Item 5: Fees and Compensation
Item 5.A.
Management Fee
Pursuant to the advisory agreements between Valley Forge and the Funds, each Fund pays a monthly
management fee (the “Management Fee”). The Management Fee payable by each of the Funds is
generally equal to 1.00% annualized, and payable monthly in advance. If an investor is admitted to a
Fund other than at the beginning of a month, that investor will pay a pro rata portion of the Management
Fee for the number of days remaining in the month. The Management Fee payable by the Funds in
respect of any investor may be reduced or waived, with respect to the VF Fund, in the sole discretion of
Valley Forge, and with respect to the Sub-Advised Fund, at the election of the Institution and with the
consent of Valley Forge.
Incentive Allocation
The General Partner is generally entitled to a performance allocation equal to 20% of the annual increase,
if any, in the net asset value of each investor’s capital account in the VF Fund. An affiliate of Valley
Forge is generally entitled to a performance allocation in respect of the annual increase, if any, in the net
asset value of each investor’s capital account in the Sub-Advised Fund as further set forth in the offering
documents of the Sub-Advised Fund. The performance allocation is calculated based on both realized
gains and losses and unrealized appreciation and depreciation of securities held in the Client’s respective
portfolio. Generally, any decrease in the net asset value in a fiscal year allocated to any investor’s capital
account is carried forward in a “loss carryforward” or “high water mark” provision, so that no
performance allocation is charged to that capital account unless the losses have been recouped or the
previous high water mark has been achieved, as applicable. The performance allocation, if any, is
determined at the end of each fiscal year and at the time of each withdrawal from each Fund. The
performance allocation made in respect of any investor's capital account may be reduced or waived, with
respect to the VF Fund, in the sole discretion of Valley Forge, and with respect to the Sub-Advised Fund,
at the election of the Institution and with the consent of Valley Forge. The calculations of the
performance allocation for each of the Funds is set forth in more detail in the respective offering
documents of the Funds.
Item 5.B.
Management Fees payable by the VF Fund are deducted directly from the VF Fund’s account. Valley
Forge bills the Sub-Advised Fund for Management Fees payable by the Sub-Advised Fund. Fees are
charged at the frequency described in Item 5.A.
Item 5.C.
The Firm bears all of its own operational expenses incurred in connection with the provision by it of
investment management services to the Funds, including office space and utilities, operational services
and secretarial, clerical and other personnel, in each case except to the extent provided through “soft
dollars” generated by the Fund (provided that any “soft dollars” will be within the safe harbor created by
Section 28(e) of the Securities Exchange Act of 1934, as amended). The Management Fee may exceed
the expenses borne by the Firm on behalf of the Funds.
The Funds each bear their own operational and other expenses, including, without limitation, the
Management Fee, costs and expenses incurred in connection with the offer and sale of interests,
regulatory filings and reporting, investment-related expenses (e.g., expenses that the Firm reasonably
determines to be related to the investment of the Fund’s assets, such as fees to prime brokers, brokerage
commissions, clearing and settlement charges, custodial fees, wire transfer charges, ticket charges,
interest expense, consulting and other professional fees relating to particular investments or
contemplated investments), professional fees relating to investments (including, without limitation, fees
and expenses of consultants and experts), investment-related travel and lodging expenses and research-
related expenses, including, without limitation, quotation equipment and services, expenses relating to
third-party providers of risk management services for the Fund’s portfolios, legal expenses, internal and
external accounting, audit fees, tax structure and preparation expenses, organizational expenses,
premiums for insurance (if any and where applicable), fees and expenses of the Fund’s administrators,
expenses related to the maintenance of the Fund’s registered office, franchise taxes, corporate licensing,
extraordinary expenses and other reasonable expenses related to the Fund. All of the investors share such
expenses.
Brokerage practices are specifically discussed in Item 12.
Item 5.D.
As discussed in Item 5.A., the Management Fee is generally payable monthly in advance as set forth by
the offering documents of each Fund. If a Fund terminates the advisory agreement with Valley Forge
after the payment of a Management Fee but before the end of the applicable billing period, the
Management Fee will be pro-rated based on the number of days elapsed in the month before the
termination, and the excess Management Fee will be returned to the account of the Fund.
Item 5.E.
Not Applicable. Neither Valley Forge, nor any of its supervised persons, are compensated for the sale of
securities or other investment products or mutual funds. Additionally, Valley Forge does not charge its
Clients advisory fees over and above commissions or markup fees for the purchase and sale of securities
for Client portfolios.