N-CSR17.SUB
FORM N-CSR
CERTIFIED SHAREHOLDERS REPORT OF REGISTERED MANAGEMENT INESTMENT COMPANIES
Investment Company Act file number 811-01932
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: 12/31/07
Date of reporting period: 01/01/07 to 06/30/07
Item 1. Report to Shareholders.
Valley Forge Fund
1375 Anthony Wayne Dr.
Wayne PA 19087
June 30, 2007
Dear Shareholder:
Your Fund started 2007 at $9.53 per share. Results show that our net asset
value per share closed at $10.37. This represents an increase in value of 8.8%
the first half of this year as compared to the Dow Jones Industrial Average that
increased 7.6% and the S&P 500 Index was up 6.0%.
Our security selections have been satisfactory, doing, on average, almost twice
as well as the best known market indicators. However, our cash position has
been at about 50% because of the existing turbulent market conditions that is
in line with the conservative nature of our Fund. If the market turns downward,
which may provide excellent buying opportunities, the Fund's performance is
expected to be even better relative to the above market indicators.
Financial figures for the six months ended June 30, 2007 are attached.
Respectfully submitted,
s/Bernard B. Klawans
President
This report and the financial statements contained herein are submitted for the
general information of shareholders and are not authorized for distribution to
prospective investors unless preceeded or accompanied by an effective prospect-
us. Nothing herein contained is to be considered an offer of sale or solicita-
tion or an offer to buy shares of the Valley Forge Fund, Inc. Such offering is
made only by prospectus, which includes details as to offering price and materi-
al information.
- 1 -
VALLEY FORGE FUND
UNAUDITED EXPENSES - JUNE 30, 2007
As a shareholder of the Fund, you incur ongoing costs that include management
fees and other Fund operating expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in this Fund as compared
to the ongoing costs of investing in other mutual funds. It is based on a
$1,000 investment made on January 1, 2007 that is held for the entire six-month
period to June 30, 2007.
Actual Expenses: The first line of the following table provides actual values &
expenses. Simply divide your account value on July 1, by $1,000 (for example,
an $8,600 account value divided by $1,000=8.6), then multiply the result by the
number in the first line under the heading "Expenses Paid During Period" to cal-
ulate the expenses you actually paid on your account over the past six months.
Hypothetical Example for Comparison Purposes: The second line of the table pro-
vides hypothetical account values & expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses which is not
the Fund's actual return. These hypothetical acount values and expenses may not
be used for anything but comparison of ongoing costs of investing in this Fund
with an assumed rate of return of 5% hypothetical examples that appear in the
shareholder reports of other funds. Please note that the expenses shown in the
table are meant to highlight your ongoing costs only and do not reflect any di-
rect costs, such as wire or low balance fees. Therefore, the second line of the
table is useful in paring ongoing costs only, and will not help you determine
the relative total costs of owning different funds. In addition, if these
direct costs were included, your cost would be higher.
Beginning Account Ending Account Expenses Paid
Value Value During Period *
January 1, 2007 June 30, 2007 January 1, 2007 to
June 30, 2007
Actual $1,000.00 $1,088.14 $ 2.88
Hypothetical ** $1,000.00 $1,022.07 2.76
* Expenses are equal to the Fund's annualized expense ratio of 1.11%
multiplied by 181/365 to reflect the one=half year period.
** With a 5% return before expenses
TOP TEN HOLDINGS AND ASSET ALLOCATION
Top Ten Holdings, % of Net Asset Asset Allocation, % of Net Assets
Supervalu Inc. 6.87 Basic Materials 2.8
Federal Agri Mtg Corp. 6.05 Communications 5.4
General Electric Corp. 5.66 Consumers 24.3
Granger (W. W.) 4.59 Industrials 10.3
EMC Corproation 4.47 Manufacturing 5.0
Time Warner Inc. 4.15 Technology 4.5
Pep Boys, Manny Moe & Jack 3.98 Short Term Investments 47.4
Caterpillar Inc. 3.86 Other Assets Less Liabilities 0.3
Kimberly-Clark Corp. 3.30 _____
AT&T Corp. 3.19 100.0%
_____
46.11%
=====
The above portfolio holdings are subject to change and are not recommendations
of individual stocks.
- 2 -
VALLEY FORGE FUND
UNAUDITED SCHEDULE OF INVESTMENTS - JUNE 30, 2007
COMMON STOCKS: 52.3% Shares Cost Value
Basic Materials 2.8%
Coeur D'Alene Mines Corp. (*) 13,000 $ 221,935 $ 46,670
Peabody Energy Corp 5,000 238,705 241,900
__________ __________
460,640 288,570
Communications 5.4%
ADC Telecommunications (*) 12,000 190.021 219,960
AT&T Corp. 7,794 236,687 323,451
__________ __________
426,708 543,411
Consumers 24.3%
Federal Agic Mtg Corp. Class C Non Voting 17,900 410,558 612,538
Kimbery-Clark Corp 5,000 295,455 334,450
Pep Boys - Manny, Moe & Jack 20,000 542,916 403,200
Supervalu Inc. 15,000 162,719 694,800
Time Warner Inc. 20,000 332,670 420,800
__________ __________
1,744,318 2,465,788
Industrials 10.3%
General Electric Company 15,000 606,320 574,200
Granger (W. W.) Inc. 5,000 273,605 465,250
__________ _________
879,925 1,039,450
Manufacturing 5.0%
Abitibi Consolidated (Canadian) 40,000 298,734 117,600
Caterpillar Inc. 5,000 381,855 391,500
__________ _________
680,589 509,100
Technology 4.5%
EMC Corporation (*) 25,000 313,615 452,500
__________ ___________
Total Common Stocks $ 4,505,795 $ 5,298,819
___________
SHORT-TERM INVESTMENTS: 47.4%
Commerce Bank Saving Act 5,0% (**) 4,803,471
_________
Total Short-Term Investments $ 4,803,471 $ 4,803,471
___________ ___________
TOTAL INVESTMENTS 99.7% $ 9,309,266 $10,102,290
___________
Other Assets Less Liabilitits - Net 0.3 % 30,784
___________
NET ASSETS 100.0% $10,133,074
===========
* Non-income producing during the period
** Only $100,000 of this amount is insured by the Federal Government. Fund
Management belkeves that the risk of loss is small but, nevertheless ahould
be disclosed.
The accompaning notes are an integral part of these financial statements.
- 3 -
VALLEY FORGE FUND
STATEMENT OF ASSETS & LIABILITIES - JUNE 30, 2007
Assets: Investments in securities at value (cost $ 9,309,266) $10,102,290
Cash and cash equivalents 9,544
Dividends and interest receivable 22,740
___________
Total Assets 10,134,574
___________
Liabilities: Accrued expenses 1,500
___________
Net Assets: $10,133,074
===========
Composition of Net Assets:
Common stock $ 977
Paid in capital 9,155,479
Accumulated undistributed net investment income 183,594
Net unrealized appreciation of investments 793,024
___________
Net Assets: (equivalent to $10.37 per share based on
976,788 shares outstading) (Note 4) $10,133,074
===========
STATEMENT OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 2007
Investment Income:
Dividends: $ 36,989
Interest 107,570
__________
Total Income: 144,559
__________
Expenses:
Investment advisory fee (Note 2) 49,148
Non-interested directors' fees and expenses 1,020
Fees 3,880
Communications 841
Other (1,287)
________
Total expenses: 53,602
__________
Net Investment Income: $ 90,957
__________
Realized and Unrealized Gain (Loss) From Investments:
Net realized gain on investment securities 49,390
Net change in unrealized appreciation on investment securities 689,071
__________
Net Realized and Unrealized Gain (Loss) from Investments: 738,461
__________
Net Increase in Net Assets Resulting from Operations: $ 829,418
==========
The accompanying notes are an integral part of these unaudited financial
statements
- 4 -
VALLEY FORGE FUND STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED JUNE 30, 2007, AND YEAR ENDED 2006
06/30/07 12/31/06
Unaudited
Increase (Decrease) in Net Assets from Operations:
Investment income - net $ 90,957 $ 107,541
Net realized gain from investments 49,390 141,676
Unrealized appreciation of investments 689,071 661,388
___________ ___________
Net increase in net assets fron operations 829,418 910,605
___________ ___________
Distributions to shareholders 0 (249,217)
Capital share transactions (Note 4) (394,803) (473,029)
___________ ___________
Total increase (decrease) 434,615 188,359
Net Assets:
Beginning of period $ 9,698,459 $ 9,510,100
___________ ___________
End of period $10,133,074 $ 9,698,459
=========== ===========
UNAUDITED NOTES TO FINANCIAL STATEMENTS - JUNE 30, 2007
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - Organization: The Valley
Forge Fund, Inc. (the "Fund"), is a non-diversified open-end management invest-
ment company registered under the Investment Company Act of 1940, as amended.
The Fund's investment objective is to provide appreciation through investment
in common stocks and securities convertible into common stocks. The following
summarizes significant accounting policies followed by the Fund.
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 for which market quotations are not readily available are
valued at their fair values as determined in good faith by or under the super-
vision of the Company's Board of Directors in accordance with methods that have
been authorized by the Board. Short-term investments (maturities of 60 days
or less) are valued at amortized cost that approximates market value.
Securities Transactions & Investment Income: Security transactions are recorded
on the dates transactions are entered into (the trade dates). Realized gains
& losses on security transactions are determined on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income is deter-
mined on the accrual basis. Discount on fixed income securities 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.
Federal Income Taxes: It is the Fund's intention to qualify as a regulated in-
vestment company and distribute all of its taxable income. The Fund has com-
plied 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 the financial statements.
- 5 -
VALLEY FORGE FUND
UNAUDITED NOTES TO FINANCIAL STATEMENTS (Continued) - JUNE 30, 2007
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 & liabilities & dis-
closure of contingent assets & liabilities at the date of the financial state-
ments & reported amounts of increases & decreases in net assets from operations
during the reporting period. Actual results may differ from those estimates.
2. MANAGEMENT FEE AND TRANSACTIONS WITH AFFILIATES - Under the terms of the
investment management agreement, Valley Forge Management Corp. ("the Manager")
has agreed to provide the Fund investment management services and be responsible
for the day to day operations of the Fund. The Manager will receive a fee, pay-
able monthly, for providing investment advice at an annual rate of 1% based on
the average daily net assets of the Fund. The fee will be accrued daily and
paid monthly. A management fee of $49,149 was paid for the six months ended
June 30, 2007. The Manager also provides transfer agency, portfolio pricing,
administration, accounting, financial reporting, tax accounting, and compliance
services to the Fund at no charge. Mr. Bernard Klawans is the sole owner,
director and officer of the Manager and is also President of the Fund.
3. INVESTMENT TRANSACTIONS - Purchases and sales of investment securities
(excluding short-term securities) for the six months ended June 30, 2007 were
$381,855 and $1,659,519 respectively. At June 30, 2007 net unrealized
appreciation for Federal income tax puposes aggregated $793,024 of which
$1,321,258 related to unrealized appreciation of securities and $528,234
related to unrealized depreciation of securities. The cost of investments at
June 30, 2007 for Federal income tax purposes was $4,505,795 excluding
short-term investments.
4. CAPITAL SHARE TRANSACTIONS - As of June 30, 2007, there were 10,000,000
shares of $.001 per value capital stock authorized. The total par value plus
paid-in capital equaled $9,156,456. Share transactions totaled:
Six months ended 6/30/07 Year - 2006
Shares Amount Shares Amount
------------------ ------------------
Shares sold 6,054 $ 60,320 17,382 $ 163,888
Shares issued in dividend reinvestment 0 0 24,971 238,909
Shares redeemed (46,560) (455,123) (94,479) (875,826)
_________________________________________
Net increase (decrease) (40,506) $(394,803) (52,126) ($473,029)
=========================================
5. FEDERAL INCOME TAXES - Income and long-term capital gain distributions are
determined in accordance with Federal income tax regulations, which may differ
from accounting principles generally accepted in the United States. As of June
30, 2007, the taxable components of distributable earnings were as follows:
Undistributed ordinary income $ 53,968
Uudistributed dividend income $ 36,989
Undistributed long-term capital gain $ 49,390
Undistributed appreciation $ 793,024
The tax character of distributions paid during the years ended December 31, 2006
and 2005 were as follows:
2006 2005
Ordinary income $ 168,592 $ 51,982
Long-term capital gain $ 80,625 $ 138,866
--------- ---------
$ 249,217 $ 190,848
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UNAUDITED NOTES TO THE FINANCIAL STATEMENTS - JUNE 30, 2007 (Continued)
6. NEW ACCOUTING PRONOUNCEMENTS - In June 2006, the Financial Accounting
Standard Board ("FASB") Interpretation No. 48 Acounting for Uncertainty in
Income Taxes that requires the tax effects of certain tax provisions to be
recognized. These tax provisions must meet a "more than likely than not"
standard that, based on their technical merits, have a more than fifty percent
likelyhood of being sustained upon exanination. FASB Interpretation No. 48 is
effective for fiscal periods beginning after December 15, 2006. At adaption,
the financial statements must be adjusted to reflect only those tax positions
that are more likely than not of being sustained. Management of the Fund is
currently evaluating the impact that FASB Interpretation No. 48 will have on
the Fund's financial statements.
In September 2006, FASB issued Statement of Financial Accounting Standards No.
157, "Fair Value Measurements". The Statement defines fair value, establishes
a framework for measuring fair value in generally accepted accounting
principles ("GAAP"), and expands disclosures about fair value measurements.
The Statement establishes a fair value hierachy that distinguishes between (1)
market participant assumptions developed based on market data obtained from
sources independent of the reporting entity (observable inputs) and (2) the
reporting entity's own assumptions about market participant assumptions
developed based on the best information available in the circumstances
(unobservable inputs). The statement is effective for financial statements
issued for fiscal years beginning after November 15, 2007, and is to be applied
prospectively as of the beginning of the fiscal year in which the statement is
initially applied. At this time, management is evaluating the implications of
FASB No, 157, and the impact, if any, of this standard on the Fund's financial
statements has not been determined.
ADDITIONAL INFORMATION - UNAUDITED
PROXY VOTING GUIDLINES - The Fund's proxy voting policies and procedures, and in
formation regarding how the Fund voted proxies relating to portfolio securities
is available without charge by calling the Fund at 1-800-548-1942 or by visiting
the Securities and Exchange's ("SEC") website (http://www.sec.gov).
QUARTERLY PORTFOLIO SCHEDULE - The Fund now files a complete schedule of invest-
ments with the SEC for the first and third quarters of each fiscal year on Form
N-Q. These forms are available on the SEC's website at http://www.sec.gov and
may be reviewed and copied at the SEC's Public Reference Room in Washington DC.
Information on the operation of this Public Reference Room may be obtained by
calling (1-800-732-0330).
BOARD OF DIRECTORS - The Fund's business and affairs are managed under the di-
rection of Directors that are elected annually to serve for one year. Informa-
tion pertaining to them is set forth below. The Statement of Additional
Information published by the Fund contains additional information about these
Directors and is available without charge by calling 1-800-548-1942. Each may
Director may be contacted by writing to the director c/o Valley Forge Fund,
P.O. Box 262, Valley Forge, PA 19481.
Interested Officers and Directors: - *
Name and Age Position Term of Office Principal Other
with Fund and Length of Occupation Director-
Time Served Past 5 Years ships
Bernard B. Klawans Director Elected for One Year President None
President Served Since Incep- of Valley
tion 05/15/1973 Forge Fund
- 7 -
Interested Officiers and Directors: - * (Continued)
Name and Age Position Term of Office Principal Other
with Fund and Length of Occupation Director-
Time Served Past 5 Years ships
Sandra K. Texter Secretary Elected for One Year System Analyst None
Age 57 Served Since Lockeed Martin
01/30/2003
Independent Directors:
Donald A. Peterson Director Elected for One Year Program Manager None
Age 67 and Board Served Since DRS Technologies
Chairman 08/15/1974
Victor J. Belanger Director Elected for One Year Retired Chief None
Age 65 Served Since Financial Off
08/18/1980 Linearizer Tech
Dr. James P. King Director Elected for One Year President None
Age 74 Served Since Incep- Desilube Tech Inc
tion 05/15/1973
C. William Majer Director Elected for One Year President None
Age 71 Served Since 06/21/05 MajerPlus LTD
* "Interested persons" in the Fund as defined in the Investment Company Act of
1940 are Mr. Klawans because he owns the Fund's Investment Adviser and Sandra
Texter because she is the daughter of Mr. Klawans and Secretary of the Fund.
REMUNERATION OF FUND OFFICERS, DIRECTORS AND ASSOCIATED PERSONS - The Fund Inde-
pendent Directors and an Associated Person are paid for travel expenses associ-
ated with attending Fund meetings and/or performing Fund services. Their
remuneration for the six months ended June 30, 2007 was:
Bernard B. Klawans $ 0 Victer J. Belanger $129 Donald A. Peterson $ 297
Sandra K. Texter 0 Dr. James P. King 297 C. William Majer 297
Ellen Klawans 580
Since Bernard Klawans and Sandra Texter are officers of the Fund, they may not
receive compensation from the Fund outside of a management fee paid to the
Adviser. Everone else except Ellen Klawans is an Independent Director of the
Fund. Mrs. Klawans is an Associated Person because she is Mr. Klawans daughter
in law who does all the Edgar electronic SEC filings and provides other support
concerned with shareholder servicing.
SECURITIES & EXCHANGE COMMISSION EXAMINATION - The Securities & Exchange
Commission ("SEC") performs local examinations of all registered mutual funds.
Their most recent one of the Valley Forge Fund discussed certain previous
operational practices by Fund management. These practices have also been
examined by an independend accountant hired by the Fund. Both the SEC and the
independent accountant suggested that these practices were not in line with
modern business practices and were best discontinued even though they had not
affected Fund performance, per share pricing or shareholder values as presented
in the originally filed Fund financial statements.
The Valley Forge Fund Board of Directors has addressed and caused action to be
taken to ensure that Fund operations and reporting procedures are brought up to
the level suggested by the SEC in the modern financial operating environment.
The practices that have ceased include, among other things, no interest short
term loans from management to meet unexpected large shareholder redemptions and
personal banking accounts by management in the same banking instutions as used
by the Fund. In addition, the Fund annual and semi-annual financial reports
for the years 2004, 2005 and 2006 will be reissued to disclose these practices
and the actions taken to ensure their discontinuance.
- 8 -
VALLEY FORGE FUND FINANCIAL HIGHLIGHTS
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGH THE PERIOD
Ended
06/30/07 Year Ended December 31
unaudited 2006 2005 2004 2003
PER SHARE DATA:
Net Asset Value, Start of Year $ 9.53 $ 8.89 $ 9.24 $ 8.89 $ 7.18
Income from Investment Operations: _______________________________________
Net Investment Income (**) 0.09 0.25 0.18 0.13 0.14
Net Real & Unrealized Gain (Loss) 0.75 0.64 (0.35) 0.35 1.72
_______________________________________
Total From Investment Ops. 0.84 0.89 (0.17) 0.48 1.86
_______________________________________
Less Distributions 0.00 (0.25) (0.18) (0.13) <0.15>
_______________________________________
Net Asset Value, End of Period $10.37 $ 9.53 $ 8.89 $ 9.24 $ 8.89
Total Return (***) 8.81% 10.12% (1.84)% 5.40% 25.91%
RATIOS TO AVERAGE NET ASSETS:
Expenses (*)1.04% 1.27% 1.36% 1.22% 1.32%
Net Investment Income 0.94% 1.14% 0.55% 0.69% 1.31%
SUPPLEMENTAL DATA:
Net Assets in Thousands $10,133 $ 9,698 $ 9,510 $10,070 $ 9,523
Portfolio Turnover Rate 7.57% 10.30% 18.31% 14.99% 16.27%
* Annualized
** Per share net investment income has been determined on the basis of
average number of shares outstanding during the period.
*** Total return assumes reinvestment of dividends.
VALLEY FORGE FUND PERFORMANCE SUMMARY - The following is a line graph comparing
the initial and subsequent account values at the end of each of the past ten
years of a $10,000 investment in the Fund and in the Dow Jones Industrial
Average.
17,000 I X = VALLEY FORGE FUND OX
I O = DOW JONES INDUSTRIAL AVERAGE
16,000 I
I
15,000 I
I O OX
14,000 I O X
I O OX O
13,000 I
I X
12,000 I O X
I O O
11,000 I X X
I
10,000 I____OX_____X___________X____________________________________________
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Another measure of performance is the Fund's Average Annual Total Returns for
the past 1, 5 and 10 year periods. A table presenting these values follows.
1 Year 5 years 10 years
Valley Forge Fund 18,5% 7.9% 7.1%
Dow Jones Industrial Average 16.9% 8.8% 6.9%
The accompning notes are integral parts of these unaudited financial
statements
- 9 -
Item 2. Code of Ethics
CODE OF ETHICS
Pursuant to the requirements of Sections 406 & 407 of the Sarbanes Oxley Act of
2002, the Vally Forge Fund, (the "Fund"), hereby adopts the following Code of
Ethics that applies to Bernard Klawans who is the Fund's principal executive,
financial and accounting officer or persons performing similar functions
regardless of whether these individuals are employed by the Fund or a third
party in order to prepare these written standards that are reasonably designed
to deter wrongdoing and to
a) Honest and ethical conduct, including the ethical handling of actual or
apparent conflicts of interest between personal and professional relationships;
b) Full, fair, accurate, timely and understandable disclosure in reports and
documents that the Fund files with, or submits to, the Securities & Exchange
Commission and in all public communications;
c) Compliance with all applicable governmental laws, rules and regulations;
d) Prompt internal reporting of violations of the code, should any ever occur,
to all principal officers of the Fund and all appropriate persons identified in
the code; and
e) The principal executive officer of the Fund will be held accountable for
adherence to the code as presented above.
Item 3. Audit Committee Financial Expert.
Mr. Klawans has prepared all financial documens issued by the Fund, is still
responsible for their preparation. The current Fund auditor is John P. Townsend
of Sanville & Company.
Victor Belanger, retired Chief Financial Officer, Linearizer Technology Inc. in
Hamilton NJ is an "independent" member of the Board of Directors of the Valley
Forge Fund who has performed several independent examinations including those
of the Fund's securities held in self custodianship in the past thirty five
years. He always reported satisfactory findings to the Board of Directors.
Items 4-8. (Reserved)
Item 9. Controls and Procedures.
Bernard B. Klawans is the president of the Fund. He handles all financial mat-
ters of the Fund and has along wuth support from the Fund's Board of Directors
instituted additional internal control procedures to not only improve accuracy
and safety in all financial matters involved in running the Fund but also
properly publish disclosures of Fund Operations. He is also president and owner
of the Investment Adviser, the Valley Forge Management Corporation that has
acted as Transfer Agent "pro bono" to the Fund.
- 10 -
Item 10. Exhibits.
A. Code of Ethics.
Filed under Item 2 Code of Ethics above
B. Certification.
CERTIFICATIONS
I, Bernard B. Klawans certify that:
1. I have prepared this report on Form N-CSR of the Valley Forge Fund, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement, a
material fact or omit to state a material fact necessary to make the statement
made, in light of the circumstances under which such statements were made, mis-
leading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial infor-
mation presented, fairly show in all material respects as of, and for the peri-
ods included in this report. Cash flow information is not considered pertainent
to this document or the registrant;
4. Mr. Klawans is the certifying officer of the Fund who is responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and
has:
a) Designed such disclosure controls and procedures to ensure that material
information relating to the registrant is made known to him by all others
associated with the Fund, particularly during the period which this report is
being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
report (the "Eveluation Date"); and
c) Evaluated and believes that the effectiveness of the disclosure controls
and procedures produces a satisfactory evaluation of the Fund's financials
reported in the unaudited semi- annual report given above as of the
Evaluation Date;
5. The Board of Directors and Mr. Klawans have discused, based on their most
recent evaluation, that:
a) They were satisfied that there were no significant deficiencies in
the design or operation of internal controls which could adversly affect the
registrrant's ability to record, process, summarize, and report financial
data; and
b) There was no fraud, whether or not material, that involves management
or other employees who might have a role in internal controls;
6. The registrant's Board of Directors and Mr. Klawans hereby state in this re-
port that there have been changes in internal controls or other factors that
do not deminish the accuracy of the financial results but significantly affect
internal controls subsequent to the date our most recent evaluation, including
corrective actions with regard to deficiencies and material weaknesses.
Date: 08/01/07
/s/ Bernard B. Klawans
President and
Chief Financial Officer
- 11 -
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Invsstment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Valley Forge Fund, Inc.
By (Signature and Title) /s/ Bernard B. Klawans
Bernard B. Klawans
President
Date 08/01/07
- 12 -