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The Berwyn Funds reorganizing to be part of Chartwell Investment Partners

edited January 2016 in Fund Discussions

497 1 berwyn_497e-0116.htm THE BERWYN FUNDS - 497E

January 19, 2016






BERWYN, PA 19312

Supplement to Prospectus dated May 1, 2015

The Prospectus, dated May 1, 2015, of the Berwyn Fund, the Berwyn Income Fund and the Berwyn Cornerstone Fund is hereby supplemented to inform you of important information impacting your investment in The Berwyn Funds. If you have any questions regarding this supplement please call 1-877-454-5536.

The Board of Trustees (the "Board) of The Berwyn Funds has approved the reorganization of the Berwyn Fund, Berwyn Income Fund and the Berwyn Cornerstone Fund (each, an "Acquired Fund") into Berwyn Fund, Berwyn Income Fund and Berwyn Cornerstone Fund (each, an "Acquiring Fund"), respectively, each a series of Investment Managers Trust. Each Acquiring Fund will have the same investment objective, and the policies and strategies of the relevant Acquiring Fund are substantially similar to the Acquired Fund. The reorganization of each Acquired Fund is subject to shareholder approval. Shareholders of the Acquired Fund as of January 11, 2015 (the "Record Date") are eligible to vote at a Special Meeting of Shareholders. If you became a shareholder after the Record Date, you are not eligible to vote at the Special Meeting. All shareholders of record as of the Record Date will receive a combined proxy statement/prospectus describing the terms and conditions of each proposed reorganization. The Funds will mail the combined proxy statement/prospectus in February, 2016 after SEC review and comment. The Special Meeting is scheduled to take place on March 31, 2016.

Investors Should Retain This Supplement for Future Reference

****New registration statement for The Berwyn Funds (with Chartwell name exhibited):


  • What a mess. What a f*g mess.
  • A December press release describing the acquisition of the Berwyn Funds’ investment advisor is here.
    TriState Capital Holdings, Inc. (NASDAQ: TSC) entered into a definitive asset-purchase agreement to acquire The Killen Group, Inc. (TKG), an investment management firm and the advisor to The Berwyn Funds.
  • edited January 2016
    And here is the website of the new advisor for the Berwyn Funds, Chartwell Investment Partners ("a wholly-owned subsidiary of TriState Capital Holdings, Inc., a registered bank holding company based in Pittsburgh, Pennsylvania"), who will be swallowing The Killen Group, and all of the Berwyn Funds, whole:
  • edited January 2016

    Since the Killen Group is being acquired, what are the chances are that those with existing investments in the Berwyn Funds will be converted to "I" shares (similar to what happened with the Stratton Funds being acquired by Sterling Capital. I purchased the Stratton Small Cap Fund before the cut-off; I now have Sterling Capital Special Opportunities "I" class upon Jim0445's recommendation or the acquisition of the Pennsylvania Avenue Event Driven Fund (in which Quaker grandfathered existing Penn shareholders from paying the "A" class load))?

    Chartwell's prospectus for the Short Duration High Yield Fund indicates that on January 15, 2016 the "A" shares were terminated and only the "I" shares exist. Investors in the "A" shares had the right to convert to "I" shares.

    It appears the same cannot be said for the Small Cap Value Fund though.
  • edited January 2016
    @TheShadow Well, that is a "second order" question, which tells me (as if I didn't realize it already) that you've walked around a few blocks in the MF World. I did intend to pursue that question while sniffing around the Chartwell site, but the lights in the room started to flicker and spooky music started to play, so I thought it best to get out and try again later.:)

    I was thinking, given the big honking FEL they have on their 2 young funds, Chartwell might do something with good ol' Z share crap; i.e. as part of the "adsorption" of Berwyn funds, they'd convert present Berwyn shareholder accounts to special Z share status (no load) and create another share class for future retail investors (with the FEL of their current funds). I'm still of this inclination, because it is clear from TriState Capital's press releases that this acquisition is all about asset gathering and fee income extraction. The bank holding company is awfully young, and I suspect these two purchases (Chartwell and now Berwyn) may have been funded almost entirely by debt, so maybe this emphasis was done to placate bank shareholders. I dunno.

    However, your observation does raise alternative possibilities. The question of which way they'll go with initial and subsequent investment also remains an open one (Berwyn 3000/250 vs. Chartwell 1000/100).
    Merging the 2 operations (Berwyn and Chartwell) shouldn't be too taxing; they are about a 5 minute drive from each other:,-75.453515/to/us/pa/berwyn/19312/1235-westlakes-dr-40.06315,-75.471817
  • edited January 2016

    I found the N-14 filing for Investment Managers Series Trust under "Berwyn".

    While the filing makes no mention of receiving "I" shares for existing Berwyn investors, I did find this blurb on page B-48 under "General Information": "The Trust may offer more than one class of shares of any series. Each share of a series or class represents an equal proportionate interest in that series or class with each other share of that series or class. With respect to each Fund, the Trust currently offers one class of shares. The Trust has reserved the right to create and issue additional series or classes. Each share of a series or class represents an equal proportionate interest in that series or class with each other share of that series or class."

    Too early to call this one. I am also concerned with the potential bloat in the Berwyn Income Fund.
  • TheShadow said:

    Chartwell's prospectus for the Short Duration High Yield Fund indicates that on January 15, 2016 the "A" shares were terminated and only the "I" shares exist. Investors in the "A" shares had the right to convert to "I" shares.

    We're reading the prospectus supplement differently (I don't know whose interpretation is correct, just that they're different).

    "Shareholders may redeem their shares until the Liquidation Date. In addition, eligible shareholders may convert their Class A Shares into Class I Shares until the Liquidation Date. On or promptly after the Liquidation Date, the Fund will make a liquidating distribution to shareholders of the Class A Shares ..."

    The qualifier "eligible" in the second sentence suggests to me that only some of the A share investors may convert their shares - the "eligible" ones. Neither the supplement nor the prospectus seems to define "eligible" so I take the plain English interpretation along the lines of "meeting all requirements". Among those requirements is a $1M min investment for I shares.

    It looks like over 90% of assets are (were) in I shares and Chartwell just wanted to dump the small accounts. My read is that the A share investors were forced out, not converted.
  • @msf

    You are correct in that the key word is "eligible" which was missing from my statement.
  • edited January 2016
    My takeaway is to watch whether Berwyn Income Fund, with current AUM in the neighborhood of $1.7B, will become an asset gatherer for the acquiring firm.

    Most striking was a phrase in the TriState Capital Holdings (TSC) release that its subsidiary, Chartwell, hoped to "meaningfully accelerate growth in client assets..."

    That's never a good sign. (Remember, Berwyn Income Fund closed in 2010-2011, when it could not find new investment opportunities)

    As for Berwyn, it says neither the objectives, invest team or process will change. And it says "total fund expenses are to remain unchanged for two years."

    Also, the offerings of Berwyn and Chartwell appear somewhat redundant.

    Chartwell's two mutual funds: small cap value (CWSIX-$1.7B market cap) and short duration (CWFIX- mostly BB-rated corporate bonds).

    Berwyn: Berwyn (BERWX-$620m market cap) and Berwyn Income (BERIX- >%50 corporate bonds, BBB to B )

    I presume the acquisition settles succession issues for the boutique firm - Berwyn CEO and president Robert Killen, and the principals are well acquainted, only a few miles apart out on the Main Line of Philadelphia.
  • Berwyn must be having problems getting proxies. I just got a proxy call from them, and all I have is a bare minimum in one of their funds (just in case).
  • @msf You got a proxy badgering already? Geez, I know my sense of Time has been out of wack recently, but didn't we receive the proxy docs a week (or less) ago? Seems a bit pushy to expect all to have read thru a 60-page doc (plus 3 appendices) so soon. Glad I voted my ballot online, on Thursday, and avoided the annoyance.
  • Apparently the proxy material that Shadow found was supposed to go "live" on February 14th, but was delayed.

    Here's the updated material, filed Feb 22, dated Feb 23:

    My online version appeared March 3th. I suppose two weeks ago does seem like just this past week:-)
  • @msf

    I did see the delayed filing; however, there was not reason listed for the delay; a couple of days later the amended filing was filed again listing the revised date.
  • edited March 2016
    If the reorg is approved, and if you invest directly with Chartwell instead of thru a financial intermediary, there are a few notable nuts-and-bolts that will change [these are items that popped out as I did the quick read-thru; probably not comprehensive]:
    1. investing in a Berwyn fund will shift to the current Chartwell funds arrangement ($1000 initial min/ $100 subsequent min)
    2. if you set up the option, you will now be able to invest by giving telephone instruction, in addition to the snail mail route; however, min. phone investment is $1000, not $100 (I have no explanation for this difference)
    3. the new administrator and transfer agent will be UMB Fund Services.
  • @ MFO Members: A little mutual fund triva. How did the Berwyn Mutual Funds get their name ?
  • I voted against the reorganization (though now I remember why I didn't turn in the proxy initially - if they don't get a quorum, it fails).

    All the reasons given amounted to "because nothing will change":
    (1) The management companies support it (why?)
    (2) The investment objectives won't change
    (3) The day to day management won't change
    (4) Fees won't go up, at least for two years (oh, goody)
    (5) You won't have to pay for this reorg
    (6) No tax impact

    That's the complete, numbered list under the heading REASONS FOR THE REORGANIZATIONS

    They could have said something like: we feel the acquiring organization can provide better service, or the current management company would rather focus strictly on investment management and not how to run the business, or ....

    As nothing more was said, one has to think the reason is money, pure and simple. Which makes the threat of shutting down the funds if this isn't approved ring hollow.

    I must be getting more cynical as the years go by.
  • @Ted

    Berwyn, PA is where the funds are managed from.
  • @The Shadow & MFO Members: The Shadow knows ! Berwyn PA. is the home of Turner Investments, who spun-off the Berwyn Funds in 2004.
    The Shadow Knows:

  • edited May 2016
    The 2015 Annual Report gave an explanation for the deal as "a plan that aims to assist in [the funds'] continued growth and success, beyond [CEO Robert Killen's] retirement" - which will apparently be in 2018. Other than that paragraph in the report and subsequent proxy materials, communication with shareholders has been nearly nonexistent. The Berwyn Funds website made no reference to the acquisition; one day a Chartwell link showed up at the bottom of the page, and Chartwell showed up as the listed advisor. This month, I got transaction confirmations for the exchange of shares in the Berwyn Funds for shares in the (Chartwell) Berwyn Funds.

    It's difficult to see what we get out of the deal other than a vague sense of a succession plan that had to go outside the fund advisor. Chartwell has agreed to waive fees above the ERs that Berwyn charged - until 2018. They have a different distributor and do not offer online access to our accounts. From what I can tell, what we gained was less service, the threat of higher expenses in a couple years, and new branding on our statements (which we can't get online).
  • I received an account statement from the new transfer agent (and one from the prior agent) reflecting the change over to Chartwell. I have not seen a link to access my accounts at the new agent (it was not listed on my statement either). I think I am going to liquidate both of my positions in Berwyn and Berwyn Income Funds very shortly.

    I see my "no" vote on the reorganization did not matter much. I was hoping for more from the reorganization than two years of expenses frozen, i.e. possibly receiving "I" shares, and see no hope of closing the Berywn Income Fund in sight in order to generate more fee income for Chartwell.
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