FORM N-CSR
CERTIFIED SHAREHOLDERS REPORT OF REGISTERED MANAGEMENT INESTMENT COMPANIES
Investment Company Act file number 811-2287
Exact name of registrant as specified in charter Valley Forge Fund, Inc.
Address of principal executive offices 1375 Anthony Wayne Dr
Wayne PA 19087
Name and address of agent for service Bernard B. Klawans
1375 Anthony Wayne Dr
Wayne PA 19087
Registrants telephone number, including area code 610-688-6839
Date of fiscal year end: 12/31/03
Date of reporting period: 01/01/03 to 06/30/03
Item 1. Report to Shareholders.
Valley Forge Fund
1375 Anthony Wayne Dr.
Wayne PA 19087
June 30, 2003
Dear Shareholder:
Your Fund started 2003 at $7.18 per share. Results show that our net asset
value per share advanced to $7.67
representing an increase in value of 6.8% so far this year as compared to the
Dow Jones Industrial Average that has advanced 7.7%.
Adding value securities to our portfolio in late 2002 caused our Fund to partic-
ipate in the market advance that has occurred in the first half of this year.
We are still selectively adding to our portfolio since we exprct this rally to
extend through the summer. If we are correct, we will then take profits and
take advantage of a buying opportunity for Dow typ value securities that may
occur towards the end of the year.
Financial figures for the half year ended June 30, 2003 are attached.
Respectfully submitted,
Bernard B. Klawans
President
THE VALLEY FORGE FUND
PORTFOLIO OF INVESTMENTS - IN SECURITIES, JUNE 30, 2003
COMMON STOCKS 71.93% # Shares or Prin Amt Value
Conglomerates 5.58%
AOL Time Warner * 10,000 160,900
General Electric Corp. 10,000 286,800
___________
$ 447,790
Manufacturing 19.14%
Abitibi Consolidated (Canadian) 50,000 320,500
Cisco Systems * 10,000 167,800
Eastman Kodak 10,000 273,500
EMC Corporation * 15,000 157,050
General Motors 14,000 506,100
Newell Rubbermaid Inc. 4,000 112,000
___________
$ 1,536,950
Metals 1 7.18%
Barrick Gold Corp (Canadian) 20,000 358,000
Coeur Dalene Mines * 13,000 17,550
Imco Recycleing Inc. * 30,000 200,700
___________
$ 576,253
Miscellaneous 21.93%
Alexander & Baldwin Inc. 10,000 260,600
Arrow Electronics * 10,000 152,400
Diamond Trust Unit Ser 1 10,000 900,000
Duke Energy 10,000 199,500
Hercules Incorporated * 25,000 248,750
___________
$ 1,761,250
Retailers 15.56%
Home Depot Incorporated 10,000 331,200
McDonalds Corp 10,000 220,600
Pep Boys 20,000 270,000
Supervalu Inc. 20,000 427,600
___________
$ 1,249,400
Telecommunications 2.54%
ADC Telecommunications * 10,000 23,000
AT&T Corp. 1,600 30,560
Comcast Corp New Class A 5,000 150,850
___________
$ 204,410
___________
TOTAL COMMON STOCKS (COST $7,578,600) $ 5,775,960
___________
SHORT TERM INVESTMENTS 15,88%
American Business Financial Services 9.6% Note** 875,159 876.159
Best Vest Investment Brokerage Services MM 23,625 23,625
Commerce Bank Certificate of Deposit 3.2% Note** 375,354 375,354
__________
TOTAL SHORT-TERM INVESTMENT (COST $1,275,138) $ 1,275,138
___________
TOTAL SECURITIES (Cost $8,853,738) $ 7,051.098
===========
The accompaning notes are an integral part of this unaudeted financial statement
* Non-income producing during the year ** Redeemable upon request
The accompanying footnotes are an integral part of these financial statements
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VALLEY FORGE FUND, INC.
STATEMENT OF ASSETS & LIABILITIES - DECEMBER 31, 2002
ASSETS: Investments in securities at fair value (cost $8,853,738) $ 7,051,098
Cash and cash equivalents 930,063
Dividends and interest receivable 49,255
___________
Total Assets 8,030,416
___________
LIABILITIES:
Total Liabilities 0
___________
NET ASSETS: $ 8,030,416
___________
COMPOSITION OF NET ASSETS: Common stock $ 1,047
Paid in capital 9,801,868
Accumulated net realized loss on investments 30,141
Net unrealized depreciation of securities (1,802,640)
___________
NET ASSETS: (equivalent to $7.67 per share based on 1,047,023
shares outstading) (Note 5) $ 8,030,416
===========
STATEMENT OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 2003
INVESTMENT INCOME: Interest $ 64,505
Dividends 60,415
Miscellaneous (5,723)
___________
Total investment income 119,197
EXPENSES: Audit - balane from 2002 500
Investment advisory fee (Note 2) 36,333
Non-interested directors' fees and expenses 843
Other expenses 1,210
Printing and mailing expenses 2,422
Registration fees 1,040
Taxes 600
___________
Total expenses 42,958
__________
NET INVESTMENT INCOME: $ 76,239
___________
REALIZED GAIN OR (LOSS) FROM INVESTMENTS:
Net realized gain on investment securities 35,580
Net decrease in unrealized depreciation on investment securities 403,604
__________
NET REALIZED AND UNREALIZED GAIN FROM INVESTMENTS: 438,604
__________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS: $ 514,443
==========
The accompanying notes are integral parts of this unaudited financial statement
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THE VALLEY FORGE FUND
STATEMENT OF CHANGES IN NET ASSETS - SIX MONTHS ENDED JUNE 30, 2,003 & 2002
06/30/03 06/30/03
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Investment income - net $ 76,239 $ 78,864
Net realized gain (loss) from investment transactions 35,580 (153,476)
Unrealized appreciation (depreciation) of investments 403,024 276,678
__________ __________
Net inc. (decrease) in net assets from operations 514,843 202,066
Distributions to shareholders 0 0
Share transactions (Note 6) 181,576 211,801
__________ __________
TOTAL INCREASE IN NET ASSETS 696,419 413,867
NET ASSETS
Beginning of period 7,333,997 7,182,200
__________ __________
End of period $8,030,416 $7,596,067
========== ==========
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 2003
1. ORGANIZATION - The Valley Forge Fund (the "Fund") is a non-diversified
open-end management investment company registered under the Investment Company
Act of 1940, as amended. The Fund's investment objective is to provide apprec-
iation through investment in common stocks and securities convertible into com-
mon stocks.
2. SIGNIFICANT ACCOUNTING POLICIES - Security Valuation: Securities are valued
at the last reported sales price or in the case of securities where there is no
reported last sale, the closing bid price. Securities that have no readily
available market quotations are priced at their fair value as determined in good
faith by or under the supervision of the Company's Board of Directors in accord-
ance with methods that have been authorized by the Board. Short-term invest-
ments with maturities of 60 days or less are valued at amortized cost that ap-
proximates market value.
Securities Transactions and Investment Income: Security transactions are re-
corded on the dates the transactions are entered into (the trade dates). Rea-
lized gains and losses on security transactions are determined on the identified
cost basis. Dividend income is recorded on the ex-dividend date. Interest in-
come is determined on the accrual basis. Discount on fixed income secur-
ities is amortized.
Dividends and Distributions to Shareholders: The Fund records all dividends and
distributions payable to shareholders on the ex-dividend date. Permanent book
and tax differences relating to shareholder distributions may result in reclass-
ifications to paid in capital and may affect the per-share allocation between
net investment income and realized and unrealized gain/loss. Undistributed net
investment income and accumulated undistributed net realized gain/loss on in-
vestment transactions may include temporary book and tax differences which
reverse in subsequent periods. Any taxable income or gain remaining at fiscal
year end is distributed in the following year.
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THE VALLEY FORGE FUND
NOTES TO FINANCIAL STATEMENTS (Continued) - JUNE 30, 2003
2. SIGNIFICANT ACCOUNTING POLICIES (continued) - Federal Income Taxes: It is
the Fund's intention to qualify as a regulated investment company and distribute
all of its taxable income. The Fund has complied to date with the provisions of
the Internal Revenue Code applicable to investment companies and accordingly, no
provision for Federal income taxes is required in these financial statements.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
from operations during the reporting period. Actual results may differ from
those estimates.
3. MANAGEMENT FEE AND TRANSACTIONS WITH AFFILIATES - Under the terms of the
investment management agreement, Valley Forge Management Corp. (the "Manager")
will receive a fee, payable monthly, for providing security investment advice at
an anual rate of 1% based on the average daily net assets of the Fund. The Man-
ager will receive a fee, payable monthly, for the performances of its services
at an annual rate of 1% based on the average daily assets of the Fund. The fee
is accrued daily, paid monthly and amounted to $36,333 for the six months ended
June 30, 2003. The Manager provided transfer agency, portfolio pricing, admin-
istration, accounting, financial reporting, tax accounting, and compliance ser-
vices to the Fund at no charge over this period. Mr. Bernard B. Klawans is the
sole owner, director and officer of the Manager and is President of the Fund.
4. INVESTMENT TRANSACTIONS - Purchases and sales of investment securities
(excluding short-term securities) for the six months ended June 30, 2003 were
$1,084,774 and $137,389 respectively. At the end of this period, net unrealized
depreciation for Federal income tax purposes aggregated $1,802,640 of which
$231,884 related to unrealized appreciation of securities and $2,034,524 related
to unrealized depreciation of securities. The cost of investments was
$7,578,600, excluding short-term investments.
5. CARRYOVERS - At June 30, 2003, the Fund had a net capital loss carryforward
of $163,396 that expires in 2010.
6. CAPITAL SHARE TRANSACTIONS - As of June 30, 2003, there were 10,000,000
shares of $.001 per value capital stock authorized. The par value and paid-in
capital totaled $9,822,915. Transactions in capital stock were as follows for
the six months ended:
June 30, 2003 June 30, 2002
Shares Amount Shares Amount
----------------- -------------------
Shares sold 47,068 $ 337,178 171,657 $1,345.821
Shares issued in dividend reinvestment 0 0 0 0
Shares redeemed (22,130) (155,602) (71,246) (557,355)
_________________________________________
Net increase 24,938 181,576 121,740 $ 960.623
=========================================
7. DISTRIBUTIONS TO SHAREHOLDERS - On December 31, 2002, a distribution of
$0.1721 per share was paid to shareholders of record on this same date from net
investment income.
This is an unaudited report
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Item 10. Exhibits.
A. Code of Ethics.
B. Certification.