THE BERWYN FUND, INC.
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
Robert E. Killen and Kevin M. Ryan, or either of them, with power of
substitution, are hereby authorized as proxies to represent, and to
vote the shares
of, the undersigned at the Annual Meeting of Shareholders of The
Berwyn Fund,
Inc., to be held at 10:00 A.M., Friday, March 22, 1996 at 1199
Lancaster Avenue,
Berwyn, Pennsylvania, and at any adjournment thereof. The proxies
are to vote
the shares of the undersigned as instructed below and in accordance
with their
judgment on all other matters which may properly come before the
meeting. If
no specification is made, this proxy shall be voted in favor of each
listed
proposal (including each nominee for director).
The Board of Directors recommends voting for Items 1, 2, and 3.
1. Election of Directors:
For Withhold Withhold
______All Nominees ______All Nominees
______Those Listed Below
Nominees:
Robert E. Killen, Anthony N. Carrelli, Denis P. Conlon,
Kevin M. Ryan and William H. Vonier.
Instruction: To withhold authority to vote for any individual
nominee,
please print his name below:
2. Investment Advisory Agreement:
______Approve ______Disapprove ______Abstain
3. Ratification of Price Waterhouse as Independent Accountants:
______For ______Against ______Abstain
Please sign and date this proxy and return it promptly in the
enclosed envelope.
_____________________________________
Dated____________________1996
_____________________________________
Dated____________________1996
Joint Tenant (if any)
Please check here if planning to attend the annual meeting.
Please check here if you have comments and use back of form.
YOUR VOTE IS IMPORTANT
THE BERWYN FUND, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MARCH 22, 1996
BERWYN, PENNSYLVANIA
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of
The Berwyn Fund, Inc., ("The Fund"), a registered investment
company, will
be held at the executive offices of The Killen Group, Inc., 1199
Lancaster
Avenue, Berwyn, Pennsylvania, on Friday, March 22, 1996 at 10:00
A.M., for
the following purposes:
1. To elect 5 Directors to serve until the next
annual meeting of
shareholders and until their successors are
elected;
2. To consider and approve the Investment Advisory
Agreement between
the Fund and The Killen Group, Inc. for the period
March 22, 1996 to
March 28, 1997, or until the next annual meeting
of shareholders;
3. To consider and ratify the appointment of Price
Waterhouse as
independent accountants for the fiscal year ending
December 31, 1996.
At such meeting, only holders of common stock of record at the close
of
business on February 5, 1996 will be entitled to vote.
You are encouraged to attend this meeting in person, but if you
cannot do so,
please complete, date, sign and return the accompanying proxy at
your earliest
convenience.
YOUR PARTICIPATION, IN PERSON OR BY PROXY, IS IMPORTANT.
BUSINESS MAY BE TRANSACTED ONLY IF A MAJORITY OF THE
SHARES ENTITLED TO VOTE ARE PRESENT IN PERSON OR BY
PROXY.
By Order of The Board of
Directors
Kevin M.
Ryan
Kevin M. Ryan
Secretary
February 7, 1996
-1-
PROXY STATEMENT
SOLICITATION, REVOCATION AND VOTING OF PROXIES
The enclosed proxy is solicited by and on behalf of
the Board of Directors of The Berwyn Fund, Inc., for
use at the Annual Meeting of Shareholders or any
adjournment thereof, to be held on March 22, 1996 at
10:00 A.M., at the executive offices of The Killen
Group, Inc., 1199 Lancaster Avenue, Berwyn,
Pennsylvania. The Fund's address is 1189 Lancaster
Avenue, Berwyn, Pennsylvania 19312. This proxy
statement and the enclosed proxy are being sent to
shareholders on or about February 23, 1996. The
close of business on February 5, 1996 has been fixed
as the record date for the determination of
shareholders entitled to vote at the Annual Meeting.
On that date there were, outstanding, 5,071,209
shares of common stock. (The Fund issues only common
stock.) Shareholders will be entitled to one vote on
each matter for each share held.
A majority of the shares entitled to vote,
represented in person or by proxy, will constitute a
quorum and the presence of a quorum is necessary for
the transaction of business. Under Pennsylvania law,
abstentions and broker non-votes would likely be
included for purposes of determining whether a quorum
is present at the meeting, but would likely be
treated as votes not cast and, therefore, would not
be counted in determining whether matters to be voted
upon at the meeting have been approved.
Approval of the Investment Advisory Agreement (the
"Advisory Agreement") requires approval by a vote of
a majority of the Fund's outstanding voting
securities as defined in the Investment Company Act
of 1940 (the "1940 Act"). Under the 1940 Act, such
approval means the affirmative vote at a meeting of
shareholders of the lesser of (a) more than 50% of
the Fund's outstanding shares, or (b) 67% or more of
the shares present or represented at the meeting, if
the holders of more than 50% of the Fund's
outstanding shares are present in person or
represented by proxy. The election of a nominee for
Director and the ratification of the appointment of
Price Waterhouse will require the affirmative vote of
a majority of shares in attendance at the meeting
either in person or by proxy.
All shares represented by properly executed proxies,
unless such proxies have been previously revoked,
will be voted at the Annual Meeting in accordance
with the directions on the proxies. A shareholder
who executes and returns a proxy may revoke it at any
time prior to its exercise by delivering to the
Secretary of the Fund written notice of its
revocation, sending the Fund a proxy with a later
date, or by voting in person at the meeting. The
cost of soliciting proxies, which is estimated at
$2,500, is being paid by the Fund. In addition to
solicitation by mail, Officers and employees of the
fund may request the return of proxies by personal
conversation or by telephone or telegraph.
Since the Fund is bearing all proxy solicitation
costs, it is requested that shareholders, who will
not attend the meeting, execute and return a proxy so
as to avoid any additional solicitation expense.
-2-
OWNERSHIP OF SHARES
Shareholders known by the Board of Directors to own
more than 5% of the outstanding shares of the Fund on
February 5, 1996 and the percentage of the
outstanding shares owned on that date are listed
below.
Name of Shareholder Amount of Percentage of
and Address Shares Owned Outstanding Shares
Charles Schwab & Co. (1) 1,000,191 19.76%
101 Montgomery Street
San Francisco, CA
FTC & Co. (2) 608,032 12.00%
P. O. Box 173736
Denver, CO
National Financial Services Corp. (1) 295,200 5.83%
1 World Financial Center
200 Liberty Street
New York, NY
(1)The shareholders are registered broker dealers and hold these sh
ares for the
benefit of their customers.
(2)The shareholder is a trust company and holds these shares for th
e benefit of its customers.
To the Fund's knowledge, no individual owned more
than 5% of the
outstanding shares of the Fund on February 5,
1996.
PROPOSAL 1. NOMINEES FOR ELECTION AS DIRECTORS
Five Directors are to be elected to serve until the
next Annual Meeting of Shareholders and until their
successors are elected. The Board's nominees are
named in the following table, which also sets forth
information about each of them concerning his age,
principal occupation, business experience for at
least
the past five years, and ownership of Fund shares.
Robert E. Killen, Anthony N. Carrelli, Denis P.
Conlon, Kevin M. Ryan and William H. Vonier are
currently members of the Fund's Board of Directors
and all are nominees for election. The number and
percentage of shares of the Fund owned by all
Directors and Officers as a group is set forth below:
-3-
Name(Age) Number of Shares
*Robert E. Killen Beneficially
(54) Owned & Percent
of Class as of
February 5, 1996
159,991 3% (1)
Principal Occupation and Other Business
Experience During the Past Five Years
Director and Shareholder, Berwyn Financial Services
Corp., a financial services company (registered as a
broker-dealer with the SEC 12/93 and a member of
the NASD since 7/94) since October 1991. President
and Director of The Berwyn Fund, Inc., since February
1983. 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.
Name(Age) Number of Shares
Denis P. Conlon Beneficially
(46) Owned & Percent
of Class as of
February 5, 1996
1,624+
Principal Occupation and Other Business
Experience During the Past Five Years
Director of The Berwyn Fund, Inc. and Berwyn Income
Fund, Inc., since June 1992. Vice President, Corporate
Development Berwind Corporation (Diversified
Manufacturing and Financial Company) since 1990. Prior
to 1990, Vice President, Corporate Planning Pneumo/ABEX
Corp. (a Division of IC Industries) for more than 5
years.
Name(Age) Number of Shares
*Anthony N. Carrelli Beneficially
(46) Owned & Percent
of Class as of
February 5, 1996
74,175+ (1)
Principal Occupation and Other Business
Experience During the Past Five Years
Director of Berwyn Income Fund, Inc. since December
1986. Director of The Berwyn Fund, Inc., since
January 1995. Vice President of The Killen Group, Inc.
(an Investment Advisory Firm and the Investment Adviser
to the Fund) since August 1986.
Name(Age) Number of Shares
*Kevin M. Ryan Beneficially
(48) Owned & Percent
of Class as of
February 5, 1996
19,277+ (1)
Principal Occupation and Other Business
Experience During the Past Five Years
President, Treasurer, Director and Sole Shareholder of
Berwyn Financial Services Corp., a financial service
company (registered as a broker-dealer with the SEC
12/93 and a member of the NASD since 7/94) since
October 1991. Registered Principal with Securities
America, Inc. (a broker-dealer) from March 1993 to
August 1994. Secretary, Treasurer and Director of The
Berwyn Fund, Inc., since February 1983 . 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.
-4-
Name(Age) Number of Shares
William H. Vonier Beneficially
(66) Owned & Percent
of Class as of
February 5, 1996
10.921+ (1)
Principal Occupation and Other Business
Experience During the Past Five Years
Director of The Berwyn Fund, Inc. and Berwyn Income
Fund, Inc., since June 1992. Independent Consultant
in Sales and Marketing since 1989.
All Directors and Officers of the Fund as a group
owned 199,228 shares of the Fund, which constitutes
4% of its outstanding shares as of February 5, 1996.
+Indicates ownership of less than 1% of the
outstanding shares of the Fund.
Notes: (1) The shares listed for Robert E. Killen
include shares owned by The Killen Group, Inc.
and by his wife.
Shares listed for Anthony N. Carrelli
include shares beneficially owned by members
of his immediate family.
Shares listed for William Vonier include
shares owned by his wife.
Shares listed for Kevin M. Ryan include
shares owned by his wife and by a partnership
of which he is General Partner.
* 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 sole shareholder in
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,
Inc. and he is an Officer, Director and the
Owner of 1/3 of the outstanding shares of
Berwyn Financial Services Corp., a broker-
dealer. In addition, Robert E. Killen and
Kevin M. Ryan are brothers-in-law. Berwyn
Financial Services Corp. serves as the
selling agent for the Fund in certain
jurisdictions.
The Board of Directors sets broad policies for the
Fund and elects the Officers. The Officers are
Robert E. Killen, President, and Kevin M. Ryan,
Secretary-Treasurer. The Officers of the Fund manage
its daily operations and are directly responsible to
the Directors.
-5-
The Board held three meetings in fiscal year 1995 and
all Directors were present at each meeting. The
Board has an Audit Committee composed of Messrs.
Conlon and Vonier each of whom are not "interested
persons" of the Fund, as that term is defined in the
1940 Act (the "Independent Directors"). The Audit
Committee recommends the selection of Independent
Public Accountants for the Fund, reviews the scope of
the audit and evaluates the Independent Accountants'
work and opinions and reports its findings to the
Board. The Committee met once in 1995.
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. In 1995,
Messrs. Conlon and Vonier were paid fees of $1,200
and $1,200, respectively. Messrs. Conlon and Vonier
also serve as Independent Directors of Berwyn Income
Fund, Inc. (another registered investment company
managed by The Killen Group, Inc.). In 1995, Messrs.
Conlon and Vonier received $1,200 and $1,200,
respectively, in Directors' fees from Berwyn Income
Fund, Inc. The total payment from both Funds to
Messrs. Conlon and Vonier was $2,400 and $2,400
respectively, for the 1995 fiscal year. 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.
PROPOSAL 2. INVESTMENT ADVISORY AGREEMENT
Investment Adviser
The Killen Group, Inc. ("the Adviser") currently
serves as the Investment Adviser to the Fund. The
Killen Group is a Pennsylvania corporation formed in
September 1982 and its offices are located at 1189
Lancaster Avenue, Berwyn, Pennsylvania.
The Officers and Directors of the Adviser are Robert
E. Killen, Presdient, Treasurer and Director, Edward
A. Killen II, Vice President, Secretary and Director,
Tara J. Killen, Director, and William A.
Siegenthaler, Director.
Robert E. Killen's address is 1199 Lancaster Avenue,
Berwyn, Pennsylvania. He has worked as an Investment
Adviser since 1969. In that year, he cofounded the
partnership of Compu Val Management Associates (an
Investment Advisory Firm) and was a partner until
February 1983 when he was replaced by the Adviser as
a partner.
In December, 1983, the partnership of Compu Val
Management Associates was dissolved.
Edward A. Killen II's address is 1189 Lancaster
Avenue, Berwyn, Pennsylvania. He was Portfolio
Manager for Compu Val Management Associates from 1976
until September 1983. At that time he assumed his
present position with the Adviser.
-6-
Tara J. Killen's address is 1189 Lancaster Avenue,
Berwyn, Pennsylvania. She has been employed by the
Adviser since June 1994 as an assistant portfolio
manager and supervisor for mutual fund
communications.
William A. Siegenthaler's address is 1375 Cinnamon
Drive, Fort Washington, Pennsylvania. He is employed
as a manager of the Capital Markets Department of
Electronic Data Systems Corporation, Wayne,
Pennsylvania since March 1995.
Robert E. Killen is Chairman of the Board and
President of the Fund and currently a nominee for
election as a Director. Anthony N. Carrelli, a Vice
President of the Adviser and Kevin M. Ryan, Legal
Counsel to the Adviser, are currently members of the
Board and nominees for election as Directors at the
Annual Meeting.
Advisory Contract
The Adviser serves as Investment Adviser pursuant to
a written agreement dated May 14, 1993. Under the
terms of the agreement, 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.
In addition to providing investment services to the
Fund, the Adviser provides and furnishes office space
for the Fund and provides personnel to administer the
Fund's operations. The Adviser also pays all
expenses associated with the sales promotion of the
Fund.
As compensation for investment services, the Fund has
agreed to pay the Adviser 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 Adviser received advisory
fees from the Fund totaling $787,039. The agreement
between the Adviser and the Fund provides that the
Adviser's fee will be reduced in any fiscal year by
any amount necessary to prevent the Fund expenses and
liabilities (excluding taxes, interest, brokerage
commissions and extraordinary expenses, determined by
the Fund or Adviser, but inclusive of the Adviser's
fee) from exceeding 2% (1-1/2% when net assets are
over $100 million) of the average daily net assets of
the Fund. This expense limitation was not used in
1995.
The Advisory Agreement is terminable at any time
without penalty on 60 days written notice by the
Board of Directors and will terminate automatically
in the event it is assigned. The Advisory Agreement
is also terminable at any time without penalty by a
vote of a majority of the outstanding shares on 60
days written notice. The Adviser may terminate the
Agreement by written notice to the Fund at least 60
days prior to the date of the annual shareholder
meeting of any year thereafter. The Advisory
Agreement provides that, unless sooner terminated, it
will continue in effect from year to year provided
that such continuance is specifically approved at
least annually by a vote of a majority of the
outstanding shares of the Fund as defined in the 1940
Act. Continuance of the Advisory Agreement also must
be approved by the Independent Directors of the Fund
annually. The Board of Directors
-7-
of the Fund, including the Independent Directors,
unanimously approved continuance of the Advisory
Agreement at a meeting held on January 10, 1996.
In making its recommendation to continue the Advisory
Agreement, the Board considered a number of factors.
These factors were the performance of the Fund in
1995 and for last ten years, the nature and quality
of the services provided by the Adviser and the
Adviser's fee and the expenses of the Fund in
comparison to other mutual funds with a similar
investment objective. The Board was also aware that
the Adviser placed portfolio transactions through
affiliated brokers and that the Adviser allocated
portfolio transactions with brokers who sold shares
of the Fund and provided research to the Adviser.
Prior to the Board meeting held on January 10, 1996,
the members of the Board were provided with a
memorandum prepared by the Adviser that detailed the
experience of the Fund's portfolio manager, the
services provided by the Adviser and the number of
employees engaged in providing those services. Also
provided in the memorandum was the annual performance
of the Fund for the last ten years as well as the
annual average total return for 1, 5 and 10 years.
The annual performance was compared to the
performance of a relevant index. The memorandum
listed the total amount of fees paid to the Adviser
for the year, the ratio of expenses to average net
assets for the year and the rate at which the Fund
pays the Adviser.
In addition to the Adviser's memorandum, the members
of the Board were provided with information which
compared the various expenses and fees of funds with
similar investment objectives to the Fund.
After a discussion regarding the Advisory Agreement,
the Board unanimously determined that it was in the
best interest of the Fund's shareholders to renew the
Agreement. The Board determined that the performance
of the Fund in 1995 was satisfactory and that the
performance of the Fund and the level and quality of
services provided by the Adviser over the last ten
years had been good. The Board also determined that
the fee charged by the Adviser was fair and
reasonable considering the nature and quality of the
services provided to the Fund.
The terms of the Advisory Agreement require that the
agreement be submitted to the shareholders of the
Fund at the Annual Meeting for their approval.
This Advisory Agreement was last submitted for
shareholder approval at the Annual Meeting of the
Fund held on March 24, 1995. At that time, the
agreement was approved. No changes have been made in
the agreement since March 24, 1995.
A copy of the agreement is attached as Appendix A.
The Board of Directors recommends approval by
shareholders of the Advisory Agreement.
Affiliated Brokers
The Board has adopted procedures under Rule 17e-1 of
the 1940 Act that permit portfolio transactions
through affiliated brokers. In 1995, the affiliated
broker used by the Fund was Berwyn
-8-
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 selling agent for the Fund in various
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 commissions paid by the Fund during 1995.
PROPOSAL 3. RATIFICATION OF SELECTION OF INDEPENDENT
ACCOUNTANTS
The Board of Directors of the Fund is requesting
ratification of the selection of Price Waterhouse,
LLP as Independent Accountants of the Fund for the
fiscal year ending December 31, 1996. Price
Waterhouse has served as Independent Accountants for
the Fund since it began operation.
No representative of Price Waterhouse is expected at
the Annual Meeting.
The Board of Directors recommends the ratification by
shareholders of such selection.
Shareholder Proposals
The next Annual Meeting of Shareholders will be held
on March 28, 1997. Proposals of shareholders
intended to be presented at the 1996 Annual Meeting
must be received by the Fund by February 4, 1997 for
inclusion in the Fund's Proxy Statement and Proxy
relating to that Meeting. Upon receipt of any
proposal, the Fund will determine whether or not to
include such proposal in the Proxy Statement and
Proxy, in accordance with regulations governing the
solicitation of proxies.
By Order of the Board of Directors
Kevin M.
Ryan
Kevin M. Ryan
Secretary
February 7, 1996
-9-
insert original copy of Appendix A
14 15 16
APPENDIX A
CONTRACT FOR
INVESTMENT ADVISORY SERVICES
Agreement made on May 14, 1993 between The Berwyn
Fund, Inc., a Pennsylvania corporation, having its
principal place of business at 1189 Lancaster Avenue,
Berwyn, Pennsylvania, herein referred to as the Fund,
and The Killen Group, Inc., a Pennsylvania
corporation, having its principal place of business
at 1189 Lancaster Avenue, Berwyn, Pennsylvania,
herein referred to as the Adviser.
l. The Fund shall register with the Securities and
Exchange Commission as a non-diversified, open-
end management investment company under the
provisions of the Investment Company Act of 1940
and shall qualify to engage in business under
said act and other applicable federal and state
statutes.
2. The Adviser is registered under the Investment
Advisers Act and is engaged in the business of
acting as an Investment Adviser and rendering
research and Advisory services.
3. The Fund desires to retain the Adviser to render
such services to the Fund in the manner and on
the terms and conditions hereinafter set forth.
4. Nothing contained herein shall be deemed to
require the Fund to take any action contrary to
its certificate of incorporation or any
applicable statute or regulation, or to relieve
or deprive the Board of Directors of the Fund
of its responsibility for, and control of, the
conduct of the affairs of the Fund.
For the reasons recited above, and in consideration
of the mutual promises contained herein, the Fund and
Adviser agree as follows:
SECTION ONE
INVESTMENT ADVICE AND OTHER SERVICES
a. Adviser shall to the extent reasonably
required in the conduct of the business of
the Fund, place at the disposal of the Fund, its
judgment and experience and furnish to the Fund
advice and recommendations with respect to
investments, investment policies, the purchase and
sale of securities, and the management of its
resources. Adviser shall also, from time to
time, furnish to or place at the disposal of the
Fund such reports and information relating to
industries, businesses, corporations or
securities as may be reasonably required by the Fund
or as Adviser may deem to be helpful to the Fund in
the administration of its investments.
b. Adviser agrees to use its best efforts in the
furnishing of such advice and
recommendations and in the preparation of such
reports and information, and for this purpose
Adviser shall at all times maintain a staff
of Officers and other trained personnel for the
performance of its obligations under this
agreement. Adviser, may at its expense,
employ other persons to furnish to Adviser
statistical and other factual
information, advice regarding economic factors and
trends, information with respect to technical
and scientific developments and such other
information, advice and assistance as Adviser may
desire.
c. The Fund will from time to time furnish to
Adviser detailed statements of the
investments and resources of the Fund and
information as to its investment problems, and will
make available to Adviser such financial
reports, proxy statements, and legal and other
information relating to its investments as may be in
possession of the Fund or available to it.
SECTION TWO
COMPENSATION TO INVESTMENT ADVISER
a. The Fund agrees to pay to Adviser and Adviser
agrees to accept, as full compensation for
all services rendered and as full reimbursement
for all expenses assumed by Adviser hereunder, an
annual fee equal to l.0% of the average daily
assets of the Fund. The fee will be paid
monthly.
b. Adviser agrees that neither it nor any of
its Officers or Directors shall take any long
or short position in the capital stock of the
Fund; but this prohibition shall not prevent
the purchase by or for Adviser or any of its
Officers or Directors of shares of the capital
stock of the Fund at the price at which such
shares are available to the public at the
moment of purchase provided that (1) such
purchase be made for investment purposes only
and (2) if any shares of stock so purchased
are resold within two months after the date of
purchase, such fact will be immediately
reported to the Fund.
SECTION THREE
PAYMENT OF EXPENSES
The Adviser shall provide and furnish office space to
the Fund and provide personnel to administer the
Fund's operations. The Adviser shall pay all
expenses associated with the sales promotion of the
Fund. The Fund will pay all other expenses incurred
in the operation of the Fund.
The Adviser hereby agrees to reduce its fee 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 Adviser, but inclusive of
the Adviser's fee) from exceeding 2% of net assets of
the Fund. When the net assets of the Fund exceed
$100 million, the Adviser agrees to reduce its fee 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 Adviser, but
inclusive of the Adviser's fee) from exceeding 1 1/2%
of the net assets of the Fund.
SECTION FOUR
DURATION; TERMINATION
a. The term of this agreement shall begin on
May 14, l993, and this agreement shall
continue from year to year thereafter, subject
to the provisions for termination and all of
the other terms and conditions hereof, if (1)
such continuation shall be specifically
approved at least annually by vote of a
majority of the outstanding voting securities
of the Fund; and (2) Adviser shall not have
notified the Fund, in writing, at least sixty
days prior to the date of the Annual
Shareholders Meeting of any year, that it does
not desire such continuation.
b. This agreement may be terminated by the
Fund on 60 days notice in writing to Adviser,
without the payment of any penalty, provided
such termination be authorized by resolution
of the Board of Directors of the Fund or by
vote of a majority of its outstanding voting
securities.
SECTION FIVE
AMENDMENT OF AGREEMENT
This agreement may not be amended, transferred,
assigned, sold or in any manner hypothecated or
pledged without the affirmative vote or written
consent of the holders of a majority of the
outstanding voting securities of the Fund; and this
agreement shall automatically and immediately
terminate in the event of its assignment by Adviser.
In witness whereof, the parties hereto have caused
this agreement to be signed by their respective
Officers thereunto duly authorized and their
respective corporate seals to be hereunto affixed,
the day and year first above written.
THE BERWYN FUND, INC. THE KILLEN GROUP, INC.
by: Kevin M. Ryan by:
Robert E. Killen
Secretary-Treasurer
President
OPINION OF COUNSEL
TO WHOM IT MAY CONCERN:
I am counsel to The Berwyn Fund, Inc. I am
writing this letter to state my opinion as
counsel that the shares of the Fund sold in
calendar year 1995 were legally issued, fully
paid and non-assessable.
The Berwyn Fund, Inc., is a corporation
incorporated under the laws of the Common-
wealth of Pennsylvania on February 18, 1983.
Under its Articles of Incorporation, the Fund
has the power to issue 20,000,000 shares of
common stock. On March 1,1983, a shareholder
resolution was approved that authorized the
Board of Directors to issue shares of common
stock in such amounts and proportions as from
time to time it deemed appropriate and the
Board was authorized to set the price at
which shares would be sold.
On September 1, 1983, the Board approved a
resolution authorizing the sale of 2,000,000
shares of common stock to the public. The
resolution directed that prior to sale, the
shares be registered with the U.S. Securities
and Exchange Commission and various states
and that the shares be sold at their net
asset value and that they be fully paid and
non-assessable when issued. The share
registration with the Securities and Exchange
Commission became effective May 4, 1984.
On September 5, 1991, the Board authorized
the Fund to register an indefinite number of
shares of common stock for sale with the
Securities and Exchange Commission pursuant
to rule 24f of the Investment Company Act of
1940.
Registration under Rule 24f became effective
on April 1, 1992. Under section 1524 of the
Pennsylvania Business Corporation Law of
1988, shares of stock sold by Pennsylvania
corporations after December 1988, will be
deemed fully paid and non-assessable unless
there are contrary provisions in Articles of
Incorporation or By Laws. There are no
provisions in the Fund's Articles or By Laws
that allow the Fund to issue stock that is
not fully paid or to issue assessable stock.
Based upon the foregoing facts, it is my
opinion that the shares issued in 1995 were
legally issued, fully paid and non-
assessable.
Kevin M. Ryan
Kevin M. Ryan
Counsel to the Fund
