BERWYN INCOME FUND SEMI-ANNUAL REPORT
August 4, 1999 Net Asset Value Per Share: $10.81
Dear Berwyn Income Shareholder:
The total return to shareholders of the Berwyn Income Fund (BIF)
in the first half of 1999 was 4.37 percent versus 1.89 percent in
the first half of 1998. Net asset value per share rose from
$10.72 on December 31, 1998 to $10.80 on June 30, 1999. During
April, a dividend of $0.19 per share was paid from net investment
income.
BIF's 4.37 percent total return, attained through adherence to
its value oriented investment style, exceeded the returns for all
three of its benchmarks. The six month returns for the Salomon
Smith Barney Broad Investment Grade Bond Index (SBBIG), Salomon
Smith Barney High Yield Composite Index (SBHYC) and Lipper Income
Fund Index (LIFI) were -1.39 percent, 1.42 percent and 3.40
percent, respectively.
The bond markets were generally weak during the first half as
reflected in the performance of the SBBIG. Bonds reacted
negatively to the upward pressure on interest rates brought about
by the vibrant economy. The yield on the long Treasury bond rose
100 basis points (one percentage point) during the period. The
corporate bond portion of the BIF portfolio experienced this
weakness, but it was ameliorated by the emphasis placed on
shorter and intermediate maturities, which are less sensitive to
changes in interest rates.
As the SBHYC shows, the returns on high yield bonds were
lackluster. During the first half, the default rate in the high
yield bond market expanded to a level not seen since 1991. These
defaults were spread over a number of industry categories
including oil and gas exploration and production,
telecommunications services and equipment, leisure and
entertainment, apparel manufacturing and marine transport. The
high default rate resulted from the aggressive issuance of high
yield bonds in recent years and the intensely competitive
economic environment.
Historically, BIF's performance has closely tracked that of the
high yield market. More recently, BIF has de-emphasized high
yield bonds. There were no bond defaults in the BIF portfolio in
the first six months of 1999.
The positive performance of BIF relative to the LIFI in the first
six months contrasts with last year when LIFI outperformed.
Then, LIFI benefited from the outsized performance of blue chip
consumer growth stocks in the top-tier of the S&P 500, which are
so heavily represented in the mutual funds comprising LIFI. The
improved relative performance of BIF in the first half of this
year reflects a shift within the marketplace in favor of cyclical
and, in a broader sense, value-oriented securities. Within the
BIF portfolio, standout performers included Impala Platinum
ADR's, a dividend paying common stock which rallied from $13.60
to $24.75. Another strong performer was Whittaker Corp., a
restructuring aerospace company. Their convertible bonds rallied
from $107 to $160.
The composition of BIF by asset class as of June 30, 1999 is as
follows:
Dividend-paying Common Stocks 24.90%
Corporate Bonds 32.46
Convertible Bonds 22.87
Convertible Preferred Stocks 15.14
Preferred Stocks 4.63
The weighted average maturity of the bonds in the portfolio is
11.5 years. The duration of the bonds is 6.5 years. The credit
quality of the bonds, constituting 55.3 percent of the portfolio,
is as follows: investment grade, 18.64 percent; rated less than
investment grade, 21.01 percent; and, unrated, 15.65 percent.
The five sectors of the economy with the largest representation
at mid-year were:
Industrial Basic Materials 27.3%
Consumer Cyclicals 16.6
Energy 14.3
Capital Goods 10.8
Financial 9.9
BIF's ten largest holdings at mid-year are listed below:
Company Security Percent
Impala Platinum common stock 3.33%
Cyprus Amax 7.375% due 5/15/07 3.10
Dairy Mart 10.25% due 3/15/04 3.15
Dixie Group 7.00% due 5/15/12 3.73
Drug Emporium 7.75% due 10/1/14 3.44
Trans Lux 7.75% due 12/1/06 3.22
Cyprus Amax preferred stock 2.68
Chase Manhattan 7.125% due 2/1/07 2.67
Ford Motor 6.375 due 11/5/08 2.58
IMC Global 7.30% due 1/15/28 2.66
At mid-year, the total net assets in BIF were approximately $75
million. The annualized expense ratio was 0.74 percent.
We believe that the recent shift favoring value style investments
will be sustained for the following reasons. First, it appears
that the worst of the worldwide economic turmoil of the past two
years is over. The economies of Japan and other Asian nations
have stabilized and look to be on the road to recovery.
Coincidentally, the prices of many important commodities such as
oil, copper, aluminum and paper products have rebounded strongly
from last year's depressed levels. These developments should
favor value style investments in economically sensitive areas
such as industrial basic materials, manufacturing and capital
goods. Secondly, it appears that while current earnings for the
S&P consumer growth stocks have remained strong, growth
expectations have moderated. Even though second quarter earnings
results for companies such as GE and Microsoft excelled, the S&P
500's multiple expansion has stalled. This is consistent with
lower anticipated growth rates and the recent rise in interest
rates. Thirdly, speculation in the internet stocks has
moderated. Money formerly targeted for this sector could find
its way into more defensive, value investments.
Very truly yours,
Edward A. Killen Robert E. Killen
Portfolio Manager President
Note: Returns for Berwyn Income Fund are net of all expenses,
advisory fees and commission charges and include the reinvestment
of dividends and interest (total return). All index returns
listed herein also include the reinvestment of dividends and
interest (total return). The investment return and the principal
value of an investment in BIF will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than
their original cost.
<TABLE>
BERWYN INCOME FUND
A SERIES OF THE BERWYN FUNDS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
(Unaudited)
Assets:
<S> <C>
Investments in Securities, at Market Value $73,352,945
(Cost $81,954,273) (Note 2)
Cash 96,849
Receivables:
Interest 855,013
Dividends 62,199
Investment Securities Sold 480,649
Total Assets 74,847,655
Liabilities:
Payable for Investment Securities Purchased 34,608
Accrued Expenses 11,015
Investment Advisory Fee Payable 31,047
Total Liabilities 76,670
Net Assets: (1)
Applicable to 6,920,914 Outstanding Shares of
Common Stock, $1.00 Par Value
(Authorized 20,000,000 Shares) $74,770,985
Net Asset Value, Offering Price and Redemption
Price Per Share ($74,770,985 / 6,920,914
Outstanding Shares) $ 10.80
(1) On June 30, 1999 Net Assets consisted of the following:
Common Stock, Par Value $1.00 6,920,914
Paid-in Capital 77,196,866
Undistributed Net Investment Income 1,663,558
Accumulated Net Realized Capital Loss (2,409,026)
Net Unrealized Deprec. of Investment
Securities (8,601,327)
$74,770,985
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<TABLE>
BERWYN INCOME FUND
A SERIES OF THE BERWYN FUNDS
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 1999
(Unaudited)
Investment Income:
<S> <C> <C>
Interest $1,494,280
Dividends 1,040,435
Total Investment Income $2,534,715
Expenses:
Investment Advisory Fee (Note 3) 212,572
Transfer Agent 20,761
Custodian 19,036
Professional Fees 2,119
Registration Fees 9,932
Directors' Fees 1,600
Printing Costs 8,124
Office Expenses 8,813
Insurance 4,657
Taxes (Other than Income Tax) 3,161
Total Expenses 290,775
Net Investment Income 2,243,940
Realized and Unrealized Gain on Investments:
Net Realized Loss from Sales of Securities (2,409,026)
Net Change in Unrealized Depreciation
on Investment Securities 3,623,680
Net Realized and Unrealized Gain on
Investments 1,214,654
Net Increase in Net Assets Resulting
from Operations $3,458,594
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<TABLE>
BERWYN INCOME FUND
A SERIES OF THE BERWYN FUNDS
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
Six Months Six Months
Ended Ended
06/30/99 06/30/98
<S> <C> <C>
Increase in Net Assets from Investment Activities:
Net Investment Income $2,243,940 $8,658,922
Net Realized Loss from Sales
of Securities (2,409,026) 5,910,963
Change in Net Unrealized
Appreciation/Depreciation on
Investment Securities 3,623,680 (11,096,884)
Net Increase in Net Assets
Resulting from Operations 3,458,594 3,473,001
Distributions to Shareholders:
From Net Investment Income (2,742,652) (3,142,405)
Capital Share Transactions: (1)
Net Proceeds from Sales of Shares 15,183,318 24,655,929
Cost of Shares Redeemed (46,915,787) (38,320,365)
Distributions Reinvested 2,163,941 2,454,289
Net Increase in Net Assets from
Capital Share Transactions (29,568,527) (11,210,147)
Total Increase in Net Assets (28,852,585) (10,879,551)
Net Assets:
Beginning of Period 103,623,570 180,821,379
End of Period (Including Undistributed Net
Investment Income of $1,663,558 and
$5,802,011 at June 30, 1999 and 1998,
respectively) $74,770,985 $169,941,828
(1) Shares Issued and Redeemed:
Shares Sold 1,410,485 1,939,629
Shares Redeemed (4,359,964) (3,019,045)
Shares Reinvested 203,143 192,342
(2,746,336) (887,074)
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<TABLE>
BERWYN INCOME FUND
A SERIES OF THE BERWYN FUNDS
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
(Unaudited)
SIX MONTHS
ENDED YEAR ENDED
6/30/99 12/31/98 12/31/97 12/31/96 12/31/95 12/30/94
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $10.72 $12.51 $12.31 $11.95 $10.75 $11.63
Income from Investment
Operations:
Net Investment Income 0.38 0.90 .77 0.76 0.73 0.73
Net Realized and Unrealized
Gains (Losses) on
Securities 0.08 (1.44) .84 0.87 1.48 (0.85)
Total from Investment
Operations 0.46 (0.54) 0.61 1.63 2.21 (0.12)
Less Distributions:
From Net Investment
Income (0.38) (0.92) (0.77) (0.80) (0.70) (0.73)
From Net Realized
Gains (0.00) (0.15) (0.64) (0.47) (0.31) (0.03)
From Capital (0.00) (0.18) (0.00) (0.00) (0.00) (0.00)
Total Distributions(0.38) (1.25) (1.41) (1.27) (1.01) (0.76)
Net Asset Value, End of
Period $10.80 $10.72 $12.51 $12.31 $11.95 $10.75
Total Return 4.37% (4.57%) 13.36% 13.99% 21.0% (1.10%)
Ratios/Supplemental Data:
Net Assets, End of Period
(000) $74,771 $103,624 $180,823 $137,166 $119,552 $55,825
Ratio of Expenses to Average
Net Assets 0.74%* 0.66% 0.65% 0.68% 0.73% 0.93%
Ratio of Net Investment Income
to Average Net Assets 6.70%* 6.27% 6.15% 6.35% 6.78% 7.20%
Portfolio Turnover Rate 3.86%* 31% 53% 38% 39% 30%
*Annualized
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
BERWYN INCOME FUND
A SERIES OF THE BERWYN FUNDS
STATEMENT OF INVESTMENTS
JUNE 30, 1999
Number of
Shares COMMON STOCKS - 24.1% Value*
<S> <S> <C>
BANKING - 0.3%
15,500 First Essex Bancorp, Inc. $ 245,094
COMMERCIAL PRINTING - 1.4%
46,248 Courier Corp. 1,052,142
DIVERSIFIED MANUFACTURING - 1.0%
48,551 Lindberg Corp. 527,992
32,400 Synalloy Corp. 240,975
768,967
FOREST & PAPER PRODUCTS - 0.6%
13,100 Greif Brothers Corp. 334,050
2,850,148 Repap Enterprises, Inc. 173,859
507,909
INSURANCE - 0.5%
11,000 Chicago Title Corp. 392,562
MANUFACTURED HOUSING - 1.2%
58,800 Patrick Industries, Inc. 922,425
MACHINERY MANUFACTURER - 0.4%
16,000 Hardinge, Inc. 280,000
METALS & MINING INDUSTRY - 4.3%
2,000 Alcoa Inc. 123,750
16,000 Cleveland-Cliffs Inc. 518,000
99,416 Impala Platinum Holdings Limited 2,500,919
3,142,669
OIL & GAS EXPLORATION & PRODUCTION - 4.0%
17,500 Berry Petroleum Co. 243,906
8,000 Laclede Gas Co. 186,000
28,710 Louis Dreyfus Natural Gas Corp. 619,059
231,011 Ranger Oil Ltd. 1,140,617
25,180 Sunoco, Inc. 760,121
2,949,703
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<TABLE>
BERWYN INCOME FUND
STATEMENT OF INVESTMENTS (Continued)
Number of
Shares COMMON STOCKS (Continued) Value*
<S> <S> <C>
REAL ESTATE INVESTMENT TRUST - 4.8%
8,000 First Industrial Realty Trust, Inc. $ 219,500
41,500 Hospitality Property Trust 1,125,688
22,400 Mid-America Apartment Communities, Inc. 518,000
95,900 Town & Country Trust 1,714,212
3,577,400
STEEL & STEEL PRODUCTS - 1.5%
50,314 AK Steel Holding Corp. 1,132,065
TEXTILE INDUSTRY - 0.6%
51,902 Dixie Group, Inc. 439,548
TRANSPORTATION INDUSTRY - 1.9%
130,900 Anangel-American Shipholding - SP ADR 695,406
48,300 Stolt-Nielsen S.A. 736,575
1,431,981
UTILITIES - 1.6%
3,500 Conectiv, Inc. 85,531
28,200 Otter Tail Power Co. 1,085,700
TOTAL COMMON STOCKS (Cost $17,423,377) 18,013,696
PREFERRED STOCKS - 19.4%
BANKING - 2.1%
52,620 Astoria Financial Corp. PFD B 1,552,290
CHEMICAL INDUSTRY - 0.8%
35,000 LSB Industries, Inc. PFD C CV 577,500
FOOD PROCESSING - 1.4%
29,500 Chiquita Brands International, Inc.
PFD Series A CV 1,017,750
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<TABLE>
BERWYN INCOME FUND
STATEMENT OF INVESTMENTS (Continued)
Number of
Shares PREFERRED STOCKS (Continued) Value*
<S> <S> <C>
METALS & MINING INDUSTRY - 8.3%
26,100 Battle Mountain Gold Co. PFD CV $325 $ 889,031
44,470 Cyprus Amax Minerals PFD CV 2,012,268
77,900 Freeport McMoran Copper & Gold PFD A
CV 0.05 SH 1,460,625
14,800 Freeport McMoran Copper & Gold PFD C
DP Gold II 187,775
38,600 Freeport McMoran Copper & Gold PFD D 545,225
34,600 Hecla Mining PFD B CV 1,012,050
5,880 Westmoreland Coal PFD Series A CV** 107,310
6,214,284
OIL & GAS EXPLORATION & PRODUCTION - 3.2%
66,835 Callon Petro Co. PFD A CV 1,771,128
20,400 Western Gas Resources, Inc. PFD CV 657,900
2,429,028
REAL ESTATE INVESTMENT TRUST - 1.5%
14,800 First Industrial Realty PFD A 366,300
32,100 Mid America Apt. Communities PFD A 744,319
1,110,619
STEEL & STEEL PRODUCTION - 2.1%
44,567 Bethlehem Steel Corp. 3.5% PFD CV 1,604,412
TOTAL PREFERRED STOCKS (Cost $18,415,186) 14,505,883
Face
Amount CORPORATE BONDS - 54.3%
AIRCRAFT & AEROSPACE - 1.4%
$1,041,000 Sequa Corp. 9.375% 12/15/03 1,046,205
APPAREL - 0.0%
20,000 Fruit of the Loom 7% 03/15/11 15,050
AUTO & AUTOMOTIVE PARTS - 4.6%
2,020,000 Ford 6.375% 11/05/08 1,936,675
1,520,000 General Motors 7.40% 09/01/25 1,503,886
3,440,561
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<TABLE>
BERWYN INCOME FUND
STATEMENT OF INVESTMENTS (Continued)
Face
Amount CORPORATE BONDS (Continued) Value*
<S> <S> <C>
BANKING - 2.7%
$2,000,000 Chase Manhattan 7.125% 02/01/07 $2,000,016
20,000 Nations Bank Corp. 6.375% 02/15/08 19,188
2,019,204
CHEMICAL INDUSTRY - 2.7%
2,130,000 IMC Global Inc. 7.30% 01/15/28 1,992,892
COMPUTER & PERIPHERAL - 1.9%
1,750,000 Integrated Devices 5.50% CV 06/01/02 1,417,500
DRUGSTORE - 3.4%
3,057,000 Drug Emporium, Inc. 7.75% CV 10/01/14 2,579,344
ELECTRONICS - 5.9%
1,389,000 Kollmorgen Corp. 8.75% CV 05/01/09 1,390,736
1,500,000 Reptron Electronics 6.75% CV 08/01/04 592,500
2,520,000 Trans-Lux Corp. 7.5% CV 12/01/06 2,419,200
4,402,436
FINANCE INDUSTRY - 0.0%
20,000 General Motors Acceptance Corp. 5.875%
01/22/03 19,546
FOREST & PAPER PRODUCTS - 3.1%
980,000 Boise Cascade 7.35% 02/01/16 888,213
750,000 Georgia Pacific 7.25% 06/01/28 700,323
30,000 Georgia Pacific 7.375% 12/01/25 28,429
737,000 Stone Container Corp. 6.75% CV 02/15/07 641,190
2,258,155
MACHINERY MANUFACTURING - 1.7%
1,250,000 Robbins & Myers 6.5% CV 09/01/03 1,237,500
METALS & MINING - 3.5%
500,000 Campbell Resources Inc. 7.5% CV
07/20/04 293,750
2,500,000 Cyprus Amax Minerals Co. 7.375%
05/15/07 2,327,203
2,620,953
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<TABLE>
BERWYN INCOME FUND
STATEMENT OF INVESTMENTS (Continued)
Face
Amount CORPORATE BONDS (Continued) Value*
<S> <S> <C>
OFFICE EQUIPMENT - 1.7%
$1,250,000 XEROX Corp. 8% 02/01/27 $ 1,243,680
25,000 XEROX Corp. 8.125% 04/15/02 26,095
1,269,775
OIL & GAS - 4.9%
1,500,000 Ashland Oil, Inc. 8.23% 02/26/07 1,565,415
500,000 Crown Central Petroleum 10.875% 02/01/05 435,000
700,000 Gulf Canada Resources Ltd. 9.625%
07/01/05 717,500
1,000,000 OXY USA 7% 04/15/11 932,479
3,650,394
OIL & GAS EXPLORATION & PRODUCTION - 2.1%
2,040,000 Swift Energy 6.25% CV 11/15/06 1,588,650
RETAIL INDUSTRY - 3.2%
2,524,000 Dairy Mart Stores 10.25% 03/15/04 2,359,940
TELECOMMUNICATIONS INDUSTRY - 1.0%
750,000 GTE 7.51% 04/01/09 777,194
TEXTILE - 3.7%
3,495,000 Dixie Group, Inc. 7% CV 05/05/12 2,800,369
TOBACCO - 2.5%
3,079,000 Standard Commercial Corp. 7.25%
CV 03/31/07 1,862,795
TRANSPORTATION - 1.8%
1,365,000 Transportacion Maritima Mexicana SA
10% 11/15/06 1,013,512
1,700,000 World Airways, Inc. 8% CV 08/26/04 327,250
1,340,762
UTILITY - 2.5%
1,000,000 Consolidated Edison 6.25% 02/01/08 961,740
1,000,000 PECO Energy Cap Trust 7.38% 04/06/28 936,276
1,898,016
TOTAL CORPORATE BONDS (Cost $45,715,612) 40,597,241
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<TABLE>
BERWYN INCOME FUND
STATEMENT OF INVESTMENTS (Continued)
Face
Amount CORPORATE BONDS (Continued) Value*
<S> <S> <C>
6,000 IMC Global, Inc. $ 3,375
TOTAL WARRANTS (Cost $21,336) 3,375
CLOSED-END MUTUAL FUNDS - 0.3%
14,000 ASA Limited 232,750
TOTAL CLOSED-END MUTUAL FUNDS (Cost $378,762) 232,750
TOTAL INVESTMENTS (Cost $81,954,273) - 98.1% 73,352,945
OTHER ASSETS IN EXCESS OF LIABILITIES - 1.9% 1,418,040
NET ASSETS - 100% $74,770,985
__________________________________________
* See Note 2 to the Financial Statements.
** Considered to be an affiliate under the Investment Company Act of 1940
ADR American Depositary Receipt
CV Convertible Security
PFD Preferred Stock
SP Sponsored
The accompanying notes are an integral part of these financial
statements.
</TABLE>
BERWYN INCOME FUND
A SERIES OF THE BERWYN FUNDS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
NOTE 1 - ORGANIZATION
On April 30, 1999, Berwyn Income Fund, Inc., (the Fund) merged
with The Berwyn Funds, a Delaware Business Trust. The Berwyn
Funds is registered under the Investment Company Act of 1940, as
amended, as an open-end management company. Berwyn Income Fund
is a portfolio series of The Berwyn Funds.
The Fund's investment objective is to provide investors with
current income while seeking to preserve capital. Certain of the
Fund's investments are in corporate debt instruments; the
issuers' ability to meet these obligations may be affected by
economic developments in their respective industries.
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
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 using the accrual method. Discounts and
premiums on debt securities purchased are amortized to interest
income over the lives of the respective securities.
Distributions to Shareholders: Dividends from net investment
income are paid quarterly to the shareholders. Distributions of
net realized capital gains, if any, are paid at least annually to
the shareholders. 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 .50% 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 156,254 shares of the Fund at June 30,
1999.
During the period ended June 30, 1999, the Fund paid $43,829 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 ended June 30, 1999, the Fund made purchases of
$1,656,680 and sales of $36,280,919 of investment securities
other than short-term securities and U.S. Government securities.
Cost of securities owned at June 30, 1999 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, 1999, net unrealized depreciation for financial
reporting and Federal income tax purposes aggregated $8,601,327
of which $3,473,081 related to appreciated securities and
$12,074,358 related to depreciated securities.
