File #33-14604

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

FORM N-1A


REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933	o

	Pre-Effective Amendment No.             			o

	Post-Effective Amendment No.    12   			x

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT 
OF 1940	x

	Amendment No.    14   

(Check appropriate box or boxes.)

BERWYN INCOME FUND, INC.
(Exact Name of Registrant as Specified in Charter)

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



(Zip Code)

Registrant's Telephone Number, including Area Code                     
(610) 408-
9850                                            

                     KEVIN M. RYAN, 1199 LANCASTER 
AVENUE, BERWYN, PA  19312             
(Name and Address of Agent for Service)

Approximate date of PROPOSED Public Offering   

It is proposed that this filing will become effective 
(check appropriate box):
	x  immediately upon filing pursuant to paragraph 
(b)
	o  on (date) pursuant to paragraph (b)
	o  60 days after filing pursuant to paragraph 
(a)(1)
	o  on (date) pursuant to paragraph (a)(1)
	o  75 days after filing pursuant to paragraph 
(a)(2)
	o  on (date) pursuant to paragraph (a)(2) of rule 
485.
If appropriate, check the following box:
	o  this post effective amendment designates a new 
effective date for a previously filed post-effective 
	      amendment.

Declaration Pursuant to Rule 24f-2.  The 
Registrant has registered an indefinite 
number
or amount of securities under the Securities 
Act of 1933 pursuant to Rule 24(f)(2) under
the Investment Company Act of 1940.  The 
Rule 24f-2 Notice for the Registrant's most
recent fiscal year was be filed March 12, 
1997.


CROSS REFERENCE SHEET

                                                       
                                                       
                               
		                      	Statement of
	           Prospectus  	Additional       	Registration
Section     	Page #     	Information Page#	Statement Page #
PART A
Item 1.
Item 2.      	2	                              	5
Item 3.      	3a & 3b	                        	6 & 6b
Item 4.      	4 & 16	                         	7 - 12 & 19
Item 5.      	9 - 10 & 16	                    	12 - 13 & 19
Item 5A      	4	                              	7
Item 6.      	14 & 16	                        	17 & 19
Item 7.      	11 & 13		                        14 & 16
Item 8.      	15	                             	18
Item 9.      	N/A	                            	N/A

PART B     
Item 10.	               	Cover Page           	21
Item 11.	               	1                    	22
Item 12.	               	N/A                  	N/A
Item 13.	               	2                    	23
Item 14.	               	6                    	27
Item 15.	               	8                    	29
Item 16.	               	5 & 12               	26 & 33
Item 17.	               	8                    	29
Item 18.	               	12                   	33
Item 19.	               	10 & 11              	31 & 32
Item 20.	               	13                   	34
Item 21.	               	10                   	31
Item 22.	               	11                   	32
Item 23.	               	13                   	34

PART C     
Item 24.		                                    	37
Item 25.		                                    	38
Item 26.		                                    	38
Item 27.		                                    	38
Item 28.		                                    	38
Item 29.		                                    	39
Item 30.		                                    	39
Item 31.		                                    	40
Item 32.		                                    	40
_______________________________
*Information is provided in the Registrant's 1996 
Annual Report to Shareholders filed with the Securities 
and Exchange Commission on March 11, 1997.
BERWYN INCOME FUND, INC.
Shareholder Services
c/o Rodney Square Management Corp.
P.O. Box 8987
Wilmington, DE  19899

PROSPECTUS
March 27, 1997
Investment Objective

	Berwyn Income Fund, Inc. (the "Fund") is a no-
load, diversified, open-end management investment 
company.  The Fund's 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 the potential for 
capital appreciation.

	The Fund intends to achieve its objective through 
investment in fixed income corporate debt securities, 
preferred stocks, securities issued or guaranteed by 
the U.S. Government, its agencies or instrumentalities, 
and common stocks paying cash dividends.  The Fund's 
investment adviser determines the percentage of each 
category of securities to hold based upon the 
prevailing economic and market conditions.  All or a 
majority of the assets of the Fund may be invested in 
high yield, high risk corporate debt securities, 
commonly referred to as "junk bonds".  Investments of 
this type are subject to a greater risk of loss of 
principal and interest.  Purchasers should carefully 
assess the risks associated with an investment in this 
Fund.

	There can be no assurance that the investment 
strategy of the Fund will be successful and its 
objective may not be realized.

Investment Adviser

	The Killen Group, Inc. (the "Adviser") is the 
investment adviser to the Fund.  Robert E. Killen is 
CEO and sole shareholder of The Killen Group, Inc.

	This Prospectus sets forth concisely the 
information that an investor should know before 
investing in the Fund.  Investors are advised to retain 
this Prospectus for future reference.  The Fund has 
filed a Statement of Additional Information ("SAI") 
containing additional information about the Fund with 
the Securities and Exchange Commission.  The SAI is 
dated March 27,1997 and is incorporated by reference 
into this Prospectus.  The SAI may be obtained, without 
charge, by writing to the Fund.

	THESE SECURITIES HAVE NOT BEEN APPROVED OR 
DISAPPROVED BY THE SECURITIES AND EXCHANGE 
COMMISSION OR ANY STATE SECURITIES COMMISSION, 
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION 
OR ANY STATE SECURITIES COMMISSION PASSED UPON 
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.  
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL 
OFFENSE.
TABLE OF CONTENTS



Fee and Expense 
Table..................................................
 .......................................................
 ...	2

Financial 
Highlights.............................................
 .......................................................
 ............	3

Calculation of Performance 
Data...................................................
 .........................................	4

Investment Objective, Policies and Risk 
Factors................................................
 ....................	4

Management of the 
Fund...................................................
 .....................................................	9

Computation of Net Asset 
Value..................................................
 ..........................................	10

Share 
Purchases..............................................
 .......................................................
 .................	10

Distributor............................................
 .......................................................
 ............................ 	12

Exchange of 
Shares.................................................
 .......................................................
 .........	13

Dividends, Capital Gains Distributions and 
Taxes..................................................
 ...............	13

Retirement 
Plans..................................................
 .......................................................
 ............	14

Redemption of 
Shares.................................................
 .......................................................
 .....	14

General 
Information............................................
 .......................................................
 .............	16

Additional 
Information............................................
 .......................................................
 .........	17















-1


FEE and EXPENSE TABLE



Annual Fund Operating Expenses
(as a percentage of average net assets)

Management Fees	  0.50 % 

Other Expenses	  0.18 %

Total Fund Operating Expenses	  0.68 %

_______________________________________________________
_______________________

	The purpose of this Fee Table is to assist the 
investor in understanding the various costs and 
expenses that an investor in the Fund will bear 
directly or indirectly.  For more complete descriptions 
of the various costs and expenses, see "Management of 
the Fund" in the Prospectus and "Investment Advisory 
Arrangements" in the Statement of Additional 
Information.

Example 

	                          	1 Year     3 Years     5 Years     10 Years

You would pay the following		7       	22          	38          	85
expenses on a $1,000 invest-
ment, assuming (1) 5% annual
return and (2) redemption at
the end of each time period:	

THE FOREGOING EXAMPLE SHOULD NOT BE CONSIDERED A REPRE-
SENTATION OF  PAST OR FUTURE EXPENSES.  ACTUAL EXPENSES 
MAY BE GREATER OR LESSER THAN THOSE SHOWN.












-2-


FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

The following financial highlights information for a 
share outstanding throughout each period, insofar as it 
relates to each of the five years in the period ended 
December 31, 1996, have been audited by Price 
Waterhouse LLP, independent accountants, whose report 
on the financial statements containing this information 
was unqualified.  This information should be read in 
conjunction with the Fund's financial statements and 
notes thereto, which are incorporated by reference in 
the Fund's Statement of Additional Information and this 
Prospectus, and which appear, along with the report of 
Price Waterhouse LLP, in the Fund's 1996 Annual Report 
to Shareholders (the "Annual Report").  Additional 
Information about the Fund's investment performance is 
contained in the Annual Report which can be obtained 
from the Fund upon request without charge.

             	Year Ended	 Year Ended	Year Ended	 Year Ended	   Year Ended
              	12/31/96 	12/31/95    	12/31/94	12/31/93      	12/31/92

Net Asset Value, Beginning of Period	$11.95	$10.75	$11.63	$11.12	$10.20
	--------	--------	--------	--------	--------
Income From Investment Operations
	Net Investment Income	0.76	0.73      	0.73     	0.69        	0.70
	Net Realized and Unrealized Gains 
		(Losses) on Securities	0.87	1.48	(0.85)	1.15	1.47
			--------	--------	--------	--------	--------
	Total from Investment Operations	1.63	2.21	(0.12)	1.84	2.17
			--------	--------	--------	--------	--------

Less Distributions
	Dividends from Net Investment Income	(0.80)	(0.70)	(0.73)	(0.65)	(0.70)
	Distributions from Net Realized Gains	(0.47)	(0.31)	(0.03)	(0.68)	(0.55)
	Return of Capital Distributions	---	---	---	---	---
			--------	--------	--------	--------	--------
	Total Distributions	(1.27)	(1.01)	(0.76)	(1.33)	(1.25)
			--------	--------	--------	--------	--------

Net Asset Value, End of Period	$12.31	$11.95	$10.75	$11.63	$11.12
			           	           	           	           	           
          
Total Return	13.99%	21.00%	(1.10%)	16.90%	21.70%

Ratios/Supplemental Data
Net Assets, End of Period (000)	$137,166	$119,552	$55,825	$30,359	$12,486

Ratio of Expenses to Average Net Assets	0.68%	0.73%	0.93%	1.07%	1.34%

Ratio of Net Investment Income to Average	6.35%	6.78%	7.20%	6.15%	6.14%
Net Assets

Portfolio Turnover Rate	38%	39%	30%	83%	46%

Average Commissions Rate Paid	$0.0860**	---	---	---	---

-3a-



FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
(Continued)


                        	Year  	Year    	Year   	Year  	  Year
                        	Ended 	Ended 	 Ended	   Ended	   Ended
                      	12/31/91	12/31/90	12/31/89	19/31/88	12/31/87

Net Asset Value, Beginning of Period	$9.14	$10.03	$9.75	$9.50	$9.88
	--------	--------	--------	--------	-------- 
Income From Investment Operations
	Net Investment Income	0.85	0.83	0.79	1.365(2)	.04(1)(2)
	Net Realized and Unrealized Gains 
		(Losses) on Securities	1.19	(0.85)	0.34	(0.300)	(0.38)
			--------	--------	--------	--------	--------
	Total from Investment Operations	2.04	(0.02)	1.13	1.065	(0.34)
			--------	--------	--------	--------	--------
Less Distributions
	Dividends from Net Investment Income	(0.85)	(0.83)	(0.79)	(0.765)	(0.04)
	Distributions from Net Realized Gains	((0.05)	(0.04)	(0.06)	(0.050)	---
	Return of Capital Distributions	(0.08)	---	---	---	---
			--------	--------	--------	--------	--------
	Total Distributions	(0.98)	(0.87)	(0.85)	(0.815)	(0.04)
			--------	--------	--------	--------	--------

Net Asset Value, End of Period	$10.20	$9.14	$10.03	$9.75	$9.50
			           	           	           	           	           
     
Total Return	23.00%	(0.13%)	11.90%	11.30%(2)	(3.44%)(2)

Ratios/Supplemental Data
Net Assets, End of Period (000)	$5,359	$3,955	$3,870	$2,644	$892

Ratio of Expenses to Average Net Assets	1.34%	1.46%	1.50% 1.75%(2) 7.50%*(2)

Ratio of Net Investment Income to	8.40%	8.59%	8.00%	8.29%	0.87%*
Average Net Assets

Portfolio Turnover Rate	14%	14%	3%	17%	---

Average Commissions Rate Paid	---	---	---	---	---
*Annualized
(1)	Net investment income per share was calculated 
based on average daily number of Fund shares 
outstanding 
	during the period 9/03/87 (commencement of 
operations) through 12/31/87.
(2)	Investment Advisory fees of $.06 per share and $.02 
per share were waived by The Killen Group, Inc. for the 
	year ended 12/31/88 and for the period 9/03/87 to 
12/31/87, 	respectively.  If the 
	waived fees had been included 
	in expenses, the total return of the Fund for those 
two periods would have been lower and the Ratio of 
	Expenses to Average Net Assets would have been 
2.08% for 	the year ended 12/31/88 and 7.50% 
(annualized) 
	for the period 9/03/87 to 12/31/87.
** Computed by dividing the total amount of commission 
paid by the total number of shares purchased and sold 
during the year.
Commenced operations on 9/03/87.
-3b


CALCULATION OF PERFORMANCE DATA

	From time to time the Fund may advertise its 
annual total return and its yield for a particular 
month.  The total return of the Fund reflects the 
change in share price and reinvestment of dividends and 
capital gains.  The yield of the Fund for a particular 
month is the net investment income per share for the 
month stated as a percentage of the maximum share price 
on the last day of the month.  The Fund's total return, 
and its yield are based on historical performance and 
are not intended to indicate future performance.  The 
Fund calculates total return for a period by 
determining the redeemable value of a $1,000 investment 
made at the beginning of the period, with dividends and 
capital gains reinvested on the reinvestment date, on 
the last day of the period and dividing that value by 
$1,000.  The yield for a month is determined by 
dividing the net investment income per share for the 
month by the share price on the last day of the month.

There is further information regarding the Fund's 
performance in its Annual Report.  An investor may 
obtain a copy of the annual report without charge by 
writing to the shareholder services agent of the Fund 
or by calling (800) 992-6757.

INVESTMENT OBJECTIVE, POLICIES, AND RISK FACTORS

	The Fund is a no-load, diversified, open-end 
management investment company.  The Fund's 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 the 
potential for capital appreciation.  To achieve its 
objective, the Fund will invest in fixed income 
corporate debt securities, preferred stocks, securities 
issued or guaranteed by the U. S. Government, its 
agencies or instrumentalities, and common stocks paying 
cash dividends.  The fixed income corporate debt 
securities in which the Fund will invest will be bonds, 
debentures and corporate notes.  Since there are risks 
in all investments, there can be no assurance that the 
Fund will be successful or achieve its objective. 

	Under normal market conditions, the Fund will 
invest at least 80% of the value of its net assets in 
income producing securities.  The Fund may invest any 
percentage of its net assets that the Adviser deems 
appropriate 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 and 
preferred stocks.  The Adviser will determine the 
percentage of net assets to invest in each category of 
securities and the percentage of each category to hold 
based upon the prevailing economic and market 
conditions.  This means that the Fund has the option to 
invest up to 100% of its net assets in high yield, high 
risk corporate debt securities, commonly known as "junk 
bonds".  Investments in these securities may make an 
investment in the Fund riskier than an investment in a 
fund that invests all or a larger percentage of its net 
assets in securities of higher quality.  Investment in 
common stocks will be limited to a maximum of 25% of 
the value of the Fund's net assets.  This means that 
the Fund will not invest in additional common stocks 
anytime common stocks comprise 25% or more (through 
appreciation in value of the common stocks or 
depreication in value of other securities) of the value 
of its net assets.  At such time, however, the Fund may 
continue to invest in fixed income securities and 
preferred stocks that have common stock conversion 
privileges.  

-4-
	The Adviser will select fixed income corporate 
debt securities primarily on the basis of current yield 
and secondarily on the basis of anticipated long term 
return.  When selecting fixed income corporate debt 
securities, the Adviser will be aware of the rating the 
security has received from a nationally recognized 
statistical rating organization such as Standard & 
Poor's Ratings ("S & P") and Moody's Investors Service, 
Inc. ("Moody's").  These organizations rate the 
creditworthiness of the issuers of debt securities and 
assign a rating to the debt securities that are issued.  
S & P has a system that rates securities from AAA, 
highest, to D, lowest.  Moody's ratings go from Aaa, 
highest to C, lowest.  (See Appendices A and B in the 
Statement of Additional Information for definitions of 
S & P and Moody's Bond Ratings.)

	Investment grade securities are debt securities 
rated BBB or higher by S & P and Baa or higher by 
Moody's.  Debt securities rated lower than BBB or Baa 
are termed high yield, high risk securities or junk 
bonds.  The Fund invests in junk bonds that have a 
rating of CC or better by S & P and Caa or better by 
Moody's.  The Fund will not invest in debt securities 
that are in default in the payment of interest or 
principal.  The Fund may also invest in debt securities 
that are not rated.  Investment in unrated debt 
securities will be limited to 10% of the value of the 
Fund's net assets at the time of investment and the 
securities must have a creditworthiness, in the opinion 
of the Adviser, better than or equal to a rating of CC 
by S & P or Caa by Moody's.  If a debt security's 
rating falls or the security becomes unrated after the 
Fund purchases the security, the Fund will not be 
required to sell the security.

	At December 31, 1996, the Fund's portfolio was 
invested in investment grade and high yield, high risk 
corporate debt securities, preferred and common stocks 
and repurchase agreements.  

	Listed below are the percentages of the portfolio 
invested at December 31, 1996, in various bond ratings 
published by Moody's and S & P, as well as the 
percentages invested in unrated debt securities, 
preferred and common stocks and repurchase agreements:

Moody's Ratings
	A:  2%; BAA:  3%; BA:  9%; B:  32%; CAA:  2%; 
Unrated:  11%.

S & P Ratings
	A:  2%; BBB:  3%; BB:  9%; B:  25%; CCC:  5%; 
Unrated:  15%.

Preferred and Common Stocks and Repurchase Agreements
	Preferred stocks: 14%; Common Stocks:  22%;  
Repurchase Agreements:  5%.

Risk Considerations for High Yield, High Risk 
Securities

	Debt securities rated A or higher by S & P and 
Moody's are considered high grade securities and have 
the three highest ratings for creditworthiness.  Debt 
Securities rated BBB by




-5-
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.  Debt securities 
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. 

	Debt 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 in accordance with the 
terms of the debt securities.

	Issuers of high yield, high risk debt securities 
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 debt securities 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 flow 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 debt securities because such 
securities are unsecured and are often subordinated to 
other creditors of the issuer.  The default by an 
issuer of securities held by the Fund will adversely 
affect the Fund by lowering its net asset value and by 
decreasing the amount of income available to the Fund 
from which dividends may be paid.  In addition to the 
risk of default, holders of high yield, high risk debt 
securities also face the risk of greater market 
volatility than the holders of investment grade debt 
securities.  Changes in the general level of interest 
rates normally affect the market value and yield of 
corporate debt securities.  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 level rose, debt 
securities 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 debt securities 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 debt securities 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 securities may become thin and market liquidity 
may be significantly reduced.  Even under normal 
conditions, the market for high yield, high risk debt 
securities may be less liquid than the market for 
investment grade debt securities.  In periods of 
reduced market liquidity, the prices of high yield, 
high risk debt securities may become more volatile and 
these securities may experience sudden and substantial 
price declines.  A decline in value of the securities 
held by the Fund would adversely affect its net asset 
value and the value of a shareholder's investment in 
the Fund.



-6-
	The Adviser will attempt to minimize the risks of 
investing in medium grade and high yield, high risk 
debt securities by doing a credit analysis of the 
issuer, diversifying the Fund's portfolio and 
monitoring the Fund's investments and the investment 
environment.

	As previously stated, in selecting fixed income 
debt securities, the Adviser is aware of the issuer's 
credit rating in S & P and Moody's.  But this credit 
rating is not the only criterion for selection.  The 
Adviser examines the financial structure of each issuer 
and with regard to high yield, high risk debt 
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 debt risk securities than is the case in selecting 
higher quality securities.

	There can be no guarantee that the issuer of debt 
securities in which the Fund has invested will not 
default or that the securities will not decline in 
value.

	In addition to debt securities that are rated, 
the Fund also invests in unrated debt securities.  
These securities may or may not be more speculative 
than investment grade securities.  It is the issuer's 
decision to seek to have a security rated.  The risks 
of investing in unrated debt securities depend upon the 
creditworthiness of the issuer, changes in interest 
rates and economic and market factors.  Investors in 
unrated debt securities face the same risks that 
investors in investment grade and high yield, high risk 
debt securities face.  There is the possibility of 
default by the issuer or a change in interest rates 
that could adversely affect the value of the security.  
The Adviser will determine the creditworthiness of an 
unrated debt security and the issuer's ability to meet 
the debt obligation.  To be purchased by the Fund an 
unrated debt security must have a creditworthiness, in 
the Adviser's opinion, equal to or better than a CC 
rating by S & P or a Caa rating by Moody's.

	The investment objective of the Fund is to 
provide investors' with current income while seeking to 
preserve capital.  The Fund seeks to achieve this 
objective by investing in the corporate debt securities 
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.  The Fund will not invest in corporate debt 
securities 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.  The Fund 
will invest in only those corporate debt securities 
that are listed on national exchanges or on the over-
the-counter market and will not invest more than 10% of 
the Fund's net assets in illiquid securities.   

U.S. Government Securities

	The securities of the U. S. Government in which 
the Fund invests are U.S. Treasury bonds and notes and 
securities issued or guaranteed by Federal agencies or 
U. S. Government sponsored instrumentalities.

	U. S. Treasury bonds and notes are backed by the 
"full faith and credit" of the United States.  
Securities issued or guaranteed by Federal agencies or 
U. S. Government sponsored 

-7-
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, the Fund must look principally to 
the agency or instrumentality issuing or guaranteeing 
the security for ultimate repayment, and may not be 
able to assert a claim against the United States itself 
in the event the agency or instrumentality does not 
meet its commitment.

	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.  

Preferred and Common Stocks  

	The Fund also invests in preferred stocks and may 
invest in common stocks, subject to the 25% limit 
described above, when the Adviser deems it appropriate.  
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.

	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.

	Only common stocks that have been paying cash 
dividends are purchased by the Fund.  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 and 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.

	The Fund will not invest more than 10% of its net 
assets in illiquid securities whether fixed income or 
equity securities.

-8-
	The investment objective of the Fund is a 
fundamental policy that cannot be changed without the 
approval of a majority of the outstanding voting 
securities of the Fund.  Investment policies other than 
the fundamental policy stated above may be changed with 
the approval of a majority of the Fund's Board of 
Directors.

	Although the Fund will normally invest as 
outlined above, the Fund may at times, for temporary 
defensive purposes, invest all or a portion of its 
assets in savings accounts and certificates of deposit 
of domestic banks with assets in excess of $1,000,000, 
commercial paper rated A-1 by S & P Corporation, 
repurchase agreements, treasury bills or the Fund may 
hold cash.  
 
	The Fund will not invest more than 5% of its net 
assets in repurchase agreements.  Also, the Fund will 
not invest more than 5% of its net assets in Real 
Estate Investment Trusts.

	The Fund does not intend to engage in short-term 
trading.  In 1996 the Fund had a portfolio turnover 
rate of 38% and anticipates it will have a portfolio 
turnover rate of less than 100% in 1997.

MANAGEMENT OF THE FUND

	The Fund is a corporation formed under the laws 
of the Commonwealth of Pennsylvania on December 26, 
1986.  The business of the Fund is managed under the 
direction of the Board of Directors.  The Board is 
elected annually by the shareholders and sets broad 
policies for the Fund.  The daily operation of the Fund 
is administered by employees of the Adviser under the 
supervision of the Board.

	The Killen Group, Inc. (the "Adviser") is the 
investment adviser to the Fund.  The Adviser is a 
Pennsylvania corporation that was formed in September 
1982.  Its address is 1189 Lancaster Avenue, Berwyn, 
Pennsylvania 19312.  Robert E. Killen is Chairman, CEO 
and sole shareholder of the Adviser.  Mr. Killen is 
also President and Chairman of the Board of the Fund.  
Edward A. Killen is Vice-President and Secretary of the 
Adviser.  He is also a Director of the Fund and its 
portfolio manager, responsible for the day-to-day 
management of the Fund's portfolio.  He has been 
managing the Fund's portfolio since July 1, 1994.

	Edward A. Killen II has over seventeen years' 
experience in the investment advisory field.  In 1978, 
he started to work for Compu Val Management Associates, 
an investment advisory firm, as a portfolio manager.  
In February, 1983, the Adviser became a partner in 
Compu Val Management Associates and Edward A. Killen II 
assumed his current position as Vice President and 
Secretary of the Adviser.  The partnership of CompuVal 
Management Associates was dissolved on December 31, 
1983 and the Adviser continued its advisory business as 
a separate entity.  As of December 31, 1996, the 
Adviser was managing 383 individual investment 
portfolios worth approximately $484 million.




-9-
	The Adviser also manages The Berwyn Fund, Inc. 
("The Berwyn Fund").  The Berwyn Fund is an open-end 
management investment company that seeks long-term 
capital appreciation by investing in common stock and 
fixed income securities.  The Adviser has been the 
investment adviser to The Berwyn Fund, since it became 
public in May 1984.  On December 31, 1996, The Berwyn 
Fund had net assets of over $94 million.

	Under the contract between the Fund and the 
Adviser, the Adviser provides the Fund with investment 
management services.  These services include advice and 
recommendations with respect to investments, investment 
policies, the purchase and sale of securities and the 
management of the Fund's resources.  In addition, 
employees of the Adviser manage the daily operations of 
the Fund under the supervision of the Board.

	As compensation for its services, the Adviser 
receives monthly compensation at the annual rate of 
0.50% of the average daily net assets of the Fund.  
During 1996, the Fund paid the Adviser $638,212 in 
advisory fees.  Total expenses for the Fund in 1996 
were 0.68% of average daily net assets.  Payments to 
the Adviser were 0.50% of average daily net assets.

	Subject to the policies established by the Fund's 
Board of Directors, 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.

COMPUTATION OF NET ASSET VALUE

	The net asset value per share of the Fund is 
determined by dividing the total value of the Fund's 
investments and other assets, less any liabilities, by 
the total number of outstanding shares of the Fund.  
Net asset value per share is determined daily, Monday 
through Friday, as of the close of regular trading on 
the New York Stock Exchange (the "Exchange") (4 p.m., 
Eastern Time) and is effective as of the time of 
computation.  (The Exchange is closed on, and therefore 
net asset value is not calculated on, New Year's Day, 
President's Day, Good Friday, Memorial Day, 
Independence Day, Labor Day, Thanksgiving Day and 
Christmas Day, and on the preceding Friday or 
subsequent Monday when any of these holidays falls on a 
Saturday or Sunday, respectively.)  For the purpose of 
making this determination, securities listed on 
national securities exchanges are valued at their last 
sales price on the exchange where primarily traded.  In 
the event there are no sales, the security is valued at 
the last current bid price.  An unlisted security, for 
which over-the-counter market quotations are readily 
available, is valued on the basis of the last current 
bid price.  When over-the-counter market quotations are 
not readily available, an unlisted security is valued 
at its fair value as determined in good faith by, or 
under the supervision of, the Board of Directors.  All 
other assets are valued at fair value as determined in 
good faith by the Board of Directors.





-10-
SHARE PURCHASES

	The Fund's shares are offered for sale on a 
continuous basis.  There is no sales charge.  The 
offering price of shares of the Fund is the net asset 
value per share next determined after receipt by the 
Transfer Agent of the order for the purchase of shares.  
The value of a shares can be expected to fluctuate 
daily.

	Orders for shares of the Fund received prior to 
the close of the Exchange (normal closing time is 4:00 
p.m., Eastern Time) on any day the Exchange is open 
will be the net asset value effective at the close of 
the Exchange on such a day.  Orders received after the 
close of the Exchange will be valued at the net asset 
value computed on the next business day (i.e., the next 
day the Exchange is open).

	The minimum initial investment is $10,000 per 
investor.  This investment may be divided by a single 
investor among different investment accounts in the 
Fund that total $10,000 in the aggregate or between 
accounts in the Fund and The Berwyn Fund. Subsequent 
investments must be least $250 per account.  For 
Individual Retirement Accounts ("IRA"), the minimum 
initial investment is $1,000.  The minimum initial 
investment for a spousal IRA is $250.  Subsequent 
investments in IRA accounts must be at least $250.  
There are no minimum investment requirements for an 
investment in any retirement plan (other than an IRA) 
or custodial account for the benefit of a minor.  
Initial investments must consist of a New Account 
Application and payment of the initial investment.  
Investments are deemed effective when they are received 
at the office of the Fund's Transfer Agent, Rodney 
Square Management Corp., P. O. Box 8987, Wilmington DE 
19899.

	The Fund has an Automatic Investment Plan under 
which an investor may have money transferred from the 
investor's checking account to the investor's account 
in the Fund.  If you wish to use this plan, please 
contact the Fund for further information and an 
application.

	An investor may also exchange securities for 
shares of the Fund.  The securities offered, by the 
investor, however, have to be acceptable to the Fund 
and the Fund reserves the right to reject any security 
that does not meet its criteria.

	To be acceptable to the Fund, the securities 
offered by the investor for both initial and subsequent 
investments must have a fair market value, determined 
as set forth below, of at least $20,000.  (An investor 
would be permitted to invest a combination of cash and 
securities totaling $20,000.)  The securities must meet 
the investment standards and criteria listed in the 
Fund's Prospectus and Statement of Additional 
Information and, the securities will not be accepted if 
the Fund would violate any of its investment 
restrictions by having the securities in its portfolio.  
(See "Investment Objective Policies and Risk Factors" 
in the Prospectus, "Invesetment Policies and Risk 
Factors" in the Statement of Additional Information 
("SAI") and "Investment Restrictions" in the SAI.)




-11-
	The Adviser will determine the acceptability and 
the fair market value of the securities.  An investor 
wishing to exchange securities for Fund shares should 
write to the Adviser stating his intention to make an 
exchange and giving the names and amounts of securities 
being offered.  Within three business days of receipt 
of the letter, the Adviser will mail a notice to the 
investor accepting or rejecting the securities being 
offered.

	If the securities are acceptable to the Fund, the 
Adviser will also inform the investor in the 
notification of the preliminary value the Adviser has 
determined for each security being offered and the date 
upon which the valuation was made.  This amount may be 
different from the value obtained on the valuation date 
described below.

	The investor will have fourteen calendar days 
from receipt of the Adviser's notification to deliver 
to the Fund certificates for securities offered 
endorsed to The Berwyn Income Fund, Inc. (In the case 
of an initial investment, a New Account Application 
completed by the investor must accompany the 
certificates.)
 
	Upon receipt of the securities, the Fund will 
determine the value of the securities on the valuation 
date which will be the date on which the net asset 
value shares of the Fund are next determined after 
receipt of such securities.. The amount of the 
investment will be the value of the securities as 
determined by the Fund.  The value of each security 
offered by the investor will be determined on the 
valuation date as of the close of trading of the 
Exchange and the method of valuation will be the same 
as the one used to value the Fund's portfolio 
securities.  If a security being exchanged pays 
interest, the amount of interest due will be determined 
on the valuation date and the Fund will issue shares 
equal to the amount of accrued interest.  (See 
"Computation of Net Asset Value".)  Dividends due on 
any security will be paid to the person who is listed 
as owner on the record date.  For such an exchange, the 
net asset value of the shares of the Fund and the date 
upon which the investment is effective are determined 
in the same manner as for cash transactions.

	There may be Federal income tax consequences for 
an investor exchanging securities for Fund shares, and 
an investor should consult a qualified tax expert 
before entering into any exchange.

	In addition, to purchasing and redeeming shares 
through the Fund, investors may make telephone 
purchases and redemptions through broker-dealers who 
may charge a fee.  

DISTRIBUTOR

	Berwyn Financial Services Corp. ("Berwyn 
Financial"), located at 1199 Lancaster Avenue, Berwyn, 
Pennsylvania 19312, serves as the non-exclusive 
distributor of the Fund's shares pursuant to a selling 
agreement between Berwyn Financial and the Fund.  Under 
the terms of the agreement, Berwyn Financial is a 
selling agent for the Fund in certain jurisdictions in 
order to facilitate the registration of shares of the 
Fund under state securities laws and assist in the sale 
of



-12-
shares.  Berwyn Financial does not charge a fee for the 
services provided under the selling agreement with the 
Fund.  The Fund shall continue to bear the expenses of 
all filing or notification fees incurred in connection 
with the registration of shares under state securities 
laws.  Berwyn Financial is affiliated with the Fund and 
the Adviser.  Robert E. Killen who is an Officer and 
Director of the Fund and the Adviser, is also a 
Director of Berwyn Financial.  Edward A. Killen is an 
Officer and Director of the Adviser and Berwyn 
Financial and he is a Director of the Fund.  Kevin M. 
Ryan is an Officer of the Fund and an Officer and 
Director of Berwyn Financial. 

EXCHANGE OF SHARES

	Shares of the Fund may be exchanged for shares of 
The Berwyn Fund, a no-load mutual fund that is managed 
by the Adviser.  Shares may also be exchanged for 
shares in the Rodney Square Fund or the Rodney Square 
Tax-Exempt Fund (each of such Funds, a "Rodney Square 
Fund").  The Rodney Square Funds are money market funds 
managed by Rodney Square Management Corporation and 
distributed by Rodney Square Distributors, Inc.  
Exchanges will be made on the basis of the net asset 
value per share of the Funds involved next determined 
after an exchange has been requested.  The minimum 
initial investment of The Berwyn Fund is $10,000 
($1,000 for IRAs and no minimum initial investment for 
pension plans or custodial accounts for minors.)  The 
minimum initial investment for each of the Rodney 
Square Funds is $1,000.  A shareholder may make an 
exchange by telephone or written request.  Telephone 
requests for an exchange may be made by calling the 
Fund's Transfer Agent at (800)992-6757 on any business 
day between 9:00 a.m. and 4:00 p.m.
	
	Subject to the foregoing minimum investment 
amounts, any shareholder will be permitted to exchange 
shares among the above mutual funds ("Eligible Funds").  
When making a telephone exchange, the shareholder must 
know the account number of the account from which 
shares are exchanged and the social security or tax 
identification number under which the account is 
registered.  Shares will be exchanged only into an 
account that has same shareholder(s) of record and same 
social security or tax identification number.

	A shareholder in the Fund will be permitted to 
exchange the shares in his or her account for shares in 
one of the other Eligible Funds only four times in any 
twelve-month period.  A shareholder in a Rodney Square 
Fund may exchange shares of the Rodney Square Fund for 
shares of the Fund as often as the shareholder desires.

	Before making an exchange, a shareholder should 
obtain and review a current prospectus of the Eligible 
Fund into which shares of the Fund will be exchanged.  
Prospectuses for The Berwyn Fund or the Rodney Square 
Funds may be obtained from the Fund by writing to the 
Shareholder Services Agent of the Fund or calling (800) 
992-6757.

	The exchange privilege is available only to 
investors residing in states where the Eligible Funds 
have filed the notice for sale.



-13-
	The Fund, The Berwyn Fund and each of the Rodney 
Square Funds reserve the right to amend or change the 
exchange privilege upon 60 days' notice to 
shareholders.

DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES

	It will be the policy of the Fund to distribute 
substantially all of its net investment income and any 
net realized capital gains.  Dividends from net 
investment income will be paid quarterly. 
Distribution of net realized short term capital gains, 
if any, may be made quarterly or annually based upon 
the determination of the Board of Directors.  
Distribution of net realized long term capital gains, 
if any, will be made annually.

	Reinvestment of dividends and/or capital gains 
distributions will be made at the net asset value per 
share next determined after the record date.  At the 
election of the shareholder, dividends or capital gains 
distributions, or both, will be reinvested in the 
shares of the Fund or distributed in cash.  This 
election by the shareholder is made at the time of the 
initial purchase of shares indicating on the account 
application whether distribution or reinvestment is 
desired.

	The election of the shareholder to receive or 
reinvest dividends and/or capital gain distributions 
may be changed at any time after the initial account 
application is received.  To change the initial 
election, the shareholder must send the Fund a letter 
by certified 
mail, return-receipt requested, signed exactly as the 
shareholder's signature appears on the transfer agent's 
register, stating the change desired.

	The Fund qualified as a regulated investment 
company under Subchapter M of the Internal Revenue Code 
of 1986, as amended, in the past year and intends to 
continue to so qualify by complying with the provisions 
of this Subchapter in the future.

	Subchapter M provides that an investment company 
which qualifies will be relieved from Federal income 
tax on the income the company distributes.  Generally, 
shareholders of the investment company pay Federal 
income tax on dividends and capital gains 
distributions.  Shareholders are responsible for the 
tax whether the dividend or capital gains distribution 
is received in cash or in additional shares of the 
Fund.  Shareholders who are not subject to income tax 
will not be required to pay tax on the amount 
distributed. The Fund will notify shareholders what 
portion of the distribution is from net investment 
income or capital gains.  

	A dividend shortly after a purchase of Fund 
shares is taxable to the shareholder even though it 
appears to be a return of capital.  

	Redemptions and exchanges of Fund shares are 
treated as sales of Fund shares.  Consequently, 
redemptions and exchanges are generally subject to 
capital gains tax. 

	In addition to Federal income tax, Fund 
distributions and capital gains or loses from the sale, 
redemption or exchange of Fund shares may also be 
subject to state and local taxes.



-14-
The Fund is required to withhold 31% of taxable 
dividends, capital gains distributions, and redemption 
proceedes paid to shareholders that do not provide 
their correct taxpayer identification number, certify 
that it is correct, and certify that they are not 
subject to backup withholding.

RETIREMENT PLANS

	The Fund sponsors IRAs.  Individuals interested 
in having an IRA with the Fund may obtain an IRA 
information booklet and application forms by writing to 
the Shareholder Services Agent of the Fund or calling 
(800) 992-6757.

	The Fund also sponsors a Prototype Defined 
Contribution Plan under which self-employed 
individuals, partnerships and their employees and 
corporations may establish profit-sharing and money 
purchase retirement plans.  Additional details 
concerning these retirement plans are available from 
the Fund.

REDEMPTION OF SHARES

	The Fund will redeem any portion of or all shares 
in an account upon receipt of a written request from 
the shareholder by the Transfer Agent.  The Fund will 
also redeem shares worth up to $5,000 in value in an 
account upon a telephone request from a "qualified" 
shareholder.  (To qualify for telephone redemption, a 
shareholder must check the box on the new account 
application.)  The redemption price will be the net 
asset value per share next determined after receipt of 
a notice of redemption.  Shareholders liquidating their 
holdings will receive upon redemption all dividends 
reinvested through the date of redemption.

	A shareholder who wishes to submit a written 
redemption request should mail it to Berwyn Income 
Fund, c/o Rodney Square Management Corp., P.O. Box 
8987, Wilmington, DE 19899.  The letter should list the 
shareholder's account number and the amount of money or 
number of shares being redeemed.  The letter should be 
signed by the person(s) in whose name(s) the shares are 
registered.

	A shareholder who qualifies for telephone 
redemption may redeem up to $5,000 from an account by 
telephoning the Transfer Agent at (800) 992-6757 on any 
business day between the hours of 9:00 a.m. and 4:00 
p.m.

	A shareholder requesting a redemption by 
telephone must give the account number for the account 
and the social security number or tax identification 
number under which the account is registered.  Checks 
will be issued only in the name(s) listed on the 
account and will be mailed only to the address listed.  

	Neither the Fund nor the Transfer Agent is 
responsible for any shareholder loss incurred in acting 
upon written or telephone instructions for redemption 
or exchange of shares which are 
reasonably believed to be genuine.  With respect to 
such telephone transactions, the Fund will


-15-
ensure that reasonable procedures are used to confirm 
that instructions communicated by telephone are genuine 
(including verification of a form of personal 
identification).  Instructions received by telephone 
are generally tape recorded, and a written confirmation 
will be provided for all purchase, exchange and 
redemption transactions initiated by telephone.

	Payment will be mailed generally within seven 
days of receipt of a notice of redemption.

	The Fund also has a Systematic Withdrawal Plan 
("SWP") under which an investor may have money 
automatically withdrawn from his or her account on a 
regular basis.  Investors who wish to establish a SWP 
should complete the section on systematic withdrawals 
on the account application.  

	The Fund reserves the right to redeem the Fund 
shares of, and send the redemption proceeds to, any 
shareholder whose total shares in [an][all] account[s] 
fall below $1,000 in net asset value by reason of 
redemption.  Upon receiving written notice from the 
Fund, a shareholder must increase the shareholder's 
account net asset value to $1,000 or above within 60 
days to prevent liquidation.

	When permitted by the Securities and Exchange 
Commission (the "SEC"), the Fund may suspend the right 
of redemption and may postpone payment for more than 
seven days during any period when the Exchange is 
closed, other than customary weekend and holiday 
closing; when trading on the Exchange is restricted, as 
determined by the SEC, during any period when an 
emergency, as defined by rules of the SEC, exists 
making disposal of portfolio securities or valuation of 
net assets by the Fund not reasonably practicable; or 
when the SEC may permit for the protection of 
shareholders of the Fund.

GENERAL INFORMATION

Capital Structure

	The Fund has authorized capital of 20,000,000 
shares of common stock of $1 par value per share.  Each 
share has equal dividend, distribution and liquidation 
rights.  There are no conversion or preemptive rights 
applicable to any shares of the Fund.  All shares 
issued are fully paid and nonassessable.

	Fund shares do not have cumulative voting rights, 
which means that the holders of more than 50% of the 
shares voting for election of Directors may elect 100% 
of the Directors if they choose to do so and, in such 
event, the holders of the remaining shares so voting 
will not be able to elect any Directors.

Transfer Agent and Dividend Paying Agent

	Rodney Square Management Corp., P. O. Box 8987, 
Wilmington, Delaware 19899 is the Transfer Agent and 
Dividend Paying Agent.


-16-
Shareholder Inquiries

	Shareholder inquiries may be made by writing to 
the Transfer Agent or calling the Transfer Agent at 
(800) 992-6757 between the hours of 9:00 a.m. and 4:00 
p.m.

Share Certificates

	Share certificates will be issued only upon 
written request.

Reports

	The Fund will issue annual and semi-annual 
reports to shareholders and may issue quarterly 
reports.  In these reports management of the Fund will 
discuss the Fund's performance and compare the Fund's 
performance with the performance of certain bond 
indices and an index of income funds.  The annual 
report will contain audited financial statements and 
the semi-annual report will have unaudited financial 
statements.


ADDITIONAL INFORMATION

	This Prospectus omits certain information 
contained in the registration statement filed with the 
SEC.  The registration statement consists of three 
parts: the Prospectus, a SAI and a third section 
containing exhibits and other information.  A copy of 
the SAI is available from the Fund upon request free of 
charge.  The third part of the registration statement 
may be obtained from the SEC upon paying the charges 
prescribed.

	No person has been authorized to give any 
information or to make any representations other than 
those contained in this Prospectus and the SAI, and 
information or representations not herein contained, if 
given or made, must not be relied upon as having been 
authorized by the Fund.  This Prospectus does not 
constitute an offer or solicitation in any jurisdiction 
in which such offering may not lawfully be made.














-17-


PART B

BERWYN INCOME FUND, INC.
Shareholder Services 
c/o Rodney Square Management Corp.
P.O. Box 8987
Wilmington, DE  19899


STATEMENT OF ADDITIONAL INFORMATION

March 27, 1997



	This Statement of Additional Information 
("SAI")is not a Prospectus.  It is a document that 
relates to the Prospectus of the Berwyn Income Fund, 
Inc. (the "Fund") dated March 27, 1997 and contains 
additional information regarding the Fund.  This SAI 
should be read in conjunction with the Prospectus.  A 
Prospectus may be obtained by writing to the Fund at 
the above address.





























TABLE OF CONTENTS



Investment Policies and Risk 
Factors................................................
 ....................................	2

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

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

Expense 
Limitation.............................................
 .......................................................
 ............	6

Directors and 
Officers...............................................
 .......................................................
 ......	6

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

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

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

Share 
Purchases..............................................
 .......................................................
 ................	10

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

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

Calculation of Performance 
Data...................................................
 ........................................	11

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

Financial 
Statements.............................................
 .......................................................
 ..........	13


	












-1


INVESTMENT POLICIES AND RISK FACTORS

(See also "Investment Objective, Policies and Risk 
Factors" in the Fund's Prospectus.)

	The Fund is a no-load, diversified, 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 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") 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.

	Investment grade corporate debt securities are 
considered to be securities rated BBB or higher in the 
S & P Bond Rating Guide or Baa or better by Moody's 
Investors Service and high yield securities are 
considered to be securities rated lower than BBB or Baa 
by these services.  Appendices A and B list the 
definitions of the Standard Poor's and Moody's bond 
ratings.

	The Fund may also invest in fixed income 
securities that are not rated.  The Fund will not 
invest more than 10% of the value of its total net 
assets in unrated securities.  Also 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 
better or a Moody's rating of Caa.

	In addition to corporate debt securities the Fund 
may invest in the securities issued or guaranteed by 
the U.S. Government, its agencies or instrumentalities 
and in preferred and common stocks.  The securities of 
the U.S. Government that the Fund Invests in are U.S. 
Treasury bonds and notes.  The Fund may also purchase 
debt securities issued by Government agencies, such as, 
Export-Import Bank, or by an instrumentality of the 
Government, such as the Federal National Mortgage 
Association.  Treasury bonds and notes are backed by 
the full faith and credit of the U.S. Government.  
Securities issued by agencies and 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 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 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



-2-
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 only purchase common 
stocks that pay cash dividend and will not purchase 
common stocks when common stocks comprise 25% 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 savings accounts and 
certificates of deposit of domestic banks with assets 
in excess of $1,000,000, commercial paper rates A-1, 
repurchased agreements, Treasury bills, and the Fund 
may hold cash.

	The Fund may invest in real estate investment 
trusts ("REITs") and repurchase agreements.  The Fund, 
however, limits investment in REITs to 5% 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.  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, 1996, 2.35% of the Fund's net assets were 
invested in REITs.

	Repurchase agreements are defined as agreements 
wherein a seller of securities agrees with the Fund at 
the time of sale to repurchase the security from the 
Fund at a mutually agreed upon time and price.  The 
Fund intends to enter into repurchase agreements only 
with established banking institutions that deal in 
Treasury bills and notes.  The Fund intends to invest 
mostly in overnight repurchase agreements.  In the 
event of bankruptcy of the seller of a repurchase 
agreement or the failure of the seller to repurchase 
the underlying security as agreed upon, the Fund could 
experience losses that include a possible decline in 
the value of the underlying security during the period 
the Fund seeks to enforce its rights thereto and a 
possible loss of all or part of the income.  The Fund 
would also incur additional expenses enforcing its 
rights.  As of December 31, 1996, 4.85% of the Fund's 
net assets were invested in repurchase agreements.

INVESTMENT RESTRICTIONS

	The investment restrictions set forth below 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 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.  



-3-
	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); 

(10) participate in a joint investment account; 
and

	(11) issue senior securities.

	The Fund has also adopted certain investment 
restrictions that are not fundamental.  These 
restrictions are that the Fund will not invest in real 
estate limited partnerships, in 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 may be changed by a vote of the 
majority of the Board of Directors.  But if any of 
these non-fundamental restrictions are changed, the 
Fund will give shareholders at least 60 days' written 
notice.


-4-

INVESTMENT ADVISORY ARRANGEMENTS

 	(See also "Management of the Fund" in 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 is Vice President, Secretary 
and a Director of the Adviser and a Director of the 
Fund.

	The Adivser provides the Fund with investment 
management services.  Under the contract between the 
Fund and the Adviser (the "Contract"), the Adviser 
provides the Fund with advice and recommendations with 
respect to investments, investment policies, the 
purchase and sale of securities and the management of 
the Fund's resources.  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, prepare and file all 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 from  year to year if continuation is 
specifically approved annually by a vote of a majority 
of the outstanding voting securities of the Fund.  
Continuance of the Contract must also be approved 
annually by the Board of Directors, including a 
majority of Directors who are not parties to the 
Contract or interested persons of any such party cast 
in person at a meeting called for the purpose of voting 
on such approval.  The Fund may terminate the Contract 
on sixty days' written notice to the Adviser, without 
payment of any penalty, provided such termination is 
authorized by the Board of Directors or by a majority 
of the outstanding voting securities.  The Adviser may 
terminate the contract by notifying the Fund in writing 
at least sixty days before the date of the annual 
shareholder meeting that continuation of the contract 
is not desired.  The contract will be automatically and 
immediately terminated in the event of its assignment 
by the Adviser.

	As compensation for its investment management 
services to the Fund, the Adviser will receive monthly 
compensation at the annual rate of 1/2 of 1% of the 
average daily net assets.  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 amount 
paid to the Adviser. 

	The Fund paid the Adviser $638,212 in fees in 
1996, $477,283 in 1995, and $218,720 in 1994.






-5-


EXPENSE LIMITATION

	The Contract between the Fund and the Adviser 
provides that the Adviser's fee 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) 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.  Once the net assets of the 
Fund exceed $100 million, the expense limitation will 
be reduced to 1.5%.


DIRECTORS AND OFFICERS

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

Name, Age, Position 	Principal Occupation for 
the Past Five Years
and Address

*Robert E. Killen (55)	Director of Westmoreland 
Coal Co. (a mining company) since President & Director 
	July 1996. Director and Shareholder, Berwyn 
Financial Services 1199 Lancaster Avenue	Corp.,
 a financial services company (registered as
 a broker-dealer Berwyn, Pennsylvania
 	with the Securities and Exchange Commission ("SEC") since 
			12/93 and a member of 
the National Association of Securities 
			Dealers, Inc. (the 
"NASD") since 7/94), since October 1991.  
			President and Director 
of The Berwyn Fund, Inc. (a registered 
			investment company 
managed by the Adviser) since February 
			1983.  Chairman, CEO and 
Sole Shareholder of the Adivser (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 (47)	Director of The Berwyn 
Fund, Inc. since January 1995.  Vice
Director		President of the Adviser 
since August 1986.
1189 Lancaster Avenue
Berwyn, Pennsylvania

*Edward A. Killen, II (47)	Director, Secretary and 
Shareholder of Berwyn Financial Services
Director		since October 1991.  
Director of the Fund since January, 1995.  
1189 Lancaster Avenue	Director of The Berwyn 
Fund, Inc. from February 1983 to January 
Berwyn, Pennsylvania	1995.  Vice president, 
Secretary and Director of the Adviser since 
			February 1983.


-6-
Denis P. Conlon (48)	Director of The Berwyn 
Fund, Inc., since June 1992 President and 
Director		CEO of CRC Industries (a 
worldwide manufacturer) since 
Berwyn, Pennsylvania	September 1996. Vice 
President, Corporate Development,
			Berwind Corporation 
(diversified manufacturing and financialcompany)
 from 1990 to September 1996.

William H. Vonier (68)	Director of The Berwyn 
Fund, Inc. since June 1992.  Independent 
Director		Consultant in Sales and 
Marketing since 1989.
348 Valley View Lane
Chester Springs,  Pennsylvania

*Kevin M. Ryan (49)	President, Treasurer, 
Director and Shareholder of Berwyn 
Secretary-Treasurer	Financial Services Corp. 
since October 1991.  Director of the
1199 Lancaster Avenue	Fund from December 1986 
to January 1995.  Secretary, Treasurer 
Berwyn, Pennsylvania	and Director of The 
Berwyn Fund, Inc., since February 1983.  
			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 "act") and Robert E. Killen, 
Anthony N. Carrelli, and Edward A. Killen II are the 
"Interested Directors" of the Fund.  Robert E. Killen 
is an Officer, Director and Sole Shareholder of the 
Adviser.  He is also a Director of Berwyn Financial 
Services Corp., a registered broker-dealer, and owns 
1/3 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 1/3 of the 
outstanding shares of Berwyn Financial Services Corp.  
Kevin M. Ryan is legal counsel to the Adviser and he is 
an Officer, Director and Owner of 1/3 of the 
outstanding shares of Berwyn Financial Services Corp.  
In addition, Robert E. Killen and Edward A. Killen II 
are brothers and Kevin M. Ryan is brother-in-law to 
both.  Berwyn Financial Services Corp. serves as the 
distributor for the Fund's shares in certain 
jurisdictions.

Messrs. Conlon and Vonier are the Directors of the Fund 
who are not "interested persons" of the Fund as defined 
in the 1940 Act (the "Independent Directors") and are 
paid a fee of $400 for each Board or Committee meeting 
attended and are reimbursed for any travel expenses by 
the Fund.  If a Board and Committee meeting are held on 
the same date, the Independent Directors receive only 
one fee.  Messrs. Conlon and Vonier also serve as 
Independent Directors of The Berwyn Fund, Inc. (another 
registered investment company managed by the Adviser).  
The Fund has not adopted a pension or retirement plan 
or any other plan that would afford benefits to its 
Directors.  The Fund paid each Independent Director a 
fee of $1600 in 1996.

Officers of the Fund are not paid compensation by the 
Fund for their work as officers and no fees are paid to 
the Interested Directors for the performance of their 
duties.  (See "Management of the Fund" in the 
Prospectus for a discussion of management 
responsibilities of the Board and Officers.)


-7-

OWNERSHIP OF THE FUND

	As of February 28, 1997 there were 11,134,197 
shares of the Fund outstanding.  Charles Schwab & Co. 
(Schwab"), 101 Montgomery Street, San Francisco, CA was 
the record owner of 43% 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 28, 1997, 
the Directors and Officers of the Fund, as a group, 
owned beneficially and of record less than1.0% of the 
Fund's outstanding shares.

PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS

	Subject to policy established by the Fund's Board 
of Directors, the Adviser is responsible for the Fund's 
portfolio decisions and the buying and selling of the 
Fund's portfolio transactions.  In executing such 
securities, 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.

	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.  Consideration will be given to brokers who 
have assisted in the distribution of shares of the 
Fund.  No effort is made in any given circumstance to 
determine the value of these materials or services or 
the amount they might have reduced expenses of the 
Adviser.

	The Board has adopted procedures under 17e-1 of 
the 1940 Act that permit portfolio transactions to be 
executed through affiliated brokers.  In 1994, 1995, 
and 1996 the Fund used an affiliated broker, Berwyn 
Financial Services Corp. ("BFS").



-8-

	BFS is affiliated with the Fund by reason of the 
fact that Officers and Directors of the Fund and the 
Adviser are Officers, Directors and Shareholders of 
BFS.  In addition, BFS serves as the distributor for 
the Fund's shares in various jurisdictions pursuant to 
a written agreement.

	In 1996, the Fund paid a total of $126,520 in 
commissions to BFS.  This figure represents 88% of the 
total commissions paid by the Fund.  The percentage of 
the Fund's aggregate dollar amount of transactions 
involving the payment of commissions effected through 
BFS was 90%.  In 1995, the Fund paid a total of 
$199,302 in commissions to BFS.  This figure represents 
87% of the total commissions paid by the Fund.  The 
percentage of the Fund's aggregate dollar amount of 
transactions involving the payment of commissions 
effected through BFS was 92%.

	In 1994, the Fund used two affiliated brokers.  
During the first eight months of 1994, the affiliated 
broker used by the Fund was Securities America, Inc. 
("America").  America was affiliated with the Fund and 
the Adviser by reason of the fact that David C. Dameron 
and Kevin M. Ryan, persons affiliated with the Fund and 
the Adviser, were registered representatives with SAI 
and had portfolio transactions executed for the Fund 
through America.  During the last four months of 1994, 
BFS was the affiliated broker used by the Fund.

	In 1994, the Fund paid a total of $41,954 in 
Commissions to America and $51,261 to BFS.  The 
percentage of the Fund's total brokerage commissions 
paid to America and BFS was 31% and 38%, respectively.  
Total commissions paid to such affiliated brokers was 
$93,215.  This figure represents 69% of the total 
commissions paid by the Fund during the fiscal year 
ended December 31, 1994.  The percentage of the Fund's 
aggregate dollar amount of transactions involving the 
payment of commissions effected through America was 37% 
and through BFS was 36%.

	The Fund paid brokerage commissions of $144,128 
in 1996, $229,668 in 1995, and $133,581 in 1994.  The 
Fund was closed to new investors in 1996 and as a 
result, the proceeds from the sale of Fund shares was 
less in 1995 than in 1996 and there was less trading.  
The Board of Directors decided to open the Fund to new 
investors on January 21, 1997.

	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 






-9-
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 
Fund's 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

	The Fund's shares are offered for sale on a 
continuous basis.  There is no sales load.  The 
offering price of shares of the Fund is the net asset 
value per share next determined after receipt by the 
Transfer Agent of the order for purchase of shares.	

	The minimum initial investment is $10,000 per 
investor.  This investment may be divided by a single 
investor among different investment accounts in the 
Fund that total $10,000 in the aggregate or between 
accounts in the Fund and The Berwyn Fund, Inc.  
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 Corp., a broker-dealer registered with the 
Securities and Exchange Commission, is the current 
distributor of the Fund's shares, pursuant to a selling 
agreement which became effective July 25, 1994 (the 
"Selling Agreement").  Under the Selling Agreement, BFS 
is the non-exclusive agent in certain jurisdictions for 
the Fund's continuous offering of shares.  Shares of 
the Fund are offered to the public at net asset value, 
without the imposition of a sales load.  The 
jurisdictions in which BFS is the distributor are 
Arizona, Arkansas, Florida, Maryland, North Dakota, 
Nebraska, Texas, Vermont and West Virginia.




-10-
	The Selling Agreement provides that it will 
continue in effect form year to year only so long as 
such continuance is approved at least annually by the 
Fund's Board of Directors and by the vote of a majority 
of the Directors who are not parties to the agreement 
or interested persons of any such party by vote cast in 
person at a meeting called for the purpose of voting on 
such approval.  The Selling Agreement will terminate 
automatically in the event of its assignment.

REDEMPTION OF SHARES

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

	The Fund has elected to be governed by Rule 18f-1 
under the 1940 Act, under which the Fund is obligated 
to redeem the shares of any shareholder solely in cash 
up to the lesser of 1% of the net asset value of the 
Fund or $250,000 during any 90-day period.  Should any 
shareholder's redemptions exceed this limitation, the 
Fund can, at its sole option, redeem the excess in cash 
or in portfolio securities selected solely by the Fund 
(and valued as in computing net asset value).  In these 
circumstances, an investor that receives and sells such 
portfolio securities would probably incur a brokerage 
charge and there can be no assurance that the price 
realized by an investor upon the sale of such portfolio 
securities will not be less than the value used in 
computing net asset value for the purpose of such 
redemptions.

CALCULATION OF PERFORMANCE DATA
Yield

	The Fund's yield for the month ended December 31, 
1996 was 6.95%.

	The yield was determined based upon the net 
investment income per share for the period December 1 
to December 31, 1996.  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 the life of the Fund ended 
December 31, 1996 are listed below:

		One Year:	14.0%
		Five Years:	14.2%
		Life of the Fund:	12.0% 
		  
	The period of time for one year's performance is 
from January 1, 1996 to December 31, 1996.  The dates 
for the five year period are January 1, 1992 to 
December 31, 1996 and the life of the Fund covers the 
period from September 3, 1987 to December 31, 1996.  To 
obtain the performance listed above, the Fund computed 
its average total return for each period of time.  


-11-
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 return on a calendar year 
basis.  Listed below are the Fund's total returns for 
the calendar years 1988, 1989, 1990, 1991, 1992, 1993, 
1994, 1995 and 1996:

			  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%

	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

Capital Structure  

	The Fund has authorized capital of 20,000,000 
shares of common stock of $1 par value per share.  Each 
share has equal dividend, distribution and liquidation 
rights.  There are no conversion or preemptive rights 
applicable to any shares of the Fund.  All shares 
issued are fully paid and nonassessable.  Fund shares 
do not have cumulative voting rights.  (See "General 
Information" in the Prospectus for a discussion of 
noncumulative voting rights.)






-12-
Custodian

	Wilmington Trust Company, Rodney Square North, 
1100 North Market Street, Wilmington, DE 19890-0001 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

	Price Waterhouse LLP, 30 South 17th Street, 
Philadelphia, Pennsylvania has been selected as the 
independent accountants for the Fund by the Board of 
Directors.  Price Waterhouse LLP will perform an annual 
audit of the financial statements of the Fund.

Tax Status

	The Fund intends to comply with Subchapter M of 
the Internal Revenue Code.  (See "Dividends, Capital 
Gains, Distributions and Taxes" in the Prospectus for a 
discussion of the tax status of the Fund and the 
consequences to its shareholders.)

Litigation

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

FINANCIAL STATEMENTS

	The Fund's audited financial statements and notes 
thereto for the year ended December 31, 1996 and the 
unqualified Report of Independent Accountants of the 
Fund's accountants, Price Waterhouse LLP, on such 
financial statements (the "Report") which are 
incorporated by reference in this statement of 
additional information are included in the Fund's 1996 
annual report to shareholders.  An investor may obtain 
a copy of the annual report by writing to the 
Shareholder Services Agent of the Fund or calling (800) 
992-6757.  The Rerpot follows on the next page.















-13-
APPENDIX A

DEFINITIONS OF STANDARD & POOR'S BOND RATINGS



	Standard  Poor's 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 repyament of 
			principal is in arrears.










-14-

APPENDIX B

MOODY'S BOND RATINGS



	Moody's give ratings to bonds that range 
from Aaa to D.  Definitions of these ratings are set 
forth below.  The Fund may invest in bonds with any 
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.


-15-
PART C

Item 24

(a) Financial Statements:

	The Financial Statements and Financial Highlights 
and the note thereon in the 1996 Annual Report to 
Shareholders are incorporated by reference into Part A 
and Part B of this Registration Statement. The 
Financial Statements incorporated by reference include 
the Statement of Assets and Liabilities, Statement of 
Operations, Statement of Changes in Net Assets, 
Financial Highlights, Statement of Investments, and 
Notes to Financial Statements.  The Financial 
Highlights of the Fund are also included in Part A and 
the Report of Independent Accounts is included in Part 
B.

(b)  Exhibits:

	1.	A copy of the Articles of Incorporation was 
filed in the registration statement filed
		May 21, 1987 and is incorporated herein by 
reference.

	2.	A copy of the amended bylaws was filed 3/01/94 
and is incorporated herein by this reference.

	3.	Not applicable.

	4.	A copy of the security being issued was filed 
in the registration statement filed May 21, 
1987 and is incorporated herein by this 
reference.

	5.	A copy of the amended Investment Avisory 
Contract was filed 3/01/94 and is incorporated 
herein by this reference.

	6.	A copy of the Selling Agreement between the 
Fund and Berwyn Financial Services Corp. was 
filed 4/24/95 and is incorporated herein by 
this reference.

	7.	Not applicable.

	8.	A copy of the new Custodian Agreement was 
filed 3/01/94 and is incorporated herein by 
this reference.

	9.	Not applicable.

	10.	A copy of the opinion and consent of counsel 
was filed with the Fund's Rule 24f-2 notice on 
3/12/97 and is incorporated herein by this 
reference.

	11.	The consent of Price Waterhouse LLP is 
included herein.

	12.	Not applicable.

	13.	Not applicable.

	14.	Copies of the IRA information booklet and SEP 
Information booklet were filed in the post-
effective amendment filed April 8, 1991 and 
are incorporated by reference.  The


C-1
		Prototype Defined Contribution Plan used by the 
Fund was filed as part of The Berwyn Fund, Inc. 
post-effective amendment filed April 8, 1991 and 
the documents are incorporated by this reference.

	15.	Not applicable.

	16.	Schedules for computation of each performance 
figure are included as Exhibit #16.

	17.	Financial Data Schedule.

	18.	Not applicable.

Item 25

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

Item 26

	Listed below is the class of stock and number of 
holders, the Registrant had on 
February 28, 1997:  

		(1)	(2)

		Title of Class	Number of Record 
Holders
		
		Common Stock	1,764 

Item 27

	Article XVI of the Registrant's bylaws sets forth 
the rules on indemnification of officers and directors.  
There will be no indemnification of a director or 
officer from an judgment, verdict or settlement 
resulting from liability to the corporation or its 
shareholders by reason of willful misfeasance, bad 
faith, gross negligence or reckless disregard of the 
duties involved in the conduct of his office (the 
foregoing referred to as "Disabling Conduct").  The 
following methods will be used to determine if a 
director or officer is guilty of Disabling Conduct: (a) 
a final decision on the merits by a court or other body 
before whom a proceeding was brought, or (b) a 
reasonable determination based upon a review of the 
facts, by independent legal counsel in a written 
opinion, that the director or officer was not liable on 
the basis of Disabling Conduct.  If there were no 
Disabling Conduct, a director or officer would be 
entitled to indemnification for expenses and for any 
judgment, verdict or settlement.

Item 28

	Robert E. Killen, President and a Director of the 
Registrant, is Chairman and CEO of The Killen Group, 
Inc., the adviser (the "Adviser") to the Registrant.  
Mr. Killen is President and a Director of The Berwyn 
Fund, Inc., a registered investment company having the 
same investment adviser as the Fund.  He is a Director 
and Shareholder of Berwyn Financial Services Corp. 
("BFS"), a registered broker-dealer.

C-2
	Edward A. Killen II is Vice President and a 
Director of the Adviser and a Director of Berwyn Income 
Fund, Inc.  He is also a Director, Officer and 
Shareholder of BFS, a registered broker-dealer.

	For information as to any other business, 
profession, vocation or employment of a substantial 
nature in which each director or officer of The Killen 
Group, Inc. (the "Adviser") is or engaged for his own 
account or in the capacity of director, officer, 
employee, partner or trustee, reference is made to the 
Adviser's Form ADV (File #801-18770) currently on file 
with the Commissions as required by the Invesmtnet 
Advisers Act of 1940, as amended.

Item 29

	(a)	Berwyn Financial Services Corp. also 
serves as the distributor for The Berwyn Fund, Inc., in 
certain jurisdictions.

	(b)
						Positions & Office
Name & Principal	w/Berwyn Financial		Positions & Office
Business Address	Services 
Corp.          		with the Fund         

Robert E. Killen	Director		President and Director
1199 Lancaster Ave.
Berwyn, PA

Edward A. Killen	Secretary and 
Director	Director
1189 Lancaster Ave.
Berwyn, PA

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

Item 30

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

C-3
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, Pennsylvania 19312.

3)	The Articles of Incorporation, the bylaws, the 
minutes of shareholders and directors' meetings 
will be maintained under the control of Kevin M. 
Ryan, 1189 Lancaster Avenue, Berwyn, Pennsylvania 
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, Pennsylvania 
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 investment advisor will be 
under the control of Kevin M. Ryan, 1189 
Lancaster Avenue, Berwyn, Pennsylvania 19312.

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

Item 31

	Not applicable

Item 32

(a) Not applicable.

	(b) Not applicable.

	(c) The Registrant has placed information 
required by Item 5A 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 Registrant's latest annual report to 
shareholders upon request and without charge.










C-


SIGNATURES

	Pursuant to the requirements of the Securities 
Act of 1933 and the Investment Company Act of 1940 the 
Registrant certifies that it meets all of the 
requirements for effectiveness of this Registration 
Statement pursuant to Rule 485(b) under the Securities 
Act of 1933 and has duly caused this Registration 
Statement to be signed on its behalf by the 
undersigned, thereto duly authorized in the City of 
Berwyn and State of Pennsylvania on the 25th day of 
March 1997.

Berwyn Income Fund, Inc.        
Registrant     


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 Director	3/25/97
Robert E. Killen



/S/ Kevin M. Ryan                             
	Secretary and Treasurer	3/25/97
Kevin M. Ryan



/S/ Anthony N. Carrelli                      
	Director	3/25/97
Anthony N. Carrelli



/S/ Denis P. Conlon                           
	Director	3/25/97
Denis P. Conlon



/S/ William H. Vonier                        
	Director	3/25/97
William H. Vonier



/S/ Edward A. Killen II                      
	Director	3/25/97
Edward A. Killen II


SIGNATURES

	Pursuant to the requirements of the Securities 
Act of 1933 and the Investment Company Act of 1940 the 
Registrant certifies that it meets all of the 
requirements for effectiveness of this Registration 
Statement pursuant to Rule 485(b) under the Securities 
Act of 1933 and has duly caused this Registration 
Statement to be signed on its behalf by the 
undersigned, thereto duly authorized in the City of 
Berwyn and State of Pennsylvania on the 25th day of 
March 1997.

	Berwyn Income Fund, Inc.                   
	Registrant     


	By:____________________________
	      Robert E. Killen, President

	Pursuant to the requirements of the Securities 
Act of 1933, this Registration Statement has been 
signed below by the following persons in the capacities 
and on the date indicated.

Signature	                	Title                  Date



                          	President and Director	3/25/97
Robert E. Killen



                          	Secretary and Treasurer3/25/97
Kevin M. Ryan



                          	Director               3/25/97
Anthony N. Carrelli



                          	Director              3/25/97
Denis P. Conlon        



                          	Director             	3/25/97
William H. Vonier



                          	Director             	3/25/97
Edward A. Killen II





42