THE BERWYN FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 1 - ORGANIZATION
The Berwyn Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940, as amended, as a nondiversified open-end
management company and incorporated under the laws of the Commonwealth
of Pennsylvania. The Fund's primary investment objective is long-term
capital appreciation. For capital shares of the Fund held less than
one year, the Fund charges a redemption fee of 1% of the net asset
value of the capital shares being redeemed.
NOTE 2 - ACCOUNTING POLICIES
The following significant accounting policies are in conformity with
generally accepted accounting principles for investment companies.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management of the Fund to make
estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual results could differ
from those estimates.
Security Valuation: Securities listed on a national securities
exchange are valued at the last quoted sales price. Securities not
traded on the valuation date and securities not listed are valued at
the last quoted bid price. Short-term investments are valued at
amortized cost which approximates market value. The value of other
assets and securities for which no quotations are readily available is
determined in good faith at fair value using methods determined by the
Board of Directors.
Federal Income Taxes: The Fund intends to continue to qualify as a
regulated investment company and distribute all of its taxable income
and otherwise comply with the provisions of the Internal Revenue Code
of 1986, as amended. Accordingly, no provision for Federal income tax
is required in the financial statements.
Securities Transactions and Investment Income: Securities
transactions are accounted for on the date the securities are
purchased or sold. Costs used in determining realized gains and
losses on sales of investment securities are those of specific
securities sold. Dividend income and distributions to shareholders
are recorded on the ex-dividend date. Interest income is recorded as
earned.
Distributions to Shareholders: The Fund distributes annually all of
its net investment income and any net realized capital gains. The
amounts of distributions from net investment income and net realized
capital gains are determined in accordance with Federal income tax
regulations, which may differ from those amounts determined under
generally accepted accounting principles. These book/tax differences
are either temporary or permanent in nature. To the extent these
differences are permanent, they are adjusted to reflect their tax
treatment in the period the differences arise.
NOTE 3 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY
TRANSACTIONS
Under the terms of the investment advisory agreement, the Fund has
agreed to pay The Killen Group, Inc. (the "Investment Adviser") an
investment advisory fee at an annual rate of 1% of the Fund's average
daily net assets. The Investment Adviser and the Directors and
Officers of the Investment Adviser, together with their families,
owned 264,733 shares of the Fund at June 30, 1998.
During the period ended June 30, 1998, the Fund paid $68,061 in
commissions to Berwyn Financial Services, a brokerage company
affiliated with the Investment Adviser, to execute certain portfolio
transactions.
NOTE 4 - SECURITY TRANSACTIONS
During the period, the Fund made purchases of $12,998,599 and sales of
$23,545,760 of investment securities other than U.S. Government
securities and temporary cash investments.
Cost of securities owned at June 30, 1998 and the net realized gains
or losses on securities sold for the period then ended for Federal
income tax purposes were not materially different from amounts
reported for financial reporting purposes.
At June 30, 1998, net unrealized appreciation for financial reporting
and Federal income tax purposes aggregated $24,595,450 of which
$34,542,914 related to appreciated securities and $9,947,464 related
to depreciated securities.
THE BERWYN FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
(Unaudited)
Assets:
Investments in Securities, at Market Value $91,352,467
(Cost $66,757,017) (Note 2)
Receivables:
Dividends 20,351
Interest 13,696
Investment Securities Sold 773,302
Prepaid Expenses 21,663
Total Assets 92,181,479
Liabilities:
Payable to Custodian 522,023
Payable for Investment Securities Purchased 267,125
Accrued Expenses 5,548
Investment Advisory Fee Payable 75,644
Total Liabilities 870,340
Net Assets: (1)
Applicable to 4,077,842 Outstanding Shares of
Common Stock, $1.00 Par Value
(Authorized 20,000,000 Shares) $91,311,139
Net Asset Value and Offering Price Per Share
($91,311,139 / 4,077,842 Outstanding Shares) $ 22.39
Redemption Price Per Share (Note 1) $ 22.17
(1) On June 30, 1998 Net Assets consisted of the following:
Common Stock, Par Value $1.00 4,077,842
Paid-in Capital 58,578,004
Accumulated Net Investment Loss (213,055)
Accumulated Net Realized Capital Gains 4,272,898
Net Unrealized Appreciation of Investment Securities 24,595,450
$91,311,139
The accompanying notes are an integral part of these financial
statements.
THE BERWYN FUND, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 1998
(Unaudited)
Investment Income:
Dividends $311,759
Interest 28,791
Extraordinary Income 750
Total Investment Income $ 341,300
Expenses:
Investment Advisory Fee (Note 3) 490,619
Transfer Agent Fees 10,368
Custodian Fees 8,639
Professional Fees 8,123
Registration Fees 12,560
Directors' Fees 1,672
Printing Costs 11,277
Office Expenses 4,000
Insurance 2,662
Taxes (Other than Income Taxes) 3,685
Total Expenses 553,605
Net Investment Loss (212,305)
Realized and Unrealized Gain on Investments:
Net Realized Gain from Sales of Investment Securities 4,238,887
Net Change in Unrealized Depreciation on
Investment Securities (2,078,636)
Net Realized and Unrealized Gain on Investments 2,160,251
Net Increase in Net Assets Resulting from Operations $1,947,946
The accompanying notes are an integral part of these financial
statements.
THE BERWYN FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
Six Months Six Months
Ended Ended
06/30/98 06/30/97
Increase in Net Assets from Investment Activities:
Net Investment Income (Loss) $ (212,305) $ (218,707)
Net Realized Gain from Sales of
Investment Securities 4,238,887 5,895,551
Change in Net Unrealized Appreciation/Depreciation
on Investment Securities (2,078,636) 5,328,064
Net Increase in Net Assets Resulting
from Operations 1,947,946 11,004,908
Capital Share Transactions (1):
Net Proceeds from Sales of Shares 8,048,217 5,448,042
Cost of Shares Redeemed (19,090,964) (20,497,182)
Net Increase in Net Assets from
Capital Share Transactions (11,042,747) (15,049,140)
Total Increase in Net Assets (9,094,801) (4,044,232)
Net Assets:
Beginning of Period 100,405,940 94,055,970
End of Period (Including Undistributed Net
Investment Loss of ($213,055) and
($378,117) at June 30, 1998 and 1997,
respectively) $ 91,311,139 $90,011,738
(1) Capital Shares Issued and Redeemed:
Shares Sold 354,495 267,605
Shares Redeemed (837,781) (1,003,764)
(483,286) (736,159)
The accompanying notes are an integral part of these financial
statements.
THE BERWYN FUND, INC.
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
(Unaudited)
SIX MONTHS YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
06/30/98 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
Net Asset Value, Beginning of Year $22.01 $19.69 $19.43 $17.55 $17.67 $14.86
______ ______
______ ______ ______
______
Income from Investment Operations:
Net Investment Income (Loss) (0.05) (0.00) (0.02) --- 0.02 (0.03)
Net Realized and Unrealized Gains
on Securities 0.43 5.06 2.78 3.34 0.65 3.42
______ ______
______ ______ ______
______
Total from Investment Operations 0.38 5.06 2.76 3.34 0.67 3.39
______ ______
______ ______ ______
______
Less Distributions:
Dividends from Net Investment Income --- --- --- (0.01) (0.01) ---
Distributions from Net Realized Gains --- (2.74) (2.50) (1.45) (0.78) (0.58)
______ ______
______ ______ ______
______
Total Distributions --- (2.74) (1.46) (0.79) (0.58) (1.35)
______ ______
______ ______ ______
______
Net Asset Value, End of Year 22.39 $22.01 19.69 $19.43 $17.55 $17.67
Total Return 1.73% 26.05% 14.35% 19.18% 3.90% 22.90%
Ratios/Supplemental Data:
Net Assets, End of Period (000) $91,311 $100,406 $94,056 $97,234 $63,522 $47,312
Ratio of Expenses to Average Net Assets 1.12* 1.20% 1.21% 1.23% 1.33% 1.37%
Ratio of Net Investment Income (Loss) to
Average Net Assets (0.42%)* (0.02%) (0.10%) 0.04% 0.11% (0.18%)
Portfolio Turnover Rate 26%* 26% 32% 32% 24% 24%
Average Commission Rate Paid** $0.0530 $0.0676 $0.0554 --- --- ---
*Annualized
**Computed by dividing the total amount of commission by the total
number of shares purchased and sold during
the period.
The accompanying notes are an integral part of these financial
statements
THE BERWYN FUND, INC.
STATEMENT OF INVESTMENTS
JUNE 30, 1998
(Unaudited)
Number of
Shares COMMON STOCKS -
99.6% Value*
AEROSPACE / DEFENSE -
2.3%
53,166 Ducommun Inc. + $1,063,320
75,701 Whittaker Corp. + 1,003,038
2,066,358
AIRLINES -
2.1%
35,300 Alaska Air Group, Inc. + 1,926,056
ALCOHOLIC BEVERAGE -
1.6%
158,641 Todhunter International Corp. + 1,457,514
AUTOMOTIVE AND TRUCK PARTS -
2.0%
16,000 Bandag Inc. 624,000
257,434 National Standard Co. + 1,238,901
1,862,901
BANKING -
3.5%
92,920 BSB Bancorp Inc. 2,810,830
24,500 Lawrence Savings Bank 381,281
3,192,111
CHEMICALS -
0.8%
24,070 IMC Global, Inc. 725,109
COMMERCIAL PRINTING -
2.5%
88,167 Courier Corp. 2,336,425
COMPUTER & PERIPHERALS -
5.8%
284,855 Data I/O Corp. + 961,386
34,950 Inacom Corp. + 1,109,663
161,000 Plaintree Systems + 246,539
184,002 Printronix, Inc. + 2,944,032
5,261,620
The accompanying notes are an integral part of these financial
statements.
THE BERWYN FUND, INC.
STATEMENT OF INVESTMENTS (Continued)
Number of
Shares COMMON STOCKS
(Continued) Value*
DIVERSIFIED MANUFACTURING -
5.4%
80,985 Griffon Corp. + $1,037,620
82,404 Lindberg Corp. 1,606,878 60,908 Robbins & Myers, Inc. 1,770,139
40,000 Synalloy Corp. 535,000
4,949,637
ELECTRONICS INTEGRATED -
3.5%
371,417 Scan-Optics 1,949,939
69,100 Trans-Lux Corp. 842,156
105,100 Wells-Gardner Electronics 446,675
3,238,770
ENVIRONMENTAL CONTROL -
0.1%
85,200 Envirogen Inc. + 103,842
FOOD PROCESSING & DISTRIBUTION - 2.8
175,701 Orange Co. 1,043,225
106,000 Chiquita Brands International 1,490,625
2,533,850
FOREST & PAPER PRODUCTS -
3.7%
36,000 Greif Brothers Corp. 1,651,975
30,706 MAXXAM Inc. 1,742,566
3,394,541
FURNITURE MANUFACTURING - 2.8%
84,998 Ladd Furniture + 2,539,315
INDUSTRIAL EQUIPMENT -
0.9%
30,000 Airgas Inc. 431,250
3,000 Cascade Corporation 54,750
123,500 Dura Products International 286,520
772,520
INSURANCE -
5.0%
29,021 First American Financial Corp. 2,611,890
39,292 Stewart Information Services 1,908,118
4,520,008
The accompanying notes are an integral part of these financial
statements.
THE BERWYN FUND, INC.
STATEMENT OF INVESTMENTS (Continued)
Number of
Shares COMMON STOCKS
(Continued) Value*
MACHINERY MANUFACTURING -
8.0%
38,700 Hardinge, Inc. $ 943,312
182,044 Terex Corp. + 5,188,254
135,355 Unit Instruments Inc. + 1,218,195
7,349,761
MANUFACTURED HOUSING -
3.8%
85,200 Drew Ind. + 1,272,675
71,000 Kevco Inc. + 1,553,125
44,000 Patrick Industries 671,000
3,496,800
MARITIME INDUSTRY -
5.2%
148,311 Anangel-American Shipholders 1,065,985
275,605 B & H Ocean Carriers 1,636,405
240,437 BT Shipping Ltd. ADR+ 1,021,857
61,700 Stolt-Nielsen S.A. 1,048,900
4,773,147
MEDICAL PRODUCTS & SERVICES -
1.4%
36,000 Complete Management Inc. 141,750
350,676 Quidel Corp.+ 1,095,862
1,237,612
METALS & MINING -
5.9%
5,462 Alumax Inc. + 273,100
1,430,139 Campbell Resources, Inc. + 536,302
34,750 Cleveland Cliffs, Inc. 1,863,469
5,000 Freeport McMoran Class B 75,938
51,200 Impala Platnium-UNSPON ADR 438,979
147,200 Kaiser Aluminum + 1,407,600
305,110 Nord Pacific Limited ADR+ 648,359
512,350 Westmoreland Coal Co. +** 199,817
5,443,564
OIL & GAS EXPLORATION & PRODUCTION - 6.8%
25,000 Berry Petroleum 325,000
80,000 Callon Petroleum + 1,145,000
168,000 COHO Energy + 1,134,000
87,596 Louis Dreyfus Natural Gas + 1,658,849
254,864 Ranger Oil Ltd. 1,863,693
6,126,542
The accompanying notes are an integral part of these financial
statements.
THE BERWYN FUND, INC.
STATEMENT OF INVESTMENTS (Continued)
Number of
Shares COMMON STOCKS
(Continued) Value*
OIL REFINING -
6.5%
418,344 Frontier Oil Corp. $3,346,752
45,000 Giant Industries 781,875
24,200 Sun Co. 939,263
27,658 Ultramar Diamond Shamrock 872,640
5,940,530
PRECISION INSTRUMENTS -
5.3%
163,412 Brown & Sharpe + 1,960,944
141,470 Esterline Technology Corp. + 2,908,977
4,869,921
RESTAURANT INDUSTRY -
0.1%
6,000 Lone Star Steakhouse 82,875
RETAIL INDUSTRY -
1.3%
37,500 Blair Corporation 1,200,000
STEEL & STEEL PRODUCTS -
4.6%
176,903 Acme Metals, Inc. + 884,515
103,702 AK Steel Holding Corp. 1,853,673
121,828 Keystone Consolidated Inc. + 1,446,708
4,184,896
TELECOMMUNICATIONS - 1.9%
64,766 Commonwealth Telephone Enterprise + 1,708,203
TEXTILES -
4.0%
124,040 Culp, Inc. 1,604,767
215,049 Dixie Group, Inc. + 2,016,084
3,620,851
TOTAL COMMON STOCKS (Cost $66,267,017) 90,915,279
The accompanying notes are an integral part of these financial
statements.
THE BERWYN FUND, INC.
STATEMENT OF INVESTMENTS (Continued)
Face
Amount CORPORATE BONDS -
0.5% Value*
$250,000 Campbell Resources 7.5% CV 07/20/04 $ 178,125
250,000 TransLux 7.5% CV 12/01/06 259,063
437,188
TOTAL CORPORATE BONDS (Cost $500,000) 437,188
TOTAL INVESTMENTS (Cost $66,757,017) - 100.0% 91,352,467
LIABILITIES IN EXCESS OF OTHER ASSETS - 0.0% (41,328)
NET ASSETS - 100% $91,311,139
______________________________________
* See Note 2 to the Financial Statements
** Considered to be an affiliate under the Investment Company Act
of 1940
+ Non-Income Producing Security
ADR American Depositary Receipt
CV Convertible Security
The accompanying notes are an integral part of these financial
statements.
Notes
