BERWYN FUND
a series of THE BERWYN FUNDS
2000
SEMI-ANNUAL REPORT
Shareholders Services a no load
c/o PFPC Inc. mutual fund
P. O. Box 8821
Wilmington, DE 19899 (800) 992-6757
BERWYN FUND SEMI-ANNUAL REPORT
August 8, 2000 Net Asset Value Per Share: $15.37
Dear Berwyn Fund Shareholder:
The Berwyn Fund's (TBF's) net asset value per share fell from $16.18 to
$14.54 during the first
half of the year. On a total return basis, the DJIA declined 8.45 percent;
however, the S&P 500
and S&P 600 did better, down 0.42 percent and up 6.89 percent, respectively.
The first six months of the year were characterized by a number of
crosscurrents that could be
very beneficial to TBF in the months to follow. Throughout January and
February there was a
frenzy amongst the investment community and the public to buy high technology
and Internet
stocks. This fervor apparently peaked on March 10th when the NASDAQ Index
traded over the
5100 level. The remainder of the first half consisted of a major drop in the
NASDAQ Index
(now at 3759), a rush to blue chip stocks and, amongst this volatility, some
indications that value
investing may be returning to favor.
Since September of 1998, your Fund has traded in a narrow dividend-adjusted
price range of
$13.96 to $17.75. Meanwhile, the popular market indices have, until
recently, been hitting all-
time highs. Investors, anxious to join the good times, have been buying blue
chip, high
technology and Internet related stocks without regard to price. In order to
fund those purchases,
they have sold currently unpopular stocks regardless of their low valuations.
This process has
gone on for much longer than we would have thought. Last year many of our
stocks were selling
at eight times annual earnings while popular stocks were selling between 25
and 35 times
earnings. Some Internet-related stocks have sold at 1,000 times earnings or,
when earnings were
not present, 20 to 30 times revenues.
This year we find our stocks even more unpopular, with many of them selling
at five and six
times earnings. To us they appear as extremely attractive bargains, but they
have remained
unloved by the majority of investors and especially short-term speculators.
Last year we thought value investing had turned the corner. In the second
quarter of 1999 TBF
rose 21.26 percent which was more than the gain experienced by the DJIA, S&P
500 or S&P
600. However, in the fall high technology and Internet stocks experienced
another wave of
excitement and speculation which lasted into March 2000.
Some market observers believe that the March 10th top in the NASDAQ Index
marks a long-term
peak in the bull market for high technology and Internet stocks. At its top
the NASDAQ Index
was selling at 165 times earnings. We would hope that such an outrageously
high valuation
could not be exceeded, however, since the financial markets have recently
broken all precedents,
it is difficult to forecast with any degree of certitude.
Since the end of the first quarter TBF has outperformed the DJIA, S&P 500 and
NASDAQ
Indices. The figures below, which are called relative strength curves, are
obtained by dividing
TBF's price by the price of the various indices. Therefore, a rising
trendline indicates better
performance on the part of TBF while a declining line means TBF is doing
worse than the index
to which it is being compared. In each of the three figures TBF has made
relative progress since
March 31st, the end of the first quarter. The greatest progress has been
made against the
NASDAQ, however, TBF has also put in a good relative performance versus the
S&P 500 and
the DJIA.
Relative Strength of TBF versus the NASDAQ
Since March 31st TBF has outperformed the NASDAQ
Relative Strength of TBF versus the S&P 500
TBF has also outperformed the S&P 500 since March 31st
Relative strength of TBF versus the DJIA
TBF has outperformed the DJIA in the past 4 months as well
As investors we have been frustrated by the inability of our soundly based
investment strategy to
provide a decent return over the past 2 years. Equally frustrated have been
the insiders and
management teams of these undervalued companies. In response, almost all of
the companies in
TBF's portfolio have initiated stock repurchase programs. At the same time
second quarter
earnings have been responding to a strong economy, cost reduction programs
and rising
commodity prices. If sustained, higher earnings, coupled with fewer shares
outstanding, should
provide an exciting turnaround for our Fund.
We are further encouraged by the following factors:
? Our basic material companies, which include AK Steel, IMC Global, Impala
Platinum and
Kaiser Aluminum are enjoying higher selling prices
? Energy related companies such as Berry Petroleum, Frontier Oil and Callon
Petroleum are
benefiting from higher oil and natural gas prices
? Anangel, B & H Ocean and Stolt Nielsen are receiving higher shipping rates
due to a pick-up
in the Asian economy
? Due to an increase in Boeing's build rate and cessation of its inventory
reduction program,
Ducommun and Esterline Technology are experiencing higher order levels
? Dixie Group, Drew, Kevco and Patrick Industries should rise as the
manufactured housing
industry bottoms and begins to rebound
? Our health care companies Invacare, Quidel and Rehabcare are experiencing
solid growth
trends
While Department 56 and Printronix have announced disappointing second
quarter earnings,
their balance sheets remain sound and their growth strategies are intact.
Overall we remain very
pleased with the fundamentals of our investments.
For the first half of 2000, the portfolio's annual turnover rate was 10
percent, which is
below our historical turnover rate, but greater than last year's unusually
low turnover rate of 6.0
percent. New portfolio additions such as Ansys, Chemfirst, IBP, Invacare and
Rehabcare are
responsible for the increase in turnover. The annualized expense ratio
declined to 1.16 percent,
which is down from the 1.39 percent registered in calendar 1999. Assets
declined from $39.3
million at year-end and $29.2 million at the end of the March quarter to
$26.8 million.
In summary, although the euphoria surrounding Internet, high technology and
biotech stocks
persisted far longer and went to heights which we did not foresee, that
unprecedented period now
appears to have ended. The disappointments suffered by investors in these
areas of the market in
the past four months is already leading to a greater emphasis on value
investing. We continue to
be excited about the future of our investments and TBF.
Very truly yours,
Robert E. Killen
President
Note: Returns for the Berwyn 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 TBF will
fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
BERWYN FUND
A SERIES OF THE BERWYN FUNDS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(Unaudited)
Assets:
Investments in Securities, at Market Value $26,580,030
(Cost $25,194,503.) (Note 2)
Cash 122,207
Receivables:
Dividends 12,944
Interest 3,074
Investment Securities Sold 159,862
Total Assets 26,878,117
Liabilities:
Payable to Securities Purchased 29,781
Accrued Expenses 13,494
Investment Advisory Fee Payable 23,017
Total Liabilities 66,292
Net Assets: (1)
Applicable to 1,843,463 Outstanding Shares of
Common Stock, $1.00 Par Value
(Authorized 20,000,000 Shares) 26,811,825
Net Asset Value and Offering Price Per Share
($26,811,825 /1,843,463 Outstanding Shares) 14.54
Minimum Redemption Price Per Share (Note 1) 14.39
(1) On June 30, 2000 Net Assets consisted of the following:
Common Stock, Par Value $1.00 1,843,463
Paid-in Capital 23,308,555
Accumulated Net Investment Loss (75,780)
Accumulated Net Realized Capital Gains 350,059
Net Unrealized Appreciation of Investment Securities 1,385,528
$26,811,825
The accompanying notes are an integral part of these financial statements.
BERWYN FUND
A SERIES OF THE BERWYN FUNDS
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 2000
(Unaudited)
Investment Income:
Dividends $162,336
Interest 18,647
Total Investment Income $ 180,983
Expenses:
Investment Advisory Fee (Note 3) 160,965
Transfer Agent Fees 18,342
Custodian Fees 15,554
Professional Fees 22,597
Registration Fees 15,951
Directors' Fees 1,600
Printing Costs 8,009
Office Expenses 5,635
Insurance 6,143
Taxes (Other than Income Taxes) 1,967
Total Expenses 256,763
Net Investment Loss (75,780)
Realized and Unrealized Gain (Loss) on Investments:
Net Realized Gain from Sales of Investment Securities 411,233
Net Change in Unrealized Depreciation on
Investment Securities (3,777,912)
Net Realized and Unrealized Loss on Investments (3,366,679)
Net Decrease in Net Assets Resulting from Operations $(3,442,459)
The accompanying notes are an integral part of these financial statements.
BERWYN FUND
A SERIES OF THE BERWYN FUNDS
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
Six Months Six Months
Ended Ended
06/30/00 06/30/99
Increase in Net Assets from Investment Activities:
Net Investment Loss $ (75,780) $ (128,582)
Net Realized Gain from Sales of
Investment Securities 411,233 3,612,311
Change in Net Unrealized Appreciation
on Investment Securities (3,777,912) (3,270,774)
Net Increase (Decrease) in Net Assets Resulting
from Operations (3,442,459) 212,955
Capital Share Transactions (1):
Net Proceeds from Sales of Shares 838,223 1,994,782
Cost of Shares Redeemed (9,893,535) (15,530,472)
Net Decrease in Net Assets from
Capital Share Transactions (9,055,312)
(13,535,690)
Total Decrease in Net Assets (12,497,771) (13,322,735)
Net Assets:
Beginning of Period 39,309,596 62,874,532
End of Period (Including Undistributed Net
Investment Loss of ($75,780) and
($128,582) at June 30, 2000 and 1999,
respectively) $ 26,811,825 $ 49,551,797
(1) Capital Shares Issued and Redeemed:
Shares Sold 52,817 126,236
Shares Redeemed (638,989) (976,884)
(586,172) (850,648)
The accompanying notes are an integral part of these financial statements
BERWYN FUND
A SERIES OF THE BERWYN FUNDS
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
(Unaudited)
SIX MONTHS
ENDED YEAR ENDED
06/30/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
Net Asset Value, Beginning of Year $16.18 $16.96 $22.01
$19.69 $19.43 $17.55
______ ______ ______ ______
______ ______
Income from Investment Operations:
Net Investment Income (Loss) (0.04) (0.08) (0.09) 0.00
(0.02) 0.00
Net Realized and Unrealized Gains
on Securities (1.60) (0.70) (4.11) 5.06 2.78
3.34
______ ______ ______ ______
______ ______
Total from Investment Operations (1.64) (0.78)
(4.20) 5.06 2.76 3.34
______ ______ ______ ______
______ ______
Less Distributions:
Dividends from Net Investment Income 0.00 0.00 0.00 0.00 0.00
(0.01)
Distributions from Net Realized Gains 0.00 0.00 (0.85)
(2.74) (2.50) (1.45)
______ ______ ______ ______
______ ______
Total Distributions 0.00 0.00 (0.85) (2.74)
(2.50) (1.46)
______ ______ ______ ______
______ ______
Net Asset Value, End of Year $14.54 $16.18 $16.96 $22.01
$19.69 $19.43
Total Return (10.14%) (4.60%) (18.90%) 26.05%
14.35% 19.18%
Ratios/Supplemental Data:
Net Assets, End of Period (000) $26,812 $39,310 $62,862
$100,406 $94,056 $97,234
Ratio of Expenses to Average Net Assets 1.16%* 1.39% 1.20% 1.20%
1.21% 1.23%
Ratio of Net Investment Income (Loss)
To Average Net Assets (0.46%)* (0.39%) (0.45%)
(0.02%) (0.10%) 0.04%
Portfolio Turnover Rate 10%* 6% 19% 26% 32%
32%
*Annualized
The accompanying notes are an integral part of these financial statements.
BERWYN FUND
A SERIES OF THE BERWYN FUNDS
STATEMENT OF INVESTMENTS
JUNE 30, 2000
(Unaudited)
Number of
Shares COMMON STOCKS - 98.0%
Value*
AEROSPACE / DEFENSE -3.2%
72,366 Ducommun Inc. + $ 863,869
AIRLINES - 0.2%
11,900 Midway Airlines + 60,988
ALCOHOLIC BEVERAGE - 1.2%
40,641 Todhunter International Corp. + 320,048
AUTOMOTIVE AND TRUCK PARTS - 0.8%
246,334 National Standard Co. + 215,542
BANKING - 2.9%
32,520 BSB Bancorp Inc. 632,107
8,000 First Essex Bancorp, Inc. 127,500
759,607
CHEMICALS - 0.6%
19,000 Carbide/Graphite + 71,250
4,000 IMC Global, Inc. 52,000
1,000 Chemfirst, Inc. 24,125
147,375
COMMERCIAL PRINTING -6.7%
56,767 Courier Corp. 1,603,667
25,500 Ennis Business Forms 204,000
1,807,667
COMPUTER & PERIPHERALS -10.7%
223,855 Data I/O Corp. + 895,420
20,000 Microtouch+ 172,500
29,000 Ansys+ 329,875
113,152 Printronix, Inc. + 1,470,975
2,868,770
DIVERSIFIED MANUFACTURING -2.2%
84,404 Lindberg Corp. 590,828
The accompanying notes are an integral part of these financial statements.
BERWYN FUND
STATEMENT OF INVESTMENTS (Continued)
Number of
Shares COMMON STOCKS (Continued)
Value*
ELECTRONIC PRODUCTS - 1.7%
74,917 Scan-Optics $ 46,823
127,338 Wells-Gardner Electronics 413,849
460,672
FOOD PRODUCTS - 0.3%
5,000 IBP 77,188
FOREST & PAPER PRODUCTS - 4.0%
31,000 Greif Brothers Corp. 954,381
7,506 MAXXAM Inc. 133,231
1,087,612
FURNITURE MANUFACTURING - 3.6%
69,823 La-Z-Boy 977,522
HEALTH CARE - 2.2%
22,000 Rehabcare Group + 599,500
INSURANCE - 1.9%
35,563 First American Financial Corp. 508,995
MACHINERY MANUFACTURING - 4.5%
39,750 Hardinge, Inc. 419,859
55,744 Terex Corp. + 787,384
1,207,243
MANUFACTURED HOUSING - 4.0%
85,700 Drew Ind. + 674,888
82,000 Kevco Inc. + 115,317
47,000 Patrick Industries 293,750
1,083,955
MARITIME INDUSTRY - 5.4%
97,311 Anangel-American Shipholders ADR 456,145
267,405 B & H Ocean Carriers 133,703
47,600 Stolt-Nielsen S.A. ADR 850,850
1,440,698
MEDICAL SERVICES - 0.4%
4,000 Invacare Corp. 105,000
The accompanying notes are an integral part of these financial statements.
BERWYN FUND
STATEMENT OF INVESTMENTS (Continued)
Number of
Shares COMMON STOCKS (Continued)
Value*
MEDICAL PRODUCTS & SERVICES - 2.8%
141,176 Quidel Corp.+ $ 741,174
METALS & MINING - 11.1%
38,200 Impala Platnium-UNSPON ADR 1,420,998
60,600 Kaiser Aluminum + 242,400
435,250 Westmoreland Coal Co. +** 1,305,750
2,969,148
OIL & GAS EXPLORATION & PRODUCTION - 8.9%
25,300 Berry Petroleum Co. 430,100
66,100 Callon Petroleum + 983,238
174,364 Ranger Oil Ltd. 959,002
2,372,340
OIL REFINING - 6.8%
226,744 Frontier Oil Corp. 1,813,952
PRECISION INSTRUMENTS - 4.3%
77,670 Esterline Technology Corp. + 1,155,341
RETAIL INDUSTRY - 2.1%
28,100 Blair Corporation 519,850
5,000 Department 56 55,000
574,850
STEEL & STEEL PRODUCTS - 1.3%
42,100 AK Steel Holding Corp. 336,800
TEXTILES - 4.2%
86,040 Culp, Inc. 440,955
179,649 Dixie Group, Inc. + 696,140
1,137,095
TOTAL COMMON STOCKS (Cost $24,694,503) 26,283,779
The accompanying notes are an integral part of these financial statements.
BERWYN FUND
STATEMENT OF INVESTMENTS (Continued)
Face
Amount CORPORATE BONDS - 1.1% Value*
$250,000 Campbell Resources 7.5% CV 07/20/04 $ 92,813
250,000 TransLux 7.5% CV 12/01/06 203,438
296,251
TOTAL CORPORATE BONDS (Cost $500,000) 296,251
TOTAL INVESTMENTS (Cost $25,194,503) - 99.1% 26,580,030
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.9% 231,795
NET ASSETS - 100% $26,811,825
______________________________________
* 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.
BERWYN FUND
A SERIES OF THE BERWYN FUNDS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE 1 - ORGANIZATION
The Berwyn Funds is a Delaware Business Trust registered under the Investment
Company Act
of 1940, as amended, as an open-end management company. Berwyn Fund (the
Fund) is a
portfolio series of The Berwyn Funds. The Fund's primary investment
objective is long-term
capital appreciation. For redemptions of 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
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 333,009 shares of the
Fund at June 30,
2000.
During the period ended June 30, 2000, the Fund paid $57,467 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, 2000, the Fund made purchases of $1,366,297
and sales of
$10,671,897 of investment securities other than U.S. Government securities
and temporary cash
investments.
Cost of securities owned at June 30, 2000 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, 2000, net unrealized appreciation for financial reporting and
Federal income tax
purposes aggregated $1,385,528 of which $8,793,604 related to appreciated
securities and
$7,408,077 related to depreciated securities.
Notes
