BERWYN INCOME FUND, INC.
Shareholder Services 
c/o PFPC Inc.
P.O. Box 8987
Wilmington, DE  19899



STATEMENT OF ADDITIONAL INFORMATION

April 30, 1998



	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 April 30, 1998 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..........................................................
 ................................................	4

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.................................................................
 ..........................	10

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

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

Redemption of 
Shares................................................................
 ............................................	11

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"), unrated corporate debt securities, and preferred and common 
stocks.  The Adviser determines the percentage of each category of 
securities to purchase and hold based upon the prevailing economic and 
market conditions.  This means, that the Fund may invest up to 100% of 
its net assets in high yield, high risk corporate debt securities.

	Investment grade corporate debt securities are considered to be 
securities rated BBB or higher by Standard & Poor's Rating Group 
("S&P") or Baa or better by Moody's Investors Service, Inc. 
("Moody's") 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 S&P and Moody's bond ratings.

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

	The Fund may also purchase certain debt securities that have not 
been registered with the Securities and Exchange Commission under the 
Securities Act of 1933, as amended ("1933 Act") and are restricted 
from sale to the general public.  The Fund will purchase these 
restricted securities from the issuer or qualified institutional 
buyers, and will sell these restricted securities, exclusively in the 
transactions that are exempt pursuant to Rule 144A under the 1933 Act.  
The Fund will limit its investment in such restricted securities to 
10% of the value of its net asset.

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



-2-
	The Fund invests in preferred stocks that, in the opinion of the 
Adviser, are offering an above average yield in comparison to 
preferred stocks of the same quality or in preferred stocks offering a 
potential for capital appreciation.  The Fund may also purchase 
preferred stocks that are restricted securities subject to the 
limitations under Rule 144A described above.

	The Fund invests in common stocks that it considers to be 
selling at undervalued prices.  The investment approach of the Fund 
may be deemed "contrarian" in its selection of common stocks due to 
the fact that this approach may lead the Fund to select stocks not 
recommended by other investment advisers or brokerage firms.

	The Fund, however, will purchase only common stocks that pay 
cash dividends and will not purchase additional common stocks when 
common stocks comprise 30% of the Fund's net assets.

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

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

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

	REITs are companies that invest their capital in real estate, 
long and short term mortgages and construction loans.  These companies 
normally do not pay Federal Income Tax but distribute their income to 
their shareholders who become liable for the tax.  The Fund invests in 
REITs that generate income and have a potential for capital 
appreciation.  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, 1997, 5.78% 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


-3-
part of the income.  The Fund would also incur additional expenses 
enforcing its rights.  As of December 31, 1997, 0.38% 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.  

	When investing its assets, the Fund will not:

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

(2) invest more than 25% of the value of its total assets in the 
securities of issuers in any one industry;

(3) lend money, provided that for purposes of this restriction, 
the acquisition of publicly distributed corporate bonds, and 
investment in U.S. government obligations, short-term commercial 
paper, certificates of deposit and repurchase agreements shall 
not be deemed to be the making of a loan;

(4) buy or sell real estate and real estate mortgage loans, 
commodities, commodity futures contracts, puts and calls and 
straddles;

(5) underwrite securities of other issuers, except as the Fund 
may be deemed to be an underwriter under the Securities Act of 
1933, as amended, in connection with the purchase and sale of 
portfolio securities in accordance with its objectives and 
policies;

(6) make short sales or purchase securities on margin;

(7) borrow money, except that the Fund may borrow up to 5% of 
the value of its total assets at the time of such borrowing from 
banks for temporary or emergency purposes (the proceeds of such 
loans will not be used for investment or to purchase securities, 
but will be used to pay expenses);

(8) invest for the purposes of exercising control or management;

(9) invest in restricted securities (securities that must be 
registered under the Securities Act of 1933, as amended, before 
they may be offered and sold to the public, except that the

-4-
Fund will be permitted to purchase restricted securities that 
are eligible for resale pursuant to Rule 144A under the 
Securities Act of 1933, as amended);

(10) participate in a joint investment account; and

	(11) issue senior securities.

	The Fund has also adopted certain investment restrictions that 
are not fundamental.  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.

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 Adviser 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 each day the New York Stock Exchange is open, 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.



-5-
	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 $806,435 in fees in 1997, $638,212 in 
1996, and $477,283 in 1995.

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%.  The expense limitation has not been used since 1988.  
In 1997 the Fund's expense ratio was 0.65%.


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 (56)	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 Adviser (an 
			investment advisory firm) since April 
1996. President, Treasurer, 
			Director and Sole Shareholder of the 
Adviser from September 
			1982 to March 1996.



-6-
*Anthony N. Carrelli (49)	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 (46)	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.

Denis P. Conlon (50)	Director of The Berwyn Fund, Inc., 
since June 1992 President and 
Director		CEO of CRC Industries (a worldwide 
manufacturer) since 
1282 Farm Road	September 1996. Vice President, Corporate Development,
Berwyn, Pennsylvania	Berwind Corporation (diversified 
manufacturing and financial 			company) from 1990 to September 1996.

Deborah D. Dorsi (42)	Director of The Berwyn Fund, Inc. since 
April 1998.  Retired
Director		Industry Executive since 1994.  
Director Worldwide Customer 
2801 Stanbridge Street	Support, Kulick Soffa Industries, Inc. 
(Semi Conductor 
Norristown, Pennsylvania	Equipment Manfacturer) from 1993-1994  
Corporate Account 
			Manager for Kulick & Soffa Industries, 
Inc. prior to 1993.

*Kevin M. Ryan (50)	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 "1940 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.




-7-
Mr. Conlon and Ms. Dorsi 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.  Mr. Conlon and 
Ms. Dorsi 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.

Ms. Dorsi was elected to the Board in April 1998 by a vote of the 
Board of Directors.  She replaces William H. Vonier who served as an 
Independent Director on the Board from June 1992 until April 1998.  In 
1997, the Fund paid aggregate compensation of $1,600 to Mr. Conlon and 
$1,600 to Mr. Vonier.  The total compensation from the Fund Complex, 
consisting of the Fund and The Berwyn Fund, Inc., was $3,200 for Mr. 
Conlon and $3,200 for Mr. Vonier.

Officers of the Fund are not paid compensation by the Fund or the Fund 
Complex for their work as officers and no fees are paid by the Fund or 
the Fund Complex to the Directors that are not Independent 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.)

OWNERSHIP OF THE FUND

	As of March 31, 1998 there were 14,287,713 shares of the Fund 
outstanding.  Charles Schwab & Co. ("Schwab"), 101 Montgomery Street, 
San Francisco, CA was the record owner of 47% 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 March 31, 1998, the Directors and Officers of the Fund, as a group, 
owned beneficially and of record 155,426 shares of the Fund.  This 
amount constitutes 1% of the 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 securities.  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 


-8-
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 1995, 1996, and 1997 the Fund used an affiliated broker, 
Berwyn Financial Services Corp. ("BFS").

	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 1997, the Fund paid a total of $193,023 in commissions to 
BFS.  This figure represents 77% 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 74%.

	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%.

	The Fund paid brokerage commissions of $247,987 in 1997, 
$144,128 in 1996, and $229,668 in 1995.  The Fund was reopened to 
investors on January 21, 1997.  As a result the sale of Fund shares 
increased in 1997.  There was more trading than in 1996 and the amount 
of commissions paid increased.

	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 

-9-
the policy of the Adviser to allocate purchases and sales as well as 
expenses incurred in the transactions among the Fund and its other 
clients in a manner which the Adviser deems equitable, taking into 
consideration such factors as size of account, concentration of 
holdings, investment objectives, tax status, cash availability, 
purchase cost, holding period and other pertinent factors relative to 
each account.  Simultaneous transactions could adversely affect the 
ability of the Fund to obtain or dispose of the full amount of a 
security which it seeks to purchase or sell or the price at which such 
security can be purchased or sold.

COMPUTATION OF NET ASSET VALUE

	(See also "Computation of Net Asset Value" in the Prospectus.)

	The net asset value per share of the Fund is determined by 
dividing the total value of the Fund's investments and other assets, 
less any liabilities, by the total number of outstanding shares of the 
Fund.  Net asset value per share is determined as of the close of 
regular trading on the New York Stock Exchange (the "Exchange") 
(ordinarily 4:00 p.m. Eastern Time) on each day that the Exchange is 
open and is effective as of the time of computation.

SHARE PURCHASES

	(See also "Share Purchases" in the Propsectus.)

	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 or a broker authorized by the Fund to receive orders 
for the purchase of shares.  There is no sales load and the value of 
shares can be expected to fluctuate daily.

	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

	(See also "Distribution" in the Prospectus.)

	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 


-10-
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.

	The Selling Agreement provides that it will continue in effect 
from year to year only so long as such continuance is approved at 
least annually by the 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, 1997 was 
6.62%.

	The yield was determined based upon the net investment income 
per share for the period December 1 to December 31, 1997.  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, 1997 are listed 
below:

		One Year:	13.4%
		Five Years:	12.6%
		Ten Years:	12.9% 
		  

-11-
	The period of time for one year's performance is from January 1, 
1997 to December 31, 1997.  The dates for the five-year period are 
January 1, 1993 to December 31, 1997 and for the ten year period are 
from January 1, 1988 to December 31, 1997.  To obtain the performance 
listed above, the Fund computed its average total return for each 
period of time.  The Fund made this calculation by first determining 
the total return for a period and then using an exponential function 
based upon the number of years involved to obtain an average.

	The total return for a period is calculated by determining the 
redeemable value of $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, 1996 and 1997:

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

	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 100,000,000 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

	PNC Bank, 400 Bellevue Parkway, Suite 108, Wilmington, DE 19809 
is the custodian of the Fund.  The custodian holds all securities and 
cash owned by the Fund and collects all dividends and interest due on 
the securities.

Independent Accountants

	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, 1997 and the unqualified report of Price 
Waterhouse LLP, the Fund's Independent Accountants, on such financial 
statements (the "Report"), included in the Fund's 1997 Annual Report 
to Shareholders (the "Annual Report") are incorporated by reference in 
this SAI.  A copy of the Annual Report accompanies this SAI and an 
investor may obtain a copy of the Annual Report by writing to the 
Fund's or calling (800) 992-6757.  The Report follows on the next 
page.
















-13-
APPENDIX A

DEFINITIONS OF STANDARD & POOR'S BOND RATINGS



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

		AAA	Debt rated AAA has the highest rating assigned by 
Standard & Poor's.  
			Capacity to pay interest and repay principal is 
extremely strong.

		AA	Debt rated AA has a very strong capacity to pay 
interest and repay principal 
			and differs from the higher rated issues only in 
small degree.

		A	Debt rated A has a strong capacity to pay 
interest and principal although it 
			is somewhat more susceptible to the adverse 
effects of changes in 
			circumstances 	and economic conditions than debt 
in higher rated categories.

		BBB	Debt rated BBB is regarded as having an adequate 
capacity 	to pay interest 
			and repay principal.  Whereas it normally 
exhibits adequate protection 
			parameters, adverse economic conditions or 
changing circumstances are 
			more likely to lead to a weakened capacity to pay 
interest and repay 			principal for debt 
in this category than in higher rated categories.  

BB,B,CCC,CC
			Debt rated BB, B, CCC and CC is regarded, on 
balance, as predominantly 
			speculative with respect to capacity to pay 
interest and repay principal in 
			accordance with the terms of the obligation.  BB 
indicates the lowest degree 
			of speculation and C the highest degree of 
speculation.  While such debt 
			will likely have some quality and protective 
characteristics, these are 
			outweighed by large uncertainties or major risk 
exposures to adverse 
			conditions.

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










APPENDIX B

MOODY'S BOND RATINGS



	Moody's Investors Service, Inc. 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.