeavor. On occasion,companies will be
recommended because research and discussions with management indicate that the
stock price appears to be significantly undervalued.
Principal Risks of Investing in the Fund
Narrative Risk Disclosure: The Fund's total return, like stock prices generally,
goes up and down such that an investor may lose money over short and even long
periods of time. The Fund is also subject to manager risk which is the chance
that, in spite of Fund investment strategies, poor security selection will cause
the Fund to under perform other Funds with similar investment objectives.
Temporary Defensive Position: Because of the conservative intent of Fund man-
agement, the Fund may invest in large amounts of readily marketable short-term
commercial paper (60 days or less) paper with a quality rating of A2-P2 or bet-
ter to defend capital during such times that periods of falling common stock
prices are expected. These investment decisions made by the Adviser to defend
capital may reduce shareholder potential profits in extended periods of ris-
ing common stock prices. The Fund was 50% in commercial paper and money markets
at the end of 1998.
Risk/Return Bar Chart and Table: The bar chart and table below provide an indi-
cation of the risk of investing in the Fund. The bar chart shows the Fund's
performance in each year over a ten year period. The table shows how the Fund's
average annual returns for one, five and ten years compare with those of a broad
based market index. Please keep in mind that the Fund's presented performance
does not indicate how it may perform in the future.
"We were informed by Edgar personnel that bar chart requirements for this Pro-
spectus could not be handled under current filing conditions. We, therefore,
are presenting the data numerically herein which will be placed in the defin-
itive Prospectus in bar chart format upon notice that the new Prospectus has
been approved."
Valley Forge Fund Annual Total Returns
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
13.0 -5.7 7.9 9.3 17.1 5.9 10.6 6.2 6.0 3.8
Over the past ten years shown above, the highest return for a calendar quarter
was 10.22% (quarter ended March 1993) and the lowest return was -5.21% (quar-
ter ended September 1990)
Average Annual Total Returns for Years Ended December 31, 1998
1 Year 5 Years 10 Years
Valley Forge Fund 3.80 6.50 8.11
S&P 500 Index 28.58 14.06 19.21
Non-diversification Policy: The Fund is non-diversified which means that it may
invest a relatively high percentage of its assets in a limited number of securi-
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ties. As a result, the Fund may be more susceptible to a single negative eco-
nomic, political or regulatory occurrence. The Fund seeks only enough diversi-
fication in its security selections to maintain its federal non-taxable status
under Sub-Chapter M of the Internal Revenue Code.
RISK/RETURN SUMMARY: FEE TABLE
Fees and Expenses of the Fund
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the Fund.
Shareholder Fees (fees paid directly from your investment):
Maximum Sales Charge(Load) Imposed on Purchases: None
Maximum Deferred Sales Charge (Load): None
Maximum Sales Charge (Load) on Reinvested Dividends: None
Redemption Fee: None
Exchange Fee: None
Annual Fund Operating Expenses (expenses that are deducted from Fund assets):
Management Fees: 1.00%
Distribution [and/or Service] (12b-1) Fees: None
Other Expenses: 0.29%
Total Annual Fund Operating Expenses: 1.29%
Example: This example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then re-
deem all of your shares at the end of those periods. The example also assumes
that your investment has a 5% return each year and that the Funds operating ex-
penses remain the same. Although your actual costs may be lower, based on these
assumptions your costs would be:
1 year 3 years 5 years 10 years
$ 140 $ 440 $ 760 $1,680
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES, AND RELATED RISKS
Investment Objectives
The Fund seeks to provide capital appreciation through investment in common
stocks and securities convertible into common stocks. Purchases of issues list-
ed primarily on the New York Stock Exchange will be recommended by the Adviser
whenever he believes that a period of rising common stocks is expected soon.It
must be realized, as is true of almost all securities, there can be no assur-
ance that the Fund will obtain its ongoing objective of capital appreciation.
Principal Investment Strategies
Security Selection Criteria: As stated in the section Principal Investment Stra-
tegies of the Fund on page 1, security selections recommended by our Investment
Adviser include companies that have shown a general upturn in earnings accom-
panied by commensurate dividend increases. The Adviser also recommends com-
panies that either lead or are in the process of becoming leaders in their
fields of endeavor. On occasion,companies will be recommended because re-
search and discussions with management indicate that the stock price appears to
be significantly undervalued.
Portfolio Turnover Policy: In volatile markets, the Fund may engage in short-
term trading (selling securities within a year of purchase) in response to ra-
pidly changing market and particular security conditions. This would affect the
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taxes shareholders would have to pay in that the profits, if any, would be
treated as ordinary income rather than the lower rate on long-term capital
gains. Turnover of the Fund's porftfolio of securities was 108% in 1998, 60% in
1997 and 42% in 1996.
Risks
As said under Narrative Risk Disclosure on page 1, the Fund's total return, like
stock prices generally, goes up and down such that an investor may lose money
over short and even long periods of time. The Fund is also subject to manager
risk which is the chance that, in spite of Fund investment strategies, poor se-
curity selection will cause the Fund to underperform other Funds with similar
investment objectives.
MANAGEMENTS DISCUSSION OF FUND PERFORMANCE
The market continuing advance to new historic levels caused the Fund to place
over half of its assets into short term readily redeemable commercial paper.
This coupled with two poor stock picks held the Funds performance to less than
4% for the year 1998. A bar chart comparing the Fund's performance over the
past ten years with the S & P 500 Index performance over the same period
appears as:
20,195
Must add S&P 500 Data 19,455
18,358
17,283
15,622
14,753 Average Annual Total Return
12,597 1 Year 5 Years 10 Years
11,524 3.80% 6.50% 8.11%
11,296
10,684
10,000
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
Management
Investment Adviser: The Valley Forge Management Corp. (VFMC) is a Pennsylvania
corporation that acts as an Investment Adviser to the Fund. Mr. Bernard Klawans
is the owner, director and officer of the Investment Adviser and is also presi-
dent of the Fund.
On July 19, 1978 the shareholders of the Fund approved a management and advisory
contract with VFMC which was unanimously renewed by
the Directors August 11, 1998. This Agreement will continue on a year to year
basis provided that approval is voted at least annually 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 al-
so be approved by a majority of the directors of the Fund who are neither par-
ties to the agreement nor interested persons as defined in the Investment Com-
pany Act of 1940 at a meeting called for the purpose of voting on such approval.
Under the Agreement, VFMC will furnish investment
advice to the Directors of the Fund on the basis of a continuous review of the
portfolio and recommend to the Fund when and to what extent securities should be
purchased or disposed. 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 outstanding voting securities of the Fund on not more than 60 days
written notice to VFMC. In the event of its assignment,
the Agreement will terminate automatically. Ultimate decisions as to the in-
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vestment policy and as to individual purchases and sales of securities are made
by the Fund's officers and directors. For these services the Fund has agreed to
pay to VFMC a fee of 1% per year on the net assets of
the Fund. This fee is computed on the average daily closing net asset value of
the Fund, is payable monthly and is higher than the fee paid by most
other funds. VFMC would forgo sufficient
fees to hold the total expenses of the Fund to less than 1.5%. of its total
assets. All fees and expenses of the Fund incurred in 1998 were
1.29% of its averaged assets for the year 1998.
VFMC has a contract with the Fund wherein it is required to
render research, statistical, and advisory services to the Fund; to make speci-
fic recommendations based on the Fund's investment requirements; and to pay the
salaries of those of the Funds employees who may be officers or directors or em-
ployees of the Investment Advisor. Fees, if any, of the custodian, registrar or
transfer agents shall be paid by the Fund. The Fund pays all other expenses,
including fees and expenses of directors not affiliated with the Advisor; legal
and accounting fees; interest, taxes and brokerage commissions, recordkeeping
and the expense of operating its offices. VFMC has paid the
initial organizational costs of the Fund and will reimburse the Fund for any and
all losses incurred because of purchase reneges. It received $ 98,456 in man-
agement fees in 1998, $113,381 in 1997 and $114,409 in 1996.
Portfolio Manager: Mr. Klawans has been the portfolio manager of the Valley
Forge Fund since the Fund's inception in 1971. Although he manages the day to
day operations of the Fund, his only remuneration comes from receipt of the man-
agement fee earned by VFMC for portfolio investment advice.
Legal Proceedings: As of the date of this Prospectus, there was no pending or
threatened litigation involving the Fund in any capacity whatsoever.
Capital Stock
Description of Common Stock: The authorized capitalization of the Fund consists
of 10,000,000 shares of common stock of $0.001 par value per share. Each share
has equal dividend, distribution and liquidation rights. There are no conver-
sion or pre-emptive rights applicable to any shares of the Fund. All shares
issued are fully paid and non-accessible.
Voting Rights: Each holder of common stocks has one vote for each share held.
Voting rights are non-cumulative. Therefore the holders of a majority of shares
of common stock can elect all directors of the Fund if they so choose, and the
holders of the remaining shares cannot elect any person as a director.
SHAREHOLDER INFORMATION
Who May Invest:Investors seeking a fund that desires modest fluctuations under
all market conditons and are willing to accept underperformance on the upside
in times of extraordinary market moves to achieve the desired preservation of
capital by going to large short-term cash positions.
Who Should Not Invest:Investors desiring high risk increases in net asset value
and are willing to accept significant fluctuations in share prices.
Pricing of Fund Shares
When and How do We Price: The net asset value of the Fund's shares is determin-
ed as of the close of each business day the New York Stock Exchange is open
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(presently 4:00 p.m.) Monday through Friday exclusive of Washington's Birthday,
Good Friday, Memorial Day, July 4th, Labor Day, Thanksgiving, Christmas & New
Year's Day. The price is determined by dividing the value of its securities,
plus any cash and other assets less all liabilities, excluding capital surplus,
by the number of shares outstanding.
Market Value of Securities: The market value of securities held
by the Fund that are listed on a national exchange is determined to be the last
recent sales price on such exchange. Listed securities that have not recently
traded and over-the-counter securities are valued at the last bid price in such
market. Short-term paper (debt obligations maturing in less than 61 days) is
valued at amortized cost which approximates market value. Other assets are val-
ued at fair market value as determined in good faith by the Board of Directors.
Purchase of Fund Shares
The offering price of the shares offered by the Fund is at the net asset value
per share next determined after receipt of the purchase order by the Fund and is
computed in the manner described in the above section "Pricing of Fund Shares".
The Fund reserves the right at its sole discretion to terminate the offering of
its shares made by this Prospectus at any time and to reject purchase applica-
tions when, in the judgment of management such termination or rejection is in
the best interests of the Fund.
Initial Investments: Initial purchase of shares of the Fund may be made only by
application submitted to the Fund. For the convenience of investors, a Share
Purchase Application form is provided with this Prospectus. The minimum initial
purchase of shares is $1,000 which is due and payable three business days after
the purchase date. Less may be accepted under especial circumstances.
Subsequent Purchases: Subsequent purchases may be made by mail or by phone and
are due and payable three business days after the purchase date. The minimum is
$100, but less may be accepted under especial circumstances.
Fractional Shares: Fractional shares to four decimal places are now offered by
the Fund.
Redemption of Fund Shares
Endorsement Requirements: The Fund will redeem all or any part of the shares of
any shareholder who tenders a request for redemption (if certificates have not
been issued) or certificates with respect to shares for which certificates have
been issued. In either case, proper endorsements guaranteed either by a nation-
al bank or a member firm of the New York Stock Exchange will be required unless
the shareholder is known to management.
Redemption Price: The redemption price is the net asset value per share next de-
termined after notice is received by the Fund for redemption of shares. The
proceeds received by the shareholder may be more or less than his cost of such
shares, depending upon the net asset value per share at the time of redemption
and the difference should be treated by the shareholder as a capital gain or
loss for federal income tax purposes.
Redemption Payment: Payment by the Fund will ordinarily be made within three
business days after tender. The Fund may suspend the right of redemption or
postpone the date of payment if: The New York Stock Exchange is closed for other
than customary weekend or holiday closings, or when trading on the New York
Stock Exchange is restricted as determined by the Securities and Exchange Com-
mission or when the Securities and Exchange Commission has determined that an
emergency exists, making disposal of fund securities or valuation of net assets
not reasonably practicable. The Fund intends to make payments in cash, however,
the Fund reserves the right to make payments in kind.
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Dividends and Distributions
Re-Investments: The Fund will automatically use the taxable dividend and capi-
tal gains distributions for purchase of additional shares for the shareholder
at net asset value as of the close of business on the distribution date.
Cash Payouts: A shareholder may, at any time, by letter or forms supplied by the
Fund direct the Fund to pay dividend and/or capital gains distributions, if any,
to such shareholder in cash.
Tax Consequences
Under provisions of Sub-Chapter M of the Internal Revenue Code of 1986 as amend-
ed, the Fund, by paying out substantially all of its investment income and rea-
lized capital gains, has been and intends to continue to be relieved of federal
income tax on the amounts distributed to shareholders. In order to qualify as
a "regulated investment company" under Sub-Chapter M, at least 90% of the Fund's
income must be derived from dividends, interest and gains from securities trans-
actions, and no more than 50% of the Fund's assets may be in security holdings
that exceed 5% of the total assets of the Fund at the time of purchase.
Tax Distributions: Distribution of any net long term capital gains realized by
the Fund in 1998 will be taxable to the shareholder as long term capital gains,
regardless of the length of time Fund shares have been held by the investor.
All income realized by the Fund, including short term capital gains, will be
taxable to the shareholder as ordinary income. Dividends from net income will
be made annually or more frequently at the discretion of the Fund's Board of
Directors. Dividends received shortly after purchase of shares by an investor
will have the effect of reducing the per share net asset value of his shares by
the amount of such dividends or distributions and, although in effect a return
of capital, are subject to federal income taxes.
Federal Withholding: The Fund is required by federal law to withhold 31% of
reportable payments (which may include dividends, capital gains, distributions
and redemptions) paid to shareholders who have not complied with IRS regula-
tions. In order to avoid this withholding requirement, you must certify on a
W-9 tax form supplied by the Fund that your Social Security or Taxpayer Identi-
fication Number provided is correct and that you are not currently subject to
back-up withholding, or that you are exempt from back-up withholding.
DISTRIBUTION ARRANGEMENTS
The Fund is a truly no-load fund in that there are NO purchase or sales fees and
no 12b-1 fees and no account maintenance fees whatsoever.
FINANCIAL HIGHLIGHTS INFORMATION
Financial Highlights: The financial highlights table is intended to help you un-
derstand the Fund's financial performance for the past 5 years. Certain infor-
mation reflects financial results for a single Fund share. The total returns in
the table represent the rate that an investor would have earned (or lost) on an
investment in the Fund (assuming reinvestment of all dividends and distribu-
tions). This informations has been audited by Mathieson Aitken Jemison, LLP,
whose report, along with the Fund's financial statements, are included in the
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Statement of Additional Information, which is available upon request.
Years Ended December 31
1998 1997 1996 1995 1994
Net asset value Jan. 1st $ 8.96 $ 9.36 $ 9.48 $ 9.41 $ 9.51
Investment operations income:
Net investment income $ .28 .30 .32 .33 .19
Realized & unrealized cap gains .06 .26 .27 .67 .39
-----------------------------------------------
Investment operations totals 9.30 9.92 10.07 10.41 10.09
Less distributions:
Dividend from net investment inc $ (.33) (.33) (.31) (.33) (.20)
Dividend from capital gain (.63) (.40) (.60) (.48) (.88)
------------------------------------------------
Net asset value Dec. 31st $ 8.32 $ 8.96 $ 9.36 $ 9.48 $ 9.41
================================================
Total return 3.79% 5.98% 6.22% 10.63% 5.90%
Ratios/Supplemental Data:
Net assets Dec 31st in (000)'s $ 8,914 $10,800 $11,423 $11,151 $10,725
================================================
Ratios to Average Net Assets:
Expenses 1.3% 1.3% 1.4% 1.3% 1.4%
Net investment income 3.2% 3.2% 3.2% 3.2% 1.8%
Portfolio turnover rate 107.6% 59.7% 42.2% 15.7% 53.7%
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WHERE TO GO FOR MORE INFORMATION
You Will Find More Information About The Valley Forge Fund, Inc. In The
Following Documents:
Statement of Additional Information (SAI) - The Statement of Additional Infor-
mation contains additional and more detailed information about the Fund, and is
considered to be a part of this Prospectus.
Annual and Semi-annual Reports - Our annual and semi-annual reports give current
holdings and detailed financial statements of the Fund as of the end of the per-
iod presented. In addition, market conditions and Fund strategies that affected
the Fund's performance are discussed.
THERE ARE TWO WAYS TO GET A COPY OF ONE OR MORE OF THESE DOCUMENTS:
1. Call or write for one, and a copy will be sent without charge.
Valley Forge Fund, Inc.
1375 Anthony Wayne Dr.
Wayne, PA. 19087
1-800-548-1942
2. You may also obtain information about the Fund (including the Statement of
Additional Information and other reports) from the Securities and Exchange
Commission on their Internet site at http://www.sec.gov or at their Public
Reference Room in Washington, D.C. Call the Securities and Exchange Com-
mission at 1-800-sec-0330 for room hours and operation. Yo u may also obtain
Fund information by sending a written request and duplicating fee to the Pub-
lic Reference Section of the SEC, Washington, D.C. 20549-6609.
Please contact the Fund at the above address if you wish to
request other information and/or more shareholder inquires.
WHY YOU SHOULD READ THIS PPROSPECTUS
Every attempt has been made to present the objectives, risks and strategy of the
Fund in plain and, hopefully, easily understandable language. The Prospectus is
designed to aid you in deciding whether this is one of the right investments for
you. We sugges that you keep it for future reference.
VALLEY FORGE FUND, INC. - SEC file number 811-2287
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VALLEY FORGE FUND, INC.
1375 Anthony Wayne Drive
Wayne, PA. 19087
Telephone Numbers
610-688-6839 800-548-1942
Part B
STATEMENT OF ADDITIONAL INFORMATION
MAY 25, 1999
This Statement is not a prospectus, but should be read in conjunction with the
Fund's current Prospectus dated May 25, 1999. To obtain the Prospectus, you
may write the Fund or call either of the telephone numbers that are shown above.
TABLE OF CONTENTS
FUND HISTORY ................................................. 1
DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
Classification .......................................... 1
Investment Strategies and Risks ......................... 1
Fund Policies ........................................... 1
Temporary Defensive Position and Portfolio Turnover ..... 2
Portfolio Turnover ...................................... 2
MANAGEMENT OF THE FUND
Board of Directors ...................................... 2
Management Information .................................. 2
Compensation and Sales Loads ............................ 2
CONTRON PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Control Persons ......................................... 2
Principal Holders ....................................... 3
Management Ownership .................................... 3
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Adviser ...................................... 3
Principal Underwriter.................................... 3
Services Provided by Investment Adviser ................. 3
Third Party Payments and Service Agreements ............. 3
Other Investment Advice ................................. 3
Dealer Reallowances and Other Services .................. 3
BROKERAGE ALLOWANCES AND OTHER PRACTICES
Brokerage Transactions .................................. 3
Commissions ............................................. 3
Brokerage Selection ..................................... 3
Directed Brokerage and Regular Broker Dealers ........... 4
CAPITAL STOCK AND OTHER SECURITIES
Capital Stock and Other Securities ....................... 4
PURCHASE, REDEMPTION, AND PRICING OF SHARES
Purchase of Shares ....................................... 4
Fund Reorganizations ..................................... 4
Offering Price and Redemption in Kind .................... 4
Redemption in Kind ....................................... 4
TAXATION OF THE FUND ......................................... 4
UNDERWRITERS ................................................. 4
CALCULATION OF PERFORMANCE DATA ............................... 4
FINANCIAL STATEMENTS
Auditors Report .......................................... 5
Schedule of Investments in Securities - Dec. 31, 1998 .... 6
Statement of Assets & Liabilities - Dec. 31, 1998 ........ 7
Statement of Operations, Year Ended Dec. 31, 1998 ........ 7
Statement of Change in Net Assets ........................ 8
Notes to Financial Statements ............................ 8
Financial Highlights on a Per Share Basis and Ratio Data .10
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FUND HISTORY
VALLEY FORGE FUND, INC. (also referred to as the "Fund") was incorporated in
Delaware on June 1, 1971. It became a Pennsylvania corporation via domestica-
tion on August 11, 1988. The Fund's registered office is in Wayne, Pa.; mail
may be addressed to Box 262, Valley Forge, Pa. 19481.
DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
Classification
The Fund is an open-end, totally no-load, non-diversified management investment
company.
Investment Strategies and Risks
All investment strategies and risks were thoroughly discussed in the Prospectus.
No additional strategies and risks exist to be discussed here.
Fund Policies
Investment Restrictions: Investment restrictions were selected to aid in main-
taining the conservative nature of the Fund. These may not be changed except by
the approval of a majority of the outstanding shares; i.e. a) 67% or more of the
voting securities present at a duly called meeting, if the holders of more than
50% of the outstanding voting securities are present or represented by proxy, or
b) of more than 50% of the outstanding voting securities, whichever is less:
a) Sell senior securities
b) Borrow money or purchase securities on margin, but may obtain such short term
credit as may be necessary for clearance of purchases and sales of securities
for temporary or emergency purposes in an amount not exceeding 5% of the val-
ue of its total assets.
c) Act as underwriter for securities of other issuers except insofar as the Fund
Fund may be deemed an underwriter in selling its own portfolio securities.
d) Invest over 25% of its assets at the time of purchase in any one industry.
e) Make investments in commodities, commodity contracts or real estate although
the Fund may purchase and sell securities of companies which deal in real
estate or interests therein.
f) Make loans. The purchase of a portion of a readily marketable issue of pub-
licly distributed bonds, debentures or other debt securities will not be con-
sidered the making of a loan.
g) Sell securities short.
h) Invest in securities of other investment companies except as part of a mer-
ger, consolidation, or purchase of assets approved by the Fund's sharehold-
ers or by purchases with no more than 10% of the Fund's assets in the open
market involving only customary brokers commissions.
i) Acquire more than 10% of the securities of any class of another issuer,
treating all preferred securities of an issuer as a single class and all debt
securities as a single class, or acquire more than 10% of the voting securi-
ties of another issuer.
j) Invest in companies for the purpose of acquiring control.
k) The Fund may not purchase or retain securities of any issuer if those offi-
cers and directors of the Fund or its Investment Advisor owning individually
more than 1/2 of 1% of any class of security or collectively own more than
5% of such class of securities of such issuer.
l) Pledge, mortgage or hypothecate any of its assets.
m) Invest in securities which may be subject to registration under the Securi-
ties Act of 1933 prior to sale to the public or which are not at the time of
purchase readily salable.
n) Invest more than 5% of the total Fund assets, taken at market value at the
time of purchase, in securities of companies with less than three years con-
tinuous operation, including the operations of any predecessor.
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Temporary Defensive Position & Portfolio Turnover
Why and how the Fund assumes defensive positions expectations of the amount and
effect of portfolio turnover are discussed on page 2 of our Prospectus.
MANAGEMENT OF THE FUND
Board of Directors
Shareholders meet annually to elect all members of the Board of Directors, se-
lect an independent auditor, and vote on any other items deemed pertinent by the
incumbent Board. The Directors are in turn responsible for determining that the
Fund operates in accordance with its stated objectives, policies, and investment
restrictions. The Board appoints officers to run the Fund & selects an Invest-
ment Adviser to provide investment advice (See Investment Adviser, pg 5 of the
Prospectus). It meets six times a year to review Fund progress & status.
ManagementInformation
Officers and Directors of the Fund: Their addresses and principal occupations
during the past five years are:
Name and Address Position Principal Occupation Past 5 Yrs
Bernard B. Klawans President President
1375 Anthony Wayne Dr. Interested Director Valley Forge Fund, Inc.
Wayne, PA. Age 78 Valley Forge, PA.
Dr. Gerd H. Dahl Secretary Ag. Chem Research Retired
679 Jefferson Rd. Interested Director Elf Atochem
Bryn Mawr, PA. Age 68 Philadelphia, PA.
Victor J. Belanger Non-Interested VP & Chief Financial Officer
P.O. Box #96, Director Linearizer Technologies Inc.
Princeton Jct., NJ. Age 57 Robbinsville, NJ.
Dr. James P. King Non-Interested President
904 Breezwood Lane Director Desilube Technology Inc.
Lansdale, PA. Age 67 Lansdale, PA.
Donald A. Peterson Non-Interested Project Manager
3741 Worthington Rd. Director Lockeed Martin
Collegeville, PA. Age 58 King of Prussia, PA.
William A. Texter Non-Interested Manager Corp. Nuclear Quality
9 Charter Oak Dr. Director PECO Energy Co.
Newtown Sq., PA. Age 52 Philadelphia, PA.
Nancy W. Klawans Treasurer Treasurer
1375 Anthony Wayne Dr. Wife of President Valley Forge Fund, Inc.
Wayne, PA. Age 78 Valley Forge, PA.
Compensation and Sales Load: A total of $3,717 has been paid in 1998 to officers
and directors of the Fund to compensate for travel expenses associated with
their Fund duties. The Fund does not compensate officers and directors that are
affiliated with the Investment Adviser except as they may benefit through pay-
ment of the Advisory fee. There are no sales loads whatsoever.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Control Persons
There are no companies or persons that control the Fund. The Fund is controled
by its Board of Directors and run by its elected officers.
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Principal Holders
Bernard B. Klawans, the president of the Fund, Portfolio Manager and owner of
the Investment Adviser owns 6.93% of the Fund. He may be reached at the Fund's
address.
Management Ownership
All officers and directors own 12.45% of the outstanding shares of the Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Adviser
Mr. Bernard B. Klawans owns the Investment Adviser and acts as the Portfolio Ad-
viser.
Principal Underwriter
The Fund acts as its own underwriter, performing all shareholder services func-
tions.
Services Provided by the Investment Adviser
The Investment adviser is responsible for furnishing investment direction advice
to the Directors of the Fund on the basis of a continuous review of the port-
folio and recommend to the Fund when and to what extent securities should be
purchased or disposed
Third-Party Payments and Service Agreements
There are no third party payments of any kind or service agreements with any or-
ganization or individual other than the Invesrtment Adviser as described in the
previous paragraph.
Other Investment Advice
There is no individual or organization that receives remunertion from the In-
vestment Adviser or the Fund for providing investment advice except brokers that
receive competetive commissions on the purchase and sale of the Fund's securi-
ties.
Dealer Reallowances and Other Services
Ther are no dealer reallowances, Rule 12b-1 plans, paid advertising, compensa-
tion to underwriters or broker dealers, sales personnel or interest, carring or
other finance charges. The Fund does send Prospectuses when it receives unsoli-
cited requests and pays Delaware Charter and Gurantee to act as IRA trustee for
Fund shareholders.
BROKERAGE ALLOCATION AND OTHER PRACTICES
Brokerage Transactions
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.
Commissions
Other than set forth above, the Fund has no fixed policy, formula, method, or
criteria which it uses in allocating brokerage business to brokers furnishing
these materials and services. In its most recently completed year, 1998, the
Fund paid $38,375 in brokerage commissions. Brokerage comissions were $17,324
in 1996 and $14,717 in 1995. The Board of Directors evaluates and reviews the
reasonableness of brokerage commissions paid semiannually.
Brokerage Selection
The Fund will place all orders for purchase & sale of its portfolio securities
through the Fund's President who is answerable to the Fund's Board of Directors.
- 3 -
<PAGE>
He may select brokers who, in addition to meeting primary requirements of exe-
cution and price, may furnish statistical or other factual information and ser-
vices, which, in the opinion of management, are helpful or necessary to the
Fund's normal operations. Information or services may include economic studies,
industry studies, statistical analyses, corporate reports, or other forms of as-
sistance to the Fund or its Adviser. No effort is made to determine the value
of these services or the amount they might have reduced expenses of the Adviser.
Directed Brokerage and Regular Broker-Dealers
The Fund and Investment Adviser receives unsolicited soli-
citations and literature from many brokers. It is impossible to evaluate the
usefullness of the information received. The Fund selects brokers based on com-
petive commission rates and transaction services rendered. The Fund does not
hold securities of any broker-dealer.
CAPITAL STOCK AND OTHER SECURITIES
Capital stock and other securities are discussed at length in our Prospectus un-
der Section Capital Stock on Page 4.
PURCHASE, REDEMPTION, AND PRICING OF SHARES
Purchase of Shares
Purchase of Fund shares is discussed at length in the section entitled Purchase
of Fund Shares on page 5 of our Prospectus
Fund Reorganizations
The Fund was incorporated in Delaware on June 1, 1971. The shareholders
voted to become a Pennsylvania corporation via domestication on August 11, 1988.
There have been no other reorganization efforts to date.
Offering Price and Redemption in Kind
The Fund always trades at the net asset value. That means that the offering and
redemption prices are always the same. Details about the offering price are
given in the section entitled Pricing of Fund shares on page 5 of our
Prospectus. Redemption in kind is discussed in the section Redemption of
Shares on page 5 of our Prospectus.
TAXATION OF THE FUND
Taxation of the Fund is discussed in the section Tax Consequences on page 6 of
our Prospectus.
UNDERWRITERS OF THE FUND
The Fund is its oun registered transfer agent and handles all Fund share pur-
chases and redemptions. There are no direct shareholder charges for these ser-
vices. Stock certificates will be issued upon request, but are discouraged be-
cause of the chance of loss and the accompaning costs of reissue indemnfication.
All other shareholder holdings are maintained in book form.
CALCULATION OF PERFORMANCE DATA
Average Annual Total Return Quotation: The average ending redeemable values on
December 31, 1998 of a hypothetical $1,000 investment made 1 year ago would have
been $1,038, at 5 years ago it would have been $1,369 and at 10 years ago it
would have been $2,182.
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<PAGE>
LANDSBURG PLATT RASCHIATORE & DALTON
Certified Public Accountants
117 South 17th Street 13th Floor
Philadelphia, PA 19103
215-561-6633
Fax 215-561-2070
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
Valley Forge Fund, Inc.
We have audited the accompanying statement of assets and liabilities of Valley
Forge Fund, Inc., including the portfolio of investments in securities as of
December 31, 1998, the related statement of operations for the year then ended,
the statement of changes in net assets for each of the two years in the period
then ended, and the financial highlights and related ratios/supplemental data
for each of the five years in the period then ended. These financial statements
and financial highlights and related ratios/supplemental data are the responsi-
bilty of the Fund's management. Our responsibility is to express an opinion on
these financial statements and related ratios/supplementa data based on our
audits. The financial statements for the year ended December 31, 1997 were au-
dited by Landsburg, Platt, Raschiatore & Dalton, who merged with Mathieson
Aitken Jemison, LLP as of January 1, 1999, whose auditors'report was dated Jan-
uary 27, 1998.
We conducted our audits in accordance with generally accepted auditing stand-
ards. Those standards require that we plan and perform the audit to obtain re-
asonable assurance about whether the financial statements and financial high-
lights and related ratios/supplemental data are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included confirma-
tion of securities owned as of December 31, 1998, verified by examination and by
correspondence with brokers and the application of alternative auditing proce-
dures for unsettled security transactions. An audit includes assessing the ac-
counting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the selected per share data and ra-
tios referred to above present fairly, in all material respects, the financial
position of Valley Forge Fund, Inc. as of December 31, 1998, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the selected per share ratios for
each of the five years in the period then ended, in conformity with generally
accepted accounting principles.
Mathieson Aitken Jemison, LLP
January 14, 1999
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<PAGE>
VALLEY FORGE FUND, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES - YEAR ENDED DECEMBER 31, 1998
# Shares or
Princ Amt Value
COMMON STOCKS: 38.51%
MISCELLANEOUS 11.09%
Browning-Ferris Industries 4,000 $ 113,500
Disney (Walt) Co. 4,000 119,000
Dun & Bradstreet 4,000 126,248
Ryder Systems 4,000 104,000
St. Paul Companies 9,026 313,654
Texaco, Inc. 4,000 212,000
-----------
988,402
MANUFACTURING 8.47%
Boeing, Inc. 8,000 261,000
Clayton Homes 12,000 165,744
duPont de Nemours 4,000 212,248
Hughes Supply 4,000 116,000
-----------
754,992
METALS 3.94%
Kinross Gold, Inc. * 25,612 59,215
Homestake Mining 32,000 292,000
-----------
351,215
RETAILERS 15.01%
Burlington Coat Factory 4,000 65,248
Pep Boys 24,000 376,488
Supervalu Inc. 32,000 896,000
-----------
1,337,736
-----------
TOTAL COMMON STOCKS (Cost $4,063,743) 3,432,345
PREFERRED STOCKS: 6.24%
Battle Mountain Gold $3.25 cm Cv Pfd 12,000 448,500
Coeur Dalene Mines adj red Cv Pfd 16,000 108,000
-----------
TOTAL PREFERRED STOCKS (Cost $878,214) 556,500
BONDS: 5.16%
Boston Chicken 4.5% 02/01/04 sub deb Cv * 500,000 20,000
US Treasury Bond Strip Prin Amt due 2/15/27 2,000,000 440,000
-----------
TOTAL BONDS (Cost $844,668) 460,000
SHORT TERM INVESTMENT: 49.96%
Boston Scientific 5.85% due 2/16/99 495,125 495.125
Penn Power & Light 5.95% due 01/21/99 1,485,373 1,485,373
Royal Bank Gold Money Market 4.46% 2,472,816 2,472,816
-----------
TOTAL SHORT TERM INVESTMENT (Cost $ 4,453,314) 4,453,314
-----------
TOTAL SECURITY INVESTMENTS 99.87% (Cost $10,239,939) $ 8,902,159
===========
See accompanying notes to financial statements.
* Non income producing security
- 6 -
<PAGE>
VALLEY FORGE FUND, INC.
STATEMENT OF ASSETS & LIABILITIES - DECEMBER 31, 1998
ASSETS: Investments in securities, at value (cost $10,239,939) $ 8,902,159
Cash 8,298
Receivable for securities sold 63,794
Receivable for interest and dividends 14,795
-----------
TOTAL ASSETS 8,989,046
LIABILITIES: Management fee payable 7,657
Payable for investment securities purchased 67,610
-----------
TOTAL LIABILITIES 75,267
-----------
NET ASSETS (equivalent to $8.32/sh based on 1,071,105 sh of cap-
ital stock outstanding, 10 million authorized, $.001 par value) $ 8,913,779
===========
COMPOSITION OF NET ASSETS: Shares of common stock $ 1,071
Paid in capital 10,170,936
Accumulated net investment income 79,552
Net unrealized depreciation of investments (1,337,780)
===========
NET ASSETS, DECEMBER 31, 1998 $ 8,913,779
===========
STATEMENT OF OPERATIONS -YEAR ENDED DECEMBER 31, 1998
INVESTMENT INCOME: Dividends $ 109,478
Interest 327,979
Miscellaneous 5,473
-----------
TOTAL INVESTMENT INCOME 442,930
EXPENSES: Audit 1,400
Blanket brokers bond 1,365
Computer services 6,000
Management fee 98,456
Officer & director expense 3,717
Office expenses 11,435
Registration, filing fees & franchise taxes 4,114
-----------
TOTAL EXPENSES 126,487
-----------
INVESTMENT INCOME, NET 316,443
------------
NET REALIZED GAIN ON SECURITIES TRANSACTIONS: 618,976
NET CHANGE IN UNREALIZED DEPRECIATION OF INVESTMENTS: (539,348)
-----------
NET GAIN ON INVESTMENTS: 79,628
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS: $ 396,071
===========
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<PAGE>
VALLEY FORGE FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS - YEARS ENDED DECEMBER 31, 1999 & 1998
INCREASE IN NET ASSETS FROM OPERATIONS: I998 1997
Investment income - net $ 316,443 $ 358,407
Net realized gain on securities transactions 676,368 450,824
Net change in unrealized depreciation of investments (539,348) (372,523)
----------- -----------
Net inc in net assets resulting from operations 396,071 662,252
Dist to shareholders from inv income - net (320,288) (360,535)
Dist to shareholders from net realized gain on inv (622,301) (688,293)
Net capital share transactions (1,339.707) (236,397)
----------- -----------
NET DECREASE IN NET ASSETS (1,886,225) (622,973)
NET ASSETS, BEGINNING OF YEAR: 10,800,004 11,422,977
----------- ------------
NET ASSETS, END OF YEAR: $ 8,913,779 $10,800,004
=========== ===========
NOTES TO FINANCIAL STATEMENTS
NOTE 1 SUMMARY, SIGNIFICANT ACCOUNTING POLICIES: Valley Forge Fund ("the Fund")
is registered under the Investment Company Act of 1940, as amended, as a non-
diversified, open-end management investment company. The following is a sum-
mary of the significant accounting policies consistently followed by the Fund in
the preparation of its financial statements. The policies are in conformity
with generally accepted accounting principles.
The Fund values its securities, where market quotations are readily available,
at market value based on the last recorded sales price as reported by the prin-
cipal securities exchange on which the security is traded, or if the security
is not traded on an exchange, market value is based on the latest bid price.
Short term investments are valued at cost. Amortization of the discount on
these holdings are reflected in accrued interest. Zero coupon bonds are amor-
tized to investment income by the interest method. The amortization is included
in the cost of investments in determining the net change in unrealized apprecia-
tion/depreciation on investments.
The Fund's policy is to comply with the requirements of the Internal Revenue
Code that are applicable to regulated investment companies and to distribute all
its taxable income to its shareholders. Therefore no federal income tax provi-
sion is required.
The Fund intends to distribute to shareholders substantially all of its net in-
vestment income and net realized long-term capital gains at year end.
The Fund follows industry practice and records security transactions on the
trade date. The specific identification method is used for determining gains or
losses for financial statements ans income tax purposes. Dividend income is re-
corded on the ex-dividend date and interest income on an accrual basis.
ESTIMATES: The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and assump-
tions that affect the reported amount of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
NOTE 2 CAPITAL SHARE TRANSACTIONS: As of 12/31/98, total par value and paid in
capital totaled $10,172,007.
- 8 -
<PAGE>
NOTE 2 CAPITAL SHARE TRANSACTIONS: (continued) These were as follows:
Years ended December 31,
1998 1997
Shares Amount Shares Amount
-------- ------------ --------- -----------
Shares sold 78,346 $ 724,610 78,260 $ 777,806
Shares issued in reinvest of div 109,912 910,071 113,309 1,011,850
Shares redeemed (322,991) (2,974,388) (206,543) (2,026,053)
--------- ------------ --------- -----------
Net (decrease) increase (134,733) $(1,339,707) (14,974) $ (236,397)
========= ============ ========= ===========
NOTE 3 INVESTMENTS: For the year ended December 31, 1998, purchases and sales of
investment securities other than short-term investments aggregated $10,560,901
and $10,765,528 respectively. The gross unrealized appreciation for all securi-
ties totaled $502,126 and the gross unrealized depreciation for all securities
totaled $1,839,906 or a net unrealized depreciation of $1,337,780. The aggregate
cost of securities for federal income tax purposes at December 31, 1998 was
$10,239,939.
Net realized gain on investments for the year ended Dec. 31, 1998 was $618,976,
all of which were long transactions.
NOTE 4 INVESTMENT ADVISORY AGREEMENT & OTHER RELATED TRANSACTIONS: The Fund has
an investment advisory agreement with the Valley Forge Management Corp., (VFMC)
whereby VFMC receives a fee of 1% per year on the net assets of the Fund. All
fees are computed on the average daily closing net asset value of the Fund and
are payable monthly. For the year ended December 31, 1998 VFMC received $98,456
in investment advisory fees.
Mr Bernard Klawans is the sole owner, director and officer of VFMC and is also
president of the Fund. Mr. Klawans also received $6,000 this year from the Fund
for computer leasing.
NOTE 5 DISTRIBUTION TO SHAREHOLDERS: On Dec. 31, 1998, a distribution of $.98
per share aggregating $942,589 was paid to shareholders of record on Dec. 31,
1998 from net investment income ($.333 per share is treated as ordinary income &
$.647 per share as distribution from capital gains).
- 9 -
<PAGE>
VALLEY FORGE FUND, INC.
FINANCIAL HIGHLIGHTS AND RELATED RATIOS/SUPPLEMENTAL DATA
For a share outstanding throughout each fiscal year ending December 31st
1998 1997 1996 1995 1994
------ ------ ------ ------ -------
Net asset value start of year $ 8.96 $ 9.36 $ 9.48 $ 9.41 $ 9.51
Income from investment operations:
Net investment income .28 .30 .32 .33 .19
Net realized & unrealized cap gains .O6 .26 .27 .39 1.39
----------------------------------------------
Total from investment operations 9.30 9.92 10.07 10.41 10.09
Less distributions:
Dividends from net investment inc (.33) (.33) (.31) (.33) (.20)
Distributions from capital gains (.65) (.63) (.40) (.60) (.48)
----------------------------------------------
Net asset value end of year $ 8.32 $ 8.96 $ 9.36 $ 9.48 $ 9.41
===============================================
Total return 3.79% 5.98% 6.22% 10.63% 6.10%
Net assets year end (in 000's) $ 8,918 $10,800 $11,423 $11,151 $10,725
Ratios to Average Net Assets
Expenses 1.3% 1.3% 1.4% 1.3% 1.4%
Net investment income 3.2% 3.2% 3.3% 3.2% 1.8%
Portfolio turnover rate 107.6% 59.7% 42.4 15.7% 53.7%
Average commission per share $ .0638 $ .0646 $ .0695 $ .0683 N/A
N/A - Disclosure not applicable to prior periods
- 10 -
<PAGE>
FORM N-1A
PART C - OTHER INFORMATION
Contents Page #
1. Financial Statements & Exhibits ............................. 1
2. Control Persons ............................................. 1
3. Number of Shareholders ...................................... 1
4. Indemnification ............................................. 1
5. Activities of Investment Advisor ............................ 1
6. Principal Underwriters ...................................... 1
7. Location of Accounts & Records .............................. 1
8. Management Services ......................................... 1
9. Distribution Expenses ....................................... 1
10. Undertakings ................................................ 1
11. Auditor's Consent ........................................... 2
12. Signatures .................................................. 3
Exhibits
Reimbursement Agreements - Officers/Directors ................ 10 ii
- i -
<PAGE>
1. a. Financial Statements - Performance comparisons with the S & P 500 and fin-
ancial information on a per share basis is presented in Part A for 1998. All
other financial statements are presented in Part B including:
STATEMENT OF ASSETS & LIABILITIES - DECEMBER 31, 1998
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998
Year ended Dec. 31, 1997 incorporated by reference to Amendment 22
STATEMENT OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DEC. 31, 1998 & 1997
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 1998
SCHEDULE OF INVESTMENTS IN SECURITIES DECEMBER 31, 1998
b. Exhibits
(3.i) Articles of Incorporation
(3.ii) By-Laws
(10.i) Investment Advisory Contract
(10.ii) Reimbursement Agreements with Officers and/or Directors
(99.1) Opinion of Counsel Concerning Fund Securities
All exhibits are incorporated by reference to post-effective amendment no. 25
of the Securities Act of 1933 except exhibit (10.ii) which is attached.
The "Consent of Independent Public Accountants" is presented on page two of
this section Part C - Other Information.
2. Control Persons - Not applicable
3. Number of Shareholders - There were 974 shareholders of the Valley Forge Fund
as of December 31, 1998.
4. Indemnification - Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers & controlling
persons of the registrant, the registrant has been advised that, in the o-
pinion of the Securities and Exchange Commission, such indemnification is a-
gainst public policy as expressed in the Act and is, therefore, unenforce-
able. In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, of-
ficer or controlling person in connection with the securities being register-
ed, the registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate jur-
isdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.
5. Activities of Investment Advisor - The Valley Forge Management Corporation's
activity at the present time is performance on its Investment Advisory Con-
tracts currently effective with the Valley Forge Fund, Inc. and The O'Higgins
Fund. Mr Bernard Klawans, owner of the Investment Adviser, is also president
of the Bookkeeper Corporation, Wayne, PA. that leases and sells turnkey hard-
ware/software computer systems and owner of the Raven Motel in Media, PA.
6. Principal Underwriter - The Fund acts as its own underwriter.
7. Location of Accounts & Records - All fund records are held at corporate head-
quarters - 1375 Anthony Wayne Drive, Wayne, Pa. 19087 - with the exception of
security certificates that are in a safe deposit box at the Royal Bank of
Pennsylvania, DeKalb Pike, King of Prussia, PA.
8. Not applicable
9. Distribution Expenses - The fund currently bears no distribution expenses.
10. Not applicable
- 1 -
<PAGE>
Landsburg Platt Raschiatore & Dalton
A Mathieson Aitken Jemison, LLP Affilliate
Certified Public Accountants
117 S. 17th St. 13th Fl.
Philadelphia, PA. 19103
215-561-6633
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the inclusion by reference in Post-Effective Amendment No. 23 to
the Registration Statement on Form N-1A of Valley Forge Fund, Inc. of our report
dated February 25, 1999 on our examination of the Financial Statements of such
Company. We also consent to the reference to our firm in such Registration
Statement.
Mathieson Aitken Jemison, LLP (Signature)
Thursday February 25, 1999
- 2 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Invest-
ment Company Act of 1940, the VALLEY FORGE FUND, Inc. certifies that it
meets all of the requirements for effectiveness of this Registration State-
ment and has duly caused this amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Wayne and State of Pennsylvania, on the 25th day of May, 1999.
VALLEY FORGE FUND, INC.
Bernard B. Klawans,
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signatures Title Date
Bernard B. Klawans President, CEO and Director 05-25-99
Gerd H. Dahl Secretary and Director 05-25-99
Nancy W. Klawans Treasurer 05-25-99
Victor J. Belanger Director 05-25-99
Dr. Thomas A. Fosnocht Director 05-25-99
Dr. James P. King Director 05-25-99
Donald A. Peterson Director 05-25-99
William A. Texter Director 05-25-99
Exhibit - 10 ii
Reimbursement Agreements
The Valley Forge Fund reimburses officers and directors not affiliated with the
Investment Adviser to compensate for travel expenses associated with performance
of their duties. A total of $3,717 was paid in this regard in 1998. As the
Fund grows in total assets, the Board of Directors may place them on salaries
commensurate with their duties.
The Fund does not now, and has no plans to compensate officers, employes and
directors who are affiliated with the Investment Adviser except indirectly
through payment of the management fee.
- 1 -
