http://www.sec.gov/Archives/edgar/data/102681/000116204416001738/valley497201604.htm
497 1 valley497201604.htm
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Valley Forge Fund, Inc.
TICKER: VAFGX
Supplement dated April 20, 2016 to the Prospectus dated April 22, 2015
The Board of Directors of the Valley Forge Fund, Inc. (the "Fund"), has concluded that due to the relatively small size of the Fund, it is in the best interests of the Fund and its Shareholders that the Fund cease operations. The Board of Directors has chosen to close the Fund and redeem all remaining outstanding shares on May 27, 2016.
Effective as of the date of this Supplement, the Fund will no longer pursue its stated investment objective. The Fund will liquidate its portfolio and will invest in cash equivalents such as money market funds until all shares have been redeemed. Any required distributions of income and capital gains will be distributed as soon as practicable to Shareholders. Shares of the Fund are not available for purchase.
Prior to May 27, 2016, you may redeem your shares, including any reinvested distributions, in accordance with the "How to Redeem Shares" section in the Prospectus. Unless your investment in the Fund is through a tax-deferred retirement account, any redemption is subject to tax on any taxable gains. Please refer to the "Taxes" section in the Prospectus for general information. You may wish to consult your tax advisor about your particular situation.
ANY SHAREHOLDERS WHO HAVE NOT REDEEMED THEIR SHARES OF THE FUND PRIOR TO MAY 27, 2016, WILL HAVE THEIR SHARES AUTOMATICALLY REDEEMED AS OF THAT DATE, AND PROCEEDS WILL BE SENT TO THE ADDRESS OF RECORD. If you have questions or need assistance, please contact your financial advisor directly or the Fund toll-free at 1-800-869-1679.
IMPORTANT INFORMATION FOR RETIREMENT PLAN INVESTORS
If you are a retirement plan investor, you should consult your tax advisor regarding the consequences of any redemption of Fund shares. If you receive a distribution from an Individual Retirement Account or a Simplified Employee Pension (SEP) IRA, you must roll the proceeds into another Individual Retirement Account within sixty (60) days of the date of the distribution in order to avoid having to include the distribution in your taxable income for the year. If you receive a distribution from a 403(b)(7) Custodian Account (Tax-Sheltered account) or a Keogh Account, you must roll the distribution into a similar type of retirement plan within sixty (60) days in order to avoid disqualification of your plan and the severe tax consequences that it can bring. If you are the trustee of a Qualified Retirement Plan, you may reinvest the money in any way permitted by the plan and trust agreement.
This Supplement, and the existing Prospectus dated April 22, 2015, provide relevant information for all Shareholders and should be retained for future reference. Both the Prospectus and the Statement of Additional Information dated April 22, 2015, have been filed with the Securities and Exchange Commission, and are incorporated by reference, and can be obtained without charge by calling the Fund toll-free at 1-866-869-1679.

FYI: The rally that has sent the benchmark S&P 500 up more than 15 percent from its February low is prompting U.S. diversified funds to sell shares as the market nears its record high.
The average asset allocation fund - so called because the funds can invest in anything from stocks to bonds and currencies - has 40.2 percent of its portfolio in U.S. equities, down 1.2 percentage points from six months ago, according to Lipper, a Thomson Reuters company.
The average weighting to U.S. stocks is nearly 2 percentage points less than it was at when stocks last reached record high in May 2015, suggesting that fund managers are less bullish now
Regards,
Ted
http://www.reuters.com/article/usa-stocks-rally-idUSL2N17N0UL

This is a good fund to demonstrate just how bunched together bond funds tend to be.
MCOIX (class I) with its 0.50% ER does get a 5* rating. But its sibling shares classes don't.
MSCAX.lw (class A, load waived) with its 0.75% ER gets a 4* rating.
MSCVX (Investor class) with its 0.83% ER gets a 2* rating.
A tiny difference in expenses (resulting in a tiny difference in returns) can make a large difference in ratings. One way of taking this is that a large difference in percentiles could represent a minscule performance difference, depending on the type of fund.
Then there is the matter of loads. Obviously if you can get MSCAX load-waived (e.g. at Schwab), that's going to be better than MSCVX, since the former has a lower ER.
But with respect to star ratings, Morningstar incorporates the front end load into the calculations. It amortizes the load over the period of interest (3, 5, or 10 years), to calculate a reduced load-adjusted return. That's why A shares will often have lower star ratings than load-waived A shares.
The longer the period, the less of an impact (per year) the load has. So if a fund has a ten year history, Morningstar calculates the load adjusted returns for all three periods, gets star ratings for all of them, and combines them into a single rating. But if a fund like this one has only a three year rating, the impact of the load is overstated.
That is because the load is amortized only over a short three year span. Consequently, the star rating may take an oversized hit from the load simply because the fund's lifetime is somewhat short.
Just another idiosyncrasy to keep in mind.

Yeah I hear ya. Crazy stuff going on here as well - had a handful of days in the 70's and then back down below freezing for a week and now back up in the 60's. No climate change stuff happening around here don'tcha know. And yes, despite all the excellent advice I was given to sell my MLP's and invest in some decent bond funds I didn't listen and instead dove in head first and doubled down during the January lows. Now I'm sitting on these silly 40-50% gains that I don't know what to do with. Maybe I'll take a bath in the goo.
You too, be careful out there.

FYI: MainStay announced today that the three year track record of the MainStay California Tax Free Opportunities Fund (MSCAX, MCOIX) has earned the Fund’s Class I shares a five-star rating from Morningstar, a leading provider of independent investment research in North America, Europe, Australia and Asia. The Fund has ranked in the 1st and 3rd percentiles, therefore beating at least 97 percent of the 115 funds in its peer group, in Morningstar's Muni California Long category in 2015 and 2014, respectively
Regards,
Ted
http://www.businesswire.com/news/home/20160420005877/en
M* Snapshot MSCAX:
http://www.morningstar.com/funds/XNAS/MSCAX/quote.html
Lipper Snapshot MSCAX:
http://www.marketwatch.com/investing/Fund/MSCAX
MSCAX Is Unranked In The (MCB) Fund Category By U.S. News & World Report:
http://money.usnews.com/funds/mutual-funds/muni-california-long/mainstay-california-tax-free-opportunities-fund/mscax

My income sleeve is up ytd about 2.75% which consist of six funds (GIFAX, LALDX, LBNDX, NEFZX, THIFX & TSIAX) and my hybrid income sleeve also consisting of six funds (CAPAX, CTFAX, FKINX, ISFAX, JNBAX & PGBAX) is up about 3.25%. Currently, I don't have any funds within my portfolio that are not up ytd. Overall, my portfolio as a whole is up ytd about 4.1%; and, in comparison, the Lipper Balanced Index is up about 3.1%.

If you are up 4.1% YTD with the large cash position you hold then that is a very commendable return. Congrats!
Edit: So are you including cash as part of your portfolio because if you are you must have some boffo equity funds YTD? As I recall you were a bit of a momentum investor so that would not surprise me at all.
The other ones where I have money, such as D&C, there just isn't much reason to trade. Maybe one or two changes a year. I'd love to hear Junkster reveal what it takes to be banned from a fund house! God knows I've tried their patience over the years.:)

T Rowe was the very first fund family I was banned from when I held an account there in the early to mid 90s.

FYI: Fund designed for investors who want the performance of the S&P 500 Index without all the exposure to weapons, adult entertainment and other traditional Catholic no-nos.
Regards,
Ted
http://www.investmentnews.com/article/20160419/FREE/160419902?template=printart
Global X Funds Website:
http://www.globalxfunds.com/funds/cath/

My income sleeve is up ytd about 2.75% which consist of six funds (GIFAX, LALDX, LBNDX, NEFZX, THIFX & TSIAX) and my hybrid income sleeve also consisting of six funds (CAPAX, CTFAX, FKINX, ISFAX, JNBAX & PGBAX) is up about 3.25%. Currently, I don't have any funds within my portfolio that are not up ytd. Overall, my portfolio as a whole is up ytd about 4.1%; and, in comparison, the Lipper Balanced Index is up about 3.1%.

Howdy Professor,
Good article.
Note that while silver jumped 4.2% the silver miners went nuts. [aside - haven't we been down this road before?]
http://www.kitcosilver.com/equities.html
In the precious metals space, there are two metrics that can be used to fine tune your approach and holdings. The gold/silver ratio and the gold/XAU ratio.
The first- the gold/silver ratio has historically been around 1/17 with one ounce of gold worth seventeen of silver. In fact, this is what happened in the Hunt bull market in the late 70's. Gold tripled from around $300 to $850 and silver went from below $5 to $50. Note they topped out at 1/17. Also note that silver went up tenfold. During the Big Bonanza bull from 2002 to 2011, gold went from around $300 to $1800 while silver went from around $4 to $45. Note that the leverage is still there but the ratio is about 1/45 or so. Right now the ratio is 1/73. This would point towards overweighting silver relative to gold.
The gold/XAU ratio is an historic metric showing the relationship between the price of bullion and the bullion mining stocks. Now it's easy to understand why bullion and mining stocks would track each others performance, but realize they are traded in different markets and can diverge from each other for various and sundry reasons. This divergence, or convergence is measured by the gold/XAU ratio. Before the advent of ETF's, 5 was the demarcation with under that pointing towards overweighting bullion to miners and over that calling for overweighting the miners to bullion. Whelp, the ETF's have skewered the metric way higher and I'm not sure the wizards have reset the bar, but currently the ratio is over 15. That screams at me to overweight the miners relative to bullion.
This tells me the greatest potential leverage is with the silver miners.
Note that in each of these cases, we're talking about overweighting silver and the miners . . . but only 'overweighting'. This doesn't mean you don't own gold bullion in some form. Just that you own a bit more than you might otherwise, in silver. You own a bit more of the miners, via most every pm mutual fund in existence. I met one guy that actually bought silver and gold at the ratio amounts. But that's being a purist.
Why silver is running right now? Geez, I don't know. Most of it is probably because of the dollar falling relative to gold.
However, and this is what matters. I don't care why silver miners are going nuts. I just watch Captain Price and follow his lead. I own SVM, EXK and AG and it's getting fairly obscene. And I like it.
Take care,
peace,
rono

FYI:
Regards,
Ted
Bloomberg Slant;
http://www.bloomberg.com/news/articles/2016-04-18/asian-stocks-poised-to-extend-u-s-equity-gains-as-oil-rebounds
Reuters Slant:
http://www.reuters.com/article/us-usa-stocks-idUSKCN0XG1NS
MarketWatch Slant:
http://www.marketwatch.com/story/dow-on-pace-to-rise-further-above-18000-as-stock-futures-gain-2016-04-19/print
USA Today Slant:
http://www.usatoday.com/story/money/markets/2016/04/19/wall-street-stocks-dow-sp500-nasdaq-oil/83224532/
IBD Slant:
http://www.investors.com/market-trend/stock-market-today/stocks-mixed-in-afternoon-ibm-plunges-on-weak-sales/
WSJ Markets At A Glance:
http://markets.wsj.com/us
Sector Tracker:
http://www.sectorspdr.com/sectorspdr/tools/sector-tracker
Current Futures:
http://finviz.com/futures.ashx

FYI: (In the precious metals space the Linkster likes CEF. You hold both gold and silver, and you don't pay the 28% tax)
Futures prices for this “other” precious metal jumped 4.2% on Tuesday to $16.93 an ounce, a rarefied level last touched in March 2015. The iShares Silver Trust (SLV) jumped 4.2%, while the leveraged ProShares Ultra Silver (AGQ) added 8.5
Regards,
Ted
http://www.marketwatch.com/story/silver-jumps-3-to-10-month-high-as-hedge-funds-buy-in-2016-04-19/print
Barron's Slant:
http://blogs.barrons.com/focusonfunds/2016/04/19/hi-yo-silver-the-other-precious-metal-hits-11-month-high/tab/print/
I'm sure you new this was coming !

Yale is routinely the best-performing endowment in the world
Posted on April 15, 2016 by David Ott Acropolis Investment Management LLC
One of my favorite reads of the year is from the Yale Investments Office, which manages their $25.6 billion endowment. You can find the report by clicking here.http://investments.yale.edu/images/documents/Yale_Endowment_15.pdf
Yale is routinely the best-performing endowment in the world and has earned a remarkable 13.9 percent return over the last 30 years – well above the 10.7 percent return for US stocks, 8.7 percent return for foreign stocks and 7.1 percent return for bonds.
I’ve read both books by David Swenson, their pioneering investment manager, and pay close attention to their annual report. I haven’t finished this one yet, but I was surprised by their large increase to foreign stocks in recent years.
http://acrinv.com/yale-bets-big-overseas/
Asset Allocations
as of June 30, 2015
Yale University / Educational Institution Mean
Absolute Return 20.5% / 24.1%
Domestic Equity 3.9 / 19.4
Fixed Income 4.9 / 9.3
Foreign Equity 14.7 / 22.1
Leveraged Buyouts 16.2 / 5.9
Natural Resources 6.7 / 7.3
Real Estate 14.0 / 3.7
Venture Capital 16.3 / 4.6
Cash 2.8 / 3.7
In 1985, 80% of the Endowment
was committed to U.S. stocks and bonds. Today, target allocations call for
12.5% in domestic marketable securities, while the diversifying assets of
foreign equity, natural resources, leveraged buyouts, venture capital,
absolute return, and real estate dominate the Endowment, representing
87.5% of the target portfolio.
The heavy allocation to nontraditional asset classes stems from
their return potential and diversifying power.
Venture capital investments provide compelling option-like returns as
the University’s premier venture managers gain exposure to innovative
start-up companies from an early stage. Yale’s venture capital allocation
of 14.0% exceeds the 4.6% actual allocation of the average educational
institution. The venture capital portfolio is expected to generate real
returns of 16.0% with risk of 37.8%.
Yale’s venture capital program, one of the first of its kind, is
regarded as among the best in the institutional investment community,
and the University is frequently cited as a role model by other investors.
Yale’s venture capital managers are strong, cohesive, and hungry teams
with proven ability to identify opportunities early and support talented
entrepreneurs as they build early-stage businesses. The University’s vast
experience in venture capital provides an unparalleled set of manager
relationships, significant market knowledge, and an extensive network.
Over the past twenty years, the venture capital program has earned an
outstanding 92.7% per annum.
http://investments.yale.edu/images/documents/Yale_Endowment_15.pdf

Not all ownership information is contained in the SAI. Many SAIs list only the holders of 5% or more of a fund's total assets. Some show only board members' holdings, not the managers' holdings. There is no requirement for how each fund must show ownership. My M* data base has more fund manager ownership detail, but it, too, is woefully incomplete and inaccurate. Fund companies differ in how management teams must invest their company retirement plan dollars, their bonuses, etc. Some companies require all of these dollars be invested in funds the company runs, some are more specific. Alas, because of the inconsistent reporting of data, we always ask managers to provide this information to us. Most do it matter-of-factly. Those that don't, we remove from our screening. Another thing...new funds, young managers, etc. can present problems in terms of how to evaluate. We just try to verify as best we can.

Yes, I've noticed that quite a few "Global" bond funds use the US as approx 50% of their respective portfolios. I own enough US bond funds so I'm thinking an international bond fund would work better for me.

It is turning out to be a good year for bond traders. 12/2015 and 1/2016 were a couple of down months, but I kept the discipline and finally caught a nice rally. It is nice to see all the bond sectors are in rally mode simultaneously. It is a rare treat. I have been 64% high yield muni funds and 36% bank loan funds for the past couple of weeks. I like the risk/return in bank loan funds, although corp junk is coming on very strong.

Government, emerging markets, and long term bond funds up over 7%. World and corporate bond funds up over 4%. Junk corps up 3.62% with some of the larger ones up over 5%. Even some of the stodgy bank loan funds are up in the 3% to 4% range and some of the steady eddie funds in this category have had but one or two down days in the past two months. The junk munis are trailing at 2.62% albeit some of the better ones are near 4%. Munis in general seem to be overloved. Never a good thing from a contrarian point of view. Entering today I was 41% bank loans, 29% junk corp, 26% junk munis, and 4% emerging markets. That could be subject to change (as it is almost everyday) as may exchange more out of my Nuveen junk muni (NHMRX) into more of my Nuveen junk corporate (NCOIX) This scattered and diversified approach is normally not my thing but it sure has been less stressful. Hopefully can incorporate more of that strategy as I continue to age. Up around 4.35% YTD (edit: 4.99% through 4/22) and would be thrilled to get 10% for the year - or whatever the market has to offer. I am always more concerned with a smooth ride upward in my account with as least volatility as possible than I am hitting it out of the ballpark Harper style.

Interesting link, Ted, thanks for it. I'm curious what some of the many saavy bond investors here think about current junk valuations, @junkster and @dex maybe?

Not an investor but the "experts" are all over the ball park when it comes to the prospects of the junk bond market. In Ted's linked and bullish article we see this comment Payson Swaffield, chief income investment officer at Eaton Vance, thinks we are at the beginning of a new cycle of positive junk returns that could last a few years. Yet, in this week's Barrons we see an interview with Michael Weilheimer, head of Eaton Vance's Income Fund who is cautious and thinks we will be rangebound and are anywhere from the 6th to 9th inning of the credit cycle. Same firm yet two entirely different opinions on junk bonds. Marty Fridson the junk bond guru says ex oil we are an extreme valuations in the junk bond market. And of course we all know the Bond King's (Gundlach) constant and continual bearishness on the junk bond market.
The market though, who never listens to the experts has been very bullish and the average open end junk fund is up 3.62% YTD with many up over 5%. So unless oil goes back to $30 it is looking more and more like double digits gains for 2016 will be achieved.
Edit Ted's linked article was a good one as it highlighted the dampened volatility of junk bonds.

These funds are too varied to make meaningful comparisons. I understand you want some concrete historical comparisons. But I think the wide variety of approaches precludes such an analysis.
- Some funds hedge against currency fluctuation vs the Dollar. The degree of hedging and methods vary. (I don't pretend to understand the technicals.) Expect more muted returns but an easier ride with funds that hedge. (Prospectus should clarify degree of hedging, if any.)
- Those classified as local currency funds normally don't hedge. It's a bit like adding rocket fuel to your tank. They outperform greatly during periods of weak Dollar, but are dangerous to own if the Dollar undergoes sustained strengthening. Since the Dollar can undergo multi-year periods of rising or falling against other currencies, performance of local currency funds cannot be predicted and tends to be erratic.
- Geographic concentrations vary widely. Lately, funds investing in Japan have outperformed others as the Yen has appreciated rapidly. In addition, the more aggressive funds dabble in risky places like Brazil and Russia where currencies can fall or appreciate 50% in a single year. Others avoid these markets, sacrificing potential gain in favor of stability.
- International or Global fund? International bond funds invest primarily in non-U.S. markets. Global funds are much more likely to include U.S. bonds. Dodge & Cox Global Bond DODLX (which I own) for example, has about 50% of assets invested in the U.S. If you're looking to offset your U.S. Dollar denominated assets, you're getting less impact with a fund like this.
- Since the question does not reference EM bonds, I'll assume you mean investment grade funds. But many of these (including OIBAX which I own) can invest in EM markets. A 20-30% weighting to EM or sub investment grade debt would not be uncommon for some of these. Result: Exposure to EM helps in healthy markets, but makes the manager look like an idiot when EMs falter.
- Finally (and very importantly), as with U.S. bond funds, considerations like duration, weighting to sovereign debt, industry concentration, and credit quality all affect the performance.

If you own the fund in a taxable account and have a large, unrealized gain, maybe best to hold but watch. If in a retirement account, at least move to watch status with no additional purchases, or sell if you are so inclined. Keep in mind FPACX has underperformed its category in 2015 and 2016 YTD, not a long period. Performance itself is not problematic for me. The fund should not be compared to an S&P Index. Yeah, it was convenient for management to do this when their numbers looked good by comparison, but we never compared it to the index. The sudden change of comparable index by management, however, is troubling, especially when the selected index does not resemble the fund in any way.

@Sven
Hopefully, your question was sincere and not rhetorical. As I'm sure you realize, those ETFs were not in existence in 1993 (the inception of FPACX), in 2000-2002, or in 2008. One would have to come up with some other fund combination which would resemble the portfolio compositions of FPACX during those time periods. I was unable to find the portfolio x-rays of FPACX for those periods so I can't use PortfolioVisualizer to answer your question.
Also, according to BrightScope, FPACX had only $84M in AUM at the end of 1999, and only $1.3B in AUM at the end of 2007. So during those time periods, FPACX likely had very little resemblance to the fund it is today with $17B in AUM -- 15% down from the all time high of $20B -- in terms of exposure to SC and MC equities, its ability to short equities, and its ability to move in and out of stocks with agility. Also, because of huge differences in AUM, I don't think anybody can draw any conclusions about how FPACX will perform in future downturns based on how it performed in past downturns when AUM were much, much smaller.
Kevin