As filed with the Securities and Exchange Commission on July 1, 1999.
Securities Act File No. 33-57724
Investment Company Act File No. 811-7458
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
--
Pre-Effective Amendment No. __ __
Post-Effective Amendment No. 10 X
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 13 X
Tweedy, Browne Fund Inc.
(Exact name of Registrant as Specified in Charter)
52 Vanderbilt Avenue, New York, NY 10017
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 916-0600
Name and Address of Agent for Service: Copies to:
M. Gervase Rosenberger, Esq. Richard T. Prins, Esq.
Tweedy, Browne Company L.P. Skadden, Arps, Slate, Meagher & Flom
52 Vanderbilt Avenue 919 Third Avenue
New York, NY 10017 New York, NY 10022
Gail A. Hanson, Esq.
First Data Investor Services Group, Inc.
101 Federal Street
Boston, MA 02110
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b), or
X on July 30, 1999 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(1), or on
_____________ pursuant to paragraph (a)(1) 75 days after
filing pursuant to paragraph (a)(2) on _____________ pursuant
to paragraph (a)(2) of Rule 485
<PAGE>
Prospectus - July __ , 1999
G TWEEDY, BROWNE GLOBAL VALUE FUND
A TWEEDY, BROWNE AMERICAN VALUE FUND
52 Vanderbilt Avenue Shareholder Services: 800-432-4789, Press 2
New York, NY 10017 Daily Net Asset Value 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
- ------------------------------------------------------------------------
Both the Global Value Fund and American Value Fund seek long-term capital growth
by investing in equity securities. The Global Value Fund expects to invest
primarily in foreign securities although investments in U.S. securities may be
made to a limited extent when opportunities appear attractive. The American
Value Fund focuses on investments in U.S. companies but may invest in foreign
securities to a limited extent when opportunities appear attractive.
The Funds' investment adviser, Tweedy, Browne Company LLC, manages both Funds
using a value investing style derived directly from work of the late Benjamin
Graham. Value investing seeks to uncover stocks whose current market prices are
at significant discounts to the Adviser's estimate of their true or intrinsic
value.
Tweedy, Browne Company LLC is a successor to Tweedy & Co. founded in 1920, which
has managed assets since 1968. Tweedy, Browne currently manages approximately
$6.9 billion in client funds, including approximately $2.8 billion in
foreign securities. The current Managing Directors and retired principals and
their families, as well as employees of Tweedy, Browne, have more than $388.3
million in portfolios combined with or similar to client portfolios, including
approximately $31.3 million in the Global Value Fund and $40.7 million in the
American Value Fund.
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 both Traditional and Roth IRAs and similar accounts) and subsequent
investments must be a minimum of $250.
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
Page
Risk/Return Summary..................................................... 3
Investment Objective........................................... 3
Principal Investment Strategies................................ 3
Principal Risks of Investment.................................. 4
Performance.................................................... 6
Fees and Expenses.............................................. 8
The Funds' Investments.................................................. 9
Investment Goals and Strategies................................ 9
Reducing Currency Risk Through Currency Hedging................ 9
Pursuit of Long-Term Capital Growth............................. 10
Management of the Funds.................................................. 10
Pricing of Fund Shares................................................... 12
Transaction Information.................................................. 12
Purchases....................................................... 12
Redemptions and Exchanges....................................... 14
Transaction Policies............................................. 14
Distributions and Taxes.................................................. 15
Financial Highlights..................................................... 16
For More Information..................................................... 18
<PAGE>
RISK/RETURN SUMMARY
Investment Objective. Each Fund seeks long-term capital growth.
Principal Investment Strategies. Tweedy, Browne Company LLC, the Funds'
Investment Adviser, practices investment management principles derived 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". The Investment Adviser seeks to make investments
for the Funds at a significant discount - - often 40% to 50% - - to intrinsic
value. Professor Graham called this discount the investor's "margin of safety."
Depending on tax considerations, the Funds may sell investments as their market
price approaches intrinsic value, and then reinvest the proceeds in other
situations offering a greater discount to intrinsic value.
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 and characteristics that have produced high rates of return.
Academic research and studies have indicated an historical statistical
correlation between each of the investment characteristics described in What Has
Worked In Investing and above average investment rates of return over long
measurement periods. These studies found exceptional returns 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 significant pattern of stock purchases by
one or more insiders (officers and directors)
The study periods ranged from 1 to 55 years. The indicated annual returns ranged
from 12.1% to 49.6% and indicated annual returns in excess of the market indices
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, 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 Value
Fund and the Global Value Fund.
The returns from the American Value Fund and the Global Value 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 Value Fund and the
Global Value Fund.
The Investment Adviser seeks to construct a widely diversified
portfolio of small, medium and large capitalization stocks from a variety of
industries and, in the case of the Global Value Fund, a variety of countries.
The Global Value Fund invests throughout the world in a diversified
portfolio of equity securities. The Global Value Fund invests mostly in foreign
securities of developed countries, but also invests in U.S. stocks when
opportunities appear attractive. The American Value Fund invests in a
diversified portfolio of primarily domestic equity securities. The American
Value Fund will invest mostly in U.S. stocks but also invests some of its assets
in foreign securities when opportunities appear attractive.
The Global Value Fund is designed for investors who would like to
participate in a diversified fund that searches out undervalued investment
opportunities wherever they may exist in the developed world. Although world
economies are increasingly interdependent, specific country economic conditions
can cause substantial differences in stock market valuations. For this reason,
the ability to invest on a global basis may provide more opportunities to the
value investor than a fund that is restricted to one country. Investing globally
also increases the number of potential investment opportunities that would meet
the Fund's principal investment strategies described above.
The American Value Fund is designed for long-term value investors who
wish to limit their exposure to foreign markets. The equity capitalization of
the United States is the largest in the world, representing more than one-third
of the Morgan Stanley Capital International World Index. The American Value Fund
offers investors the opportunity to invest in a diversified portfolio of
primarily domestic, undervalued securities where the market price may be well
below the stock's intrinsic value.
Principal Risks of Investment. The Funds invest primarily in common
stocks. Common stock represents a proportionate interest in the earnings and
value of the issuing company. Therefore, a Fund participates in the success or
failure of any company in which it owns stock. The market value of common stocks
fluctuates significantly, reflecting the past and anticipated business
performance of the issuing company, investor perception and general economic or
financial market movements.
Smaller companies, in which both Funds invest to a significant extent,
may be especially sensitive to these factors. Although the Investment Adviser
examines each company according to its investment criteria, smaller companies
may be less well established and may have a more highly leveraged capital
structure, less liquidity, a smaller investor base, greater dependence on a few
customers and similar factors that can make their business and stock market
performance susceptible to greater fluctuation. The Investment Adviser seeks to
reduce the risk of permanent capital loss, as contrasted to temporary stock
price fluctuation, through both diversification and application of its stock
selection process, which includes assessing and weighing quantitative and
qualitative information concerning specific companies. In general, the
Investment Adviser's investment philosophy and selection process favors
companies that do not have capital structures that would be considered to be
"highly leveraged" for a company in the same field.
While both Funds may invest in foreign securities, the Global Value
Fund will do so to a far greater extent. Investing in foreign securities
involves additional considerations beyond those of investing in U.S. markets.
These considerations include:
changes in currency exchange rates, which can lower performance
in U.S. dollar terms exchange rate controls (which, may include
an inability to transfer currency from a given country) costs
incurred in conversions between currencies less publicly
available information different accounting standards greater
market volatility delayed settlements difficulty in enforcing
obligations in foreign countries less securities regulation
unrecoverable withholding and transfer taxes war seizure
political and social instability
Currency fluctuations are often more extreme than stock market
fluctuations and can magnify losses or reverse gains experienced in local
currency terms. In an effort to minimize fluctuations in the Funds' performance
due to currency swings, the Funds hedge their foreign investments back to the
U.S. dollar when practicable. However, hedging currency risk tends to make the
Funds underperform a similar unhedged portfolio when the dollar is losing value
against the local currencies in which the portfolio's investments are
denominated.
You could lose money on your investment in a Fund or a Fund could
underperform other investments. Investment in either Fund should not be
considered a complete investment program, which for many investors may include
cash or fixed income investments. The Investment Adviser has compiled a booklet
entitled 10 Ways To Beat An Index which describes how the Investment Adviser
strives to provide value above an index return in the future. The Investment
Adviser attempts to provide perspective concerning the year-by-year variability
of investment returns, especially in relation to an unmanaged index. The
Investment Adviser believes the booklet is useful for investors to be aware of
the general pattern, sequence and composition of investment returns for the many
smaller periods of time that compromise long-term investment track records.
Performance. The following graphs and tables illustrate how the Funds' returns
vary over time and how they compare to relevant market benchmarks. The
Investment Adviser has chosen the Morgan Stanley Capital International ("MSCI")
Europe, Australasia and Far East ("EAFE") Index, on both a hedged and unhedged
basis, at the relevant market benchmark for the Global Value Fund and the
Standard & Poor's 500 Stock Index ("S&P 500") as the relevant market benchmark
for the American Value Fund. The MSCI EAFE Index is a widely recognized,
unmanaged index of common stocks traded in the leading foreign markets. The S&P
500 is a widely recognized, unmanaged index of common stocks traded in the U.S.
The past performance of the Funds does not necessarily indicate how the Funds
will perform in the future.
Global Value Fund
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1993+ 1994 1995 1996 1997 1998
15.40% 4.36% 10.70% 20.23% 22.96% 10.99%
</TABLE>
+Since inception: June 15, 1993
American Value Fund
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1993+ 1994 1995 1996 1997 1998
(0.60)% 0.56% 36.21% 22.45% 38.87% 9.59%
</TABLE>
+Since inception: December 8, 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Global Value Fund American Value Fund
Best quarterly return 16.24% (4th quarter 1998) 15.66% (2nd quarter 1997)
Worst quarterly return -3.03% (1st quarter 1995) -3.66% (4th quarter 1994)
</TABLE>
<PAGE>
Average Annual Total Return
For periods ended 12/31/98
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Since
One Year Five Year Inception
Global Value Fund (inception 6/15/93) 10.99% 13.65% 15.16%
MSCI EAFE Index (in U.S. Dollars) 20.00% 9.19% 9.30%
MSCI EAFE Index (Hedged) 13.71% 10.26% 11.08%
Since
One Year Five Year Inception
American Value Fund (inception 12/8/93) 9.59% 20.34% 19.92%
S&P 500 Index 28.60% 24.05% 23.91%
</TABLE>
Fees and Expenses. This table describes the fees and expenses that you may
pay if you buy and hold shares of the Funds.
<TABLE>
<CAPTION>
<S> <C> <C>
Global Value American Value Fund
Fund
------------------- ----------------------
Shareholder Fees
(fees paid directly from your investment)
Maximum sales charge (load) imposed on None None
purchases (as a percentage of offering price)
Maximum deferred sales charge (load) (as a None None
percentage of offering price)
Redemption fee (as a percentage of amount None None
redeemed)
Annual Fund Operating Expenses (for year ended 3/31/98)
(expenses deducted from Fund assets)
Management fees 1.25% 1.25%*
Distribution (12b-1) and/or service fees None None
Other Expenses 0.16% 0.15%
Total annual fund operating expenses 1.41% 1.40%*
</TABLE>
* The Adviser waived part of its fees related to American Value Fund
during the most recent fiscal year. As a result, the actual management
fee incurred by the American Value Fund was 1.24% and actual total
annual fund operating expenses incurred were 1.39%.
Example. This example is intended to help you compare the cost of
investing in the Funds with the cost of investing in other mutual funds.
The example assumes that:
You invest $10,000 in each Fund for the time periods indicated;
Your investment earns a 5% return each year; and The Funds
operating expenses remain the same.
<PAGE>
Although your actual costs may be higher or lower, under these assumptions your
costs would be:
<TABLE>
<CAPTION>
<S> <C> <C>
Global Value American Value Fund
Fund
-------------------- ----------------------
One Year........................................... $ 14 $ 14
Three Years........................................ $ 45 $ 44
Five Years......................................... $ 77 $ 76
Ten Years.......................................... $ 169 $ 167
</TABLE>
THE FUNDS' INVESTMENTS
Investment Goals and Strategies. Each of the Funds pursues the
investment goal of long-term capital growth. This goal may be changed for either
Fund without shareholder approval. In selecting investments for the Funds, the
Adviser employs a value investing style. Value investing seeks to uncover stocks
whose current market prices are at significant discounts to the Adviser's
estimate of their true or intrinsic value. Investments are made at significant
discounts to the Adviser's estimate of this true or intrinsic value of a share
of stock. Like a credit analyst reviewing a loan application, the Adviser is
seeking collateral value in the form of assets and/or earning power
substantially greater than the cost of the investment. The universe of potential
investments includes both businesses whose profits are likely to show steady
increases in the future and more cyclical companies. Value is merely a function
of the price the Adviser is willing to pay.
Reducing Currency Risk Through Currency Hedging. Both the Global Value
Fund's and the American Value 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. The Funds may also use a variety of currency hedging techniques
including forward currency contracts, to manage exchange rate risk. The
Investment Adviser believes the use of these instruments will benefit 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 if the inherent investment in the pound, through
ownership of a British stock, is not hedged back to the U.S. dollar. Currency
fluctuations are often 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 Value Fund and the
American Value Fund intend to minimize currency risk through hedging activities.
Although hedging against currency exchange rate changes reduces the risk of loss
from exchange rate movements, it also reduces the ability of the Funds to gain
from favorable exchange rate movements when the U.S. dollar declines against the
currencies in which the Funds' investments are denominated and in some interest
rate environment may impose out-of-pocket costs on the Funds. Accordingly, the
strength or weakness of the U.S. dollar against foreign currency may account for
part of the Fund's investment performance although both of the Global Value Fund
and American Value Fund intend to minimize this investment risk through currency
hedging.
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. Investments in the Global Value Fund will
focus on those developed markets around the world where Tweedy, Browne believes
value is more abundant. Investments in the American Value 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)
and medium (up to $5 billion) 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 at
a premium may be greater than with large, multinational companies.
Under normal circumstances, both Funds will stay fully invested in
stocks, including common stock, preferred stock, securities representing the
right to acquire stock (such as convertible debentures, options and warrants),
and depository receipts for securities. The Funds may also invest in debt
securities although for each Fund income is an incidental consideration.
Although the Global Value Fund will invest primarily in foreign securities, for
temporary defensive purposes, the Fund may invest solely in U.S. securities.
MANAGEMENT OF THE FUNDS
The Funds' investment adviser is Tweedy, Browne Company LLC, a
successor to Tweedy & Co. founded in 1920. Tweedy, Browne has managed assets
since 1968 and currently manages approximately $6.9 in client funds, including
approximately $2.8 billion in foreign securities. Tweedy, Browne is
located at 52 Vanderbilt Avenue, New York, NY 10017. Tweedy, Browne has
extensive experience in selecting undervalued stocks in U.S. domestic
equity markets, first as a market maker, then as an investor and
investment adviser. Tweedy, Browne began investing outside the United
States in 1983 utilizing the same principles of
value investing it has applied to U.S. securities for [thirty-eight] years.
The current Managing Directors and retired principals and their
families, as well as employees of Tweedy, Browne, have more than $388.3 million
in portfolios combined with or similar to client portfolios, including
approximately $31.3 million in the Global Value Fund and $40.7 million in the
American Value Fund. We eat our own cooking.
Tweedy, Browne manages the daily investment and business affairs for
the Funds, subject to oversight by the Board of Directors. For the fiscal year
ended March 31, 1999, Tweedy, Browne received investment advisory fees from the
Global Value Fund of 1.25%, and from the American Value Fund of 1.24%, of
average daily net assets.
Tweedy, Browne's Management Committee, which consists of Christopher
Browne, William Browne and John Spears, manages the day-to-day operations of
Tweedy, Browne and makes all investment management decisions. These individuals
have been working together at Tweedy, Browne for more than twenty years.
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 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.
PRICING OF FUND SHARES
Purchases and redemptions, including exchanges, are made at the net
asset value per share next calculated after the transfer agent is considered to
have received the transaction request. The Funds value their assets based on
market value except that assets that are not readily marketable are valued at
fair value under procedures adopted by the Board of Directors. Each Fund will
usually send your redemption proceeds within one business day following the
request, but may take up to seven days. The Funds' Administrator determines net
asset value per share as of the close of regular trading on the New York Stock
Exchange ("NYSE") (normally 4:00 p.m. eastern time) on each day the NYSE is open
for trading. Since many of the securities owned by the Global Value Fund trade
on foreign exchanges that trade on weekends or other days when the Global Value
Fund does not price its shares, the net asset value of that Fund may change on
days when you are unable to purchase or redeem shares.
TRANSACTION INFORMATION
Dislike forms and instruction manuals? Call 1-800-432-4789 and press 2, we'll
make it easier to invest in the Funds.
Purchases
You can purchase shares of either Fund without sales charges of any
kind. If you need assistance or have any questions, please call shareholder
services at 1-800-432-4789, Press 2 between 9:00 a.m. and 5:00 p.m. eastern
time, Monday through Friday.
Opening an Account Minimum Investment: $2,500; IRAs, $500
Make checks payable to the Fund you are purchasing. An account cannot be opened
without a completed and signed application.
By Mail. Send your completed, signed account application and
check to: Tweedy, Browne Fund Inc., P.O. Box 5160,
Westborough, MA 01581
<PAGE>
By Wire. First, call shareholder services at 1-800-432-4798,
Press 2 to get information you need to establish an account and to submit a
completed, signed application. Then contact your bank to arrange wire
transfer to the Fund's transfer agent. Your bank will need to know:
the name and account number from which you will wire money the
amount you wish to wire the name(s) of the account holder(s)
exactly as appear on your application ABA wire instructions, as
follows:
<PAGE>
- --------------------------------- ---------------------------------------------
Global Value Fund American Value Fund
Boston Safe Deposit & Trust Co. Boston Safe Deposit & Trust Co.
Boston, MA Boston, MA
Account of Tweedy, Browne Account of Tweedy, Browne
Global Value Fund American Value Fund
Account #138-517 Account #138-517
ABA #011001234 ABA #011001234
- --------------------------------- ---------------------------------------------
- ----------------------------- ---------------------------------------------
For further credit to [name(s) of the account For further credit to
[name(s) of the holder(s) and account number given to you by account
holder(s) and account number given shareholder services] to you by
shareholder services]
- --------------------------------- ---------------------------------------------
Purchasing Additional Shares Minimum Investment: $250
Make checks payable to the Fund you are purchasing.
By Mail. Send a check with an investment slip or letter
indicating your account number and the Fund you are purchasing to:
Tweedy, Browne Fund Inc., P.O. Box 5160, Westborough, MA 01581.
By Wire. Follow the wire procedures listed above under "Opening an
Account - By Wire."
By Telephone. Call shareholder services at 1-800-432-4789, Press 2
before the close of the NYSE to purchase at the share price on that day. Your
investment is limited to four times the value of your account at the time of the
order. Payment for your order (by check or wire) must include the order number
given to you when the order was placed. If payment is not received within three
business days, the order will be cancelled and you will be responsible for any
loss resulting from this cancellation.
By Automated Clearing House ("ACH"). Once you have established ACH for
your account, you may purchase additional shares via ACH by calling shareholder
services at 1-800-432-4789, Press 2. To establish ACH, please see "Transaction
Policies - ACH" below.
Redemptions and Exchanges
You can redeem or exchange shares of either Fund without fees or sales
charges of any kind. You can exchange shares from one Fund to the other after
five days.
By Telephone. Call shareholder services at 1-800-432-4789, Press 2 to
request redemption or exchange of some or all of your Fund shares. The telephone
privilege must be authorized on your application, or see "Transaction Policies -
by Telephone" below. You can request that redemption proceeds be mailed to your
address of record or, if previously established, sent to your bank account via
wire or ACH. For information on establishing ACH or authorizing wire
redemptions, please see "Transaction Policies" below.
By Mail. Send your redemption or exchange instructions to:
Tweedy, Browne Fund Inc., P.O. Box 5160, Westborough, MA
01581. Your instructions must be signed exactly as the account is registered
and must include:
your name
the Fund and account number from which you are redeeming or
exchanging the number of shares or dollar value to be redeemed or
exchanged the Fund you are exchanging into
If you wish to redeem or exchange $25,000 or more or you request that
redemption proceeds be paid to or mailed to other than the account holder(s) of
record, you must have your signature guaranteed. You can obtain a signature
guarantee from most banks, credit unions or savings associations, or from
broker/dealers, government securities broker/dealers, national securities
exchanges, registered securities associations, or clearing agencies deemed
eligible by the Securities and Exchange Commission. A notary public cannot
provide a signature guarantee. If market conditions exist that make cash
payments undesirable, either Fund may honor any request to redeem more than
$250,000 within a three-month period by making payment entirely or partially in
securities. This is known as a redemption-in-kind. The securities given in
payment are selected by the Fund and are valued the same way as for calculating
the Funds' net asset value. If payment is made in securities, you would incur
trading costs in converting the securities to cash.
Transaction Policies
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 responsible for any
loss resulting from this cancellation. Purchases made by check are not available
for redemption or exchange until the purchase check has cleared, which may take
up to seven business days. Checks must be drawn on or payable through a U.S.
bank or savings institution and must be payable to the Fund.
<PAGE>
By ACH. You can designate a bank account to electronically transfer
money via ACH for investment in either Fund. Additionally, you can designate a
bank account to receive redemption proceeds from either Fund via ACH. Your bank
must be a member of ACH. To establish ACH for your account in either Fund, which
requires two weeks, complete the Systematic Purchase and Redemption Form and
send it to Tweedy, Browne Fund Inc., P.O. Box 5160, Westborough, MA 01581. Money
sent via ACH takes two business days to clear.
By Telephone. The Funds and transfer agent employ procedures to verify
that telephone transaction instructions are genuine. If they follow these
procedures, they will not be liable for any losses resulting from unauthorized
telephone instructions. You can establish telephone transaction privileges on
your account by so indicating on your account application. If you wish to add
telephone transaction privileges to your account after it has been opened, send
a letter, signed by each account holder, to Tweedy, Browne Fund Inc., P.O. Box
5160, Westborough, MA 01581.
DISTRIBUTIONS AND TAXES
Each Fund declares and pays dividends and distributions at least
annually. Dividends and distributions are paid in additional shares of the same
Fund unless you elect to receive them in cash. Dividends and distributions are
taxable whether you receive cash or additional shares. Redemptions and exchanges
of shares are taxable events on which you may recognize a gain or loss.
Type of Distribution Frequency Federal Tax Status
Dividends from net investment income annual taxable as ordinary income
Distributions of short-term capital gain annual taxable as ordinary income
Distributions of long-term capital gain annual taxable as capital gain
Generally, you should avoid investing in a Fund shortly before an
expected dividend or distribution. Otherwise, you may pay taxes on amounts that
basically consist of a partial return of your investment. Every January, each
Fund will send you information about its dividends and distributions made during
the previous calendar year. You should consult your tax adviser about particular
federal, state, local and other taxes that may apply to you.
<PAGE>
FINANCIAL HIGHLIGHTS
Tweedy, Browne Global Value Fund
The following information for the fiscal year ended March 31, 1999 has
been audited by Ernst & Young LLP, independent auditors, whose report thereon
appears in the Global Value Fund's Annual Report, dated March 31, 1999. This
information should be read in conjunction with the financial statements and
related notes that also appear in the Global Value Fund's Annual Report.
TWEEDY, BROWNE GLOBAL VALUE FUND
(For a Fund share outstanding throughout each period)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Year Year Year Year Year
Ended Ended Ended Ended Ended
3/31/99 3/31/98 3/31/97 3/31/96(a) 3/31/95
Net asset value, beginning of year $ 15.46 $ 14.28 $ 11.52 $ 12.26
- ----------------------------------------- ------------- --------------- --------------- ---------------- ------------------
Income from investment operations:
Net investment income (loss)(c) 0.26 0.12 0.15 0.10
- ----------------------------------------- ------------- --------------- --------------- ---------------- ------------------
Net realized and unrealized gain (loss) 4.62 2.18 2.81 (0.68)
on investments
- ----------------------------------------- ------------- --------------- --------------- ---------------- ------------------
Total from investment operations 4.88 2.30 2.96 (0.58)
- ----------------------------------------- ------------- --------------- --------------- ---------------- ------------------
Distributions:
Dividends from net investment income (0.79) (0.19) -- --
- ----------------------------------------- ------------- --------------- --------------- ---------------- ------------------
Dividends in excess of net investment (0.08) (0.36) -- --
income
- ----------------------------------------- ------------- --------------- --------------- ---------------- ------------------
Distributions from net realized gains (0.49) (0.57) (0.05) (0.06)
- ----------------------------------------- ------------- --------------- --------------- ---------------- ------------------
Distributions in excess of net realized -- -- (0.15) (0.10)
gains
- ----------------------------------------- ------------- --------------- --------------- ---------------- ------------------
Total distributions (1.36) (1.12) (0.20) (0.16)
- ----------------------------------------- ------------- --------------- --------------- ---------------- ------------------
Net asset value, end of year $ 18.98 $ 15.46 $ 14.28 $ 11.52
- ----------------------------------------- ------------- --------------- --------------- ---------------- ------------------
Total return(e) 33.09% 16.66% 25.88% (4.74)%
- ----------------------------------------- ------------- --------------- --------------- ---------------- ------------------
Ratios/Supplemental Data:
Net assets, end of year (in 000's) $ 2,527,941 $ 1,441,210 $ 950,911 $ 655,035
- ----------------------------------------- ------------- --------------- --------------- ---------------- ------------------
Ratio of operating expenses to average 1.42% 1.58% 1.60% 1.65%
net assets (f)
- ----------------------------------------- ------------- --------------- --------------- ---------------- ------------------
Ratio of net investment income (loss) 1.05% 0.73% 1.15% 1.08%
to average net assets
- ----------------------------------------- ------------- --------------- --------------- ---------------- ------------------
Portfolio turnover rate 16% 20% 17% 16%
- ----------------------------------------- ------------- --------------- --------------- ---------------- ------------------
</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 (loss) for a Fund share outstanding, before the
waiver of fees by the administrator and/or investment adviser for the years
ended March 31, 1998 and 1997 were $0.26 and $0.11 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 ratios before the waiver of fees by the administrator
and/or investment adviser for the years ended March 31, 1998 and 1997 were
1.43% and 1.58% , respectively.
(g) Annualized.
(h) Amount represents less than (0.01)% per share.
<PAGE>
Tweedy, Browne American Value Fund
The following information for the fiscal year ended March 31, 1999
has been audited by Ernst & Young LLP, independent auditors, whose report
thereon appears in the American Value Fund's Annual Report, dated March 31,
1999. This information should be read in conjunction with the financial
statements and related notes that also appear in the American Value Fund's
Annual Report.
TWEEDY, BROWNE AMERICAN VALUE FUND
(For a Fund share outstanding throughout each period)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Year Year Year Year Year
Ended Ended Ended Ended Ended
3/31/99 3/31/98 3/31/97 3/31/96(a) 3/31/95(a)
Net asset value, beginning of year $ 16.22 $ 14.29 $ 10.71 $ 9.71
- ----------------------------------- --------------- --------------- --------------- ----------------- -----------------
Income from investment operations:
Net investment income (loss) (c) 0.11 0.13 0.15 0.13
- ----------------------------------- --------------- --------------- --------------- ----------------- -----------------
Net realized and unrealized gain 7.31 2.39 3.56 0.93
(loss) on investments
- ----------------------------------- --------------- --------------- --------------- ----------------- -----------------
Total from investment operations 7.42 2.52 3.71 1.06
- ----------------------------------- --------------- --------------- --------------- ----------------- -----------------
Distributions:
Dividends from net investment (0.17) (0.17) (0.11) (0.06)
income
- ----------------------------------- --------------- --------------- --------------- ----------------- -----------------
Distributions from net realized (0.43) (0.42) (0.02) --
gains
- ----------------------------------- --------------- --------------- --------------- ----------------- -----------------
Total distributions (0.60) (0.59) (0.13) (0.06)
- ----------------------------------- --------------- --------------- --------------- ----------------- -----------------
Net asset value, end of year $ 23.04 $ 16.22 $ 14.29 $ 10.71
- ----------------------------------- --------------- --------------- --------------- ----------------- -----------------
Total return (d) 46.14% 17.75% 34.70% 11.02%
- ----------------------------------- --------------- --------------- --------------- ----------------- -----------------
Ratios/Supplemental Data:
Net assets, end of year (in 000's) $1,011,238 $ 342,467 $ 201,599 $ 58,856
- ----------------------------------- --------------- --------------- --------------- ----------------- -----------------
Ratio of operating expenses to 1.39% 1.39% 1.39% 1.74%
average net assets (e)
- ----------------------------------- --------------- --------------- --------------- ----------------- -----------------
Ratio of net investment income to 0.69% 0.92% 1.13% 1.25%
average net assets
- ----------------------------------- --------------- --------------- --------------- ----------------- -----------------
Portfolio turnover rate 6% 16% 9% 4%
- ----------------------------------- --------------- --------------- --------------- ----------------- -----------------
</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, 1998, 1997, 1996 and 1995 was $0.11, $0.11,
$0.12 and $0.11, 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, 1998, 1997, 1996 and 1995 were 1.41%, 1.52%, 1.61% and 1.94%,
respectively.
(f) Annualized.
(g) Amount rounds to less than 1.0%.
<PAGE>
Investment Adviser:
Tweedy, Browne Company LLC
52 Vanderbilt Avenue
New York, NY 10017 TWEEDY, BROWNE FUND INC.
The Funds:
Tweedy, Browne Fund Inc.
P.O. Box 5160
Westboro, MA 01581
FOR MORE INFORMATION PROSPECTUS
If you want more information about the
Funds, the following documents are available upon July - , 1999
request:
o Annual/Semi-annual Reports - Additional
information about the Funds' investments is G
available in the annual and semi-annual TWEEDY, BROWNE
reports to shareholders. In the annual GLOBAL VALUE FUND
report, you will find a discussion of the
market conditions and investment strategies
that significantly affected the Funds'
performance during the last fiscal year. A
TWEEDY, BROWNE
o Statement of Additional Information AMERICAN VALUE FUND
(SAI) - The SAI provides more detailed
information about the Funds and is
incorporated into this prospectus by
reference.
<TABLE>
<CAPTION>
<S> <C> <C>
You can request free copies of reports and SAI, Shareholder Services: 800-432-4789, Press 2
request other information and discuss your
questions about the Funds by contacting your Daily Net Asset Value Prices: 800-432-4789, Press 2
financial adviser or the Funds at: Tweedy,
Browne Fund Inc., c/o First Data Investor For Special Assistance
Services Group, Inc., P.O. Box 5160, Westborough, In Opening A New Account: 800-432-4789, Press 2
MA 01581, 800-432-4789, Press 2.
Fund Information Kit: 800-432-4789, Press 1
You can review the Funds' reports and SAI at the
Public Reference Room of the Securities and
Exchange Commission and on the SEC's website Web site: www.tweedy.com
(http://www.sec.gov). You can obtain copies for
a fee by writing or calling the Public
Reference Room, Washington, DC
20549-6009; 800-SEC-0330.
</TABLE>
Investment Company
Act File No. 811 - 7458
<PAGE>
TWEEDY, BROWNE GLOBAL VALUE FUND
TWEEDY, BROWNE AMERICAN VALUE FUND
each a series of
TWEEDY, BROWNE FUND INC.
STATEMENT OF ADDITIONAL INFORMATION
July __, 1999
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 JULY __, 1999, AS AMENDED FROM
TIME TO TIME. COPIES OF THE CURRENT PROSPECTUS 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, WESTBOROUGH,
MASSACHUSETTS 01581 OR BY CALLING 800-432-4789.
<PAGE>
TABLE OF CONTENTS
Page
Investment Objectives and Policies.......................... 1
Performance Information..................................... 20
Operation of the Funds...................................... 23
Taxes....................................................... 32
Portfolio Transactions...................................... 37
Net Asset Value............................................ 38
Additional Information..................................... 39
Financial Statements...................................... 40
Appendix A................................................. A-1
<PAGE>
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") (collectively, the "funds") 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 primarily 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 a globally
oriented portfolio, 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 u.S. 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
rocedures 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.
.........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.
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.
.........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
rate 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 (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 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
Euro-Denominated Securities. On January 1, 1999, the European Monetary Union
("EMU") implemented a new currency unit, the Euro, which is expected to reshape
financial markets, banking systems and monetary policies in Europe and other
parts of the world. The countries that have converted to the Euro include
Austria, Belgium, France, Germany, Luxembourg, the Netherlands, Ireland,
Finland, Italy, Portugal and Spain.
.........Since January 1, 1999, financial transactions and market information
including share quotations and company accounts, in participating countries have
been denominated in Euros. As of January 1, 1999, approximately [46%] of the
stock exchange capitalization of the total European market was reflected in
Euros, and participating governments will issue their bonds in Euros. Monetary
policy for participating countries is being managed by a new central bank, the
European Central Bank (ECB).
.........Although it is not possible to predict the long-term impact of the
Euro on the Funds, the short-term impact has been negligible. It is
possible that the transition will change the economic environment and behavior
of investors, particularly in European markets. In addition, investors
may begin to view those countries participating in the EMU as a single
entity. In the opinion of the Investment Adviser, there will be no
fundamental change in the investment philosophy of the Funds with the
advent of the Euro, nor will the Funds alter their policies to hedge
exposure to foreign currency back to the U.S. dollar. It is expected that
a foreign forward currency market will be established in the Euro once it
enters general circulation. The process of implementing the Euro also may
adversely affect financial markets world-wide and may result in changes in
the relative strength and value of the U.S. dollar or other major currencies.
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 upon 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.
<PAGE>
.........For purposes of the Investment Company Act of 1940, as amended
(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.
Illiquid Securities. Each Fund may invest a portion of its assets in 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.
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. 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 Services, a division of McGraw-Hill Companies, Inc. ("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.
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 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.
<PAGE>
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, 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"). 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 benefit from these
strategic transactions 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 they 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 hong kong dollars and the adviser believes that the value of such
dollars will decline against the u.S. Dollar, the adviser may cause the fund to
ENTER INTO A CONTRACT TO SELL YEN 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 of
1986, as amended (the "code"), for qualification as a regulated investment
company (see "taxes").
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.
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, five years 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.
Period Ended
12/31/98
Global Fund
1 year...................................... 10.99%
5 years..................................... 13.65%
Since inception............................. 15.16%
American Fund
1 year....................................... 9.59%
5 year...................................... 20.34%
Since inception.............................. 19.92%
<PAGE>
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 diversified series of
Tweedy, Browne Fund Inc., a Maryland corporation organized on January 28, 1993.
Tweedy, Browne Fund Inc. is an open-end management investment company.
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 on matters on which they are entitled to vote. The
Corporation is not required to and has no 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.
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 acts as investment 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. Amg is a publicly traded company
that acquires ownership interests in investment management firms. 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 separate investment advisory agreements each dated as of july 30,
1998 (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 code
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 sec 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 july 30, 1998, the adviser served pursuant to investment
advisory agreements dated october 9, 1997, and was entitled to an annual fee
equal to 1.25% Of each fund's average daily net assets. 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, 1999, March 31, 1998 and March 31,
1997, the Global Fund incurred $31,308,970, $23,717,001 and $14,318,034,
respectively, in investment advisory fees.
For the fiscal years ended March 31, 1999, March 31, 1998 and March 31,
1997, the American Fund incurred $13,473,779, $7,546,393 and $2,892,275,
respectively, in investment advisory fees after voluntary waivers of $121,000,
$105,730 and $284,262, 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 and Transfer Agent
First data investor services group, inc. (The "administrator" or
"investor services group") 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, 1999, the global fund incurred $1,042,815 in administration
fees. For the fiscal years ended march 31, 1998 and march 31, 1997, the global
fund incurred $734,106 and $1,313,340, respectively, in administration fees
after voluntary waivers of $86,035 and $84,934, respectively.
Prior to February 15, 1997, the Company paid Investor Services Group 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, 1999, the American Fund incurred $437,177 in
administration fees. For the fiscal year ended March 31, 1998, the American Fund
incurred $254,085 in administration fees, after a voluntary waiver of $22,539.
For the fiscal year ended March 31, 1997, the American Fund incurred $296,867 in
administration fees, after voluntary waivers 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.
Prior to February 15, 1997, the Company paid Investor Services Group 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.
Investor services group, 4400 computer drive, westborough, ma 01581, is
the funds' transfer, shareholder servicing and dividend paying agent.
Directors and executive officers
the corporation's activities are supervised by its board of directors.
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 1940 act, is indicated by an asterisk.
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Address; Age Position with Corporation Principal Occupation**
Bruce A. Beal, Age 62 Director Partner and Officer of various real estate
The Beal Companies development and investment companies. Real
177 Milk Street estate consultant.
Boston, MA 02109
Christopher H. Browne*+, President, Director Managing Director of Investment Adviser and
Age 52 Distributor
Arthur Lazar, Age 86 Director President of Lazar Brokerage (insurance
Lazar Brokerage brokerage)
355 Lexington Avenue
New York, NY 10017
Richard Salomon, Director Partner in Christy & Viener
Age 51 (law firm)
Christy & Viener
620 5th Avenue
New York, NY 10020
Anthony H. Meyer, Director Retired
Age 68
Box 1980
Edgartown, MA 02539
William H. Browne+, Treasurer Managing Director of Investment Adviser and
Age 54 Distributor
M. Gervase Rosenberger, Vice President General Counsel for Investment Adviser and
Age 48 and Secretary Distributor
John D. Spears, Age 50 Vice President Managing Director of Investment Adviser and
Distributor
</TABLE>
* 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. + Christopher Browne and William Browne are brothers.
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
Fund pays each of these unaffiliated Directors an annual Director's fee of
$8,000 and fees of $500 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,
1999. No executive officer or person affiliated with the Funds received
compensation from the Funds. No Director receives pension or retirement benefits
from the Funds.
<PAGE>
COMPENSATION TABLE
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL COMPENSATION FROM THE CORPORATION
AGGREGATE COMPENSATION FROM THE AND COMPLEX PAID
NAME OF PERSON CORPORATION TO DIRECTORS
AND POSITION
Christopher H. Browne $0 $0
Chairman of the Board and
President
Bruce A. Beal $20,000 $20,000
Director
Arthur Lazar $16,000 $16,000
Director
Richard Salomon $19,000 $19,000
Director
Anthony Meyer* $20,000 $20,000
Director
</TABLE>
* EFFECTIVE MAY 12, 1998, ANTHONY H. MEYERS WAS ELECTED A DIRECTOR OF THE
COMPANY.
Control Persons and Principal Holders of Securities
AS OF [JULY ___, 1999], THE FOLLOWING PERSONS OWNED 5% OR MORE OF THE
OUTSTANDING SHARES OF THE GLOBAL FUND AND THE AMERICAN FUND:
<TABLE>
<CAPTION>
<S> <C> <C>
[To Be Updated] Percent of Total
Shares
Fund Name Name and Address Outstanding
Tweedy, Browne Global Value Fund Charles Schwab & Co., Inc. %
101 Montgomery Street
San Francisco, CA 94104
Tweedy, Browne Global Value Fund National Financial Services Corp. %
P.O. Box 3908
Church Street Station
New York, NY 10008
Tweedy, Browne Global Value Fund Donaldson Lufkin & Jenrette %
P.O. Box 2052
Jersey City, NJ 07303
Tweedy, Browne American Value Fund Charles Schwab & Co., Inc. %
101 Montgomery Street
San Francisco, CA 94104
Tweedy, Browne American Value Fund National Financial Services Corp. %
P.O. Box 3908
Church Street Station
New York, NY 10008
Tweedy, Browne American Value Fund Donaldson Lufkin & Jenrette %
P.O. 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 [july ___, 1999], the directors and officers of the corporation
beneficially owned ____% of the outstanding common stock of the global fund and
____]% 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 july 30, 1998 (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 sec 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 funds; 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 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 stocks 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 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.
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 expenses 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 a regulated investment company and to avoid federal income tax at
the level of the fund.
Each fund will be required to report to the internal revenue service
(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 irs 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 places 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, 1999, march 31, 1998 and march 31, 1997, the global
fund incurred brokerage commissions of $3,474,835, $2,670,257 and $2,167,248,
respectively. For the fiscal years ended march 31, 1999, march 31, 1998 and
march 31, 1997, the american fund incurred brokerage commissions of
$563,102, $636,393 and $223,652, respectively. 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 of
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, 1999 and march 31, 1998, the global fund's
portfolio turnover rates were 23% and 16%, respectively. For the fiscal years
ended march 31, 1999 and march 31, 1998, the american fund's portfolio turnover
rates were 16% and 6%, 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, Inc. (the "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, Jr. 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 same day 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 quoted sale price prior to the close of regular trading.
Portfolio securities and other assets listed on a foreign exchange or through
any system providing for same day publication of actual prices are valued at the
last quoted sale price available before the time when assets are valued.
Portfolio securities and other assets for which there are no reported sales on
the valuation date are valued at the mean between the last asked price and the
last bid price prior to the close of regular trading. When the adviser
determines that the last sale price prior to valuation does not reflect current
market value, the adviser will determine the market value of those securities or
assets in accordance with industry practice and other factors considered
relevant by the adviser. All other securities and assets for which current
market quotations are not readily available and those securities which are not
readily marketable due to significant legal or contractual restrictions will be
valued by the adviser or at fair value as determined by or under the direction
of the board of directors. Debt securities with a remaining maturity of 60 days
or less are valued at amortized cost, which approximates market value, or by
reference to other factors (i.E., Pricing services or dealer quotations) by the
adviser.
<PAGE>
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 U.S. dollars on the basis of the
conversion of the local currencies (if other than U.S.) into U.S. dollars at the
2:00 p.m. New York time spot rate. Foreign currency exchange contracts are
valued using the relevant 2:00 p.m. New York time spot rate and future rate on
foreign currency contracts.
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.
ADDITIONAL INFORMATION
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 during any three-month period 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.
<PAGE>
Experts
Ernst & Young LLP, 200 Clarendon Street, Boston, MA 02116, serves as
independent auditors for the Funds. The financial statements and schedules of
investments of Tweedy, Browne Global Value Fund and Tweedy, Browne American
Value Fund at March 31, 1998 and for each of the periods indicated therein
appearing in this Statement of Additional Information have been audited by Ernst
& Young LLP 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, One
Boston Place, Boston, MA 02108, as custodian 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. In addition, the sec
maintains a web site (http://www.Sec.Gov) that contains the statement of
additional information, information incorporated by reference to this statement
of additional information and the prospectus and other information regarding
registrants that file electronically with the sec.
Financial Statements
THe funds' annual report for the fiscal year ended march 31, 1999 will
be filed by amendment.
<PAGE>
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.
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.
<PAGE>
PART C: OTHER INFORMATION
Item 23. Exhibits.
(a) (1) Articles of Incorporation is incorporated by reference to Exhibit 1
to Pre-Effective Amendment No. 2 to the Registration Statement ("Pre-Effective
Amendment No. 2").
(a) (2) Articles Supplementary is incorporated by reference to Exhibit 1 to
Post-Effective Amendment No. 1 to the Registration Statement ("Post-Effective
Amendment No. 1").
(b) By-Laws is incorporated by reference to Exhibit 2 to Pre-Effective
Amendment No. 2.
(c) Not Applicable.
(d) (1) Specimen Certificate for the Tweedy, Browne Global Value Fund is
incorporated by reference to Exhibit 4 to Pre-Effective Amendment No. 2.
(d) (2) Specimen Certificate for the Tweedy, Browne American Value Fund is
incorporated by reference to Exhibit 4 to Post-Effective Amendment No. 3 to the
Registration Statement ("Post-Effective Amendment No. 3").
(d) (3) Advisory Agreement between Registrant and Tweedy, Browne Company
L.P. dated June 2, 1993 relating to the Tweedy, Browne Global Value Fund is
incorporated by reference to Exhibit 5 to Pre-Effective Amendment No. 2.
(d) (4) Advisory Agreement between Registrant and Tweedy, Browne Company
L.P. dated December 8, 1993 relating to the Tweedy, Browne American Value Fund
is incorporated by reference to Exhibit 5(b) to the Registration Statement
("Post-Effective Amendment No. 5").
(d) (5) Advisory Agreement between Registrant and Tweedy, Browne Company
LLC dated October 9, 1997 relating to the Tweedy, Browne Global Value Fund is
incorporated by reference to Exhibit 5(c) to the Registration Statement
("Post-Effective Amendment No. 8").
<PAGE>
(d) (6) Advisory Agreement between Registrant and Tweedy, Browne Company
LLC dated October 9, 1997 relating to the Tweedy, Browne American Value Fund is
incorporated by reference to Exhibit 5(d) to the Registration Statement
("Post-Effective Amendment No. 8").
(d) (7) Advisory Agreement between Registrant and Tweedy, Browne Company
LLC relating to the Tweedy, Browne Global Value Fund and Tweedy, Browne American
Value Fund.*
(e) (1) Distribution Agreement between Registrant and Tweedy, Browne
Company L.P. dated June 3, 1993 relating to the Tweedy, Browne Global Value Fund
is incorporated by reference to Exhibit 6 to Pre-Effective Amendment No. 2.
(e) (2) Distribution Agreement between Registrant and Tweedy, Browne
Company L.P. dated December 8, 1993 relating to the Tweedy, Browne American
Value Fund is incorporated by reference to Exhibit 6(b) to Post-Effective
Amendment No. 5.
(e) (3) Distribution Agreement between Registrant and Tweedy, Browne
Company LLC dated October 9, 1997 relating to the Tweedy, Browne Global Value
Fund is incorporated by reference to Exhibit 6(c) to the Registration Statement
("Post-Effective Amendment No. 8").
(e) (4) Distribution Agreement between Registrant and Tweedy, Browne
Company LLC dated October 9, 1997 relating to the Tweedy, Browne American Value
Fund is incorporated by reference to Exhibit 6(d) to the Registration Statement
("Post-Effective Amendment No. 8").
(f) Not Applicable.
(g) (1) Custody Agreement between Registrant and Boston Safe Deposit and
Trust Company dated June 2, 1993 relating to the Tweedy, Browne Global Value
Fund is incorporated by reference to Exhibit 8 to Pre-Effective Amendment No. 2.
(g) (2) Amended and Restated Custody Agreement between Registrant and
Boston Safe Deposit and Trust Company relating to the Tweedy, Browne Global
Value Fund and the Tweedy, Browne American Value Fund dated December 8, 1993 is
incorporated by reference to Exhibit 8(b) to Post-Effective Amendment No. 3.
(g) (3) First Amendment to the Amended and Restated Custody Agreement
between Registrant and Boston Safe Deposit & Trust Company relating to the
Tweedy, Browne Global Value Fund and the Tweedy, Browne American Value Fund
dated December 31, 1996 is incorporated by reference to Exhibit 8(c) to
Post-Effective Amendment No. 7. -------------------------------- * To be filed
by amendment. (h) (1) Transfer Agent Agreement between Registrant and Unified
Advisers, Inc. dated June 2, 1993 relating to the Tweedy, Browne Global Value
Fund is incorporated by reference to Exhibit 9 to Pre-Effective Amendment No. 2.
(h) (2) Transfer Agent Agreement between Registrant and Unified Advisers,
Inc. relating to the Tweedy, Browne Value Fund is incorporated by reference to
Exhibit 9(b) to Post-Effective Amendment No. 3.
(h) (3) Transfer Agent Agreement between Registrant and First Data Investor
Services Group, Inc. dated May 9, 1997, relating to the Tweedy, Browne Global
Value Fund and the Tweedy, Browne American Value Fund is incorporated by
reference to Exhibit 9(c) to Post-Effective Amendment No. 7.
(h) (4) Administration Agreement between Registrant and The Boston Company
Advisors, Inc. dated June 2, 1993 relating to the Tweedy, Browne Global Value
Fund is incorporated by reference to Exhibit 9 to Pre-Effective Amendment No. 2.
(h) (5) Amended and Restated Administration Agreement between Registrant
and The Boston Company Advisors, Inc. relating to the Tweedy, Browne Global
Value Fund and the Tweedy, Browne American Value Fund dated December 8, 1993 is
incorporated by reference to Exhibit 9(d) to Post-Effective Amendment No. 3.
(h) (6) Amendment No. 1 to the Amended and Restated Administration
Agreement between Registrant and First Data Investor Services Group, Inc.
relating to the Tweedy, Browne Global Value Fund and the Tweedy, Browne American
Value Fund dated February 15, 1997 is incorporated by reference to Exhibit 9(f)
to Post-Effective Amendment No. 7.
(i) Opinion and Consent of Miles & Stockbridge is incorporated by reference
to Exhibit 10 to Post-Effective Amendment No. 1.
(j) Consent of Ernst & Young LLP, independent auditors.*
(k) Not Applicable.
(l) (1) Purchase Agreement dated June 2, 1993 relating to the initial
capital for the Tweedy, Browne Global Value Fund is incorporated by reference to
Exhibit 13 to Post-Effective Amendment No. 3.
<PAGE>
(l) (2) Purchase Agreement relating to the initial capital for the Tweedy,
Browne American Value Fund is incorporated by reference to Exhibit 13 to
Post-Effective Amendment No. 4 to the Registration Statement.
(m) None.
(n) Financial Data Schedules.*
(o) None.
Item 24. Persons Controlled by or Under Common Control with Registrant.
No person is controlled by the Registrant.
Item 25. Indemnification.
Under Registrant's Articles of Incorporation and By-Laws, as
amended, the Directors and officers of Registrant will be indemnified to the
fullest extent allowed and in the manner provided by Maryland law and applicable
provisions of the Investment Company Act of 1940, as amended, including
advancing of expenses incurred in connection therewith. Indemnification shall
not be provided, however, to any officer or director against any liability to
the Registrant or its security holders 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.
Article 2, Section 405.2 of the Maryland General Corporation
Law provides that the Articles of Incorporation of a Maryland corporation may
limit the extent to which directors or officers may be personally liable to the
Corporation or its stockholders for money damages in certain instances. The
Registrant's Articles of Incorporation, as amended, provide that, to the fullest
extent permitted by Maryland law, as it may be amended or interpreted from time
to time, no Director or officer of the Registrant shall be personally liable to
the Registrant or its stockholders. The Registrant's Articles of Incorporation,
as amended, also provide that no amendment of the Registrant's Articles of
Incorporation, as amended, or repeal of any of its provisions shall limit or
eliminate any of the benefits provided to Directors and officers in respect of
any act or omission that occurred prior to such amendment or repeal.
The Investment Advisory Agreements and Distribution Agreements
contain provisions requiring indemnification of the Registrant's investment
advisor and principal underwriter by the Registrant.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended may be permitted to Directors, officers and
controlling persons of the Registrant and the investment advisor and distributor
pursuant to the foregoing provisions or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Director, officer, or controlling person of the Registrant and the
Distributor in connection with the successful defense of any action, suit or
proceeding) is asserted against the Registrant by such Director, officer or
controlling person or the Distributor in connection with the shares being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 26. Business and Other Connections of Investment Adviser.
See "Management of the Funds?" in the Prospectus regarding the
business of Tweedy, Browne Company LLC (the "Investment Adviser"). The
Investment Adviser also acts as the adviser for the following investment
company: Tweedy, Browne Global Value Fund, Inc. The address of the Investment
Adviser is 52 Vanderbilt Avenue, New York, New York 10017. Set forth below is a
list of each Managing Director of the Investment Adviser.
<TABLE>
<CAPTION>
<S> <C>
NAME EMPLOYMENT
Christopher H. Browne Associated with the Investment Adviser since 1969. He is a managing
director of the Investment Adviser, and a general partner of TBK Partners,
L.P. and Vanderbilt Partners, L.P. Mr. Browne serves as a Trustee of the
University of Pennsylvania and sits on its Investment Committee; he is a
member of The Board of Trustees of The Rockefeller University. He also
serves on the Faculty Advisory Committee of The Kennedy School at Harvard
University's program in behavioral finance, and is a Director of Tweedy,
Browne Fund Inc. He is a frequent speaker on behavioral psychology and
financial decision making as it relates to international investing.
Mr. Browne holds a B.A. degree from the University of Pennsylvania.
William H. Browne Associated with the Investment Adviser since 1978. He is a managing
director of the Investment Adviser, and a general partner of TBK Partners,
L.P. and Vanderbilt Partners, L.P., both private investment partnerships.
He also serves as a Director of Fairfield Aerospace Corp. and Dornier
Lufthart 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 Associated with the Investment Adviser since 1974. He is a managing
director of the Investment Adviser, and a general partner of TBK Partners,
L.P. and Vanderbilt Partners, L.P. 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 Associated with the Investment Adviser since 1989. He is a managing
director of the Investment Adviser. Previously, he worked in mergers and
acquisitions at Bear Stearns, and as a consultant for Arthur D. Little. Mr.
Shrager holds the degrees of B.A. and M.I.A. from Columbia University.
Robert Q. Wyckoff, Jr. Associated with the Investment Adviser since 1991. He is a managing
director of the Investment Adviser. Prior to joining the Investment
Adviser, he held positions with Bessemer Trust, C.J. Lawrence, J&W Seligman,
and Stillrock Management. Mr. Wyckoff received a B.A. from Washington & Lee
University and a J.D. from the University of Florida School of Law.
</TABLE>
Item 27. Principal Underwriters.
(a) Tweedy, Browne Value Fund (SICAV) offshore fund series not offered to U.S.
persons.
(b) Not Applicable.
(c) Not Applicable.
<PAGE>
Item 28. Location of Accounts and Records.
All accounts, books and other documents required to be
maintained by Registrant by Section 31(a) of the Investment Company Act of 1940,
as amended, and the rules thereunder will be maintained at the offices of the
Administrator at 101 Federal Street, Boston, Massachusetts 02110 or at the
offices of the Adviser at 52 Vanderbilt Avenue, New York, New York 10017.
Item 29. Management Services.
Not Applicable.
Item 30. Undertakings.
Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, the Registrant has duly caused this
Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Boston, the
State of Massachusetts on the 7th day of May, 1999.
TWEEDY, BROWNE FUND INC.
By: CHRISTOPHER H. BROWNE
Christopher H. Browne
President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Post-Effective Amendment No. 9 to the Registration Statement has been
signed below by the following persons in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title Date
CHRISTOPHER H. BROWNE Chairman of the Board, May 7, 1999
- --------------------------------------------
- --------------------------------------------
Christopher H. Browne President and Director
WILLIAM H. BROWNE Treasurer and Director May 7, 1999
- --------------------------------------------
- --------------------------------------------
William H. Browne
BRUCE A. BEAL Director May 7, 1999
- --------------------------------------------
- --------------------------------------------
Bruce A. Beal
ARTHUR LAZAR Director May 7, 1999
- --------------------------------------------
- --------------------------------------------
Arthur Lazar
RICHARD B. SOLOMON Director May 7, 1999
- --------------------------------------------
Richard B. Salomon
ANTHONY H. MEYER Director May 7, 1999
- --------------------------------------------
Anthony H. Meyer
</TABLE>
