File #2-88860
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 o
Pre-Effective Amendment No. o
Post-Effective Amendment No. 16 x
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 x
Amendment No. 19
(Check appropriate box or boxes.)
THE BERWYN FUND,
INC.
(Exact Name of Registrant as Specified in Charter)
1189 LANCASTER AVENUE, BERWYN,
PENNSYLVANIA 19312
(Address o
f
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
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 24f-2 under
the Investment Company Act of 1940. The Rule 24f-2 Notice
for the Registrant's most
recent fiscal year was filed March 12, 1997.
CROSS REFERENCE SHEET
______________________________________________________________________
_
Statement of
Prospectus Additional Registration
Section Page # Information Page # Statement Page #
______________________________________________________________________
_
PART A
Item 1. Cover Page 3
Item 2. 2 5
Item 3. 3a & 3b 6a & 6b
Item 4. 4 - 6 7 - 9
Item 5. 6, 7 & 13 9, 10 & 16
Item 5a * 13, 14 & 16
Item 6. 10, 11 & 13 10 - 14
Item 7. 7 - 10 10 & 11
Item 8. 10 - 13 13-15
Item 9. N/A N/A
PART B
Item 10. Cover Page 18
Item 11. 1 19
Item 12. N/A N/A
Item 13. 2 - 44 20 - 22
Item 14. 4 - 7 22 - 25
Item 15. 7 25
Item 16. 4 - 6, 10 - 12 22 & 28 - 30
Item 17. 8 24 - 26
Item 18. 11 - 12 26 - 29
Item 19. 9 - 10 27 - 30
Item 20. 12 30
Item 21. 10 10
Item 22. 10 - 11 29
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
*Information is provided in the Registrant's 1996 Annual Report to
Shareholders mailed to the Securities and Exchange Commission on March
11, 1997
THE BERWYN FUND, INC.
Shareholder Services
c/o Rodney Square Management Corp.
P. O. Box 8987
Wilmington, DE 19899
PROSPECTUS
April 29, 1997
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 investment objective of the Fund is long-term (i.e., greater
than one year) 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. (the "Adviser") is the investment adviser
to the Fund. Robert E. Killen is Chief Executive Officer ("CEO") 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 ("SAI")
containing additional information about the Fund with the Securities
and Exchange Commission. The SAI is dated April 29, 1997 and is
incorporated by reference into this Prospectus. The SAI 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
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FEE and EXPENSE 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 0.21 %
Total Fund Operating Expenses 1.21 %
______________________________________________________________________
________
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 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.
Example
1 Year 3 Years
5 Years 10 Years
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: 12
38 66 147
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-
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
The following financial highlights for a share outstanding throughout
each period, insofar as it relates to each of the five years in the
period ended December 31, 1996, have been derived from financial
statements 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 Fund's Statement of Additional
Information and this Prospectus, and which appear, along with the
report of Price Waterhouse LLP, in the Fund's 1996 Annual Report to
Shareholders (the "Annual Report"). Additional Information about the
Fund's investment performance is contained in the Annual Report which
can be obtained from the Fund upon request without charge.
Year Ended Year Ended Year Ended Year Ended Year Ended
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
Net Asset Value, Beginning of Period $19.43 17.55 $17.67 $14.86 $13.47
-------- -------- -------- -------- --------
Income From Investment Operations
Net Investment Income (Loss) (0.02) 0.00 0.02 (0.03) 0.04
Net Realized and Unrealized Gains
(Loss) on Securities 2.78 3.34 0.65 3.42 2.70
-------- -------- -------- -------- --------
Total from Investment Operations 2.76 3.34 0.67 3.39 2.74
-------- -------- -------- -------- --------
Less Distributions
Dividends from Net Investment Income --- (0.01) (0.01) --- (0.04)
Distributions from Net Realized Gains (2.50) (1.45) (0.78) (0.58) (1.31)
-------- -------- -------- -------- --------
Total Distributions (2.50) (1.46) (0.79) (0.58) (1.35)
-------- -------- -------- -------- --------
Net Asset Value, End of Period $19.69 $19.43 $17.55 $17.67 $14.86
Total Return 14.35% 19.18% 3.90% 22.90% 20.60%
Ratios/Supplemental Data
Net Assets, End of Period (000) $94,056 $97,234 $63,522 $47,312 $31,334
Ratio of Expenses to Average Net Assets 1.21% 1.23% 1.33% 1.37% 1.38%
Ratio of Net Investment Income (Loss)
to Average Net Assets (0.10%) 0.04% 0.11% (0.18%) 0.28%
Portfolio Turnover Rate 32% 32% 24% 24% 45%
Average Commissions Rate Paid* $0.0554 ---- --- --- ---
_______________________________
*Computed by dividing the total amount of commissions paid by the
total number of shares purchased and sold
during year.
- -3a-
FINANCIAL HIGHLIGHTS (continued)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
Year Ended Year Ended Year Ended Year Ended Year Ended
12/31/91 12/31/90 12/31/89 12/31/88 12/31/87
Net Asset Value, Beginning of Period $9.66 13.82 $12.63 $10.84 $12.41
-------- -------- -------- -------- --------
Income From Investment Operations
Net Investment Income (Loss) 0.11 0.13 0.09 0.07 0.05
Net Realized and Unrealized Gains
(Loss) on Securities 4.08 (3.44) 1.99 2.27 0.39
-------- -------- -------- -------- --------
Total from Investment Operations 4.19 (3.31) 2.08 2.34 0.44
-------- -------- -------- -------- --------
Less Distributions
Dividends from Net Investment Income (0.11) (0.13) (0.09) (0.08) (0.16)
Distributions from Net Realized Gains (0.27) (0.72) (0.80) (0.47) (1.85)
-------- -------- -------- -------- --------
Total Distributions (0.38) (0.85) (0.89) (0.55) (2.01)
-------- -------- -------- -------- -------
Net Asset Value, End of Period $13.47 $9.66 $13.82 $12.63 $10.84
Total Return 43.70% (23.90%) 16.50% 21.60% 2.90%
Ratios/Supplemental Data
Net Assets, End of Period (000) $18,667 $11,.627 $14,078 $11,367 $8,741
Ratio of Expenses to Average Net Assets 1.38% 1.46% 1.42% 1.45% 1.52%
Ratio of Net Investment Income (Loss)
to Average Net Assets 0.91% 1.11% 0.70% 0.60% 0.50%
Portfolio Turnover Rate 33% 24% 25% 20% 43%
Average Commissions Rate Paid --- --- --- --- ---
- -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. Any investor may obtain
a copy of the Annual Report without charge by writing to the
Shareholder Services Agent of the Fund or by calling (800) 992-6757.
INVESTMENT OBJECTIVE, POLICIES, AND RISK FACTORS
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 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, as
amended (the "1940 Act") 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.
Even though the Fund is non-diversified under the 1940 Act, the
Fund has placed restrictions on its investment policy for purposes of
diversification. 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. With these two
restrictions, hypothetically, the Fund could hold a portfolio with
investments in as few as 14 issuers. The Fund does not anticipate
having a portfolio with as few as 14 issuers. 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 value of its total assets). Under normal market
conditions, the Fund follows the 5% and 20% guidelines of the Adviser.
The Fund will always adhere to this 25% rule.
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
- -4-
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, 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) companies
selling substantially below their book value; (2) companies selling at
a low valuation to their present earnings level; and (3) 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 believes that its (i) 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 Index, Russell 2000 and
the Value Line Composite), and (ii) 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 current 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 the Adviser believes
prevailing interest rates offer long-term capital appreciation. The
fixed income securities selected may include securities with any of
the ratings listed by Standard & Poor's Rating ("Standard & Poor's")
and Moody's Investors Service, Inc. ("Moody's"), including securities
with a Standard & Poor's D rating and a Moody's C rating and in
unrated securities that are
- -5-
determined by the Adviser to be of equivalent quality. (See
Appendices A and B in the Statement of Additional Information for
Standard & Poor's and Moody's definitions of Bond Ratings.) Fixed
income corporate debt securities that have a BBB or Baa rating have
speculative characteristics and are riskier investments than debt
securities rated A (Standard & Poor's or Moody's rating) and higher.
Fixed income securities that have credit ratings lower than BBB
(Standard & Poor's rating) or a Baa (Moody's rating) are commonly
referred to "junk bonds". These lower rated securities are
speculative investments and investment in them is riskier than an
investment in a fixed income security with a rating of BBB or Baa or
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, or 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. When the Fund invests in such securities,
however, the U.S. Government will be not required to provide financial
support to the Fund. Also, the Fund will not invest more than 5% of
its total assets in repurchase agreements.
The Fund does not intend to engage in short term trading. In
1996, the Fund had a portfolio turnover rate of 32% and anticipates it
will have a portfolio turnover rate of less than 100% in 1997.
MANAGEMENT OF THE FUND
The Fund is a corporation formed under the laws of the
Commonwealth of Pennsylvania on February 18, 1983. The business of
the Fund is managed under the direction of the Board of Directors (the
"Board"). 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 the Adviser under the supervision of the
Board.
- -6-
The Killen Group, Inc. (the "Adviser") is the investment
adviser to the Fund. The Adviser is a Pennsylvania corporation that
was formed in September 1982. Its address is 1189 Lancaster Avenue,
Berwyn, Pennsylvania 19312. Robert E. Killen is Chairman, CEO and
sole shareholder of the Adviser.
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 Fund's
portfolio since May 4, 1984, the date the Fund's public offering
began. Mr. Killen has over twenty-five 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 the 50% partner. The partnership of Compu-Val
Management Associates was dissolved on December 31, 1983 and The
Killen Group, Inc. continued its advisory business as a separate
entity. As of December 31, 1996, The Killen Group, Inc. was managing
383 individual investment portfolios worth approximately $484 million.
In addition, the Adviser also manages the Berwyn Income Fund,
Inc. (the "Berwyn Income Fund"). 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, Inc. has been the investment adviser to the Berwyn Income Fund
since it became public in September, 1987. On December 31, 1996, the
Berwyn Income Fund had net assets of over $137 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
1996, the Fund paid the Adviser $976,110 for its services. This
amount was 1.00% of the average daily net assets of the Fund for the
year. Total expenses for the Fund in 1996 were 1.21% of the average
daily net assets of the Fund.
Subject to policies established by Board, the Adviser is
responsible for the Fund's 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
- -7-
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 (the "Exchange") (4:00 p.m. Eastern Time) and is effective as
of the time of computation. (The Exchange is closed on, and net asset
value is not calculated on, New Year's Day, President's Day, Good
Friday, Memorial Day (day observed), Independence Day, Labor Day,
Thanksgiving Day and Christmas Day and on the preceding Friday or
subsequent Monday when any of these holidays falls on a Saturday or
Sunday, respectively.) 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 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.
All other assets are valued at fair value as determined in good faith
by the Board.
SHARE PURCHASES
The Fund's shares are offered for sale on a continuous basis
except that the Fund will not accept new shareholder accounts whenever
its net assets are over $100,000,000.. 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 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 in the Fund or between accounts in the Fund and
the Berwyn Income Fund that total $10,000 in the aggregate.
Subsequent investments must be at least $250. For Individual
Retirement Accounts ( each an "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 has an Automatic Investment Plan under which an
investor may have money transferred from the investor's checking
account to the investor's account in the Fund. If you wish to use
this plan, please contact the Fund for further information and an
application.
- -8-
An investor may also exchange common stock for shares of the
Fund. The stock offered by the investor, 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 by the investor
for both initial and subsequent investments must have a fair market
value, determined as set forth below, of at least $20,000. (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 Fund's Prospectus and Statement of Additional
Information ("SAI") and, 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, Policies and Risk
Factors" in the Prospectus and Investment Policies and Risk Factors
and "Investment Restrictions" in the SAI.)
The 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 described below.
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 the securities, the Fund will determine the
value of the securities on the valuation date which will be the date
on which the net asset value shares of the Fund are next determined
after receipt of such securities.. The amount of the investment will
be the value of the securities as determined by the Fund. The value
of each security offered by the investor will be determined on the
valuation date as of the close of trading of the Exchange and the
method of valuation will be the same as the one used to value the
Fund's portfolio securities. If a security being exchanged pays
interest, the amount of interest due will be determined on the
valuation date and the Fund will issue shares equal to the amount of
accrued interest. (See "Computation of Net Asset Value".) Dividends
due on any security will be paid to the person who is listed as owner
on the record date. For such an exchange, 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 for 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.
- -9-
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 notification 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 who is an Officer and Director of the Fund
and its Adviser is also a Director of Berwyn Financial. Kevin M. Ryan
who is an Officer and Director of the Fund is also an Officer and
Director of Berwyn Financial.
EXCHANGE OF SHARES
Shares of the Fund may be exchanged for shares of Berwyn Income
Fund, a no-load mutual fund that is managed by the Adviser. Shares
may also be exchanged for shares in the Rodney Square Fund or the
Rodney Square Tax-Exempt Fund (each of such Funds, a "Rodney Square
Fund"). The Rodney Square 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 net
asset value per share of the Funds involved next determined after an
exchange has been requested. The minimum initial investment of 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 each 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. Written requests should be sent to
the address on the cover of this Prospectus.
Subject to the foregoing minimum investment amounts, any
shareholder will be permitted to exchange shares among the above
mutual funds ("Eligible 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 identification
number under which the account is registered. Shares will be
exchanged only into an account that has the same shareholder(s) of
record and the same social security or tax identification number.
A shareholder in the Fund will be permitted to exchange the
shares in his or her account for shares in one of the other Eligible
Funds only four times in any twelve-month period. A shareholder in a
Rodney Square Fund may exchange shares of the Rodney Square Fund for
shares of the Fund as often as the shareholder wishes.
- -10-
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
writing to the Shareholder Services Agent of the Fund or calling (800)
992-6757.
The exchange privilege is available only to investors residing
in states where the Eligible Funds have filed a notice 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 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 of 1986, as amended, 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 the company
distributes. Generally, shareholders of the investment company pay
Federal income tax on dividends and capital gains distributions.
Shareholders are responsible for the tax whether the dividend or
capital gains distribution is received in cash or in additional shares
of the Fund. Shareholders who are not subject to income tax will not
be required to pay tax on the amount distributed. The Fund will notify
shareholders what portion of the distribution is from net investment
income or capital gains.
A dividend shortly after a purchase of Fund shares is taxable to
the shareholder even though it appears to be a return of capital.
- -11-
Redemptions and exchanges of Fund shares are treated as sales of
Fund shares. Consequently, redemptions and exchanges are generally
subject to capital gains tax.
In addition to Federal income tax, Fund distributions and
capital gains or loses from the sale, redemption or exchange of Fund
shares may also be subject to state and local taxes.
The Fund is required to withhold 31% of taxable dividends,
capital gains distributions, and redemption proceeds paid to
shareholders that do not provide their correct taxpayer identification
number, certify that it is correct, and certify that they are not
subject to backup withholding.
RETIREMENT PLANS
The Fund sponsors IRAs. Individuals interested in having an
IRA with the Fund may obtain an IRA information booklet and
application forms by writing to the Shareholder Services Agent of the
Fund or calling (800) 992-6757.
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 any portion of or 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
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 identification number under which the account
- -12-
is registered. Checks will be issued only in the name listed on the
account and will be mailed only 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). 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 ("SWP") under
which an investor may have money automatically withdrawn from his or
her account on a regular basis. Investors who wish to establish a SWP
should complete the section in the new account application for
systematic withdrawal.
The Fund reserves the right to redeem the Fund shares of, and
send the redemption proceeds to, any shareholder whose total shares in
[an][all] account[s] fall below $1,000 in net asset value by reason of
redemption. Upon receiving written notice from the Fund, a
shareholder must increase the shareholder's account net asset value to
$1,000 or above within 60 days to prevent liquidation.
When permitted by the Securities and Exchange Commission
("SEC"), the Fund may suspend the right of redemption and postponement
of payment for more than seven days during any period when the
Exchange is closed, other than customary weekend and holiday closing;
when trading on such Exchange is restricted, as determined by the SEC,
during any period when an emergency, as defined by rules of the SEC,
exists making disposal of portfolio securities or valuation of net
assets by the Fund not reasonably practicable; or when the SEC 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 is paid to the Fund and included
in its net assets 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.
- -13-
GENERAL INFORMATION
The Fund
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 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.
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 SEC. The registration statement
consists of three parts: the Prospectus, the SAI and a third section
containing exhibits and other information. A copy of the SAI is
available from the
- -14-
Fund free of charge. The third part of the registration statement may
be obtained from the SEC upon request 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.
- -15
PART B
THE BERWYN FUND, INC.
Shareholders Services
c/o Rodney Square Management Corp.
P. O. Box 8987
Wilmington, DE 19899
STATEMENT OF ADDITIONAL INFORMATION
April 29, 1997
This Statement of Additional Information ("SAI") is not a
Prospectus. It is a document that relates to the Prospectus of The
Berwyn Fund, Inc. (the "Fund") dated April 29, 1997 and contains
additional information regarding the Fund. This SAI 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 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 POLICIES AND RISK FACTORS
(See also "Investment Objective, Policies and Risk Factors" in the
Prospectus.)
The Fund is a no-load, non-diversified, 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 The Killen Group, Inc. (the "Adviser")
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
Ratings Group ("Standard & Poor's") and Moody's Investors Service.
Inc. ("Moody's). (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 commonly referred to as "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, 1996, 0.74% 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's and Moody's Commercial Paper Ratings, respectively),
repurchase agreements, and U.S. treasury bills, treasury notes and
treasury bonds, or 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, 1996, 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 bankruptcy of the 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. As of December
31, 1996, the Fund had 0.10% of its assets invested in repurchase
agreements.
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;
- -3-
(4) buy or sell real estate, real estate mortgage loans,
commodities, commodity futures contracts, puts, calls and
straddles;
(5) underwrite securities of other issuers, except as the Fund
may be deemed to be an underwriter under the Securities Act of
1933, as amended (the "1933 Act") 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 1933 Act 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
approval by vote of a majority of the Fund's outstanding voting
securities. Under the Investment Company Act of 1940, as amended (the
"1940 Act") 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 (i) the Fund will
not invest in real estate limited partnerships or in oil, gas or other
mineral leases, and (ii) the Fund's 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 (the
"Adviser") to the Fund. Robert E. Killen is Chairman, Chief Executive
Officer ("CEO") and sole shareholder of the Adviser.
- -4-
Edward A. Killen II is Vice President and Secretary of the Adviser.
Both Robert E. Killen II and Edward A. Killen are Directors of the
Adviser and Robert E. Killen is a Director of the Fund. In addition,
Robert 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 Adviser provides the Fund with investment management
services. Under the Contract between the Fund and the Adviser (the
"Contract"), 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 on the days it
is calculated, 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 the 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.
The Fund paid the Adviser $976,110 in fees in 1996, $787,039 in
1995, and $562,887 in 1994.
EXPENSE LIMITATION
Under the Contract, 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
- -5-
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 1.5%. The Fund has not used the
expense limitation since 1985. In 1996, the Fund's ratio of
expenses to average net asests was 1.21%.
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
and Address Principal Occupation for the Past Five
Years
*Robert E. Killen (56) Director of Westmoreland Coal Co. (a
mining company) since
President & Director July 1996. Director and Shareholder,
Berwyn Financial Services
1199 Lancaster Avenue Corp., a financial services company
(registered as a broker-dealer
Berwyn, Pennsylvania with the Securities and Exchange
Commission ("SEC") since
December, 1993 and a member of the
National Association of
Securities Dealers, Inc. (the "NASD")
since July, 1994) since
October, 1991. President and Director
of Berwyn Income Fund,
Inc. (a registered investment company
managed by the Adviser)
since December 1986. Chariman , CEO
and Sole Shareholder of
the Adviser (an investment advisory
firm) since April 1996.
President, Treasurer, Director and Sole
Shareholder of the Adviser
from September 1982 to March 1996.
Denis P. Conlon (48) Director of Berwyn Income Fund, Inc.,
since June 1992.
Director President and CEO of CRC Industrial (a
worldwide
1282 Farm Road manufacturer) since September 1996. Vice President,
Corporate
Berwyn, Pennsylvania Development, Berwind Corporation
(diversified manufacturin and financial company) from 1990
SEPTEMBER 1996
*Anthony N. Carrelli (47) Director of Berwyn Income Fund, Inc.
since December 1996.
Director Vice President of the Adviser since
August 1986.
1189 Lancaster Avenue
Berwyn, Pennsylvania
William H. Vonier (68) 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
- -6-
*Kevin M. Ryan (49) President, Treasurer, Director and
Shareholder of Berwyn
Secretary-Treasurer Financial Services Corp. (registered as
a broker-dealer with the
and Director the SEC since December, 1993 and a
member of the NASD since
1199 Lancaster Avenue July, 1995) since October 1991.
Registered Principal with
Berwyn Pennsylvania Securities America, 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 Adviser since
September 1985.
*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 Chairman, CEO and sole
shareholder of the Adviser. 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 Adviser.
Kevin M. Ryan is legal counsel to the Adviser 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.)
Messrs. Conlon and Vonier are the Directors of the Fund who are not
"interested persons" of the Fund as defined in the 1940 Act (the
"Independent Directors") and are paid a fee of $400 for each Board or
Committee meeting attended and are reimbursed by the Fund 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
Adviser). The Fund has not adopted a pension or retirement plan or
any other plan that would afford benefits to its Directors. The
Fund paid each Independent Director a fee of $1,600 in 1996. 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 31, 1997, there were 4,380,444 shares of the Fund
outstanding. Charles Schwab & Co., 101 Montgomery Street, San
Francisco, CA was the record owner of 22% of the outstanding shares.
National Financial Services Corp., One World Financial Center, 200
Liberty
Street, New York, NY was the record owner of 6.4% 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
31, 1997, the Directors and Officers as a group, owned beneficially
and of record 226,221 shares of the Fund. This amount constituted
5.2% of the outstanding shares.
- -7-
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 and capabilities 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.
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 decision
making responsibilities of the Adviser for the Fund. 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 of the Fund's portfolio
securities 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 shares 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 1994, 1995 and 1996, 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 1996, the Fund paid a total of $187,169 in commissions to
BFS. This amount represents 62% of the total commissions paid by the
Fund in 1996. The percentage of the Fund's aggregate dollar amount of
transactions involving the payment of commissions effected through BFS
was 77%.
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 in 1995. The percentage of the Fund's aggregate dollar amount of
transactions involving the payment of commissions effected 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. ("America"). America was affiliated
with the Fund by reason of the fact that David C. Dameron and Kevin M.
Ryan,
- -8-
persons affiliated with the Fund and the Adviser, were registered
representatives with America and had portfolio transactions executed
for the Fund through America. 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
America and $58,066 in commissions to BFS. The percentage of the
Fund's total brokerage commissions paid to America and BFS was 29% and
28%, respectively. The total commissions paid to such affiliated
brokers were $119,193. This amount represents 57% of the total
commissions paid by the Fund in 1994. The percentage of the Fund's
aggregate dollar amount of transactions involving the payment of
commissions effected through America was 33% and through BFS was 31%.
The Fund paid brokerage Commissions of $303,958 in 1996, 335,153
in 1995, and $208,859 in 1994. The increase in brokerage commissions
from 1994 to 1995 was due primarily to an increase of investment in
the Fund. The level of trading done in 1996 was similar to the level
in 1995 and the amount paid in brokerage commissions was approximately
the same.
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 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 (the "Exchange") (ordinarily
4:00 p.m. Eastern Time) on each day that the Exchange is open and is
effective as of the time of computation.
SHARE PURCHASES
(See also "Share Purchases" in the Prospectus)
The Fund's shares are offered for sale on a continuous basis
except that the Fund will not accept new shareholder accounts whenever
its net assets are over $100,000,000. There is no sales load. The
offering price of shares of the Fund is the net asset value per share
next
- -9-
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.
DISTRIBUTOR
BFS Corp., a broker-dealer registered with the SEC, is the
current distributor of the Fund's shares, pursuant to a selling
agreement which became effective on July 25, 1994 (the "Selling
Agreement"). Under the Selling Agreement, BFS is the non-exclusive
agent in certain jurisdictions for the Fund's continuous offering 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
Selling 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 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 under the 1940
Act, 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 redemptions 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 that receives and sells
such portfolio 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 portfolio securities will not be less than the value
used in computing net asset value for the purpose of such redemptions.
CALCULATION OF PERFORMANCE DATA
The average annual total returns of the Fund for one year, five
years and ten years ended December 31, 1996 are listed below:
One Year: 14.4%
Five Years: 16.0%
Ten Years: 12.8%
- -10-
The one year performance is for the period January 1, 1996 to
December 31, 1996. The five-year period runs from January 1, 1992 to
December 31, 1996 and the ten year-period runs from January 1, l987 to
December 31, 1996. 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 - 1996:
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%
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%
January 1, 1996 - December 31, 1996 14.4%
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
- -11-
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 of 1986, as amended. (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.
FINANCIAL STATEMENTS
The Fund's audited financial statements and notes thereto for
the year ended December 31, 1996 and the unqualified report of Price
Waterhouse LLP, Fund's independent accountants, are included in the
Fund's 1996 annual report to shareholders which are 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-
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, including the Financial Highlights,
and the notes thereon and the Report of Independent Accountants in the
1996 Annual Report to Shareholders are incorporated by reference into
Part A and Part B of this Registration Statement. The Financial
Statements incorporated by reference include the Statement of Assets
and Liabilities, Statement of Operations, Statement of Changes in Net
Assets, Financial Highlights, Statement of Investments, and Notes to
Financial Statements. The Financial Highlights of the Fund are also
included in Part A.
(b) Exhibits:
1. A copy of the Articles of Incorporation were filed in a
registration statement on May
2, 1984 and is incorporated herein by this reference.
2. A copy of the amended bylaws was filed in the Registrant's
registration statement
(File #2-88860) on 3/01/94 and is incorporated herein by
this reference.
3. Not applicable.
4. A copy of the security being issued was included in the
1940 Act registration, filed
October 25, 1983, File #811-3890, as Exhibit #3 and is
incorporated herein by this
reference.
5. A copy of the amended investment advisory contract was
filed in the Registrant's
registration statement (File #2-88860) on 3/01/94 as
Exhibit #2 and is incorporated
herein by this reference.
6. A copy of the Selling Agreement between the Fund and Berwyn
Financial Services
Corp. herein was filed in the Registrant's registration
statement (File #2-88860) on
3/01/94 and is incorporated herein by this reference.
7. Not applicable.
8. A copy of the new custody agreement was filed in the
Registrant's registration
statement (File #2-88860) on 3/01/94 and is incorporated
herein by this reference.
9. Not applicable.
10. The opinion and consent of counsel was filed with the
Fund's Rule 24f-2 notice on
03/12/97 and is incorporated herein by this reference.
11. Consent of Price Waterhouse LLP is included herein as
Exhibit #11.
12. Not applicable.
13. Not applicable.
C-1
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 to the Fund's registration statement (File #2-
88860) on April 8,
1991 and is incorporated herein by this reference.
15. Not applicable.
16. Schedules for computation of each performance figure are
included as Exhibit #16.
17. Financial Data Schedule is filed herewith as Exhibit 27.
18. Not applicable.
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 31, 1997:
(1) (2)
Title of Class Number of Record Holders
Common Stock 1,814
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 foregoing referred to as "Disabling Conduct'). 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
were no Disabling Conduct, a director or officer would be entitled to
indemnification for expenses and for any judgment, verdict or
settlement.
C-2
Item 28
Robert E. Killen, President and Director of the Registrant, is
Chairman and CEO of The Killen Group, Inc. (the "Adviser") the
investment adviser to the Registrant. Mr. Killen is
President and a Director of Berwyn Income Fund, Inc., a registered
investment company having the same investment adviser as the
Registrant. He is a Director and Shareholder of Berwyn Financial
Services Corp. ("BFS"), a registered broker-dealer.
Edward A. Killen II is Vice President and a Director of the
Adviser and a Director of Berwyn Income Fund, Inc. He is also a
Director, Officer and Shareholder of BFS.
For information as to any other business, profession, vocation
or employment of a substantial nature in which each director or
officer of the Adviser is or has been, at any time during the past two
fiscal years, engaged for his own account or in the capacity of
director, employer, partner or trustee of the Adviser, reference is
made to the Adviser's Form ADV (File #801-18770) currently on file
with the Securities and Exchange Commission as required by the
Investment Advisers Act of 1940, as amended.
Item 29
(a) Berwyn Financial Services Crop. also serves as the
distributor for the Berwyn Income Fund, Inc., in certain
jurisdictions.
(b)
Positions and Offices
Name and Principal with Berwyn Financial Positions and Offices
Business Address Services Corp. with the Fund
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 Investment Company of 1940 Act,
as amended, and regulations thereunder will be maintained in the
possession of Kevin M. Ryan at 1189 Lancaster Avenue, Berwyn,
Pennsylvania.
C-3
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.
C-4
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 28th day of April, 1997.
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 4/28/97
Robert E. Killen
Kevin M. Ryan Secretary, Treasurer, 4/28/97
Kevin M. Ryan and Director
Anthony N. Carrelli Director 4/28/97
Anthony N. Carrelli
Denis P. Conlon Director 4/28/97
Denis P. Conlon
William H. Vonier Director 4/28/97
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 28th day of April, 1997.
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 4/28/97
Robert E. Killen
____________________________ Secretary, Treasurer 4/28/97
Kevin M. Ryan and Director
____________________________ Director 4/28/97
Anthony N. Carrelli
____________________________ Director 4/28/97
Denis P. Conlon
____________________________ Director 4/28/97
William H. Vonier
36
EXHIBIT #24(b)(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. 16 to the registration statement on Form
N-1A (the Registration Statement) of our report dated February 19,
1997, relating to the financial statements and financial highlights
appearing in the December 31, 1996 Annual Report to Shareholders of
The Berwyn Fund, Inc., which is also incorporated by reference in such
Registration Statement. We also consent to the references to us under
the headings Independent Accountants and Financial Statements in
the Statement of Additional Information and under the heading
Financial Highlights in the Prospectus.
PRICE WATERHOUSE LLP
30 South Seventeenth Street
Philadelphia, Pennsylvania
April 28, 1997
EXHIBIT #24(b)(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, 1996
P equals $1,000
T equals .144
n equals 1
ERV equals $1,144
For the five year period ending December 31, 1996
P equals $1,000
T equals .160
n equals 5
ERV equals $2,099
For the ten year period of the Fund ending December 31, 1996
P equals $1,000
T equals .128
n equals 10 years
ERV equals $3,348
The Fund calculated its annual performance for the years 1985 through
1996 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
For the year 1/01/96 - 12/31/96:
P = $1,000
T = .144
n =-1
ERV = $1,144
3-3
9
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<ARTICLE> 6
<LEGEND>
THIS INFORMATION COMES FROM THE NSAR-B
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 77,783,592
<INVESTMENTS-AT-VALUE> 94,551,652
<RECEIVABLES> 62,188
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 94,613,840
<PAYABLE-FOR-SECURITIES> 169,656
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 388,214
<TOTAL-LIABILITIES> 557,870
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 72,512,075
<SHARES-COMMON-STOCK> 4,775,835
<SHARES-COMMON-PRIOR> 0
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<DIVIDEND-INCOME> 981,341
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<EXPENSES-NET> 1,177,523
<NET-INVESTMENT-INCOME> (94,742)
<REALIZED-GAINS-CURRENT> 10,629,857
<APPREC-INCREASE-CURRENT> 2,589,405
<NET-CHANGE-FROM-OPS> 13,124,520
<EQUALIZATION> (5,632,432)
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 10,669,743
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,041,744
<NUMBER-OF-SHARES-REDEEMED> 1,794,722
<SHARES-REINVESTED> 525,276
<NET-CHANGE-IN-ASSETS> (3,177,655)
<ACCUMULATED-NII-PRIOR> 6,338
<ACCUMULATED-GAINS-PRIOR> 54,655
<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 976,110
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<GROSS-EXPENSE> 1,177,523
<AVERAGE-NET-ASSETS> 97,590,268
<PER-SHARE-NAV-BEGIN> 19.43
<PER-SHARE-NII> (.02)
<PER-SHARE-GAIN-APPREC> 2.78
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<PER-SHARE-DISTRIBUTIONS> 2.50
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