UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM N-1A


REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

     Pre-Effective Amendment No.  ______

     Post-Effective Amendment No.     15    

                                     and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

     Amendment No.    17  

                        (Check appropriate box or boxes.)

                                THE BERWYN FUNDS
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                (Exact Name of Registrant as Specified in Charter)

               1189 LANCASTER AVENUE, BERWYN, PENNSYLVANIA, 19312
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               (Address of  Principal Executive Offices)  (Zip Code)

                             (610) 296-7222 Ext. 30
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             (Registrant's Telephone Number, including Area Code)

                     KEVIN M. RYAN, 1189 LANCASTER AVENUE, BERWYN, PA  19312
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                     (Name and Address of Agent for Service)

Approximate date of PROPOSED Public Offering  April 30, 1999

It is proposed that this filing will become effective (check  appropriate  box):

/_/ immediately  upon  filing  pursuant  to  paragraph  (b)
/X/ on  April 30, 1999 pursuant  to paragraph  (b)
/_/ 60 days  after  filing  pursuant  to  paragraph  (a)(1)
/_/ on (date) pursuant to paragraph  (a)(1)
/_/ 75 days after filing pursuant to paragraph  (a)(2)
/_/ on (date) pursuant to paragraph (a)(2) of rule 485.

If appropriate, check the following box:

   this  post  effective  amendment  designates  a  new  effective  date  for  a
   previously filed post-effective amendment.

<PAGE>
                               THE BERWYN FUNDS

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                               BERWYN INCOME FUND
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                               PROSPECTUS
                              April 30, 1999

This Prospectus describes shares of Berwyn Income Fund, one of the
series of The Berwyn Funds (the "Trust"). Shares of Berwyn Income
Fund are sold on a no-load basis.

The  Securities and Exchange  Commission  has not approved or disapproved  these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.

<PAGE>
<TABLE>
<CAPTION>
<S>                                                 <C>                           <C>
TABLE OF CONTENTS                                                                 Page
Risk/Return Summary                                                                3

Carefully review these sections which
summarize the Fund's investments, risks,               
performance and fees                        Performance                            4
                                            Fees and Expenses of the Fund          5

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This section contains important additional  Investment Objective,
information, including the Fund's principal Principal Investment
investment strategies and risks             Strategies and
                                            Related Risks                          6 


This sections contains details on the       Management and Organization            9
management of the Fund

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                                                   Shareholder Information          10
Turn to this section for information on how
to open and maintain your account, including       Distribution and Taxes           12
how to purchase, sell and exchange Fund shares     Distributor                      13

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This sections contains important financial         Financial Highlights             14
information on the Fund
</TABLE>


<PAGE>
RISK/RETURN SUMMARY

Investment Objective of the Fund

Berwyn Income Fund's  investment  objective is to provide investors with current
income  while  seeking to  preserve  capital by taking  what the Fund  considers
reasonable risks.

Principal Investment Strategies of the Fund

The Fund intends to achieve its objective through investment in corporate bonds,
preferred stocks,  U.S. Treasury bonds and notes, debt securities issued by U.S.
Government  agencies and dividend  paying common stocks.  The Fund's  investment
adviser (the  "Adviser")  determines the percentage of each category of security
to hold based upon the  prevailing  economic  and market  conditions.  The Fund,
however, does allow investment in common stocks when the value of the common 
stocks in the Fund's  portfolio is equal to or less than 30% of the value of the
Fund's net assets.  The Fund uses value criteria in selecting the Fund's 
investments.

Normally, the Fund will invest in a diversified 
portfolio consisting of a mix of
securities,  such as corporate bonds, preferred  stocks and common stocks.  The
Adviser may invest 100% of the Fund's net assets in corporate bonds or preferred
stocks. If the Adviser decides it is appropriate,  the Adviser may invest all of
the Fund's  net  assets in lower  rated,  high  yield,  high risk bonds or "junk
bonds."  The average maturities of bonds purchased for the Fund are typically
five to ten years.  The duration of bonds purchased for the Fund will typically 
vary from three to seven years.  The Adviser has the discretion to vary the 
average duration of the bond portfolio in order to take advantage of prevailing
trends in interest rates.

Principal Risks of Investing in the Fund

|_|  Although  the Fund will strive to achieve its goal,  there is no  assurance
     that it will.  The value of the  Fund's  investments  will  fluctuate  with
     market  conditions and as a result the value of your investment in the Fund
     will fluctuate. You could lose money on your investment in the Fund, or the
     Fund could underperform other investments.

|_|  High yield bonds  entail  greater  risks than those  found in higher  rated
     bonds. High yield bonds are below investment grade instruments based on the
     significant risk of issuer default. High yield bonds and other fixed income
     securities are sensitive to interest rate changes. Generally, when interest
     rates rise,  the prices of fixed income  securities  fall. The longer the
     maturity  of fixed  income  securities,  the  greater  is the  impact  from
     interest rate changes.  The value of the Fund's  investment  will also vary
     with bond market conditions.

|_|  Other risks of high yield bonds include the market's relative youth,  price
     volatility,  sensitivity to economic changes, limited liquidity,  valuation
     difficulties and special tax considerations.

|_|  The prices of common stocks and preferred stocks are subject to market, 
     economic and business risks that will cause their prices to fluctuate over 
     time.  The Fund may invest in preferred and common stocks with limited
     liquidity.  The Fund can invest in the preferred or common stock of 
     companies with small market capitalizations.  Such preferred or common
     stock tend to have less liquidty than the stock of companies with large
     market capitalizations.  The preferred stock of large companies may also
     have limited liquidity, particularly if the size of the issue of such
     stock is small.

     An  investment  in the Fund is not a deposit of any bank and is not insured
     or guaranteed by the Federal Deposit  Insurance  Corporation  (FDIC) or any
     other government agency.

<PAGE>
PERFORMANCE

The bar chart and table can help you evaluate the potential risks of
investing  in  Berwyn  Income  Fund.  They show  changes  in the  Fund's  yearly
performance  over the life of the Fund and  compare  the Fund's  average  annual
returns for the past  one-year,  five-year,  and  ten-year  periods.  Investment
performance also often reflects the risks associated with the Fund's  investment
objective and policies. You should keep in mind that the Fund's past performance
is not necessarily an indication of the Fund's future performance.


  30.00%|                                       
        |
        |
        |
        |                23.00%
        |                       21.70%                21.00%
  20.00%|                                             
        |                                16.90%
        |
        |
        | 11.90%                                              13.99% 13.36%
  10.00%|
        |
        |                                                                 
        |
     0% |        -0.13%                         -1.10%                          
        |                                                                 -4.57%
        |           
 -10.00%|-----------------------------------------------------------------------
          1989   1990    1991    1992    1993   1994    1995   1996   1997 1998




  
 -----------------------------------------------------------------------------

          Best Quarter:  1Q '92    +10.58%
          Worst Quarter: 3Q '98    -6.04%

                   Average Annual Total Return as of 12/31/98

                         1 Year              5 Years              10 Years
   Fund                  -4.57%               8.13%               11.20%
   BIG*                   8.71%               7.30%                9.31%
   HYC**                  3.98%               9.53%               11.42% 
   LII+                   8.12%              11.37%               11.98%

     *    Salomon Smith Barney Broad  Investment  Grade Bond Index ("BIG") is an
          unmanaged  index of  investment  grade  bonds and does not include the
          costs of fund operating or management expenses.

     **   Salomon  Smith Barney High Yield  Composite  Index ("HYC") is a widely
          recognized  unmanaged  index of high  yield  securities,  and does not
          include the costs of fund operating or management expenses.

     +    Lipper Income Fund Index ("LII") is an unmanaged composite of the
          performance of income funds, funds that invest primarily in fixed
          income securities.

          ----------------------------------------------------------------------

<PAGE>
FEES AND EXPENSES OF THE FUND

As an investor,  you pay certain fees and expenses in connection  with the Fund,
which are described in the table below.  

--------------------------------------------------------------------------------
Shareholder Transaction Fees
(Fees paid directly from your investment)
--------------------------------------------------------------------------------
Maximum Sales Charge (load) on Purchases (as a                   None
percentage of offering price)
Sales Charge on Reinvested Dividends                             None
--------------------------------------------------------------------------------
Exchange Fees                                                    None
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Annual Fund Operating Expenses
(Expenses that are deducted from Fund assets)
--------------------------------------------------------------------------------
Management Fee                                         0.50%
Distribution and Service (12b-1) Fees                  0.00%
--------------------------------------------------------------------------------
Other Expenses                                         0.14%
Total Fund Operating Expenses                          0.64%
--------------------------------------------------------------------------------

[FN] Shareholder  transaction  fees are paid  from  your  account.  Annual  fund
     operating  expenses  are paid out of Fund  assets,  so that their effect is
     included in the share price.  The Fund has no sales charges (loads) or Plan
     12b-1 distribution fees and minimal shareholder transaction fees.

EXAMPLE

This  Example is intended to help you compare the cost of  investing in the Fund
with the cost of investing in other mutual funds.  The Example  assumes that you
invest $10,000 in the Fund for the time periods indicated and then redeem all of
your shares at the end of those  periods.  The Example  also  assumes  that your
investment  has a 5% return  each year and that the  Fund's  operating  expenses
remain the same.  Although  your  actual  costs may be higher or lower  based on
these assumptions your costs would be:


                        One Year     Three Years    Five Years      Ten Years
Berwyn Income Fund      $67          $211           $368            $822

<PAGE>

INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND RELATED RISKS

The Berwyn  Income  Fund's  investment  objective is to provide  investors  with
current  income  while  seeking  to  preserve  capital  by taking  what the Fund
considers  reasonable  risks. The Fund invests in corporate bonds, U.S. Treasury
bonds and notes, debt securities issued by U.S. Government  Agencies,  preferred
stocks, and dividend paying common stocks. The Fund may invest any percentage of
its net assets in the foregoing securities the Adviser deems appropriate, except
common stocks.  The Adviser may not purchase common stocks when the value of the
common  stocks  that the Fund  owns is  equal to 30% or more of the  Fund's  net
assets. The Adviser would not be required to sell any common stocks owned if the
value of the common stocks exceeded 30% of net assets due to appreciation of the
common stocks or depreciation in the Fund's other securities.

The Adviser uses value criteria in selecting the Fund's investments. The value
criteria can lead the Adviser to invest a significant portion of the portfolio
in securities of small companies.

Corporate  Bonds -- The Fund seeks to achieve its  objective by investing in the
corporate bonds of only those issuers that, in the opinion of the Adviser,  have
sufficient net worth and operating cash flow to repay  principal and make timely
interest payments. A corporate bond is an interest-bearing  debt security issued
by a corporation.  The issuer has a contractual  obligation to pay interest at a
stated rate on specific dates and to repay  principal (the bond's face value) on
a specified  date. An issuer may have the right to redeem ("call") a bond before
maturity.

While the bond's annual  interest  income  established by the coupon rate may be
fixed for the life of the bond, its yield (income as a percent of current price)
will reflect current  interest rate levels.  The bond's price rises and falls so
that its yield remains  reflective  of current  market  conditions.  

The  Adviser  will  select  corporate  bonds on the basis of  current  yield and
secondarily  on the  basis of  anticipated  long  term  return.  The average
maturities of bonds purchased for the Fund are typically five to ten years.  
The duration of bonds purchased for the Fund will typically vary from three to 
seven years.  The Adviser has the discretion to vary the average duration of the
bond portfolio in order to take advantage of 
prevailing trends in interest rates.

When  selecting corporate  bonds the  Adviser  will take into  account  the  
rating the bond has received from S&P and Moody's. 
The Adviser has the discretion
to invest in bonds with any  rating  as long as the  issuer is not in  default 
in the  payment  of interest or  principal.  The  Adviser  may also invest in 
unrated  bonds and may purchase bonds in private transactions.

Bonds rated A or higher by S&P and Moody's are considered high grade  securities
and have the three highest ratings for creditworthiness.  Bonds rated BBB by S&P
or Baa by Moody's are defined as medium grade  securities.  These securities are
considered  creditworthy  and of  investment  quality but there is a possibility
that the ability of the issuer of the  securities  to pay  interest or repay the
principal  in the  future may be  impaired  by adverse  economic  conditions  or
changing circumstances.  Bonds rated lower than BBB or Baa are less creditworthy
than investment  grade  securities with the same maturity and, as a consequence,
may pay higher income.  Bond securities rated BB, B, CCC or CC by S & P or Ba, B
or Caa by Moody's are  regarded  on balance as  predominantly  speculative  with
respect to capacity to pay interest and repay principal.

At December 31, 1998, the Fund's  portfolio was invested in investment grade and
high  yield,  high  risk  corporate  bonds,  preferred  and  common  stocks  and
closed-end  mutual  funds.  Listed below are the  percentages  of the  portfolio
invested at December 31, 1998, in securities with various bond ratings published
by  Moody's  and S&P as well  as the  percentages  invested  in  unrated  bonds,
preferred and common stocks and closed end mutual funds:

         Moody's Ratings:
         A:  8.8%; Baa:  14.2%; Ba:  1.7%; B:  20.4%; Caa:  0.2%; Unrated:  17%

         S&P Ratings:
         AA:  7.3%; BBB: 17.9%; BB:  3.4%; B:  16.7%; Unrated:  17%

         Preferred and Common Stocks and Closed-End Investment Companies:
         Preferred Stocks:  19.1%; Common Stocks:  18.2%;
         Closed-End Investment Companies:  0.4%


The Fund will not  invest in  corporate  bonds  issued  to  finance a  leveraged
buyout.  The Fund will also diversify its portfolio and do a credit  analysis of
the issuers in which it invests.

Preferred and Common Stocks -- The Fund also invests in preferred stocks and may
invest in common  stocks,  subject to the 30% limit  described  above,  when the
Adviser deems it appropriate. The Adviser uses a value criteria in selecting
preferred and common stock.  The portfolio allocations to preferred and common
stock are determined by the Adviser based upon the market valuation of these
securities relative to corporate bonds.  The outlook for the economy is also a
consideration.  During periods of economic strength, greater emphasis is placed
on preferred and common stock.  Preferred stocks are 
selected from two categories:
(1) stocks  offering an above average yield,  in the opinion of the Adviser,  in
comparison to preferred  stocks of the same quality;  and (2) stocks  offering a
potential for capital  appreciation due to the business prospects of the issuer.
The Fund may also purchase  preferred stocks in transactions  that qualify under
Rule 144A.

Common  stocks  are  selected  from  three   categories:   (1)  stocks   selling
substantially  below their book value;  (2) stocks  selling at low valuations to
their present earnings level; and (3) stocks judged by the Adviser to have above
average growth prospects and to be selling at small premiums to their book value
or at modest valuations to their present earnings level.

The Fund  purchases  only common  stocks  that have been paying cash  dividends.
Preferred stocks that have a cumulative feature do not have to be paying current
dividends in order to be  purchased.  If a dividend on a stock is canceled,  the
Fund would not be required to sell the stock.

The method of stock  selection used by the Fund may result in the Fund selecting
stocks that are not being recommended by other investment  advisers or brokerage
firms and the Fund may invest in the securities of lesser known  companies.  The
Adviser  believes,  however,  that any risks involved in the stocks selected for
the Fund will be minimized by  diversification of the Fund's portfolio and daily
monitoring of the stock selection.  In addition, the Fund only invests in stocks
listed on national exchanges or on the over-the-counter market and the Fund only
purchases stocks in companies that have been in business at least five years and
have at least $10,000,000 in assets.

Temporary  Defensive  Positions  --  Although  the  Fund  will  normally  invest
according  to its  objective  as  outlined  above,  the Fund may at  times,  for
temporary defensive  purposes,  invest all or a portion of its assets in no load
money market funds,  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  (A-1 by S & P and  P-1 by  Moody's  Commercial  Paper
Ratings),  repurchase  agreements,  U.S.  treasury  bills, or treasury notes and
treasury bonds backed by the "full faith and credit" of the U.S. Government,  or
the Fund may hold cash. Investment in a no-load money market fund will result in
the Fund paying a management  fee on the money invested in such fund in addition
to the operating expenses of the Fund.  When the Fund invests for temporary
defensive purposes, the Fund may not achieve its investment objective.


Risks of Investing in the Fund

Investing in any mutual fund such as the Fund involves risk,  including the risk
that you may receive little or no return on your  investment,  and the risk that
you may lose part or all of the money you invest.  Before you invest in the Fund
you should carefully evaluate the risks.  Because of the nature of the Fund, you
should  consider an  investment  to be a  long-term  investment  that  typically
provides the best results when held for a number of years. The following are the
chief risks you assume when investing in the Fund.

Bond prices usually rise when interest rates fall and conversely, bond prices 
fall when interest rates rise. If a bond is
subject to call and is called before 
maturity, the Fund may have to reinvest the proceeds at lower market rates.

Issuers of high yield, high risk bonds are generally smaller,  less creditworthy
companies or highly leveraged  companies which are generally less able than more
financially  stable  companies  to  make  scheduled  payments  of  interest  and
principal.  The  risks  posed by  bonds  issued  under  such  circumstances  are
substantial.  For example,  during an economic downturn or a sustained period of
rising interest rates, highly leveraged companies or smaller,  less creditworthy
companies may experience financial stress.  During these periods, such companies
may not have sufficient cash flows to meet their interest payment obligations. A
company's ability to service its debt obligations may also be adversely affected
by specific  corporate  developments,  the company's  inability to meet specific
projected business forecasts, or the unavailability of additional financing. The
risk of loss due to default by the issuer may be  significantly  greater for the
holders of high yield, high risk bonds because such securities are unsecured and
are often subordinated to other creditors of the issuer. In addition to the risk
of default, holders of high yield, high risk bonds also face the risk of greater
market  volatility  than the holders of investment  grade bonds.  Changes in the
general level of interest  rates  normally  affect the market value and yield of
corporate  bonds.  As a general  rule if the  level of  interest  rates  were to
decline,  these  securities would increase in value and the yield would decline.
Conversely,  if the interest  rate level rose,  bonds would decline in value and
the yield would  increase.  Fluctuations  in the general level of interest rates
would therefore  affect the value of the Fund's  investments and the value of an
investment in the Fund. However, the market value of high yield, high risk bonds
may also be affected not only by changing interest rates, but also by investors'
perception of credit quality and the outlook for economic growth.  When economic
conditions  appear to be  deteriorating,  lower  rated  bonds may decline due to
investors'  heightened  concern over credit  quality,  regardless  of prevailing
interest  rates.  Especially  at such times,  trading for high yield,  high risk
bonds may become thin and market  liquidity may be significantly  reduced.  Even
under normal conditions,  the market for high yield, high risk bonds may be less
liquid than the market for investment  grade bonds. In periods of reduced market
liquidity,  the prices of high yield,  high risk bonds may become more  volatile
and these securities may experience sudden and substantial price declines.

In addition  to bonds that are rated,  the Fund also  invests in unrated  bonds.
These  securities  may or may  not be more  speculative  than  investment  grade
securities.   The  risks  of  investing   in  unrated   bonds  depend  upon  the
creditworthiness  of the issuer,  changes in  interest  rates and  economic  and
market factors.  The Adviser will determine the  creditworthiness  of an unrated
debt  security  and the  issuer's  ability to meet the  interest  and  principal
obligations of such security.



<TABLE>
<CAPTION>
<S>                                                                             <C>
Risks                                                                           How The Fund Manages These Risks

Market  Risk is the risk that all or a majority  of the                         The Fund maintains a long-term investment approach. 
It manages market risk primarily through diversification
--of asset classes, of industry sectors, of company
names, and in relation to bonds, of maturities.
The Fund does not try to predict overall market  
movements and does not trade for short-term purposes.


Industry  and  Security Risk is the risk that the value of                      The Berwyn Income Fund limits its assets invested in
securities in a particular industry or the value of an                          any one industry and in any individual security.The
individual  stock or bond will decline because of changing                      Adviser also follows rigorous selection process
expectations for the performance of that industry or for the individual         before choosing securities for the Fund.
company issuing the stock or bond.


Lower Rated,  High Yield,  High Risk Fixed Income Securities                    The Fund may invest in fixed income securities that
include those securities rated lower than BBB by S&P or                         are listed in national exchanges or on the over-the
Baa by Moody's.  Securities of this type are  considered to                     counter market.  The Adviser will attempt to
be of poor  standing  and  predominantly 
speculative as to their minimize the risks of investing in medium grade and
ability  to  repay  interest  and  principal.                                   high yield, high risk bonds by doing a credit anal-
                                                                                ysis  of the  issuer, monitoring the Fund's invest-
                                                                                ments and the investment environment in general. The
                                                                                credit rating is not the only criterion for 
                                                                                selection.  The Adviser examines the financial
                                                                                structure of each issuer and with regard to these
                                                                                securities,  makes a determination  as  to  the
                                                                                issuer's  ability  to  meet  its  debt  obligations.
                                                                                Achievement  of  the  Fund's  investment  objective
                                                                                is  more  dependent  on the Adviser's  credit
                                                                                analysis in selecting high yield,  high risk bonds
                                                                                than is the case in selecting higher quality
                                                                                securities.  However, there can be no guarantee that
                                                                                the issuer of the bonds in which the Fund  invests
                                                                                will not default or that the securities will not
                                                                                decline in value.

Portfolio  Turnover  rates reflect the amount of securities                     The Fund normally will not invest for short-term
that are replaced from the beginning of the year to the                         trading purposes. However, the Fund may sell
end of the year by the Fund.  The  degree of  portfolio                         securities without regard to the length of time they
activity may affect  brokerage  costs and other transaction                     have been held.  The Fund anticipates that the
costs of the Fund, as well as taxes payable                                     portfolio turnover rate will not exceed 100%.
by shareholders that are subject to federal income tax.


Small Company Investment Risk includes the general risks                        The securities of companies with small revenues and
of investing in common stocks such as market, economic and                      capitalizations in which the Fund invests, may offer
business risk that cause their prices to fluctuate over                         greater opportunity for capital appreciation than 
time.  Historically, smaller capitalization stocks have                         larger companies.
been more volatile in price than larger capitalization
stocks.  Among the reasons for the greater price
volatility of these securities are the lower degree of
liquidity in the markets for such stocks, and the
potentially greater sensitivity of such small companies to
changes in or failure of management, and in many other
changes in competitive, business, industry and economic
conditions, including risks associated with limited
production, markets, management depth, or financial
resources.



</TABLE>

For additional information about the Fund's investment policies, please see the
Statement of Additional Information.

Year 2000 Issues

Like all mutual funds, the Fund and its service providers utilize systems that 
must accurately process date related information on or after January 1, 2000. 
If systems used by the Fund or its service providers are negatively affected by 
Year 2000 issues, the Fund may not be able to handle securities trades,
payments of interest and dividends, or pricing and account services.  Although,
at this time, there can be no assurance that there will be no adverse impact
on the Fund, the Fund's service providers have advised the Fund that they have
been actively working on necessary changes to their computer systems to prepare
for the Year 2000 and expect that their systems, and those of other parties they
deal with, will be prepared in time for that event.  The Adviser has reviewed
the types of securities and debt obligations held as investments by the Fund to
determine the impact of the Year 2000 issues on the returned and relative 
safety of principal of such securities and debt obligations.  Based on this 
review, the Adviser does not believe the Year 2000 issues pose any substantial
risk for such returns and safety of principal.

<PAGE>
MANAGEMENT AND ORGANIZATION

The Fund  commenced  operations  as a series of shares of The  Berwyn  Funds,  a
Delaware  business  trust,  on  April  30,  1999  in  a  reorganization  of  its
predecessor,  the Berwyn  Income  Fund,  Inc.  In the  reorganization,  the Fund
succeeded to all the business, assets and liabilities of its predecessor.

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, Chief Executive Officer and sole shareholder of the Adviser. Robert
Killen is also the President and Chairman of the Board of Trustees of the Trust.
Edward A. Killen, II is primarily  responsible for the day-to-day  management of
the Berwyn  Income Fund.  He managed the  portfolio  of the Berwyn  Income Fund,
Inc., the  predecessor of the Berwyn Income Fund, from July 1, 1994 to April 30,
1999. He has managed the Berwyn Income Fund since April 30, 1999.  Edward Killen
has over twenty year's investment management experience. In 1978 he started work
at Compu-Val Management  Associates as a portfolio manager. In February 1983, he
assumed his current position as Vice President and Secretary of the Adviser.

As of December  31, 1998,  The Killen  Group,  Inc. was managing 335  individual
investment  portfolios worth  approximately $367 million.  On December 31, 1998,
Berwyn Income Fund had net assets of over $103 million.

Investment Management Fees

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 of Trustees.  For its investment advisory services, the
Adviser receives a fee of 0.50% of the Fund's average daily net assets.

Subject to the  policies  established  by the  Trust's  Board of  Trustees,  the
Adviser is  responsible  for the Fund's  portfolio  decisions.  When  buying and
selling securities, the Adviser gives consideration to brokers who have assisted
in the  distribution  of the  Fund's  shares.  The Fund  may also pay  brokerage
commissions to brokers who are affiliated with the Adviser or the Fund.

<PAGE>
SHAREHOLDER INFORMATION

Buying Shares

You may buy  shares of the Fund  without  a sales  charge.  Your  price for Fund
shares is the Fund's net asset value per share (NAV).  Your order will be priced
at the next NAV calculated  after your order is received by the Fund's  Transfer
Agent. The Fund also has arrangements that permit third parties to accept orders
on the Fund's behalf, so that investors can receive the NAV calculated after the
order is received in good order by the third party.

The NAV is calculated as of the close of trading on the New York Stock  Exchange
(the "Exchange")  (4:00 p.m. Eastern Time) every day the Exchange is open. If we
receive  your order after the close of trading,  you will pay the next  business
day's price.  Currently,  the Exchange is closed when the following holidays are
observed:  New Year's Day, Martin Luther King,  Jr.'s  Birthday,  President Day,
Good  Friday,  Memorial  Day,  Independence  Day,  Labor Day,  Thanksgiving  and
Christmas.

The NAV is determined by dividing the value of the Fund's  securities,  cash and
other  assets,  minus  all liabilities,  by the  number of shares
outstanding.  The Fund's  securities  are valued each day at their market value,
which  usually  means the last  quoted  sale price on the  security's  principal
exchange. If market quotes are not readily available,  securities will be priced
at their fair value as determined in good faith by the Board of Trustees.

Minimum Investment

|_|  The minimum initial investment for each Fund is $3,000 per investor.  This
     investment may be divided by a single investor among  different  investment
     accounts  in each Fund or between  accounts  in the Berwyn  Income Fund and
     Berwyn  Fund,  another  series of the  Trust,  that  total  $3,000  in the
     aggregate.  Subsequent investments must be at least $250.

|_|  For an Individual Retirement Account (IRA), the 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 pension or profit sharing 
     plan or a custodial  account  established  for the benefit of a minor.

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.

In Kind Purchases

An  investor  may  exchange  securities  for  shares  of the Fund.  For  taxable
investors  an  exchange of  securities  for shares of the Fund will be a taxable
exchange.  The  securities  must  meet  the  Fund's  investment  objectives  and
policies.  The  securities  will be  valued  in the same  way  that  the  Fund's
portfolio  is valued for purposes of  calculating  the NAV.  Please  contact the
Adviser for further information.


<PAGE>

Exchange of Shares

|_|  You may exchange your shares of the Fund for shares of another fund managed
     by the Adviser.  The initial  minimums for the Fund must be met ($1,000 for
     IRAs and no minimum initial  investment for pension or profit sharing plans
     or custodial accounts for minors.).

|_|  Shares may also be  exchanged  for shares in the Rodney  Square Fund or the
     Rodney Square  Tax-Exempt  Fund. These 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 next NAV of
     the funds  involved that is determined  after a request for an exchange has
     been received. The minimum initial investment for each of the Rodney Square
     funds is $1,000.  A shareholder  may request an exchange by calling 1 (800)
     992-6757 between (9:00 a.m. and 4:00 p.m. Eastern Time) on any business day
     or by writing to the Fund's Transfer Agent.

|_|  A  shareholder  in the Fund,  however,  will only be  permitted to exchange
     shares in his or her  account  for  shares of one of the other  funds  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 he or she  wishes.  The Fund  reserves  the right to amend or change the
     exchange privilege upon 60 days' notice to shareholders.

Redeeming Shares

|_|  You may redeem your shares at any time.  The shares will be redeemed at the
     next NAV calculated  after the redemption  request has been received by the
     Fund's  Transfer  Agent.  You may redeem  your  shares by sending a written
     request to the Fund's  Transfer  Agent.  If you have selected the telephone
     redemption option on your application, you may redeem up to $5,000 worth of
     shares by calling the  Transfer  Agent at 1 (800)  992-6757 on any business
     day between the hours of 9:00 a.m.  and 4:00 p.m.  Eastern  Time.  The Fund
     will use reasonable procedures to confirm that instructions communicated by
     telephone  are genuine and, if the  procedures  are  followed,  will not be
     liable  for  any  losses  due  to  unauthorized  or  fraudulent   telephone
     transactions.

|_|      Generally, there is no sales charge for redeeming shares.

Shareholders  may buy and sell shares of the Fund through broker dealers who may
charge a fee for such  service.  In addition,  if a shareholder  redeems  shares
through  the  Transfer  Agent and  requests  that the  proceeds  be wired to the
shareholder, the Transfer Agent may charge the shareholder a wiring fee.


DISTRIBUTION AND TAXES

The Fund distributes  annually  substantially all of its net investment income
and any net realized capital gains. Dividends from net investment income will be
paid  quarterly.   Unless  a  shareholder  requests  otherwise  in  the  account
application,  dividends and capital gains  distributions  will be  automatically
reinvested in shares of the Fund at the NAV on the Fund's ex-dividend date.

In general,  Fund  distributions are taxable to you as either ordinary income or
capital  gains.  This  is  true  whether  you  reinvest  your  distributions  in
additional  shares of the Fund or receive  them in cash.  Any capital  gains the
Fund  distributes  are taxable to you as long-term  capital  gains no matter how
long you have owned your shares.  It is not  ordinarily to your advantage to buy
shares in the Fund shortly before the Fund makes a distribution  because part of
your investment will come back to you as a taxable distribution.

Every  January,  you will  receive a  statement  that  shows  the tax  status of
distributions  you received for the previous  year.  Distributions  declared in
December but paid in January are taxable as if they were paid in December.

When you sell or redeem your shares of the Fund,  you may have a capital gain or
loss. For tax purposes, an exchange of your Fund shares for shares of the Berwyn
Fund, the Rodney Square Fund or the Rodney Square Tax-Exempt Fund is the same as
a sale.  The  individual  tax rate on any gain from the sale or exchange of your
shares depends on how long you have held your shares.

Fund  distributions  and gains from the sale or  exchagne  of your  shares  will
generally be subject to state and local income tax.  Non-U.S.  investors  may be
subject to U.S.  withholding  and estate  tax.  You  should  consult  your tax
advisor  about the federal,  state,  local or foreign tax  consequences  of your
investment in the Fund.

By law, the Fund is required to withhold 31% of your taxable  distributions  and
proceeds if you do not provide your correct taxpayer identification number (TIN)
or certify that your TIN is correct, or if the IRS instructs us to do so.

DISTRIBUTOR

Berwyn Financial Services Corp. ("Berwyn Financial"),  located at 1189 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 Trust. 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 to assist 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 continues to bear the expenses of
all filing or notification  fees incurred in connection with the registration of
shares under state securities laws.


FINANCIAL HIGHLIGHTS

The financial  highlights table is intended to help you understand Berwyn Income
Fund's  financial  performance  and reflects the  financial  performance  of the
Berwyn Income Fund,  Inc.,  the  predecessor  of the Fund, for the past 5 years.
Certain  information  reflects  financial  results for a single Fund share.  The
total returns in the table represent the rate that an investor would have earned
or lost on an investment in the Fund (assuming reinvestment of all dividends and
distributions).

<TABLE>
<CAPTION>

                              FINANCIAL HIGHLIGHTS
                 FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

                                                                  YEAR ENDED

<S>                                          <C>         <C>        <C>       <C>       <C>
  
                                             12/31/98(1) 12/31/97   12/31/96  12/31/95  12/31/94

Net Asset Value, Beginning of Year           $12.51      $12.31     $11.95    $10.75     $11.63
                                             -------     -------    -------   -------    -------
Income from Investment Operations:
    Net Investment Income                     0.90        0.77       0.76      0.73       0.73
    Net Realized and Unrealized Gains
        (Losses) on Securities               (1.44)       0.84       0.87      1.48      (0.85)
                                             -------     -------    -------   -------    -------

        Total from Investment Operations     (0.54)       1.61       1.63      2.21      (0.12)
                                             -------     -------    -------   -------    -------

Less Distributions:
    From Net Investment Income               (0.92)      (0.77)     (0.80)    (0.70)     (0.73)
    From Net Realized Gains                  (0.15)      (0.64)     (0.47)    (0.31)     (0.03)
    From Capital                             (0.18)      (0.00)     (0.00)    (0.00)     (0.00)
                                             -------     -------    -------   -------    ------
        Total Distributions                  (1.25)      (1.41)     (1.27)    (1.01)     (0.76)
                                             -------     -------    -------   -------    ------

Net Asset Value, End of Year                 $10.72      $12.51     $12.31    $11.95     $10.75


        Total Return                         (4.57%)     13.36%     13.99%     21.0%     (1.10%)


Ratios/Supplemental Data:
Net Assets, End of Period (000)             $103,624    $180,823   $137,166  $119,552    $55,825

Ratio of Expenses to Average Net Assets       0.66%       0.65%      0.68%      0.73%     0.93%
Ratio of Net Investment Income to
    Average Net Assets                        6.27%       6.15%      6.35%      6.78%     7.20%
Portfolio Turnover Rate                         31%         53%        38%       39%        30%



(1) Effect of change in accounting principle (see Note 5 to the financial statements) 
    is to increase per share net income by $0.04 and ratio of net investment 
    income to average net assets by 0.3%.


</TABLE>


<PAGE>
                                

Berwyn Income Fund

More information about the Fund's  investments is available in the Fund's Annual
and  Semi-Annual  Report  to  Shareholders.  
In  the  Fund's  Annual  Reports  to
Shareholders, you will find a discussion of the market conditions and investment
strategies that significantly affected the performance of the Fund's predecessor
during its last fiscal year.  You can find more detailed  information  about the
Fund in the current Statement of Additional  Information ("SAI"),  which we have
filed  with the  Securities  and  Exchange  and which is  legally a part of this
prospectus.  If you  want a free  copy of the SAI,  the  Annual  or  Semi-Annual
Report,  or if you have any questions about investing in the Fund, you can write
to us at Berwyn  Income Fund,  Shareholder  Services,  c/o PFPC, P. O. Box 8987,
Wilmington, DE 19899 or call toll free 800-992-6757.

You can find  reports and other  information  about the Fund on the SEC web site
(http://www.sec.gov), or you can get copies of this information after payment of
a  duplicating  fee,  by  writing to the Public  Reference  Section of the SEC,
Washington, DC 20549-6009. Information about the Fund, including the SAI, can be
reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can
get information on the public reference room by calling the SEC at 800-SEC-0330.


Shareholder Services

PFPC Inc.
P.O. Box 8987
Wilmington, Delaware 19899

800-992-6757 (toll-free)

(Investment Company Act File Number 811-4963)

<PAGE>

                              THE BERWYN FUNDS
--------------------------------------------------------------------------------

                                BERWYN FUND

--------------------------------------------------------------------------------

                                PROSPECTUS
                              April 30, 1999

          This Prospectus describes shares of the Berwyn Fund, one of the
          series of The Berwyn Funds (the "Trust"). Shares of Berwyn Fund
          are sold on a no-load basis.

          The Securities and Exchange Commission has not approved or disapproved
          these securities or passed upon the adequacy of this  prospectus.  Any
          representation to the contrary is a criminal offense.

<PAGE>
<TABLE>
<CAPTION>
<S>                                                <C>                                            <C>

TABLE OF CONTENTS                                                                                 Page
Risk/Return Summary                                                                                 3

Carefully review these sections which
summarizes the Fund's investments, risks,         Performance                                       4
performance and fees                              Fees and Expenses of the Fund                     5

----------------------------------------          -----------------------------                   ----

This section contains important additional        Investment Objective, Principal Investment        6
information, including the Fund's principal       Strategies and Related Risks
investment strategies and risks

This sections contains details on the             Management and Organization                       9
management of the Fund

                                                  Shareholder Information                          10
Turn to this section for information on how
to open and maintain your account, including      Distribution and Taxes                           12
how to purchase, sell and exchange Fund shares
                                                  Distributor                                      12

----------------------------------------          -----------------------------                   ----

This sections contains important financial        Financial Highlights                             13
information on the Fund
</TABLE>

<PAGE>

RISK/RETURN SUMMARY

Investment Objective of the Fund
Berwyn Fund seeks to achieve long-term capital appreciation; current income is a
secondary consideration.

Principal Investment Strategies of the Fund
The Fund  invests in common  stocks  and fixed  income  securities  that offer a
potential for capital appreciation.  Under normal market conditions at least 80%
of the value of the Fund's net assets  will be invested  in common  stocks. The 
principal strategy of the Fund is to achieve long term growth through 
investments in equities that the Fund's investment adviser (the "Adviser")
believes are undervalued.  However, during 
periods of stock market adversity the 
Fund may take a more defensive position through the use of investment grade 
and/or junk bonds, as well as preferred stocks.  The use of higher yielding 
securities also serves to offset the normal operating expenses of the Fund.  
Up to twenty percent of the Fund may be invested in fixed income securities.

Principal Risks of Investing in the Fund
|_|  Although  the Fund will strive to achieve its goal,  there is no  assurance
     that it will.  Common  stock  prices are  subject to market,  economic  and
     business risks that will cause their prices to fluctuate  over time.  While
     common  stocks  have  historically  been a  leading  choice  of  long  term
     investors,  stock prices may decline over short or even  extended  periods.
     Therefore,  the value of your investment in the Fund may down and
     you could lose money.

|_|  Using  its  investment  approach  may  result  in  the  Fund  investing  in
     securities that are not in favor with other investment  advisers or brokers
     or  securities of lesser known  companies.  The Fund's  investment  success
     depends  on  the  skill  of  the  Adviser  in  evaluating,  selecting,  and
     monitoring  the Fund's  investments.  If the  Adviser's  conclusions  about
     growth  rates or stock  values are  incorrect,  the Fund may not perform as
     anticipated.

|_|  High yield bonds ("junk  bonds")  entail  greater risks than those found in
     higher rated bonds. High yield bonds are below investment grade instruments
     based on the significant risk of issuer default. High yield bonds and other
     fixed income securities are sensitive to interest rate changes.  Generally,
     when interest  rates rise, the prices of fixed income  securities  fall.
     The longer the maturity of fixed income  securities,  the greater is the
     impact from interest rate changes.  The value of the Fund's  investments
     will also vary with bond market conditions.

|_|  Other risks of high yield bonds include the market's relative youth,  price
     volatility,  sensitivity to economic changes, limited liquidity,  valuation
     difficulties and special tax considerations.

|_|  Lastly,  the Fund is  considered  "non-diversified"  under federal laws and
     regulations.  This means that the Fund may invest a greater  portion of its
     net assets in the shares of individual  companies  than a diversified  fund
     could.  Changes in the  financial  condition or market  assessment of these
     companies  may cause  greater  fluctuations  in the share value of the Fund
     than in the share value of a diversified fund.


An  investment  in the Fund is not a deposit  of any bank and is not  insured or
guaranteed  by the Federal  Deposit  Insurance  Corporation  (FDIC) or any other
government agency.


<PAGE>

PERFORMANCE

The bar chart and table can help you evaluate the  potential  risks of investing
in the Berwyn Fund. They show changes in the Fund's yearly  performance over the
life of the Fund and  compare  the Fund's  average  annual  returns for the past
one-year,  five-year,  and ten-year periods.  Investment  performance also often
reflects the risks associated with the Fund's investment objective and policies.
You should keep in mind that the Fund's past  performance is not  necessarily an
indication of the Fund's future performance.

  60.00%|
        |
  50.00%| 
        |             43.70% 
  40.00%|                                       
        |
  30.00%|                                       
        |                              22.90%                        26.05%   
  20.00%|                      20.60%                 19.18%
        |16.50%                                              14.35%
  10.00%|
        |                                      3.90%
     0% |
        |                                                               
 -10.00%|-----------------------------------------------------------------------
        |
        |                                                                -18.90%
 -20.00%|
        |       -23.90%  
 -30.00%|
        |
 -40.00%|
 
         1989    1990   1991   1992   1993    1994   1995   1996    1997  1998
  

     Best Quarter:  1Q '91    +23.91%
     Worst Quarter: 3Q '98    -22.73%


-------------------------------------------------------------------------------

Average Annual Total Return as of 12/31/98

                         1 Year         5 Years        10 Years
                         ------         -------        --------
Fund                     -18.90%        7.65%          10.01%
                        
Russell 2000 Index*      -2.55%         11.87%         12.92% 

     *    The Russell 2000 Index is an unmanaged  index of  securities  and does
          not include the actual costs of fund operation or management expenses.


<PAGE>


FEES AND EXPENSES OF THE FUND

As an investor,  you pay certain fees and expenses in connection  with the Fund,
which are described in the table below. 

------------------------------------------------------------------------------
------------------------------------------------------------------------------
                        Shareholder Transaction Fees
                  (Fees paid directly from your investment)
------------------------------------------------------------------------------

Maximum Sales Charge (load) on Purchases (as a percentage of             None
offering price)

Sales Charge on Reinvested Dividends                                     None

Redemption Fees*                                                         1.00%

Exchange Fees                                                            None
------------------------------------------------------------------------------
------------------------------------------------------------------------------


------------------------------------------------------------------------------
------------------------------------------------------------------------------
                        Annual Fund Operating Expenses
                  (Expenses that are deducted from Fund assets)

Management Fee                                                           1.00%

Distribution and Service (12b-1) Fees                                    0.00%

Other Expenses                                                           0.20%

Total Fund Operating Expenses                                            1.20%

------------------------------------------------------------------------------
------------------------------------------------------------------------------

* A redemption  fee of 1.00% is assessed if shares are redeemed in less than one
  year from the date of purchase.

[FN] Shareholder  transaction  fees are paid  from  your  account.  Annual  fund
     operating  expenses are paid out of Fund assets,  so that their effect
     is included in the share price.  The Fund has no sales charges (loads)
     or Rule 12b-1  distribution fees and minimal  shareholder  transaction
     fees.

EXAMPLE

This Example is intended to help you compare the cost of investing in the Berwyn
Fund with the cost of investing in other mutual funds.  The Example assumes that
you invest  $10,000 in the Fund for the time periods  indicated  and then redeem
all of your shares at the end of those  periods.  The Example  also assumes that
your investment has a 5% return each year and that the Fund's operating expenses
remain the same.  Although  your actual  costs may be higher or lower,  based on
these assumptions, your costs would be:


------------------------------------------------------------------------------
------------------------------------------------------------------------------
                     One Year       Three Years      Five Years     Ten Years
Berwyn Fund          $122          $381             $660           $1,455
------------------------------------------------------------------------------
------------------------------------------------------------------------------


<PAGE>

INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES
AND RELATED RISKS

The investment  objective of the Berwyn Fund is to seek long-term (i.e., greater
than  one  year)   capital   appreciation;   current   income  is  a   secondary
consideration.  The Fund is a non-diversified,  open-end  management  investment
company.  Being non-diversified means that the Fund may invest a greater portion
of its net assets in the shares of individual issuers. 

Even though the Fund is considered  non-diversified,  it 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% limitation.

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  in  selecting  securities  that 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 or on the
over-the-counter  market. The Adviser is a "value" manager. Where value is found
in the  marketplace  is  dependent  upon many  factors,  including  the level of
inflation, price-to-earnings ratios, as compared to interest rates, stock market
psychology and political factors.  Over its history, the Adviser has, more often
than   not,   found   small-   capitalization   stocks   to  offer   more   than
large-capitalization stocks. Consequently,  the performance of the Fund has been
typified by the Russell 2000 composite  stock index,  a smaller  captitalization
index. At the present time the avearge  weighted market  capitalization  for the
Fund is under $900 million, which is comparable to that of the Russell 2000.

Common Stocks -- 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 Adviser  believes that (i) its 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) 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.

Corporate Bonds -- A corporate bond is an interest-bearing  debt security issued
by a corporation.  The issuer has a contractual  obligation to pay interest at a
stated rate on specific dates and to repay  principal (the bond's face value) on
a specified  date. An issuer may have the right to redeem ("call") a bond before
maturity.

While the bond's annual  interest  income  established by the coupon rate may be
fixed for the life of the bond, its yield (income as a percent of current price)
will reflect current  interest rate levels.  The bond's price rises and falls so
that its yield remains  reflective  of current  market  conditions.  Bond prices
usually  rise when  interest  rates fall and  conversely,  bond prices fall when
interest rates rise.

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  Ratings  Group
("S&P") and Moody's Investors Service,  Inc.  ("Moody's"),  including securities
with a S&P D  rating,  a  Moody's  C  rating  and  unrated  securities  that are
determined by the Adviser to be of equivalent  quality.  (See Appendices A and B
in the Statement of Additional  Information for S&P'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 (S&P's or Moody's rating) and higher. Fixed income securities
that have credit ratings lower than BBB (S&P's rating) or a Baa (Moody's rating)
are  commonly  referred to as "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.

Temporary  Defensive  Positions  --  Although  the  Fund  will  normally  invest
according  to its  objective  as  outlined  above,  the Fund may at  times,  for
temporary defensive  purposes,  invest all or a portion of its assets in no load
money market funds,  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  (A-1 by S & P and  P-1 by  Moody's  Commercial  Paper
Ratings),  repurchase  agreements,  U.S.  treasury  bills, or treasury notes and
treasury bonds backed by the "full faith and credit" of the U.S. Government,  or
the Fund may hold cash. Investment in a no-load money market fund will result in
the Fund paying a management  fee on the money invested in such fund in addition
to the operating expenses of the Fund.


<PAGE>

Risks of Investing in the Fund

Investing in any mutual fund such as the Fund involves risk,  including the risk
that you may receive little or no return on your  investment,  and the risk that
you may lose part or all of the money you invest.  Before you invest in the Fund
you should carefully evaluate the risks.  Because of the nature of the Fund, you
should  consider an  investment  to be a  long-term  investment  that  typically
provides the best results when held for a number of years. The following are the
chief risks you assume when investing in the Fund.

Because the Fund is a non-diversified fund, an investment in the Fund may be a
greater risk than an investment in a diversified fund.  Bond prices usually rise
when interest rates fall and conversely, bond prices fall when interest rates
rise.  If a bond is subject to a call and is called before maturity, the Fund 
may have to reinvest the proceeds at lower market rates.

<TABLE>
<CAPTION>
<S>                                                         <C>
Risks                                                       How the Fund Manages These Risks

Market  Risk is the risk that all or a majority  of the     The Fund  maintains  a long-term investment  approach and
securities in a certain market - like the stock or bond     focus on stocks we  believe  can  appreciate  over an extended
market  - will decline in value because of factors such as  time  frame regardless of interim market  fluctuations.  The
economic  conditions,  future expectations  or investor     Fund does not try to predict  overall  stock market
confidence.  If the value of the majority of common stocks  movements and does not trade for short-term  purposes.
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 is a decline in the
value of a  majority  of the common stocks of the Fund,
then the net assets of the Fund and  investment in the
Fund would normally decline in value.


Industry and Security Risk is the risk that the value of    The Adviser follows a rigorous  selection process before
securities in a particular industry or the value of an      choosing  securities for the Fund.
individual  stock or bond will decline because of changing
expectations for the performance of that industry
or for the individual company issuing the stock or bond.


Lower Rated,  High Yield,  High Risk Fixed Income           The Fund may invest in fixed income  securities that are
Securities include those  securities  rated lower than BBB  listed in national  exchanges or on the  over-the-counter market
by S&P and Baa by Moody's.  Securities of this type are     The Adviser will attempt to minimize the risks of investing
considered to be of poor  standing  and  predominantly      in medium grade and high yield, high risk bonds by doing a credit
speculative as to their ability to repay  interest          analysis of the issuer, monitoring the Fund's investments and the
and  principal.                                             investment  environment in general. The credit rating is not the only
                                                            criterion for selection.  The Adviser examines  the  financial  
                                                            structure  of each  issuer  and with  regard  to these
                                                            securities,  makes a determination  as to the issuer's  ability to meet
                                                            its debt obligations. Achievement of the Fund's investment objective is
                                                            more dependent on the Adviser's  credit analysis in selecting high
                                                            yield,  high risk bonds than is the case in  selecting  higher  quality
                                                            securities.  However,  there  can be no guarantee  that the  issuer
                                                            of the  bonds in which  the Fund  invests  will not default or that the
                                                            securities will not decline in value.


Portfolio  Turnover  rates reflect the amount of securities The Fund normally will not invest for short-term trading
that are replaced from the beginning of the year to the     purposes. However, the Fund may sell securities without
end of the year by the Fund.  The  degree of  portfolio     regard to the length of time they have  been  held.  The
activity may affect brokerage costs and othertransaction    Fund anticipates that the portfolio  turnover rate of the
costs of the Fund, as well as taxes payable by              Fund will not exceed 100%.
shareholders that are subject to federal income tax.


Small Company Investment Risk includes the general risks    The securities of companies with small revenues and
of investing in common stocks such as market, economic and  capitalizations, in which the Fund invests, may offer
business risk that cause their prices to fluctuate over     greater opportunity for capital appreciation than larger
time.  Historically, smaller capitalization stocks have     companies.
been more volatile in price than larger capitalization
stocks.  Among the reasons for the greater price
volatility of these securities are the lower degree of
liquidity in the markets for such stocks, and the
potentially greater sensitivity of such small companies to
changes in or failure of management, and in many other
changes in competitive, business, industry and economic
conditions, including risks associated with limited
production, markets, management depth, or financial
resources.

</TABLE>

For additional  information about the Fund's investment policies, please see the
Statement of Additional Information.

Year 2000 Issues

Like all mutual funds, the Fund and its service providers utilize systems that 
must accurately process date related information on or after January 1, 2000. 
If systems used by the Fund or its service providers are negatively affected by 
Year 2000 issues, the Fund may not be able to handle securities trades,
payments of interest and dividends, or pricing and account services.  Although,
at this time, there can be no assurance that there will be no adverse impact
on the Fund, the Fund's service providers have advised the Fund that they have
been actively working on necessary changes to their computer systems to prepare
for the Year 2000 and expect that their systems, and those of other parties they
deal with, will be prepared in time for that event.  The Adviser has reviewed
the types of securities and debt obligations held as investments by the Fund to
determine the imapct of the Year 2000 issues on the returns and relative safety 
of principal of such securities and debt obligations.  Based on this 
review, the Adviser does not believe the Year 2000 issues pose any substantial
risk for such returns and safety of principal.


MANAGEMENT AND ORGANIZATION

The Fund  commenced  operations  as a series of shares of The  Berwyn  Funds,  a
Delaware  business  trust,  on  April  30,  1999  in  a  reorganization  of  its
predecessor, The Berwyn Fund, Inc. In the reorganization,  the Fund succeeded to
all the business, assets and liabilities of its predecessor.

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, Chief Executive Officer and sole shareholder of the Adviser.

Robert Killen is also the  President and Chairman of the Board of the Trust.  He
is the person primarily  responsible for the day-to-day management of the Berwyn
Fund's  portfolio.  He managed  the  portfolio  of The Berwyn  Fund,  Inc.,  the
predecessor of the Berwyn Fund, from May 4, 1984, the date of that Fund's public
offering,  until  April 30,  1999.  Robert  Killen  has over  twenty-five  years
experience as an investment  adviser. In 1969, Robert 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 him 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, 1998,  The Killen  Group,  Inc. was managing 335  individual
investment  portfolios worth  approximately $367 million.  On December 31, 1998,
The Berwyn Fund, Inc. had over $62 million in net assets.

Investment Management Fees

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 of Trustees. For the advisory services it provides, the
Adviser  receives a fee of 1.00% of the Fund's  average  daily net  assets.  The
advisory  fee  payable to the  Adviser by the Berwyn Fund is higher than that of
many mutual funds.

Subject to the  policies  established  by the  Trust's  Board of  Trustees,  the
Adviser is  responsible  for the Fund's  portfolio  decisions.  When  buying and
selling securities, the Adviser gives consideration to brokers who have assisted
in the  distribution  of the  Fund's  shares.  The Fund  may also pay  brokerage
commissions to brokers who are affiliated with the Adviser or the Funds.


SHAREHOLDER INFORMATION

Buying Shares

You may buy  shares of the Fund  without  a sales  charge.  Your  price for Fund
shares is the Fund's net asset value per share (NAV).  Your order will be priced
at the next NAV calculated  after the Fund's Transfer Agent receives your order.
The Fund also has arrangements that permit third parties to accept orders on the
Fund's behalf,  so that investors can receive the NAV calculated after the order
is received in good order by the third party.

The NAV is calculated as of the close of trading on the New York Stock  Exchange
(the "Exchange")  (4:00 p.m. Eastern Time) every day the Exchange is open. If we
receive  your order after the close of trading,  you will pay the next  business
day's price.  Currently,  the Exchange is closed when the following holidays are
observed:  New Year's Day, Martin Luther King,  Jr.'s  Birthday,  President Day,
Good  Friday,  Memorial  Day,  Independence  Day,  Labor Day,  Thanksgiving  and
Christmas.

The NAV is determined by dividing the value of the Fund's  securities,  cash and
other  assets,  minus  all  expense  and  liabilities,  by the  number of shares
outstanding.  The Fund's  securities  are valued each day at their market value,
which  usually  means the last  quoted  sale price on the  security's  principal
exchange. If market quotes are not readily available,  securities will be priced
at their fair value as determined in good faith by the Fund's Board of Trustees.

Minimum Investment

|_|  The minimum initial  investment for the Fund is $3,000 per investor.  This
     investment may be divided by a single investor among  different  investment
     accounts  in the Fund or between  accounts  in the  Berwyn  Fund and Berwyn
     Income  Fund,  another  series of the  Trust,  that  total  $3,000  in the
     aggregate.  Subsequent investments must be at least $250.

|_|  For an Individual Retirement Account (IRA), the 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 pension or profit sharing 
     plan or a custodial  account  established  for the benefit of a minor.

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.

In Kind Purchases

An  investor  may  exchange  securities  for  shares  of the Fund.  For  taxable
investors  an  exchange of  securities  for shares of the Fund will be a taxable
exchange.  The  securities  must  meet  the  Fund's  investment  objectives  and
policies.  The  securities  will be  valued  in the same  way  that  the  Fund's
portfolio  is valued for purposes of  calculating  the NAV.  Please  contact the
Adviser for further information.

<PAGE>


Exchange of Shares

|_|  You may exchange  your shares of one Fund for shares of Berwyn Income Fund,
     another series of the Trust. The initial minimums for the Funds must be met
     ($1,000 for IRAs and no minimum  initial  investment  for pension or profit
     sharing plans or custodial accounts for minors.).

|_|  Shares may also be  exchanged  for shares in the Rodney  Square Fund or the
     Rodney Square  Tax-Exempt  Fund. These 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 next NAV of
     the funds  involved that is determined  after a request for an exchange has
     been received. The minimum initial investment for each of the Rodney Square
     funds is $1,000.  A shareholder  may request an exchange by calling 1 (800)
     992-6757 between (9:00 a.m. and 4:00 p.m. Eastern Time) on any business day
     or by writing to the Fund's Transfer Agent.

|_|  A  shareholder  in the Fund,  however,  will only be  permitted to exchange
     shares in his or her  account  for  shares of one of the other  funds  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 he or she  wishes.  The Fund  reserves  the right to amend or change the
     exchange privilege upon 60 days' notice to shareholders.

Redeeming Shares

|_|  You may redeem your shares at any time.  The shares will be redeemed at the
     next NAV  calculated  after the  Fund's  Transfer  Agent has  received  the
     redemption request. You may redeem your shares by sending a written request
     to the Fund's Transfer Agent. If you have selected the telephone redemption
     option on your application,  you may redeem up to $5,000 worth of shares by
     calling the Transfer  Agent at 1 (800) 992-6757 on any business day between
     the  hours of 9:00  a.m.  and 4:00  p.m.  Eastern  Time.  The Fund will use
     reasonable   procedures  to  confirm  that  instructions   communicated  by
     telephone  are genuine and, if the  procedures  are  followed,  will not be
     liable  for  any  losses  due  to  unauthorized  or  fraudulent   telephone
     transactions.

|_|  Generally,  there  is no sales  charge  for  redeeming  shares.  The  Fund,
     however,  does charge a 1% redemption  fee on shares held for less than one
     year. The fee is charged on the proceeds of the redemption. The fee is paid
     to the Fund and included in its net assets for the benefit of the remaining
     shares.  This fee is waived  for those who buy and sell  shares of the Fund
     through third parties.

Shareholders  may buy and sell shares of the Fund through broker dealers who may
charge a fee for such  service.  In addition,  if a shareholder  redeems  shares
through  the  Transfer  Agent and  requests  that the  proceeds  be wired to the
shareholder, the Transfer Agent may charge the shareholder a wiring fee.


<PAGE>

DISTRIBUTION AND TAXES

The Fund  distributes  annually all of its net  investment  income and any net
realized capital gains.  Unless a shareholder  requests otherwise in the account
application,  dividends and capital gains  distributions  will be  automatically
reinvested in shares of the Fund at the NAV on the Fund's ex-dividend date.

In general,  Fund  distributions are taxable to you as either ordinary income or
capital  gains.  This  is  true  whether  you  reinvest  your  distributions  in
additional  shares of the Fund or receive  them in cash.  Any capital  gains the
Fund  distributes  are taxable to you as long-term  capital  gains no matter how
long you have owned your shares.

It is not  ordinarily to your advantage to buy shares in the Fund shortly before
the Fund makes a distribution  because part of your investment will come back to
you as a taxable distribution.

Every  January,  you will  receive a  statement  that  shows  the tax  status of
distributions  you  received for the previous  year.  Distributions  declared in
December but paid in January are taxable as if they were paid in  December.  The
Adviser  expects  that the  majority  of the  payments  from  the  Fund  will be
long-term capital gains distributions.

When you sell or redeem your shares of the Fund,  you may have a capital gain or
loss. For tax purposes, an exchange of your Fund shares for shares of the Berwyn
Income Fund, the Rodney Square Fund or the Rodney Square  Tax-Exempt Fund is the
same as a sale. The individual tax rate on any gain from the sale or exchange of
your shares depends on how long you have held your shares.

Fund  distributions  and gains from the sale or  exchange  of your  shares  will
generally be subject to state and local income tax.  Non-U.S.  investors  may be
subject to U.S.  withholding and estate tax. You should consult your tax advisor
about the federal,  state,  local or foreign tax consequences of your investment
in the Fund.

By law, the Fund is required to withhold 31% of your taxable  distributions  and
proceeds if you do not provide your correct taxpayer identification number (TIN)
or certify that your TIN is correct, or if the IRS instructs us to do so.


DISTRIBUTOR

Berwyn Financial Services Corp. ("Berwyn Financial"),  located at 1189 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 Trust. 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 to assist 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 continues to bear the expenses of
all filing or notification  fees incurred in connection with the registration of
shares under state securities laws.



<PAGE>

FINANCIAL HIGHLIGHTS 

The financial  highlights  table is intended 
to help you  understand  the Berwyn 
Fund's financial performance and reflects the financial performance of The 
Berwyn Fund, Inc., the  predecessor of the Fund,  
for the past 5 years.  Certain 
information reflects  financial  results for a single Fund share.  The total 
returns in the table  represent  the rate  that an  investor  would  have  
earned or lost on an investment   in  the  Fund   (assuming   reinvestment   of
all dividends and distributions).

<TABLE>
<CAPTION>

                              FINANCIAL HIGHLIGHTS
                 FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

                                                                     YEAR ENDED 

<S>                                        <C>         <C>        <C>        <C>       <C>

                                           12/31/98    12/31/97   12/31/96   12/31/95  12/31/94

Net Asset Value, Beginning of Year         $22.01      $19.69     $19.43     $17.55    $17.67
                                           -------     -------    -------    -------   -------
Income from Investment Operations:
      Net Investment Income (Loss)          (0.09)       0.00      (0.02)      0.00      0.02
      Net Realized and Unrealized Gains
          (Losses) on Securities            (4.11)       5.06       2.78       3.34      0.65
                                           -------     -------    -------    -------   -------
        Total from Investment Operations    (4.20)       5.06       2.76       3.34      0.67
                                           -------     -------    -------    -------   -------

Less Distributions:
      Dividends from Net Investment Income   0.00        0.00       0.00      (0.01)    (0.01)
      Distributions from Net Realized Gains (0.85)      (2.74)     (2.50)     (1.45)    (0.78)
                                           -------     -------    -------    -------   -------

        Total Distributions                 (0.85)      (2.74)     (2.50)     (1.46)    (0.79)
                                           -------     -------    -------    -------   -------

Net Asset Value, End of Year               $16.96      $22.01     $19.69     $19.43    $17.55


        Total Return                       (18.90%)     26.05%     14.35%     19.18%     3.90%


Ratios/Supplemental Data:
Net Assets, End of Period (000)             $62,862   $100,406    $94,056    $97,234   $63,522

Ratio of Expenses to Average Net Assets      1.20%       1.20%      1.21%      1.23%     1.33%

Ratio of Net Investment Income (Loss) to
    Average Net Assets                      (0.45%)     (0.02%)    (0.10%)     0.04%     0.11%

Portfolio Turnover Rate                        19%         26%        32%       32%        24%




</TABLE>


<PAGE>

Berwyn Fund

More information about the Fund's  investments is available in the Fund's Annual
and  Semi-Annual  Reports  to  Shareholders.  In the  Fund's  Annual  Report  to
Shareholders, you will find a discussion of the market conditions and investment
strategies that significantly affected the performance of the Fund's predecessor
during its last fiscal year.  You can find more detailed  information  about the
Fund in the current Statement of Additional  Information ("SAI"),  which we have
filed  with the  Securities  and  Exchange  and which is  legally a part of this
prospectus.  If you  want a free  copy of the SAI,  the  Annual  or  Semi-Annual
Report,  or if you have any questions about investing in the Fund, you can write
to us at The  Berwyn  Fund,  Shareholder  Services,  c/o  PFPC,  P. O. Box 8987,
Wilmington, DE 19899 or call toll free 1-800-992-6757.

You can find  reports and other  information  about the Fund on the SEC web site
(http://www.sec.gov), or you can get copies of this information after payment of
a  duplicating  fee,  by  writing to the  Public  Reference  Section of the SEC,
Washington, DC 20549-6009. Information about the Fund, including the SAI, can be
reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can
get information on the public reference room by calling the SEC at 800-SEC-0330.


Shareholder Services

PFPC Inc.
P.O. Box 8987
Wilmington, Delaware 19899

800-992-6757 (toll-free)

(Investment Company Act File Number 811-4963)

<PAGE>

                                THE BERWYN FUNDS
                Berwyn Income Fund, a Series of The Berwyn Funds
                              Shareholder Services
                                  c/o PFPC Inc.
                                  P.O. Box 8987
                              Wilmington, DE 19899
                                1 (800) 992-6757


                       STATEMENT OF ADDITIONAL INFORMATION

                                 April 30, 1999


This Statement of Additional Information ("SAI") is not a Prospectus. The SAI is
a document that relates to the  Prospectus of the Berwyn Income Fund series (the
"Fund") of The Berwyn  Funds (the  "Trust")  dated April 30,  1999 and  contains
additional   information  regarding  the  Fund.  This  SAI  should  be  read  in
conjunction  with the  Prospectus.  The Prospectus may be obtained by writing to
the Fund at the above address or calling the 800 number.  The audited financial
statements  and notes thereto for the year ended December 31, 1998 of the Berwyn
Income Fund, Inc.  ("BIF"),  the predecessor of the Fund, and the report of 
PricewaterhouseCoopers  LLP, the Fund's independent  accountants, on such 
financial  statements (the "Report"),  included in BIF's 1998 Annual Report
to  Shareholders  will be  incorporated by reference in this SAI by amendment to
the Trust's registration statement.


<PAGE>
                                TABLE OF CONTENTS

Investment Policies and Risk Factors.......................................   1

Investment Restrictions....................................................   3

Investment Advisory Arrangements...........................................   5

Expense Limitation.........................................................   5

Trustees and Officers......................................................   6

Ownership of the Fund......................................................   8

Portfolio Transactions and Brokerage Commissions...........................   8

Computation of Net Asset Value.............................................   9

Share Purchases............................................................   9

Distributor................................................................  10

Redemption of Shares.......................................................  10

Calculation of Performance Data............................................  10

General Information........................................................  12

Distribution and Taxes.....................................................  12

Financial Statements.......................................................  15

<PAGE>

                      INVESTMENT POLICIES AND RISK FACTORS

(See also "Investment  Objectives,  Principal Investment  Strategies and Related
Risks" in the Fund's Prospectus.)

The Fund is a  no-load,  diversified  series of shares of The Berwyn  Funds,  an
open-end,  management investment company. Its investment objective is to provide
investors with current  income while seeking to preserve  capital by taking what
the Fund considers to be reasonable risks. In pursuing its investment objective,
the Fund may also offer, as a secondary consideration, the potential for capital
appreciation.  To achieve its  objective,  the Fund invests in investment  grade
corporate  debt  securities,   securities  issued  or  guaranteed  by  the  U.S.
Government,  its agencies or instrumentalities,  high yield, high risk corporate
debt securities (also known as "junk bonds"), unrated corporate debt securities,
and preferred and common stocks.  The Adviser  determines the percentage of each
category of securities to purchase and hold based upon the  prevailing  economic
and market  conditions.  This means,  that the Fund may invest up to 100% of its
net  assets  in high  yield,  high risk  corporate  debt  securities.  The Fund,
however,  may not invest in common  stock when the value of the common  stock in
the  Fund's  portfolio  equals or  exceeds  30% of the value of the  Fund's  net
assets.


Securities  rated BBB or higher by Standard & Poor's Rating Group ("S&P") or Baa
or  better  by  Moody's  Investors  Service,  Inc.  ("Moody's")  are  considered
investment grade corporate debt  securities.  Securities rated lower than BBB or
Baa by these services are considered high yield  securities.  Appendices A and B
list the definitions of the S&P and Moody's bond ratings.


The Fund may invest in fixed income securities that are not rated. The Fund will
only invest in unrated securities that have a  creditworthiness,  in the opinion
of the Adviser,  that is equal to or better than the  creditworthiness  of fixed
income securities with S&P ratings of CC or Moody's ratings of Caa.

The Fund may also purchase certain debt securities that have not been registered
with  the  U.S.  Securities  and  Exchange  Commission  (the  "SEC")  under  the
Securities Act of 1933, as amended ("1933 Act"), and are restricted from sale to
the general public. The Fund will purchase these restricted  securities from the
issuer  or  qualified  institutional  buyers,  and will  sell  these  restricted
securities,  exclusively in  transactions  that are exempt pursuant to Rule 144A
under  the 1933 Act.  The Fund will  limit  its  investment  in such  restricted
securities to no more than 10% of the value of its net asset.


There  are  risks  associated  with  investing  in  Rule  144A  Securities.  The
securities  may  become  illiquid  if  qualified  institutional  buyers  are not
interested in acquiring the securities. Although the Rule 144A Securities may be
resold in negotiated transactions,  the price realized from these sales could be
less  than  the  price  originally  paid by the  Fund or less  than  what may be
considered the fair value of such  securities.  Furthermore,  if such securities
are  required  to be  registered  under  the  securities  laws  of one  or  more
jurisdictions  before being resold, the Fund may be required to bear the expense
of registration.


In an effort to minimize the risks  associated with these  securities,  the Fund
will only purchase Rule 144A  Securities of companies that have publicly  traded
securities  outstanding,  have been in business a minimum of 5 years, and have a
market capitalization of at least $100 million.  Finally, the Fund will purchase
Rule 144A  Securities  only in  situations  where the Adviser  has a  reasonable
expectation  that the  securities  will be registered  with the  Securities  and
Exchange Commission within six months.


In addition to corporate debt securities,  the Fund may invest in the securities
issued or  guaranteed by the U.S.  Government  and its agencies and in preferred
and common  stocks.  The  securities  of the U.S.  Government  in which the Fund
invests  are U.S.  Treasury  bonds and notes.  The Fund may also  purchase  debt
securities  issued  by  Government  agencies  or by an  instrumentality  of  the
Government.  Some of the Federal  agencies  that issue or  guarantee  securities
include, among others, the Export-Import Bank of the United States, Farmers Home
Administration,  Federal Housing Administration,  Maritime Administration, Small
Business  Administration and the Tennessee Valley Authority.  An instrumentality
of the U. S. Government is a government  agency  organized under Federal charter
with   government   supervision.   Instrumentalities   issuing  or  guaranteeing
securities include,  among others, the Federal Home Loan Banks, the Federal Land
Banks, Central Bank for Cooperatives,  Federal Intermediate Credit Banks and the
Federal National Mortgage Association.


U.S.  Treasury  bonds and notes are  backed by the full  faith and credit of the
U.S.  Government.  Securities issued by Government agencies or instrumentalities
may or may not be backed by the full faith and credit of the United  States.  In
the case of  securities  not  backed by the full  faith and credit of the United
States, an investor must look principally to the agency or  instrumentality  for
repayment.


The Fund invests in preferred  stocks that,  in the opinion of the Adviser,  are
offering an above average  yield in  comparison to preferred  stocks of the same
quality or in preferred  stocks  offering a potential for capital  appreciation.
The Fund may also  purchase  preferred  stocks  that are  restricted  securities
subject to the limitations under Rule 144A described above.


The Fund invests in common stocks that it considers to be selling at undervalued
prices.  The investment  approach of the Fund may be deemed  "contrarian" in its
selection of common  stocks due to the fact that this approach may lead the Fund
to select  stocks not  recommended  by other  investment  advisers or  brokerage
firms.  The Fund,  however,  will  purchase  only  common  stocks  that pay cash
dividends  and will not purchase  additional  common  stocks when common  stocks
comprise 30% or more of the Fund's net assets.

Aside from the investments  listed above,  the Fund may at times,  for temporary
defensive  purposes,  invest all or a portion  of its  assets in  no-load  money
market funds,  savings  accounts and  certificates  of deposit of domestic banks
with assets in excess of  $1,000,000,  commercial  paper  rated A-1,  repurchase
agreements or Treasury bills, and may hold cash.

Investment  by the Fund in a no-load  money  market fund will result in the Fund
paying a management  fee and other fund  expenses on the money  invested in such
fund in addition to the operating expenses of the Fund.

The Fund may invest in real estate  investment  trusts  ("REITs") and repurchase
agreements.  The Fund  limits  investment  in REITs to 10% of its net assets and
investment in repurchase agreements to 5% of its net assets.

REITs 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.  Some REITs own  properties and earn income
from leases and rents.  These types of REITs are termed  "Equity"  REITs.  Other
REITs hold  mortgages  and earn income from interest  payments.  These REITs are
termed "Mortgage" REITs.  Finally,  there are "Hybrid" REITs that own properties
and hold  mortgages.  The Fund may invest in any of the three types of REITs and
may purchase the common stocks, preferred stocks or bonds issued by REITs.

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 a means of lessening risks. As of December 31, 1998, 4.9%
of the Fund's net assets were invested in REITs.

In a repurchase agreement a seller of securities,  usually a banking institution
or securities  dealer,  sells securities to the Fund and agrees with the Fund at
the time of sale to repurchase the securities 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.  In the event
of  bankruptcy  of the seller of a  repurchase  agreement  or the failure of the
seller to repurchase  the  underlying  securities as agreed upon, the Fund could
experience losses.  Such losses could include a possible decline in the value of
the underlying securities during the period the Fund seeks to enforce its rights
thereto and a possible  loss of all or part of the income from such  securities.
The Fund  would also incur  additional  expenses  enforcing  its  rights.  As of
December 31, 1998, the Fund had no assets invested in repurchase agreements.


                             INVESTMENT RESTRICTIONS

The  investment  restrictions  set forth below are  fundamental  policies of the
Fund.  Fundamental  policies  may not be changed  without  approval by vote of a
majority of the Fund's outstanding voting securities. As used in this SAI and in
the Prospectus,  "a majority of the Fund's  outstanding voting securities" means
the  lesser of (a) more than 50% of the  Fund's  outstanding  shares,  or (b) at
least  67% of the  shares  present  or  represented  by  proxy at a  meeting  of
shareholders  provided  that  the  holders  of  more  than  50%  of  the  Fund's
outstanding shares are present in person or represented by proxy.

When investing its assets, the Fund will not:

(1)  invest more than 5% of the value of its total assets in the  securities  of
     any  one  issuer  or  purchase  more  than  10% of the  outstanding  voting
     securities,  debt or preferred  stock of any one issuer.  This  restriction
     does not apply to obligations issued or guaranteed by the U. S.
     Government,  its  agencies  or instrumentalities;

(2)  invest more than 25% of the value of its total assets in the  securities of
     issuers 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 the making of a loan;

(4)  buy or sell  real  estate  and real  estate  mortgage  loans,  commodities,
     commodity futures contracts, puts and 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,  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 Securities Act of 1933, as amended, before they may be offered and sold
     to the  public,  except  that  the  Fund  will  be  permitted  to  purchase
     restricted  securities  that are eligible for resale  pursuant to Rule 144A
     under the Securities Act of 1933, as amended);

(10) participate in a joint investment account; and

(11) issue senior securities.

The  Fund  has  also  adopted  certain  investment  restrictions  that  are  not
fundamental  policies.  These  restrictions are that the Fund will not invest in
real estate  limited  partnerships  or oil, gas or other mineral  leases and any
investments   in  warrants  will  not  exceed  5%  of  the  Fund's  net  assets.
Restrictions  that are not fundamental  policies may be changed by a vote of the
majority of the Board of Trustees. If any of these non-fundamental  restrictions
are changed,  however, the Fund will give shareholders at least 60 days' written
notice.


                        INVESTMENT ADVISORY ARRANGEMENTS

(See also "Management of the Fund" in the Fund's Prospectus)

The Killen Group,  Inc., is the investment  adviser (the "Adviser") to the Fund.
Robert E. Killen is Chairman,  CEO and sole  shareholder  of the Adviser.  He is
also  President and Chairman of the Board of the Fund.  Edward A. Killen,  II is
Vice  President,  Secretary  and a Director  of the Adviser and a Trustee of the
Trust.

The Adviser  provides the Fund with investment  management  services.  Under the
Contract for Investment  Advisory  Services  between the Trust, on behalf of the
Fund,  and the Adviser (the  "Contract"),  dated  March 26,  1999,  the Adviser
provides the Fund with advice and  recommendations  with respect to investments,
investment  policies,  the purchase and sale of securities and the management of
the Fund's  resources.  In  addition,  employees of the Adviser  administer  the
operation of the Fund. These employees prepare and maintain the accounts,  books
and records of the Fund,  calculate the daily net asset value per share each day
the New York Stock Exchange is open,  prepare and file the documents required of
the Fund under Federal and state laws and prepare all shareholder reports.

The  Contract  provides  that it will  continue  in  effect,  after the  initial
two-year term of the Contract, from year to year if continuation is specifically
approved  annually  by either a majority of the Board of Trustees or a vote of a
majority of the outstanding  voting  securities of the Fund.  Continuance of the
Contract  must also be approved  annually by a majority of Trustees  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 authorized by the Board of
Trustees or by a vote of a majority of the outstanding  voting securities of the
Fund.  The Adviser may terminate  the Contract on sixty days' written  notice to
the Fund without payment of any penalty.  The Contract will be automatically and
immediately terminated in the event of its assignment.

As  compensation  for its investment  management  services to the Fund under the
Contract,  the Adviser is entitled to receive monthly compensation at the annual
rate of 0.50% of the average  daily net assets of the Fund.  The fee is computed
daily by multiplying the net assets for a day by the appropriate  percentage and
dividing  the result by 365.  At the end of the month,  the daily fees are added
and the sum is paid to the Adviser.

BIF, the  predecessor  of the Fund,  paid the Adviser  $789,024 in fees in 1998,
$806,435 in 1997, and $638,212 in 1996.



                               EXPENSE LIMITATION

The Contract provides that the Adviser's fee payable by the Fund will 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 payable by the Fund) from  exceeding  2% of the average  daily net assets of
the Fund.  In any month that the Fund  expenses and  liabilities  exceed 2%, the
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 payable by the Fund.  Once the net assets of the Fund
exceed  $100  million,  the  expense  limitation  will be reduced to 1.5% of the
average daily net assets of the Fund. The expense limitation has not reduced the
Adviser's  fee since 1988.  In 1998 the Fund's total annual  operating  expenses
amounted to 0.66% the average daily net assets of the Fund.


                              TRUSTEES AND OFFICERS

The Board of Trustees  oversees the  management of the business of the Trust and
the Fund. The Board is elected initially by shareholders and thereafter Trustees
are  elected by the Board or the  shareholders  from time to time in  accordance
with the Trust's  Agreement and  Declaration of Trust and By-Laws.  The Board of
Trustees sets broad policies for the Fund and has responsibility for supervision
of the operations of the Fund. The daily operations of the Fund are administered
by employees of the Adviser under the Board's supervision.

The Trustees and  executive  officers of the Trust and their ages and  principal
occupations for the past five years are set forth below:


<TABLE>
<CAPTION>
Name, Age, Position                 Principal Occupation for the Past Five Year
and Address
<S>                                 <C>
*Robert E. Killen (57)              Director of Westmoreland Coal Co. (a mining company) since
President & Trustee                 July 1996.  Director and shareholder, Berwyn Financial Services
1199 Lancaster Avenue               Corp. ("BFS"), a financial services company (registered as a broker-dealer with
Berwyn, Pennsylvania                the 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 the Berwyn  Income  Fund,  Inc. ("BIF"),  the  predecessor  of the Fund, and
                                    The  Berwyn   Fund,   Inc.   ("TBF")   (both registered  investment  companies managed by
                                    the  Adviser)  from  December  1986 to April, 1999 and from  February  1983 to April 1999,
                                    respectively.   Chairman,   Chief  Executive Officer 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.

*Anthony N. Carrelli (50)           Director of BIF from December 1996 to April 1999 and TBF from January 1995 to
Trustee                             April 1999.  Vice President of the Adviser since August 1986.
1189 Lancaster Avenue
Berwyn, Pennsylvania

*Edward A. Killen, II (47)          Director, Secretary and shareholder of BFS since October 1991.  Director of BIF
Trustee                             from January 1995 to April 1999 and TBF from February 1983 to January 1995 and
1189 Lancaster Avenue               from March 1999 to April 1999.  Vice President, Secretary and Director of the
Berwyn, Pennsylvania                Adviser since February 1983.

Denis P. Conlon (51)                Director  of BIF and TBF from June  1992 to April  1999.
Trustee                             President and Chief Executive Officer of CRC Industries (a worldwide
1282 Farm Road                      manufacturer)  since  September 1996.  Vice President, Corporate
Berwyn, Pennsylvania                Development, Berwind Corporation (diversified manufacturing
                                    and financial company) from 1990 to September 1996.

Deborah D. Dorsi (43)               Director of BIF and TBF from April 1998 to April 1999.  Retired industry
Trustee                             executive since 1994.  Director Worldwide Customer Support, Kulick Soffa
1801 Stanbridge Street              Industries, Inc. (Semi Conductor Equipment Manufacturer) from 1993 to 1994.
Norristown, Pennsylvania            Corporate Account Manager for Kulick & Soffa Industries, Inc. prior to 1993.

Kevin P. Ryan (51)                  President,  Treasurer,  Director and shareholder of BFS since
1199 Lancaster Avenue               October 1991.  Secretary-Treasurer, and Director of BIF from December 1986 to January
Berwyn,  Pennsylvania               1995. Secretary and Treasurer of TBF from February 1983 to April  1999 and BIF from December 
                                    1986 to April 1999, Director of TBF from  February 1983 to March 1999.  Legal  counsel to the
                                    Adviser since September 1985.

*    Robert E. Killen, Anthony N. Carrelli, Edward A. Killen, II and Kevin M. Ryan are "interested persons"
     of the Fund as defined in the Investment Company Act of 1940, as amended (the "1940 Act").  Consequently, Robert E. Killen,
     Anthony N. Carrelli, and Edward A. Killen, II are the "Interested Trustees" of the Fund.  Robert E. Killen is an Officer,
     Director and sole shareholder of the Adviser.  Robert E. Killen is  also a  Director  of  BFS,  a  registered  broker-dealer,
     and  owns one-third  of  its  outstanding  shares.  Anthony  N.  Carrelli  is a  Vice President of the Adviser.  Edward A.
     Killen,  II is an officer and Director of the Adviser. He is also an officer,  Director and the owner of one-third of the  
     outstanding  shares of BFS.  Kevin M. Ryan is legal  counsel to the Adviser and an officer,  Director and owner of one-third
     of the outstanding shares of BFS. In addition,  Robert E. Killen and Edward A. Killen,  II are brothers  and Kevin M. Ryan 
     is  brother-in-law  to both.  BFS serves as the distributor for the Fund's shares in certain jurisdictions.

</TABLE>

Mr.  Conlon and Ms. Dorsi are the Trustees of the Trust who are not  "interested
persons"  of the Trust as defined in the 1940 Act (the  "Independent  Trustees")
and are paid a fee of $800 for each Board or Committee  meeting attended and are
reimbursed  for any  travel  expenses  by the  Trust.  If a Board and  Committee
meetings are held on the same day,  the  Independent  Trustees  receive only one
$800 fee for all  meetings on the same day.  The Trust has not adopted a pension
or retirement plan or any other plan that would afford benefits to its Trustees.

The Trust estimates that the Trust will pay Ms. Dorsi and Mr. Conlon each $3,200
for the Trust's initial fiscal year ending December 31, 1999. The Trust is not a
part of any fund complex.

Officers of the Trust are not paid compensation by the Trust or any fund complex
for their work as officers and no fees are paid by the Trust or any fund complex
to the Trustees that are not  Independent  Trustees 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 February 11, 1999, there were no shareholders of the Trust or the Fund. As
of February 1, 1999 there were 9,136,706  shares of BIF, the  predecessor of the
Fund, outstanding.  Charles Schwab & Co. ("Schwab"),  101 Montgomery Street, San
Francisco,  CA was the record owner of 44% of the outstanding  shares.  Although
Schwab is the  record  owner of more than 25% of the  outstanding  shares of the
Fund,  Schwab cannot be considered to control the Fund.  Schwab holds the shares
in nominee name for its customers and does not have the power to vote the shares
or to sell them.  National Financial Services Corp., One World Trade Center, 200
Liberty  Street,  New  York,  NY  was  the  record  owner  of 9% of  the  Fund's
outstanding  shares.  National Financial Services Corp. holds the shares for its
customers  and does not have the power to vote the shares or to sell  them.  The
records of the Fund do not indicate that any individual owns more than 5% of the
Fund's outstanding  shares. As of February 1, 1999, the Trustees and officers of
BIF, as a group,  owned  beneficially  and of record 143,022 shares of BIF. This
amount constitutes 1.6% of the outstanding shares.


                PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS

Subject to policy  established by the Trust's Board of Trustees,  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 will seek
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 that effects the transaction.

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 Fund's  normal  operations.  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 and
statistical  services  furnished  either directly to the Fund or to the Adviser.
The Adviser makes no effort in any given  circumstance to determine the value of
these  materials or services or the amount they might have  reduced  expenses of
the Adviser.  The Fund considers giving  brokerage  business to brokers who have
assisted in the distribution of shares of the Fund.

The Board has adopted procedures  pursuant to Rule 17e-1 under the 1940 Act that
permit portfolio  transactions to be executed  through  affiliated  brokers.  In
1996,  1997,  and  1998  BIF  used  an  affiliated  broker,   BFS,  pursuant  to
substantially  the same procedures,  and the Fund anticipates using BFS pursuant
to its Rule 17e-1 procedures in its current fiscal year.

BFS is  affiliated  with the Fund because  officers and Trustees 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  various  jurisdictions
pursuant to a written agreement.

In 1996,  1997 and 1998,  BIF paid a total of $126,520,  $193,023 and $185,897
in commissions to BFS,  respectively.  These figures  represent 88%, 77% and 85%
of the  total  commissions  paid by BIF,  respectively.  The  percentage  of 
BIF's aggregate  dollar amount of  transactions  involving the payment of  
commissions effected through BFS was 90%, 74% and 88%, respectively.

BIF  paid  brokerage  commissions  of  $217,957  in 1998,  $247,987  in 1997 and
$144,128 in 1996.

The  Adviser has other  advisory  clients  which  include  individuals,  trusts,
pension and profit sharing funds, and an investment company,  some of which have
similar investment objectives to the Fund. As such, there will be times when the
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 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
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  as of 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 "Buying Shares" in the Prospectus.)

The Fund offers shares for sale on a continuous  basis. The Fund does not impose
sales charge (load) on the purchase of the Fund's shares.  The offering price of
shares  of the Fund is the net  asset  value per  share  next  determined  after
receipt  by the  Transfer  Agent or a broker  authorized  by the Fund to receive
orders for the purchase of shares. The net asset value of shares can be expected
to fluctuate daily.

The minimum initial  investment is $3,000 per investor.  This investment may be
divided by a single  investor among  different  investment  accounts in the Fund
that total  $3,000 in the  aggregate  or between  accounts  in the Fund and the
Berwyn Fund series of the Trust.  Subsequent  investments  must be at least $250
per account.  The minimum initial investment for Individual  Retirement Accounts
("IRAs")  is  $1,000.  The  minimum  is  $250  for  a  spousal  IRA.  Subsequent
investments in IRAs must be at least $250. There are no minimum requirements for
pension and profit sharing plans or custodial accounts for minors.

The Fund reserves the right to reduce or waive the minimum purchase requirements
in certain cases where subsequent and continuing purchases are contemplated.


                                   DISTRIBUTOR

(See also "Distributor" in the Prospectus.)

BFS,  a  broker-dealer   registered  with  the  U.S.   Securities  and  Exchange
Commission,  is the  current  distributor  of the Fund's  shares,  pursuant to a
selling   agreement  which  became   effective  April  30,  1999  (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 Trust's
Board of  Trustees  and by the vote of a majority  of the  Trustees  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 also "Redemption of Shares" in the Fund's 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.



                         CALCULATION OF PERFORMANCE DATA

Yield

The Fund's yield for the month ended December 31, 1998 was 8.7%.

The yield was determined based upon the net investment  income per share for the
period  December 1 to December  31, 1998.  Expenses  accrued for the period were
subtracted from the interest and dividends accrued and the remainder was divided
by daily  average  number of shares  multiplied  by maximum  offering  price per
share. The number then obtained was annualized.

Total Return

The average  annual  total  return of the Fund for one year,  five years and ten
years ended December 31, 1998 are listed below:

                        One Year:                    (4.57%)
                        Five Years:                   8.13%
                        Ten Years:                   11.20%

The  period  of time for one  year's  performance  is from  January  1,  1998 to
December 31,  1998.  The dates for the  five-year  period are January 1, 1994 to
December  31,  1998 and for the ten year  period  are from  January  1,  1989 to
December 31, 1998. 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 $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  that 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
returns on a calendar year basis.  Listed below are the Fund's total returns for
the calendar years 1988 through 1998:


         January 1, 1988 -        December 31, 1988             l1.3%
         January 1, 1989 -        December 31, 1989             11.9%
         January 1, 1990 -        December 31, 1990             -0.13%
         January 1, 1991 -        December 31, 1991             23.0%
         January 1, 1992 -        December 31, 1992             21.7%
         January 1, 1993 -        December 31, 1993             16.9%
         January 1, 1994 -        December 31, 1994             -1.1%
         January 1, 1995 -        December 31, 1995             21.0%
         January 1, 1996 -        December 31, 1996             14.0%
         January 1, 1997 -        December 31, 1997             13.4%
         January 1, 1998 -        December 31, 1998             -4.57%

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

History and Capital Structure

The Fund is a series of shares of The Berwyn Funds,  a Delaware  business  trust
formed under the laws of the State of Delaware on February 4, 1999.  The Fund is
the successor to BIF, a corporation organized under the laws of the Commonwealth
of Pennsylvania on December 26, 1986, which was a no-load, diversified, open-end
management  investment  company.  In a  reorganization  approved  by vote of the
shareholders  of BIF and  accomplished  on April 30,  1999,  all the  assets and
liabilities  of BIF were  transferred  to the Fund and the  shareholders  of BIF
became the  shareholders  of the Fund.  Thereafter  the Fund has  carried on the
business of BIF.

The Fund has  authorized an unlimited  number of shares of beneficial  interest,
without 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.

Custodian

PFPC Trust Company, 400 Bellevue Parkway, Suite 108, Wilmington, DE 19809 is the
custodian of 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

PricewaterhouseCoopers  LLP, 30 South 17th Street,  Philadelphia,  Pennsylvania
has been selected as the  independent  accountants  for the Fund by the Board of
Trustees and its initial sole  shareholder.  PricewaterhouseCoopers LLP,  will
perform an annual audit of the financial statements of the Fund.

Litigation

The Fund is not involved in any litigation or other legal proceedings.


                             DISTRIBUTION AND TAXES

Distributions of Net Investment Income

The Fund receives income  generally in the form of dividends and interest on its
investments.  This income,  less expenses incurred in the operation of the Fund,
constitutes the Fund's net investment income from which dividends may be paid to
you.  Any  distributions  by the Fund from such income will be taxable to you as
ordinary income, whether you take them in cash or in additional shares.

Distributions of Capital Gains

The Fund may derive  capital gains and losses in connection  with sales or other
dispositions  of its portfolio  securities.  Distributions  from net  short-term
capital gains will be taxable to you as ordinary income.  Distributions from net
long-term  capital  gains  will be  taxable to you as  long-term  capital  gain,
regardless  of how long you have held your  shares in the Fund.  Any net capital
gains realized by the Fund generally will be distributed once each year, and may
be distributed  more frequently,  if necessary,  in order to reduce or eliminate
excise or income taxes on the Fund.

Information on the Tax Character of Distributions

The Fund will inform you of the amount of your  ordinary  income  dividends  and
capital gains  distributions  at the time they are paid,  and will advise you of
their tax status for federal income tax purposes shortly after the close of each
calendar  year.  If you have not held Fund shares for a full year,  the Fund may
designate  and  distribute  to you,  as  ordinary  income  or  capital  gain,  a
percentage  of income  that is not  equal to the  actual  amount of such  income
earned during the period of your investment in the Fund.

Election to Be Taxed as a Regulated Investment Company

The Fund has  elected to be  treated as a  regulated  investment  company  under
Subchapter M of the Internal  Revenue  Code,  has qualified as such for its most
recent fiscal year, and intends to so qualify during the current fiscal year. As
a regulated investment company, the Fund generally pays no federal income tax on
the income and gains it  distributes to you. The board reserves the right not to
maintain the qualification of the Fund as a regulated  investment  company if it
determines such course of action to be beneficial to shareholders. In such case,
the Fund will be subject to federal, and possibly state,  corporate taxes on its
taxable  income and gains,  and  distributions  to you will be taxed as ordinary
dividend income to the extent of the Fund's earnings and profits.

Excise Tax Distribution Requirements

To avoid federal  excise taxes,  the Internal  Revenue Code requires the Fund to
distribute  to you by  December  31 of each year,  at a minimum,  the  following
amounts: 98% of its taxable ordinary income earned during the calendar year; 98%
of its capital gain net income  earned  during the twelve  month  period  ending
October 31; and 100% of any undistributed  amounts from the prior year. The Fund
intends to declare  and pay these  amounts in December  (or in January, which
you treat as received in  December) to avoid these  excise  taxes,  but can
give no assurances  that its  distributions  will be sufficient to eliminate all
taxes.

Redemption of Fund Shares

Redemptions  and exchanges of Fund shares are taxable  transactions  for federal
and state income tax purposes.  If you redeem your Fund shares, or exchange your
Fund shares for shares of the Berwyn Income Fund,  the Rodney Square Fund or the
Rodney Square  Tax-Exempt  Fund,  the IRS will require that you report a gain or
loss on your redemption or exchange. If you hold your shares as a capital asset,
the  gain or loss  that  you  realize  will be  capital  gain or loss  and  will
belong-term or short-term, generally depending on how long you hold your shares.
Any loss incurred on the redemption or exchange of shares held for six months or
less will be treated as a long-term  capital loss to the extent of any long-term
capital gains distributed to you by the Fund on those shares.

All or a portion of any loss that you realize upon the  redemption  of your Fund
shares will be  disallowed  to the extent that you buy other  shares in the Fund
(through  reinvestment of dividends or otherwise) within 30 days before or after
your share  redemption.  Any loss disallowed  under these rules will be added to
your tax basis in the new shares you buy.

U.S. Government Obligations

Many states grant tax-free  status to dividends paid to you from interest earned
on direct obligations of the U.S. government,  subject in some states to minimum
investment  requirements that must be met by the Fund. Investments in Government
National  Mortgage   Association  or  Federal  National   Mortgage   Association
securities,  bankers`  acceptances,  commercial paper and repurchase  agreements
collateralized  by U.S.  government  securities  do not  generally  qualify  for
tax-free  treatment.  The rules on  exclusion of this income are  different  for
corporations.

Investment in Complex Securities

The Fund may investment in complex securities.  These investments may be subject
to numerous  special and complex  tax rules.  These rules could  affect  whether
gains and  losses  recognized  by the Fund are  treated  as  ordinary  income or
capital gain,  accelerate the recognition of income to the Fund and/or defer the
Fund's ability to recognize  losses. In turn, these rules may affect the amount,
timing or character of the income distributed to you by the Fund.


                              FINANCIAL STATEMENTS

BIF's audited financial statements and notes thereto for the year ended December
31,  1998 and the report of  PricewaterhouseCoopers  LLP,  BIF's
independent accountants,  on such financial statements (the "Report") are
included in BIF's 1998 Annual Report to Shareholders  (the "Annual Report"), and
incorporated  by  reference  in  this  SAI  by  amendment  to  the  Trust's
registration  statement. A copy of the Annual Report accompanies this SAI and an
investor may obtain a copy of the Annual Report without charge by writing to the
Fund at the address on the cover of the SAI or calling (800) 992-6757.

<PAGE>
                                   APPENDIX A

                  DEFINITIONS OF STANDARD & POOR'S BOND RATINGS

Standard & Poor's Ratings Group gives ratings to bonds that range from AAA to D.
The Fund may invest in bonds  with  ratings  of CC above.  Definitions  of these
ratings are set forth below.

    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 C the highest degree of 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.

     D        Debt  rated  D is in  default,  and  payment  of  interest  and/or
              repayment of principal is in arrears.

<PAGE>

                                   APPENDIX B

                              MOODY'S BOND RATINGS

Moody's Investors Service,  Inc. 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 ratings of Caa or better.

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.


<PAGE>

                               THE BERWYN FUNDS
                    Berwyn Fund, a Series of The Berwyn Funds
                              Shareholders Services
                                  c/o PFPC Inc.
                                 P. O. Box 8987
                              Wilmington, DE 19899
                                1 (800) 992-6757


                       STATEMENT OF ADDITIONAL INFORMATION

                                 April 30, 1999


This Statement of Additional Information ("SAI") is not a Prospectus. The SAI is
a document that relates to the Prospectus of the Berwyn Fund series (the "Fund")
of The Berwyn Funds (the "Trust")  dated April 30, 1999 and contains  additional
information  regarding the Fund. This SAI should be read in conjunction with the
Prospectus.  The  Prospectus may be obtained by writing to the Fund at the above
address or calling the 800 number.  The audited financial  statements and notes
thereto for the year ended December 31, 1998 of The Berwyn Fund,  Inc.  ("TBF"),
the   predecessor   of   the   Fund, and the report  of PricewaterhouseCoopers 
LLP,  the  Fund's  independent  accountants,   on  such financial  statements 
(the  "Report"),  included in TBF's 1998 Annual Report to Shareholders  will be 
incorporated by reference in this SAI by amendment to the Trust's registration 
statement.



<PAGE>

                                 TABLE OF CONTENTS

Investment Policies and Risk Factors........................................1

Investment Restrictions.....................................................2

Investment Advisory Arrangements............................................4

Expense Limitation..........................................................5

Trustees and Officers.......................................................5

Ownership of the Fund.......................................................7

Portfolio Transactions and Brokerage Commissions............................7

Computation of Net Asset Value..............................................8

Share Purchases.............................................................8

Distributor.................................................................9

Redemption of Shares........................................................9

Calculation of Performance Data.............................................9

General Information.........................................................10

Distribution and Taxes......................................................11

Financial Statements........................................................12


<PAGE>

                     INVESTMENT POLICIES AND RISK FACTORS 

(See also "Investment  Objectives,  Principal Investment  Strategies and Related
Risks " in the Fund's Prospectus.)

The Fund is a no-load,  non-diversified series of shares of The Berwyn Funds, an
open-end management  investment company that seeks long term (i.e., greater than
one year)  capital  appreciation  by investing in common stocks and fixed income
securities that offer a potential for capital appreciation.  Current income is a
secondary consideration.

Under normal  market  conditions,  the Fund invests at least 80% of the value of
its net assets in common  stocks.  The Fund  invests in common  stocks  that The
Killen  Group,  Inc.  (the  "Adviser")  considers  to be selling at  undervalued
prices.  These are stocks 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 their 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  in which the Fund  invests  are  corporate  bonds and
preferred stocks. The Fund selects fixed income securities that have a potential
for capital appreciation due to prevailing interest rates.

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
and Baa by Moody's.  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 the whole,
these lower rated securities are considered speculative investments.

As of December 31, 1998,  0.60% of the Fund's net assets were  invested in lower
rated corporate debt securities.

The Fund may at times, for temporary defensive purposes, invest all or a portion
of its assets in no-load money market funds,  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 and P-1, as defined in
Standard  &  Poor's  and  Moody's   Commercial  Paper  Ratings,   respectively),
repurchase agreements, U.S. Treasury bills, notes and bonds, or cash.

Investment  by the Fund in a no-load  money  market fund will result in the Fund
paying a management  fee and other fund  expenses on the money  invested in such
fund in addition to the operating expenses of the Fund.

The Fund's investment in securities issued by the U. S. Government does not mean
the U.S. Government is required to provide financial support to the Fund.

The Fund may also invest in Real Estate Investment  Trusts ("REITs").  REITs are
companies  that invest in real estate.  REITs normally do not pay federal income
tax but distribute their income to their  shareholders who become liable for the
tax.  Some REITs own  properties  and earn income  from leases and rents.  These
types of REITs are termed  "Equity"  REITs.  Other REITs hold mortgages and earn
income from interest payments. These REITs are termed "Mortgage" REITs. Finally,
there are "Hybrid" REITs that own properties  and hold  mortgages.  The Fund may
invest in any of the three types of REITs and may  purchase  the common  stocks,
preferred  stocks or bonds  issued  by REITs.  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 a
means of lessening  risks. As of December 31, 1998, the Fund was not invested in
any REITs.

In a repurchase agreement a seller of a security,  usually a banking institution
or securities  dealer,  sells securities to the Fund and agrees with the Fund at
the time of sale to repurchase the securities 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
the  bankruptcy  of the seller of a  repurchase  agreement  or the  failure of a
seller to repurchase  the  underlying  securities as agreed upon, the Fund could
experience losses.  Such losses could include a possible decline in the value of
the underlying  securities during the period while the Fund seeks to enforce its
rights  thereto  and a  possible  loss of all or part of the  income  from  such
securities.  The Fund would also incur additional expenses enforcing its rights.
As of  December  31,  1998,  the  Fund  had no  assets  invested  in  repurchase
agreements.


                             INVESTMENT RESTRICTIONS

The  investment  restrictions  set forth below are  fundamental  policies of the
Fund.  Fundamental  policies  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 by proxy 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.

When investing its assets, 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;

(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.

In addition, the Fund has the following restrictions:

(1)  With  respect to 50% of its  assets,  the Fund will not at time of purchase
     invest more than 5% of its gross assets, at market value, in the securities
     of any one issuer (except the securities of the United States  government);
     and

(2)  With  respect to the other 50% of its  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.

The  Fund  has  also  adopted  certain  investment  restrictions  that  are  not
fundamental  policies.  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  Trustees.  But  if  any  of  these  nonfundamental
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 Fund's 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. Edward A. Killen, II is Vice President and Secretary
of the Adviser.  Both Robert E. Killen and Edward A. Killen, II are Directors of
the Adviser and Robert E. Killen is a Trustee of the Trust. In addition,  Robert
E. Killen is President of the Trust.

The Adviser  provides the Fund with investment  management  services.  Under the
Contract for Investment  Advisory  Services  between the Trust, on behalf of the
Fund,  and the Adviser (the  "Contract"),  dated  March 26,  1999,  the Adviser
provides the Fund with advice and  recommendations  with respect to investments,
investment  policies,  the purchase and sale of securities and the management of
the Fund's  resources.  In  addition,  employees of the Adviser  administer  the
operation of the Fund. These employees prepare and maintain the accounts,  books
and records of the Fund,  calculate the daily net asset value per share each day
the New York Stock Exchange is open,  prepare and file the documents required of
the Fund under Federal and state laws and prepare all shareholder reports.

The  Contract  provides  that it will  continue  in  effect,  after the  initial
two-year term of the Contract, from year to year if continuation is specifically
approved  annually  by either a majority of the Board of Trustees or a vote of a
majority of the outstanding  voting  securities of the Fund.  Continuance of the
Contract  must also be approved  annually by a majority of Trustees  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 authorized by the Board of
Trustees or by a vote of a majority of the outstanding  voting securities of the
Fund.  The Adviser may terminate  the Contract on sixty days' written  notice to
the Fund without payment of any penalty.  The Contract will be automatically and
immediately terminated in the event of its assignment.

As  compensation  for its investment  management  services to the Fund under the
Contract,  the Adviser is entitled to receive 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 sum is
paid to the Adviser.

TBF paid the Adviser  $843,125 in fees in 1998,  $947, 901 in 1997, and $976,110
in 1996.

                               EXPENSE LIMITATION

The Contract provides that the Adviser's fee payable by the Fund will 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 payable by the Fund) from  exceeding  2% of the average  daily net assets of
the Fund.  In any month that the Fund  expenses and  liabilities  exceed 2%, the
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 payable by the Fund.  Once the net assets of the Fund
exceed  $100  million,  the  expense  limitation  will be reduced to 1.5% of the
average daily net assets of the Fund. The expense limitation has not reduced the
Adviser's  fee since 1985. In 1998,  the Fund's ratio of total annual  operating
expenses to average net assets was 1.20%.


                              TRUSTEES AND OFFICERS

The Board of Trustees  oversees the  management of the business of the Trust and
the Fund. The Board is elected initially by shareholders and thereafter Trustees
are  elected by the Board or the  shareholders  from time to time in  accordance
with the Trust's  Agreement and  Declaration of Trust and By-Laws.  The Board of
Trustees sets broad policies for the Fund and has responsibility for supervision
of the operations of the Fund. The daily operations of the Fund are administered
by employees of the Adviser under the Board's supervision.

The Trustees and executive officers of the Trust and their principal occupations
for the past five years are set forth below:

<TABLE>
<CAPTION>
<S>                                <C>
Name, Age, Position                 Principal Occupation for the Past Five Year
and Address
*Robert E. Killen (57)              Director of Westmoreland Coal Co. (a mining company) since
President & Trustee                 July 1996.  Director and shareholder, Berwyn Financial Services
1199 Lancaster Avenue               Corp. ("BFS"), a financial services company (registered as a broker-dealer with
Berwyn, Pennsylvania                the 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 the Berwyn  Income  Fund,  Inc. ("BIF"),  the  predecessor  of the Fund, and
                                    The  Berwyn   Fund,   Inc.   ("TBF")   (both registered  investment  companies managed by
                                    the  Adviser)  from  December  1986 to April, 1999 and from  February  1983 to April 1999,
                                    respectively.   Chairman,   Chief  Executive Officer 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.

*Anthony N. Carrelli (50)           Director of BIF from December 1996 to April 1999 and TBF from January 1995 to
Trustee                             April 1999.  Vice President of the Adviser since August 1986.
1189 Lancaster Avenue
Berwyn, Pennsylvania

*Edward A. Killen, II (47)          Director, Secretary and shareholder of BFS since October 1991.  Director of BIF
Trustee                             from January 1995 to April 1999 and TBF from February 1983 to January 1995 and
1189 Lancaster Avenue               from March 1999 to April 1999.  Vice President, Secretary and Director of the
Berwyn, Pennsylvania                Adviser since February 1983.

Denis P.  Conlon  (51)              Director  of BIF and TBF from June  1992 to April  1999. 
Trustee                             President and Chief Executive Officer of CRC  Industries (a worldwide
1282 Farm Road                      manufacturer)  since September  1996.  Vice President, Corporate
                                    Development,   Berwind  Corporation  (diversified  manufacturing  and  financial
                                    company) Berwyn, Pennsylvania from 1990 to September 1996.

Deborah D. Dorsi (43)               Director of BIF and TBF from April 1998 to April 1999.  Retired industry
Trustee                             executive since 1994.  Director Worldwide Customer Support, Kulick Soffa
1801 Stanbridge Street              Industries, Inc. (Semi Conductor Equipment Manufacturer) from 1993 to 1994.
Norristown, Pennsylvania            Corporate Account Manager for Kulick & Soffa Industries, Inc. prior to 1993.

Kevin P. Ryan (51)                  President,  Treasurer,  Director and shareholder of BFS since October 1991. Director of BIF from
Secretary and Treasuer              December 1986 to January 1995. Secretary and Treasurer of TBF from February 1983 to April and
1199 Lancaster Avenue               BIF from  December  1986 to April  1999. Director of TBF from February 1983 to March 1999. Legal
                                    counsel to the Adviser since September 1985.

* Robert E. Killen, Anthony N. Carrelli, Edward A. Killen, II and Kevin M. Ryan are "interested persons" of the Fund as defined in
the Investment Company Act of 1940, as amended (the "1940 Act").  Consequently, Robert E. Killen, Anthony N. Carrelli, and Edward A.
Killen, II are the "Interested Trustees" of the Fund. 
</TABLE>

Robert E. Killen is an Officer, Director and sole shareholder of the Adviser. 
Robert E. Killen is also a Director of BFS, a registered broker-dealer, and owns
one-third of its outstanding  shares.  Anthony N. 
Carrelli is a Vice  President  
of the Adviser. Edward A. Killen,  II is an officer and  
Director of the Adviser.  
He is also an officer,  Director and the owner of one-third of the outstanding 
shares of BFS. Kevin M. Ryan is legal counsel to the Adviser and an officer,
Director and owner of one-third of the outstanding shares of BFS. In addition, 
Robert E. Killen and Edward A. Killen,  II are brothers and Kevin M. Ryan is  
brother-in-law to both. BFS serves as the distributor for the Fund's shares in 
certain jurisdictions.

Mr.  Conlon and Ms. Dorsi are the Trustees of the Trust who are not  "interested
persons"  of the Trust as defined in the 1940 Act (the  "Independent  Trustees")
and are paid a fee of $800 for each Board or Committee  meeting attended and are
reimbursed  for any  travel  expenses  by the  Trust.  If a Board and  Committee
meetings are held on the same day,  the  Independent  Trustees  receive only one
$800 fee for all  meetings on the same day.  The Trust has not adopted a pension
or retirement plan or any other plan that would afford benefits to its Trustees.

The Trust estimates that the Trust will pay Ms. Dorsi and Mr. Conlon each $3,200
for the Trust's initial fiscal year ending December 31, 1999. The Trust is not a
part of any fund complex.

Officers of the Trust are not paid compensation by the Trust or any fund complex
for their work as officers and no fees are paid by the Trust or any fund complex
to the Trustees that are not  Independent  Trustees 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 February 11, 1999,  there are no shareholders of the Trust or the Fund. As
of February 1, 1999,  there were 3,554,799 shares of TBF, the predecessor of the
Fund,  outstanding.  Charles Schwab & Co., 101 Montgomery Street, San Francisco,
CA was the record owner of 12% of the  outstanding  shares.  National  Financial
Services Corp., One World Financial Center, 200 Liberty Street, New York, NY was
the record owner of 9% 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 February 1, 1999,  the  Directors  and  officers of TBF as a group,
owned  beneficially and of record 338,297 shares of TBF. This amount constituted
9.5% of the outstanding shares of TBF.


                PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS

Subject to policy  established by the Trust's Board of Trustees,  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 that effects the transaction.

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.  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 Fund
considers  giving  brokerage  business  to  brokers  who  have  assisted  in the
distribution of shares of the Fund.

The Board has adopted procedures  pursuant to Rule 17e-1 under the 1940 Act that
permit portfolio  transactions to be executed  through  affiliated  brokers.  In
1996,  1997,  and  1998,  BIF  used  an  affiliated  broker,  BFS,  pursuant  to
substantially  the same procedures,  and the Fund anticipates using BFS pursuant
to its Rule 17e-1 procedures in its current fiscal year.

BFS is  affiliated  with the Fund because  officers and Trustees 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  various  jurisdictions
pursuant to a written agreement.

In 1996,  1997 and 1998, TBF paid a total of $187,169, $115,779 and $109,726 in
commissions to BFS,  respectively.  This figure  represents 62%, 50% and 53%
of the total  commissions paid by TBF,  respectively.  The percentage of the 
Fund's aggregate  dollar amount of  transactions  involving the payment of  
commissions effected through BFS was 77%, 74%, and 72%, respectively.

TBF paid  brokerage  Commissions  of  $207,140 in 1998,  $231,239  in 1997,  and
$303,958  in 1996.  The level of  trading  in 1998 was  similar  to the level in
1997.

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  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
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 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.

<PAGE>
                                 SHARE PURCHASES

(See also "Buying Shares" in the Prospectus)

The Fund offers shares for sale on a continuous  basis. The Fund does not impose
sales charge (load) on the purchase of the Fund's shares.  The offering price of
shares  of the Fund is the net  asset  value per  share  next  determined  after
receipt  by the  Transfer  Agent or a broker  authorized  by the Fund to receive
orders for the purchase of shares. The net asset value of shares can be expected
to fluctuate daily.

The minimum initial  investment is $3,000 per investor.  This investment may be
divided by a single  investor among  different  investment  accounts in the Fund
that total  $3,000 in the  aggregate  or between  accounts  in the Fund and the
Berwyn Income Fund series of the Trust.  Subsequent  investments  must be at 
least $250 per account.  The minimum initial investment for Individual  
Retirement Accounts ("IRAs")  is  $1,000.  The  minimum  is  $250  for  a  
spousal  IRA.  Subsequent investments in IRAs must be at least $250. There are 
no minimum requirements for pension and profit sharing plans or custodial 
accounts for minors.

The Fund reserves the right to reduce or waive the minimum purchase requirements
in certain cases where subsequent and continuing purchases are contemplated.


                                   DISTRIBUTOR

BFS, a  broker-dealer  registered  with the SEC and a member of the NASD, is the
current distributor of the Fund's shares,  pursuant to a selling agreement which
became  effective  on [April  30],  1999 (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 Trust's
Board of  Trustees  and by the vote of a majority  of the  Trustees  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.


                         CALCULATION OF PERFORMANCE DATA

The average  annual total  returns of the Fund for one year,  five years and ten
years ended December 31, 1998 are listed below:

                         One Year:          -18.90%
                         Five Years:         7.65%
                         Ten Years:          10.01%

The one-year performance is for the period January 1, 1998 to December 31, 1998.
The five-year  period runs from January 1, 1994 to December 31, 1998 and the ten
year-period  runs from  January  1, l988 to  December  31,  1997.  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
returns on a calendar  year basis.  Listed below are the Funds total returns for
each calendar year from 1985 through 1998:

          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%
          January 1, 1997 - December 31, 1997                   26.1%
          January 1, 1998 - December 31, 1998                  -18.90%

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

History and Capital Structure

The Fund is a series of shares of The Berwyn Funds,  a Delaware  business  trust
formed under the laws of the State of Delaware on February 4, 1999.  The Fund is
the successor to TBF, a corporation organized under the laws of the Commonwealth
of Pennsylvania in February,  1983, which was a no-load,  diversified,  open-end
management  investment  company.  In a  reorganization  approved  by vote of the
shareholders  of TBF and  accomplished  on April 30,  1999,  all the  assets and
liabilities  of TBF were  transferred  to the Fund and the  shareholders  of TBF
became the  shareholders  of the Fund.  Thereafter  the Fund has  carried on the
business of TBF.

The Fund has  authorized an unlimited  number of shares of beneficial  interest,
without 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.

Custodian

PNC Bank, 400 Bellevue Parkway, Suite 108, Wilmington, DE 19809 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

PricewaterhouseCoopers  LLP, 30 South 17th Street, Philadelphia,  Pennsylvania,
has been selected as the  independent  accountants  for the Fund by the Board of
Trustees. PricewaterhouseCoopers  LLP performs an annual audit of the financial
statements of the Fund.

Litigation

The Fund is not involved in any litigation or other legal proceedings.


                             DISTRIBUTION AND TAXES

Distributions of Net Investment Income

The Fund receives income  generally in the form of dividends and interest on its
investments.  This income,  less expenses incurred in the operation of the Fund,
constitutes the Fund's net investment income from which dividends may be paid to
you.  Any  distributions  by the Fund from such income will be taxable to you as
ordinary income, whether you take them in cash or in additional shares.

Distributions of Capital Gains

The Fund may derive  capital gains and losses in connection  with sales or other
dispositions  of its portfolio  securities.  Distributions  from net  short-term
capital gains will be taxable to you as ordinary income.  Distributions from net
long-term  capital  gains  will be  taxable to you as  long-term  capital  gain,
regardless  of how long you have held your  shares in the Fund.  Any net capital
gains realized by the Fund generally will be distributed once each year, and may
be distributed  more frequently,  if necessary,  in order to reduce or eliminate
excise or income taxes on the Fund.

Information on the Tax Character of Distributions

The Fund will inform you of the amount of your  ordinary  income  dividends  and
capital gains  distributions  at the time they are paid,  and will advise you of
their tax status for federal income tax purposes shortly after the close of each
calendar  year.  If you have not held Fund shares for a full year,  the Fund may
designate  and  distribute  to you,  as  ordinary  income  or  capital  gain,  a
percentage  of income  that is not  equal to the  actual  amount of such  income
earned during the period of your investment in the Fund.

Election to Be Taxed as a Regulated Investment Company

The Fund has  elected to be  treated as a  regulated  investment  company  under
Subchapter M of the Internal  Revenue  Code,  has qualified as such for its most
recent fiscal year, and intends to so qualify during the current fiscal year. As
a regulated investment company, the Fund generally pays no federal income tax on
the income and gains it  distributes to you. The Board reserves the right not to
maintain the qualification of the Fund as a regulated  investment  company if it
determines such course of action to be beneficial to shareholders. In such case,
the Fund will be subject to federal, and possibly state,  corporate taxes on its
taxable  income and gains,  and  distributions  to you will be taxed as ordinary
dividend income to the extent of the Fund's earnings and profits.

Excise Tax Distribution Requirements

To avoid federal  excise taxes,  the Internal  Revenue Code requires the Fund to
distribute  to you by  December  31 of each year,  at a minimum,  the  following
amounts: 98% of its taxable ordinary income earned during the calendar year; 98%
of its capital gain net income  earned  during the twelve  month  period  ending
October 31; and 100% of any undistributed  amounts from the prior year. The Fund
intends to declare and pay these amounts in December (or in January, which you
treat as received in  December) to avoid these  excise  taxes,  but can
give no assurances  that its  distributions  will be sufficient to eliminate all
taxes.

Redemption of Fund Shares

Redemptions  and exchanges of Fund shares are taxable  transactions  for federal
and state income tax purposes.  If you redeem your Fund shares, or exchange your
Fund shares for shares of the Berwyn Income Fund,  the Rodney Square Fund or the
Rodney Square  Tax-Exempt  Fund,  the IRS will require that you report a gain or
loss on your redemption or exchange. If you hold your shares as a capital asset,
the  gain or loss  that  you  realize  will be  capital  gain or loss  and  will
belong-term or short-term, generally depending on how long you hold your shares.
Any loss incurred on the redemption or exchange of shares held for six months or
less will be treated as a long-term  capital loss to the extent of any long-term
capital gains distributed to you by the Fund on those shares.

All or a portion of any loss that you realize upon the  redemption  of your Fund
shares will be  disallowed  to the extent that you buy other  shares in the Fund
(through  reinvestment of dividends or otherwise) within 30 days before or after
your share  redemption.  Any loss disallowed  under these rules will be added to
your tax basis in the new shares you buy.

U.S. Government Obligations

Many states grant tax-free  status to dividends paid to you from interest earned
on direct obligations of the U.S. government,  subject in some states to minimum
investment  requirements that must be met by the Fund. Investments in Government
National  Mortgage   Association  or  Federal  National   Mortgage   Association
securities,  bankers`  acceptances,  commercial paper and repurchase  agreements
collateralized  by U.S.  government  securities  do not  generally  qualify  for
tax-free  treatment.  The rules on  exclusion of this income are  different  for
corporations.

Investment in Complex Securities

The Fund may investment in complex securities.  These investments may be subject
to numerous  special and complex  tax rules.  These rules could  affect  whether
gains and  losses  recognized  by the Fund are  treated  as  ordinary  income or
capital gain,  accelerate the recognition of income to the Fund and/or defer the
Fund's ability to recognize  losses. In turn, these rules may affect the amount,
timing or character of the income distributed to you by the Fund.


                              FINANCIAL STATEMENTS

TBF's audited financial statements and notes thereto for the year ended December
31, 1998 and the report of  PricewaterhouseCoopers  LLP,  TBF's
independent accountants,  on such financial statements (the "Report") are
included in TBF's 1998 Annual Report to Shareholders  (the "Annual Report") and
incorporated  by  reference  in  this  SAI  by  amendment  to  the  Trust's
registration  statement. A copy of the Annual Report accompanies this SAI and an
investor  may  obtain a copy of the  Annual  Report  by  writing  to the Fund or
calling (800) 992-6757.

<PAGE>

                                   APPENDIX A

                  DEFINITIONS OF STANDARD & POOR'S BOND RATINGS

Standard & Poor's Ratings Group 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.


<PAGE>

                                   APPENDIX B

                              MOODY'S BOND RATINGS


Moody's Investor's Service, Inc. 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     - 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.


<PAGE>
                                     PART C

Item 23. Exhibits

         (a)(1)   Agreement and Declaration of Trust is incorporated by
                  reference.

         (a)(2)   Certificate of Trust is incorporated by reference.

         (b)      By-Laws are incorporated by reference.

         (c)      Not applicable.

         (d)(1)   Form of Contract  for  Investment  Advisory  Services  for the
                  Berwyn Fund series is incorporated by reference.

         (d)(2)   Form of Contract  for  Investment  Advisory  Services  for the
                  Berwyn  Income  Fund  series is  incorporated by reference.

         (e)      Form of Selling Agreement between the Fund and Berwyn
                  Financial Services Corp. is incorporated by reference.

         (f)      Not applicable.

         (g)      Form of Custodian  Services Agreement between the Fund and PNC
                  Trust Company is included herein as Exhibit EX-99.B8.
=
         (h)      Form of  Transfer  Agency Services  Agreement between the
                  Fund and PFPC  Inc. is included herein as Exhibit EX-99.B9.

         (i)      Opinion and consent of counsel is included herein as Exhibit
                  EX-99.B10.

         (j)      Consent  of  PricewaterhouseCoopers   LLP is included herein
                  as Exhibit EX-99.B11.

         (k)      Not applicable.

         (l)      Not applicable.

         (m)      Not applicable.

         (n)(1)   Financial Data Schedule for the Berwyn Income Fund series is 
                  included herein as Exhibit EX-27.1.

         (n)(2)   Financial Data Schedule for Berwyn Fund series is
                  included herein as Exhibit EX-27.2.

         (o)      Not applicable.

         (p)(1)   Power of Attorney for Robert E. Killen is incorporated by
                  reference.
               
         (p)(2)   Power of Attorney for Edward A. Killen, II, Anthony N.
                  Carrelli, Deborah D. Dorsi, Denis P. Conlon and the Fund is
                  incorporated by reference.

Item 24. Persons Controlled by or Under Common Control with the Fund.

The Fund is not  under  common  control  with any  person  and does not  control
directly or indirectly any person.


Item 25. Indemnification.

Article VII,  Section 2 of the Fund's  Agreement  and  Declaration  of Trust and
Article VI of the By-Laws set forth the rules on indemnification of officers and
Trustees.  Article VII,  Section 2 of the  Agreement  and  Declaration  of Trust
provides:

         (a) To the fullest extent that limitations on the liability of Trustees
         and officers are permitted by the DBTA, the officers and Trustees shall
         not be  responsible  or liable in any event for any act or  omission of
         any agent, employee, Investment Adviser or Principal Underwriter of the
         Trust; or with respect to each Trustee and officer, the act or omission
         of any other Trustee or officer,  respectively.  The Trust,  out of the
         Trust  Property,  shall  indemnify  and hold  harmless  each and  every
         officer  and  Trustee  from and  against any and all claims and demands
         whatsoever  arising out of or related to such  officer's  or  Trustee's
         performance of his or her duties as an officer or Trustee of the Trust.
         This limitation on liability  applies to events occurring at the time a
         Person  serves as a Trustee or officer of the Trust whether or not such
         Person is a Trustee or officer at the time of any  proceeding  in which
         liability is asserted.  Nothing herein contained shall indemnify,  hold
         harmless  or  protect  any  officer  or  Trustee  from or  against  any
         liability  to the Trust or any  Shareholder  to which such Person would
         otherwise be subject by reason of willful misfeasance, bad faith, gross
         negligence or reckless  disregard of the duties involved in the conduct
         of such Person's office.

         (b) Every note, bond, contract, instrument,  certificate or undertaking
         and every other act or document whatsoever issued,  executed or done by
         or on behalf of the Trust,  the officers or the Trustees or any of them
         in connection with the Trust shall be conclusively  deemed to have been
         issued,  executed  or done only in such  Person's  capacity  as Trustee
         and/or as officer,  and such Trustee or officer,  as applicable,  shall
         not be  personally  liable  therefore,  except as described in the last
         sentence of the first paragraph of this Section 2 of this Article VII.

Article VI, Section 2 of the By-Laws provides:

         ACTIONS OTHER THAN BY TRUST.  The Trust shall  indemnify any person who
         was or is a party or is threatened to be made a party to any proceeding
         (other than an action by or in the right of the Trust) by reason of the
         fact  that  such  person  is or was an  agent  of  the  Trust,  against
         expenses,  judgments, fines, settlements and other amounts actually and
         reasonably  incurred in connection  with such proceeding if such person
         acted  in good  faith  and in a  manner  that  such  person  reasonably
         believed to be in the best  interests of the Trust and in the case of a
         criminal proceeding,  had no reasonable cause to believe the conduct of
         such  person  was  unlawful.  The  termination  of  any  proceeding  by
         judgment,  order, settlement,  conviction or plea of nolo contendere or
         its equivalent shall not of itself create a presumption that the person
         did not act in good faith or in a manner  which the  person  reasonably
         believed  to be in the best  interests  of the Trust or that the person
         had reasonable cause to believe that the person's conduct was unlawful.

Article VI, Section 3 of the By-Laws provides:

         ACTIONS BY TRUST.  The Trust shall indemnify any person who was or is a
         party or is threatened to be made a party to any threatened, pending or
         completed  action by or in the right of the Trust to procure a judgment
         in its favor by  reason of the fact that the  person is or was an agent
         of the Trust, against expenses actually and reasonably incurred by that
         person in  connection  with the defense or settlement of that action if
         that person acted in good faith, in a manner that person believed to be
         in the best  interests  of the  Trust  and with  such  care,  including
         reasonable  inquiry, as an ordinarily prudent person in a like position
         would use under similar circumstances.

Article VI, Section 4 of the By-Laws provides:

         EXCLUSION  OF  INDEMNIFICATION.  Notwithstanding  any  provision to the
         contrary  contained herein,  there shall be no right to indemnification
         for any liability arising by reason of willful misfeasance,  bad faith,
         gross negligence,  or the reckless  disregard of the duties involved in
         the conduct of the agent's office with the Trust.

Item 26. Business and Other Connections of the Investment Adviser.

Robert E.  Killen,  President  and a Trustee of the Fund,  is Chairman and Chief
Executive  Officer  of The Killen  Group,  Inc.,  the  investment  adviser  (the
"Adviser") to the Fund.  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. 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  engaged  for his own  account or in the  capacity  of  Director,  officer,
employee,  partner  or trustee  within  the last two  fiscal  years of the Fund,
reference is made to the Adviser's Form ADV (File #801-18770)  currently on file
with the U.S.  Securities and Exchange  Commission as required by the Investment
Advisers Act of 1940, as amended.

Item 27. Principal Underwriters.

(a)      None.


<PAGE>


(b)
Name & Principal           Position & Offices         Positions & Offices
Business Address           with BFS                   with the Fund
Robert E. Killen           Director                   President and Trustee
1199 Lancaster Avenue
Berwyn, PA  19132

Edward A. Killen, II       Secretary and Director     Trustee
1189 Lancaster Avenue
Berwyn, PA  19132

Kevin M. Ryan              President, Treasurer       Secretary and Treasurer
1199 Lancaster Avenue      and Director
Berwyn, PA  19132


Item 28. Location of Accounts and Records

Accounts,  books and other  documents  that are required to be maintained  under
Section  31(a) of the  Investment  Company  Act of  1940,  as  amended,  and the
regulations thereunder are maintained as follows:

1)   Journals  detailing  the purchase and sale of  securities,  the receipt and
     delivery  of  securities,  receipt and  disbursement  of cash and all other
     debits and credits will be in the physical  possession  of Kevin M. Ryan at
     1189 Lancaster Avenue, Berwyn, PA 19312.

2)   Ledgers  reflecting  all asset,  liability,  reserve,  capital,  income and
     expense accounts as well as ledgers containing the information required for
     each  portfolio  security,  for each  broker-dealer,  bank or other  person
     through whom transactions in portfolio securities are effected and for each
     shareholder of record in the  investment  company will be maintained in the
     physical  possession of Kevin M. Ryan, 1189 Lancaster  Avenue,  Berwyn,  PA
     19312.

3)   The  Agreement  and  Declaration  of Trust,  the  By-Laws,  the  minutes of
     shareholders and Trustees' meetings will be maintained under the control of
     Kevin M. Ryan, 1189 Lancaster Avenue, Berwyn, PA 19312.

4)   A record of all brokerage  orders and a record of all  portfolio  purchases
     and sales will be  maintained  under the  control  of Kevin M.  Ryan,  1189
     Lancaster Avenue, Berwyn, PA 19312.

5)   Monthly  trial  balances  for all ledger  accounts,  a quarterly  record of
     broker  commissions,  a record identifying persons authorizing the purchase
     or sale of portfolio securities and files of all advisory material received
     from the Adviser will be under the control of Kevin M. Ryan, 1189 Lancaster
     Avenue, Berwyn, PA 19312.

6)   Records  required to be maintained by the Adviser will be under the control
     of Robert E. Killen, 1189 Lancaster Avenue, Berwyn, PA 19312.


Item 29. Management Services.

         None.


Item 30. Undertakings.

The Fund  has  placed  information  required  by Item 5 of the Form  N-1A in the
latest annual report to  shareholders  and  undertakes to furnish each person to
whom a prospectus is delivered with a copy of the Fund's latest annual report to
shareholders upon request and without charge.

<PAGE>
                                   SIGNATURES

Pursuant to the  requirements  of the Securities Act and the Investment  Company
Act,  the Fund certifies that it meets all of the requirements for effectiveness
of this Registration Statement under Rule 485(b) under the Securities Act and
has duly caused this  registration  statement to be signed on its behalf by the 
undersigned,  duly  authorized,  in the City of  Berwyn,  and the Commonwealth 
of Pennsylvania on the 22nd day of April, 1999.

                                THE BERWYN FUNDS

                            By: /S/ 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


/S/ ROBERT E. KILLEN   President and Trustee              April 22, 1999
ROBERT E. KILLEN        (chief executive officer)


/S/ KEVIN M. RYAN      Treasurer (chief financial officer) April 22, 1999
KEVIN M. RYAN


/S/ ANTHONY N. CARRELLI*   Trustee                         April 22, 1999
ANTHONY N. CARRELLI

/S/ DENIS P. CONLON*       Trustee                         April 22, 1999
DENIS P. CONLON


/S/ DEBORAH D. DORSI*      Trustee                         April 22, 1999
DEBORAH D. DORSI


/S/ EDWARD A. KILLEN, II*  Trustee                         April 22, 1999
EDWARD A. KILLEN, II

*    By /S/ KEVIN M. RYAN
         Kevin M. Ryan, as attorney-in-fact for such person, pursuant to a
         Power of Attorney filed herewith with the U.S. Securities
         and Exchange Commission.

<PAGE>

                                  EXHIBIT INDEX

EDGAR EXHIBIT                                                  FORM N-1A EXHIBIT
NUMBER                                                         NUMBER
EX-99.B8            Form of Custodian  Services Agreement
                    between the Fund and PNC Trust                23(g)

EX-99.B9            Form of  Transfer  Agency Services
                    Agreement between the Fund and PFPC
                    Inc.                                          23(h)

EX-99.B10           Opinion and consent of counsel                23(i)

EX-99.B11.          Consent of PricewaterhouseCoopers LLP         23(j)

EX-27.1             Financial Data Schedule of The Berwyn 
                    Income Fund series                            23(n)(1)

EX-27.2             Financial Data Schedule of The Berwyn 
                    Fund series                                   23(n)(2)