N-CSR26.SUB
FORM N-CSR/A
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: 12/31/06
Date of reporting period: 07/01/06 to 12/31/06
The registrant is filing this amendment to its Certified Shareholder Report
on Form N-CSR filed with the Securities and Exchange Commission on
November 12, 2007 in order to restate certain financial disclosure
information about The Valley Forge Fund, Inc. ("the Fund"). Additional
information about such restatement is contained in Note 7 to the
financial statements of the Fund.
Item 1. Report to Shareholders.
Valley Forge Fund
1375 Anthony Wayne Dr.
Wayne PA 19087
December 31, 2006
Dear Shareholder:
Your Fund started 2006 at $8.89 per share. Results show that our net asset
value per share closed at $9.53 after paying a $0.2524 dividend. This
represents an increase in value of 10% this year as compared to the Dow Jones
Industrial Average ("DJIA") that increased 16%
The cash position in the Fund's securities has been held at about 40% since
midyear. This was done because of the conservative nature of our Fund. It
cost some profit but allowed shareholders to sleep at night while receiving a
reasonable return on their investment.
Management believes absolutely that a sharp break in the market will occur from
some totally unexpected event. In the meantime, the large cash position earning
5% interest will be maintained to weather the present turbulent conditions that
now exist. This will be used to purchase securities at significantly lower
prices if or when the break occurs.
Financial figures for the year ended December 31, 2006 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.
2006 PERFORMANCE DISCUSSION
The Fund increased 10% in value in 2006 compared to the Dow Jones Industrial
Average increase of 16%. Our communication securities including ADC Tele-
communications and AT&T Corp. about broke even. The same was true with regard
to our basic material securities including Coeur D'Alene Mines and Peabody
Energy Corp. Our consumer stocks increased nicely, including Federal Agric
Mtg Corp., Home Depot, Johnson and Johnson Corp., Kimberly Clark Corp., Pep
Boys-Manny, Moe & Jack, Supervalue and Time Warner. Our industrials also
performed well including General Electric and Granger (W.W.) Inc. Our
manufacturing stock Abitibi Consolidated was down appreciably. Technology
stocks including Cisco Systems and EMC Corp. were up nicely.
VALLEY FORGE FUND
EXPENSES - DECEMBER 31, 2006
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, 2006 that is held for the entire
twelve-month period to December 31, 2006.
Actual Expenses: Line one of the following table provides actual values and
expenses. Simply divide your account value on January 1, 2007 by $1,000 (i.e.,
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-
culate 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 *
July 1, 2006 December 31, 2006 July 1 to December 31, 2006
Actual $1,000.00 $1,090.30 $ 6.69
Hypothetical** $1,000.00 $1,018.80 $ 6.46
* Expenses are equal to the Fund's annualized expense ratio of 1.27%
** With a 5% return before expenses
TOP TEN HOLDINGS AND ASSET ALLOCATION
Top Ten Holdings, % of Net Assets Asset Allocation, % of Net Assets
Cisco Systems 7.04% Basic Materials 2.7%
Time Warner 6.74 Communications 4.7
General Electric Corp. 5.76 Consumers 31.4
Supeervalu 5.53 Industrials 9.4
Federal Agric/mtg. Corp 5.01 Manufacturing 1.6
The Home Depot Inc. 4.14 Technology 10.4
Granger (W. W.) 3.61 Short Term Investments 38.6
Kimberly-Clark Corp. 3.50 Other Assets Less Liabilities 1.2
Johnson & Johnson 3.40 _____
EMC Corp. 3.40 100.0%
_____ ======
48.13%
=====
The above portfolio holdings are subject to change and are not recommendations
of individual stocks.
VALLEY FORGE FUND
SCHEDULE OF INVESTMENTS - DECEMBER 31, 2006
COMMON STOCKS: 60.2% Shares Cost Value
Basic Materials 2.7%
Coeur D'Alene Mines Corporation * 13,000 $ 221,935 $ 64,350
Peabody Energy Corp. 5,000 238.705 202,050
__________ __________
460.640 266,400
Communications 4.7%
ADC Telecommunications * 12,000 190,022 174,360
AT&T Corp. 7,794 236,686 278,635
__________ __________
426,708 452,995
Consumers 31.4%
Federal Agic Mtg Corp. Class C Non Voting 17,900 410,558 485,627
The Home Depot Incorporated, Inc. 10,000 394,960 401,600
Johnson & Johnson Corp. 5,000 289,505 330,100
Kimbery-Clark Corp 5,000 295,455 339,750
Pep Boys - Manny, Moe & Jack 20,000 542,916 297,200
Supervalu Inc. 15,000 162,719 536,250
Time Warner Inc. 30,000 609,680 653,400
__________ __________
2,705,793 3,043,927
Industrials 9.4%
General Electric Company 15,000 606,320 558,150
Granger (W. W.) Inc. 5,000 273,605 349,700
________ _________
879,925 907,850
Manufacturing 1.6%
Abitibi Consolidated (Canadian) 60,000 461,838 153,600
Technology 10.4%
Cisco Systems * 25,000 485,550 683,250
EMC Corporation * 30,000 313,615 330,000
__________ __________
799,165 1,013,250
_________ __________
Total Common Stocks $5,734,069 $5,838,022
__________ __________
SHORT-TERM INVESTMENTS: 38.8%
Citizens Bank Money Market 5.0% $3,747,877 $3,747,877
__________ __________
Total Short-Term Invstments $3,747,877 $3,747,877
__________ __________
TOTAL INVESTMENTS 98.8% $9,481,946 $9,585,899
__________ __________
OTHER ASSETS LESS LIABILITIES - NET 1.2% $ 112,560 $ 112,560
__________ __________
$9,594,506 $9,698,459
NET ASSETS 100.0% ========== ==========
* Non-income producing during the period
The accompanying notes are an integral part of these financial statements
VALLEY FORGE FUND
STATEMENT OF ASSETS & LIABILITIES - DECEMBER 31, 2006
Assets: Investments in securities at value (cost $ 9,481,946) $ 9,585,899
Cash and cash equivalents 109,455
Dividends receivable 6,650
___________
Total Assets 9,702,004
___________
Liabilities: Accrued expenses 3,545
__________
Total Liabilities 3,545
_________
Net Assets: $ 9,698,459
===========
Composition of Net Assets:
Common stock $ 1,017
Paid in capital 9.550,240
Accumulated undistributed net investment income 43,249
Net unrealized appreciation of investments 103,953
___________
Net Assets: (equivalent to $9.53 per share based on
1,017,294 shares outstading) (Note 4) $ 9,698,459
===========
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED DECEMBER 31, 2006
Investment Income:
Dividends: (net of foreign taxes of $388) $ 111,699
Interest 116,130
__________
Total Income: 227,829
__________
Expenses:
Investment advisory fee (Note 2) 94,682
Registration & custody fees 2,817
Audit fees 9,800
Printing and mailing expenses 6,034
Non-interested directors' fees and expenses 2,934
Communications 1,912
Insurance 1,119
Other 990
__________
Total expenses: 120,288
__________
Net Investment Income: $ 107,541
__________
Realized and Unrealized Gain (Loss) From Investments:
Net realized gain on investment securities 141,576
Net increase in unrealized appreciation on investment securities 661,388
__________
Net Realized and Unrealized Gain from Investments: 803,064
__________
Net Increase in Net Assets Resulting from Operations: $ 910,605
==========
The accompanying notes are an integral part of these financial statements
VALLEY FORGE FUND
STATEMENT OF CHANGES IN NET ASSETS - YEARS ENDED 2006 & 2005
12/31/06 12/31/05
Increase (Decrease) in Net Assets from Operations:
Investment income - net $ 107,541 $ 51,985
Net realized gain from investments 141,676 138,874
Unrealized appreciation (depreciation) of investments 661,388 (381,334)
___________ __________
Net increase (decrease) in net assets fron operations 910,605 (190,475)
Distributions to shareholders (249,217) (190,847)
Capital share transactions (Note 4) (473,029) (178,648)
___________ __________
Total increase (decrease) 188,359 (559,970)
Net Assets:
Beginning of period $ 9,510,100 $10,070,070
___________ ___________
End of period $ 9,698,459 $ 9,510,100
=========== ===========
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2006
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.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
VALLEY FORGE FUND
NOTES TO FINANCIAL STATEMENTS (Continued) - DECEMBER 31, 2006
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.
Concentration of credit risk: The Company maintains its cash in bank deposit
accounts at one financial institution. The balances, at times, may exceed
depositor's insurance provided by the applicable guaranty agency.
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 $94,682 as paid for the year ended December
31, 2006. The Manager also provides transfer agency, portfolio pricing, adminis-
tration, accounting, financial reporting, tax accounting, and compliance
services to the Fund at no charge for the year ended December 31, 2006. Mr.
Bernard Klawans is the sole owner, director and officer of the Manager and is
also President of the Fund.
In addition, the Manager engaged in the following related party transactions
during the year ended December 31, 2006. The sole shareholder of the Manager
personally made various short-term loans to the Fund in order to assist the Fund
in meeting redemption requests without having to sell portfolio investments.
These loans were repaid without interest by the Fund. During the fiscal year
ending December 31, 2006, $27,000 of loans were made to the Fund and repaid to
the sole shareholder of the Manager without interest.
3. INVESTMENT TRANSACTIONS - Purchases and sales of investment securities
(excluding short-term securities) for the year ended December 31, 2006 were
$701,465 and $3,687,286 respectively. At December 31, 2006, net unrealized
appreciation for Federal income tax puposes aggregated $103,953 of which
$915,978 related to unrealized appreciation of securities and $812,025
related to unrealized depreciation of securities. The cost of investments at
December 301, 2006 for Federal income tax purposes was $5,733,869 excluding
short-term investments.
4. CAPITAL SHARE TRANSACTIONS - As of December 31, 2006, there were 10,000,000
shares of $.001 per value capital stock authorized. The total par value plus
paid-in capital equaled $9,551,257. Transactions in capital stock were as
follows for the years ended:
December 31, 2006 December 31, 2005
Shares Amount Shares Amount
------------------ ------------------
Shares sold 17,382 $ 163,888 26,847 $ 235,573
Shares issued in dividend reinvestment 24,971 238,909 20,325 182,277
Shares redeemed (94,479) (875,826) (68,056) (596,498)
_________________________________________
Net decrease (52,126) $(473,029) (20,884) ($178,648)
=========================================
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 Dec-
ember 31, 2006, taxable components of distributable earnings were as follows:
Undistributed ordinary income $ 43,249
Uudistributed appreciation 103,953
__________
$ 147,202
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 gains 80,625 138,865
_________ _________
$ 249,217 $ 190,847
6. NEW ACCOUNTING PRONOUNCEMENT - In June 2006, the Financial Accounting Stand-
ards Board (FASB) issued Interputation N0. 48 - Accounting for uncertainty in
Income Taxes that requires the tax effects of certain tax positions to be recog-
nized. These tax positions must meet a "more likely than not" standard that,
based on their merits, have a more than 50% likelihood of being sustained upon
examination. FASB Interpretation No. 48 is effective for fiscal periods beginn-
ing after Decembere 15, 2006. At adoption, the financial statements must be ad-
justed to refledt only those tax positions that are more likely than not of be-
ing sustained. Fund management is curently evaluating the impact that FASB
Interpretation will have on the Fund's financial statements.
7. RESTATEMENT OF PREVIOUSLY ISSUES FINANCIAL STATEMENTS - The Fund's previously
issued financial statements omitted disclosures in Note 1 regarding
concentrations of credit risk and disclosures in Note 2 regarding related party
transactions whereby the sole shareholder of the Manager made various short-term
loans to the Fund in order to assist the Fund in meeting redemotion requests
without having to sell portfolio investments.
VALLEY FORGE FUND
FINANCIAL HIGHLIGHTS
For a share of capital stock outstanding throughout the period
Years Ended December 31
2006 2005 2004 2003 2002
PER SHARE DATA:
Net Asset Value, Beginning of Year $ 8.89 $ 9.24 $ 8.89 $ 7.18 $ 7.98
Income from Investment Operations:
Net Investment Income * 0.25 0.18 0.13 0.14 0.15
Net Real & Unrealized Gain (Loss) 0.64 (0.35) 0.35 1.72 (0.78)
________________________________________
Total From Investment Operations 0.89 (0.17) 0.48 1.86 (0.63)
Less Distributions (0.25) (0.18) (0.13) <0.15> (0.17)
_______________________________________
Net Asset Value, End of Period $ 9.53 $ 8.89 $ 9.24 $ 8.89 $ 7.18
Total Return ** 10.12% (1.84)% 5.40% 25.91% (7.89)%
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.27% 1.36% 1.22% 1.32% 1.24%
Net Investment Income 1.14% 0.55% 0.69% 1.31% 2.30%
SUPPLEMENTAL DATA:
Net Assets End of Period in Thousands $ 9,698 $ 9,510 $10,070 $ 9,523 $ 7,334
Portfolio Turnover Rate 10.30% 18.31% 14.99% 16.27% 43.10%
* Per share net investment income has been determined on the basis of
average number of shares outstanding during the period.
** Total return assumes reeinvestment of dividends.
The accompaning notes are integral parts of these financial statements
ADDITIONAL INFORMATION
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 at the SEC's website (http://www.sec.gov) & may
be reviewed 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 thr Fund contains additional information about these
Directors, and is available without charge by calling 1-800-548-1942. Each may
be contacted by writing to the director c/o Valley Forge Fund, P.O. Box 262,
Valley Forge, PA 19481.
Name and Age Position Term of Office Principal Other
with Fund and Length of Occupation Director-
Time Served Past 5 Years ships
Interested Directors & Officers: *
Bernard B. Klawans Director Elected for One Year President of None
Age 85 President Served Since Incep- Valley Forge
tion 05/15/1973 Fund
VALLEY FORGE FUND
ADDITIONAL INFORMATION - (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 Treasurer Elected for One Year System Analyst None
Age 56 Served Since Lockeed Martin
01/30/2003
Independent Directors:
Donald A. Peterson Director Elected for One Year Program Manager None
Age 66 and Board Served Since DRS Technologies
Chairman 08/15/1974
Victor J. Belanger Director Elected for One Year Retired Chief None
Age 64 Served Since Financial Off
08/18/1980 Linearizer Tech
Dr. James P. King Director Elected for One Year President None
Age 73 Served Since Incep- Desilube Tech Inc
tion 05/15/1973
C. William Majer Director Elected for One Year President None
Age 70 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 his ownership of the Fund's Investment Adviser and
Sandra Texter because she is the daughter of Mr. Klawans.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors
of the Valley Forge Fund, Inc.
We have audited the accompanying statement of assets and liabilities of the
Valley Forge Fund, ("the "Fund") including the schedule of investments, as
of December 31, 2006 and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights 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, 2006, verified by examination and by
correspondence with brokers. An audit also includes assessing the accounting
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 financial highlights referred to
above present fairly, in all material respects, the financial position
of the Valley Forge Fund as of December 31, 2006, 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 financial highlights for each of the five
years in the period then ended, in conformity with accounting principles
generally accepted in the United States of America.
As discussed in Note 7 to the financial statements, the accompanying financial
statements have been restated.
Abington Pennsylvania s/ Sanville & Company
February 9, 2007, except for the information in
in Note 7, as to which the date is November 2, 2007
Item 2. Code of Ethics.
CODE OF ETHICS
Pursuant to the requirements of Sections 406 and 407 of the Sarbanes-Oxley Act
of 2002 the Vally Forge Fund, (the "Fund"), hereby adopts the following Code of
Ethics that applies to the Fund's principal executive, financial and accounting
officers 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 sthical 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.
The Fund is small and has had a flawless financial record since inception 36
years ago. The current principal executive officer has prepared all financial
documents ever issued by the Fund, and has been doing so since the Fund's for-
mation. The current Fund auditor is John F. Townsend of Sanville & Company,
whose reports and communications indicate total satisfacation with the reports
he has received. 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 audits
including those of the Fund's securities held in self custodianship in the past
twenty years. He always reported satisfactory findings to the Board of Direct-
ors. This 36 year record is believed to be sufficient rational to preclude the
need for an Audit Committee or an Audit Committee Financial Expert to monitor
future Fund finances unless the Fund should exceed 15 million in total assets.
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 provided excellent internal control procedures to pro-
duce accuracy and safety in all financial matters involving Fund operations. He
is also president and owner of the Investment Adviser, the Valley Forge Manage-
ment Corporation that has acted as Transfer Agent "pro bono" to the Fund. He
has provided the additional control of requiring the signatures of either the
secretary, Sandra Texter or Ellen Klawans that holds no position in the Fund or
Adviser as well as his on all checks issued by the Fund.
Auditors have reviewed the Internal Control exercised by the Fund every year
since it was installed as a filing requirement by the Securities & Exchange
Commission and found it to be satisfactory for a small (less that 15 million
dollars in total assets) fund.
- 9 -
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. The Fund is small being under 15 million dollars in total assets. Mr.
Klawans is the certifying officer of the Fund. The Board, in view of the small
size of the Fund determined that the clean operation by him over the past 36
years, the continuing history of certified audits and the auditors satisfaction
as stated in their statement of internal control exercised by the Fund, made it
unnecessary to have more certifying officers. Mr. Klawans therefore is respons-
ible for establishing and maintaining disclosure controls and procedures (as
defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the re-
gistrant 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 audited 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 are no changes in internal controls or other factors that signi-
ficantly affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: 12/31/06
/s/ Bernard B. Klawans
President
- 10 -
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 12/31/06
- 11 -
Cover Letter
January 30, 2007
N-CSR Filing
Securities & Exchange Commission
Judiciary Plaza
450 Fifth Street
Washington DC. 20549
Re: The Year-End Valley Forge Fund N-CSR Filing for the Year 2006
Dear Gentlepersons:
This letter covers transmittal of the Valley Forge Fund's N-CSR filing for the
year ended 2006.
A copy of the annual audited report to shareholders is included as Item 1.
A statement of a Code of Ethics for individual personnel conduct pertainent to
the Fund and Investment Manager is again presented as Item 2. This Code of
Ethics is intended to compliment the Code of Ethics for security purchase and
sales that the Board of Directors established years ago. The older Code was
included as an exhibit to our N-1A 2003 filing to further publicize this
information.
Rational for not having an audit committee or an independent audit committee
financial expert associated with the Fund is again presented in Item 3. Major
reasons included the size of the Fund, the Fund's history and the costs invol-
ved. However, the Board will continue to observe and monitor this item to
determine whether the need for such action may be warrented.
Details about Fund Controls and Procedures are given in Item 9. The Privacy
Policy of the Fund was included in the proxy statement sent to all
shareholders on June 4, 2006.
Certification statements desired by the law are properly agreed to and signed
by the pretainent personnel.
Please call or write if there is anything the undersigned could change or add
to inprove the service to its shareholders of this filing.
Yours truly,
/s Bernard B. Klawans
President
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