41
As filed with the Securities and Exchange Commission on April 24,
1996
File #2-88860
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1993 o
Pre-Effective Amendment No.
o
Post-Effective Amendment No. 15
x
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
x
Amendment No. 18
(Check appropriate box or boxes.)
THE BERWYN FUND, INC.
(Exact Name of Registrant as Specified in Charter)
1189 LANCASTER AVENUE, BERWYN, PENNSYLVANIA
19312
(Address of Principal
Executive Offices)
(Zip Code)
Registrant's Telephone Number, including Area Code
(610) 408-9850
KEVIN M. RYAN, 1199 LANCASTER AVENUE,
BERWYN, PA 19312
(Name and Address of Agent for Service)
Approximate date PROPOSED Public Offering April
24, 1996
It is proposed that this filing will become effective (check
appropriate box)
x immediately upon filing pursuant to paragraph (b)
o on (date) pursuant to paragraph (b)
o 60 days after filing pursuant to paragraph (a)(1)
o on (date) pursuant to paragraph (a)(1)
o 75 days after filing pursuant to paragraph (a)(2)
o on (date) pursuant to paragraph (a)(2) of rule 485
If appropriate, check the following box:
o this post effective amendment designates a new effective
date for a previously filed post-effective
amendment.
Declaration Pursuant to Rule 24f-2. The registrant has
registered an indefinite number
or amount of securities under the securities act of 1933
pursuant to Rule 24(f)(2) under
the Investment Company Act of 1940. The Rule 24f-2
Notice for the registrant's most
recent fiscal year will be filed April 30, 1996.
CROSS REFERENCE SHEET
_________________________________________________________________
______
Statement of
Prospectus Additional Registration
Section Page # Information Page # Statement Page #
_________________________________________________________________
______
PART A
Item 1. NA 3
Item 2. 2 5
Item 3. 3 & 4 6 & 7
Item 4. 4 & 13 7 & 16
Item 5. 6 & 13 9 & 16
Item 6. 10 & 13 13 & 16
Item 7. 7 & 8 10 & 11
Item 8. 11 14
Item 9. N/A N/A
PART B
Item 10. N/A 18
Item 11. 1 19
Item 12. 11 29
Item 13. 2 20
Item 14. 6 24
Item 15. 7 25
Item 16. 4 & 11 22 & 29
Item 17. 7 25
Item 18. 11 29
Item 19. 9 27
Item 20. 11 29
Item 21. N/A N/A
Item 22. 10 28
Item 23. 12 30
PART C
Item 24. 34
Item 25. 35
Item 26. 35
Item 27. 35
Item 28. 35
Item 29. 35
Item 30. 36
Item 31. 36
Item 32. 36
THE BERWYN FUND, INC.
1189 LANCASTER AVENUE
BERWYN, PA. 19312
PROSPECTUS
April 24, 1996
Investment Objective
The Berwyn Fund, Inc. (the "Fund") is a no-load, non-
diversified, open-end management investment company. While there
is no sales charge for the purchase of shares in the Fund, the
Fund does charge a 1% fee on the redemption of shares held for
less than one year. If shares are held for one year or longer,
there is no fee on redemption.
The primary investment objective of the Fund is long-term
capital appreciation; current income is a secondary
consideration. The Fund intends to achieve its objective
through investment in common stock and fixed income securities.
There can be no assurance that the investment strategy of the
Fund will be successful and its objective may not be realized.
Investment Adviser
The Killen Group, Inc. is the Investment Adviser to the Fund.
Robert E. Killen is President and sole shareholder of The Killen
Group, Inc.
This Prospectus sets forth concisely the information that an
investor should know before investing in the Fund. Investors are
advised to read and retain this Prospectus for future reference.
The Fund has filed a Statement of Additional Information
containing additional information about the Fund with the
Securities and Exchange Commission. Such Statement is dated
April 24, 1996 and has been incorporated by reference to this
Prospectus. It may be obtained, without charge, by writing to
the Fund.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
TABLE OF CONTENTS
Fee and Expense
Table............................................................
................................................. 2
Financial
Highlights.......................................................
........................................................... 3
Calculation of Performance
Data.............................................................
................................. 4
Investment Objective, Policies and Risk
Factors..........................................................
............. 4
Management of the
Fund.............................................................
............................................ 6
Computation of Net Asset
Value............................................................
.................................. 7
Share
Purchases........................................................
...............................................................7
Distributor......................................................
.................................................................
........ 9
Exchange of
Shares...........................................................
...................................................... 10
Dividends, Capital Gains Distribution and
Taxes............................................................
.......... 10
Retirement
Plans............................................................
......................................................... 11
Redemption of
Shares...........................................................
.................................................. 11
General
Information......................................................
.......................................................... 13
Additional
Information......................................................
....................................................... 14
-1-
FEE TABLE
Shareholder Transaction Expenses
Redemption Fees (as a percentage of
amount redeemed) 1.00 % 1
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 1.00 %
+
Other Expenses 0.23 %
Total Fund Operating Expenses 1.23 %
_________________________________________________________________
_____________
1 The Fund charges a fee of 1% of the amount redeemed on
redemptions of shares held less than 1 year.
The purpose of this Fee Table is to assist the investor in
understanding the various costs and expenses that an investor in
the Fund will bear directly or indirectly. For more complete
descriptions of the various costs and expenses, see "Management
of the Fund" in the Prospectus and "Investment Advisory
Arrangements" in the Statement of Additional Information.
<TABLE>
Example
1 Year 3 Years 5 Years
10 Years
<S> <C> <C> <C>
<C>
You would pay the following
expenses on a $1,000 invest-
ment, assuming (1) 5% annual
return and (2) redemption at
the end of each time period: $13.00 $39.00
$68.00 $149.00
</TABLE>
THE FOREGOING EXAMPLE SHOULD NOT BE CONSIDERED A REPRE-SENTATION
OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESSER THAN THOSE SHOWN.
-2-
THE BERWYN FUND, INC.
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
The following Financial Highlights Information for a share outstanding
throughout each period, insofar as they relate to each of the five years
in the period ended December 31, 1995, have been audited by Price
Waterhouse LLP, Independent Accountants, whose report on the Financial
Statements containing this information was unqualified. This
information should be read in conjunction with the Fund's financial
statements and notes thereto, which are incorporated by reference in the
Statement of Additional Information and this Prospectus, and which
appear, along with the report of Price Waterhouse LLP, in the Fund's
1995 Annual Report to Shareholders. Additional Information about the
Fund's Investment Performance is contained in the Fund's 1995 Annual
Report to Shareholders which can be obtained from the Fund without
charge.
<TABLE>
Year EndedYear EndedYear EndedYear Ended Year Ended
12/31/95 12/31/94 12/31/9312/31/92 12/31/91
<S> <C>
<C> <C> <C> <C>
Net Asset Value, Beginning of Period $17.55 $17.67 $14.86 $13.47$9.66
-------- -------- ---------------- --------
Income From Investment Operations
Net Investment Income (Loss)0.00 0.02 (0.03) 0.04 0.11
Net Realized and Unrealized Gains
(Losses) on Securities 3.34 0.65 3.42 2.70 4.08
-------- -------- ---------------- --------
Total from Investment Operations 3.34 0.67 3.39 2.74 4.19
-------- -------- ---------------- --------
Less Distributions
Dividends from Net Investment Income(0.01) (0.01) --- (0.04)(0.11)
Distributions from Net Realized Gains(1.45) (0.78) (0.58) (1.31)(0.27)
-------- -------- ---------------- --------
Total Distributions (1.46) (0.79) (0.58) (1.35) (0.38)
-------- -------- ---------------- --------
Net Asset Value, End of Period$19.43 $17.55 $17.67 $14.86 $13.47
Total Return 19.18% 3.90% 22.90% 20.60% 43.70%
Ratios/Supplemental Data
Net Assets, End of Period (000)$97,234$63,522 $47,312 $31,334 $18,667
Ratio of Expenses to Average Net Assets1.23% 1.33% 1.37% 1.38% 1.38%
Ratio of Net Investment Income (Loss)
to Average Net Assets 0.04% 0.11% (0.18%) 0.28% 0.91%
Portfolio Turnover Rate 32% 24% 24% 45% 33%
</TABLE>
-3a-
THE BERWYN FUND, INC.
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
Year EndedYear EndedYear EndedYear Ended Year Ended
12/31/90 12/31/8912/31/88 12/31/87 12/31/86
<S> <C>
<C> <C> <C> <C>
Net Asset Value, Beginning of Period $13.82 $12.63 $10.84 $12.41 $11.03
-------- ---------------- -------- --------
Income From Investment Operations
Net Investment Income (Loss)0.13 0.09 0.074 0.05 0.11
Net Realized and Unrealized Gains
(Losses) on Securities (3.44) 1.99 2.265 0.39 1.475
-------- ---------------- -------- --------
Total from Investment Operations (3.31) 2.08 2.339 0.44 1.585
-------- ---------------- -------- --------
Less Distributions
Dividends from Net Investment Income (0.13)(0.09) (0.079) (0.016) (0.09)
Distributions from Net Realized Gains (0.72)(0.80) (0.470) (1.85)(0.115)
-------- ---------------- -------- --------
Total Distributions (0.85) (0.89) (0.549) (2.01) (0.205)
-------- ---------------- -------- -------
Net Asset Value, End of Period$9.66 $13.82 $12.63 $10.84 $12.41
Total Return (23.90%) 16.50% 21.60% 2.90% 14.60%
Ratios/Supplemental Data
Net Assets, End of Period (000) $11.627 $14,078 $11,367 $8,741 $6,153
Ratio of Expenses to Average Net Assets1.46% 1.42% 1.45% 1.52% 1.66%
Ratio of Net Investment Income (Loss)
to Average Net Assets 1.11% 0.70% 0.60% 0.50% 1.10%
Portfolio Turnover Rate 24% 25% 20% 43% 17%
</TABLE>
-3b-
CALCULATION OF PERFORMANCE DATA
From time to time the Fund may advertise its annual total
return. The total return of the Fund reflects the change in share
price and the reinvestment of dividends and capital gains. Total
return is based on historical performance and is not intended to
indicate future performance. The Fund calculates total return
for a period by determining the redeemable value of a $1,000
investment made at the beginning of the period, with dividends
and capital gains reinvested on the reinvestment date, on the
last day of the period and dividing that value by $1,000. There
is further information regarding the Fund's performance in its
annual report to shareholders. Any investor who wishes may
obtain a copy of this report without charge by writing to the
Fund at its address or by calling (800) 824-2249.
INVESTMENT OBJECTIVES, POLICIES, AND RISK FACTORS
The Fund is a no-load, non-diversified, open-end management
investment company. Since the Fund is non-diversified, there are
no restrictions concerning the diversification of the Fund's
investments under the Investment Company Act of 1940 and there
may be greater risk in an investment in the Fund than in a
diversified investment company. Being non-diversified means that
the Fund may invest a greater portion of its net assets in the
shares of a single issuer than a diversified fund. Changes in
the financial condition or market assessment of a single issuer
may cause greater fluctuation in the share value of the Fund than
in a diversified fund.
The Fund has placed restrictions on its investment policy.
Two particularly significant restrictions are: (1) with respect
to 50% of the value of its total assets, the Fund will not, at
the time of purchase, invest more than 5% of the value of its
total assets, at market value, in the securities of any one
issuer, except the securities of the U.S. government, and (2)
with respect to the other 50% of the market value of its total
assets, the Fund will not invest at the time of purchase more
than 15% of the market value of its total assets in any single
issuer. These two restrictions, hypothetically, could give rise
to a portfolio with as few as 14 issues. The Fund does not
anticipate having a portfolio with as few as 14 issues. The
investment policy of the Adviser has been to use two basic
guidelines in the management of investment portfolios: (1) the
initial investment in any single issuer must comprise less than
5% of the total value of the assets in a portfolio and (2) the
initial investment in any one industry must comprise less than
20% of the total value of the assets in a portfolio. (The
maximum that the Fund will invest in any industry will be 25% of
the total value of its assets). Under normal market conditions,
the Fund follows the 5% and 20% guidelines. The Fund will always
adhere to the 25% rule.
The investment objective of the Fund is to seek long-term
(i.e., greater than one year) capital appreciation; current
income is a secondary consideration. The Fund invests in what it
believes to be undervalued common stock, and fixed income
securities that offer a potential for long-term capital
appreciation. This approach can often result in selecting
securities which are not being recommended by other investment
advisers and/or brokerage firms. In addition, this approach can
often result in the selection of securities of lesser known
companies. The Fund,
-4-
however, only invests in corporations that have been in business
for at least five years and have a minimum of $10,000,000 in
assets. Also, the Fund only invests in securities listed on
national exchanges and on the over-the-counter market. The Fund
will not invest more than 10% of its net assets in illiquid
securities. Under normal market conditions, the Fund invests at
least 80% of the value of its net assets in common stocks. The
Fund selects common stock investments from three broad areas: (1)
in companies selling substantially below their book value; (2) in
companies selling at a low valuation to their present earnings
level; and (3) in companies judged by the Adviser, to have above-
average growth prospects over the next three-to-five year period
and to be selling, in the opinion of the Adviser, at small
premiums to their book value, or at modest valuations to their
present earnings level. The Fund may invest in real estate
investment trusts.
The value of the common stocks in which the Fund invests can
be expected to fluctuate daily. A change in the value of the
majority of common stocks in which the Fund invests would
normally affect the value of the net assets of the Fund and the
value of an investment in the Fund. If the value of the majority
of common stocks held by the Fund increases in value, then the
net assets of the Fund and an investment in the Fund would
normally increase in value. If there were a decline in the value
of a majority of the common stocks of the Fund, then the net
assets of the Fund and an investment in the Fund would normally
decline in value.
The adviser to the Fund believes that its strategy of
investing in undervalued common stock offers the potential for
long-term capital appreciation above that of the leading stock
market indices (i.e. Dow Jones Industrial Average, Standard Poor
500 Average, Russell 2000 and the Value Line Composite) and that
use of the guidelines of the Adviser for portfolio management
together with the investment restrictions previously described
will lessen the risks in this investment approach.
The investment objective of the Fund, to seek long term
capital appreciation with income as a secondary consideration, is
a fundamental policy of the Fund. Also, the policy of the Fund
to invest the majority of its net assets in common stocks that
the Adviser deems to be undervalued is a fundamental policy of
the Fund. Fundamental policies are those policies which cannot
be changed without the approval of a majority of the outstanding
voting securities of the Fund. Investment policies, other than
the fundamental policies, may be changed with the approval of a
majority of the Board of Directors.
While the portfolio of the Fund emphasizes investment in
common stock, the Fund may invest up to 20% of the value of its
net assets in fixed income securities (corporate bonds and
preferred stocks.) The Fund invests in fixed income securities
when it believes prevailing interest rates offer long-term
capital appreciation. The fixed income securities selected may
include securities in any of the investment grade ratings listed
by Standard & Poor's Corporation ("Standard & Poor's") and
Moody's Investors Service ("Moody's"), including securities with
a Standard & Poor's D rating and a Moody's C rating and in
unrated securities. (See Appendices A B in the Statement of
Additional Information for Standard & Poor's and Moody's
definitions of Bond Ratings.) Fixed income securities that have
credit ratings lower than BBB (Standard &
Poor's rating) or a Baa (Moody's rating) are termed "junk" bonds.
These lower rated securities
-5-
are speculative investments and investment in them is riskier
than an investment in a fixed income security with a rating of
BBB, Baa or higher. Fixed income corporate debt securities that
have a BBB or Baa rating are not termed junk bonds but do have
speculative characteristics and are riskier investments than debt
securities rated A and higher. The ability of the issuer of a
lower rated security to pay income or repay principal in
accordance with the terms of the obligation may be impacted more
severely by adverse economic conditions or a business downturn
than the ability of an issuer of higher rated securities.
Unrated securities may or may not be considered more creditworthy
than lower rated securities. It is the decision of the issuer to
seek to have a security rated.
In investing in lower rated and unrated fixed income
securities, the Adviser will examine the financial statements of
an issuer and determine its creditworthiness. The Fund only
invests in fixed income securities that are listed on national
exchanges or the over-the-counter market. The Fund will not
invest more than 10% of the value of its portfolio in unrated
fixed income securities.
Although the Fund will normally invest in common stocks and
fixed income securities the Fund may at times, for temporary
defensive purposes, invest all or a portion of its assets in
savings accounts and certificates of deposit of domestic banks
with assets in excess of $1,000,000, commercial paper with the
highest investment grade rating (i. e., A-1, P-1, as defined by
Standard Poor's and Moody's Commercial Paper Ratings,
respectively) repurchase agreements, U. S. treasury bills,
treasury notes and treasury bonds, and the Fund may hold cash.
Treasury bills, treasury notes and treasury bonds are issued by
the United States Treasury Department and backed by the "full
faith and credit" of the U.S. Government. However, when the Fund
invests in such securities, the Government will be not required
to provide financial support to it. Also, the Fund will not
invest more than 5% of its assets in repurchase agreements.
The Fund does not intend to engage in short term trading.
In 1995, the portfolio turnover rate of the Fund was 32%.
MANAGEMENT OF THE FUND
The business of the Fund is managed under the direction of
the Board of Directors. The Board is elected annually by the
shareholders and sets broad policies for the Fund. The daily
operations of the Fund are administered by employees of its
Investment Adviser under the supervision of the Board.
The Killen Group, Inc. (the Adviser) is the Investment
Adviser to the Fund. The Killen Group is a Pennsylvania
corporation that was formed in September 1982. Its address is
1189 Lancaster Avenue, Berwyn, Pennsylvania 19312. Robert E.
Killen is President and sole shareholder of The Killen Group.
Mr. Killen is also the President and Chairman of the Board
of the Fund. He is the person primarily responsible for the day-
to-day management of the Fund's portfolio. He has been managing
the portfolio since May 4, 1984, the date the Fund's public
offering began.
-6-
Mr. Killen has over twenty years experience as an investment
adviser. In 1969, Mr. Killen cofounded Compu-Val Management
Associates, an investment advisory firm and was a 50% partner
until February 1983. At that time, The Killen Group, Inc.,
replaced Mr. Killen as a partner. The partnership of Compu-Val
Management Associates was dissolved on December 31, 1983 and The
Killen Group continued its advisory business as a separate
entity. As of December 31, 1995, The Killen Group was managing
352 individual investment portfolios worth approximately $228
million.
In addition the Adviser also manages the Berwyn Income Fund,
Inc. The Berwyn Income Fund is an open-end management investment
company that seeks current income for its shareholders by
investing in fixed income securities. The Killen Group has been
the Adviser to the Fund since it became public in September,
1987. On December 31, 1995, the Berwyn Income Fund had net
assets of over $119 million.
Under the contract between the Fund and the Adviser, the
Adviser provides the Fund with investment management services.
These services include advice and recommendations with respect to
investments, investment policies, the purchase and sale of
securities and the management of the Fund's resources. In
addition, employees of the Adviser manage the daily operations of
the Fund under the supervision of the Board.
As compensation for its services, the Adviser receives
monthly compensation at the annual rate of 1% of the average
daily net assets of the Fund. This fee is higher than that of
most mutual funds. In 1995, the Fund paid the Adviser $787,039
for its services. This amount was 1.00% of the average daily net
assets for the year. Total expenses for the Fund in 1995 were
1.23% of the average net assets.
Subject to policies established by Fund's Board of
Directors, the Adviser is responsible for the Fund portfolio
decisions. When buying and selling securities, the Fund may pay
commissions to brokers who are affiliated with the Adviser or the
Fund. The Adviser also gives consideration to brokers who have
assisted in the distribution of the Fund's shares.
COMPUTATION OF NET ASSET VALUE
The net asset value per share of the Fund is determined by
dividing the total value of the Fund's investments and other
assets, less any liabilities, by the total number of outstanding
shares of the Fund. Net asset value per share is determined
daily, Monday through Friday, at the close of regular trading on
the New York Stock Exchange (4:00 P.M. Eastern Time) and is
effective as of the time of computation. (The New York Stock
Exchange is closed on, and net asset value is not calculated on,
New Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.)
For the purpose of making this determination, securities listed
on national securities exchanges are valued at their last sales
price on the exchange where primarily traded. In the event there
are no sales, the security is valued at the last current bid
price. An unlisted security, for which over-the-counter market
quotations are readily available, is valued on the basis of the
last current bid price. When over-the-counter bids
-7-
are not readily available, an unlisted security is valued at its
fair value as determined in good faith by, or under the
supervision of, the Board of Directors. All other assets are
valued at fair value as determined in good faith by the Board of
Directors.
SHARE PURCHASES
The Fund's shares are offered for sale on a continuous
basis. There is no sales load. The offering price of shares of
the Fund is the net asset value per share next determined after
receipt by the Transfer Agent of the order for purchase of
shares. The value of the shares can be expected to fluctuate
daily.
Orders for shares of the Fund received prior to the close of
the New York Stock Exchange (normal closing time is 4:00 P.M.,
eastern time) on any day the Exchange is open will be the net
asset value effective at the close of the Exchange on such a day.
Orders received after the close of the Exchange will be valued at
the net asset value computed on the next business day (i.e., the
next day the Exchange is open).
The minimum initial investment is $10,000 per investor.
This investment may be divided by a single investor among
different investment accounts that total $10,000 in the
aggregate. Subsequent investments must be at least $250. For
Individual Retirement Accounts (IRA), the minimum initial
investment is $1,000. The minimum initial investment for a
spousal IRA is $250. Subsequent investments in IRA accounts must
be at least $250. There are no minimum investment requirements
for an investment by a retirement plan (other than IRAs) or a
custodial account established for the benefit of a minor.
Initial investments must consist of a New Account Application and
payment of the initial investment. Investments are deemed
effective when they are received at the office of the Fund's
Transfer Agent, Rodney Square Management Corp., P. O. Box 8987,
Wilmington DE 19899. The Fund will not accept new shareholder
accounts whenever its net assets are over $100,000,000.
The Fund has an Automatic Investment Plan under which an
investor may have money transferred from their checking account
to their account in the Fund. If you wish to use this Plan,
please contact the Fund for further information and an
application.
An investor may also exchange common stock for shares of the
Fund. The stock offered, however, has to be acceptable to the
Fund and the Fund reserves the right to reject any stock that
does not meet its criteria.
To be acceptable to the Fund, the stock offered must have a
fair market value, determined as set forth below, of at least
$20,000 for both initial and subsequent investments. (An
investor would be permitted to invest a combination of cash and
stock totaling $20,000.) The stock must meet the investment
standards and criteria listed in the Prospectus and Statement of
Additional Information and, lastly, the stock will not be
accepted if the Fund would violate any of its investment
restrictions by having the stock in its portfolio. (See
"Investment Objective and Policies" in the Prospectus and
"Statement of Additional Information and Investment Restrictions"
in the Statement of Additional Information.)
-8-
The Investment Adviser will determine the acceptability and
the fair market value of the stock. An investor wishing to
exchange stock for Fund shares should write to the Adviser
stating his intention to make an exchange and giving the names
and amounts of shares being offered. Within three business days
of receipt of the letter, the Adviser will mail a notice to the
investor accepting or rejecting the stocks being offered.
If the stock is acceptable to the Fund, the Adviser will
also inform the investor in the notification of the preliminary
value the Adviser has determined for each stock being offered and
the date upon which the valuation was made. This amount may be
different from the value obtained on the valuation date.
The investor will have fourteen calendar days from receipt
of the Adviser's notification to deliver to the Fund stock
certificates for each security offered endorsed to The Berwyn
Fund, Inc.
Upon receipt of properly endorsed stock certificates, the
Fund will determine the value of the stock and forward the
certificates to its transfer agent. (In the case of an initial
investment, a New Account Application completed by the investor
must accompany the certificates.) The amount of the investment
will be the value of the stock determined by the Fund. The value
of each stock will be determined on the valuation date as of the
close of trading of the New York Stock Exchange and the method of
valuation will be the same as the one used to value portfolio
securities. (See "Computation of Net Asset Value".) Dividends
due on any stock will be paid to the person who is listed as
owner on the record date. The net asset value of the shares of
the Fund and the date upon which the investment is effective are
determined in the same manner as cash transactions.
There may be Federal Income Tax consequences for an investor
exchanging stock for Fund shares, and an investor should consult
a qualified tax expert before entering into any exchange.
In addition to purchasing and redeeming shares through the
Fund, investors may make telephone purchases and redemptions
through broker-dealers, who may charge a fee.
DISTRIBUTOR
Berwyn Financial Services Corp. ("Berwyn Financial"),
located at 1199 Lancaster Avenue, Berwyn, Pennsylvania 19312,
serves as the non-exclusive distributor of the Fund's shares
pursuant to a selling agreement between Berwyn Financial and the
Fund. Under the terms of the agreement, Berwyn Financial is a
selling agent for the Fund in certain jurisdictions in order to
facilitate the registration of shares of the Fund under state
securities laws and assists in the sale of shares. Berwyn
Financial does not charge a fee for the services provided under
the selling agreement with the Fund. The Fund shall continue to
bear the expenses of all filing or registration fees incurred in
connection with the registration of shares under state securities
laws. Berwyn
Financial is affiliated with the Fund and its Adviser. Robert E.
Killen is an officer and Director of
the Fund and its Adviser and of Berwyn Financial. Kevin M. Ryan
is an Officer and Director of the Fund and Berwyn Financial.
-9-
EXCHANGE OF SHARES
Investors who have purchased shares of the Fund prior to
October 17, 1995 may exchange their shares for shares of Berwyn
Income Fund, a no load mutual fund that is managed by The Killen
Group. (Berwyn Income Fund was closed to new investors on August
16, 1995. The exchange privilege between The Berwyn Fund and
Berwyn Income Fund was amended at that time and shareholders were
given sixty days' notice of the amendment. Shares may also be
exchanged for shares in the Rodney Square Fund or the Rodney
Square Tax-Exempt Fund. These Funds are money market funds
managed by Rodney Square Management Corporation and distributed
by Rodney Square Distributors, Inc. Exchanges will be made on
the basis of the next determined net asset value per share of the
Funds involved after an exchange has been requested. The minimum
initial investment for Berwyn Income Fund is $10,000 ($1,000 for
IRAs and no minimum initial investment for pension plans or
custodial accounts for minors.) The minimum initial investment
for either of the Rodney Square Funds is $1,000. A shareholder
may make an exchange by telephone or written request. Telephone
requests for an exchange may be made by calling the Fund's
Transfer Agent at (800)992-6757 on any business day between 9:00
A.M. and 4:00 P.M.
Any shareholder will be permitted to exchange shares among
the above Funds. When making a telephone exchange, the
shareholder must know the account number of the account from
which shares are exchanged and the social security or tax id
number under which the account is registered. Shares will only
be exchanged into an account that has same shareholder(s) of
record and same social security or tax id number.
A shareholder in The Berwyn Fund will only be permitted to
exchange the shares in his or her account for shares in one of
the other Funds four times in any twelve month period. A
shareholder in one of the money market Funds may exchange shares
of the money market fund for shares of The Berwyn Fund as often
as they desire.
Before making an exchange, a shareholder should obtain and
review a current prospectus of the fund into which shares of the
Fund will be exchanged. Prospectuses for Berwyn Income Fund,
Inc., Rodney Square Fund or Rodney Square Tax Exempt Fund may be
obtained by contacting the Fund at (800) 824-2249 or by writing
to the Fund at its address, 1189 Lancaster Avenue, Berwyn, PA.
The exchange privilege is available only to investors
residing in states where the mutual funds in the exchange program
are qualified for sale.
The Fund, Berwyn Income Fund, Rodney Square Fund and Rodney
Square Tax Exempt Fund reserve the right to amend or change the
exchange privilege upon 60 days' notice to shareholders.
DIVIDENDS, CAPITAL GAINS, DISTRIBUTIONS AND TAXES
It is the policy of the Fund to distribute annually all of
its net investment income and any net realized capital gains.
Unless shareholders request otherwise by notifying the Fund's
transfer
-10-
agent, dividends and capital gains distributions will be
automatically reinvested in shares of the Fund at net asset
value; such reinvestments will be made at the next net asset
value per share determined after the record date.
At the election of any shareholder, dividends or capital
gains distributions, or both, will be distributed in cash. This
election by the shareholder is made at the time of the initial
purchase of shares by indicating on the account application
whether distribution or reinvestment is desired.
The election of the shareholder to receive or reinvest
dividends and/or capital gain distributions may be changed at any
time after the initial account application is received. To
change the initial election, the shareholder must send the Fund a
letter by certified mail, return-receipt requested, signed
exactly as the shareholder's signature appears on the transfer
agent's register, stating the change desired.
The Fund qualified as a regulated investment company under
Subchapter M of the Internal Revenue Code in the past year and
intends to continue to so qualify by complying with the
provisions of this Subchapter in the future.
Subchapter M provides that an investment company which
qualifies will be relieved from Federal Income Tax on the income
it distributes. Generally, shareholders of investment company
pay Federal Income Tax on such dividends and capital gains
distributions. Shareholders are responsible for the tax whether
the dividend or capital gains distribution is received in cash or
additional shares of the Fund. Shareholders who are not subject
to income tax will not be required to pay on the amount
distributed.
The Fund will notify shareholders what portion of the
distribution is net investment income or capital gains. In
addition to Federal Income Tax, Fund distributions may also be
subject to state and local taxes.
RETIREMENT PLANS
The Fund sponsors Individual Retirement Accounts.
Individuals interested in having an IRA with the Fund may obtain
an IRA information booklet and application forms by writing to
the Fund at its address, 1189 Lancaster Avenue, Berwyn,
Pennsylvania 19312 or by calling (800) 824-2249.
The Fund also sponsors a Prototype Defined Contribution Plan
under which self-employed individuals, partnerships and their
employees and corporations may establish profit-sharing and money
purchase retirement plans. Additional details concerning these
retirement plans are available from the Fund.
REDEMPTION OF SHARES
The Fund will redeem all shares in an account upon receipt
of a written request from the shareholder by the Transfer Agent.
The Fund will also redeem shares worth up to $5,000 in value
-11-
in an account upon a telephone request from a "qualified"
shareholder. (To qualify for telephone redemption, a shareholder
must check the box on the new account application.) The
redemption price will be the net asset value per share next
determined after receipt of a notice of redemption. Shareholders
liquidating their holdings will receive upon redemption all
dividends reinvested through the date of redemption.
A shareholder who wishes to submit a written redemption
request should mail it to The Berwyn Fund, c/o Rodney Square
Management Corp., P.O. Box 8987, Wilmington, DE 19899. The
letter should list the shareholder's account number and amount of
money or number of shares being redeemed. The letter should be
signed by the person(s) in whose name(s) the shares are
registered.
A shareholder who qualifies for telephone redemption may
redeem up to $5,000 from an account by telephoning the Transfer
Agent at (800) 992-6757 on any business day between the hours of
9:00 A.M. and 4:00 P.M.
A shareholder requesting a redemption by telephone must give
the account number for the account and the social security number
or tax id number under which the account is registered. Checks
will only be issued in the name listed on the account and will
only be mailed to the address listed.
Neither the Fund nor the Transfer Agent is responsible for
any shareholder loss incurred in acting upon written or telephone
instructions for redemption or exchange of shares which are
reasonably believed to be genuine. With respect to such
telephone transactions, the Fund will ensure that reasonable
procedures are used to confirm that instructions communicated by
telephone are genuine (including verification of a form of
personal identification) as, if it does not, the Fund or the
Transfer Agent may be liable for any losses due to unauthorized
or fraudulent transactions. Instructions received by telephone
are generally tape recorded and a written confirmation will be
provided for all purchase, exchange and redemption transactions
initiated by telephone.
Payment will generally be mailed within seven days of
receipt of a notice of redemption.
The Fund also has a Systematic Withdrawal Plan under which
an investor may have money automatically withdrawn from his or
her account on a regular basis. Investors who wish to use this
Plan should complete the section in the new account application
for Systematic Withdrawal.
The Fund reserves the right to liquidate the account of any
shareholder whose total shares fall below $1,000 in value by
reason of redemption. Upon receiving written notice from the
Fund, a shareholder must increase his account value to $1,000 or
above within 60 days to prevent liquidation.
When permitted by the Securities and Exchange Commission,
the Fund may suspend the right of redemption and postponement of
payment for more than seven days during any period
-12-
when the New York Stock Exchange is closed, other than customary
weekend and holiday closing; when trading on such Exchange is
restricted, as determined by the Securities and Exchange
Commission, during any period when an emergency, as defined by
rules of the Securities and Exchange Commission, exists making
disposal of portfolio securities or valuation of net assets by
the Fund not reasonably practicable; or when the Securities and
Exchange Commission may permit for the protection of shareholders
of the Fund.
In order to emphasize the long-term objective of the Fund, a
redemption fee of 1% of the net asset value of the shares being
redeemed will be charged to shareholders redeeming shares held
for less than one year. This fee only applies to the shares
being redeemed. The redemption fee will be subtracted from the
payment to the shareholder. The redemption fee will be
deposited in the Fund for the benefit of the remaining
shareholders. It is intended that this provision will protect
the remaining shareholders by discouraging short-term oriented
investors from using the Fund as a trading vehicle. The
redemption fee is paid to the Fund and included in its net
assets.
GENERAL INFORMATION
The Fund
The Fund is a Pennsylvania Corporation organized on February
18, 1983. Since May 4, 1984 the Fund has been offering its
shares for sale to the public. It has authorized capital of
20,000,000 shares of common stock of $1 par value per share.
Each share has equal dividend, distribution and liquidation
rights. There are no conversion or preemptive rights applicable
to any shares of the Fund. All shares issued are fully paid and
nonassessable.
Fund shares do not have cumulative voting rights, which
means that the holders of more than 50% of the shares voting for
election of Directors may elect 100% of the Directors if they
choose to do so and, in such event, the holders of the remaining
shares so voting will not be able to elect any Directors.
Transfer Agent and Dividend Paying Agent
Rodney Square Management Corporation, P.O. Box 8987,
Wilmington, DE 19899 is the Transfer Agent and Dividend Paying
Agent.
Shareholder Inquiries
Shareholder inquiries may be made by writing to the Fund or
Transfer Agent or calling the Transfer Agent at (800) 992-6757
between the hours at 9:00 A.M. and 4:00 P.M.
Share Certificates
Share certificates will be issued only upon written request.
-13-
Reports
The Fund will issue annual and semi annual reports to
shareholders and may issue quarterly reports. In these reports,
management of the Fund will discuss the Fund's performance and
may included comparisons of the Fund's performance with that of
stock market indices such as the Dow Jones Industrial Average,
the S & P 500 Index and the Russell 2000 Index.
The annual report will contain audited financial statements
and the semi annual report will have unaudited financial
statements.
ADDITIONAL INFORMATION
This Prospectus omits certain information contained in the
registration statement filed with the Securities and Exchange
Commission. The registration statement consists of three parts:
the Prospectus, a Statement of Additional Information and a third
section containing exhibits and other information. A copy of the
Statement of Additional Information is available from the Fund
free of charge. The third part of the registration statement may
be obtained from the Commission paying the charges prescribed.
No person has been authorized to give any information or to
make any representations other than those contained in this
Prospectus and the Statement of Additional Information, and
information or representations not herein contained, if given or
made, must not be relied upon as having been authorized by the
Fund. This Prospectus does not constitute an offer or
solicitation in any jurisdiction in which such offering may not
lawfully be made.
-14-
PART B
THE BERWYN FUND, INC.
1189 LANCASTER AVENUE
BERWYN, PA. 19312
STATEMENT OF ADDITIONAL INFORMATION
April 24, 1996
This Statement of Additional Information is not a
Prospectus. It does not constitute an offering to sell the
shares of The Berwyn Fund. It is a document that relates to The
Berwyn Fund Prospectus dated April 24, 1996 and contains
additional information regarding the Fund. This Statement should
be read in conjunction with the Prospectus. A Prospectus may be
obtained by writing to the Fund at the above address.
TABLE OF CONTENTS
Investment Objective, Policies and Risk
Factors..........................................................
............ 2
Investment
Restrictions.....................................................
..................................................... 3
Investment Advisory
Arrangements.....................................................
................................... 4
Expense
Limitation.......................................................
......................................................... 5
Directors and
Officers.........................................................
................................................... 6
Ownership of the
Fund.............................................................
.............................................. 7
Portfolio Transactions and Brokerage
Commissions......................................................
......... 7
Computation of Net Asset
Value............................................................
................................ 9
Share
Purchases........................................................
............................................................. 9
Distributor......................................................
.................................................................
...... 9
Redemption of
Shares...........................................................
................................................. 9
Calculation of Performance
Data.............................................................
............................... 10
General
Information......................................................
......................................................... 11
Financial
Statements.......................................................
........................................................ 12
-1-
INVESTMENT OBJECTIVE, POLICIES AND RISK FACTORS
(See also "Investment Objectives, Policies and Risk Factors" in
the Prospectus.)
The Fund is a no-load, nondiversified, open-end management
investment company that seeks long-term capital appreciation by
investing in common stocks and fixed income securities. Income
is a secondary consideration.
Under normal market conditions, the Fund invests at least
80% of the value of its net asset value in common stocks. The
Fund invests in common stocks that it considers to be selling at
undervalued prices. These stocks are ones selling substantially
below their book value or at a low valuation to present earnings
or are stocks of companies, judged by the Adviser, to have above
average growth prospects and to be selling at a small premium to
book value or at modest valuation to present earnings level.
The investment approach of the Fund may be deemed
"contrarian" in that it may lead the Fund to select stocks not
recommended by other investment advisers or brokerage firms.
While the portfolio of the Fund emphasizes common stocks,
the Fund may also invest up to 20% of the value of its net
assets in fixed income securities. The fixed income securities
that the Fund invests in are corporate bonds and preferred
stocks. The Fund selects fixed income securities that have a
potential for capital appreciation.
There are no restrictions on the Adviser as to the
investment rating a fixed income corporate debt security must
have in order to be purchased. The Fund may purchase fixed
income corporate debt securities in any investment grade rating
listed by Standard & Poor's Corporation and Moody's Investors
Service. (See Appendices A and B for Standard & Poor's and
Moody's definitions of Bond ratings.) This means that the Fund
may invest up to 20% of the value of its net assets in high
yield high risk corporate debt securities that are termed "junk"
bonds. These are corporate debt securities that are rated lower
than BBB by Standard & Poor's Corporation and Baa by Moody's
Investors Service. These securities have a low rating due to
the fact that the issuers of the securities are not considered
as creditworthy as the issuers of investment grade bonds. There
is the risk that the issuer of a lower rated security may
default in the payment of interest and principal. On whole,
these lower rated securities are considered speculative
investments.
As of December 31, 1995, 0.5% of the Fund's net assets were
invested in lower rated corporate debt securities.
The Fund will normally invest in common stocks and fixed
income securities, but it may at times, for temporary defensive
purposes, invest all or a portion of its assets in savings
accounts and certificates of deposit of domestic banks with
assets in excess of $1,000,000, commercial paper with the
highest investment grade rating (i.e., A-l, P-1, as defined in
Standard
-2-
Poor and Moody's Commercial Paper Ratings, respectively),
repurchase agreements, and U.S. treasury bills, treasury notes
and treasury bonds, and the Fund may hold cash.
When the Fund invests in securities issued by the U. S.
Government, the Government is not required to provide financial
support to the Fund.
The Fund may invest in real estate investment trusts
(REITs). These are companies that invest their capital in real
estate, long and short term mortgages and construction loans.
These companies normally do not pay Federal Income Tax but
distribute their income to their shareholders who become liable
for the tax. The Fund invests in REITs that generate income and
have a potential for capital appreciation. There are risks in
investing in REITs. The property owned by a REIT could decrease
in value and the mortgages and loans held by a REIT could become
worthless. The Adviser however monitors the investment
environment and the Fund's investments as means of lessening
risks. As of December 31, 1995, none of the Fund's net assets
were invested in REITs.
As to repurchase agreements, these are defined as agreements
wherein a seller of securities agrees with the Fund at the time
of sale to repurchase the security from the Fund at a mutually
agreed upon time and price. The Fund intends to enter into
repurchase agreements only with established banking institutions
that deal in treasury bills and notes. The Fund intends to
invest mostly in overnight repurchase agreements. The Fund will
only invest up to 5% of its net assets in repurchase agreements.
In the event of a bankruptcy of a seller of a repurchase
agreement or the failure of a seller to repurchase the underlying
security as agreed upon, the Fund could experience losses that
include: a possible decline in the value of the underlying
security during the period while the Fund seeks to enforce its
rights thereto; a possible loss of all or part of the income; and
the Fund will incur additional expenses enforcing its rights.
For the fiscal years ended December 31, 1995 and 1994, the
Fund's portfolio turnover rate was 32% and 24%, respectively.
INVESTMENT RESTRICTIONS
In addition to the two restrictions listed in the discussion
of "Investment Objectives, Policies and Risk Factors" in the
Prospectus, the Fund will not:
(1) purchase more than 10% of the outstanding voting
securities of a single issuer;
(2) invest more than 25% of the value of its total assets
in any one industry;
(3) lend money, provided that for purposes of this
restriction, the acquisition of publicly distributed
corporate bonds, and investment in U.S. government
obligations, short-term commercial paper, certificates of
deposit and repurchase agreements shall not be deemed to be
making of a loan;
(4) buy or sell real estate, real estate mortgage loans,
commodities, commodity futures contracts, puts, calls and
straddles;
-3-
(5) underwrite securities of other issuers, except as the
Fund may be deemed to be an underwriter under the Securities
Act of 1933 in connection with the purchase and sale of
portfolio securities in accordance with its objectives and
policies;
(6) make short sales or purchase securities on margin;
(7) borrow money, except that the Fund may borrow up to 5%
of the value of its total assets at the time of such
borrowing from banks for temporary or emergency purposes.
(The proceeds of such loans will not be used for investment
or to purchase securities, but will be used to pay
expenses.);
(8) invest for the purposes of exercising control or
management;
(9) invest in restricted securities (securities that must
be registered under the Securities Act of 1933, as amended,
before they may be offered and sold to the public);
(10) participate in a joint investment account; and
(11) issue senior securities.
These investment restrictions may not be changed without the
approval by a vote of a majority of the Fund's outstanding voting
securities. Under the Investment Company Act of 1940, such
approval requires the affirmative vote at a meeting of
shareholders of the lesser of (a) more than 50% of the Fund's
outstanding shares, or (b) at least 67% of shares present or
represented at the meeting, provided that the holders of more
than 50% of the Fund's outstanding shares are present in person
or represented by proxy.
The Fund has also adopted certain investment restrictions
that are not fundamental. These restrictions are that the Fund
will not invest in real estate limited partnerships, in oil, gas
or other mineral leases and any investments in warrants will not
exceed 5% of the Fund's net assets. Restrictions that are not
fundamental may be changed by a vote of the majority of the Board
of Directors. But if any of these non fundamental restrictions
are changed, the Fund will give shareholders at least 60 days'
written notice.
INVESTMENT ADVISORY ARRANGEMENTS
(See also "Management of the Fund" in the Prospectus)
The Killen Group, Inc. is the Investment Adviser to the
Fund. Robert E. Killen is President-Treasurer and sole
shareholder of The Killen Group. Edward A. Killen II is Vice
President and Secretary of The Killen Group. Both Robert E.
Killen and Edward A. Killen are Directors of The Killen Group and
Robert E. Killen is a Director of the Fund. In addition, Robert
-4-
E. Killen is President of the Fund. He is the person primarily
responsible for the day-to-day management of the Fund's
portfolio. He has been managing the portfolio since May 4, 1984.
The Killen Group, Inc. provides the Fund with investment
management services. Under the contract between the Fund and the
Adviser, the Adviser provides the Fund with advice and
recommendations with respect to investments, investment policies,
the purchase and sale of securities and the management of the
Fund's resources. The Adviser also provides the Fund with office
space and with personnel to administer the daily operations of
the Fund. These individuals prepare and maintain the accounts,
books and records of the Fund, calculate the net asset value per
share daily, prepare and file all the documents required of the
Fund under federal and state laws and prepare all shareholder
reports. In addition, the Adviser pays all expenses associated
with the promotion of the Fund.
The contract provides that it will continue in effect from
year to year if continuation is specifically approved annually by
a vote of a majority of the outstanding voting securities of the
Fund. Continuance of the contract must also be approved annually
by the Board of Directors including a majority of directors who
are not parties to such contract or interested persons of any
such party, cast in person at a meeting called for the purpose of
voting on such approval. The Fund may terminate the contract on
sixty days written notice to the Adviser without payment of any
penalty, provided such termination is approved by the Board of
Directors or by a majority of the outstanding voting securities.
The Adviser may terminate the contract by notifying the Fund in
writing at least sixty days before the date of the annual
shareholder meeting that continuation of the contract is not
desired. The contract will be automatically and immediately
terminated in the event of its assignment by the Adviser.
As compensation for its investment management services to
the Fund, the Adviser receives monthly compensation at the annual
rate of 1% of the average daily net assets of the Fund. The fee
is computed daily by multiplying the net assets for a day by 1%
and dividing the result by 365. At the end of the month, the
daily fees are added and the resulting amount paid to the
Adviser.
In 1995, the Fund paid the Adviser $787,039 in fees. In
1994 and 1993, the Fund paid $562,887 and $427,400, respectively,
in advisory fees.
EXPENSE LIMITATION
Under the Investment Advisory Agreement, the Adviser's
fee is to be reduced in any fiscal year by any amount
necessary to prevent Fund expenses and liabilities
(excluding taxes, interest, brokerage commissions and
extraordinary expenses, determined by the Fund or the
adviser, but inclusive of the Adviser's fee) from exceeding
2% of the average daily net assets of the Fund. In any
month that the Fund's expenses and liabilities exceed 2%,
the Adviser's fee will be reduced so that expenses and
liabilities will be 2%. Although the Fund expects to
maintain expenses within 2% of its average daily net assets,
the Adviser will not be responsible for additional expenses
exceeding its advisory fee. Once the net assets of the Fund
exceed $100 million, the expense limitation will be 1-1/2%.
-5-
DIRECTORS AND OFFICERS
The directors and executive officers of the Fund and
their principal occupations for the past five years are set
forth below:
Name, Age, Position
Principal Occupation for the Past Five Years
and Address
*Robert E. Killen (54)
Director and Shareholder, Berwyn Financial Services Corp., a
President & Director
financial services company (registered as a broker-dealer with
1199 Lancaster Avenue the
SEC since 12/93 and a member of the NASD since 7/94)
Berwyn, Pennsylvania
since October, 1991. President and Director of Berwyn Income
Fund, Inc. since December 1986. President,
Treasurer, Director
and Sole Shareholder of The Killen Group,
Inc. (an Investment
Advisory firm and the Investment Adviser to
the Fund) since
September 1982.
Denis P. Conlon (47)
Director of Berwyn Income Fund, Inc., since June 1992. Vice
Director President, Corporate Development Berwind
Corporation
1282 Farm Road (Diversified Manufacturing and Financial
Company) since 1990.
Berwyn, Pennsylvania
*Anthony N. Carrelli (46)
Director of Berwyn Income Fund, Inc. since December, 1986.
Director Vice President of The Killen Group, Inc. (an
Investment Advisory
1189 Lancaster Avenue Firm
and the Investment Adviser to the Fund) since August 1986.
Berwyn, Pennsylvania
*Kevin M. Ryan (48) President, Treasurer, Director and
Shareholder of Berwyn
Secretary-Treasurer Financial Services Corp. (registered as a
broker-dealer with the
and Director the
SEC since 12/93 and a member of the NASD since 7/95)
1199 Lancaster Avenue
since October 1991. Registered Principal with Securities
America,
Berwyn, Pennsylvania Inc.
(a broker-dealer) from March 1993 to August 1994.
Secretary and Treasurer of Berwyn Income
Fund, Inc. since 1986.
Director of Berwyn Income Fund, Inc. from
December 1986 to
January 1995. Counsel to The Killen Group,
Inc. (an Investment
Advisory Firm and the Investment Adviser to
the Fund) since
September 1985.
William H. Vonier (67)
Director of The Berwyn Fund, Inc. since June 1992. Independent
Director Consultant in Sales and Marketing since
1989.
348 Valley View Lane
Chester Springs, Pennsylvania
*Robert E. Killen, Anthony N. Carrelli and Kevin M. Ryan are
interested persons of the Fund, as defined in the 1940 Act (the
"Interested Directors"). Robert E. Killen is an Officer,
Director and
-6-
sole shareholder of The Killen Group, Inc., the Investment
Adviser to the Fund. He is also a Director and owner of 1/3 of
the outstanding shares of Berwyn Financial Services Corp., a
broker-dealer. Anthony N. Carrelli is a Vice President of The
Killen Group, Inc. Kevin M. Ryan is legal counsel to The Killen
Group and he is an Officer, Director and the Owner of 1/3 of the
outstanding shares of Berwyn Financial Services Corp. In
addition, Robert E. Killen and Kevin M. Ryan are brothers-in-law.
Berwyn Financial Services Corp. serves as the distributor for the
Fund's shares in certain jurisdictions. (See "Portfolio
Transactions and Brokerage Commissions" and "Distributor" for
further information on Berwyn Financial.)
Mssrs. Conlon and Vonier are the Independent Directors of the
Fund. The Independent Directors are paid a fee of $400 for each
Board or Committee meeting attended and are reimbursed for any
travel expenses. If a Board and Committee meeting are held on
the same date, the Independent Directors receive only one fee.
Messrs. Conlon and Vonier also serve as Independent Directors of
Berwyn Income Fund, Inc. (another registered investment company
managed by The Killen Group, Inc.). The Fund has not adopted a
pension or retirement plan or any other plan that would afford
benefits to its Directors. Officers of the Fund are not paid
compensation by the Fund for their work as Officers and no fees
are paid to Interested Directors for the performance of their
duties. (See "Management of the Fund" in the Prospectus for a
discussion of management responsibilities of the Board and
Officers.)
OWNERSHIP OF THE FUND
As of March 29, 1996, there were 5,137,903 shares of the Fund
outstanding. Charles Schwab & Co., 101 Montgomery Street, San
Francisco, CA was the record owner of 21.6% of the outstanding
shares. FTC & Co., P. O. Box 173736, Denver CO was the record
owner of 12% of the outstanding shares and National Financial
Services Corp., One World Center, 200 Liberty Street, New York,
NY was the record owner of 5.6% of the outstanding shares. The
records of the Fund do not indicate that any individual owned
more than 5% of the outstanding shares of the Fund. As of March
29, 1996, the Directors and Officers as a group, owned
beneficially and of record 199,228 shares of the Fund. This
amount constituted 3.9% of the outstanding shares.
PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
Subject to policy established by the Fund's Board of
Directors, the Adviser is responsible for the Fund's portfolio
decisions and the buying and selling of the Fund's portfolio
securities. In executing such transactions, the Adviser seeks to
obtain the best net results for the Fund, taking into account
such factors as price (including the applicable brokerage
commission or dealer spread), size of order, difficulty of
execution and operational facilities of the firm involved. While
the Adviser generally seeks reasonably competitive commission
rates, the Adviser is authorized to pay a broker a brokerage
commission in excess of that which another broker might have
charged for effecting the same transaction, in recognition of the
value of brokerage and research services provided by the broker.
-7-
The Adviser may select brokers who, in addition to meeting
the primary requirements of execution and price, have furnished
statistical or other factual information and services, which in
the opinion of the Board, are reasonable and necessary to the
Fund's normal operations. The services provided by these
brokerage firms may also be used in dealing with the portfolio
transactions of the Adviser's other clients and not all such
services may be used by the Adviser in connection with the Fund.
Those services may include economic studies, industry studies,
security analysis or reports, sales literature and statistical
services furnished either directly to the Fund or to the Adviser.
Consideration will be given to brokers who have assisted in the
distribution of the Fund. No effort is made in any given
circumstance to determine the value of these materials or
services or the amount by which they might have reduced expenses
of the Adviser.
The Board has adopted procedures under Rule 17e-1 of the 1940
Act that permit the portfolio transactions to be executed through
affiliated brokers. In 1995, the Fund used an affiliated broker.
The affiliated broker was Berwyn Financial Services Corp.
("BFS"). BFS is affiliated with the Fund by reason of the fact
that Officers and Directors of the Fund and the Adviser are
Officers, Directors and Shareholders of BFS. In addition, BFS
serves as the distributor for the Fund's shares in certain
jurisdictions pursuant to written agreement.
In 1995, the Fund paid a total of $246,121 in commissions to
BFS. This amount represents 73% of the total commission paid by
the Fund in 1995. The percentage of the Fund's aggregate dollar
amount of transactions involving the payment of commissions
affected through BFS was 79%.
In 1994, the Fund used two affiliated brokers. During the
first eight months of fiscal year 1994, the affiliated broker
used by the Fund was Securities America, Inc. ("SAI"). SAI was
affiliated with the Fund by reason of the fact that David C.
Dameron and Kevin M. Ryan, persons affiliated with the Fund and
the Adviser, were registered representatives with SAI, and had
portfolio transactions executed for the Fund through SAI. During
the last four months of the 1994 fiscal year, the affiliated
broker used by the Fund was BFS.
In 1994, the Fund paid a total of $61,127 in commissions to
SAI and $58,066 in commissions to BFS. In 1993, SAI was the only
affiliated broker used by the Fund and the Fund paid SAI $61,160
in brokerage commissions in that year.
The Fund paid brokerage Commissions of $335,153 in 1995,
$208,859 in 1994, and $151,464 in 1993. The increase in
brokerage commissions in 1994 and 1995 was due primarily to an
increase of investment in the Fund.
The Adviser has other advisory clients which include
individuals, trusts, pension and profit sharing funds, some of
which have similar investment objectives to the Fund. As such,
there will be times when the Investment Adviser may recommend
purchases and/or sales of the same portfolio securities for the
Fund and its other clients. In such circumstances, it will be
the policy of the Investment Adviser to allocate purchases and
sales as well as expenses incurred in the
-8-
transactions among the Fund and its other clients in a manner
which the Investment Adviser deems equitable, taking into
consideration such factors as size of account, concentration of
holdings, investment objectives, tax status, cash availability,
purchase cost, holding period and other pertinent factors
relative to each account. Simultaneous transactions could
adversely affect the ability of the Fund to obtain or dispose of
the full amount of a security which it seeks to purchase or sell
or the price at which such security can be purchased or sold.
COMPUTATION OF NET ASSET VALUE
(See also "Computation of Net Asset Value" in the Prospectus)
The net asset value per share of the Fund is determined by
dividing the total value of the Fund's investments and other
assets, less any liabilities, by the total number of outstanding
shares of the Fund. Net asset value per share is determined at
the close of regular trading on the New York Stock Exchange
(ordinarily 4:00 p.m. eastern time on each day that the Exchange
is open.)
SHARE PURCHASES
(See also "Share Purchases" in the Prospectus)
The Fund's shares are offered for sale on a continuous basis.
There is no sales load. The offering price of shares of the Fund
is the net asset value per share next determined after receipt of
the Transfer Agent of the order of purchase of shares. The value
of the shares can be expected to fluctuate daily.
DISTRIBUTOR
BFS Corp., a broker-dealer registered with the Securities and
Exchange Commission, is the current distributor of the Fund's
shares, pursuant to a selling agreement which became effective on
July 25, 1994. Under the agreement, BFS is the non-exclusive
agent in certain jurisdictions for the Fund's continuous offer of
shares. Shares of the Fund are offered to the public at net
asset value, without the imposition of a sales load. The
jurisdictions in which BFS is the distributor are Arizona,
Arkansas, Florida, Maryland, North Dakota, Nebraska, Texas,
Vermont and West Virginia.
The selling agreement provides that it will continue in effect
from year to year only so long as such continuance is approved at
least annually by the Fund's Board of Directors and by the vote
of a majority of the directors who are not parties to the
agreement or interested persons of any such party by vote cast in
person at a meeting called for the purpose of voting on such
approval. The agreement will terminate automatically in the
event of its assignment.
REDEMPTION OF SHARES
(See "Redemption of Shares" in the Prospectus)
The Fund will redeem all full and fractional shares of the
Fund upon receipt of a written request in proper form. The
redemption price is the net asset value per share next determined
-9-
after receipt of proper notice of redemption. Shareholders
liquidating their holdings will receive upon redemption all
dividends reinvested through the date of redemption.
The Fund has elected to be governed by Rule 18f-1 of the
Investment Company Act of 1940, under which the Fund is obligated
to redeem the shares of any shareholder solely in cash up to the
lesser of 1% of the net asset value of the Fund or $250,000
during any 90-day period. Should any shareholder's redemption
exceed this limitation, the Fund can, at its sole option, redeem
the excess in cash or in portfolio securities selected solely by
the Fund (and valued as in computing net asset value). In these
circumstances an investor selling such securities would probably
incur a brokerage charge and there can be no assurance that the
price realized by an investor upon the sale of such securities
will not be less than the value used in computing net asset value
for the purpose of such redemption.
CALCULATION OF PERFORMANCE DATA
The average annual total returns of the Fund for one year,
five years and ten years ended December 31, 1995 are listed
below:
One Year: 19.2%
Five Years: 21.4%
Ten Years: 12.9%
The One Year performance is for the period January 1, 1995 to
December 31, 1995. The Five Year period runs from January 1,
1991 to December 31, 1995 and the ten year period January 1, l986
to December 31, 1995. To obtain the performance listed above,
the Fund computed its average total return for each period of
time. The Fund made this calculation by first determining the
total return for a period and then using an exponential function
based upon the number of years involved to obtain an average.
The total return for a period is calculated by determining
the redeemable value of a $1,000 initial investment made at the
beginning of the period, with dividends and capital gains
reinvested on the reinvestment date, on the last day of the
period and dividing the value by $1,000. The average annual
total return for the period is calculated by taking the total
return for the period and determining the annual average by using
an exponential function based upon the number of years and any
fraction thereof in the period. In addition to an average annual
total return, the Fund calculates its total return on a calendar
year basis. Listed below are the Fund's total returns for each
calendar year from 1985 - 1994:
January 1, 1985 -December 31, l985
23.6%
January 1, 1986 -December 31, l986
14.6%
January 1, 1987 - December 31, l987 2.9%
January 1, 1988 -December 31, l988
21.6%
January 1, 1989 -December 31, l989
16.5%
January 1, 1990 -December 31, 1990 -
23.9%
January 1, 1991 -December 31, 1991
43.7%
-10-
January 1, 1992 -December 31, 1992
20.6%
January 1, 1993 -December 31, 1993
22.9%
January 1, 1994 -December 31, 1994 3.9%
January 1, 1995 -December 31, 1995
19.2%
The Fund calculates the total return for a calendar year by
determining the redeemable value of $1,000 investment made at the
beginning of the year with dividends and capital gains reinvested
on the reinvestment date, on last day of the year and dividing
that value by $1,000.
Annual average total return and the total returns for
calendar year are based on historical performance and are not
intended as an indication of future performance.
GENERAL INFORMATION
The Fund
The Fund is a Pennsylvania corporation organized on February
18, 1983. Since May 4, 1984, the Fund has been offering its
shares for sale to the public. The Fund has authorized capital
of 20,000,000 shares of common stock of $1 par value per share.
Each share has equal dividend, distribution and liquidation
rights. There are no conversion or preemptive rights applicable
to any shares of the Fund. All shares issued are fully paid and
non-assessable. Fund shares do not have cumulative voting
rights.
Custodian
Wilmington Trust Company, Rodney Square North, 1100 North
Market Street, Wilmington, DE 19890-0001 is the custodian for the
Fund. The custodian holds all securities and cash owned by the
Fund and collects all dividends and interest due on the
securities.
Independent Accountants
Price Waterhouse LLP, 30 South 17th Street, Philadelphia,
Pennsylvania, has been selected as the independent accountants
for the Fund by the Board of Directors. Price Waterhouse LLP
performs an annual audit of the financial statements of the Fund.
Tax Status
The Fund intends to comply with Subchapter M of the Internal
Revenue Code. (See "Dividends, Capital Gains, Distributions and
Taxes" in the Prospectus for a discussion of the tax status of
the Fund and the consequences to its shareholders.)
Litigation
The Fund is not involved in any litigation or other legal
proceedings.
-11-
FINANCIAL STATEMENTS
The Fund's audited financial statements for the year ended
December 31, 1995 are included in the Fund's 1995 annual report
to shareholders which is incorporated by reference in this
Statement of Additional Information. An investor may obtain a
copy of the annual report by writing to the Funds or calling
(800) 992-6757.
-12-
Thirty South Seventeenth
Street Telephone 215 575 5000
Philadelphia, PA 19103-4094
PRICE WATERHOUSE LLP
Report of Independent Accountants
February 8, 1996
To the Shareholders and Board of Directors
The Berwyn Fund, Inc.
In our opinion, the accompanying statement of assets and
liabilities, including the statement of investments, and the
related statements of operations and of changes in net assets and
the financial highlights present fairly, in all material
respects, the financial position of The Berwyn Fund, Inc. (the
"Fund") at December 31, 1995, the results of its operations, the
changes in its net assets and the financial highlights for each
of the respective periods presented, in conformity with generally
accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial
statements") 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 of these
financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of
securities at December 31, 1995 by correspondence with the
custodian and brokers and the application of alternative auditing
procedures where confirmations from brokers were not received,
provided a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
-13-
APPENDIX A
DEFINITIONS OF STANDARD & POOR'S BOND RATINGS
Standard Poor's gives ratings to bonds that range from AAA
to D. Definitions of these ratings are set forth below. The
Fund may invest in bonds with any of these ratings.
AAA Debt rated AAA has the highest rating assigned by Standard
Poor's. Capacity to pay interest and repay principal is
extremely strong.
AA Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the higher rated issues only
in small degree.
A Debt rated A has a strong capacity to pay interest and
principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
BBB Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally
exhibits adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated
categories.
BB, B,
CCC, CC
Debt rated BB, B, CCC and CC is regarded, on balance, as
predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of
the obligation. BB indicates the lowest degree of
speculation and CC the highest degree to speculation. While
such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties
or major risk exposures to adverse conditions.
C The rating C is reserved for income bonds on which no
interest is being paid.
D Debt rated D is in default, and payment of interest and/or
repayment of principal is in
arrears.
APPENDIX B
MOODY'S BOND RATINGS
Moody's give ratings to bonds that range from Aaa to D.
Definitions of these ratings are set forth below. The Fund may
invest in bonds with any of these ratings.
Aaa - These bonds are judged to be of the best quality. They
carry the smallest degree of
investment risk. Interest payments are protected by a large
or by an exceptionally stable
margin and principal is secure.
Aa - These bonds are judged to be of high quality by all
standards. They are rated lower than
the
best bonds because margins of protection may not be as large
as in Aaa securities or
fluctuation of protective elements may be of greater
amplitude or there may be other
elements present which make the long-term risks appear
somewhat larger than in Aaa
securities.
A - These are bonds which possess many favorable investment
attributes and are to be
considered as upper medium grade obligations. Factors giving
security to principal and
interest are considered adequate but elements may be present
which suggest a
susceptibility to impairment sometime in the future.
Baa - These bonds are considered as medium grade obligations,
i.e., they are neither highly
protected nor poorly secured. Such bonds lack outstanding
investment characteristics
and
in fact have speculative characteristics as well.
Ba - These are bonds judged to have speculative elements; their
future cannot be considered
as
well assured. Uncertainty of position characterizes bonds in
this class.
B - These bonds generally lack characteristics of the desirable
investment. Assurance of
interest and principal payments or of maintenance of other
terms of the contract over
any
long period of time may be small.
Caa - These are bonds of poor standing. Such issues may be in
default or there may be present
elements of danger with respect to principal or interest.
Ca - These bonds represent obligations which are speculative in
a high degree. Such issues
are
often in default or have other market shortcomings.
C - These are the lowest rated class of bonds and issues so
rated can be regarded as having
extremely poor prospects of ever attaining any real
investment standing.
PART C
Item 24
(a) Financial Statements:
The Financial Statements and Financial Highlights in the 1995
Annual Report are incorporated by reference into this
Registration Statement. The Financial Statements incorporated
include the Statement of Assets and Liabilities, Statement of
Operations, Statement of Changes in Net Assets, Financial
Highlights, Statement of Investments and the Notes to the
Financial Statements..
(b) Exhibits:
1. The Articles of Incorporation were filed in a registration
statement on May 2, 1984
and are incorporated by this reference.
2. A copy of the amended bylaws was filed 3/01/94 as Exhibit
#1 and is incorporated by
reference.
3. Not applicable.
4. A specimen of the security was included in the 1940 Act
registration, filed October 25,
1983, File #811-3890, as Exhibit #3 and is incorporated by
this reference.
5. A copy of the amended investment advisory contract was
filed 3/01/94 as Exhibit #2
and is incorporated by reference.
6. A copy of the Selling Agreement between the Fund and
Berwyn Financial Services
Corp. is Exhibit #6.
7. Not applicable.
8. A copy of the new custody agreement was filed 3/01/94 as
Exhibit #3 and is
incorporated by reference.
9. Not applicable.
10. The
opinion and consent of counsel will be filed with the Funds
Rule 24f-2 notice on
04/30/96.
11.
Consent of Price Waterhouse LLP is included as Exhibit #11.
12. Not
applicable.
13. Not
applicable.
14. A
copy of the updated Individual Retirement Account Application
and Disclosure
Form, SEP Information Booklet and the revised Prototype
Defined Contribution
Retirement Plan and Trust Agreement were filed as part of
the post effective
amendment on April 8, 1991 and incorporated by this
reference.
15. Not
applicable.
16.
Schedules for computation of each performance figure are
included as Exhibit #16.
17.
Financial Data Schedule.
Item 25
The Registrant is not under common control with any person
and the Registrant does not control any person directly or
indirectly.
Item 26
The following is a list of the number of record holders of
each class of the Registrant's securities as of March 29, 1996:
(1) (2)
Title of Class Number of Record Holders
Common Stock 2,043
Item 27
Article XVI of the Registrant's by laws sets forth the rules
on indemnification of officers and directors. There will be no
indemnification of a director or officer from any judgment,
verdict or settlement resulting from liability to the corporation
or its shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of his office. The following methods will be used to
determine if a director or officer is guilty of disabling
conduct: (a) a final decision on the merits by a court or other
body before whom a proceeding was brought, or (b) a reasonable
determination based upon a review of the facts, by independent
legal counsel in a written opinion, that the director or officer
was not liable on the basis of disabling conduct. If there is no
disabling conduct, a director or officer would be entitled to
indemnification for expenses and for any judgment, verdict or
settlement.
Item 28
Robert E. Killen, President of The Killen Group, Inc., the
Adviser for the Fund, is also President of Registrant and
President of The Berwyn Income Fund, Inc. Mr. Killen is also a
Director of The Berwyn Fund, Inc., Berwyn Income Fund, Inc., and
The Killen Group, Inc. He is Director and Shareholder of Berwyn
Financial Services Corp., a registered broker-dealer.
Edward A. Killen II is Vice President and Secretary of The
Killen Group, Inc. and a Director of The Killen Group, Inc., and
Berwyn Income Fund, Inc. He is a Director, Officer and
Shareholder of Berwyn Financial Services Corp., a registered
broker-dealer.
Item 29
(a) Berwyn Financial Services Crop. also serves as the
distributor for the Berwyn Income Fund, Inc., in certain
jurisdictions.
(b)
Name and Principal Positions and Offices
Positions and Offices
Business Address with Berwyn Financial with
the Fund
Services Corp.
Robert E. Killen Director and Shareholder
President and Director
1199 Lancaster Ave.
Berwyn, PA
Kevin M. Ryan President, Treasurer
Secretary, Treasurer
1199 Lancaster Ave. and Director and
Director
Berwyn, PA
Item 30
Accounts, books and other documents that are required to be
maintained under Section 31(a) of the 1940 Act and regulations
thereunder will be maintained in the possession of Kevin M. Ryan
at 1189 Lancaster Avenue, Berwyn, Pennsylvania.
Item 31
Not applicable
Item 32
(a) Not applicable.
(b) Not applicable.
(c) The Registrant has placed information required by Item
5A in the latest annual report to shareholders and undertakes
to furnish each person to whom a prospectus is delivered with
a copy of the Registrant's latest annual report to
shareholders upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940 the Registrant certifies
that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto
duly authorized in the City of Berwyn and State of Pennsylvania
on the 17th day of April 1996.
The Berwyn Fund, Inc.
Registrant
BY: Robert E. Killen
Robert E. Killen, President
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following persons in the capacities and on the date indicated.
Signature Title Date
Robert E. Killen President and
Director 4/17/96
Robert E. Killen
Kevin M. Ryan Secretary,
Treasurer, 4/17/96
Kevin M. Ryan and Director
Anthony N. Carrelli Director
4/17/96
Anthony N. Carrelli
Denis P. Conlon Director
4/17/96
Denis P. Conlon
William H. Vonier Director
4/17/96
William H. Vonier
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940 the Registrant certifies
that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto
duly authorized in the City of Berwyn and State of Pennsylvania
on the 17th day of April 1996.
The Berwyn Fund, Inc.
Registrant
BY: _________________________
Robert E. Killen, President
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following persons in the capacities and on the date indicated.
Signature Title Date
____________________________ President and
Director 4/17/96
Robert E. Killen
____________________________ Secretary,
Treasurer 4/17/96
Kevin M. Ryan and Director
____________________________ Director
4/17/96
Anthony N. Carrelli
____________________________ Director
4/17/96
Denis P. Conlon
____________________________ Director
4/17/96
William H. Vonier
EXHIBIT INDEX
Exhibit #11
Consent of Price Waterhouse LLP
Exhibit #16
Performance Calculations
Exhibit #17
Financial Data Schedule
EXHIBIT #11
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the
Prospectus and Statement of Additional Information
constituting parts of this Post-Effective Amendment No. 15
to the registration statement on Form N-1A of our report
dated February 8, 1996, relating to the financial statements
and financial highlights of The Berwyn Fund, Inc. appearing
in the December 31, 1995 Annual Report to Shareholders,
which is incorporated by reference in such Statement of
Additional Information. We also consent to the reference to
us under the heading "General Information" in the Statement
of Additional Information and to the reference to us under
the heading "Financial Highlights" in the Prospectus.
PRICE WATERHOUSE LLP
Philadelphia, Pennsylvania
April 23, 1996
EXHIBIT #16
Schedules for Computation of Performance Figures
Annual Average Total Return
The Fund calculated its annual average total return for one
year, five years and ten years using the formula P(1+t)n=
ERV in Item 22 of Form N-1A.
In using this formula, P is equal to an initial investment
of $1,000, T is equal to average annual total return for the
period, n equals the number of years and ERV is the ending
redeemable value.
For the one year period ending December 31, 1995
P equals $1,000
T equals .192
n equals 1
ERV equals $1192
For the five year period ending December 31, 1995
P equals $1,000
T equals .214
n equals 5
ERV equals $2,637
For the ten year period of the Fund ending December 31, 1995
P equals $1,000
T equals .129
n equals 10 years
ERV equals $3,355
The Fund calculated its annual performance for the years
1985 through 1995 by using the formula P(1 + t)n = ERV.
In using this formula, P is equal to an initial investment
of $1,000, T is equal to total return for the period, n
equals the number of years and ERV is the ending redeemable
value.
1-3
For the year 1/10/85-12/31/85:
P = $1,000
T = .236
n = 1
ERV = $1,236
For the year 1/01/86-12/31/86:
P = $1,000
T = .146
n = 1
ERV = $1,146
For the year 1/01/87-12/31/87:
P = $1,000
T = .029
n = 1
ERV = $1,029
For the year 1/01/88-12/31/88:
P = $1,000
T = .216
n = 1
ERV = $1,216
For the year 1/01/89-12/31/89:
P = $1,000
T = .165
n = 1
ERV = $1,165
For the year 1/01/90-12/31/90:
P = $1,000
T = -.239
n = 1
ERV = $761
For the year 1/01/91-12/31/91:
P = $1,000
T = .437
n = 1
ERV = $1,437
2-3
For the year 1/01/92-12/31/92:
P = $1,000
T = .206
n = 1
ERV = $1,206
For the year 1/01/93-12/31/93:
P = $1,000
T = -.229
n = 1
ERV = $1,229
For the year 1/01/94-12/31/94:
P = $1,000
T = .039
n = 1
ERV = $1,039
For the year 1/01/95-12/31/95:
P = $1,000
T = .192
n = 1
ERV = $1,192
3-3
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 83,696,325
<INVESTMENTS-AT-VALUE> 97,874,981
<RECEIVABLES> 129,072
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 98,004,053
<PAYABLE-FOR-SECURITIES> 649,757
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 120,671
<TOTAL-LIABILITIES> 770,428
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 77,990,438
<SHARES-COMMON-STOCK> 5,003,538
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 6,338
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 54,655
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14,178,656
<NET-ASSETS> 97,233,625
<DIVIDEND-INCOME> 851,179
<INTEREST-INCOME> 160,485
<OTHER-INCOME>
<EXPENSES-NET> 982,429
<NET-INVESTMENT-INCOME> 29,235
<REALIZED-GAINS-CURRENT> 6,766,861
<APPREC-INCREASE-CURRENT> 4,895,968
<NET-CHANGE-FROM-OPS> 11,692,064
<EQUALIZATION> 28,797,039
<DISTRIBUTIONS-OF-INCOME> 62,714
<DISTRIBUTIONS-OF-GAINS> 6,714,611
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,020,481
<NUMBER-OF-SHARES-REDEEMED> 975,398
<SHARES-REINVESTED> 339,559
<NET-CHANGE-IN-ASSETS> 33,711,778
<ACCUMULATED-NII-PRIOR> 39,817
<ACCUMULATED-GAINS-PRIOR> 2,405
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 787,039
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 982,429
<AVERAGE-NET-ASSETS> 80,181,263
<PER-SHARE-NAV-BEGIN> 17.55
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 3.34
<PER-SHARE-DIVIDEND> 0.01
<PER-SHARE-DISTRIBUTIONS> 1.45
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.43
<EXPENSE-RATIO> 1.23
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
