TWEEDY BROWNE FUND INC
497, 1998-03-24
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<PAGE>
 
                 The Date of this Prospectus is August 1, 1997
                         as supplemented March 24, 1998
 
                        TWEEDY, BROWNE GLOBAL VALUE FUND
                       TWEEDY, BROWNE AMERICAN VALUE FUND
 
52 VANDERBILT AVENUE             SHAREHOLDER SERVICES:     800-432-4789, PRESS 2
NEW YORK, NY 10017               DAILY NAV PRICES:         800-432-4789, PRESS 2
                                 FOR SPECIAL ASSISTANCE 
                                 IN OPENING A NEW ACCOUNT: 800-432-4789, PRESS 2
                                 FUND INFORMATION KIT:     800-432-4789, PRESS 1
- --------------------------------------------------------------------------------
 
[LOGO]  GLOBAL FUND
 
     Tweedy, Browne Global Value Fund (the "Global Fund") seeks long-term growth
of capital by investing throughout the world in a diversified portfolio
consisting primarily of marketable equity securities, including common stocks,
preferred stocks and securities representing the right to acquire stocks. The
Global Fund may also invest in debt instruments, although income is an
incidental consideration. The Global Fund expects to invest primarily in foreign
securities, although investments in U.S. securities are permitted and will be
made when opportunities in U.S. markets appear more attractive.
 
[LOGO]  AMERICAN FUND
 
     Tweedy, Browne American Value Fund (the "American Fund") seeks long-term
growth of capital by investing in a diversified portfolio consisting primarily
of domestic equity securities of U.S. issuers, including common stocks,
preferred stocks and securities representing the right to acquire stocks. The
American Fund may invest up to 20% of its portfolio in foreign securities when
opportunities in foreign markets appear attractive.
 
     Both the Global Fund and the American Fund (the "Funds") are diversified
series of Tweedy, Browne Fund Inc., an open-end management investment company
(the "Corporation").

                                 -------------
 
     The Funds are sold without any sales charges or 12b-1 fees and are
accordingly purely "no-load." The minimum initial investment for each Fund is
$2,500 ($500 for IRAs and similar accounts) and subsequent investments must be a
minimum of $250.
 
     The Funds' investment adviser is Tweedy, Browne Company LLC ("Tweedy,
Browne" or the "Investment Adviser"), which is a successor to Tweedy & Co. which
was founded in 1920 and has managed assets since 1968. Tweedy, Browne currently
manages approximately $5 billion in client funds, including approximately $2.3
billion in foreign securities. The current Managing Directors and retired
principals and their families, as well as employees of Tweedy, Browne, have more
than $363.4 million in portfolios combined with or similar to client portfolios,
including approximately $28.4 million in the Global Fund and $30.6 million in
the American Fund.
 
     This prospectus sets forth concisely the information about the Funds that a
prospective investor should know before investing. Please retain it for future
reference.
 
     If you require more detailed information, a Statement of Additional
Information dated August 1, 1997, as supplemented March 24, 1998 (the "Statement
of Additional Information"), as amended from time to time, may be obtained
without charge by writing to the address or calling the number above. The
Statement of Additional Information, which is incorporated by reference into
this prospectus, has been filed with the Securities and Exchange Commission.
 
     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.

<PAGE>
 
EXPENSE INFORMATION
 
     This information is designed to help you understand the various costs and
expenses of investing in the Global Fund and the American Fund. By reviewing
this table and those in other mutual funds' prospectuses, you can compare the
Funds' fees and expenses with those of other funds. You pay no commissions to
purchase or redeem shares of either Fund. As a result, all of your investment
goes to work for you.
 
HOW TO COMPARE THE GLOBAL FUND AND THE AMERICAN FUND TO OTHER MUTUAL FUNDS
 
1)  SHAREHOLDER TRANSACTION EXPENSES:
     Expenses charged directly to your individual account in each Fund for
various transactions.
 
<TABLE>
<CAPTION>
                                                            GLOBAL FUND   AMERICAN FUND
                                                            -----------   -------------
    <S>                                                        <C>           <C>
    Sales Commissions to Purchase Shares (sales load).......    NONE          NONE
    Commissions to Reinvest Dividends.......................    NONE          NONE
    Redemption Fees.........................................    NONE          NONE
</TABLE>
 
2)  ANNUAL OPERATING EXPENSES:
    Expenses paid by either Fund before it distributes its net investment
    income, expressed as a percentage of the Funds' average daily net assets as
    of fiscal year ended March 31, 1997.
 
<TABLE>
<CAPTION>
                                                             GLOBAL FUND   AMERICAN FUND
                                                             -----------   -------------
    <S>                                                        <C>           <C>
    Investment Advisory Fee (after voluntary fee waiver)....    1.25%         1.14% **
    12b-1 Fees..............................................    NONE          NONE 
    Other Expenses (after voluntary fee waiver).............    0.33%         0.25% **
                                                                ----          ----
    Total Fund Operating Expenses (after voluntary fee                              
      waiver)...............................................    1.58% *       1.39% **
                                                                ====          ====
</TABLE>
 
- ---------------
 
   The purpose of the above table is to assist the investor in understanding the
   various costs and expenses that investors in the Global Fund and the American
   Fund will bear directly or indirectly.
 
 * As of September 30, 1997, the annualized expense ratio for the Global Fund
   was 1.43% (unaudited). The decrease in the Global Fund's operating expenses
   may be attributed to the increase in average net assets and the effect of new
   agreements with the Global Fund's administrator, custodian and transfer
   agent.
 
** Without the voluntary fee waiver the investment advisory fee would have been
   1.25% for the American Fund. Without the voluntary fee waivers of the
   administrator and custodian, Other Expenses would have been 0.27%. Absent the
   voluntary fee waivers, Total Fund Operating Expenses would have been 1.52%.
 

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

 
                                        2

<PAGE>
 
     "Total Fund Operating Expenses" in the table on the preceding page is based
on the Funds' fiscal year ended March 31, 1997. See "Operation of the Funds --
Investment Adviser" for further information on the investment advisory fees paid
by each Fund.
 
EXAMPLE
 
     Based on the level of total operating expenses listed on the preceding
page, the total expenses relating to a $1,000 investment in either Fund,
assuming a 5% annual return and redemption at the end of each period, are listed
below. Investors do not pay these expenses directly; they are paid by each Fund
before it distributes its net investment income to shareholders.
 
<TABLE>
<CAPTION>
                                           GLOBAL          AMERICAN
                                            FUND             FUND
                                           ------          --------
<S>                                         <C>              <C>
One Year...............................     $ 16              $ 14
 
Three Years............................     $ 50              $ 44
 
Five Years.............................     $ 86              $ 76
 
Ten Years..............................     $188              $167
</TABLE>
 
     This example assumes reinvestment of all dividends and distributions and
that the percentage amounts listed under "Total Fund Operating Expenses" remain
the same each year. THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES OR RETURNS. ACTUAL EXPENSES AND RETURNS VARY FROM YEAR
TO YEAR AND MAY BE HIGHER OR LOWER THAN THOSE SHOWN.


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

 
                                        3

<PAGE>
 
FINANCIAL HIGHLIGHTS
 
TWEEDY, BROWNE GLOBAL VALUE FUND
 
     The following information for the fiscal year ended March 31, 1997 has been
audited by Ernst & Young LLP, independent auditors whose report thereon appears
in the Global Fund's Annual Report, dated March 31, 1997. This information
should be read in conjunction with the financial statements and related notes
that also appear in the Global Fund's Annual Report.

<TABLE>
<CAPTION>
=============================================================================================================
                                    TWEEDY, BROWNE GLOBAL VALUE FUND
                           (For a Fund share outstanding throughout each year)
=============================================================================================================
                                                        YEAR         YEAR        YEAR         PERIOD
                                                        ENDED        ENDED       ENDED         ENDED
                                                       3/31/97     3/31/96(a)   3/31/95    3/31/94(a)(b)
                                                       -------     ----------   -------    -------------
<S>                                                   <C>          <C>          <C>        <C>
Net asset value, beginning of year                    $    14.28    $  11.52   $  12.26       $  10.00
=============================================================================================================
Income from investment operations:
Net investment income (loss)(c)                             0.12        0.15       0.10          (0.00)(d)
- -------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
  investments                                               2.18        2.81      (0.68)          2.26
- -------------------------------------------------------------------------------------------------------------
Total from investment operations                            2.30        2.96      (0.58)          2.26
=============================================================================================================
DISTRIBUTIONS:
Dividends from net investment income                       (0.19)         --         --             --
- -------------------------------------------------------------------------------------------------------------
Dividends in excess of net investment income               (0.36)         --         --             --
- -------------------------------------------------------------------------------------------------------------
Distributions from net realized gains                      (0.57)      (0.05)     (0.06)            --
- -------------------------------------------------------------------------------------------------------------
Distributions in excess of net realized gains                 --       (0.15)     (0.10)            --
- -------------------------------------------------------------------------------------------------------------
Total distributions                                        (1.12)      (0.20)     (0.16)            --
=============================================================================================================
Net asset value, end of year                          $    15.46    $  14.28   $  11.52       $  12.26
=============================================================================================================
Total return(e)                                            16.66%      25.88%     (4.74)%        22.60%
=============================================================================================================
Ratios/Supplemental Data:
Net assets, end of year (in 000's)                    $1,441,210    $950,911   $655,035       $297,434
- -------------------------------------------------------------------------------------------------------------
Ratio of operating expenses to average net assets(f)        1.58%       1.60%      1.65%          1.73 %(g)
- -------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net
  assets                                                    0.73%       1.15%      1.08%         (0.00)%(g)(h)
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                       20%         17%        16%            14%
- -------------------------------------------------------------------------------------------------------------
Average commission rate (per share of security)(i)    $   0.0249    $ 0.0206        N/A            N/A
- -------------------------------------------------------------------------------------------------------------

</TABLE>

(a)    Per share amounts have been calculated using the monthly average share
       method, which more appropriately presents the per share data for the
       period since the use of the undistributed income method does not accord
       with results of operations.
        
(b)    The Fund commenced operations on June 15, 1993.

(c)    Net investment income for a Fund share outstanding, before the waiver of
       fees by the administrator and/or investment adviser for the year ended
       March 31, 1997 and for the 7.5-month period ended March 31, 1994 was
       $0.11 and $(0.01)per share, respectively.
        
(d)    Amount represents less than $(0.01) per share.

(e)    Total return represents aggregate total return for the periods indicated.

(f)    Annualized expense ratio before the waiver of fees by the administrator
       and/or investment adviser for the year ended March 31, 1997 and for the
       7.5-month period ended March 31, 1994 was 1.58% and 1.83%, respectively.
        
(g)    Annualized.

(h)    Amount represents less than (0.01)% per share.

(i)    Average commission rate (per share of security) as required by amended
       disclosure requirements effective September 1, 1995.
        
 
- -------------------------------------------------------------------------------
 

 
                                        4

<PAGE>
 
TWEEDY, BROWNE AMERICAN VALUE FUND
 
     The following information for the fiscal year ended March 31, 1997 has been
audited by Ernst & Young LLP, independent auditors whose report thereon appears
in the American Fund's Annual Report, dated March 31, 1997. This information
should be read in conjunction with the financial statements and related notes
that also appear in the American Fund's Annual Report.

<TABLE>
<CAPTION>

====================================================================================================
                                  TWEEDY, BROWNE AMERICAN VALUE FUND
                            (For a Fund share outstanding throughout each year)
====================================================================================================
 
                                                     YEAR         YEAR          YEAR         PERIOD
                                                    ENDED        ENDED          ENDED         ENDED
                                                   3/31/97     3/31/96(a)    3/31/95(a)    3/31/94(b)
                                                   -------     ----------    ----------    ---------
<S>                                                <C>        <C>            <C>           <C>

Net asset value, beginning of year                 $  14.29     $  10.71       $  9.71       $ 10.00
====================================================================================================
Income from investment operations:
Net investment income (c)                              0.13         0.15          0.13          0.01
- ----------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
  investments                                          2.39         3.56          0.93         (0.30)
- ----------------------------------------------------------------------------------------------------
Total from investment operations                       2.52         3.71          1.06         (0.29)
====================================================================================================
DISTRIBUTIONS:
Dividends from net investment income                  (0.17)       (0.11)        (0.06)           --
- ----------------------------------------------------------------------------------------------------
Distributions from net realized gains                 (0.42)       (0.02)           --            --
- ----------------------------------------------------------------------------------------------------
Total distributions                                   (0.59)       (0.13)        (0.06)           --
====================================================================================================
Net asset value, end of year                       $  16.22     $  14.29       $ 10.71       $  9.71
====================================================================================================
Total return (d)                                      17.75%       34.70%        11.02%        (2.90)%
====================================================================================================
Ratios/Supplemental Data:
Net assets, end of year (in 000's)                 $342,467     $201,599       $58,856       $16,133
- ----------------------------------------------------------------------------------------------------
Ratio of operating expenses to average net
  assets (e)                                           1.39%        1.39%         1.74%         2.26%(f)
- ----------------------------------------------------------------------------------------------------
Ratio of net investment income to average
  net assets                                           0.92%        1.13%         1.25%         0.64%(f)
- ----------------------------------------------------------------------------------------------------
Portfolio turnover rate                                  16%           9%            4%            0%(g)
- ----------------------------------------------------------------------------------------------------
Average commission rate (per share of security)(h) $ 0.0302     $ 0.0341           N/A           N/A
- ----------------------------------------------------------------------------------------------------

</TABLE>

(a)     Per share amounts have been calculated using the monthly average share
        method, which more appropriately presents the per share data for the
        period since the use of the undistributed income method does not accord
        with results of operations.
(b)     The Fund commenced operations on December 8, 1993.
(c)     Net investment income (loss) for a Fund share outstanding, before the
        waiver of fees by the investment adviser and/or administrator and/or
        custodian for the years ended March 31, 1997, 1996 and 1995 and the
        3.75-month period ended March 31, 1994 was $0.11, $0.12, $0.11 and
        $(0.01), respectively.
(d)     Total return represents aggregate total return for the periods
        indicated.
(e)     Annualized expense ratios before the waiver of fees by the investment
        adviser and/or administrator and/or custodian for the years ended March
        31, 1997, 1996 and 1995 and the 3.75-month period ended March 31, 1994
        were 1.52%, 1.61%, 1.94% and 3.51%, respectively.
(f)     Annualized.
(g)     Amount rounds to less than 1.0%.
(h)     Average commission rate (per share of security) as required by amended
        disclosure requirements effective September 1, 1995.


- ------------------------------------------------------------------------------- 
 
                                        5

<PAGE>
 
PERFORMANCE OF THE FUNDS
 
     The following chart illustrates the unaudited total returns of the Global
Fund and the American Fund for the periods specified.

<TABLE>
<CAPTION>
===================================================================================================
                                                       AVERAGE ANNUAL           VALUE OF $10,000
TWEEDY, BROWNE GLOBAL VALUE FUND                     TOTAL RETURN(1)(2)       INVESTED AT INCEPTION
- ---------------------------------------------------------------------------------------------------
<S>                                                         <C>                     <C>
From inception (6/15/93) to 3/31/97                         15.29%                   $17,149
- ----------------------------------------------------------------------------------------------------
One year period ended 3/31/97                               16.66%                        --
- ----------------------------------------------------------------------------------------------------
From inception (6/15/93) to 12/31/97                        16.11%                   $19,709
- ----------------------------------------------------------------------------------------------------
One year period ended 12/31/97                              22.96%                        --
====================================================================================================

TWEEDY, BROWNE AMERICAN VALUE FUND
- ----------------------------------------------------------------------------------------------------
From inception (12/8/93) to 3/31/97                         17.58%                   $17,097
- ----------------------------------------------------------------------------------------------------
One year period ended 3/31/97                               17.75%                        --
- ----------------------------------------------------------------------------------------------------
From inception (12/8/93) to 12/31/97                        22.62%                   $22,892
- ----------------------------------------------------------------------------------------------------
One year period ended 12/31/97                              38.87%                        --
====================================================================================================
</TABLE>
 
 (1) See page 21, "Performance Information," for a discussion of "total return."
     These unaudited figures reflect changes in the price of the shares and
     assume that any income dividends and/or capital gains distributions made by
     the Fund during the period were reinvested. The performance shown
     represents past performance and is not a guarantee of future results. A
     Fund's share price and investment return will vary with market conditions,
     and the principal value of shares, when redeemed, may be more or less than
     original cost.
 
 (2) These figures reflect waiver of fees.
 
WHY INVEST IN THE FUNDS?
 
     EXPERIENCED MANAGEMENT.  Tweedy, Browne, founded in 1920, is a registered
investment adviser and, as of December 31, 1997, manages in excess of $5
billion, which includes several private investment funds. The Investment Adviser
is owned by its five Managing Directors, Christopher H. Browne, William H.
Browne, John D. Spears, Thomas H. Shrager and Robert Q. Wyckoff, Jr. and a
wholly-owned subsidiary of Affiliated Managers Group, Inc. ("AMG"). AMG's
subsidiary purchased a majority interest in, and became the manager member of
Tweedy, Browne in October 1997. In its entire history, the Investment Adviser
has had only eleven principals, five of whom are currently active. The
operations of the Investment Adviser are managed by its Management Committee
consisting of Christopher H. Browne, William H. Browne and John D. Spears, who
have been with the Investment Adviser for nineteen to twenty-eight years and
have been principals working with each other for almost twenty years. No
Managing Director or general partner has ever left the Investment Adviser to
join another investment firm.
 
     COMMITMENT OF THE INVESTMENT ADVISER.  Tweedy, Browne was founded as Tweedy
& Co. in 1920 and has extensive experience in selecting undervalued stocks in
U.S. domestic equity markets. Tweedy, Browne's history is grounded in
undervalued securities, first as a market maker, then as an investor and
investment adviser. The Investment Adviser does not attempt to be all things to
all people, but instead pursues a value-oriented approach to investment
management that is based on the work of the late Benjamin Graham, co-author of
the first textbook on investment research, Security Analysis (1934), and author
of The
 
- --------------------------------------------------------------------------------
 
 
                                        6

<PAGE>
 
Intelligent Investor (1949). Tweedy, Browne began investing outside the United
States in 1983 by applying the same principles of value investing that it has
applied to U.S. securities for thirty-eight years.
 
     Tweedy, Browne strongly believes in the opportunities available to value
investors on both a global and domestic basis. So much so that the current and
retired principals of Tweedy, Browne and their families and Tweedy, Browne
employees have more than $363.4 million of their personal funds invested in
portfolios combined with or similar to their clients' portfolios, including
approximately $28.4 million in the Global Fund and $30.6 million in the American
Fund. They own what their clients own.
 
     INVESTMENT PRINCIPLES.  The investment management principles practiced by
the Investment Adviser derive from the work of the late Benjamin Graham,
professor of investments at Columbia Business School and author of Security
Analysis and The Intelligent Investor. The Investment Adviser's research seeks
to appraise the worth of a company, what Graham called "intrinsic value", by
determining its acquisition value, or by estimating the collateral value of its
assets and/or cash flow. The term "intrinsic value" may also be referred to as
private market value, breakup value or liquidation value. The process is more
closely related to credit analysis, for as Will Rogers once said, "I'm more
concerned about the return of my money than the return on my money". Investments
are made at a significant discount to intrinsic value, normally 40% to 50%,
which Graham called an investor's "margin of safety". Investments are sold as
the market price approaches intrinsic value, with the proceeds reinvested in
other situations offering a greater discount to intrinsic value. These
principles result in a contrarian approach to investment, forcing the purchase
of securities in generally declining stock markets, conversely forcing sales as
stock markets or individual companies achieve new highs.
 
     Most investments in Tweedy, Browne portfolios have one or more of the
following investment characteristics: low stock price in relation to book value,
low price-to-earnings ratio, low price-to-cash-flow ratio, above average
dividend yield, low price-to-sales ratio as compared to other companies in the
same industry, low corporate leverage, low share price, purchases of a company's
own stock by the company's officers and directors, company share repurchases, a
stock price which has declined significantly from its previous high price and/or
small market capitalization. Academic research and studies have indicated an
historical statistical correlation between each of these investment
characteristics and above average investment rates of return over long
measurement periods.
 
     Tweedy, Browne has compiled a complimentary booklet, included with this
prospectus, entitled WHAT HAS WORKED IN INVESTING. We encourage all current and
prospective shareholders to read it. It describes 44 academic studies of certain
investment criteria that have produced high rates of return. In the 44 studies
included in WHAT HAS WORKED IN INVESTING, exceptional returns were found for
stocks with one or more of the following investment characteristics: low stock
price in relation to book value, net current assets, earnings, cash flow,
dividends or previous share price; small market capitalization; and a
significant pattern of stock purchases by one or more insiders (officers and
directors), or by the company itself. The study periods ranged from 1 to 55
years; indicated annual returns ranged from 12.1% to 49.6% and indicated annual
returns in excess of the market index used in the studies ranged from 2.7% to
33.5% for the various characteristics and historical periods that were examined.
Approximately one-half of the studies examined in the booklet focused on U.S.
stocks and the balance focused on mature foreign stock markets. The investment
characteristics explained in this booklet, which are "value" oriented
characteristics,
 
- --------------------------------------------------------------------------------
 

 
                                      7

<PAGE>
 
have been the core of Tweedy, Browne's investment philosophy and stock selection
decision making process for more than 30 years, and are the basis for the
management of the American Fund and the Global Fund.
 
     The returns from the American Fund and the Global Fund will differ from
those indicated by these studies for a number of reasons. Tweedy, Browne does
not make its portfolio decisions in accordance with any one particular academic
study or computer model, but instead uses empirical studies of historically
successful investment characteristics as a framework for its stock selection
screening and decision making process. In addition, Tweedy, Browne assesses and
weighs qualitative information concerning specific companies that meet its
initial screening criteria. Finally, the studies analyze only historical data
and generally assume an equal dollar investment in each stock and calculate
returns without any reduction for advisory fees or other investment expenses,
which are incurred by the American Fund and the Global Fund.
 
     MANAGING DIRECTORS OF THE INVESTMENT ADVISER.  The following is a brief
biography of each of the Managing Directors of Tweedy, Browne:
 
     Christopher H. Browne has been with the Investment Adviser since 1969 and
is a member of the firm's Management Committee. He is a Managing Director of
Tweedy, Browne Company LLC, and a general partner of TBK Partners, L.P. and
Vanderbilt Partners, L.P., both private investment partnerships. Mr. Browne is
on the Board of Directors of Tweedy, Browne Fund Inc. Mr. Browne is a Trustee of
the University of Pennsylvania and sits on the Executive Committee of its
Investment Board; he is also a Trustee and a member of The Council of The
Rockefeller University. He also serves as a Director of the American Atlantic
Corporation. Mr. Browne holds a B.A. degree from the University of Pennsylvania.
 
     William H. Browne has been with the Investment Adviser since 1978 and is a
member of the firm's Management Committee. He is a Managing Director of Tweedy,
Browne Company LLC, and of TBK Partners, L.P. and Vanderbilt Partners, L.P.,
both private investment partnerships. Mr. Browne is an officer of Tweedy, Browne
Fund Inc. He also serves as a Director of Fairchild Aerospace Corp. and Dornier
Luftfahrt GmbH. Additionally, he is a Trustee of Colgate University. Mr. Browne
holds the degrees of B.A. from Colgate University and M.B.A. from Trinity
College in Dublin, Ireland.
 
     John D. Spears joined the Investment Adviser in 1974 and is a member of the
firm's Management Committee. He is a Managing Director of Tweedy, Browne Company
LLC, and a general partner of TBK Partners, L.P. and Vanderbilt Partners, L.P.,
both private investment partnerships. Mr. Spears is an officer of Tweedy, Browne
Fund Inc. Previously, he had been in the investment business for five years with
Berger, Kent Associates; Davic Associates; and Hornblower & Weeks-Hemphill,
Noyes & Co. Mr. Spears studied at the Babson Institute of Business
Administration, Drexel Institute of Technology and the University of
Pennsylvania -- The Wharton School.
 
     Thomas H. Shrager has been associated with the Investment Adviser since
1989 and is a Managing Director of Tweedy, Browne Company LLC. Previously he had
worked in mergers and acquisitions at Bear, Stearns, and as a consultant for
Arthur D. Little. He received a B.A. and a Masters in International Affairs from
Columbia University.
 
     Robert Q. Wyckoff, Jr. has been associated with the Investment Adviser
since 1991 and is a Managing Director of Tweedy, Browne Company LLC. Prior to
joining the Investment Adviser, he held positions
 
- --------------------------------------------------------------------------------
 

 
                                      8

<PAGE>
 
with Bessemer Trust, C.J. Lawrence, J&W Seligman, and Stillrock Management. He
received a B.A. from Washington & Lee University, and a J.D. from the University
of Florida School of Law.
 
     REDUCING CURRENCY RISK THROUGH CURRENCY HEDGING.  Both the Global Fund's
and the American Fund's share price will tend to reflect the movements of the
different securities markets in which they are invested and, to the degree not
hedged, the foreign currencies in which investments are denominated. Tweedy,
Browne intends to hedge both Funds' foreign securities investments back to the
U.S. dollar where practicable except when, in its judgment, currency movements
affecting particular investments are likely to improve the performance of the
Funds. Possible losses from changes in currency exchange rates are primarily a
risk of investing unhedged in foreign stocks. While a stock may perform well on
the London Stock Exchange, if the pound declines against the dollar, gains can
disappear or become losses. Currency fluctuations are more extreme than stock
market fluctuations. In the more than thirty-eight years in which the Managing
Directors of Tweedy, Browne have been investing, the Standard & Poor's Index of
500 stocks has declined on an annual basis more than 20% only once, in 1974. By
contrast, the dollar/pound/deutsche mark relationship has moved more than 20% on
numerous occasions. In the last twenty years, there was a four to five-year
period, during 1979-1984, when the U.S. dollar value of British, French, German
and Dutch currency declined by 45% to 58%. Accordingly, the strength or weakness
of the U.S. dollar against these foreign currencies may account for part of the
Funds' investment performance although both the Global Fund and the American
Fund intend to minimize currency risk through hedging activities.
 
     PURSUIT OF LONG-TERM CAPITAL GROWTH.  The Managing Directors of Tweedy,
Browne believe that there are substantial opportunities for long-term capital
growth from professionally managed portfolios of securities selected from
foreign and domestic equity markets. A security's long-term capital growth based
on a value-oriented investment approach is generally realized over a three-year
period, although this period may be significantly shorter or longer depending on
the circumstances. Investments in the Global Fund will focus on those markets
around the world where Tweedy, Browne believes value is more abundant.
Investments in the American Fund will focus on those issues in the U.S. market
that Tweedy, Browne believes will provide greater value. With both Funds,
Tweedy, Browne will consider all market capitalization sizes for investment with
the result that a significant portion of the two portfolios may be invested in
smaller (generally under $1 billion as defined by the SEC) and medium (up to $5
billion as defined by Morningstar) capitalization companies. Tweedy, Browne
believes smaller and medium capitalization companies can provide enhanced
long-term investment results in part because the possibility of a corporate
acquisition may be greater than with large, multinational companies.
 
     ASSOCIATED RISK FACTORS.  The Funds' investment techniques involve
potential risks. These include the special economic, currency exchange and
political risks of investing in non-U.S. securities, unrated and lower credit
quality debt obligations, smaller capitalization stocks, illiquid securities and
ancillary portfolio practices such as hedging currency risk, short sales and
lending of securities. For further information regarding these and other
investment considerations, please see "Other Investments of the Funds --
Associated Risk Factors" below and "Investment Objectives and Policies -- Risk
Considerations of the Funds" in the Statement of Additional Information. As with
any long-term investment, the value of the Funds' shares when sold may be higher
or lower than when purchased. Investment in shares of either Fund should not be
considered a complete investment program, which for many investors may include
cash or fixed income investments.
 
- --------------------------------------------------------------------------------
 

                                      
                                      9

<PAGE>
 
INVESTMENT OBJECTIVES AND POLICIES
 
     Except as otherwise indicated, the Funds' investment objectives and
policies are not fundamental and thus may be changed without shareholder votes.
There can be no assurance that the Funds' respective investment objectives will
be achieved.
 
[LOGO]  GLOBAL FUND
 
     THE GLOBAL FUND.  The Global Fund seeks long-term growth of capital by
investing throughout the world in a diversified portfolio consisting primarily
of marketable equity securities, including common stocks, preferred stocks and
securities representing the right to acquire stocks. The Global Fund may also
invest in debt securities, although income is an incidental consideration. The
Global Fund expects to invest primarily in foreign securities although
investments in U.S. securities are permitted and will be made when opportunities
in U.S. markets appear more attractive.
 
     GLOBAL FUND'S WORLDWIDE OPPORTUNITIES.  The Global Fund was formed for
investors who would like to participate in a diversified fund which seeks
undervalued investment opportunities wherever they may be in the developed
world. Although economies around the world are becoming more integrated, local
variances in economic and stock market cycles can lead to a greater or lesser
number of investment opportunities in different stock markets or different
times. For this reason, the ability to invest on a global basis may provide
increased opportunities to the value investor than a fund which is restricted to
one country. Investing globally also increases the number of potential
investment opportunities that would meet Tweedy, Browne's investment criteria,
which are discussed below. For temporary defensive purposes, the Fund may be
invested 100% in U.S. issues, although under normal circumstances it is expected
that the Fund's portfolio will consist primarily of foreign investments.
 
     Through the years, Tweedy, Browne has developed an understanding of the
different reporting and accounting procedures characteristic of non-U.S.
companies and has acquired financial databases that permit them to screen more
than 10,000 companies in much the same way that they screen U.S. companies. The
ability to screen so many non-U.S. companies is the key to Tweedy, Browne's
decision to sponsor the Global Fund since they are now able to research and
analyze many small and medium capitalization companies rather than concentrate
on the more obvious large capitalization, multinational corporations.
 
[LOGO]  AMERICAN FUND
 
     THE AMERICAN FUND.  The American Fund seeks long-term growth of capital by
investing in a diversified portfolio of U.S. equity securities consisting
primarily of common stocks, preferred stocks and securities representing the
right to acquire stocks. The American Fund expects to invest primarily in
domestic equity securities although it may invest up to 20% of its assets in
foreign securities when opportunities in foreign markets appear attractive. The
American Fund may also invest in debt securities, although income is an
incidental consideration.
 
     The American Fund invests in domestic companies of varying sizes that the
Fund's Investment Adviser believes are selling at a substantial discount to the
underlying value of the assets, earning power or private
 

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                                      10

<PAGE>
 
market value. It is expected that investments will be spread broadly throughout
U.S. equity markets. Tweedy, Browne believes that its extensive investment
experience in the U.S. domestic equity markets, guided by investment principles
that feature undervalued stock selection and portfolio diversification, offers
value investors a sensible strategy for long-term profits.
 
     AMERICAN FUND'S DOMESTIC OPPORTUNITIES.  The American Fund was formed for
long-term value investors who desire to limit their exposure to foreign markets.
The equity capitalization of the United States is the largest in the world,
comprising more than one-third of the Morgan Stanley Capital International
(MSCI) World Index. The American Fund offers investors the opportunity to invest
in a diversified portfolio of primarily domestic, undervalued securities whose
market price may be well below the stock's intrinsic value. The American Fund's
portfolio consists of many of the same securities which are owned by the
separate accounts and private investment funds managed by the Managing Directors
of Tweedy, Browne, including those in which they participate.
 
OTHER INVESTMENTS OF THE FUNDS
 
     The Global Fund and the American Fund generally invest in equity securities
of established companies (i.e., companies with at least three years' business
operations) listed on U.S. or foreign securities exchanges, but also may invest
in securities traded over-the-counter or privately. Equity securities include
common stock, preferred stock, securities representing the right to acquire
stock (such as convertible debentures, options and warrants) and depository
receipts for any of the above. Depository receipts are utilized to make
investing in a particular foreign security more convenient for U.S. investors.
Depository receipts that are not sponsored by the issuer may be less liquid and
there may be less readily available public information about the issuer.
 
     Both the Global Fund and the American Fund may also invest in
non-convertible debt instruments of governments, government agencies,
supranational agencies and companies when the Investment Adviser believes the
potential for appreciation will equal or exceed the total return available from
investments in equity securities. These debt instruments will be predominantly
investment-grade securities, that is, those rated Aaa, Aa, A or Baa by Moody's
Investors Service, Inc. ("Moody's") or AAA, AA, A or BBB by Standard & Poor's
Ratings Group ("S&P") or those of equivalent quality as determined by the
Investment Adviser. Each Fund may not invest more than 15% of its total assets
in debt securities rated below Baa by Moody's, or below BBB by S&P or deemed by
the Investment Adviser to be of comparable quality. Each Fund may invest in
securities which are rated as low as C by Moody's or D by S&P at the time of
purchase. Securities rated D may be in default with respect to payment of
principal or interest. Securities rated below BBB or Baa are typically referred
to as "junk bonds" and have speculative characteristics.
 
     For liquidity and flexibility, each Fund may also invest in cash or
investment grade short-term securities. The Funds may also engage in strategic
transactions as described below for hedging purposes and to seek to increase
gain.
 
     For further information regarding these investments, see "Associated Risk
Factors" below and the Statement of Additional Information.

 
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                                      11

<PAGE>
 
OTHER PORTFOLIO TRANSACTIONS
 
     As a means of earning income for periods as short as overnight, both the
Global Fund and the American Fund may enter into repurchase agreements with
selected banks and broker/dealers. Under a repurchase agreement, the Funds
acquire securities, subject to the seller's agreement to repurchase at a
specified time and price. Each Fund does not expect to utilize repurchase
agreements with respect to more than 5% of its assets except for short-term
investment of excess cash. The Funds may also sell securities short or lend
portfolio securities to dealers or others with respect to up to 25% of its
assets and may buy securities on a when-issued basis and enter into delayed
delivery and forward commitment transactions.
 
STRATEGIC TRANSACTIONS
 
     The Global Fund and the American Fund may, but are not required to, utilize
various other investment strategies as described below. Such strategies are
generally accepted as modern portfolio management techniques and are regularly
utilized by many mutual funds and other institutional investors. Techniques and
instruments may change over time as new instruments and strategies are developed
or regulatory changes occur.
 
     In the course of pursuing these investment strategies, each Fund may
purchase and sell exchange-listed and over-the-counter put and call options on
securities, equity and fixed-income indices and other financial instruments,
purchase and sell financial futures contracts and options thereon, enter into
various interest rate transactions such as swaps, caps, floors or collars, and
enter into various currency transactions such as currency forward contracts,
currency futures contracts, currency swaps or options on currencies or currency
futures (collectively, all the above are called "Strategic Transactions").
 
BORROWING
 
     The Global Fund and the American Fund each may borrow up to one-third of
its total assets from banks for use in connection with Strategic Transactions,
as a temporary measure for extraordinary or emergency purposes, in connection
with clearance of transactions or to pay for redemptions. Except when borrowing
in connection with Strategic Transactions, a Fund will not purchase any security
when any borrowings are outstanding. The Funds' borrowings in connection with
Strategic Transactions will be limited to the purchase of liquid high grade
securities to post as collateral or satisfy segregation requirements with
respect to such transactions. The Funds do not enter into any of such borrowings
for the purpose of earning incremental returns in excess of borrowing costs from
investments made with such funds.
 
ASSOCIATED RISK FACTORS
 
     The Global Fund's and the American Fund's risks are determined by the
nature of the securities each holds and the portfolio management strategy for
each used by Tweedy, Browne. The following are descriptions of certain risks
related to the investment policies and techniques that the Funds are permitted
to use from time to time.
 
     Foreign Securities.  Investing in foreign securities involves economic and
political considerations not typically found in U.S. markets. These
considerations include changes in exchange rates and exchange rate controls
(which may include suspension of the ability to transfer currency from a given
country), costs incurred in conversions between currencies, non-negotiable
brokerage commissions, less publicly available
 


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                                      12

<PAGE>
 
information, different accounting standards, lower trading volume, delayed
settlements and greater market volatility, the difficulty of enforcing
obligations in other countries, less securities regulation, different tax
provisions (including withholding on dividends paid to each Fund), war,
expropriation, political and social instability and diplomatic developments.
 
     These considerations generally are more of a concern in developing
countries, inasmuch as their economic systems are generally smaller and less
diverse and mature and their political systems less stable than those in
developed countries. The Funds seek to mitigate the risks associated with these
considerations through diversification and active professional management.
 
     Strategic Transactions.  Strategic Transactions have risks associated with
them including possible default by the other party to the transaction,
illiquidity and, to the extent the Investment Adviser's view as to certain
market movements is incorrect, the risk that the use of such Strategic
Transactions could result in losses greater than if they had not been used. The
use of currency transactions can result in the Funds' incurring losses as a
result of a number of factors including the imposition of exchange controls,
suspension of settlements, or the inability to deliver or receive a specified
currency.
 
     Small Capitalization Companies.  The equity securities of small
capitalization companies often exhibit more volatile trading patterns than
securities of larger companies. Often they are less established companies and
may have a more highly leveraged capital structure, less experienced management,
greater dependence on a few customers and similar factors that make their
performance susceptible to greater fluctuation.
 
     Illiquid Securities.  Disposition of illiquid securities often takes more
time than for more liquid securities, may result in higher selling expenses and
may not be able to be made at desirable prices or at the prices at which such
securities have been valued by the Fund.
 
     Other Portfolio Transactions.  If the seller under a repurchase agreement
becomes insolvent, the Fund's right to dispose of the securities may be
restricted or delayed. Lending of securities can result in a failure to deliver
the original securities by the borrower, and similar risks with respect to
disposition of collateral. When issued and delayed delivery securities
transactions and forward commitments involve potential loss to the Funds if the
counterparty fails to perform. If one of the Funds sells securities short, the
Fund will incur a loss if the security does not decrease in value by more than
the cost of maintaining the short position.
 
     Redemptions-in-Kind.  The Funds are authorized to pay for redemptions
in-kind on redemptions in excess of $250,000 by any one shareholder in any
three-month period. A shareholder receiving securities upon redemption will
incur additional expenses in disposing of such securities.
 
     Further Information.  Various investment policies and techniques that one
or both of the Funds intend to use and some of their risks are described more
fully in the Statement of Additional Information.
 
OPERATION OF THE FUNDS
 
STRUCTURE OF THE FUNDS
 
     Both the Global Fund and the American Fund are diversified series of
Tweedy, Browne Fund Inc. (the "Corporation"), an open-end management investment
company registered under the Investment Company Act of 1940. The Corporation was
organized as a Maryland corporation on January 28, 1993.
 
     The Corporation's activities are supervised by its Board of Directors.
Shareholders have one vote for each share held on matters on which they are
entitled to vote. The Corporation is not required to and has no
 

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                                      13

<PAGE>
 
current intention of holding annual shareholder meetings, although special
meetings may be called for purposes such as electing or removing Directors, or
changing fundamental investment policies. Shareholders will be assisted in
communicating with other shareholders in connection with any effort to remove a
Director.
 
INVESTMENT ADVISER
 
     The Corporation, on behalf of both Funds, retains Tweedy, Browne to manage
each of the Fund's daily investment and business affairs subject to the policies
established by the Board of Directors. Tweedy, Browne is owned by its Managing
Directors, Christopher H. Browne, William H. Browne, John D. Spears, Thomas H.
Shrager and Robert Q. Wyckoff, Jr., and a subsidiary of AMG, which owns a
majority interest in the Investment Adviser. The Management Committee, which
consists of Messrs. Christopher and William Browne and John Spears, manages the
day-to-day operations of Tweedy, Browne and the Funds and makes all investment
management decisions. Neither AMG nor its subsidiary manages the day-to-day
operations of, nor participates in the investment process at, Tweedy, Browne.
AMG is a publicly traded company which acquires interests in investment
management firms. The largest shareholder of AMG is a group of private equity
funds managed by TA Associates, Inc.; however, such entities have no power or
authority to participate in the management of operations of Tweedy, Browne, and
it is expected that the equity ownership of such funds will be diluted or
reduced. Tweedy, Browne's management discussion and analysis, and additional
performance information regarding the Funds during the fiscal year ended March
31, 1997, is included in the Annual Report for each Fund.
 
     Tweedy, Browne is entitled to receive investment advisory fees for each
Fund in an amount equal to 1.25% of each Fund's average daily net assets on an
annual basis. The fee is payable monthly, provided that each Fund makes such
interim payments as may be requested by the Investment Adviser not to exceed 75%
of the amount of the fee then accrued on the applicable Fund's books and unpaid.
 
     For the fiscal year ended March 31, 1997, Tweedy, Browne Company L.P. as
investment adviser received advisory fees equal to 1.25% of the value of its
average daily net assets of the Global Fund and advisory fees equal to 1.14% of
the value of its average daily net assets of the American Fund after voluntary
waivers by the investment adviser, Tweedy, Browne Company L.P. of $284,262.
 
     In addition to the fees of the Investment Adviser, each Fund is responsible
for the payment of all its other expenses incurred in the operation of the Fund,
which include, among other things, expenses for legal and independent auditor's
services, charges of its custodian, transfer agent and dividend paying agent and
any other persons hired by the Fund, securities registration fees, fees and
expenses of unaffiliated directors, accounting and printing costs for reports
and similar materials sent to shareholders, membership fees in trade
organizations, fidelity bond and liability coverage for the Corporation's
directors, officers and employees, interest, brokerage and other trading costs,
taxes, expenses of qualifying the Fund for sale in various jurisdictions,
expenses of personnel performing shareholder servicing functions, litigation and
other extraordinary or nonrecurring expenses and other expenses properly payable
by the Funds.
 
     The Investment Adviser is located at 52 Vanderbilt Avenue, New York, New
York 10017.
 
ADMINISTRATOR
 
     First Data Investor Services Group, Inc. ("Investor Services Group") is
responsible for providing administrative services to the Global Fund and
American Fund for a fee equal to .09% of the average daily
 

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                                      14

<PAGE>
 
net assets of each Fund on an annual basis. The fee is subject to reduction at
certain asset levels and fee minimums.
 
TRANSFER AGENT AND CUSTODIAN
 
     First Data Investor Services Group, Inc., P.O. Box 5160, Westboro, MA
01581, is the Funds' transfer, shareholder servicing and dividend paying agent.
Boston Safe Deposit and Trust Company is the Funds' custodian.
 
UNDERWRITER
 
     Tweedy, Browne, which is also a registered broker-dealer, is the Funds'
principal underwriter.
 
TAXATION
 
     The Global Fund and the American Fund intend to qualify each year as
regulated investment companies under Subchapter M of the Internal Revenue Code
of 1986, as amended. As a result, the Funds generally will not be liable for
U.S. federal income or excise taxes with respect to net investment income and
net capital gains that have been distributed to shareholders. The Funds could be
subject to U.S. federal income tax on a portion of their income if they invest
in passive foreign investment companies. See the Statement of Additional
Information for more information regarding U.S. federal income tax consequences.
Investors are urged to consult with their tax advisors concerning the tax
consequences of an investment in the Funds.
 
ADDITIONAL INFORMATION
 
     NO-LOAD FUNDS.  The Funds are true no-load funds. There are no commissions
or fees for purchasing or redeeming shares, and no "12b-1" fees which many funds
charge to support their marketing efforts. The minimum investment is $2,500 for
individual accounts and $500 for IRAs and similar accounts. Subsequent
investments must be a minimum of $250.
 
     DIVIDEND REINVESTMENT PLAN.  Dividends and distributions are automatically
reinvested in additional shares unless shareholders request otherwise in
writing.
 
     SHAREHOLDER STATEMENTS.  Shareholders will receive a detailed account
statement every time there is a purchase or redemption of shares of either Fund.
All statements should be retained in order to keep track of account activity and
the cost of shares for tax purposes.
 
     SHAREHOLDER REPORTS.  In addition to account statements, shareholders will
receive periodic shareholder reports highlighting relevant information,
including investment results and a review of portfolio changes.
 
     To reduce the volume of mail received by shareholders, only one copy of
each report will be mailed to your household (household is identified by tax
identification number and zip code). Please call shareholder services at
1-800-423-4789, press 3 if you wish to receive additional shareholder reports.
 
     CHANGE OF ADDRESS.  All address changes must be submitted in writing and
sent by mail to shareholder services c/o First Data Investor Services Group,
Inc., P.O. Box 5160, Westboro, MA 01581.
 


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                                      15

<PAGE>
 
PURCHASING, REDEEMING AND EXCHANGING SHARES
 
PURCHASING SHARES
 
     If you would like assistance in purchasing shares of either the Global Fund
or the American Fund or in providing us with the appropriate information, please
feel free to call shareholder services between 9:00 a.m. and 5:00 p.m. Eastern
time at 1-800-432-4789, press 2 and we will be happy to assist you.
 
     Purchases are executed at the net asset value per share next calculated
after the Funds' transfer agent receives the purchase request in good order. A
purchase request will not be considered in good order unless it is accompanied
or preceded by a completed and signed application and a check or guaranteed
payment procedures acceptable to Tweedy, Browne. Purchases are made in full and
fractional shares. (See "Share Price" below.)
 
     BY CHECK.  If you purchase shares of either Fund with a check that does not
clear, your purchase will be cancelled and you will be subject to any losses or
fees incurred in the transaction. Checks must be drawn on or payable through a
U.S. bank or savings institution and payable to the Fund. If you purchase shares
by check and redeem them by letter within seven business days of purchase,
either Fund may hold redemption proceeds until the purchase check has cleared,
which may take up to seven business days. If you purchase shares by federal
wire, you may avoid this delay. Redemption requests by telephone or fax prior to
the expiration of the seven-day period will not be accepted.
 
     BY THE AUTOMATED CLEARING HOUSE ("ACH").  You may use ACH to purchase
additional shares. ACH is the electronic transfer of money directly from your
bank account to either Fund or vice versa. If you want to use the ACH service,
complete the Systematic Purchase and Redemption Form and allow at least two
weeks for preparation before using ACH. Monies sent via ACH take approximately
two business days to clear. The transaction will be processed at clearance date.
Your bank may charge you a transaction fee. When you are ready to make a
purchase, call the Funds' transfer agent at 1-800-432-4789, press 2.
 
     BY WIRE.  To open a new account by wire, first call shareholder services at
1-800-432-4789, press 2 to obtain information with regard to procedures for
faxing a completed and signed application. A representative will provide an
account number which must be included on your application. Accounts cannot be
opened without a completed, signed application form. The application must be
faxed and the original mailed to Investor Services Group. Your account will be
subject to withholding and redemption of shares will be prohibited until an
original application is received by Investor Services Group. Contact your bank
to arrange a wire transfer to the transfer agent.


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

 
                                      16

<PAGE>
 
     Give your bank:
 
          -- the name and number of the bank account from which you wish to send
             funds
 
          -- the amount you wish to send
 
          -- the name(s) of the account holder(s) exactly as will appear on your
             application
 
          -- the following instructions:
 
          -- For Global Fund
 
             Boston Safe Deposit & Trust Co.
             Boston, MA
             Account of Tweedy, Browne Global Value Fund
             Account #138-517
             ABA # 011001234
             For further credit to [give the name(s) you want for your Fund's
             account and the account number provided to you].
 
          -- For American Fund
 
             Boston Safe Deposit & Trust Co.
             Boston, MA
             Account of Tweedy, Browne American Value Fund
             Account #138-517
             ABA #011001234
             For further credit to [give the name(s) you want for your Fund's
             account and the account number provided to you].
 
     The account will be established at the net asset value per share next
calculated after the wire transfer is made. Wires must be received by 4:00 p.m.
to receive that day's price. You will not be able to redeem your shares,
however, until your application is received in good order.
 
     You may also make additional investments of $250 or more to your existing
account by following the same procedures.
 
     SUBSEQUENT PURCHASES BY TELEPHONE ORDER.  If you are already a shareholder,
you may purchase shares of either Fund at a certain day's price by calling
shareholder services at 1-800-423-4789, press 2 before the regular close of the
New York Stock Exchange (the "Exchange"), normally 4 p.m. eastern time, on that
day. Orders must be for $250 or more and cannot be for an amount greater than
four times the value of your account at the time the order is placed. You must
include with your payment the order number given to you at the time the order is
placed. A confirmation with complete purchase information will be sent shortly
after your payment is received. If payment by check or wire is not received
within three business days, the order will be cancelled and you will be
responsible for any loss to the Funds resulting from this cancellation.
 
REDEEMING SHARES
 
     Both the Global Fund and the American Fund allow you to redeem shares
(i.e., sell them back to the Funds) without redemption fees or deferred sales
charges of any kind. Redemptions are made at net asset value per share next
calculated after a redemption request in good order is received by the Funds'
transfer agent.
 

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                                      17

<PAGE>
 
     BY TELEPHONE.  This is the quickest and easiest way to sell either Fund's
shares. If you elected telephone redemption on your application, you can call to
request the check be mailed to the address of record or to request a federal
wire be sent to your authorized bank account or to request the proceeds to be
transferred by ACH. ACH takes two business days to settle at your bank. (See
page 16 for additional details with respect to ACH procedures. See page 18
"Share Price" with respect to certain delayed redemptions.) The Funds and the
transfer agent will not be liable for following telephone instructions
reasonably believed to be genuine. In this regard, the Funds and the transfer
agent require personal identification information before accepting a telephone
redemption. If the Funds or the transfer agent fail to use reasonable
procedures, the Funds might be liable for losses due to fraudulent instructions.
 
     Redemption proceeds will be wired to your bank. Any other payment
instructions may not be accepted over the telephone; they must be submitted in
writing. If your bank cannot receive federal wires, redemptions will be mailed
to your bank.
 
     If you open an account by wire, you cannot redeem shares by telephone until
the Funds' transfer agent has received your completed and signed application.
 
     In the event that you are unable to reach either Fund by telephone, you
should write to both Funds c/o First Data Investor Services Group, Inc., P.O.
Box 5160, Westboro, MA 01581.
 
     BY MAIL OR FAX.  A shareholder may redeem shares by mailing a written
request to Tweedy, Browne Fund Inc., c/o First Data Investor Services Group,
Inc., P.O. Box 5160, Westboro, MA 01581. Written requests must state the
shareholder's name, the name of the Fund, the account number and the shares or
dollar amount to be redeemed and must be signed exactly as the shares are
registered. Shareholders requesting a redemption of $25,000 or more, or a
redemption of any amount payable to a person other than the shareholder of
record, or to be sent to an address other than that on record with the Fund,
must have all signatures guaranteed. (The Corporation on behalf of both Funds
reserves the right, however, to require a signature guarantee for all
redemptions.) You can obtain a signature guarantee from most banks, credit
unions or savings associations, or from broker/dealers, municipal securities
broker/dealers, government securities broker/dealers, national securities
exchanges, registered securities associations, or clearing agencies deemed
eligible by the Securities and Exchange Commission. Signature guarantees by a
notary public are not acceptable. Transactions requiring signature guarantees
cannot be accepted via fax. Redemption requirements for corporations, other
organizations, trusts, fiduciaries, agents, institutional investors and
retirement plans may be different from those for regular accounts. For more
information, please call shareholder services at 1-800-432-4789, press 2.
 
EXCHANGING SHARES
 
     Shares held in either the Global Fund or the American Fund which have been
registered in a shareholder's name for at least 5 days may be exchanged for
shares of the other Fund. Exchanges of shares between Funds are made at net
asset value per share calculated after an exchange request in good order is
received by the Funds' transfer agent. If any portion of the shares requested to
be exchanged between Funds represents an investment made by personal check for
which collection of payment has not yet been received, the transfer agent and
the Funds reserve the right not to honor the exchange until collection of
payment is reasonably satisfied, which could take up to 15 days or more. A
shareholder who anticipates the need for more immediate access to his or her
investment should purchase shares by federal wire or by certified or cashier's
check. The exchange privilege may be modified or terminated at any time subject
to shareholder
 
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                                      18

<PAGE>
 
notification. The Funds reserve the right to limit the number of times an
investor may exercise the exchange privilege.
 
     BY TELEPHONE.  If you elected telephone exchange on your application, you
can call to request that an exchange of shares between the Funds be made on your
behalf. To exchange shares by telephone, you must contact the transfer agent.
The transfer agent will not be liable for following telephone instructions
reasonably believed to be genuine. In this regard, the transfer agent requires
personal identification information before accepting a telephone exchange. If
the Funds or the transfer agent fail to use reasonable procedures, the Funds
might be liable for losses due to fraudulent instructions.
 
     BY MAIL OR FAX.  If you did not elect telephone exchange on your
application, you can exchange shares by mail or fax by sending a letter to the
transfer agent with the appropriate account information. For your protection and
to prevent fraudulent exchanges, on written exchange requests in excess of
$25,000, we require a signature and a signature guarantee for each person in
whose name the account is registered. (The Corporation on behalf of both Funds
reserves the right, however, to require a signature guarantee for all
exchanges.) Institutions granting signature guarantees for purposes of
redemption can also perform the same function for exchanges of shares. Signature
guarantees by notaries public are not acceptable. Transactions requiring
signature guarantees cannot be accepted via fax. Exchange requirements for
corporations, other organizations, trusts, fiduciaries, agents, institutional
investors and retirement plans may be different from those for regular accounts.
For more information, please call shareholder services at 1-800-432-4789, press
2.
 
SHARE PRICE
 
     Purchases and redemptions, including exchanges, are made at net asset
value. The Funds' Administrator determines net asset value per share as of the
close of regular trading on the Exchange, normally 4 p.m. eastern time, on each
day the Exchange is open for trading. Net asset value per share is calculated by
dividing the current market value of total assets, less all liabilities, by the
total number of shares outstanding. The Funds will normally send your redemption
proceeds within one business day following the redemption request, but may take
up to seven days (or 15 days in the case of shares recently purchased by check).
 
SHORT-TERM TRADING
 
     Purchases and sales should be made for long-term investment purposes only.
The Corporation, on behalf of both Funds, and the distributor, Tweedy, Browne,
each reserve the right to restrict purchases of either Funds' shares when a
pattern of frequent purchases and sales made in response to short-term
fluctuations in either Funds' share price appears evident.
 
TAX INFORMATION
 
     A redemption of shares of either Fund is a sale of shares and may result in
a gain or loss for income tax purposes. An exchange of shares between Funds
pursuant to the exchange privilege is treated as a sale for Federal income tax
purposes and, depending upon the circumstances, a capital gain or loss may be
realized. Any loss realized on a sale of shares of either Fund will be
disallowed to the extent that shares disposed of are replaced within a 61-day
period beginning 30 days before and ending 30 days after the disposition of the
shares.
 
     Be sure to complete the Tax Identification Number section in each Fund's
application when you open an account. Federal tax law requires the Funds to
withhold 31% of taxable dividends, capital gains
 
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                                      19

<PAGE>
 
distributions and redemption and exchange proceeds from accounts (other than
those of certain exempt payees) without a Social Security or tax identification
number and certain other certified information or upon notification from the IRS
or a broker that withholding is required. Both Funds reserve the right,
following 30 days' notice to shareholders, to redeem all shares in accounts that
still do not have a Social Security or tax identification number.
 
MINIMUM BALANCES
 
     Shareholders should maintain a share account balance worth at least $2,500
($500 for retirement plans), which amount may be changed by the Directors. Both
Funds reserve the right, following 30 days' written notice to shareholders, to
redeem all shares in sub-minimum accounts, including accounts of new investors,
where a reduction in value has occurred due to a redemption out of the account.
Reductions in value that result solely from market activity will not trigger an
involuntary redemption. Each Fund will mail the proceeds of a redeemed account
to the shareholder. The shareholder may restore the account balance to the
requisite amount or more during the 30-day notice period and must maintain it at
no lower than that minimum to avoid involuntary redemption.
 
THIRD PARTY TRANSACTIONS
 
     If purchases and redemptions of either Fund's shares are arranged and
settlement is made at an investor's election through a member of the National
Association of Securities Dealers, Inc., other than the distributor, that member
may, at its discretion, charge a fee for that service.
 
REDEMPTIONS-IN-KIND
 
     The Corporation on behalf of both Funds reserves the right, if conditions
exist which make cash payments undesirable, to honor any request for redemption
in excess of $250,000 by making payment in whole or in part in readily
marketable securities chosen by the Funds and valued as they are for purposes of
computing the Funds' net asset value (a redemption-in-kind). If payment is made
in securities, a shareholder may incur transaction expenses in converting these
securities to cash.
 
DISTRIBUTIONS
 
     Each Fund intends to make distributions of substantially all of its net
investment income and any net realized capital gains after utilization of
capital loss carryforwards, if any, annually in December. Any dividends or
capital gains distributions declared in October, November or December with a
record date in such a month and paid during the following January will be
treated by shareholders for federal income tax purposes as if received on
December 31 of the calendar year declared. Distributions will be reinvested in
additional shares of each Fund unless an investor elects to receive
distributions in cash. If an investment is in the form of a retirement plan, all
dividends and capital gains distributions must be reinvested into the
shareholder's account.
 
TAX INFORMATION
 
     Generally, dividends from net investment income (including short-term
gains) of the Funds are taxable to shareholders as ordinary income. The Funds
will seek to maximize gains which qualify for long-term capital gains treatment.
Long-term capital gains distributions, if any, are taxable as long-term capital
gains regardless of the length of time shareholders have owned their shares. A
portion of dividends from net investment income may qualify for the
dividends-received deduction for corporations. Shareholders may be
 
- --------------------------------------------------------------------------------
 

 
                                      20

<PAGE>
 
able to claim a credit or reduction on their income tax returns for their pro
rata portions of qualified taxes paid by the Funds to foreign countries.
 
     Each Fund will send to its shareholders detailed tax information about the
amount and type of its distributions made during each calendar year and any
foreign income tax payments or credits.
 
PERFORMANCE INFORMATION
 
     From time to time, quotations of each Fund's performance may be included in
advertisements, sales literature or shareholder reports. All performance
figures are historical, show the performance of a hypothetical investment and
are not intended to indicate future performance. "Total return" is the change
in value of an investment in a Fund for a specified period. "Average annual
total return" refers to the average annual compound rate of return of an
investment in a Fund assuming that the investment has been held for the
indicated period as of a stated ending date or for the life of the Fund to the
extent it has not been in existence for any such periods. "Cumulative total
return" represents the cumulative change in value of an investment in a Fund
for various periods. These calculations assume that dividends and capital gains
distributions were reinvested. "Capital change" measures return from capital,
including reinvestment of any capital gains distributions but not reinvestment
of dividends. Performance will vary based upon, among other things, changes in
market conditions and the level of the Funds' expenses.
 

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

 
                                      21

<PAGE>

================================================================================

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


                                                           [GRAPHIC]


                                                   ------------------------
                                                   TWEEDY, BROWNE FUND INC.
                                              
                CONTENTS
                                        PAGE
                                        ----
Expense Information ...................   2
Financial Highlights...................   4
Performance of the Funds...............   6
Why Invest in the Funds?...............   6        ------------------------
Investment Objectives and Policies.....  10               PROSPECTUS
Global Fund............................  10        ------------------------
American Fund..........................  10
Other Investments of the Funds.........  11             AUGUST 1, 1997
Operation of the Funds.................  13       
Additional Information.................  15      as supplemented March 24, 1998
Purchasing, Redeeming, and Exchange              ==============================
  Shares...............................  16
Distributions..........................  20
Performance Information................  21                [LOGO]
                                                       TWEEDY, BROWNE
                                                      GLOBAL VALUE FUND


                                                           [LOGO]
                                                       TWEEDY, BROWNE
                                                     AMERICAN VALUE FUND

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

<TABLE>
<S>                       <C>                       <C>                     <C>
Shareholder Services:     800-432-4789, Press 2    Shareholder Services:     800-432-4789, Press 2
Daily NAV Prices:         800-432-4789, Press 2    Daily NAV Prices:         800-432-4789, Press 2
For Special Assistance                             For Special Assistance                         
In Opening A New Account: 800-432-4789, Press 2    In Opening A New Account: 800-432-4789, Press 2
Fund Information Kit:     800-432-4789, Press 1    Fund Information Kit:     800-432-4789, Press 1

</TABLE>

================================================================================



                        TWEEDY, BROWNE GLOBAL VALUE FUND


                       TWEEDY, BROWNE AMERICAN VALUE FUND












                       STATEMENT OF ADDITIONAL INFORMATION

                                 August 1, 1997
                         as supplemented March 24, 1998



                  This  Statement  of  Additional  Information  is not  itself a
                  Prospectus  and  should  be  read  in  conjunction   with  the
                  Prospectus  of Tweedy,  Browne  Global  Value Fund and Tweedy,
                  Browne  American  Value  Fund also dated  August 1,  1997,  as
                  amended  from time to time,  copies  of which may be  obtained
                  without charge by writing to Tweedy,  Browne Global Value Fund
                  and/or  Tweedy,  Browne  American  Value Fund,  c/o First Data
                  Investor  Services  Group  Inc.,  P.O.  Box  5160,   Westboro,
                  Massachusetts 01581 or calling 800-432-4789, Press 1.


<PAGE>

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS


<S>               <C>                                                                                             <C>
                                                                                                                  Page

                  Investment Objective and Policies.......................................................        1

                  Performance Information.................................................................        22

                  Operation of the Funds..................................................................        25

                  Taxes...................................................................................        35

                  Portfolio Transactions..................................................................        41

                  Net Asset Value.........................................................................        43

                  Additional Information..................................................................        44

                  Financial Statements....................................................................        45

                  Appendix A..............................................................................       A-1


</TABLE>

<PAGE>



Page 34


                       INVESTMENT OBJECTIVES AND POLICIES

                                    Tweedy,   Browne   Fund  Inc.,   a  Maryland
                  corporation  of which  Tweedy,  Browne  Global Value Fund (the
                  "Global  Fund") and Tweedy,  Browne  American  Value Fund (the
                  "American Fund") are separate series, is referred to herein as
                  the  "Corporation."  The  Corporation is a no-load,  open-end,
                  management  investment company which  continuously  offers and
                  redeems its shares.  The  Corporation is a company of the type
                  commonly  known as a mutual  fund.  The Funds are  diversified
                  series of the Corporation.  Tweedy,  Browne Company LLC is the
                  investment  adviser of the Global Fund and the  American  Fund
                  and  is  referred  to  herein  as  "Tweedy,   Browne"  or  the
                  "Adviser."

                                    The Funds'  objectives and policies,  except
                  as otherwise  stated,  are not  fundamental and may be changed
                  without  shareholder  votes.  The Global Fund seeks  long-term
                  growth  of  capital  by  investing  throughout  the world in a
                  diversified  portfolio of marketable  equity  securities.  The
                  American Fund seeks  long-term  growth of capital by investing
                  in a diversified portfolio of domestic equity securities. Both
                  Funds are permitted to invest in debt securities. There can be
                  no  assurance  that the Funds will  achieve  their  respective
                  objectives.

                  Risk Considerations of the Funds

                  Global Fund. The Global Fund is intended to provide individual
                  and  institutional  investors  with an opportunity to invest a
                  portion  of their  assets  in  globally  oriented  portfolios,
                  according  to  the  Fund's  objective  and  policies,  and  is
                  designed for long-term investors who can accept  international
                  investment  risk.  Investment  in shares of the Global Fund is
                  not intended to provide a complete  investment  program for an
                  investor.  The  Global  Fund  expects to invest  primarily  in
                  foreign securities although investments in U.S. securities are
                  permitted and will be made when  opportunities in U.S. markets
                  appear  attractive.  The Global  Fund may also  invest in debt
                  instruments,  although income is an incidental  consideration.
                  Tweedy,  Browne believes that allocation of assets on a global
                  basis decreases the degree to which events in any one country,
                  including the United States,  will affect an investor's entire
                  investment  holdings.  As with any long-term  investment,  the
                  value of the Global  Fund's  shares when sold may be higher or
                  lower than when purchased.

                                    Investors should recognize that investing in
                  foreign  securities  involves certain special  considerations,
                  including  those set  forth  below,  which  are not  typically
                  associated  with  investing in United  States  securities  and
                  which may  favorably or  unfavorably  affect the Global Fund's
                  performance. As foreign companies are not generally subject to
                  uniform standards,  practices and requirements with respect to
                  accounting,  auditing  and  financial  reporting  to the  same
                  degree as are  domestic  companies,  there may be less or less
                  helpful publicly available information about a foreign company
                  than  about  a  domestic  company.   Many  foreign  securities
                  markets,  while  growing in volume of trading  activity,  have
                  substantially less volume than the U.S. market, and securities
                  of most foreign issuers are less liquid and more volatile than
                  securities of comparably  sized domestic  issuers.  Similarly,
                  volume and liquidity in most foreign bond markets is less than
                  in the United States and  volatility of price is often greater
                  than in the  United  States.  Further,  foreign  markets  have
                  different  clearance and settlement  procedures and in certain
                  markets  there  have been  times  when  settlements  have been
                  unable to keep pace with the volume of securities transactions
                  making it difficult to conduct  such  transactions.  Delays in
                  settlement  could result in  temporary  periods when assets of
                  the  Global  Fund  are  uninvested  and no  return  is  earned
                  thereon.  The  inability  of the Global Fund to make  intended
                  security purchases due to settlement  problems could cause the
                  Fund to miss attractive investment opportunities. Inability to
                  dispose of portfolio  securities  due to  settlement  problems
                  could  result in losses to the Global  Fund due to  subsequent
                  declines in value of the portfolio security. Fixed commissions
                  on some foreign securities  exchanges and bid to asked spreads
                  in some  foreign  bond  markets  are  higher  than  negotiated
                  commissions on U.S.  exchanges and bid to asked spreads in the
                  U.S.  bond  market.  Further,  the Global  Fund may  encounter
                  difficulties  or be unable to pursue legal remedies and obtain
                  judgments in foreign courts.

                                    In  foreign  countries,  there is  generally
                  less  government  supervision  and  regulation of business and
                  industry practices,  securities exchanges, securities traders,
                  brokers and listed companies than in the United States. It may
                  be  more  difficult  for  the  Global  Fund's  agents  to keep
                  currently  informed  about  corporate  actions  such as  stock
                  dividends  or other  matters  which may  affect  the prices of
                  portfolio securities. Communications between the United States
                  and foreign  countries are often less reliable than within the
                  United States, thus increasing the risk of delayed settlements
                  of  portfolio   transactions  or  loss  of  certificates   for
                  portfolio  securities.  In  addition,  with respect to certain
                  foreign  countries,  there is the possibility of expropriation
                  or confiscatory taxation,  political or social instability, or
                  diplomatic  developments  which  could  affect  United  States
                  investments in those  countries.  Moreover,  at any particular
                  time,  individual  foreign  economies may differ  favorably or
                  unfavorably from the United States economy in such respects as
                  growth of gross national product,  rate of inflation,  capital
                  reinvestment,   resource   self-sufficiency   and  balance  of
                  payments  position.  The Adviser  seeks to mitigate  the risks
                  associated   with   the   foregoing   considerations   through
                  continuous professional management.

                                    Investments  in foreign  securities  usually
                  will involve currencies of foreign  countries.  Because of the
                  considerations discussed above, the value of the assets of the
                  Global  Fund as  measured  in  U.S.  dollars  may be  affected
                  favorably  or  unfavorably  by  changes  in  foreign  currency
                  exchange rates and exchange control regulations,  and the Fund
                  may incur costs in connection with conversions between various
                  currencies.  Although  the Global Fund values its assets daily
                  in terms of U.S.  dollars,  it does not intend to convert  its
                  holdings of foreign  currencies  into U.S.  dollars on a daily
                  basis.  The Global Fund will  engage in  currency  conversions
                  when it shifts holdings from one country to another.  Although
                  foreign  exchange  dealers do not charge a fee for conversion,
                  they  do  realize  a  profit  based  on  the  difference  (the
                  "spread")  between  the  prices at which  they are  buying and
                  selling various currencies. Thus, a dealer may offer to sell a
                  foreign  currency  to  the  Global  Fund  at one  rate,  while
                  offering a lesser rate of  exchange  should the Fund desire to
                  resell  that  currency  to the  dealer.  The Global  Fund will
                  conduct its foreign currency exchange transactions either on a
                  spot  (i.e.,  cash) basis at the spot rate  prevailing  in the
                  foreign  currency  exchange  market,  or through entering into
                  forward or futures  contracts (or options thereon) to purchase
                  or sell foreign  currencies.  The Global Fund may, for hedging
                  purposes,  purchase  foreign  currencies  in the  form of bank
                  deposits.

                                    Because  the Global  Fund may be invested in
                  both U.S.  and  foreign  securities  markets,  changes  in the
                  Fund's share price may have a low  correlation  with movements
                  in the U.S.  markets.  The Global Fund's share price will tend
                  to reflect the movements of both the different  stock and bond
                  markets  in which it is  invested  and,  to the  extent  it is
                  unhedged,  of the  currencies  in which  the  investments  are
                  denominated;  the  strength  or  weakness  of the U.S.  dollar
                  against foreign  currencies may account for part of the Fund's
                  investment  performance.  Foreign  securities  such  as  those
                  purchased  by the  Global  Fund  may  be  subject  to  foreign
                  government   taxes  which  could  reduce  the  yield  on  such
                  securities, although a shareholder of the Fund may, subject to
                  certain  limitations,   be  entitled  to  claim  a  credit  or
                  deduction for U.S.  federal income tax purposes for his or her
                  proportionate  share of such  foreign  taxes  paid by the Fund
                  (see  "TAXES").  U.S.  and foreign  securities  markets do not
                  always  move in step with each  other,  and the total  returns
                  from different markets may vary significantly. The Global Fund
                  invests  in many  securities  markets  around  the world in an
                  attempt to take advantage of  opportunities  wherever they may
                  arise.

                  American  Fund.  The  American  Fund is  intended  to  provide
                  individual and institutional  investors with an opportunity to
                  invest  a  portion  of  their  assets  in  a  domestic  equity
                  portfolio,  according to the Fund's objective and policies and
                  is designed for long-term  investors  who can accept  domestic
                  investment risk. The American Fund will be invested largely in
                  U.S. equity  securities  although it may allocate up to 20% of
                  its portfolio assets to foreign equity securities when Tweedy,
                  Browne  believes  that  economic  conditions  warrant  foreign
                  investment.  The  Fund may also  invest  in debt  instruments,
                  although income is an incidental consideration. Tweedy, Browne
                  believes  that a value  oriented  investment  strategy  offers
                  investors profitable investment in undervalued domestic equity
                  securities whose prices may be below intrinsic worth,  private
                  market  value or  previously  high stock  prices.  As with any
                  long-term investment,  the value of the American Fund's shares
                  when sold may be higher or lower than when purchased.

                                    Investments in a fund which  purchases value
                  oriented  stocks  as its  guiding  principle  involve  special
                  considerations. The equity capitalization of the United States
                  is the largest in the world  comprising more than one-third of
                  the Morgan  Stanley  Capital  International  World Index.  The
                  American Fund offers  investors the opportunity to invest in a
                  diversified   portfolio  of  primarily  domestic   undervalued
                  securities  whose  market  price may be well below the stock's
                  intrinsic value.

                                    The American Fund cannot guarantee a gain or
                  eliminate  the  risk of  loss.  The  net  asset  value  of the
                  American  Fund's shares will tend to increase or decrease with
                  changes in the value of U.S. equity markets. To the extent the
                  American Fund invests in foreign  securities,  comparable risk
                  factors  discussed  above with  regard to the Global Fund will
                  apply.   There  is  no  assurance  that  the  American  Fund's
                  objectives  will be  achieved.  Investment  in  shares  of the
                  American Fund is not intended to provide a complete investment
                  program for an investor.

                  Investments and Investment Techniques

                  Repurchase  Agreements.  Both the Global Fund and the American
                  Fund may enter into repurchase agreements with member banks of
                  the  Federal  Reserve  System,  any  foreign  bank or with any
                  domestic or foreign  broker/dealer  which is  recognized  as a
                  reporting    government     securities    dealer,    if    the
                  creditworthiness   of  the  bank  or  broker/dealer  has  been
                  determined  by the  Adviser  to be at least as high as that of
                  other obligations the Funds may purchase.

                                    A repurchase  agreement provides a means for
                  each  Fund to earn  income on funds  for  periods  as short as
                  overnight.  It is an  arrangement  under  which the  purchaser
                  (i.e.,   one  of  the   Funds)   acquires   a  debt   security
                  ("Obligation")  and the seller agrees, at the time of sale, to
                  repurchase  the  Obligation  at a  specified  time and  price.
                  Securities  subject to a  repurchase  agreement  are held in a
                  segregated account and the value of such securities is kept at
                  least equal to the repurchase price (plus any interest accrued
                  if  interest  will be  paid in  cash)  on a daily  basis.  The
                  repurchase  price may be higher than the purchase  price,  the
                  difference  being  income to the  Fund,  or the  purchase  and
                  repurchase  prices may be the same,  with interest at a stated
                  rate due to the Fund  together  with the  repurchase  price on
                  repurchase.  In  either  case,  the  income  to  the  Fund  is
                  unrelated  to the  interest  rate  on the  Obligation  itself.
                  Obligations will be physically held by the Fund's custodian or
                  in the Federal Reserve Book Entry system.

                                    For purposes of the  Investment  Company Act
                  of 1940 (the "1940 Act"), a repurchase  agreement is deemed to
                  be a loan  from  the  Fund  to the  seller  of the  Obligation
                  subject to the repurchase agreement. It is not clear whether a
                  court would  consider  the  Obligation  purchased  by the Fund
                  subject to a  repurchase  agreement as being owned by the Fund
                  or as being  collateral  for a loan by the Fund to the seller.
                  In the event of the  commencement  of bankruptcy or insolvency
                  proceedings  with  respect  to the  seller  of the  Obligation
                  before   repurchase  of  the  Obligation  under  a  repurchase
                  agreement,  a Fund may encounter  delay and incur costs before
                  being able to sell the  security.  Delays may involve  loss of
                  interest or decline in price of the Obligation. Apart from the
                  risk of bankruptcy or  insolvency  proceedings,  there is also
                  the risk that the seller may fail to repurchase  the security.
                  It is possible that the Fund will be  unsuccessful  in seeking
                  to enforce  the  seller's  contractual  obligation  to deliver
                  additional securities.

                  Fixed Income  Obligations.  Each Fund may also invest  without
                  limitation  in  fixed  income   obligations   including   cash
                  equivalents  (such as bankers'  acceptances,  certificates  of
                  deposit, commercial paper, short-term government and corporate
                  obligations and repurchase agreements) for temporary defensive
                  purposes  when  the   Investment   Adviser   believes   market
                  conditions so warrant and for liquidity.

                  Debt  Securities.  The Funds may purchase  "investment  grade"
                  bonds,  which are those  rated  Aaa,  Aa, A or Baa by  Moody's
                  Investors  Service,  Inc.  ("Moody's") or AAA, AA, A or BBB by
                  Standard  & Poor's  Ratings  Group a division  of  McGraw-Hill
                  Companies,  Inc.,  ("S&P") or, if  non-rated,  judged to be of
                  equivalent  credit quality by the Adviser.  Bonds rated Baa or
                  BBB may have speculative  elements as well as investment-grade
                  characteristics.

                  High Yield,  High Risk Securities.  Both Funds may also invest
                  up to 15% of net  assets in  securities  rated  lower than the
                  foregoing and in non-rated  securities  of  equivalent  credit
                  quality  in the  Adviser's  judgment.  The Funds may invest in
                  debt securities which are rated as low as C by Moody's or D by
                  S&P.  Securities  rated D may be in  default  with  respect to
                  payment  of  principal  or  interest.  Below  investment-grade
                  securities  (those  rated Ba and lower by  Moody's  and BB and
                  lower by S&P) or non-rated  securities  of  equivalent  credit
                  quality  carry a high  degree  of risk  (including  a  greater
                  possibility  of default or  bankruptcy  of the issuers of such
                  securities),  generally  involve greater  volatility of price,
                  and may be less liquid,  than  securities in the higher rating
                  categories  and are  considered  speculative.  The  lower  the
                  ratings  of such debt  securities,  the  greater  their  risks
                  render them like equity  securities.  See the Appendix to this
                  Statement  of  Additional  Information  for  a  more  complete
                  description of the ratings  assigned by ratings  organizations
                  and their respective characteristics.

                                    As has occurred during the 1990-1992 period,
                  an economic  downturn  can  disrupt the high yield  market and
                  impair the ability of issuers to repay principal and interest.
                  Also,  an  increase  in  interest  rates is  likely  to have a
                  greater adverse impact on the value of such  obligations  than
                  on higher quality debt securities. During an economic downturn
                  or period of rising interest rates,  highly leveraged  issuers
                  may experience  financial  stress which would adversely affect
                  their ability to service their principal and interest  payment
                  obligations.  Prices and yields of high yield  securities will
                  fluctuate   over  time  and,   during   periods  of   economic
                  uncertainty, volatility of high yield securities may adversely
                  affect a Fund's net asset value.  In addition,  investments in
                  high yield  zero  coupon or  pay-in-kind  bonds,  rather  than
                  income-bearing high yield securities,  may be more speculative
                  and may be  subject to  greater  fluctuations  in value due to
                  changes in interest rates.

                                    The trading market for high yield securities
                  may be thin to the extent that there is no established  retail
                  secondary  market or because of a decline in the value of such
                  securities. A thin trading market may limit the ability of the
                  Funds to value  accurately high yield securities in the Funds'
                  portfolios  and  to  dispose  of  those  securities.   Adverse
                  publicity and investor perceptions may decrease the values and
                  liquidity of high yield securities.  These securities may also
                  involve special registration responsibilities, liabilities and
                  costs.

                                    It is the policy of the  Adviser not to rely
                  exclusively  on ratings  issued by  established  credit rating
                  agencies,   but  to  supplement  such  ratings  with  its  own
                  independent  and  on-going  review of credit  quality.  If the
                  rating of a portfolio  security is  downgraded  by one or more
                  credit rating agencies,  the Adviser will determine whether it
                  is in the best interest of a Fund to retain or dispose of such
                  security.

                  Zero Coupon and Structured Securities. The Funds may invest in
                  zero coupon  securities  which pay no cash income and are sold
                  at substantial discounts from their value at maturity although
                  they currently have no intention to invest in such securities.
                  When held from  issuance to  maturity,  their  entire  income,
                  which  consists  of  accretion  of  discount,  comes  from the
                  difference   between  the  issue  price  and  their  value  at
                  maturity. Zero coupon securities are subject to greater market
                  value  fluctuations  from  changing  interest  rates than debt
                  obligations of comparable  maturities  which make current cash
                  distributions of interest. Structured securities, particularly
                  mortgage backed securities, are usually subject to some degree
                  of prepayment risk which can vary  significantly  with various
                  economic  and market  factors.  Depending on the nature of the
                  structured  security  purchased,  a  change  in  the  rate  of
                  prepayments  can have the effect of  enhancing or reducing the
                  yields to a Fund from such  investment  and expose the Fund to
                  the risk that any reinvestment will be at a lower yield.

                  Convertible  Securities.  The Funds may invest in  convertible
                  securities,  that  is,  bonds,  notes,  debentures,  preferred
                  stocks  and other  securities  which are  convertible  into or
                  exchangeable  for  another  security,  usually  common  stock.
                  Investments   in   convertible   securities   can  provide  an
                  opportunity  for capital  appreciation  and/or income  through
                  interest and dividend  payments by virtue of their  conversion
                  or exchange features.

                                    The  convertible  securities  in  which  the
                  Funds may invest are either  fixed  income or zero coupon debt
                  securities  which may be converted or exchanged at a stated or
                  determinable  exchange ratio into underlying  shares of common
                  stock.  The  exchange  ratio  for any  particular  convertible
                  security  may be  adjusted  from  time  to time  due to  stock
                  splits, dividends, spin-offs, other corporate distributions or
                  scheduled  changes in the  exchange  ratio.  Convertible  debt
                  securities and convertible  preferred stocks, until converted,
                  have general  characteristics  similar to both debt and equity
                  securities.  Although  to  a  lesser  extent  than  with  debt
                  securities   generally,   the  market  value  of   convertible
                  securities  tends to decline as interest  rates  increase and,
                  conversely,  tends to increase as interest rates  decline.  In
                  addition,  because of the conversion or exchange feature,  the
                  market value of convertible  securities  typically  changes as
                  the market  value of the  underlying  common  stock  declines,
                  convertible  securities tend to trade  increasingly on a yield
                  basis, and so usually do not experience  market value declines
                  to the same extent as the  underlying  common stock.  When the
                  market price of the  underlying  common stock  increases,  the
                  prices  of  the  convertible  securities  tend  to  rise  as a
                  reflection  of the  value  of  the  underlying  common  stock,
                  although usually not as much as the underlying common stock.

                                    As debt securities,  convertible  securities
                  are  investments  which  provide for a stream of income (or in
                  the case of zero coupon securities,  accretion of income) with
                  generally  higher yields than common stocks.  Of course,  like
                  all debt  securities,  there can be no  assurance of income or
                  principal  payments  because  the  issuers of the  convertible
                  securities  may  default  on  their  obligations.  Convertible
                  securities  generally offer lower yields than  non-convertible
                  securities of similar quality  because of their  conversion or
                  exchange features.

                                    Convertible    securities    generally   are
                  subordinated to other similar but  non-convertible  securities
                  of the same issuer,  although  convertible bonds, as corporate
                  debt  obligations,  enjoy seniority in right of payment to all
                  equity securities,  and convertible  preferred stock is senior
                  to common  stock of the same issuer.  However,  because of the
                  subordination  feature,   convertible  bonds  and  convertible
                  preferred  stock  typically  have lower  ratings  than similar
                  non-convertible securities.

                  Other Rights to Acquire Securities

                                    The Funds may also invest in other rights to
                  acquire  securities,  such  as  options  and  warrants.  These
                  securities  represent the right to acquire a fixed or variable
                  amount  of a  particular  issue  of  securities  at a fixed or
                  formula  price  either  during   specified   periods  or  only
                  immediately   prior  to  termination.   These  securities  are
                  generally  exercisable  at  premiums  above  the  value of the
                  underlying  security  at the time the right is  issued.  These
                  rights are more  volatile than the  underlying  stock and will
                  result in a total loss of the Funds' investment if they expire
                  without being  exercised  because the value of the  underlying
                  security does not exceed the exercise price of the right.

                  Strategic Transactions

                                    The  Funds  may,  but are not  required  to,
                  utilize various other investment strategies as described below
                  to  hedge  various  market  risks  (such  as  interest  rates,
                  currency  exchange  rates,  and  broad or  specific  equity or
                  fixed-income  market  movements),   to  manage  the  effective
                  maturity or duration of fixed-income securities, or to enhance
                  potential  gain.  Such  strategies  are generally  accepted by
                  modern portfolio  managers and are regularly  utilized by many
                  mutual funds and other institutional investors. Techniques and
                  instruments  may  change  over  time  as new  instruments  and
                  strategies are developed or regulatory changes occur.

                                    In the course of pursuing  these  investment
                  strategies,  the Funds may purchase  and sell  exchange-listed
                  and  over-the-counter  put and  call  options  on  securities,
                  equity   and   fixed-income   indices   and  other   financial
                  instruments, purchase and sell financial futures contracts and
                  options thereon, enter into various currency transactions such
                  as currency forward  contracts,  currency  futures  contracts,
                  currency  swaps or options on currencies  or currency  futures
                  (collectively,   all   the   above   are   called   "Strategic
                  Transactions").  Strategic Transactions may be used to attempt
                  to protect  against  possible  changes in the market  value of
                  securities  held in or to be purchased for a Fund's  portfolio
                  resulting from  securities  markets or currency  exchange rate
                  fluctuations,  to  protect  a Fund's  unrealized  gains in the
                  value of its portfolio  securities,  to facilitate the sale of
                  such  securities  for  investment  purposes,   to  manage  the
                  effective  maturity or duration of a Fund's  portfolio,  or to
                  establish a position in the derivatives markets as a temporary
                  substitute  for purchasing or selling  particular  securities.
                  Some  Strategic  Transactions  may  also be  used  to  enhance
                  potential  gain  although  no more than 5% of a Fund's  assets
                  will be committed to initial margin on  instruments  regulated
                  by  the  Commodity  Futures  Trading  Commission  ("CFTC")  in
                  Strategic  Transactions entered into for non-hedging purposes.
                  Any or all of these  investment  techniques may be used at any
                  time and there is no particular strategy that dictates the use
                  of one technique rather than another,  as use of any Strategic
                  Transaction  is a function  of  numerous  variables  including
                  market conditions. A Fund's ability to utilize these Strategic
                  Transactions successfully will depend on the Adviser's ability
                  to  predict  pertinent  market  movements,   which  cannot  be
                  assured.  Each Fund will  comply  with  applicable  regulatory
                  requirements  when implementing  these strategies,  techniques
                  and instruments.  Strategic  Transactions  involving financial
                  futures and options thereon will be purchased, sold or entered
                  into only for bona fide hedging,  risk management or portfolio
                  management purposes and not for speculative purposes.

                                    Strategic Transactions have risks associated
                  with them including possible default by the other party to the
                  transaction, illiquidity and, to the extent the Adviser's view
                  as to certain market movements is incorrect, the risk that the
                  use of such  Strategic  Transactions  could  result  in losses
                  greater  than if they had not been used.  Purchase  of put and
                  call  options  may  result  in  losses  to a Fund or limit the
                  amount of appreciation a Fund can realize on its  investments.
                  The  use  of  currency  transactions  can  result  in  a  Fund
                  incurring losses as a result of a number of factors  including
                  the   imposition   of   exchange   controls,   suspension   of
                  settlements,   or  the  inability  to  deliver  or  receive  a
                  specified   currency.   The  use  of   options   and   futures
                  transactions  entails certain other risks. In particular,  the
                  variable  degree of  correlation  between  price  movements of
                  futures contracts and price movements in the related portfolio
                  position of a Fund creates the possibility  that losses on the
                  hedging instrument may be greater than gains in the value of a
                  Fund's position. In addition,  futures and options markets may
                  not   be   liquid   in   all    circumstances    and   certain
                  over-the-counter  options may have no markets. As a result, in
                  certain  markets,  a Fund  might  not be able to  close  out a
                  transaction  without incurring  substantial losses, if at all.
                  Although  the use of  futures  and  options  transactions  for
                  hedging  should  tend to  minimize  the  risk of loss due to a
                  decline  in the value of a hedged  position,  at the same time
                  they tend to limit any potential  gain which might result from
                  an  increase  in value of such  position.  Finally,  the daily
                  variation  margin  requirements  for futures  contracts  would
                  create a greater ongoing  potential  financial risk than would
                  purchases  of  options,  where the  exposure is limited to the
                  cost of the initial premium.  Losses resulting from the use of
                  Strategic  Transactions  would  reduce  net asset  value,  and
                  possibly  income,  and such losses can be greater  than if the
                  Strategic Transactions had not been utilized.

                  General  Characteristics  of  Options.  Put  options  and call
                  options typically have similar structural  characteristics and
                  operational  mechanics regardless of the underlying instrument
                  on which  they are  purchased  or sold.  Thus,  the  following
                  general  discussion relates to each of the particular types of
                  options  discussed in greater detail below. In addition,  many
                  Strategic  Transactions  involving options require segregation
                  of a Fund's  assets in special  accounts,  as described  below
                  under "Use of Segregated and Other Special Accounts."

                                    A put  option  gives  the  purchaser  of the
                  option, upon payment of a premium,  the right to sell, and the
                  issuer  the  obligation  to  buy,  the  underlying   security,
                  commodity, index, currency or other instrument at the exercise
                  price.  For instance,  a Fund's  purchase of a put option on a
                  security  might be  designed  to protect  its  holdings in the
                  underlying   instrument   (or,  in  some   cases,   a  similar
                  instrument)  against a substantial decline in the market value
                  by  giving a Fund the  right to sell  such  instrument  at the
                  option  exercise  price.  A call  option,  upon  payment  of a
                  premium,  gives the  purchaser of the option the right to buy,
                  and  the  issuer  the   obligation  to  sell,  the  underlying
                  instrument at the exercise  price. A Fund's purchase of a call
                  option on a security,  financial  future,  index,  currency or
                  other instrument might be intended to protect the Fund against
                  an increase in the price of the underlying  instrument that it
                  intends to purchase in the future by fixing the price at which
                  it may purchase such instrument. An American style put or call
                  option may be exercised  at any time during the option  period
                  while a European  style put or call  option  may be  exercised
                  only upon  expiration or during a fixed period prior  thereto.
                  The Funds are authorized to purchase and sell exchange  listed
                  options and over-the-counter options ("OTC options"). Exchange
                  listed options are issued by a regulated  intermediary such as
                  the Options Clearing Corporation ("OCC"), which guarantees the
                  performance of the obligations of the parties to such options.
                  The discussion  below  regarding  exchange listed options uses
                  the  OCC  as a  paradigm,  but is  also  applicable  to  other
                  financial intermediaries.

                                    Each   Fund's   ability  to  close  out  its
                  position as a purchaser or seller of an OCC or exchange listed
                  put or call option is dependent,  in part,  upon the liquidity
                  of the  option  market.  Among the  possible  reasons  for the
                  absence of a liquid  option  market on an  exchange  are:  (i)
                  insufficient   trading  interest  in  certain  options;   (ii)
                  restrictions  on  transactions  imposed by an exchange;  (iii)
                  trading halts,  suspensions or other restrictions imposed with
                  respect  to  particular   classes  or  series  of  options  or
                  underlying  securities  including reaching daily price limits;
                  (iv)  interruption  of the normal  operations of the OCC or an
                  exchange;  (v)  inadequacy of the facilities of an exchange or
                  OCC to handle current  trading  volume;  or (vi) a decision by
                  one or more  exchanges to  discontinue  the trading of options
                  (or a particular  class or series of options),  in which event
                  the  relevant  market for that option on that  exchange  would
                  cease to exist,  although outstanding options on that exchange
                  would generally  continue to be exercisable in accordance with
                  their terms.

                                    The hours of trading for listed  options may
                  not  coincide  with the  hours  during  which  the  underlying
                  financial  instruments  are  traded.  To the  extent  that the
                  option  markets  close  before the markets for the  underlying
                  financial  instruments,  significant  price and rate movements
                  can take  place  in the  underlying  markets  that  cannot  be
                  reflected in the option markets.

                                    OTC  options are  purchased  from or sold to
                  securities  dealers,  financial  institutions or other parties
                  ("Counterparties") through direct bilateral agreement with the
                  Counterparty.  In contrast to exchange listed  options,  which
                  generally have standardized  terms and performance  mechanics,
                  all the terms of an OTC option, including such terms as method
                  of settlement,  term, exercise price, premium,  guarantees and
                  security, are set by negotiation of the parties.

                                    Unless the parties  provide for it, there is
                  no central clearing or guaranty  function in an OTC option. As
                  a result,  if the Counterparty  fails to make or take delivery
                  of the security,  currency or other  instrument  underlying an
                  OTC option it has entered  into with a Fund or fails to make a
                  cash  settlement  payment due in accordance  with the terms of
                  that  option,  the Fund may lose any  premium  it paid for the
                  option as well as any anticipated  benefit of the transaction.
                  Accordingly,  the Adviser must assess the  creditworthiness of
                  each such Counterparty or any guarantor or credit  enhancement
                  of the Counterparty's  credit to determine the likelihood that
                  the terms of the OTC option will be satisfied.  The Funds will
                  engage in OTC  option  transactions  only with  United  States
                  government   securities  dealers  recognized  by  the  Federal
                  Reserve  Bank of New  York as  "primary  dealers,"  or  broker
                  dealers,   domestic  or  foreign  banks  or  other   financial
                  institutions  which have  received (or the  guarantors  of the
                  obligation of which have received) a short-term  credit rating
                  of A-1 from S&P or P-1 from  Moody's or an  equivalent  rating
                  from  any  other  nationally  recognized   statistical  rating
                  organization ("NRSRO").

                                    If  a  Fund  sells  (i.e.,  issues)  a  call
                  option,  the premium  that it receives  may serve as a partial
                  hedge, to the extent of the option premium, against a decrease
                  in the value of the  underlying  securities or  instruments in
                  its portfolio, or will increase the Fund's income. The sale of
                  put options can also provide income.

                                    All  calls   sold  by  the  Funds   must  be
                  "covered"  (i.e.,  the Fund must own the securities or futures
                  contract  subject  to  the  calls)  or  must  meet  the  asset
                  segregation  requirements  described below as long as the call
                  is  outstanding.  Even though the Fund will receive the option
                  premium to help protect it against loss, a call sold by one of
                  the Funds  exposes  that Fund during the term of the option to
                  possible loss of  opportunity to realize  appreciation  in the
                  market price of the underlying  security or instrument and may
                  require  the Fund to hold a security  or  instrument  which it
                  might otherwise have sold.

                  General  Characteristics of Futures.  The Funds may enter into
                  financial  futures  contracts or purchase or sell put and call
                  options  on  such  futures  as  a  hedge  against  anticipated
                  interest rate, currency or equity market changes, for duration
                  management  and for  risk  management  purposes.  Futures  are
                  generally  bought and sold on the commodities  exchanges where
                  they are listed with payment of initial and  variation  margin
                  as described  below.  The sale of a futures contract creates a
                  firm obligation by a Fund, as seller,  to deliver to the buyer
                  the specific  type of financial  instrument  called for in the
                  contract at a specific  future time for a specified price (or,
                  with respect to index futures and Eurodollar instruments,  the
                  net cash amount).  Options on futures contracts are similar to
                  options  on  securities  except  that an  option  on a futures
                  contract  gives the  purchaser  the  right in  return  for the
                  premium  paid to assume a position in a futures  contract  and
                  obligates the seller to deliver such position.

                                    The  Funds'  use of  financial  futures  and
                  options   thereon  will  in  all  cases  be  consistent   with
                  applicable regulatory requirements and in particular the rules
                  and  regulations of the CFTC and will be entered into only for
                  bona  fide  hedging,   risk  management   (including  duration
                  management) or other portfolio management purposes. Typically,
                  maintaining  a futures  contract or selling an option  thereon
                  requires a Fund to deposit  with a financial  intermediary  as
                  security  for its  obligations  an  amount  of  cash or  other
                  specified assets (initial margin) which initially is typically
                  1% to 10% of the  face  amount  of the  contract  (but  may be
                  higher  in some  circumstances).  Additional  cash  or  assets
                  (variation margin) may be required to be deposited  thereafter
                  on a daily basis as the mark to market  value of the  contract
                  fluctuates.  The  purchase of an option on  financial  futures
                  involves  payment  of a premium  for the  option  without  any
                  further obligation on the part of the purchaser. If one of the
                  Funds  exercises an option on a futures  contract,  it will be
                  obligated to post  initial  margin (and  potential  subsequent
                  variation  margin) for the resulting  futures position just as
                  it would  for any  position.  Futures  contracts  and  options
                  thereon are  generally  settled by entering into an offsetting
                  transaction  but there can be no  assurance  that the position
                  can be offset prior to  settlement at an  advantageous  price,
                  nor that delivery will occur.

                                    Neither  Fund  will  enter  into  a  futures
                  contract or related option  (except for closing  transactions)
                  if,  immediately  thereafter,  the  sum of the  amount  of its
                  initial  margin and  premiums on open  futures  contracts  and
                  options  thereon  would  exceed 5% of that Fund's total assets
                  (taken at current  value);  however,  in the case of an option
                  that  is  in-the-money  at  the  time  of  the  purchase,  the
                  in-the-money  amount may be  excluded  in  calculating  the 5%
                  limitation.  The  segregation  requirements  with  respect  to
                  futures contracts and options thereon are described below.

                  Options on Securities Indices and Other Financial Indices. The
                  Funds  also may  purchase  and sell  call and put  options  on
                  securities indices and other financial indices and in so doing
                  can  achieve  many of the same  objectives  it  would  achieve
                  through  the  sale  or  purchase  of  options  on   individual
                  securities or other instruments. Options on securities indices
                  and other  financial  indices  are  similar  to  options  on a
                  security or other instrument except that, rather than settling
                  by physical delivery of the underlying instrument, they settle
                  by cash  settlement,  i.e.,  an option  on an index  gives the
                  holder the right to receive,  upon exercise of the option,  an
                  amount of cash if the  closing  level of the index  upon which
                  the option is based exceeds, in the case of a call, or is less
                  than,  in the case of a put, the exercise  price of the option
                  (except if, in the case of an OTC option, physical delivery is
                  specified).  This amount of cash is equal to the excess of the
                  closing  price of the  index  over the  exercise  price of the
                  option,  which also may be multiplied by a formula value.  The
                  seller of the option is  obligated,  in return for the premium
                  received, to make delivery of this amount. The gain or loss on
                  an  option  on an  index  depends  on price  movements  in the
                  instruments making up the market, market segment,  industry or
                  other composite on which the underlying index is based, rather
                  than price movements in individual securities,  as is the case
                  with respect to options on securities.

                  Currency  Transactions.  The  Funds  may  engage  in  currency
                  transactions  with  counterparties in order to hedge the value
                  of portfolio  holdings  denominated  in particular  currencies
                  against fluctuations in relative value.  Currency transactions
                  include forward currency  contracts,  exchange listed currency
                  futures,  exchange  listed and OTC options on currencies,  and
                  currency  swaps.  A  forward  currency   contract  involves  a
                  privately  negotiated  obligation  to  purchase  or sell (with
                  delivery  generally  required) a specific currency at a future
                  date,  which may be any fixed  number of days from the date of
                  the contract agreed upon by the parties, at a price set at the
                  time of the  contract.  A  currency  swap is an  agreement  to
                  exchange cash flows based on the notional difference among two
                  or more currencies and operates  similarly to an interest rate
                  swap,  which is  described  below.  The Funds  may enter  into
                  currency  transactions with counterparties which have received
                  (or the guarantors of the  obligations of which have received)
                  a credit rating of A-1 or P-1 by S&P or Moody's, respectively,
                  or that have an equivalent rating from an NRSRO or (except for
                  OTC  currency  options)  are  determined  to be of  equivalent
                  credit quality by the Adviser.

                                    The  Funds'  dealings  in  forward  currency
                  contracts  and other  currency  transactions  such as futures,
                  options,  options  on  futures  and  swaps  generally  will be
                  limited to hedging  involving either specific  transactions or
                  portfolio  positions.  Transaction  hedging is entering into a
                  currency  transaction  with  respect  to  specific  assets  or
                  liabilities  of  a  Fund,   which  will  generally   arise  in
                  connection   with  the  purchase  or  sale  of  its  portfolio
                  securities  or  the  receipt  of  income  therefrom.  Position
                  hedging is entering into a currency  transaction  with respect
                  to  portfolio  security  positions  denominated  or  generally
                  quoted in that currency.

                                    The Funds  generally  will not enter  into a
                  transaction to hedge currency  exposure to an extent  greater,
                  after netting all transactions intended wholly or partially to
                  offset other transactions, than the aggregate market value (at
                  the time of entering into the  transaction)  of the securities
                  held in its portfolio that are denominated or generally quoted
                  in or currently  convertible  into such  currency,  other than
                  with respect to proxy hedging as described below.

                                    The Funds may also cross-hedge currencies by
                  entering  into  transactions  to  purchase or sell one or more
                  currencies  that are expected to decline in value  relative to
                  other currencies to which the Funds have or in which the Funds
                  expect to have portfolio exposure.

                                    To   reduce   the    effect   of    currency
                  fluctuations on the value of existing or anticipated  holdings
                  of  portfolio  securities,  the Funds may also engage in proxy
                  hedging.  Proxy  hedging  is often used when the  currency  to
                  which a Fund's  portfolio  is exposed is difficult to hedge or
                  to  hedge  against  the U.S.  dollar.  Proxy  hedging  entails
                  entering  into a forward  contract  to sell a  currency  whose
                  changes in value are  generally  considered  to be linked to a
                  currency  or  currencies  in  which  some  or all of a  Fund's
                  portfolio  securities  are or are expected to be  denominated,
                  and to buy U.S. dollars.  The amount of the contract would not
                  exceed the value of the Fund's securities  denominated  linked
                  currencies.  For example,  if the Adviser  considers  that the
                  Austrian  schilling is linked to the German deutsche mark (the
                  "D-mark"),  a Fund holds securities  denominated in schillings
                  and the Adviser  believes  that the value of  schillings  will
                  decline against the U.S. dollar,  the Adviser may enter into a
                  contract to sell D-marks and buy U.S. dollars.

                  Risks of  Currency  Transactions.  Currency  transactions  are
                  subject  to risks  different  from  those  of other  portfolio
                  transactions.  Because currency control is of great importance
                  to the issuing  governments and influences  economic  planning
                  and  policy,  purchases  and  sales of  currency  and  related
                  instruments can be negatively  affected by government exchange
                  controls,    blockages,    and   manipulations   or   exchange
                  restrictions  imposed  by  governments.  These  can  result in
                  losses  to a  Fund  if it is  unable  to  deliver  or  receive
                  currency or funds in settlement of obligations  and could also
                  cause  hedges  it has  entered  into to be  rendered  useless,
                  resulting  in full  currency  exposure  as  well as  incurring
                  transaction costs.  Buyers and sellers of currency futures are
                  subject  to the same  risks  that  apply to the use of futures
                  generally.  Further, settlement of a currency futures contract
                  for the purchase of most currencies must occur at a bank based
                  in the issuing nation.  Trading options on currency futures is
                  relatively  new,  and the ability to  establish  and close out
                  positions on such options is subject to the  maintenance  of a
                  liquid  market  which may not  always be  available.  Currency
                  exchange  rates may  fluctuate  based on factors  extrinsic to
                  that country's  economy.  Currency  transactions can result in
                  losses to the Fund if the currency being hedged  fluctuates in
                  value to a degree or in a direction  that is not  anticipated.
                  Further,  there is the risk that the perceived linkage between
                  various  currencies  may not be  present or may not be present
                  during the  particular  time when a Fund is  engaging in proxy
                  hedging. If a Fund enters into a currency hedging transaction,
                  the Fund will comply with the asset  segregation  requirements
                  described below.

                  Short  Sales.  Each Fund may make  short  sales of  securities
                  traded on  domestic  or foreign  exchanges.  A short sale is a
                  transaction  in which a Fund sells a security  it does not own
                  in  anticipation  that the market price of that  security will
                  decline. The Fund may make short sales to hedge positions, for
                  duration and risk management,  in order to maintain  portfolio
                  flexibility or to enhance income or gain.

                                    When a Fund  makes  a  short  sale,  it must
                  borrow  the  security   sold  short  and  deliver  it  to  the
                  broker-dealer   through  which  it  made  the  short  sale  as
                  collateral  for its  obligation  to deliver the security  upon
                  conclusion  of the  sale.  The  Fund  may have to pay a fee to
                  borrow  particular  securities  and is often  obligated to pay
                  over any payments received on such borrowed securities.

                                    A Fund's  obligation to replace the borrowed
                  security  will be secured  by  collateral  deposited  with the
                  broker-dealer,  usually cash,  U.S.  government  securities or
                  other  high  grade  liquid  securities.  The Fund will also be
                  required to segregate similar collateral with its custodian to
                  the extent, if any, necessary so that the aggregate collateral
                  value is at all  times at least  equal to the  current  market
                  value of the security  sold short.  Depending on  arrangements
                  made  with  the  broker-dealer  from  which  it  borrowed  the
                  security  regarding  payment over any payments received by the
                  Fund on such  security,  the Fund may not receive any payments
                  (including  interest) on its  collateral  deposited  with such
                  broker-dealer.

                                    If the  price  of the  security  sold  short
                  increases  between the time of the short sale and the time the
                  Fund  replaces  the borrowed  security,  the Fund will incur a
                  loss; conversely, if the price declines, the Fund will realize
                  a gain. Any gain will be decreased, and any loss increased, by
                  the  transaction  costs described  above.  Although the Fund's
                  gain is  limited  to the  price at which it sold the  security
                  short, its potential loss is theoretically unlimited.

                  Combined  Transactions.  Each  Fund may  enter  into  multiple
                  transactions,   including   multiple   options   transactions,
                  multiple futures transactions,  multiple currency transactions
                  (including  forward currency  contracts) and multiple interest
                  rate  transactions  and any  combination of futures,  options,
                  currency   and   interest   rate   transactions   ("component"
                  transactions),  instead of a single Strategic Transaction,  as
                  part of a single or combined  strategy when, in the opinion of
                  the  Adviser,  it is in the best  interests of that Fund to do
                  so. A combined  transaction  will usually contain  elements of
                  risk that are present in each of its  component  transactions.
                  Although combined transactions are normally entered into based
                  on the Adviser's  judgment that the combined  strategies  will
                  reduce risk or otherwise more effectively  achieve the desired
                  portfolio management goal, it is possible that the combination
                  will instead increase such risks or hinder  achievement of the
                  portfolio management objective.

                  Swaps,   Caps,   Floors  and  Collars.   Among  the  Strategic
                  Transactions into which the Funds may enter are interest rate,
                  currency  and index swaps and the  purchase or sale of related
                  caps, floors and collars. The Funds expect to enter into these
                  transactions  primarily  to  preserve  a return or spread on a
                  particular investment or portion of its portfolio,  to protect
                  against  currency  fluctuations,   as  a  duration  management
                  technique  or to protect  against any increase in the price of
                  securities  the Funds  anticipate  purchasing at a later date.
                  Each Fund intends to use these  transactions as hedges and not
                  as  speculative  investments  and will not sell  interest rate
                  caps or  floors  where  it does  not own  securities  or other
                  instruments  providing  the  income  stream  the  Fund  may be
                  obligated to pay.  Interest rate swaps involve the exchange by
                  a Fund with another party of their  respective  commitments to
                  pay or receive  interest,  e.g.,  an exchange of floating rate
                  payments  for fixed rate  payments  with respect to a notional
                  amount  of  principal.  A  currency  swap is an  agreement  to
                  exchange  cash  flows  on a  notional  amount  of two or  more
                  currencies based on the relative value differential among them
                  and an index  swap is an  agreement  to swap  cash  flows on a
                  notional  amount  based  on  changes  in  the  values  of  the
                  reference  indices.   The  purchase  of  a  cap  entitles  the
                  purchaser to receive  payments on a notional  principal amount
                  from  the  party  selling  such  floor  to the  extent  that a
                  specified index falls below a  predetermined  interest rate or
                  amount.  A collar is a  combination  of a cap and a floor that
                  preserves a certain  return  within a  predetermined  range of
                  interest rates or values.

                                    The Funds will usually enter into swaps on a
                  net basis,  i.e., the two payment  streams are netted out in a
                  cash  settlement on the payment date or dates specified in the
                  instrument,  with a Fund receiving or paying,  as the case may
                  be, only the net amount of the two payments. Inasmuch as these
                  swaps,  caps,  floors and collars  are  entered  into for good
                  faith hedging purposes, the Adviser and the Funds believe such
                  obligations do not constitute senior securities under the 1940
                  Act and, accordingly,  will not treat them as being subject to
                  its borrowing  restrictions.  Neither Fund will enter into any
                  swap, cap, floor or collar transaction  unless, at the time of
                  entering into such transaction,  the unsecured  long-term debt
                  of the counterparty, combined with any credit enhancements, is
                  rated at least A by S&P or Moody's or has an equivalent rating
                  from an  NRSRO or is  determined  to be of  equivalent  credit
                  quality  by  the  Adviser.  If  there  is  a  default  by  the
                  counterparty,  the Fund may have contractual remedies pursuant
                  to the agreements related to the transaction.  The swap market
                  has grown substantially in recent years with a large number of
                  banks and  investment  banking firms acting both as principals
                  and as agents utilizing standardized swap documentation.  As a
                  result,  the swap market has become relatively  liquid.  Caps,
                  floors  and  collars  are more  recent  innovations  for which
                  standardized  documentation  has not yet been fully  developed
                  and, accordingly, they are less liquid than swaps.

                  Eurodollar  Instruments.  The  Funds may make  investments  in
                  instruments that are U.S. dollar-denominated futures contracts
                  or options  thereon  which are linked to the London  Interbank
                  Offered Rate ("LIBOR").  Eurodollar  futures  contracts enable
                  purchasers to obtain a fixed rate for the lending of funds and
                  sellers to obtain a fixed rate for borrowings. The Funds might
                  use Eurodollar  futures contracts and options thereon to hedge
                  against  changes in LIBOR,  to which many  interest rate swaps
                  and fixed income instruments are often linked.

                  Risks of  Strategic  Transactions  Outside the United  States.
                  When   conducted   outside   the  United   States,   Strategic
                  Transactions  may not be  regulated  as  rigorously  as in the
                  United  States,  may not  involve  a  clearing  mechanism  and
                  related   guarantees,   and  are   subject   to  the  risk  of
                  governmental  actions  affecting trading in, or the prices of,
                  foreign  securities,  currencies  and other  instruments.  The
                  value of such positions  also could be adversely  affected by:
                  (i)  other  complex  foreign  political,  legal  and  economic
                  factors;  (ii) delays in a Fund's ability to act upon economic
                  events occurring in foreign markets during  non-business hours
                  in the  United  States;  (iii)  the  imposition  of  different
                  exercise  and  settlement  terms  and  procedures  and  margin
                  requirements than in the United States; and (iv) lower trading
                  volume and liquidity.

                  Use of Segregated and Other Special  Accounts.  Many Strategic
                  Transactions, in addition to other requirements,  require that
                  the Funds  segregate  liquid  assets with its custodian to the
                  extent  the Funds'  obligations  are not  otherwise  "covered"
                  through  ownership  of  the  underlying  security,   financial
                  instrument or currency.  Liquid assets include equity and debt
                  securities  so  long  as  they  are  readily  marketable.  The
                  Adviser,  subject to oversight by the Board of  Directors,  is
                  responsible  for  determining  and monitoring the liquidity of
                  securities  in  segregated  accounts  on  a  daily  basis.  In
                  general, either the full amount of any obligation by a Fund to
                  pay or  deliver  securities  or assets  must be covered at all
                  times by the securities,  instruments or currency  required to
                  be delivered, or, subject to any regulatory  restrictions,  an
                  amount  of cash or  liquid  securities  at least  equal to the
                  current amount of the obligation  must be segregated  with the
                  custodian.  The segregated account may consist of notations on
                  the books of the custodian.  The  segregated  assets cannot be
                  sold or transferred  unless  equivalent assets are substituted
                  in their place or it is no longer necessary to segregate them.
                  For example,  a call option written by a Fund will require the
                  Fund to hold the securities subject to the call (or securities
                  convertible  into the  needed  securities  without  additional
                  consideration) or to segregate liquid securities sufficient to
                  purchase and deliver the  securities if the call is exercised.
                  A call option sold by a Fund on an index will require the Fund
                  to own portfolio  securities which correlate with the index or
                  to  segregate  liquid  assets equal to the excess of the index
                  value over the exercise price on a current basis. A put option
                  written by a Fund requires the Fund to segregate liquid assets
                  equal to the exercise price.

                                    A forward currency  contract which obligates
                  the Fund to buy or sell  currency will  generally  require the
                  Fund  to  hold  an  amount  of  that  currency  or  securities
                  denominated in that currency  equal to the Fund's  obligations
                  or to  segregate  liquid  assets  equal to the  amount  of the
                  Fund's  obligations  unless the  contract  is entered  into to
                  facilitate the purchase or sale of a security denominated in a
                  particular  currency or for hedging  currency  risks of one or
                  more of a Fund's portfolio investments.

                                    OTC  options  entered  into  by  the  Funds,
                  including those on securities, currency, financial instruments
                  or indices and OCC issued and exchange  listed  options,  will
                  generally provide for cash settlement.  As a result,  when one
                  of the  Funds  sells  these  instruments,  the Fund  will only
                  segregate  an  amount  of  assets  equal  to its  accrued  net
                  obligations,  as  there  is  no  requirement  for  payment  or
                  delivery of amounts in excess of the net amount. These amounts
                  will  equal  100% of the  exercise  price in the case of a non
                  cash-settled  put, the same as an OCC guaranteed listed option
                  sold by a Fund, or the in-the-money  amount plus any sell-back
                  formula amount in the case of a  cash-settled  put or call. In
                  addition,  when a Fund  sells a call  option  on an index at a
                  time when the in-the-money  amount exceeds the exercise price,
                  the Fund will segregate, until the option expires or is closed
                  out, cash or cash  equivalents  equal in value to such excess.
                  OCC issued and exchange listed options sold by the Funds other
                  than those above generally settle with physical delivery,  and
                  the Seller  will  segregate  an amount of assets  equal to the
                  full value of the option.  OTC options  settling with physical
                  delivery,  or with an election of either physical  delivery or
                  cash  settlement  will be  treated  the same as other  options
                  settling with physical delivery.

                                    In the  case  of a  futures  contract  or an
                  option  thereon,  a  Fund  must  deposit  initial  margin  and
                  possible  daily  variation  margin in addition to  segregating
                  assets  sufficient  to meet  its  obligation  to  purchase  or
                  provide securities or currencies, or to pay the amount owed at
                  the expiration of an index-based futures contract. Such assets
                  may consist of cash, cash  equivalents,  liquid debt or equity
                  securities or other acceptable assets.

                                    With respect to swaps, the Funds will accrue
                  the net amount of the excess,  if any, of its obligations over
                  its  entitlements  with  respect to each swap on a daily basis
                  and will  segregate  an amount  of cash or  liquid  securities
                  having a value equal to the accrued excess.  Caps, floors, and
                  collars  require  segregation  of assets with a value equal to
                  the Fund's net obligation, if any.

                                    Strategic  Transactions  may be  covered  by
                  other  means  when  consistent   with  applicable   regulatory
                  policies.  In the  case  of  portfolio  securities  which  are
                  loaned,  collateral  values of the loaned  securities  will be
                  continuously  maintained  at not less than 100% by "marking to
                  market"  daily.   A  Fund  may  also  enter  into   offsetting
                  transactions so that its combined  position,  coupled with any
                  segregated  assets,  equals its net outstanding  obligation in
                  related  options and Strategic  Transactions.  For example,  a
                  Fund could  purchase a put option if the strike  price of that
                  option is the same or higher  than the  strike  price of a put
                  option  sold by the Fund.  Moreover,  instead  of  segregating
                  assets if the Fund  held a futures  or  forward  contract,  it
                  could  purchase  a put  option on the same  futures or forward
                  contract  with a strike price as high or higher than the price
                  of the contract held. Other Strategic Transactions may also be
                  offset  in   combinations.   If  the  offsetting   transaction
                  terminates at the time of or after the primary  transaction no
                  segregation  is required,  but if it terminates  prior to such
                  time,  assets equal to any remaining  obligation would need to
                  be segregated.

                                    The Funds'  activities  involving  Strategic
                  Transactions  may be limited by the requirements of Subchapter
                  M  of  the  Internal  Revenue  Code  for  qualification  as  a
                  regulated investment company (see "TAXES").

                  Borrowing for Strategic Transactions

                                    Both  Funds  may  borrow  money  in order to
                  purchase  liquid high grade assets for  segregation  or margin
                  purposes in connection with Strategic  Transactions.  Although
                  neither  Fund  expects  that the  interest  rate  differential
                  between its borrowing  costs and the yield on such  securities
                  will be  significant,  such  borrowings  could  result  in net
                  interest expense for the Fund and also expose the Fund to risk
                  of loss  from loss of market  value  due to  adverse  interest
                  rate, credit quality or currency exchange rate changes.

                  Investment Restrictions

                                    The policies set forth below are fundamental
                  policies of the Global Fund and the American  Fund and may not
                  be  changed  with  respect  to a Fund  without  approval  of a
                  majority of the outstanding voting securities of that Fund. As
                  used in this  Statement of Additional  Information a "majority
                  of the  outstanding  voting  securities  of a Fund"  means the
                  lesser of (1) 67% or more of the voting securities  present at
                  such  meeting,  if  the  holders  of  more  than  50%  of  the
                  outstanding  voting  securities  of the Funds are  present  or
                  represented by proxy;  or (2) more than 50% of the outstanding
                  voting securities of the Funds.

                                    As a matter of fundamental  policy,  neither
Fund may:

                           1.       borrow   money,   except  to  obtain  liquid
                                    securities   for  use  in  connection   with
                                    Strategic   Transactions  conducted  by  the
                                    Funds  in  connection   with  its  portfolio
                                    activities  or as a  temporary  measure  for
                                    extraordinary  or  emergency  purposes,   in
                                    connection    with    the    clearance    of
                                    transactions or to pay for  redemptions,  in
                                    each  case   subject  to   applicable   U.S.
                                    government limitations;

                           2.       purchase  or sell real  estate  (other  than
                                    securities  representing  interests  in real
                                    estate or fixed income obligations  directly
                                    or  indirectly  secured  by real  estate and
                                    other  than  real   estate   acquired   upon
                                    exercise of rights under such securities) or
                                    purchase  or sell  physical  commodities  or
                                    contracts  relating to physical  commodities
                                    (other  than  currencies  and  specie to the
                                    extent  they  may  be  considered   physical
                                    commodities)  or oil, gas or mineral  leases
                                    or exploration programs;

                           3.       act as underwriter  of securities  issued by
                                    others,  except to the extent that it may be
                                    deemed an underwriter in connection with the
                                    disposition  of portfolio  securities of the
                                    Fund;

                           4.       make  loans to  other  persons,  except  (a)
                                    loans of  portfolio  securities,  and (b) to
                                    the  extent   the  entry   into   repurchase
                                    agreements   and   the   purchase   of  debt
                                    obligations may be deemed to be loans;

                           5.       issue   senior    securities,    except   as
                                    appropriate to evidence borrowings of money,
                                    and  except  that   Strategic   Transactions
                                    conducted by the Fund in connection with its
                                    portfolio  activities  are not considered to
                                    involve the  issuance  of senior  securities
                                    for purposes of this restriction;

                           6.       purchase  any  securities  which would cause
                                    more  than  25% of the  market  value of its
                                    total assets at the time of such purchase to
                                    be invested in the same industry; or

                           7.       with  respect  to 75% of  its  total  assets
                                    taken at market  value,  purchase  more than
                                    10%  of the  voting  securities  of any  one
                                    issuer or  invest  more than 5% of the value
                                    of its total assets in the securities of any
                                    one issuer,  except in each case  securities
                                    issued or guaranteed by the U.S. Government,
                                    its   agencies  or   instrumentalities   and
                                    securities of other investment companies.

                  In addition,  the Board of Directors has adopted the following
                  policy  (among   others)  which  may  be  changed   without  a
                  shareholder vote: neither Fund may invest more than 15% of its
                  net assets in  securities  which are not  readily  marketable.
                  These  include  securities  subject  to  contractual  or legal
                  resale  restrictions  in their primary trading market (such as
                  OTC  options,  including  floors,  caps,  collars  and  swaps,
                  securities  of private  companies and  longer-term  repurchase
                  agreements).

                  If a percentage  restriction  on investment or  utilization of
                  assets as set forth under "Investment  Restrictions"  above is
                  adhered to at the time an  investment  is made, a later change
                  in percentage resulting from changes in the value or the total
                  cost of the Funds'  assets will not be  considered a violation
                  of the restriction.

                  Share Certificates

                                    Due  to the  desire  of the  Funds  to  keep
                  purchase  and   redemption   of  shares   simple,   generally,
                  certificates  will not be  issued  to  indicate  ownership  in
                  either of the Funds.


                             PERFORMANCE INFORMATION

                                    From time to time,  each Fund may  calculate
                  its  performances  for  inclusion  in  advertisements,   sales
                  literature   or  reports  to   shareholders   or   prospective
                  investors.  These  performance  figures are  calculated by the
                  Funds in the manner described in the section below.

                  Average Annual Total Return

                  Average  Annual  Total Return is the average  annual  compound
                  rate of return  for the  periods of one year and the life of a
                  Fund, each ended on the last day of a recent calendar quarter.
                  Average annual total return quotations  reflect changes in the
                  price of a Fund's  shares and assume  that all  dividends  and
                  capital gains distributions during the respective periods were
                  reinvested in the Fund's  shares.  Average annual total return
                  is calculated by computing the average  annual  compound rates
                  of  return of a  hypothetical  investment  over such  periods,
                  according  to the  following  formula  (average  annual  total
                  return is then expressed as a percentage):


                               T = (ERV/P)1/n - 1

                           Where:

                   P         =      a hypothetical initial investment of $1,000

                   T         =      average annual total return

                   n         =      number of years

                 ERV              = ending  redeemable  value:  ERV is
                                    the   value,   at  the  end  of  the
                                    applicable period, of a hypothetical
                                    $1,000   investment   made   at  the
                                    beginning of the applicable period.

                  Cumulative Total Return

                  Cumulative  Total Return is the cumulative rate of return on a
                  hypothetical  initial  investment  of $1,000  for a  specified
                  period.  Cumulative total return quotations reflect changes in
                  the price of the Fund's  shares and assume that all  dividends
                  and  capital  gains  distributions   during  the  period  were
                  reinvested in the Fund's  shares.  Cumulative  total return is
                  calculated  by computing the  cumulative  rates of return of a
                  hypothetical  investment  over such periods,  according to the
                  following  formula  (cumulative total return is then expressed
                  as a percentage):

                                 C = (ERV/P) - 1

                           Where:

                  C         =      cumulative total return

                  P         =      a hypothetical initial investment of $1,000

                 ERV              = ending  redeemable  value:  ERV is
                                    the   value,   at  the  end  of  the
                                    applicable period, of a hypothetical
                                    $1,000   investment   made   at  the
                                    beginning of the applicable period.

                  Total Return

                  Total  Return  is the rate of return  on an  investment  for a
                  specified  period  of time  calculated  in the same  manner as
                  cumulative total return.

                  Capital Change

                  Capital  Change  measures  the return  from  invested  capital
                  including  reinvested  capital  gains  distributions.  Capital
                  change does not include the reinvestment of income dividends.

                                    Quotations  of  a  Fund's   performance  are
                  historical, show the performance of a hypothetical investment,
                  and  are not  intended  to  indicate  future  performance.  An
                  investor's shares when redeemed may be worth more or less than
                  their original cost.  Performance of each Fund will vary based
                  on  changes in market  conditions  and the level of the Fund's
                  expenses.

                  Comparison of Portfolio Performance

                                    Comparison  of the  quoted  non-standardized
                  performance   of   various   investments   is  valid  only  if
                  performance   is   calculated   in  the  same  manner  or  the
                  differences  are  understood.  Investors  should  consider the
                  methods  used to  calculate  performance  when  comparing  the
                  performance  of  either  Fund  with the  performance  of other
                  investment companies or other types of investments.

                                    In   connection   with   communicating   its
                  performance  to current or  prospective  shareholders,  either
                  Fund also may compare these figures to unmanaged indices which
                  may assume reinvestment of dividends or interest but generally
                  do not reflect deductions for operational,  administrative and
                  management costs.

                                    Because  normally  most of the Global Fund's
                  investments  are  denominated  in  foreign   currencies,   the
                  strength  or  weakness  of  the  U.S.   dollar  against  these
                  currencies   will  account  for  part  of  the  Global  Fund's
                  investment performance except to the extent hedged to the U.S.
                  dollar.  Historical  information  on the  value of the  dollar
                  versus  foreign  currencies  may be used  from time to time in
                  advertisements  concerning  the Global Fund.  Such  historical
                  information is not indicative of future performance.

                                    From  time  to  time,  in  advertising   and
                  marketing literature,  a Fund's performance may be compared to
                  the  performance  of broad groups of mutual funds with similar
                  investment  goals,  as tracked by  independent  organizations.
                  When these  organizations'  tracking  results are used, a Fund
                  will be compared to the appropriate fund category, that is, by
                  fund objective and portfolio  holdings,  or to the appropriate
                  volatility grouping, where volatility is a measure of a fund's
                  risk.

                                    Since  the   assets  in  funds  are   always
                  changing,  either  Fund may be ranked  within  one  asset-size
                  class  at one  time and in  another  asset-size  class at some
                  other time. In addition,  the independent  organization chosen
                  to rank a Fund in fund literature may change from time to time
                  depending  upon the  basis of the  independent  organization's
                  categorizations  of  mutual  funds,   changes  in  the  Fund's
                  investment policies and investments, the Fund's asset size and
                  other factors deemed relevant. Footnotes in advertisements and
                  other  marketing  literature  will  include  the  organization
                  issuing the  ranking,  time period and  asset-size  class,  as
                  applicable, for the ranking in question.

                                    Evaluations of a Fund's  performance made by
                  independent   sources  may  also  be  used  in  advertisements
                  concerning  that Fund,  including  reprints of, or  selections
                  from, editorials or articles about the Fund.

                             OPERATION OF THE FUNDS

                  Structure of the Funds

                                    Both the Global Fund and the  American  Fund
                  are  separate  series of Tweedy,  Browne Fund Inc., a Maryland
                  corporation organized on January 28, 1993.

                                    Costs  incurred  by each Fund in  connection
                  with  the  organization   and  initial   registration  of  the
                  corporation  and each Fund will be amortized  over a five year
                  period  beginning at the  commencement of the operation of the
                  applicable Fund.

                                    The   authorized   capital   stock   of  the
                  Corporation  consists of one billion  shares with  $0.0001 par
                  value, 600 million shares of which are allocated to the Global
                  Fund and 400  million  shares  of which are  allocated  to the
                  American  Fund.  Each share has equal voting rights as to each
                  other  share  of  that  series  as to  voting  for  directors,
                  redemption,  dividends and liquidation.  Shareholders have one
                  vote for each share held.  The Directors have the authority to
                  issue  additional  series  of  shares  and  to  designate  the
                  relative  rights  and  preferences  as between  the  different
                  series.  All shares issued and  outstanding are fully paid and
                  non-assessable,  transferable,  and  redeemable  at net  asset
                  value  at  the  option  of the  shareholder.  Shares  have  no
                  preemptive or conversion rights.

                                    The  shares   have   non-cumulative   voting
                  rights,  which  means that the holders of more than 50% of the
                  shares  voting for the election of Directors can elect 100% of
                  the directors if they choose to do so, and, in such event, the
                  holders of the  remaining  less than 50% of the shares  voting
                  for the  election of  Directors  will not be able to elect any
                  person or persons to the Board of Directors.

                                    Maryland   corporate  law  provides  that  a
                  Director  of the  Corporation  shall not be liable for actions
                  taken in good faith, in a manner he or she reasonably believes
                  to be in the best  interests of the  Corporation  and with the
                  care that an  ordinarily  prudent  person  in a like  position
                  would  use  under  similar  circumstances.  In  so  acting,  a
                  Director  shall be fully  protected  in  relying in good faith
                  upon the records of the  Corporation  and upon reports made to
                  the  Corporation  by  persons  selected  in good  faith by the
                  Directors  as  qualified  to make such  reports.  The  By-Laws
                  provide that the  Corporation  will  indemnify  Directors  and
                  Officers of the Corporation  against  liabilities and expenses
                  reasonably  incurred in  connection  with  litigation in which
                  they  may be  involved  because  of their  positions  with the
                  Corporation,  to the  fullest  extent  permitted  by  Maryland
                  corporate law as amended from time to time.  However,  nothing
                  in the Articles of  Incorporation  or the By-Laws  protects or
                  indemnifies  a Director or officer  against any  liability  to
                  which he or she  would  otherwise  be  subject  by  reason  of
                  willful  misfeasance,  bad faith, gross negligence or reckless
                  disregard of the duties  involved in the conduct of his or her
                  office.

                  Investment Adviser

                                    Tweedy,   Browne   Company   LLC   acts   as
                  investment adviser (the "Adviser") to both the Global Fund and
                  the  American  Fund.  The  Adviser  is  registered   with  the
                  Securities   and  Exchange   Commission   (the  "SEC")  as  an
                  investment  adviser and as a broker/dealer  and is a member of
                  the National Association of Securities Dealers.

Tweedy,  Browne was founded in 1920 and began  managing money for the account of
persons other than its  principals and their  families in 1968.  Tweedy,  Browne
began investing in foreign  securities in 1983.  Tweedy,  Browne is owned by its
Managing  Directors,  Christopher H. Browne,  William H. Browne, John D. Spears,
Thomas H. Shrager and Robert Q. Wyckoff,  Jr., and a wholly-owned  subsidiary of
Affiliated  Managers  Group,  Inc.  ("AMG"),  which owns a majority  interest in
Tweedy,  Browne.  Messrs. Browne are brothers.  The Management Committee,  which
consists of Messrs.  Christopher and William Browne and John D. Spears,  manages
the  day-to-day  operations  of  Tweedy,  Browne  and the  Funds  and  makes all
investment  management  decisions.  Neither AMG nor its  subsidiary  manages the
day-to-day operations of, nor participates in the investment process at, Tweedy,
Browne.

                                    Certain  investments  may be appropriate for
                  one or both of the Funds and also for other clients advised by
                  the  Adviser.  Investment  decisions  for each  Fund and other
                  clients  are made with a view to  achieving  their  respective
                  investment  objectives and after consideration of such factors
                  as their current holdings, availability of cash for investment
                  and the size of their  investments  generally.  Frequently,  a
                  particular  security may be bought or sold for only one client
                  or in different  amounts and at different  times for more than
                  one but less than all clients. Likewise, a particular security
                  may be bought for one or more  clients  when one or more other
                  clients are selling the  security.  In addition,  purchases or
                  sales of the same security may be made for two or more clients
                  on the same day.  In such  event,  such  transactions  will be
                  allocated  among  the  clients  in a  manner  believed  by the
                  Adviser to be equitable to each. In some cases, this procedure
                  could  have an  adverse  effect  on the price or amount of the
                  securities  purchased  or sold by a Fund.  Purchase  and  sale
                  orders  for the  Funds  may be  combined  with  those of other
                  clients of the Adviser in the interest of most  favorable  net
                  results to a particular Fund.

                                    The Adviser  renders  services to the Global
                  Fund and the American  Fund  pursuant to  Investment  Advisory
                  Agreements  dated as of  October  9, 1997 (the  "Agreements").
                  Each  Agreement  will remain in effect for an initial two year
                  term  and  thereafter,  from  year to  year  upon  the  annual
                  approval by the vote of a majority of those  Directors who are
                  not parties to such  Agreement  or  interested  persons of the
                  Adviser or the Corporation, cast in person at a meeting called
                  for the purpose of voting on such approval, and either by vote
                  of the  Corporation's  Directors or of the outstanding  voting
                  securities  of the Fund.  Each  Agreement may be terminated at
                  any time  without  payment of penalty by either party on sixty
                  days written notice, and automatically terminates in the event
                  of its assignment.

                                    Under both Agreements, the Adviser regularly
                  provides the Funds with continuing  investment  management for
                  the Funds'  portfolios  consistent with the Funds'  investment
                  objectives,  policies and  restrictions  and  determines  what
                  securities shall be purchased for the portfolios of the Funds,
                  what portfolio  securities shall be held or sold by the Funds,
                  and  what   portion  of  the  Funds'   assets  shall  be  held
                  uninvested,   subject   always  to  the   provisions   of  the
                  Corporation's  Articles of Incorporation and By-Laws, the 1940
                  Act and the  Internal  Revenue  Code of 1986 and to the Funds'
                  investment objectives, policies and restrictions, and subject,
                  further, to such policies and instructions as the Directors of
                  the Corporation may from time to time establish.

                                    Under  both  Agreements,  the  Adviser  also
                  renders  significant  administrative  services (not  otherwise
                  provided by third parties) necessary for the Funds' operations
                  as open-end investment  companies  including,  but not limited
                  to:  preparing  reports  and  notices  to  the  Directors  and
                  shareholders,     supervising,     negotiating     contractual
                  arrangements with, and monitoring various  third-party service
                  providers  to the Funds  (such as the Funds'  transfer  agent,
                  pricing agents, custodians, accountants and others); preparing
                  and making filings with the  Commission  and other  regulatory
                  agencies;  assisting  in the  preparation  and  filing  of the
                  Funds'  federal,  state and local tax  returns;  assisting  in
                  preparing  and filing the Funds'  federal  excise tax returns;
                  assisting   with  investor  and  public   relations   matters;
                  monitoring the valuation of securities and the  calculation of
                  net asset value;  monitoring the registration of shares of the
                  Funds  under  applicable  federal and state  securities  laws;
                  maintaining  the  Funds'  books  and  records;   assisting  in
                  establishing  accounting  policies of the Funds;  assisting in
                  the  resolution of accounting  and legal issues;  establishing
                  and monitoring the Funds'  operating  budgets;  processing the
                  payment  of the  Funds'  bills;  assisting  the Funds in,  and
                  otherwise  arranging  for,  the payment of  distributions  and
                  dividends and otherwise  assisting each Fund in the conduct of
                  its  business,  subject to the  direction  and  control of the
                  Directors.

                                    Subject to the ability of the  Adviser  upon
                  approval  of  the  Board  to  obtain   reimbursement  for  the
                  administrative time spent on the Funds' operations (other than
                  investment advisory matters) by employees of the Adviser,  the
                  Adviser pays the  compensation  and expenses of all directors,
                  officers and executive employees of the Corporation affiliated
                  with the Adviser and makes  available,  without expense to the
                  Funds, the services of such directors,  officers and employees
                  as may duly be elected  officers,  subject to their individual
                  consent to serve and to any  limitations  imposed by law,  and
                  provides the Funds' office spaces and facilities.

                                    For  the   Adviser's   investment   advisory
                  services to the Global Fund and the American Fund, the Adviser
                  is  entitled  to  receive an annual fee equal to 1.25% of each
                  Fund's average daily net assets. The fee is payable monthly in
                  arrears,  provided  that each  Fund  will  make  such  interim
                  payments as may be  requested by the Adviser not to exceed 75%
                  of the  amount  of the fee then  accrued  on the books of such
                  Fund and unpaid.

                                    Under   the   Agreements,   each   Fund   is
                  responsible   for  all  of  its   other   expenses   including
                  organization   expenses;   fees  and   expenses   incurred  in
                  connection    with    membership   in    investment    company
                  organizations;   broker's  commissions;  legal,  auditing  and
                  accounting  expenses;  taxes and governmental  fees; net asset
                  valuation;  the fees and expenses of the transfer  agent;  the
                  cost of preparing  share  certificates  or any other expenses,
                  including clerical expenses of issue, redemption or repurchase
                  of shares of capital  stock;  the expenses of and the fees for
                  registering  or qualifying  securities  for sale; the fees and
                  expenses of the Directors,  officers and employees who are not
                  affiliated  with the  Adviser  and,  to the  extent  described
                  above,  employees  of the  Adviser;  the cost of printing  and
                  distributing reports and notices to shareholders; and the fees
                  and  disbursements of custodians.  The Corporation may arrange
                  to have third  parties  assume all or part of the  expenses of
                  sale,  underwriting  and  distribution of shares of the Funds.
                  Each Fund is also  responsible  for its  expenses  incurred in
                  connection  with  litigation,  proceedings  and claims and the
                  legal  obligation it may have to indemnify the Adviser and its
                  Directors and officers with respect thereto.

                                    Each   Agreement   also  provides  that  the
                  applicable Fund and the Corporation may use any name utilizing
                  or derived from the name "Tweedy,  Browne" only as long as the
                  Agreement  or any  extension,  renewal  or  amendment  thereof
                  remains in effect.

                                    Each  Agreement  provides  that the  Adviser
                  shall not be liable  for any error of  judgment  or mistake of
                  law or for any  loss  suffered  by a Fund in  connection  with
                  matters  to  which  the  Agreement  relates,   except  a  loss
                  resulting  from  willful  misfeasance,   bad  faith  or  gross
                  negligence  on the part of the Adviser in the  performance  of
                  its duties or from  reckless  disregard  by the Adviser of its
                  obligations and duties under the Agreement and indemnifies the
                  Adviser and its employees,  officers and partners  against any
                  cost or expense in any  circumstance  in which the  Adviser is
                  not liable to the Fund.

                                    Prior to  October  9,  1997  Tweedy,  Browne
                  Company L.P.  was the Funds'  investment  adviser  pursuant to
                  investment advisory agreements dated June 2, 1993 and December
                  8, 1993 for the Global Fund and American  Fund,  respectively.
                  Tweedy,   Browne  Company  L.P.,  as  investment  adviser  was
                  entitled  to  receive  an  annual  fee  equal to 1.25% of each
                  Fund's average daily net assets.

                                    For the fiscal  years ended March 31,  1997,
                  March 31, 1996 and March 31,  1995,  the Global Fund  incurred
                  $14,318,034,  $9,864,278  and  $6,221,404,   respectively,  in
                  investment advisory fees.

                                    For the fiscal  years ended March 31,  1997,
                  March 31, 1996 and March 31, 1995,  the American Fund incurred
                  $2,892,275,   $1,518,122   and  $321,535,   respectively,   in
                  investment  advisory fees after voluntary waivers of $284,262,
                  $192,301 and $61,245, respectively.

                                    Officers  and  employees of the Adviser from
                  time  to  time  may  have  transactions  with  various  banks,
                  including  the Funds'  custodian  banks.  It is the  Adviser's
                  opinion that the terms and  conditions  of those  transactions
                  which  have  occurred  were  not  influenced  by  existing  or
                  potential custodial or other Fund relationships.

                                    None of the  Directors  or officers may have
                  dealings  with the Funds as principals in the purchase or sale
                  of securities,  except as individual subscribers or holders of
                  shares of the Funds.

                  Administrator

                                    First Data  Investor  Services  Group,  Inc.
                  (the  "Administrator"  or  "FDISG")  provides   administrative
                  services  for the  Global  Fund for a fee equal to .09% of the
                  Global  Fund's  average  daily net assets on an annual  basis,
                  subject  to  specified  minimum  fee  levels  and  subject  to
                  reductions  as low as .03% on  average  assets in excess of $1
                  billion.  For the fiscal year ended March 31, 1997, the Global
                  Fund  incurred  $1,313,340  in  administration  fees  after  a
                  voluntary waiver of $84,934.  For the fiscal years ended March
                  31,  1996  and  March  31,  1995,  the  Global  Fund  incurred
                  $1,116,971 and $758,219, respectively, in administration fees.

                                    Prior to February 15, 1997, the Company paid
                  FDISG an administrative fee equal to .12% of the Global Fund's
                  average  daily  net  assets  on an annual  basis,  subject  to
                  specified  minimum fee levels and subject to reductions as low
                  as .08% on average assets in excess of $500 million.

                                    The     Administrator      also     provides
                  administrative  services for the American Fund for a fee equal
                  to .09% of the American  Fund's average daily net assets on an
                  annual  basis,  subject to  specified  minimum  fee levels and
                  subject  to  reductions  as low as .03% on  average  assets in
                  excess of $1  billion.  For the fiscal  year  ended  March 31,
                  1997,  the American Fund incurred  $296,867 in  administration
                  fees,  after voluntary  waiver of $32,914 for the period April
                  1, 1996  through  February 14, 1997 and $21,979 for the period
                  February 15, 1997 through March 31, 1997. For the fiscal years
                  ended March 31, 1996 and March 31,  1995,  the  American  Fund
                  incurred  $156,669  (after  voluntary  waiver of $54,000)  and
                  $51,904, respectively, in administration fees.

                                    Prior to February 15, 1997, the Company paid
                  FDISG an  administrative  fee  equal  to .10% of the  American
                  Fund's average daily net assets on an annual basis, subject to
                  specified  minimum fee levels and subject to reductions as low
                  as .06% on average assets in excess of $500 million.

                                    Under the Administration  Agreement for each
                  Fund,  the   Administrator   is  required  to  provide  office
                  facilities,   clerical,  legal  and  administrative  services,
                  accounting and record keeping,  internal  auditing,  valuing a
                  Fund's  assets,   preparing  SEC  and   shareholder   reports,
                  preparing, signing and filing tax returns, monitoring 1940 Act
                  compliance and providing  other mutually  agreeable  services.
                  Subject to certain  conditions,  the Administration  Agreement
                  has a  term  of  three  years  until  February  15,  2000  and
                  thereafter shall  automatically  renew for successive terms of
                  one year unless terminated and is terminable on 60 days notice
                  by either party.

                  Directors and Executive Officers

                                    The Directors and executive  officers of the
                  Corporation,  together with  information as to their principal
                  business  occupations  during  the past  five  years are shown
                  below.  Each  Director  who is an  "interested  person" of the
                  Corporation, as defined in the Investment Company Act of 1940,
                  as amended, is indicated by an asterisk.

<TABLE>
<CAPTION>


<S>                 <C>                              <C>                          <C>    
                    Name and Address                 Position with Corporation    Principal Occupation**
                    -------------------------------- ---------------------------- -------------------------------------

                    Bruce A. Beal, Age 61            Director                     Partner and Officer of various real
                    The Beal Companies                                            estate development and investment
                    177 Milk Street                                               companies.  Real estate consultant.
                    Boston, MA 02109

                    Christopher H. Browne*,          President, Director          Managing Director of Investment
                    Age 51                                                        Adviser and Distributor

                    Arthur Lazar, Age 85             Director                     President of Lazar Brokerage
                    Lazar Brokerage                                               (insurance brokerage)
                    355 Lexington Avenue
                    New York, NY 10017

                    Richard Salomon, Age 50          Director                     Partner in Christy & Viener
                    Christy & Viener                                              (law firm)
                    620 5th Avenue
                    New York, NY 10020

                    William H. Browne*,              Treasurer                    Managing Director of Investment
                    Age 52                                                        Adviser and Distributor

                    M. Gervase Rosenberger,          Secretary                    General Counsel for Investment
                    Age 46                                                        Adviser and Distributor

                    John D. Spears, Age 49           Vice President               General Partner of Investment
                                                                                  Adviser and Distributor
<FN>

                  *   Mr. Christopher Browne is considered by the Corporation to
                      be a Director who is an "interested person" of the Adviser
                      or of the  Corporation  (within  the  meaning  of the 1940
                      Act).
                  **  Unless  otherwise  stated,  all the Directors and Officers
                      have been associated with their  respective  companies for
                      more than five years.
</FN>
</TABLE>



                           Except as stated,  the address of each such person is
                  the same as the  Adviser's.  Each of the  Directors who is not
                  affiliated with the Adviser will be paid by the Corporation on
                  behalf of the Funds.  Effective  October 1, 1997 each of these
                  unaffiliated  Directors  receives an annual  Director's fee of
                  $4,000  and  fees  of  $1,000  for  attending  each  Directors
                  meeting.  Prior to October 1, 1997 each unaffiliated  Director
                  received an annual  Director's  fee of $2,000 and fees of $500
                  for each Directors Meeting attended.  The officers are paid by
                  the Adviser or the Administrator.


                                    The  following   table  sets  forth  certain
                  information  regarding the  compensation of the  Corporation's
                  Directors  for the  fiscal  year  ended  March  31,  1997.  No
                  executive officer or person affiliated with the Funds received
                  compensation  from the Funds. No Director  receives pension or
                  retirement benefits from the Funds.

<TABLE>
<CAPTION>
                               COMPENSATION TABLE

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

                                                                   TOTAL COMPENSATION
                                                                  FROM THE CORPORATION
                                                                   AND COMPLEX PAID TO
                                                 AGGREGATE              DIRECTORS
                                             COMPENSATION FROM
                      NAME OF PERSON          THE CORPORATION
                       AND POSITION
                  Christopher H. Browne             $0                     $0
                  Chairman of the Board
                      and President

                      Bruce A. Beal               $4,000                 $4,000
                         Director



                                                                   TOTAL COMPENSATION
                                                                  FROM THE CORPORATION
                                                                   AND COMPLEX PAID TO
                                                 AGGREGATE              DIRECTORS
                                             COMPENSATION FROM
                      NAME OF PERSON          THE CORPORATION
                       AND POSITION
                       Arthur Lazar               $4,000                 $4,000
                         Director

                   Daniel J. Loventhal            $4,000                 $4,000
                         Director

                     Richard Salomon              $4,000                 $4,000
                         Director
</TABLE>

                  Control Persons and Principal Holders of Securities

                                    As of March 5, 1998, the following persons
                  owned 5% or more of the outstanding  shares of the Global Fund
                  and the American Fund:

                           to be updated

<TABLE>
                                                                                
<CAPTION>
<S>                <C>                                       <C>                                <C> 
                                                                                                    Percent
                                                                                                  of Total Shares
                             Fund Name                          Name and Address               Outstanding
                   Tweedy, Browne Global Value Fund          Charles Schwab & Co., Inc.                23.5%
                                                             101 Montgomery Street
                                                             San Francisco, CA  94104
                   Tweedy, Browne Global Value Fund          Donaldson Lufkin & Jenrette                5.4%
                                                             P.O. Box 2052
                                                             Jersey City, NJ  07303
                   Tweedy, Browne Global Value Fund          National Financial Services Corp          8.2%
                                  P.O. Box 3908
                                                             Church Street Station
                               New York, NY 10008
                   Tweedy, Browne American Value Fund        National Financial Services Corp          23.2%
                                  P.O. Box 3908
                                                             Church Street Station
                               New York, NY 10008
                   Tweedy, Browne American Value Fund        Charles Schwab & Co., Inc.                21.97
                                                             101 Montgomery Street
                                                             San Francisco, CA  94104
                   Tweedy, Browne American Value Fund        Donaldson Lufkin & Janette                5.08%
                              Post Office Box 2052
                              Jersey City, NJ 07303

</TABLE>

                                    The Corporation believes that such ownership
                  is of  record  only  and is not  aware  that any  person  owns
                  beneficially  5% or more of the shares of the  Global  Fund or
                  American Fund.

                                    As of March 5,  1998,  the  Directors  and
                  officers of the Corporation  beneficially  owned 1.4% of the
                  outstanding  common  stock of the  Global  Fund and 3%, of the
                  outstanding common stock of the American Fund.

                  Distributor

                                    The Corporation has distribution  agreements
                  with the Adviser to act as distributor (the "Distributor") for
                  the Global Fund and American Fund each dated as of October 9,
                  1997  (the  "Distribution   Agreements").  Each  Distribution
                  Agreement  will  remain in  effect  from year to year upon the
                  annual  approval  by a majority of the  Directors  who are not
                  parties to such  agreements or interested  persons of any such
                  party  and  either  by  vote of a  majority  of the  Board  of
                  Directors or a majority of the outstanding  voting  securities
                  of the Corporation.

                                    Under  the  Distribution   Agreements,   the
                  Corporation  is  responsible  for: the payment of all fees and
                  expenses in connection  with the  preparation  and filing with
                  the Commission of the Corporation's registration statement and
                  a Fund's  prospectus  (including  this Statement of Additional
                  Information) and any amendments and supplements  thereto,  the
                  registration  and  qualification  of  shares  for  sale in the
                  various  states,  including  registering  the Corporation as a
                  broker/dealer  in various  states;  the fees and  expenses  of
                  preparing,  printing  and  mailing  prospectuses  annually  to
                  existing shareholders,  notices, proxy statements,  reports or
                  other  communications to shareholders of the Fund; the cost of
                  printing and mailing  confirmations of purchases of shares and
                  any prospectuses  accompanying such  confirmations;  any issue
                  taxes or any initial  transfer  taxes;  shareholder  toll-free
                  telephone   charges  and  expenses  of   shareholder   service
                  representatives,  the cost of wiring funds for share purchases
                  and redemptions  (unless paid by the shareholder who initiates
                  the transaction); the cost of printing and postage of business
                  reply envelopes; and that portion of any equipment, service or
                  activity which is primarily  intended to result in the sale of
                  shares issued by the Corporation.

                                    The  Distributor  will pay for  printing and
                  distributing  prospectuses or reports  prepared for its use in
                  connection  with the  offering  of the  Fund's  shares  to the
                  public  and   preparing,   printing   and  mailing  any  other
                  literature or advertising  in connection  with the offering of
                  shares of a Fund to the public.  The Distributor  will pay all
                  fees and expenses in  connection  with its  qualification  and
                  registration  as a broker or dealer  under  federal  and state
                  laws, as well as the sales related  portion of any  equipment,
                  service or activity  which is primarily  intended to result in
                  the sale of shares issued by the Corporation.

                                    As agent,  the Distributor  currently offers
                  each Fund's  shares on a continuous  basis to  investors.  The
                  Distribution  Agreements provide that the Distributor  accepts
                  orders for shares at net asset value as no sales commission or
                  load is charged to the investor.

                                      TAXES

                                    Each Fund  intends to qualify  each year and
                  elect to be treated as a regulated  investment  company  under
                  Subchapter M of the Internal Revenue Code of 1986, as amended,
                  (the "Code"). To qualify as a regulated  investment company, a
                  Fund  must  comply  with  certain  requirements  of  the  Code
                  relating  to,  among other  things,  the sources of income and
                  diversification  of assets.  If the Fund fails to qualify  for
                  treatment  as a regulated  investment  company for any taxable
                  year,  the Fund would be taxed as an ordinary  corporation  on
                  taxable  income  for  that  year  (even  if  that  income  was
                  distributed to its shareholders), and all distributions out of
                  earnings  and  profits  would be  taxable to  shareholders  as
                  dividends (that is, ordinary income).

                                    A regulated  investment  company  qualifying
                  under  the Code is  required  to  distribute  each year to its
                  shareholders  at least 90% of its investment  company  taxable
                  income  (generally  including  dividends,   interest  and  net
                  short-term capital gain but not net capital gain, which is the
                  excess of net  long-term  capital  gains  over net  short-term
                  capital losses) and generally is not subject to federal income
                  tax to the extent that it distributes  annually its investment
                  company  taxable  income and net  capital  gains in the manner
                  required  under the Code.  Each Fund intends to  distribute at
                  least  annually all of its investment  company  taxable income
                  and net capital gains and therefore  generally does not expect
                  to pay federal income taxes.

                                    Each Fund is subject  to a 4%  nondeductible
                  excise tax on amounts required to be but not distributed under
                  a  prescribed   formula.   The  formula  requires  payment  to
                  shareholders   during  a   calendar   year  of   distributions
                  representing  at least 98% of a Fund's ordinary income for the
                  calendar  year,  at least 98% of its  capital  gain net income
                  realized  during the one-year  period ending October 31 during
                  such year, and all ordinary income and capital gain net income
                  for prior  years  that were not  previously  distributed.  For
                  purposes of the excise  tax,  any  ordinary  income or capital
                  gain net income retained by, and subject to federal income tax
                  in the hands of,  the Funds  will be  treated  as having  been
                  distributed.

                                    Distributions of investment  company taxable
                  income  are  taxable  to  shareholders  as  ordinary   income.
                  Dividends from domestic  corporations are expected to comprise
                  some portion of each Fund's gross  income.  To the extent that
                  such  dividends  constitute  a portion of a Fund's  investment
                  company taxable income, a portion of the income  distributions
                  of that Fund may be eligible for the  deduction  for dividends
                  received by corporations. Shareholders will be informed of the
                  portion of dividends  which may so qualify.  Distributions  of
                  net capital  gains are taxable to  shareholders  as  long-term
                  capital  gain,  regardless of the length of time the shares of
                  the  distributing  Fund have  been held by such  shareholders.
                  Such distributions are not eligible for the dividends-received
                  deduction   discussed   above.  Any  loss  realized  upon  the
                  redemption  of shares held at the time of  redemption  for six
                  months or less from the date of their purchase will be treated
                  as a  long-term  capital  loss to the  extent  of any  amounts
                  treated as distributions of long-term capital gain during such
                  six-month period.

                                    Distributions of investment  company taxable
                  income  and net  realized  capital  gains  will be  taxable as
                  described  above,  whether  received  in  shares  or in  cash.
                  Shareholders receiving distributions in the form of additional
                  shares will have a cost basis for federal  income tax purposes
                  in each share so  received  equal to the net asset  value of a
                  share on the distribution date.

                                    All  distributions  of  investment   company
                  taxable income and net realized capital gain, whether received
                  in shares or in cash, must be reported by each  shareholder on
                  his or her federal  income tax return.  Dividends  and capital
                  gains distributions declared in October,  November or December
                  and payable to  shareholders of record in such a month will be
                  deemed to have been received by shareholders on December 31 if
                  paid during  January of the  following  year.  Redemptions  of
                  shares may result in tax consequences (discussed below) to the
                  shareholder   and  are  also   subject   to  these   reporting
                  requirements.

                                    Distributions   by  a  Fund   results  in  a
                  reduction in the net asset value of the Fund's shares.  Should
                  distributions reduce the net asset value below a shareholder's
                  cost basis, such  distributions  would nevertheless be taxable
                  to the  shareholder  as  ordinary  income or  capital  gain as
                  described above, even though,  from an investment  standpoint,
                  it may constitute a partial return of capital.  In particular,
                  investors  should  consider  the tax  implications  of  buying
                  shares  just  prior to a  distribution.  The  price of  shares
                  purchased at that time includes the amount of the  forthcoming
                  distribution.  Those  purchasing  just prior to a distribution
                  will  then  receive  a  partial  return  of  capital  upon the
                  distribution which will nevertheless be taxable to them.

                                    Each Fund  intends  to  qualify  for and may
                  make the election  permitted  under Section 853 of the Code so
                  that  shareholders  may  (subject to  limitations)  be able to
                  claim a credit  or  deduction  on  their  federal  income  tax
                  returns  for,  and may be  required  to  treat  as part of the
                  amounts  distributed  to  them,  their  pro  rata  portion  of
                  qualified taxes paid by that Fund to foreign  countries (which
                  taxes relate  primarily to investment  income).  A shareholder
                  who does not itemize  deductions may not claim a deduction for
                  such taxes.  Each Fund may make an election  under Section 853
                  of the Code,  provided  that more than 50% of the value of the
                  total  assets  of the Fund at the  close of the  taxable  year
                  consists of stocks or securities in foreign corporations.  The
                  foreign tax credit  available  to  shareholders  is subject to
                  certain limitations imposed by the Code. Each Fund will notify
                  each shareholder  within 60 days after the close of the Fund's
                  taxable  year as to  whether  the  taxes  paid by the  Fund to
                  foreign  countries  will qualify for the  treatment  discussed
                  above for that year,  and if they do, such  notification  will
                  designate  (i)  each  shareholders'  pro rata  portion  of the
                  qualified taxes paid and (ii) the portion of the distributions
                  that represents income derived from foreign sources.

                                    Generally,  a foreign  tax credit is subject
                  to the  limitation  that it may not exceed  the  shareholder's
                  U.S. tax (before the credit) attributable to the shareholder's
                  total taxable income from foreign  sources.  For this purpose,
                  the shareholder's proportionate share of dividends paid by the
                  Fund that represents  income derived from foreign sources will
                  be treated  as foreign  source  income.  The Fund's  gains and
                  losses from the sale of securities, and certain currency gains
                  and losses,  generally  will be treated as being  derived from
                  U.S. sources. The limitation on the foreign tax credit applies
                  separately to specific  categories of foreign  source  income,
                  including  "passive  income," a  category  that  includes  the
                  portion of dividends received from each Fund that qualifies as
                  foreign source income. The foregoing  limitation may prevent a
                  shareholder  from claiming a credit for the full amount of his
                  proportionate  share of the foreign  income taxes paid by each
                  Fund.

                                    Equity options  (including  options on stock
                  and   options   on    narrow-based    stock    indices)    and
                  over-the-counter   options  on  debt  securities   written  or
                  purchased  by a Fund are subject to Section  1234 of the Code.
                  In general,  no loss is recognized by a Fund upon payment of a
                  premium  in  connection  with  the  purchase  of a put or call
                  option.  The character of any gain or loss  recognized  (i.e.,
                  long-term or short-term) will generally depend, in the case of
                  a lapse or sale of the option,  on a Fund's holding period for
                  the option and,  in the case of an exercise of the option,  on
                  the  Fund's  holding  period  for the  underlying  stock.  The
                  purchase  of a put  option  may  constitute  a short  sale for
                  federal  income tax  purposes,  causing an  adjustment  in the
                  holding  period  of  the  underlying  stock  or  substantially
                  identical stock in the Fund's  portfolio.  If the Fund sells a
                  put or call option,  no gain is recognized upon its receipt of
                  a premium.  If the option lapses or is closed out, any gain or
                  loss is treated as a  short-term  capital  gain or loss.  If a
                  call option sold by the Fund is exercised,  any resulting gain
                  or loss is a  short-term  or  long-term  capital  gain or loss
                  depending on the holding period of the underlying  stock.  The
                  exercise  of a put  option  sold by the Fund is not a  taxable
                  transaction for the Fund.

                                    Many  of the  futures  contracts  (including
                  foreign  currency futures  contracts)  entered into by a Fund,
                  certain forward  foreign  currency  contracts,  and all listed
                  non-equity options written or purchased by the Fund (including
                  options on a debt  securities,  options on futures  contracts,
                  options  on   securities   indices  and  certain   options  on
                  broad-based stock indices) will be governed by Section 1256 of
                  the Code. Absent a tax election to the contrary,  gain or loss
                  attributable to the lapse, exercise or closing out of any such
                  position  generally  will be treated as 60%  long-term and 40%
                  short-term  capital  gain or loss.  In  addition,  on the last
                  trading day of the Fund's fiscal year, all outstanding Section
                  1256 positions  will be marked to market (i.e.,  treated as if
                  such  positions were closed out at their closing price on such
                  day),  with  any  resulting  gain  or loss  recognized  as 60%
                  long-term  and 40%  short-term  capital  gain or  loss.  Under
                  certain circumstances, entry into a futures contract to sell a
                  security may  constitute  a short sale for federal  income tax
                  purposes,  causing an adjustment in the holding  period of the
                  underlying  security or a substantially  identical security in
                  the Fund's portfolio. Under Section 988 of the Code, discussed
                  below,  certain  foreign  currency  gain or loss from  foreign
                  currency  related  forward  contracts,   certain  futures  and
                  similar financial  instruments entered into or acquired by the
                  Fund will be treated as ordinary income or loss.

                                    The Code  requires  that a Fund realize less
                  than 30% of its  annual  gross  income  from the sale or other
                  disposition of stock, securities and certain options,  futures
                  and forward  contracts  held for less than three  months.  The
                  Fund's options,  futures and forward transactions may increase
                  the amount of gains  realized  by the Fund that are subject to
                  this  30%   limitation.   Accordingly,   the  amount  of  such
                  transactions that each Fund may undertake may be limited.

                                    Positions  of each Fund which  consist of at
                  least one stock and at least one stock  option with respect to
                  such stock or  substantially  identical stock or securities or
                  other  position  with  respect  to  substantially  similar  or
                  related property which substantially  diminishes a Fund's risk
                  of loss with  respect  to such  stock  could be  treated  as a
                  "straddle"  which is governed by Section 1092 of the Code, the
                  operation of which may cause  deferral of losses,  adjustments
                  in the holding  periods of stock or securities  and conversion
                  of short-term capital losses into long-term capital losses. In
                  addition,  the Fund will not be  allowed to  currently  deduct
                  interest and carry costs properly attributable to the straddle
                  position.  The Fund may make certain elections to mitigate the
                  operation of the rules discussed  above. An exception to these
                  straddle rules exists for any "qualified covered call options"
                  on stock written by the Fund.

                                    Straddle  positions of a Fund which  consist
                  of at least one  position  not governed by Section 1256 and at
                  least one futures  contract or forward  contract or non-equity
                  option governed by Section 1256 which substantially diminishes
                  the Fund's  risk of loss with  respect to such other  position
                  will  be  treated  as  a  "mixed  straddle."   Although  mixed
                  straddles are subject to the straddle rules of Section 1092 of
                  the Code, certain tax elections exist for them which reduce or
                  mitigate the operation of these rules.  Each Fund will monitor
                  its  transactions  in options and futures and may make certain
                  tax elections in connection with these investments.

                                    Under the Code, gains or losses attributable
                  to fluctuations in exchange rates which occur between the time
                  a Fund  accrues  interest  or other  receivables,  or  accrues
                  expenses  or  other  liabilities,  denominated  in  a  foreign
                  currency and the time the Fund actually collects such interest
                  or receivables, or pays such expense or liabilities, generally
                  is treated as  ordinary  income or ordinary  loss.  Similarly,
                  gains or losses from dispositions of foreign currencies,  debt
                  securities  denominated  in a  foreign  currency  and  certain
                  futures and forward contracts, attributable to fluctuations in
                  the  value  of  the  foreign  currency  between  the  date  of
                  acquisition  of the  currency or security or contract  and the
                  date of disposition are also treated as ordinary gain or loss.
                  These gains or losses may  increase or decrease  the amount of
                  the Fund's investment company taxable income to be distributed
                  to its shareholders as ordinary income.

                                    If  a  Fund   owns   shares   in  a  foreign
                  corporation  that  constitutes a "passive  foreign  investment
                  company"  for U.S.  federal  income tax  purposes and the Fund
                  does  not  elect  to  treat  the  foreign   corporation  as  a
                  "qualified  electing fund" within the meaning of the Code, the
                  Fund may be subject to U.S. federal income tax on a portion of
                  any  "excess   distribution"  it  receives  from  the  foreign
                  corporation  or any gain it derives  from the  disposition  of
                  such shares,  even if such income is  distributed as a taxable
                  dividend by the Fund to its U.S.  shareholders.  Each Fund may
                  also be subject to additional tax in the nature of an interest
                  charge  with  respect  to  deferred  taxes  arising  from such
                  distributions  or gains. Any tax paid by a Fund as a result of
                  its  ownership  of shares  in a  "passive  foreign  investment
                  company"  will not give rise to any deduction or credit to the
                  Fund or any shareholder. If the Fund owns shares in a "passive
                  foreign  investment  company" and the Fund elects to treat the
                  foreign  corporation as a "qualified  electing fund" under the
                  Code,  the Fund may be  required to include in its income each
                  year a portion of the ordinary income and net capital gains of
                  the   foreign   corporation,   even  if  this  income  is  not
                  distributed  to the Fund.  Any such income would be subject to
                  the distribution  requirements  described  above,  even if the
                  Fund does not receive any funds to distribute.

                                    A  portion  of the  difference  between  the
                  issue  price of zero  coupon  securities  and their face value
                  ("original  issue discount") is considered to be income to the
                  Fund each year,  even  though the Fund will not  receive  cash
                  interest payments from these  securities.  This original issue
                  discount imputed income will comprise a part of the investment
                  company  taxable  income of the Fund which must be distributed
                  to shareholders in order to maintain the  qualification of the
                  Fund as  regulated  investment  company  and to avoid  federal
                  income tax at the level of the Fund.

                                    Each Fund will be  required to report to the
                  IRS all distributions of investment company taxable income and
                  capital gains as well as gross proceeds from the redemption or
                  exchange of the Fund's  shares,  except in the case of certain
                  exempt shareholders.  Under the backup withholding  provisions
                  of  Section  3406 of the  Code,  distributions  of  investment
                  company taxable income and capital gains and proceeds from the
                  redemption or exchange of the shares of a regulated investment
                  company may be subject to withholding of federal income tax at
                  the rate of 31% in the  case of  non-exempt  shareholders  who
                  fail to furnish either Fund with their taxpayer identification
                  numbers  and  with  required  certifications  regarding  their
                  status under the federal income tax law.  Withholding may also
                  be required if either Fund is notified by the Internal Revenue
                  Service or a broker that the  taxpayer  identification  number
                  furnished  by  the   shareholder  is  incorrect  or  that  the
                  shareholder   is  incorrect  or  that  the   shareholder   has
                  previously  failed to report interest or dividend  income.  If
                  the   withholding   provisions   are   applicable,   any  such
                  distributions   and   proceeds,   whether  taken  in  cash  or
                  reinvested  in  additional  shares,  will  be  reduced  by the
                  amounts required to be withheld.

                                    Redeeming  shareholders  will recognize gain
                  or loss in an amount equal to the difference between the basis
                  in their  redeemed  shares  and the amount  received.  If such
                  shares are held as a capital asset, the gain or loss will be a
                  capital gain or loss and will be long-term if such shares have
                  been  held for more than one year.  Any loss  realized  upon a
                  taxable disposition of shares held for six months or less will
                  be treated as a  long-term  capital  loss to the extent of any
                  capital gain dividends received with respect to such shares.

                                    Shareholders  of each Fund may be subject to
                  state and local taxes on  distributions  received  from either
                  Fund and on redemptions of each Fund's shares.

                                    Each  distribution is accompanied by a brief
                  explanation of the form and character of the distribution.  In
                  January   of  each  year  the   Corporation   issues  to  each
                  shareholder  a statement  of the federal  income tax status of
                  all distributions.

The foregoing  general  discussion of U.S. federal income tax law relates solely
to the  application  of that  law to  U.S.  persons,  i.e.,  U.S.  citizens  and
residents  and  U.S.  corporations,   partnerships,  trusts  and  estates.  Each
shareholder  who is not a U.S.  person should  consider the U.S. and foreign tax
consequences of ownership of shares of the Funds, including the possibility that
such a shareholder may be subject to a U.S. withholding tax at a rate of 31% (or
at a lower rate under an applicable  income tax treaty) on amounts  constituting
ordinary income received by him or her, where such amounts are treated as income
from U.S. sources under the Code.

                                    Shareholders   should   consult   their  tax
                  advisers  about the  application  of the provisions of tax law
                  described in this Statement of Additional Information in light
                  of their particular tax situations.


                             PORTFOLIO TRANSACTIONS

                                    The  Adviser  conducts  all of  the  trading
                  operations for both the Global Fund and the American Fund. The
                  Adviser  executes  portfolio   transactions  with  or  through
                  issuers,  underwriters  and other brokers and dealers.  In its
                  capacity as a broker-dealer, the Adviser reserves the right to
                  receive  a ticket  charge  from  each  Fund  for such  service
                  although it currently does not engage in this practice.

                                    The  primary  objective  of the  Adviser  in
                  placing  orders for the  purchase and sale of  securities  for
                  each  Fund's  portfolio  is to obtain the most  favorable  net
                  results,   taking  into   account   such   factors  as  price,
                  commission, where applicable, (which is negotiable in the case
                  of U.S. national securities exchange transactions but which is
                  generally fixed in the case of foreign exchange transactions),
                  size of order,  difficulty of execution and skill  required of
                  the executing broker/dealer.  The Adviser reviews on a routine
                  basis  commission  rates,  execution and  settlement  services
                  performed, making internal and external comparisons.

                                    When it can be done  consistently  with  the
                  policy of obtaining the most favorable net results,  it is the
                  Adviser's  practice  to place such  orders  with  brokers  and
                  dealers who supply  market  quotations to the custodian of the
                  Funds for appraisal purposes,  or who supply research,  market
                  and statistical information to either Fund or the Adviser. The
                  term "research,  market and statistical  information" includes
                  advice  as to the value of  securities,  the  advisability  of
                  investing  in,  purchasing  or  selling  securities,  and  the
                  availability   of  securities  or  purchasers  or  sellers  of
                  securities,  and  furnishing  analyses and reports  concerning
                  issuers, industries,  securities, economic factors and trends,
                  portfolio  strategy  and  the  performance  of  accounts.  The
                  Adviser is not authorized when placing portfolio  transactions
                  for either  Fund to pay a  brokerage  commission  in excess of
                  that which another broker might have charged for executing the
                  same transaction solely on account of the receipt of research,
                  market or statistical information.  The Adviser does not place
                  orders with brokers or dealers on the basis that the broker or
                  dealer  has or  has  not  sold a  Fund's  shares.  Except  for
                  implementing the policy stated above, there is no intention to
                  place  portfolio   transactions  with  particular  brokers  or
                  dealers  or  groups  thereof.  In  effecting  transactions  in
                  over-the-counter  securities,   orders  are  placed  with  the
                  principal  market makers for the security  being traded unless
                  it  appears  that  more   favorable   results  are   available
                  otherwise.

                                    Although   certain   research,   market  and
                  statistical information from brokers and dealers can be useful
                  to the  Funds and to the  Adviser,  it is the  opinion  of the
                  Adviser,  that such  information is only  supplementary to its
                  own  research  effort  since  the  information  must  still be
                  analyzed,  weighed,  and reviewed by the Adviser's staff. Such
                  information may be useful to the Adviser in providing services
                  to clients other than the Funds,  and not all such information
                  is useful to the Adviser in  providing  services to the Funds.
                  For the fiscal  years ended March 31, 1997 and March 31, 1996,
                  the Global Fund paid  brokerage  commissions of $2,167,248 and
                  $1,135,039,  respectively. For the fiscal year ended March 31,
                  1995, the Global Fund paid brokerage commissions of $1,336,935
                  of which $7,960 was paid to  second-tier  affiliated  persons.
                  For the fiscal  years ended March 31, 1997 and March 31, 1996,
                  the American Fund paid  brokerage  commissions of $223,652 and
                  $210,767,  respectively.  For the fiscal  year ended March 31,
                  1995, the American Fund paid brokerage  commissions of $54,742
                  of which $2,240 was paid to  second-tier  affiliated  persons.
                  The increase in  commission  payments is  attributable  to the
                  increased size of the Funds.

                                    Average  annual  portfolio  turnover rate is
                  the ratio of the  lesser  sales or  purchases  to the  monthly
                  average  value of the  portfolio  securities  owned during the
                  year,  excluding  from both the numerator and the  denominator
                  all securities  with  maturities at the time of acquisition of
                  one year or less.  For the fiscal  years ended March 31, 1997,
                  March 31, 1996 and March 31, 1995, the Global Fund's portfolio
                  turnover  rates were 20%, 17% and 16%,  respectively.  For the
                  fiscal  years ended March 31,  1997,  March 31, 1996 and March
                  31, 1995, the American  Fund's  portfolio  turnover rates were
                  16%, 9% and 4%, respectively.

                                 NET ASSET VALUE

                                    The net asset  value of shares  for both the
                  Global Fund and the  American  Fund will be computed as of the
                  close of regular  trading on the New York  Stock  Exchange  on
                  each day during which the  Exchange is open for  trading.  The
                  Exchange  is  normally   closed  on  the  following   national
                  holidays:  New Year's Day, Martin Luther King Day, Presidents'
                  Day, Good Friday,  Memorial Day,  Independence Day, Labor Day,
                  Thanksgiving, and Christmas. Net asset value per share for the
                  Funds is determined by dividing the value of the total assets,
                  less  all   liabilities,   by  the  total   number  of  shares
                  outstanding.

                                    In  valuing  a  Fund's  assets,  a  security
                  listed on an  exchange  or through  any system  providing  for
                  daily  publication  of  actual  prices  (and  not  subject  to
                  restrictions  against  sale by the  Fund on such  exchange  or
                  system)  will be valued at its last  sale  price  prior to the
                  close of regular trading (or, in the case of securities traded
                  on the London Stock  Exchange,  at the "Mid Price",  i.e., the
                  mid  price  between  the bid and ask  prices,  rounded  to the
                  nearest  dollar  if the  spread  between  the  bid and the ask
                  prices  is more  than  one  pence).  Lacking  any  sales,  the
                  security  will be valued at the mean  between  the last  asked
                  price  and the last bid price  prior to the  close of  regular
                  trading.

                                    Securities  for which daily  publication  of
                  actual  prices  is not  available  and for which bid and asked
                  quotations  are readily  available  will be valued at the mean
                  between the current bid and asked  prices for such  securities
                  in the  over-the-counter  market.  Other  securities  will  be
                  valued at their fair value as  determined  in good faith by or
                  under the direction of the Directors.  Open futures  contracts
                  are valued at the most recent  settlement  price,  unless such
                  price  does not  reflect  the fair value of the  contract,  in
                  which  case  such  positions  will be  valued  by or under the
                  direction of the Directors.

                                    The value of a security which is not readily
                  marketable  and  which  accordingly  is valued by or under the
                  direction of the Directors is valued periodically on the basis
                  of all  relevant  factors  which may  include the cost of such
                  security  to  the  Fund,  the  market  price  of  unrestricted
                  securities  of the  same  class at the  time of  purchase  and
                  subsequent changes in such market price,  potential expiration
                  or release of the  restrictions  affecting such security,  the
                  existence of any registration  rights,  the fact that the Fund
                  may have to bear  part or all of the  expense  of  registering
                  such  security,  any potential  sale of such security by or to
                  another  investor  as well as  traditional  methods of private
                  security analysis.

                                    Following the calculation of security values
                  in terms of the currency in which the market quotation used is
                  expressed ("local currency"), the valuing agent will calculate
                  these values in terms of United States dollars on the basis of
                  the  conversion of the local  currencies  (if other than U.S.)
                  into U.S.  dollars at the rates of exchange  prevailing at the
                  value time as determined by the valuing agent.

                                    Trading in  securities  on European  and Far
                  Eastern securities exchanges and  over-the-counter  markets is
                  normally  completed  well before the close of business on each
                  business day in New York (i.e., a day on which the Exchange is
                  open). In addition, European or Far Eastern securities trading
                  generally or in a particular country or countries may not take
                  place on all business days in New York.  Furthermore,  trading
                  takes place in Japanese  markets on certain  Saturdays  and in
                  various foreign markets on days which are not business days in
                  New  York  and on  which  a  Fund's  net  asset  value  is not
                  calculated. Each Fund generally calculates net asset value per
                  share,   and  therefore   effects   sales,   redemptions   and
                  repurchases  of its  shares,  as of the  regular  close of the
                  Exchange  on each  day on which  the  Exchange  is open.  Such
                  calculation  does not take  place  contemporaneously  with the
                  determination  of the prices of the majority of the  portfolio
                  securities  used in such  calculation.  If  events  materially
                  affecting the value of such securities  occur between the time
                  when their price is  determined  and the time when that Fund's
                  net asset value is calculated,  such securities will be valued
                  at fair  value as  determined  in good  faith by the  Board of
                  Directors.




<PAGE>


                             ADDITIONAL INFORMATION

                  Experts

                                    The  financial  statements  and schedules of
                  investments  of Tweedy,  Browne  Global Value Fund and Tweedy,
                  Browne  American  Value Fund at March 31, 1997 and for each of
                  the periods  indicated  therein appearing in this Statement of
                  Additional Information have been audited by Ernst & Young LLP,
                  independent  auditors,  as set forth in their reports  thereon
                  appearing  elsewhere herein, and are included in reliance upon
                  such reports  given upon the authority of such firm as experts
                  in accounting and auditing.


                  Other Information

                                    The Corporation  employs Boston Safe Deposit
                  and  Trust  Company  as  custodian  and  First  Data  Investor
                  Services  Group,  Inc. as  transfer  agent for both the Global
                  Fund and the American Fund.

                                    The   Prospectus   and  the   Statement   of
                  Additional  Information omit certain information  contained in
                  the  Registration  Statement  which the  Corporation has filed
                  with the SEC under the Securities Act of 1933 and reference is
                  hereby  made  to  the   Registration   Statement  for  further
                  information  with  respect  to the  Funds  and the  securities
                  offered hereby.  The  Registration  Statement is available for
                  inspection by the public at the SEC in Washington, D.C.


                  Financial Statements

 The Funds' Annual Report for the fiscal year ended March 31, 1997 is included
 herein.



<PAGE>


A-1

                                   APPENDIX A

                                    The  following  is  a  description   of  the
                  ratings  given by Moody's and S&P to corporate  and  municipal
                  bonds.

                  Ratings of Municipal and Corporate Bonds

                  S&P:

                                    Debt  rated  AAA  has  the  highest   rating
                  assigned by Standard & Poor's.  Capacity to pay  interest  and
                  repay principal is extremely strong.  Debt rated AA has a very
                  strong  capacity  to pay  interest  and  repay  principal  and
                  differs from the highest  rated  issues only in small  degree.
                  Debt rated A has a strong  capacity to pay  interest and repay
                  principal  although it is  somewhat  more  susceptible  to the
                  adverse  effects  of  changes in  circumstances  and  economic
                  conditions  than debt in higher rated  categories.  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.

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

                                    Debt    rated   BB   has   less    near-term
                  vulnerability  to  default  than  other  speculative   issues.
                  However,  it faces major ongoing  uncertainties or exposure to
                  adverse  business,  financial,  or economic  conditions  which
                  could lead to inadequate  capacity to meet timely interest and
                  principal  payments.  The BB rating  category is also used for
                  debt subordinated to senior debt that is assigned an actual or
                  implied BBB-rating.  Debt rated B has a greater  vulnerability
                  to default but  currently  has the  capacity to meet  interest
                  payments   and   principal   repayments.   Adverse   business,
                  financial,  or economic conditions will likely impair capacity
                  or  willingness  to pay  interest and repay  principal.  The B
                  rating  category is also used for debt  subordinated to senior
                  debt that is assigned an actual or implied BB or BB- rating.



<PAGE>


                                    Debt rated CCC has a currently  identifiable
                  vulnerability  to default,  and is  dependent  upon  favorable
                  business,  financial,  and economic  conditions to meet timely
                  payment of interest and repayment of  principal.  In the event
                  of adverse business,  financial, or economic conditions, it is
                  not  likely to have the  capacity  to pay  interest  and repay
                  principal.  The CCC  rating  category  is also  used  for debt
                  subordinated  to senior  debt that is  assigned  and actual or
                  implied B or B- rating.  The rating CC typically is applied to
                  debt subordinated to senior debt that is assigned an actual or
                  implied CCC rating.  The rating C typically is applied to debt
                  subordinated  to senior  debt which is  assigned  an actual or
                  implied CCC- debt rating.  The C rating may be used to cover a
                  situation where a bankruptcy petition has been filed, but debt
                  service payments are continued.  The rating C1 is reserved for
                  income bonds on which no interest is being paid.  Debt rated D
                  is in  payment  default.  The D rating  category  is used when
                  interest  payments or  principal  payments are not made on the
                  date due even if the applicable  grace period had not expired,
                  unless S&P  believes  that such  payments  will be made during
                  such  grace  period.  The D rating  also will be used upon the
                  filing of a bankruptcy  petition if debt service  payments are
                  jeopardized.

                  Moody's:

                                    Bonds  which are rated Aaa are  judged to be
                  of the  best  quality.  They  carry  the  smallest  degree  of
                  investment risk and are generally  referred to as "gilt edge."
                  Interest   payments  are   protected  by  a  large  or  by  an
                  exceptionally stable margin and principal is secure. While the
                  various protective elements are likely to change, such changes
                  as  can  be  visualized   are  most  unlikely  to  impair  the
                  fundamentally  strong position of such issues. Bonds which are
                  rated Aa are judged to be of high  quality  by all  standards.
                  Together  with the Aaa group they  comprise what are generally
                  known as high grade bonds.  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.  Bonds  which are rated A 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.

                                    Bonds which are rated Baa are  considered as
                  medium  grade  obligations,  i.e.,  they  are  neither  highly
                  protected nor poorly secured.  Interest payments and principal
                  security   appear   adequate   for  the  present  but  certain
                  protective    elements    may   be    lacking    or   may   be
                  characteristically  unreliable  over any great length of time.
                  Such bonds lack outstanding investment  characteristics and in
                  fact  have  speculative  characteristics  as well.  Often  the
                  protection  of interest  and  principal  payments  may be very
                  moderate  and thereby not well  safeguarded  during other good
                  and  bad  times  over  the  future.  Uncertainty  of  position
                  characterizes  bonds in this  class.  Bonds  which are rated B
                  generally lack  characteristics  of the desirable  investment.
                  Assurance of interest and principal payments or maintenance of
                  other terms of the  contract  over any long period of time may
                  be small.

                                    Bonds  which  are  rated  Caa  are  of  poor
                  standing.  Such  issues  may be in  default  or  there  may be
                  present  elements  of danger  with  respect  to  principal  or
                  interest. Bonds which are rated Ca represent obligations which
                  are  speculative  to a high  degree.  Such issues are often in
                  default or have other  marked  shortcomings.  Bonds  which are
                  rated C 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.




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