[graphic omitted]
TWEEDY, BROWNE
GLOBAL VALUE FUND
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SEMI-ANNUAL
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SEPTEMBER 30, 1996
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[graphic omitted]
TWEEDY, BROWNE
AMERICAN VALUE FUND
<PAGE>
TWEEDY, BROWNE FUND INC.
Investment Manager's Report .......................................... 1
Tweedy, Browne Global Value Fund:
Portfolio of Investments ........................................... 15
Schedule of Forward Exchange Contracts ............................. 24
Statement of Assets and Liabilities ................................ 30
Statement of Operations ............................................ 31
Statement of Changes in Net Assets ................................. 32
Financial Highlights ............................................... 33
Notes to Financial Statements ...................................... 34
Tweedy, Browne American Value Fund:
Portfolio of Investments ........................................... 41
Schedule of Forward Exchange Contracts ............................. 48
Statement of Assets and Liabilities ................................ 49
Statement of Operations ............................................ 50
Statement of Changes in Net Assets ................................. 51
Financial Highlights ............................................... 52
Notes to Financial Statements ...................................... 53
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This report is for the information of the shareholders of Tweedy, Browne
Fund Inc. Its use in connection with any offering of the Company's shares is
authorized only in a case of a concurrent or prior delivery of the Company's
current prospectus. Tweedy, Browne Company L.P. is a member of the NASD and is
the Distributor of the Company.
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<PAGE>
TWEEDY, BROWNE FUND INC.
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Investment Manager's Report
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[Photo of Will Browne, John Spears and Chris Browne]
Will Browne, John Spears and Chris Browne
To Our Shareholders in Tweedy, Browne Fund Inc.:
We are pleased to present the semi-annual report for Tweedy, Browne Global
Value Fund (the "Global Value Fund") and for Tweedy, Browne American Value Fund
(the "American Value Fund") for the six months ended September 30, 1996. With
this report, we are experimenting with a combined report for our two funds. Many
of you own shares in both Funds as do the people at Tweedy, Browne. Moreover,
our investment philosophy and its application are substantially the same,
irrespective of whether we are investing in U.S. stocks or international stocks.
We would appreciate your comments on this format.
For the six months ended September 30, 1996, the net asset value of the
Global Value Fund's shares increased 3.2%* to $14.74 per share, as compared to a
gain of 1.5% in the Morgan Stanley Capital International ("MSCI") Europe,
Australasia, Far East ("EAFE") index in U.S. dollars. The results for the index
in local currency were 3.5% over the same period. Many of us think of investment
performance on a calendar basis; the results for the Global Value Fund for the
nine months ended September 30, show a gain of 13.8%* as compared to a gain of
4.4% for EAFE in U.S. dollars, and 9.1% in local currency. For the same six- and
nine-month periods, the net asset value of the American Value Fund rose to
$14.93 per share, a gain of 4.5% and 12.7%*, respectively, as compared to the
Standard & Poor's 500 Stock Index ("S&P 500"), which rose 7.7% and 13.5%,
respectively.
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* The Global Value Fund had a total return for the year ended September 30,
1996 of 17.9% and an average annual total return since inception (June 15,
1993) through September 30, 1996 of 13.5%. The total return for the year
ended September 30, 1996 for the American Value Fund was 16.1% and the
average annual total return since inception (December 8, 1993) through
September 30, 1996 was 16.0%. Past performance is not a guarantee of future
results and total return and principal value of investments will fluctuate
with market changes; and shares, when redeemed, may be worth less than their
original cost.
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Our gains over the past six and nine months cannot be attributed to any
particular geographic or sector bets made by us. ("Bet" is not a word in our
investment vocabulary.) The composition of the Funds has not changed
significantly over the past six months, either in terms of country allocations
or number of issues in any particular industry. The total number of issues in
the Global Value Fund has increased somewhat to 237 from 223, but in total we
have experienced relatively little turnover. In the American Value Fund the
total number of issues has increased from 153 to 168. Turnover for the six
months was 10% in the Global Value Fund and 0% in the American Value Fund, which
means that our gains in 1996 to date have not resulted in much taxable gain.
Portfolio turnover in our opinion should be low in a true value fund. It
should also be low in a true growth fund if the manager, as they often claim,
buys good, long-term growing companies. In our opinion, high turnover is an
indication of "momentum" investing, which we consider to be another form of
market timing. While this investment approach can produce good gross performance
numbers, it may not produce particularly good net, after tax results. The
Federal long-term capital gains tax rate is now 28% and requires a holding
period of a year and a day. Short-term gains are taxed at the marginal Federal
tax rate of 39.6%. If a fund was up 10% and the results were all realized
long-term capital gains, the investor would net 7.2% after tax. If the gains
were short-term in nature, the investor would have a net, after tax return of
only 6.04%. To the extent the fund manager can avoid realizing gains in any
particular year, and thus avoid paying taxes, the investor has the advantage of
having all of his unrealized gains "working" in subsequent years to possibly
produce further gain. If you are like us, there is a further emotional high
which comes from not paying taxes in any particular year, or at least paying as
little tax as possible.
We have been asked "When do we sell a stock?" Too often we seem to talk only
about our criteria for buying and not our criteria for selling. Obviously, if we
are to avoid riding a stock up and back down, we must realize gains from time to
time. The criteria for selling a stock depends on the criteria for purchasing a
stock. In a very simplistic way, if we bought a stock because it was selling at
a discount to book value, such as two-thirds of book value, we would begin to
sell as the share price approached book value. If we bought a stock at
two-thirds of net current assets per share (current assets less all liabilities
divided by the number of shares outstanding) we would sell at a value equal to
net current assets per share. If we bought a stock because it had a low
price/earnings ratio, say 7 to 10 times, we would sell at a P/E of 10 to 14
times. The range of P/E buy and sell points varies depending on the nature of
the business. Businesses with steadier historical earnings and higher relative
returns on capital are worth more than highly cyclical companies with lower
average returns on capital. A third category of investments are securities
bought based on our estimate of intrinsic value of the company or, as it is
sometimes called, private business value. This is an estimate of what the
company would be worth in the event it were to be sold in an arm's length
transaction between a knowledgeable buyer and a knowledgeable seller. Here,
comparisons are made to acquisition prices of similar companies. Our goal is to
buy these types of companies at prices equal to or less than 60% of intrinsic
value and to begin to sell them at 90% of intrinsic value.
As in life, nothing is ever completely black and white. Some stocks have the
characteristics of more than one of the above categories and, therefore, some
qualitative judgment comes into play in our buy and sell decisions. However, for
the vast majority of our investments the buy and sell criteria are fairly cut
and dry. As we have said in the past, we believe our greatest contribution to
our investment process is establishing the criteria and adhering to it at all
times. The actual execution of our investment process is not that difficult.
While we believe we are competent securities analysts, we are not geniuses. The
task of securities analysis is not unlike the work performed by any competent
newspaper reporter. We gather information by asking questions of management,
competitors and experts, some of whom are clients of Tweedy, Browne. There is no
magic, no divine inspiration required to read an annual report and ask questions
about accounting treatments, profit margins, product developments or
competition. The large, broadly held stocks all have an army of securities
analysts covering them, most of whom have degrees from impressive colleges and
graduate schools. We do not bring any unique talent to the task of following the
quarterly projections of American Express or Nestle and are better off talking
with someone who is paid almost exclusively to do so. And we do not think that
we will discover anything that a legion of other securities analysts will not
have discovered by visiting a research laboratory at Johnson & Johnson. The most
important thing we do is to decide which information is important and relevant
to an investment decision, and to make that decision in the framework of a
proven investment model.
In our humble opinion, entirely too much time and energy is devoted to
information that is not relevant to success in investing. Each day, the
financial news shows on television and radio devote a great deal of time to
stock market pundits who tell us why the market rose or fell that day. To us
these are like reports on why your spouse was in a good mood or a bad mood.
Maybe they had a headache or maybe they just heard that they won the lottery.
These daily mood swings have little to do with your overall opinion of your
spouse and would almost certainly not lead you to divorce him or her based on
one grumpy day. So why would one day's market activity lead you to sell your
portfolio or conversely, mortgage your house and put all the proceeds into the
market? The seemingly endless, daily predictions about "where the market is
going" are, in our opinion, equally absurd. If anyone could consistently and
accurately make these predictions, the world would canonize them. Furthermore,
if someone could actually make these predictions, why would they go on TV and
tell us? If we were lucky enough to have this great foresight, we would keep it
a secret and make zillions trading on our unique expertise. In July, with broad
press coverage, one famous pundit reversed her opinion from buy to sell and
predicted that the market was going into a period of decline. If you had
followed her advice on the day it hit the press, you would have missed a 12%
rise in the S&P 500 since then.
At Tweedy, Browne, we spend a significant portion of our time trying to
determine how we can add value to the investment process, by which we mean, how
can we beat the indexes over long periods of time. We have been working together
managing money since the mid-1970s. Along with Jim Clark, who retired in 1995,
we have put together a 21-year investment record. Our own experience, together
with numerous academic studies on the fundamental financial characteristics of
portfolios that have beaten the relevant stock market index, have brought us to
certain conclusions which we would like to share with you.
1. INVEST IN STOCKS WITH THE KINDS OF EXTREME INVESTMENT CHARACTERISTICS
THAT HAVE PRODUCED MARKET-BEATING RETURNS IN THE PAST. Stocks ranked on
price/earnings ratios or price/book value ratios that have been cheaper than 80%
to 90% of all stocks have, on average, outperformed most stock market indexes
over long measurement periods in the past. Our booklet, What Has Worked in
Investing, describes more than 40 studies of investment characteristics that
have provided above market returns in the past, both in the U.S. stock market
and throughout the world. The stocks we own in Global Value Fund and in our
American Value Fund are generally in the extreme bottom 10% to 20% "value
layer", which have produced market-beating returns in the past. Furthermore,
many of our U.S. stocks have extreme value characteristics with respect to
insider buying (i.e., officers and directors) and company share repurchases.
These two characteristics have also been associated with above market returns.
Recent proprietary empirical research, which has been incorporated into our
investment process, has indicated that stocks possessing certain combinations of
two or more value characteristics perform even better than the average low P/E
or low price/book value approach. This is a bit like breeding a prizewinning
show dog by picking out parents that are beautiful, strong and intelligent. For
example, we recently purchased shares for the American Value Fund in
Transatlantic Holdings, Inc., a leading global reinsurance company that has a
compound rate of growth in earnings per share of 16% for the past eight years.
It enjoys a high return on capital and one of the lowest expense ratios in its
industry. The company is 49% owned by American International Group (AIG) whose
well-respected chairman, Maurice Greenberg, is also chairman of Transatlantic
Holdings. AIG has also been a consistent buyer of Transatlantic's shares. The
Fund paid approximately ten times estimated earnings for its holdings, which
places it in the bottom 10% of all U.S. stocks ranked according to
price/earnings ratios. In the Global Value Fund, we recently bought shares in a
Swiss paper company named Attisholz Holding AG. Our shares were purchased at 60%
of book value, which does not reflect the current value of certain timberlands.
At this price, Attisholz is in the bottom 4% of all global stocks on a
price/book value basis.
2. COVERAGE OF ALL MARKET CAPITALIZATIONS INCLUDING SMALL CAP STOCKS IS
IMPORTANT. We do not divide the universe of all stocks into market
capitalization segments, and eliminate from consideration stocks that are too
big or too small. We have had attractive returns from large and small cap stocks
alike. Of the more than 10,000 publicly traded stocks in the U.S., 9,000 have
market caps of less than $1 billion, which means most stocks are small cap. The
most extreme areas of undervaluation often are found in small cap stocks. In
fact, many stocks are small cap as a result of a depressed stock price. After
the stock has gone up, it may no longer be small cap. Small cap stocks are also
not as well covered by investment analysts and may therefore fall off the radar
screen of the investment community and become even more undervalued for lack of
interest. We recently read some conclusions drawn by another investment adviser,
J. Carlo Cannell of Cannell Capital Management in San Francisco, which we found
interesting. Mr. Cannell found that in the past 18 months about 12,000 U.S. and
foreign companies made periodic filings with the Securities and Exchange
Commission. Of these, "77% lack consistent research coverage as defined by an
analyst ratio of less than two". The larger the company, the more likely it is
to have all financial information quickly reflected in its stock price.
Moreover, such companies are less likely to turn up in the realm of extremely
undervalued companies because the investment community rewards companies with
strong information flow with higher valuations. However, in general, only the
largest cap companies have the potential of generating sufficient corporate
finance fees or commissions from trading their shares to justify the expense to
the investment banking and brokerage firms of having an analyst follow their
stock.
Academic research has indicated a long-term statistical association between
smaller market capitalization and exceptional investment returns. In our March
1996 Annual Report for the Tweedy, Browne American Value Fund, we cited a study
presented in BARRON'S which showed that over a 69 year-period from 1926 to 1994,
small cap value significantly outperformed large cap value, small cap growth or
large cap growth. (This article, The Small Cap Myth, BARRON'S, December 4, 1995,
was authored by George C. Pierides, an investment adviser with Fox Asset
Management in Little Silver, N.J. In our previous report we omitted mention of
Mr. Pierides' name, for which we apologize.) The relatively small quantity of
assets under management at Tweedy, Browne provides an advantage over managers of
much larger pools of capital in terms of our ability to invest a meaningful
portion of our Funds' assets in small cap companies. Simply stated, size matters
and bigger is not necessarily better. Currently, 52% of the Global Value Fund's
and 44% of the American Value Fund's assets are invested in companies with
market capitalizations of less than $1 billion. The greatest part of this small
cap exposure is in companies with market capitalizations below $500 million; 40%
for the Global Value Fund and 37% for the American Value Fund.
The following table shows the universe of companies in the U.S. ranked by
market capitalization based on data from Disclosure, and illustrates how much
the universe of meaningful investment opportunities shrinks for an adviser with
$20 billion or more under management.
<TABLE>
<CAPTION>
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PORTFOLIO COMPANY
PERCENTAGE: NUMBER OF ISSUES PERCENTAGE
WHAT 5% OF NEEDED TO INVEST WHAT 1% OF A
NUMBER OF EACH COMPANY 1% OF A $20 BILLION $20 BILLION
COMPANIES AT REPRESENTS AS PORTFOLIO ($200M) PORTFOLIO ($200M)
MARKET THIS MARKET A % OF A $20 AT THIS PORTFOLIO REPRESENTS AS A %
CAPITALIZATION CAP OR ABOVE BILLION PORTFOLIO PERCENTAGE OF EACH COMPANY
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<S> <C> <C> <C> <C>
$5 billion and above 308 1.25% 80 stocks 4%
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$4 billion and above 381 1.00 100 5
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$3 billion and above 653 .50 200 10
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$1.5 billion and above 800 .375 267 13
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$1.0 billion and above 1,081 .250 400 20
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$500 million and above 1,701 .125 800 40
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$100 million and above 4,941 .0125 8,000 400
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$10 million and above 6,562 .0025 40,000 2,000
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</TABLE>
Most of the academic studies we have seen that conclude that value
investment characteristics provide better returns are based on a broader
universe of stocks than 500, 750, or even 1,000. There are about 10,000 public
companies. Making a case for value investing is not as academically valid if the
universe of investment opportunities is reduced to less than a thousand names
due to the constraint of too much money under management. In a recent article in
The Wall Street Journal, a comparison was made of the investment results of
value and growth managers. While value beat growth statistically, the individual
value managers were not doing as well as the individual growth managers, either
relatively or absolutely. One explanation offered is that value managers may not
have the courage to actually practice their philosophy when times are at their
worst. Will a value manager actually have the courage to buy a truly beaten-up
stock for fear it may go bankrupt and make him or her look like a fool? The
value index would because the index has no emotions. Such down-trodden stocks
may be the ones that statistically give value an edge, but in practice the
manager may not be willing to buy them precisely when they should be bought. We
offer another possible explanation: the value edge may be based on a broader
universe of stocks than many, if not most, value managers use to find investment
opportunities. For example, the price- to-book value ratio of the bottom tenth
of all 4,764 stocks in the Bloomberg database with market caps above $50 million
starts at 27% of book value and ends at 116% of book value. This 27% to 116% of
book value "shopping aisle" has 470 stocks from which to choose. Among the 69
stocks with market caps over $20 billion, the lowest price/book value ratio is
151%. As demonstrated in numerous empirical studies that were based on the broad
universe of stocks, the advantage of value investing over growth investing may
not be statistically significant if a manager of $20 billion, due to size
constraints, can only consider investments in 5% to 10% of the stocks in that
broad universe. In practice, the empirical study findings may not apply if 90%
to 95% of the broad universe of stocks are not considered for investment because
they are too small.
3. STATISTICS AND SPECIFICS. While we spend a great deal of time studying
the fundamental financial characteristics of groups of stocks that produce
better than market returns, what we call our underwriting criteria, we also do
company specific research to define further models of value. Over the past
twenty some odd years, Tweedy, Browne affiliates have owned and sold five
private companies and the partners have been on ten corporate boards of
directors. This has provided us with hands on experience in valuing businesses
and made us somewhat skeptical of the ability of investment analysts to predict
future earnings. We speak to numerous corporate managers and other smart
business people, many of whom are our clients. We watch insider purchases of
company stock for indications of value and grade the value of this information
based on who is doing the buying. The gathering of this information often leads
to further insights about what true value is. Companies are generally bought by
other companies; i.e., business men and women who hopefully know something about
the business they are acquiring. In one case we noticed a smart private investor
was accumulating shares in a paper company that was selling well below book
value. At the time we had a client who was a competitor of this paper company.
We called our client and went through a very detailed valuation of the other
company. Who knows better what a company is worth than a likely
buyer/competitor? This analysis led us to conclude that the company was indeed
worth far more than the market price of its stock despite the fact that it was
reporting little or no earnings at the time. It turned out to be a very
profitable investment. This kind of research, what we call appraisal analysis or
the specific valuation of a business, is not what Wall Street research is
generally all about. Most investing is earnings momentum driven; i.e., will
company X earn more or less next quarter or next year? Consequently, most
analysts spend their time making earnings predictions rather than placing values
on companies. Doing our own research permits us to look for what we believe is
important and expands our ability to make specific value judgements.
4. WE DO NOT MIMIC THE INDEX. A famous, successful investment manager once
said, "If you are going to beat the index, you can't look like the index".
Today, most institutional money management is measured by comparisons to an
index. In the case of Tweedy, Browne Global Value Fund, the comparison is most
often made to the Morgan Stanley Capital International ("MSCI") Europe,
Australasia, Far East ("EAFE") index which can either be calculated in U.S.
dollars or local currency. If one chose to hedge the foreign currency exposure
as we do, the choice would be the local currency form of the index. In the U.S.,
the index of choice is the Standard & Poor's 500 Stock Index as opposed to the
Dow Jones Industrial Average, which has only 30 stocks and is considered to be
too narrow. There are numerous sub-indexes depending on one's particular
investment style. One year more than ten years ago, we had a client whose
account was up approximately 35% as compared to 25% for the S&P 500 who wrote to
us and said we had underperformed our reference index, which was up 37%. As we
have discussed in previous letters, the anointed reference index becomes the
"benchmark" and money managers manage to the benchmark. Standard deviation,
which measures the volatility of one's performance against the benchmark, has
become more important than absolute performance. Hence, the money management
industry has come to creating portfolios that "mimic" the reference index.
Portfolios will always have some representation in every major industrial group
so as not to "deviate" significantly from the results of the benchmark. We do
not do this. If a particular industry or country has a large number of cheap
stocks, we will own a number of companies in that industry or country. If a
particular industry or country is in our opinion overvalued, we may not own any
stocks in that industry or country. For example, at September 30 we had 14.5% of
the Global Value Fund's assets invested in 26 companies in Switzerland, which is
far greater than its EAFE weighting of less than 6%. Similarly, 4.1% of the
Global Value Fund's assets were invested in tiny Finland, which accounts for a
mere 0.6% of EAFE, while only 3.2% of the Global Value Fund's assets were
invested in the United Kingdom, which accounts for 17% of the index.
The result is that our results tend to be lumpy. We invest for the long
term, not the short term. We believe, rightly or wrongly, that it is more
important to keep our eye on a ten or twenty year goal than to be obsessed with
quarter-to-quarter or even year-to-year results. Over the past 21 years we have
significantly beaten the averages, although about one-third of the time the
averages have beaten us. Sometimes the averages have beaten us several years in
a row. We don't care. We have more than $100 million of our own money, which
represents more than 90% of our liquid net worth, invested alongside our
clients, and we have no intention of changing that. Our employees also have a
vested interest in the success of our investment style, as the bulk of their
profit sharing plan is invested in both our Funds. If we invest in something
different than our clients, it is because we are volunteering to be the guinea
pigs. If it works, the clients can participate. Our net worth has not been built
on our "alternative" investments. What you eat, we eat. And we eat it first.
That is how we approached investing internationally. We invested in foreign
securities for many years, learning the differences in accounting, stock
markets, etc. before we offered this investment alternative to our clients. The
partners of Tweedy, Browne who jointly manage the Funds do not run alternative
portfolios for their money, nor do we "cherry pick" what we think are the best
stocks for our own portfolios.
5. WE WANT TO STAY AS FULLY INVESTED AS POSSIBLE. Empirical research has
shown that 80% to 90% of all investment returns occur in short spurts that
amount to 2% to 7% of the holding period. The rest of the time, returns have
been minimal. As the slogan for the New York Lottery says, "You have to be in it
to win it." Another sage said, "It's not timing the market, it's time in the
market". In the past the returns we have experienced from investing in value
stocks have in the long run beat cash. We have no reason to think that will
change. Fortunately, stocks as measured by the S&P 500 or EAFE on average go up
over time. As the indexes are merely a reflection of the value of a large
portion of corporate wealth, and since corporate wealth on average increases as
earnings and economies grow, the indexes should continue to rise. This does not
mean that bear markets have been outlawed. Stock markets will from time to time
become over-valued and thus be subject to correction. And never underestimate
the ability of governments to muck things up in the short run, with the result
being a decline in stock prices. However, on average the indexes go up more than
they go down. Determining when the market will rise and when it will fall, and
buying and selling in accordance with the ups and downs, would produce a
wonderful result. Unfortunately, we do not know anyone who has been able to
accomplish this. Therefore, we try to stay fully invested in stocks that have on
average beat the market and ignore or suffer through those times when stocks go
down. To be honest, in the past we were guilty of sitting on too much cash in
our individually managed accounts before empirical research and our own
experience convinced us of the error of our ways. In the late 1980s, as one
client pointed out, we were closet market-timing by buying less than a full
position in many stocks on the assumption that the market might retreat and we
would be able to buy more at a cheaper price. Cash and lower investment returns
were the result of this inaction. Over the past 21 years, the return on our
stocks has beaten the return on the cash in our portfolios by a factor of nearly
3 to 1.
6. KEEP TURNOVER LOW. In the past, our value approach to investing has
resulted in an average holding period for a given stock of 3 to 5 years and
below average turnover rates. Low turnover reduces total commission costs in a
portfolio and the impact that buying and selling can have on share prices.
Although low turnover may not have much impact on the reported, pre-tax return
of a given portfolio, it can have a significant impact on the after tax return
as we discussed earlier in this report. Fortunately, mutual fund monitoring
services such as Morningstar report portfolio turnover, and we think investors
are wise to pay attention to these numbers. In the past, more than 90% of our
realized gains have been taxed at more favorable long-term capital gains rates.
7. ACT LIKE AN OWNER. We encourage actions on the part of companies we own
which enhance shareholder value, such as share buy-backs, spin-offs, or the sale
of all or a part of the company. In one recent example, we, together with other
large shareholders of one company, requested and held a meeting with management
and certain directors. The purpose of the meeting was to discuss the company's
poor performance and to suggest that if management could not improve the
company's overall results, they should consider a sale of the company to a
competitor who could affect savings through a consolidation of the businesses.
The meeting was particularly frank yet friendly. Within several months the
company was acquired by a competitor at a 30% premium to the stock price at the
time of our meeting. We believe it is important to talk with managements as
owners and to voice our opinion when actions are proposed that we do not believe
serve the long-term interests of the shareholders.
8. FOCUS, FOCUS, FOCUS. At Tweedy, Browne we only manage equity money, and
we only manage it in one way. The three partners who own the firm also make all
the investment decisions. After all, we have more than $100 million of our own
money invested alongside our clients and shareholders and we want to see that
money grow. Unlike many money management firms, Tweedy, Browne is not run by
marketing people who spend their time thinking of new investment products to
offer to the world. We do not create bond funds or growth funds or industry
specific funds and then go hire a portfolio manager to run them. And as we have
grown, we have attempted to control the amount of time that is spent on
non-investment activities. We have tried to keep our business rather simple,
which makes coming to work all the more enjoyable for us.
9. CONTINUOUS IMPROVEMENT. We are avid students of the investment process.
In recent years we have increased our knowledge, through the use of empirical
data, of investment characteristics and patterns that have been associated with
above-market returns. Recent proprietary empirical research has indicated that
stocks possessing certain combinations of value related investment
characteristics have outperformed groups of stocks that only possessed a single
characteristic such as low price in relation to book value or a low
price/earnings ratio. We incorporate these insights about what works best into
our search for investment candidates and our judgment and decision-making
process. We are also increasing our use of technology to assist us in the
analytical number crunching and information assembly work that in years past was
done by hand. For example, since 1990 we have been able to quickly combine daily
observation of the investment behavior of "insiders", corporate officers and
directors, comprising thousands of transactions in their particular company's
shares over the course of a typical month, with fundamental financial
information for thousands of companies. Computer sifting through this waterfall
of information has often identified, like blips on a radar screen, good
candidates for further, in-depth research. A process improvement that we are
currently developing will enable us to quickly identify for further research
those companies within the low price-to-book value, low price/earnings ratio,
low price-to-sales and low price-to-private business value layer that show more
immediate signs of a significant spurt in earnings and increase in intrinsic
value. Empirical research indicates that within the value layer of stocks,
companies that are about to experience a significant earnings increase produce
exceptional returns. And we are continually looking for new ways that computers
and information technology can provide an investment edge.
10. ENJOY WHAT YOU DO. We believe it is difficult to succeed at any thing if
you do not enjoy it. We truly enjoy the investment process, the search for new
bargains and the analysis of a particular business or industry. We work with a
fine group of people and strive to create an environment where people like to
come to work. After all, we spend more of our waking hours at Tweedy, Browne
than anywhere else, so it should be fun.
As a postscript, one shareholder inquired about the cost of mailing to our
shareholders the recent article from the Sunday New York Times about Tweedy,
Browne. The cost of this mailing was not borne by the Funds but was paid for by
Tweedy, Browne. All requests for information or a prospectus are also paid by
Tweedy, Browne. The only printing and mailing expenses paid by the Funds are for
the annual and semi-annual reports and the yearly update of the prospectus, all
of which are required to be sent to shareholders. We are not of the opinion that
shareholders should have to pay for any marketing of your Funds.
PORTFOLIO REVIEW
As is our custom, we like to review the status of our Funds' portfolios by
putting them to what we call the "value test". To do this, we calculate the
percent of the portfolio invested in stocks selling below book value and the
percent invested in low price/earnings ratio stocks and compare these to a
universe of stocks. As of September 30, 1996 the Tweedy, Browne American Value
Fund had 26% of its assets invested in 85 stocks selling at a weighted average
of 76% of book value. In the Bloomberg database of 3,767 stocks with a market
capitalization of $100 million or more, only 2% of the stocks were this cheap in
relation to book value. A further 51% of the portfolio was invested in 45 stocks
at a weighted average of 10.4 times actual or estimated earnings. Using the same
Bloomberg database, only 10% of the companies are this cheap. Approximately 16%
of the American Value Fund's portfolio is invested in stocks that do not fall
clearly into either of the above categories, but are selling at discounts to
private market value, or at discounts to the value of certain hidden assets such
as land or cable television franchises, etc. This category also includes
companies that are historically depressed in price but where the insiders,
officers and directors are buying shares. The remaining 7% of the portfolio
consists of cash and cash equivalents.
In the Tweedy, Browne Global Value Fund, 38% of the assets were invested in
140 stocks selling at a weighted average of 67% of book value. Of the 7,897
stocks with a market capitalization of $100 million or more in the Worldscope
global database, less than 4% were selling this cheaply in relation to book
value. Approximately 41% of the portfolio was invested in 66 stocks selling at a
weighted average of 10 times actual or estimated earnings. Only 14% of the
stocks in the same Worldscope database were selling for 10 times earnings or
less. A further 14% of the Global Value Fund's assets were invested in stocks
selling at a discount to private market value or a discount to the value of
"hidden" assets. The remaining 7% was invested in cash and cash equivalents.
Morningstar, in its reports on our two Funds, shows an overall higher
price/earnings ratio and price-to-book value ratio because they make this
calculation for each Fund's entire portfolio. Their calculation is accurate.
However, in calculating valuation characteristics for our Funds, we segment each
portfolio into two categories: (i) stocks that are purchased at discounts to
book value, and (ii) stocks that are purchased at low price/earnings ratios.
Some stocks selling at a steep discount to book value have depressed earnings,
which results in a much higher price/earnings ratio than may be expected when
earnings recover. Conversely, certain low P/E stocks may be selling at a premium
to book value. Our price/book value ratios and our price/ earnings ratios are
less than the indices. As of September 30, the Morgan Stanley Capital
International EAFE index was selling at 2.25 times book value and 25.8 times
earnings. The MSCI USA index was selling at 3.3 times book value and 18.7 times
earnings. Despite reasonably robust stock markets, we have been able to keep our
portfolio characteristics at what we believe are the extreme frontiers of value.
Sincerely,
Christopher H. Browne
William H. Browne
John D. Spears
General Partners
Tweedy, Browne Company L.P.
Investment Adviser to the Fund
October 15, 1996
<PAGE>
TWEEDY, BROWNE GLOBAL VALUE FUND
- -------------------------------------------------------------------------------
Portfolio of Investments
- -------------------------------------------------------------------------------
September 30, 1996 (Unaudited)
[LOGO]
MARKET
VALUE
SHARES (NOTE 1)
------ --------
COMMON STOCKS--89.2%
AUSTRALIA--0.0%++
96,353 Carillon Development Ltd. .................. $ 127,765
--------------
AUSTRIA--0.2%
48,700 Bau Holding AG ............................ 2,715,883
--------------
BELGIUM--0.8%
788 Belvuco NV ................................ 182,463
592 Fabrique de Fer de Charleroi ............... 1,135,420
1,747 Glaces de Charleroi ........................ 3,542,343
736 Henex SA ................................... 1,089,720
1,969 Spadel SA .................................. 2,401,754
3,152 Uco Textiles SA ............................ 255,648
--------------
8,607,348
--------------
CANADA--2.6%
196,891 BRL Enterprises Inc.+ ...................... 586,893
166,500 Corby Distilleries Ltd., Class A ........... 5,317,536
104,600 Corby Distilleries Ltd., Class B ........... 3,029,602
42,900 E.L. Financial Corporation Ltd. ............ 4,031,570
393,000 Kaufel Group NV, Class B ................... 908,887
260,700 Melcor Developments Ltd. ................... 2,201,131
1,210,500 National Bank of Canada, Toronto ........... 10,886,990
181,400 Shirmax Fashions ........................... 246,386
785,883 Westfield Minerals Ltd.+ ................... 859,708
--------------
28,068,703
--------------
DENMARK--1.4%
23,930 Gronlandsbanken ............................ 1,061,976
1,801 Hojgaard Holdings, Class A ................. 204,425
10,700 Nordvestbank ............................... 913,172
13,000 Ove Arkil, Class B ......................... 1,136,088
235,571 Spar Nord Holding A/S ...................... 7,398,410
124,698 Syd-Sonderjylland Holdings+ ................ 3,980,154
--------------
14,694,225
--------------
FINLAND--4.1%
6,000 Atria OY ................................... 60,378
216,314 Huhtamaki Group, Class I ................... 8,139,221
3,200 Huhtamaki Group, Class K ................... 116,556
794,900 Kesko Ord .................................. 12,868,087
221,055 Kone Corporation, Class B .................. 22,738,025
55,050 Wemer Soderstrom, Class B .................. 1,228,365
--------------
45,150,632
--------------
FRANCE--8.0%
35,674 Banque Nationale de Paris .................. 1,350,854
904 Bongrain SA ................................ 411,617
24,763 Centenaire-Blanzy SA ....................... 1,680,269
5,229 Christian Dior, SA ......................... 611,425
71,019 Compagnie Financiere de Paribas ............ 4,564,574
226,987 Compagnie Financiere de Suez ............... 9,047,841
57,700 Compagnie Lebon SA ......................... 1,921,285
737 Docks Lyonnais ............................. 22,543
132,992 Dollfus Mieg & Cie ......................... 3,733,199
29,677 Eurafrance SA .............................. 11,789,218
1,150 Fiat France SA ............................. 31,947
15,860 Fin Marc de Lacharriere SA ................. 1,440,004
60,931 Fonciere Financiere Et de Participation+ ... 2,052,462
9,908 France SA .................................. 2,579,859
109 Gantois .................................... 21,819
2,022 Idianova SA+ ............................... 30,141
52,218 Klepierre .................................. 6,439,428
32,546 La Concorde+ ............................... 5,355,551
5,229 LVMH Moet Hennessey ........................ 1,134,781
44,973 Marine-Wendel .............................. 3,769,879
21,145 Mecelec SA ................................. 323,387
3,347 Monneret Jouets+ ........................... 49,698
2,209 Nordon Et Cie .............................. 141,550
28,354 NSC Groupe ................................. 3,699,660
38,018 Paluel Marmont SA .......................... 1,773,756
9,073 Paris Orleans .............................. 439,115
85,300 Peugeot SA ................................. 9,396,128
2,232 Precia ..................................... 61,920
11,136 Rallye+ .................................... 413,922
49,464 Salins du Midi, Series A ................... 4,289,976
13,082 Sediver .................................... 355,573
61,500 Siparex .................................... 1,119,156
161,562 Vallourec+ ................................. 7,565,937
--------------
87,618,474
--------------
GERMANY--1.5%
15,018 Axel Springer Verlag, Class A .............. 8,852,053
12,284 Kaufring AG ................................ 707,965
4,136 Linder Holding ............................. 739,761
33,843 Sinn AG .................................... 6,316,887
3,755 Tiag Tabbert-Industrie AG .................. 275,434
--------------
16,892,100
--------------
HONG KONG--1.5%
2,662,500 Jardine Strategic Holdings Ltd.+ ........... 8,466,750
2,067,953 Semi-Tech (Global) Ltd. .................... 3,422,966
8,891,000 Sing Tao Holdings .......................... 3,966,630
--------------
15,856,346
--------------
ITALY--6.3%
1,975,000 Arnoldo Mondadori Editore SPA .............. 14,327,097
2,750,400 Banca Toscana+ ............................. 4,992,520
632,850 Banco di Sardegna Risp+ .................... 3,697,597
345,500 Bassetti SPA ............................... 1,111,407
1,637,730 Cartiere Burgo Ord ......................... 7,956,148
187,000 Cementerie di Augusta+ ..................... 306,910
323,000 Cementerie di Barletta Ord ................. 1,145,052
820,500 Cementerie di Sardegna SPA ................. 2,154,604
465,000 Cementerie Siciliane SPA ................... 1,434,761
125,000 Ericsson Italia ............................ 1,485,311
357,500 Falck Ord+ ................................. 1,502,052
642,920 Franco Tosi SPA ............................ 3,946,366
566,750 IMI SPA .................................... 4,814,538
113,000 Industrie Zignago .......................... 604,595
1,204,000 Maffei SPA ................................. 1,817,955
3,254,700 Magneti Marelli SPA ........................ 3,824,660
136,000 Marangoni SPA .............................. 516,947
2,497,800 Merloni .................................... 4,509,404
2,711,500 Tecnost SPA ................................ 5,162,219
1,825,000 Vianini Industria SPA ...................... 1,120,220
493,000 Zucchi ..................................... 2,168,456
--------------
68,598,819
--------------
JAPAN--16.3%
17,000 Agro-Kanesho Company Ltd. .................. 268,052
496,000 Aichi Electric Manufacturing ............... 2,510,661
611,000 Amada Sonoike Company Ltd. ................. 3,694,902
412,000 Chofu Seisakusho Company ................... 9,707,579
178,000 Chubu Steel Plate Company Ltd. ............. 1,028,579
39,000 Daidoh Ltd. ................................ 302,231
819,000 Daiichi Cement Company Ltd. ................ 3,962,193
26,000 Denkyosha .................................. 232,933
1,765,000 Dowa Fire & Marine Insurance Company ....... 9,076,420
502,000 Fuji Coca-Cola Bottling Company ............ 5,936,571
618,000 Fuji Photo Film Ltd. ....................... 18,769,217
237,000 Fujicco Company Ltd. ....................... 3,397,241
56,000 Gakken Company Ltd. ........................ 406,379
154,000 Hitachi Medical Corporation ................ 2,469,629
322,000 Kawagishi Bridge Works ..................... 2,426,106
3,000 Kinki Coca-Cola Bottling Company ........... 41,122
675,000 Koa Fire & Marine Insurance Company ........ 4,239,160
106,000 Koito Manufacturing ........................ 787,260
234,000 Kokura Enterprises Company ................. 3,018,814
257,000 Koyosha Inc.+ .............................. 1,611,718
669,000 Matsushita Electric Industrial Company ..... 11,207,938
3,000 Morito ..................................... 32,790
870,000 Nichimo Co. Ltd.+ .......................... 3,538,613
390,000 Nippon Cable System ........................ 3,983,157
968,000 Nissan Fire & Marine Insurance Company ..... 6,547,572
657,000 Nisshinbo Industries ....................... 6,003,763
409,000 Nittetsu Mining ............................ 3,847,429
149,000 Nitto FC Co. ............................... 1,468,375
344,000 Oak ........................................ 2,342,233
119,000 Osaka Securities Finance ................... 650,331
299,000 Riken Vitamin .............................. 4,312,758
250,000 Sangetsu Company Ltd. ...................... 5,800,932
378,000 Sankyo Company Ltd. ........................ 9,651,496
395,800 Shikoku Coca-Cola Bottling ................. 5,141,641
61,000 Shin Nikkei Company Ltd. ................... 390,745
241,000 SK Kaken Co., Ltd. ......................... 5,700,054
163,000 Sonton Food Industry ....................... 2,161,261
194,000 Sotoh Company Ltd. ......................... 2,103,028
183,000 Taisei Fire & Marine Insurance Company ..... 982,055
630,000 Takeda Chemical Industries ................. 11,514,066
367,000 Takigami Steel Construction ................ 3,255,062
162,000 Teikoku Hormone Manufacturing Company ...... 2,177,029
108,000 Torii Company Ltd. ......................... 1,141,731
408,000 Torishima Pump Manufacturing ............... 3,399,391
11,000 Totech Corporation ......................... 94,705
478,000 Toyo Technical Company Ltd. ................ 4,924,745
94,000 U-Shin ..................................... 772,245
40,000 Zojirushi .................................. 451,532
--------------
177,483,444
--------------
NETHERLANDS--5.6%
87,100 Akzo NV Ord ................................ 10,546,173
110,812 Heineken Holdings NV, Class A .............. 18,126,874
207,100 Unilever NV CVA ............................ 32,656,728
--------------
61,329,775
--------------
NEW ZEALAND--1.2%
3,388,000 Independent Newspaper ...................... 13,357,670
--------------
NORWAY--1.1%
20,000 Nycomed ASA, ADR, Class B .................. 237,500
423,000 Nycomed, Class A ........................... 5,039,585
461,800 Nycomed, Class B ........................... 5,395,357
96,300 Schibsted .................................. 1,406,380
--------------
12,078,822
--------------
SINGAPORE--0.8%
2,200,500 Robinson and Company Ord ................... 9,219,536
--------------
SPAIN--2.8%
265,997 Argentaria ................................. 11,014,197
125,927 Banco de Valencia, Registered .............. 1,999,464
10,227 Banco Pastor SA ............................ 604,960
1,211,471 Corporacion Financiera Reunida ............. 3,196,518
150,097 Fabrica Auto Renault de Espana ............. 2,979,042
381,818 Fosforera .................................. 1,188,724
199,014 Grupo Anaya SA ............................. 3,702,082
31,208 Indo Internacional SA ...................... 1,020,187
47,943 Omsa ....................................... 172,584
80,898 Prim SA+ ................................... 283,344
45,068 Roberto Zubiri+ ............................ 126,280
244,796 Unipapel SA ................................ 4,077,393
--------------
30,364,775
--------------
SWEDEN--1.6%
711,350 Atle AB .................................... 6,275,198
124,085 BRIO AB, Class B ........................... 972,996
269,000 Forsheda AB, Class B ....................... 6,571,364
80,600 Invik & Company AB, Class A ................ 2,479,439
19,179 Kinnevik Investment AB, Class B ............ 500,334
55,200 Nolato AB, Class B ......................... 578,512
--------------
17,377,843
--------------
SWITZERLAND--14.5%
9,890 Attisholz Holding AG+ ...................... 4,136,757
33 Bank of International Settlements America .. 297,096
6,200 Ciba-Geigy AG, Bearer ...................... 7,888,619
9,375 Ciba-Geigy AG, Registered .................. 11,980,640
2,385 Daetwyler Holding, Bearer .................. 3,857,348
23,610 Danzas Holding AG PC ....................... 4,533,331
8,061 Danzas Holding AG, Registered .............. 8,413,265
73,702 Edipresse SA, Bearer ....................... 15,267,115
8,025 Edipresse SA, Registered ................... 342,061
2,171 Golay Buchel Holding, Bearer ............... 1,262,662
300 Industrie Holding, Cham Registered ......... 164,921
13,340 Liechtenstein Global Trust ................. 6,058,080
28,627 Loeb Holding PC ............................ 4,515,911
26,045 Magazine Zum Globus PC ..................... 13,176,573
5,000 Magazine Zum Globus, Registered ............ 2,836,314
1,225 Metallwaren Holding ........................ 761,264
27,439 Nestle SA, Registered ...................... 30,561,863
200 Sandoz AG .................................. 239,971
670 Sarna Kunsstoff Holding AG, Registered ..... 635,223
SWITZERLAND--(CONTINUED)
11,003 Sig Schweiz Industrie, Registered .......... 12,886,436
16,235 Swissair AG, Registered+ ................... 13,335,685
20,130 Swisslog Holding AG ........................ 5,372,704
3,050 Vetropack Holding AG PC .................... 687,687
8,755 Zehnder Holding, Bearer .................... 3,431,829
11,224 Zschokke Holding AG, Registered+ ........... 3,040,402
4,836 Zuercher Ziegeleien ........................ 2,966,753
--------------
158,650,510
--------------
UNITED KINGDOM--3.8%
15,610,000 Bardon Group ............................... 8,429,847
1,408,668 Dyson (J&J) PLC, Class A, Non-voting ....... 2,216,014
803,000 Folkes Group PLC ........................... 754,162
188,300 Glaxo Wellcome PLC UNITS, ADR .............. 5,860,838
760,500 Higgs & Hill PLC ........................... 916,616
515,000 Intercare Group PLC ........................ 548,168
350,000 Johnston Group PLC ......................... 2,547,526
2,831,333 McAlpine (Alfred) PLC ...................... 6,647,830
400,000 Partridge Fine Art Ord ..................... 510,288
1,436,739 Proudfoot Alexander ........................ 517,254
184,600 SmithKline Beecham, PLC Units, ADR ......... 11,237,525
600,000 Union PLC .................................. 1,028,402
--------------
41,214,470
--------------
UNITED STATES--15.1%
221,000 American Express Company ................... 10,221,250
75,700 American National Insurance Company ........ 5,147,600
298,000 BanPonce Corporation, New .................. 8,046,000
257,400 Chase Manhattan Corporation ................ 20,624,175
68,000 Coca-Cola Bottling Company ................. 2,584,000
232,200 Comerica, Inc. ............................. 11,958,300
47,300 Digital Equipment Corporation+ ............. 1,690,975
35,000 Federal Home Loan Mortgage Corporation ..... 3,425,625
240,000 Fingerhut Companies, Inc. .................. 3,180,000
205,616 First Chicago Corporation .................. 9,304,124
31,590 Great Atlantic & Pacific Tea Company ....... 817,391
193,100 Hasbro Inc. ................................ 7,168,838
98,063 Horizon/CMS Healthcare Corportation ........ 1,176,756
65,700 Household International Inc. ............... 5,403,825
15,000 Kindercare Learning Centers, Inc.+ ......... 240,000
125,000 K mart Stores .............................. 1,281,250
505,400 Lehman Brothers Holdings Inc. .............. 12,887,700
48,750 Mercantile Bancorporation, Inc. ............ 2,535,000
73,200 Philip Morris Companies Inc. ............... 6,569,700
460,000 PNC Bank Corporation ....................... 15,352,500
169,000 Ryland Group Inc. .......................... 2,513,875
253,200 Salomon Inc. ............................... 11,552,250
185,000 Sun Healthcare Group Inc.+ ................. 2,405,000
160,000 Syms Corporation ........................... 1,320,000
196,400 Transatlantic Holdings Inc. ................ 13,355,200
20,000 Tremont Corporation ........................ 682,500
12,500 Wells Fargo & Company ...................... 3,250,000
--------------
164,693,834
--------------
TOTAL COMMON STOCKS
(COST $851,338,676) ........................ 974,100,974
--------------
PREFERRED STOCK--0.8% (COST $9,341,219)
68,598 Villeroy & Boch AG, Preferred .............. 8,311,369
--------------
COMMON STOCK WARRANTS--0.0%++
105,920 Franco Tosi, Strike 20,000, Expires
11/30/97+ .................................. 6,814
9,073 Paris Orleans, Strike 330, Expires 4/30/98+ 21,078
--------------
TOTAL COMMON STOCK WARRANTS
(COST $51,141) ............................. 27,892
--------------
FACE
VALUE
-----
CONVERTIBLE CORPORATE BONDS--0.0%++
ESP 29,870,000 Grupo Anaya SA, Convertible Bond, 7.000% due
3/18/98 .................................... 225,244
JPY 9,000,000 Shikoku Coca-Cola Bottling, Convertible
Bond, 2.400% due 3/29/02 ................... 89,984
--------------
TOTAL CONVERTIBLE CORPORATE BONDS
(COST $321,519) ............................ 315,228
--------------
COMMERCIAL PAPER--7.2%
$ 39,913,000 General Electric Capital Corporation, 5.800%
due 10/1/96 ................................ 39,913,000
38,700,000 Prudential Securities, 5.750% due 10/1/96 .. 38,700,000
--------------
TOTAL COMMERCIAL PAPER
(COST $78,613,000) ......................... 78,613,000
--------------
U.S. TREASURY BILLS--0.4%
600,000 5.760%** due 5/29/97 ....................... 578,200
2,000,000 5.840%** due 7/24/97 ....................... 1,909,227
1,000,000 5.600%** due 8/21/97 ....................... 952,300
1,500,000 5.840%** due 9/18/97 ....................... 1,419,040
--------------
TOTAL U.S. TREASURY BILLS
(COST $4,858,767) .......................... 4,858,767
--------------
TOTAL INVESTMENTS (COST $944,524,322*) ............... 97.6% 1,066,227,230
OTHER ASSETS AND LIABILITIES (NET) ................... 2.4 25,784,420
----- --------------
NET ASSETS ........................................... 100.0% $1,092,011,650
===== ==============
- ----------
* Aggregate cost for Federal tax purposes.
** Rate represents annualized yield at date of purchase.
+ Non-income producing security.
++ Amount represents less than 0.1% of net assets.
Abbreviations:
ADR--American Depository Receipt
ESP--Spanish Peseta
JPY--Japanese Yen
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TWEEDY, BROWNE GLOBAL VALUE FUND
- ------------------------------------------------------------------------------
Portfolio of Investments
- ------------------------------------------------------------------------------
September 30, 1996 (Unaudited)
MARKET
PERCENTAGE OF VALUE
SECTOR DIVERSIFICATION NET ASSETS (NOTE 1)
---------------------- ------------- --------
COMMON STOCKS:
Banking ................................. 11.7% $ 127,566,578
Food and Beverages ...................... 9.6 104,344,397
Pharmaceuticals ......................... 6.5 71,222,624
Financial Services ...................... 6.5 70,728,806
Printing and Publishing ................. 5.8 62,855,832
Retail .................................. 5.1 56,024,300
Machinery ............................... 4.1 44,311,040
Holdings ................................ 4.0 43,489,595
Insurance ............................... 3.5 37,959,787
Engineering and Construction ............ 3.3 35,743,005
Consumer Durables ....................... 3.2 35,247,823
Consumer Non-Durables ................... 3.0 32,656,728
Manufacturing ........................... 2.6 28,918,114
Transportation .......................... 2.4 26,282,281
Mining and Metal Fabrication ............ 2.1 22,514,426
Textiles ................................ 2.1 22,423,469
Chemicals ............................... 2.0 22,272,630
Autos ................................... 1.9 21,245,681
Forest Products ......................... 1.5 16,461,499
Electronics ............................. 1.3 14,408,167
Real Estate ............................. 1.2 12,613,782
Building Materials ...................... 0.9 10,123,740
Leisure ................................. 0.8 8,191,532
Wholesale ............................... 0.5 5,833,722
Commercial Services ..................... 0.5 5,164,745
Health Care ............................. 0.4 4,666,572
Other ................................... 2.7 30,830,099
----- --------------
TOTAL COMMON STOCKS ..................... 89.2 974,100,974
----- --------------
PREFERRED STOCK ......................... 0.8 8,311,369
COMMON STOCK WARRANTS ................... 0.0++ 27,892
CONVERTIBLE CORPORATE BONDS ............. 0.0++ 315,228
COMMERCIAL PAPER ........................ 7.2 78,613,000
U.S. TREASURY BILLS ..................... 0.4 4,858,767
OTHER ASSETS AND LIABILITIES (NET) ...... 2.4 25,784,420
----- --------------
NET ASSETS .............................. 100.0% $1,092,011,650
===== ==============
- ----------
++ Amount represents less than 0.1% of net assets.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TWEEDY, BROWNE GLOBAL VALUE FUND
- ------------------------------------------------------------------------------
Schedule of Forward Exchange Contracts
- ------------------------------------------------------------------------------
September 30, 1996 (Unaudited)
CONTRACT MARKET
VALUE VALUE
CONTRACTS DATE (NOTE 1)
--------- -------- --------
FORWARD EXCHANGE CONTRACTS TO BUY
7,411,500 Austrian Schilling .............. 10/31/96 $ 691,381
16,900,000 Finnish Markka .................. 10/31/96 3,704,473
2,128,806 French Franc .................... 10/31/96 412,862
689,800 German Mark ..................... 10/31/96 452,735
2,224,960 German Mark ..................... 11/15/96 1,461,706
3,242,540 German Mark ..................... 11/29/96 2,132,029
281,320 German Mark ..................... 1/16/97 185,623
2,119,350 German Mark ..................... 1/31/97 1,399,917
1,451,500 German Mark ..................... 2/14/97 959,747
30,730,912 Italian Lira .................... 10/2/96 20,174
549,305,912 Italian Lira .................... 10/4/96 360,589
36,627,768 Japanese Yen .................... 10/1/96 328,147
33,143,272 Japanese Yen .................... 10/2/96 296,936
9,201,736 Japanese Yen .................... 10/3/96 82,443
1,563,000 Netherlands Guilder ............. 10/15/96 913,480
4,633,800 Netherlands Guilder ............. 10/31/96 2,711,656
10,161,775 Netherlands Guilder ............. 11/15/96 5,952,929
8,819,440 Netherlands Guilder ............. 11/29/96 5,171,479
2,497,800 Norwegian Krone ................. 11/15/96 384,305
129,279,010 Spanish Peseta .................. 10/1/96 1,006,219
3,737,863 Spanish Peseta .................. 10/7/96 29,089
190,200,000 Spanish Peseta .................. 10/15/96 1,479,259
4,758,600 Swedish Krona ................... 10/31/96 717,823
20,143,500 Swedish Krona ................... 11/29/96 3,022,848
6,803,000 Swedish Krona ................... 12/16/96 1,024,024
4,445,415 Swedish Krona ................... 1/16/97 671,906
13,514,600 Swedish Krona ................... 1/31/97 2,043,465
59,206 Swiss Franc ..................... 10/2/96 47,172
98,784 Swiss Franc ..................... 10/3/96 78,707
-------------
TOTAL FORWARD EXCHANGE CONTRACTS TO BUY
(CONTRACT AMOUNT $38,158,849) ................... $ 37,743,123
=============
FORWARD EXCHANGE CONTRACTS TO SELL
14,610,000 Austrian Schilling .............. 10/31/96 $ (1,362,892)
7,908,800 Austrian Schilling .............. 11/15/96 (738,416)
2,979,000 Austrian Schilling .............. 1/16/97 (279,215)
4,989,950 Austrian Schilling .............. 1/31/97 (468,153)
7,093,030 Austrian Schilling .............. 2/28/97 (666,689)
5,075,500 Austrian Schilling .............. 8/15/97 (482,862)
17,268,000 Belgian Franc ................... 11/15/96 (550,990)
28,900,000 Belgian Franc ................... 11/29/96 (922,925)
11,564,000 Belgian Franc ................... 1/16/97 (370,611)
24,709,500 Belgian Franc ................... 1/31/97 (792,757)
23,882,400 Belgian Franc ................... 2/14/97 (766,991)
29,630,000 Belgian Franc ................... 2/28/97 (952,538)
23,795,200 Belgian Franc ................... 3/26/97 (766,406)
30,845,000 Belgian Franc ................... 4/30/97 (996,065)
40,261,000 Belgian Franc ................... 5/30/97 (1,303,094)
30,670,000 Belgian Franc ................... 6/16/97 (993,966)
1,077,200 Canadian Dollar ................. 10/15/96 (791,345)
1,935,780 Canadian Dollar ................. 10/31/96 (1,423,046)
1,428,315 Canadian Dollar ................. 11/15/96 (1,050,674)
3,406,250 Canadian Dollar ................. 11/29/96 (2,507,204)
956,690 Canadian Dollar ................. 1/16/97 (705,794)
342,375 Canadian Dollar ................. 1/31/97 (252,745)
688,250 Canadian Dollar ................. 2/14/97 (508,370)
1,108,880 Canadian Dollar ................. 2/28/97 (819,532)
9,553,600 Canadian Dollar ................. 4/30/97 (7,077,501)
4,077,600 Canadian Dollar ................. 5/15/97 (3,022,444)
1,707,125 Canadian Dollar ................. 5/30/97 (1,266,060)
2,032,650 Canadian Dollar ................. 6/16/97 (1,508,388)
6,805,000 Canadian Dollar ................. 7/15/97 (5,054,902)
1,351,300 Canadian Dollar ................. 8/15/97 (1,004,808)
1,350,000 Canadian Dollar ................. 9/15/97 (1,004,828)
38,493,700 Danish Kroner ................... 11/15/96 (6,585,832)
12,175,900 Danish Kroner ................... 11/29/96 (2,084,486)
4,144,125 Danish Kroner ................... 1/16/97 (711,319)
16,575,000 Danish Kroner ................... 1/31/97 (2,847,255)
15,926,400 Danish Kroner ................... 2/14/97 (2,737,850)
5,589,610 Finnish Markka .................. 10/15/96 (1,223,725)
16,900,000 Finnish Markka .................. 10/31/96 (3,704,473)
7,655,580 Finnish Markka .................. 11/15/96 (1,679,751)
12,640,500 Finnish Markka .................. 11/29/96 (2,776,088)
17,228,000 Finnish Markka .................. 12/16/96 (3,788,310)
2,146,500 Finnish Markka .................. 1/16/97 (473,037)
12,201,300 Finnish Markka .................. 2/14/97 (2,694,016)
25,075,050 Finnish Markka .................. 2/28/97 (5,541,563)
18,227,200 Finnish Markka .................. 3/14/97 (4,031,847)
15,615,060 Finnish Markka .................. 4/15/97 (3,461,325)
6,996,000 Finnish Markka .................. 4/29/97 (1,552,233)
17,779,440 Finnish Markka .................. 5/30/97 (3,953,034)
6,808,500 Finnish Markka .................. 6/16/97 (1,515,517)
8,749,800 Finnish Markka .................. 7/15/97 (1,951,500)
8,795,600 Finnish Markka .................. 7/31/97 (1,963,891)
21,997,500 Finnish Markka .................. 8/15/97 (4,916,744)
8,923,000 Finnish Markka .................. 8/29/97 (1,996,360)
12,442,500 French Franc .................... 10/15/96 (2,410,760)
4,903,000 French Franc .................... 10/31/96 (950,891)
14,725,200 French Franc .................... 11/15/96 (2,858,103)
5,889,360 French Franc .................... 11/29/96 (1,143,909)
48,807,000 French Franc .................... 1/16/97 (9,507,534)
10,080,000 French Franc .................... 2/14/97 (1,966,729)
7,515,900 French Franc .................... 2/28/97 (1,467,567)
34,933,500 French Franc .................... 3/14/97 (6,826,368)
6,508,190 French Franc .................... 3/26/97 (1,272,591)
5,089,800 French Franc .................... 4/15/97 (996,410)
15,351,000 French Franc .................... 4/30/97 (3,007,909)
5,111,700 French Franc .................... 5/15/97 (1,002,506)
5,137,000 French Franc .................... 5/30/97 (1,008,388)
20,302,000 French Franc .................... 6/16/97 (3,989,421)
44,524,500 French Franc .................... 7/15/97 (8,765,036)
9,991,000 French Franc .................... 7/31/97 (1,968,799)
22,421,250 French Franc .................... 8/15/97 (4,422,484)
20,203,200 French Franc .................... 8/29/97 (3,988,557)
151,680,000 French Franc .................... 9/15/97 (29,977,843)
689,800 German Mark ..................... 10/31/96 (452,735)
2,224,960 German Mark ..................... 11/15/96 (1,461,707)
3,242,540 German Mark ..................... 11/29/96 (2,132,030)
281,320 German Mark ..................... 1/16/97 (185,623)
2,119,350 German Mark ..................... 1/31/97 (1,399,917)
1,451,500 German Mark ..................... 2/14/97 (959,747)
4,335,600 German Mark ..................... 3/14/97 (2,872,630)
2,606,760 German Mark ..................... 3/26/97 (1,728,692)
8,180,300 German Mark ..................... 4/15/97 (5,432,884)
1,342,800 German Mark ..................... 4/30/97 (892,810)
3,016,000 German Mark ..................... 5/15/97 (2,007,563)
2,112,040 German Mark ..................... 5/30/97 (1,407,451)
1,192,960 German Mark ..................... 6/16/97 (796,015)
5,778,000 German Mark ..................... 7/31/97 (3,868,506)
5,766,400 German Mark ..................... 8/15/97 (3,865,092)
1,468,500 German Mark ..................... 8/29/97 (985,343)
897,148 Great Britain Pound Sterling .... 10/15/96 (1,404,047)
1,597,852 Great Britain Pound Sterling .... 10/31/96 (2,500,094)
1,964,637 Great Britain Pound Sterling .... 12/16/96 (3,073,149)
453,838 Great Britain Pound Sterling .... 1/16/97 (709,842)
2,648,831 Great Britain Pound Sterling .... 3/26/97 (4,142,125)
1,647,757 Great Britain Pound Sterling .... 4/15/97 (2,576,480)
1,993,620 Great Britain Pound Sterling .... 4/30/97 (3,117,073)
1,330,495 Great Britain Pound Sterling .... 5/15/97 (2,080,127)
648,004 Great Britain Pound Sterling .... 6/16/97 (1,012,972)
6,137,160 Great Britain Pound Sterling .... 7/31/97 (9,591,380)
641,643 Great Britain Pound Sterling .... 8/15/97 (1,002,692)
642,880 Great Britain Pound Sterling .... 9/15/97 (1,004,434)
10,832,500 Hong Kong Dollar ................ 10/15/96 (1,400,800)
11,619,000 Hong Kong Dollar ................ 12/27/96 (1,502,344)
100,687,600 Hong Kong Dollar ................ 6/16/97 (13,010,517)
262,061,450 Italian Lira .................... 10/2/96 (172,039)
21,761,350,000 Italian Lira .................... 10/15/96 (14,268,752)
8,370,000,000 Italian Lira .................... 10/31/96 (5,480,767)
4,008,480,000 Italian Lira .................... 11/29/96 (2,620,264)
5,800,200,000 Italian Lira .................... 1/16/97 (3,780,011)
907,775,000 Italian Lira .................... 1/31/97 (591,111)
7,488,000,000 Italian Lira .................... 2/14/97 (4,872,362)
1,661,620,000 Italian Lira .................... 2/28/97 (1,080,452)
6,459,400,000 Italian Lira .................... 3/14/97 (4,197,429)
4,432,320,000 Italian Lira .................... 4/15/97 (2,876,306)
7,180,150,000 Italian Lira .................... 4/30/97 (4,656,825)
7,966,500,000 Italian Lira .................... 5/30/97 (5,161,615)
468,105,000 Italian Lira .................... 6/16/97 (303,142)
4,658,600,000 Italian Lira .................... 7/15/97 (3,014,242)
5,411,875,000 Italian Lira .................... 8/15/97 (3,498,447)
18,651,600,000 Italian Lira .................... 8/29/97 (12,052,667)
2,612,128 Japanese Yen .................... 10/1/96 (23,402)
331,835,000 Japanese Yen .................... 10/15/96 (2,979,402)
867,600,000 Japanese Yen .................... 10/31/96 (7,810,135)
579,960,000 Japanese Yen .................... 11/15/96 (5,231,180)
587,491,000 Japanese Yen .................... 11/29/96 (5,307,894)
1,457,850,000 Japanese Yen .................... 12/16/96 (13,209,278)
1,385,020,000 Japanese Yen .................... 1/16/97 (12,611,465)
279,244,000 Japanese Yen .................... 1/31/97 (2,548,116)
354,025,000 Japanese Yen .................... 2/28/97 (3,243,109)
405,480,000 Japanese Yen .................... 3/14/97 (3,721,564)
1,838,833,750 Japanese Yen .................... 3/26/97 (16,904,382)
1,595,877,500 Japanese Yen .................... 4/15/97 (14,713,022)
555,747,500 Japanese Yen .................... 4/30/97 (5,134,819)
1,654,040,000 Japanese Yen .................... 5/15/97 (15,315,758)
725,200,000 Japanese Yen .................... 5/30/97 (6,729,686)
313,020,000 Japanese Yen .................... 6/16/97 (2,911,918)
2,625,250,000 Japanese Yen .................... 6/30/97 (24,471,478)
411,680,000 Japanese Yen .................... 7/15/97 (3,845,933)
823,640,000 Japanese Yen .................... 7/31/97 (7,712,516)
1,031,700,000 Japanese Yen .................... 8/15/97 (9,682,015)
837,440,000 Japanese Yen .................... 8/29/97 (7,875,110)
421,120,000 Japanese Yen .................... 9/15/97 (3,970,004)
2,841,450 Netherlands Guilder ............. 10/1/96 (1,658,853)
1,563,000 Netherlands Guilder ............. 10/15/96 (913,480)
4,633,800 Netherlands Guilder ............. 10/31/96 (2,711,656)
10,161,775 Netherlands Guilder ............. 11/15/96 (5,952,929)
8,819,440 Netherlands Guilder ............. 11/29/96 (5,171,479)
3,968,000 Netherlands Guilder ............. 12/16/96 (2,329,979)
4,722,900 Netherlands Guilder ............. 1/16/97 (2,780,267)
20,155,200 Netherlands Guilder ............. 1/31/97 (11,879,010)
11,356,100 Netherlands Guilder ............. 2/14/97 (6,700,487)
9,698,400 Netherlands Guilder ............. 3/14/97 (5,735,281)
6,669,800 Netherlands Guilder ............. 4/15/97 (3,954,271)
6,685,600 Netherlands Guilder ............. 4/29/97 (3,967,920)
4,180,000 Netherlands Guilder ............. 5/15/97 (2,483,898)
6,722,400 Netherlands Guilder ............. 5/30/97 (3,999,284)
1,625,800 Netherlands Guilder ............. 7/31/97 (971,872)
11,822,194 New Zealand Dollar .............. 12/16/96 (8,189,849)
2,114,804 New Zealand Dollar .............. 3/26/97 (1,451,917)
2,005,554 New Zealand Dollar .............. 5/15/97 (1,371,859)
1,136,364 New Zealand Dollar .............. 6/16/97 (775,724)
1,487,874 New Zealand Dollar .............. 7/31/97 (1,013,231)
2,497,800 Norwegian Krone ................. 11/15/96 (384,305)
64,785,000 Norwegian Krone ................. 6/16/97 (9,995,661)
833,700 Singapore Dollar ................ 10/15/96 (592,443)
1,031,400 Singapore Dollar ................ 2/28/97 (738,781)
1,652,520 Singapore Dollar ................ 4/30/97 (1,186,625)
1,102,000 Singapore Dollar ................ 5/30/97 (792,874)
1,381,300 Singapore Dollar ................ 6/16/97 (994,982)
1,390,200 Singapore Dollar ................ 7/31/97 (1,003,441)
4,848,900 Singapore Dollar ................ 8/15/97 (3,501,729)
380,400,000 Spanish Peseta .................. 10/15/96 (2,958,519)
190,005,000 Spanish Peseta .................. 10/31/96 (1,476,622)
44,478,000 Spanish Peseta .................. 11/15/96 (345,458)
37,944,000 Spanish Peseta .................. 11/29/96 (294,573)
100,648,000 Spanish Peseta .................. 1/16/97 (780,363)
386,850,000 Spanish Peseta .................. 2/14/97 (2,996,973)
637,000,000 Spanish Peseta .................. 3/14/97 (4,931,508)
747,365,000 Spanish Peseta .................. 3/26/97 (5,784,373)
127,840,000 Spanish Peseta .................. 4/15/97 (989,026)
130,050,000 Spanish Peseta .................. 4/30/97 (1,005,835)
130,550,000 Spanish Peseta .................. 5/15/97 (1,009,436)
524,800,000 Spanish Peseta .................. 5/30/97 (4,056,876)
194,355,000 Spanish Peseta .................. 6/16/97 (1,502,065)
127,490,000 Spanish Peseta .................. 7/15/97 (984,911)
126,410,000 Spanish Peseta .................. 8/15/97 (976,199)
259,040,000 Spanish Peseta .................. 9/15/97 (1,999,846)
4,758,600 Swedish Krona ................... 10/31/96 (717,823)
20,143,500 Swedish Krona ................... 11/29/96 (3,022,848)
6,803,000 Swedish Krona ................... 12/16/96 (1,024,024)
4,445,415 Swedish Krona ................... 1/16/97 (671,906)
13,514,600 Swedish Krona ................... 1/31/97 (2,043,465)
14,174,000 Swedish Krona ................... 2/14/97 (2,143,971)
40,554,000 Swedish Krona ................... 3/14/97 (6,139,070)
23,824,850 Swedish Krona ................... 4/30/97 (3,611,512)
16,363,700 Swedish Krona ................... 5/15/97 (2,481,608)
6,577,300 Swedish Krona ................... 8/15/97 (999,949)
6,653,000 Swedish Krona ................... 8/29/97 (1,011,785)
666,600 Swiss Franc ..................... 10/15/96 (531,994)
1,857,250 Swiss Franc ..................... 10/31/96 (1,485,253)
11,036,500 Swiss Franc ..................... 11/15/96 (8,840,090)
4,461,600 Swiss Franc ..................... 11/29/96 (3,578,584)
6,735,000 Swiss Franc ..................... 12/16/96 (5,413,009)
41,384,500 Swiss Franc ..................... 12/27/96 (33,305,944)
389,235 Swiss Franc ..................... 1/16/97 (313,966)
7,828,100 Swiss Franc ..................... 1/31/97 (6,324,870)
11,541,000 Swiss Franc ..................... 2/28/97 (9,353,664)
23,020,000 Swiss Franc ..................... 2/28/97 (18,657,079)
2,301,800 Swiss Franc ..................... 3/26/97 (1,870,850)
8,370,000 Swiss Franc ..................... 4/15/97 (6,818,654)
8,344,350 Swiss Franc ..................... 4/30/97 (6,809,724)
10,440,500 Swiss Franc ..................... 5/15/97 (8,535,441)
12,315,000 Swiss Franc ..................... 5/30/97 (10,085,805)
1,828,950 Swiss Franc ..................... 6/16/97 (1,500,920)
5,817,000 Swiss Franc ..................... 7/31/97 (4,798,404)
8,650,500 Swiss Franc ..................... 8/15/97 (7,147,839)
7,726,550 Swiss Franc ..................... 8/29/97 (6,394,473)
-------------
TOTAL FORWARD EXCHANGE CONTRACTS TO SELL
(CONTRACT AMOUNT $828,556,266) .................. $(804,220,804)
=============
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TWEEDY, BROWNE GLOBAL VALUE FUND
- ------------------------------------------------------------------------------
Statement of Assets and Liabilities
- ------------------------------------------------------------------------------
September 30, 1996 (Unaudited)
ASSETS
Investments, at value (Cost $944,524,322) (Note 1)
See accompanying schedule .............. $1,066,227,230
Cash and foreign currency (Cost $1,548,038) 1,673,103
Net unrealized appreciation of forward
exchange contracts (Note 1) .............. 23,919,736
Receivable for investment securities sold .. 3,244,929
Dividends and interest receivable .......... 2,747,259
Receivable for Fund shares sold ............ 1,356,266
Unamortized organization costs (Note 5) .... 37,182
Prepaid expense ............................ 22,788
--------------
TOTAL ASSETS ........................... 1,099,228,493
--------------
LIABILITIES
Payable for investment securities purchased $5,547,367
Investment advisory fee payable (Note 2) ... 1,103,780
Custodian fees payable (Note 2) ............ 152,000
Administration fee payable (Note 2) ........ 119,935
Transfer agent fees payable (Note 2) ....... 38,000
Accrued Directors' fees and expenses
(Note 2) ................................. 3,333
Accrued expenses and other payables ........ 252,428
---------
TOTAL LIABILITIES ...................... 7,216,843
--------------
NET ASSETS ..................................... $1,092,011,650
==============
NET ASSETS CONSIST OF
Undistributed net investment income ........ $ 21,757,584
Accumulated net realized gain on securities,
forward exchange contracts and foreign
currencies ............................... 30,531,648
Net unrealized appreciation of securities,
forward exchange contracts, foreign
currencies and net other assets .......... 145,749,012
Par value .................................. 7,411
Paid-in capital in excess of par value ..... 893,965,995
--------------
TOTAL NET ASSETS ....................... $1,092,011,650
==============
NET ASSET VALUE, offering and redemption price per share
($1,092,011,650 / 74,105,025 shares of common stock
outstanding) ............................... $14.74
======
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TWEEDY, BROWNE GLOBAL VALUE FUND
- ------------------------------------------------------------------------------
Statement of Operations
- ------------------------------------------------------------------------------
For the Six Months Ended September 30, 1996 (Unaudited)
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $1,634,920) . $13,580,535
Interest (net of foreign withholding taxes of $100) ........ 1,962,513
-----------
TOTAL INVESTMENT INCOME ................................ 15,543,048
-----------
EXPENSES
Investment advisory fee (Note 2) .............. $6,484,446
Administration fee (Note 2) ................... 707,739
Custodian fees (Note 2) ....................... 470,394
Transfer agent fees (Note 2) .................. 271,526
Legal and audit fees .......................... 82,979
Amortization of organization costs (Note 5) ... 11,174
Directors' fees and expenses (Note 2) ......... 4,173
Other ......................................... 257,066
---------
TOTAL EXPENSES ......................................... 8,289,497
-----------
NET INVESTMENT INCOME .......................................... 7,253,551
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(Notes 1 and 3):
Net realized gain (loss) on:
Securities ............................................... 24,946,962
Forward exchange contracts ............................... 25,466,510
Foreign currencies ....................................... (379,209)
-----------
Net realized gain on investments during the period ......... 50,034,263
-----------
Net change in unrealized appreciation (depreciation) of:
Securities ............................................... (23,445,655)
Forward exchange contracts ............................... (2,830,502)
Foreign currencies and net other assets .................. 161,410
-----------
Net unrealized depreciation of investments during the period (26,114,747)
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS ................ 23,919,516
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $31,173,067
===========
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TWEEDY, BROWNE GLOBAL VALUE FUND
- ------------------------------------------------------------------------------
Statement of Changes in Net Assets
- ------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR
9/30/96 ENDED
(UNAUDITED) 3/31/96
---------------- ------------
Net investment income ...................... $ 7,253,551 $ 9,045,946
Net realized gain (loss) on securities,
forward exchange contracts and foreign
currencies during the period ............. 50,034,263 (10,403,439)
Net unrealized appreciation (depreciation)
of securities, forward exchange
contracts, foreign currencies and
net other assets during the period ....... (26,114,747) 184,687,996
-------------- ------------
Net increase in net assets resulting from
operations ............................... 31,173,067 184,330,503
DISTRIBUTIONS:
Dividends to shareholders from net
investment income ...................... -- (3,341,225)
Distributions to shareholders from net
realized gain on investments ........... -- (9,099,176)
Net increase in net assets from Fund share
transactions (Note 4) .................... 109,927,617 123,986,313
-------------- ------------
Net increase in net assets ................. 141,100,684 295,876,415
NET ASSETS
Beginning of period ........................ 950,910,966 655,034,551
-------------- ------------
End of period (including undistributed net
investment income of $21,757,584 and
$14,504,033, respectively) ............... $1,092,011,650 $950,910,966
============== ============
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TWEEDY, BROWNE GLOBAL VALUE FUND
- -------------------------------------------------------------------------------
Financial Highlights
- -------------------------------------------------------------------------------
For a Fund share outstanding throughout each period.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR YEAR PERIOD
9/30/96 ENDED ENDED ENDED
(UNAUDITED) 3/31/96(h) 3/31/95 3/31/94(a)(h)
---------- -------- -------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period ........................ $ 14.28 $ 11.52 $ 12.26 $ 10.00
---------- -------- -------- --------
Income from investment operations:
Net investment income (loss) .... 0.08 0.15 0.10 (0.00)(c)(f)
Net realized and unrealized
gain (loss) on investments .... 0.38 2.81 (0.68) 2.26
---------- -------- -------- --------
Total from investment
operations ................ 0.46 2.96 (0.58) 2.26
---------- -------- -------- --------
DISTRIBUTIONS:
Distributions from net realized
gains ....................... -- (0.05) (0.06) --
Distributions in excess of net
realized gains .............. -- (0.15) (0.10) --
---------- -------- -------- --------
Total distributions ...... -- (0.20) (0.16) --
---------- -------- -------- --------
Net asset value, end of period... $ 14.74 $ 14.28 $ 11.52 $ 12.26
========== ======== ======== ========
Total return(d) ................. 3.22% 25.88% (4.74)% 22.60%
========== ======== ======== ========
Ratios/Supplemental Data:
Net assets, end of period
(in 000's) .................... $1,092,012 $950,911 $655,035 $297,434
Ratio of operating expenses
to average net assets ......,,, 1.60%(b) 1.60% 1.65% 1.73%(b)(e)
Ratio of net investment income
(loss) to average net assets... 1.40%(b) 1.15% 1.08% (0.00)%(b)(g)
Portfolio turnover rate ......... 10% 17% 16% 14%
Average commission rate
(per share of security)(i) .... $ 0.0226 $ 0.0206 N/A N/A
- ----------
<FN>
(a) The Fund commenced operations on June 15, 1993.
(b) Annualized.
(c) Net investment loss for a Fund share outstanding, before the waiver of fees by the investment adviser was
$(0.01) for the 7.5-month period ended March 31, 1994.
(d) Total return represents aggregate total return for the periods indicated.
(e) Annualized expense ratio before the waiver of fees by the investment adviser was 1.83% for the 7.5-month period
ended March 31, 1994.
(f) Amount represents less than $(0.01) per share.
(g) Amount represents less than (0.01)% per share.
(h) 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.
(i) Average commission rate (per share of security) as required by amended disclosure requirements effective September
1, 1995.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TWEEDY, BROWNE GLOBAL VALUE FUND
- -------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited)
- -------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Tweedy, Browne Global Value Fund (the "Fund") is a diversified series of
Tweedy, Browne Fund Inc. (the "Company"). The Company is an open-end management
investment company registered with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended. The Company was organized as a
Maryland corporation on January 28, 1993. The Fund commenced operations on June
15, 1993. The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates. The following is a
summary of significant accounting policies consistently followed by the Fund in
the preparation of its financial statements.
PORTFOLIO VALUATION Generally, the Fund's investments are valued at market
value or, in the absence of market value with respect to any portfolio
securities, at fair value as determined by or under the direction of the
Company's Board of Directors. Portfolio securities that are traded primarily on
a domestic exchange are valued at the last sale price on that exchange or, if
there were no sales during the day, at the mean between the last ask price and
the last bid price prior to the close of regular trading. Over-the-counter
securities and securities listed or traded on certain foreign exchanges whose
operations are similar to the United States ("U.S.") over-the-counter market are
valued at the mean between the bid and ask prices. Portfolio securities that are
traded primarily on foreign exchanges generally are valued at the preceding
closing values of such securities on their respective exchanges, except that
when an occurrence subsequent to the time that a value was so established is
likely to have changed such value, then the fair value of those securities will
be determined by consideration of other factors by or under the direction of the
Company's Board of Directors. Short-term investments that mature in 60 days or
less are valued at amortized cost.
REPURCHASE AGREEMENTS The Fund engages in repurchase agreement transactions.
Under the terms of a typical repurchase agreement, the Fund takes possession of
an underlying debt obligation subject to an obligation of the seller to
repurchase, and the Fund to resell, the obligation at an agreed-upon price and
time, thereby determining the yield during the Fund's holding period. This
arrangement results in a fixed rate of return that is not subject to market
fluctuations during the Fund's holding period. The value of the collateral is at
least equal at all times to the total amount of the repurchase obligations,
including interest. In the event of counterparty default, the Fund has the right
to use the collateral to offset losses incurred. There is potential loss to the
Fund in the event the Fund is delayed or prevented from exercising its rights to
dispose of the collateral securities, including the risk of a possible decline
in the value of the underlying securities during the period while the Fund seeks
to assert its rights. The Fund's investment adviser, acting under the
supervision of the Company's Board of Directors, reviews the value of the
collateral and the creditworthiness of those banks and dealers with which the
Fund enters into repurchase agreements to evaluate potential risks.
FOREIGN CURRENCY The books and records of the Fund are maintained in U.S.
dollars. Foreign currencies, investments and other assets and liabilities are
translated into U.S. dollars at the exchange rates prevailing at the end of the
period, and purchases and sales of investment securities, income and expenses
are translated on the respective dates of such transactions. Unrealized gains
and losses which result from changes in foreign currency exchange rates have
been included in the unrealized appreciation (depreciation) of currencies and
net other assets. Net realized foreign currency gains and losses resulting from
changes in exchange rates include foreign currency gains and losses between
trade date and settlement date on investments securities transactions, foreign
currency transactions and the difference between the amounts of interest and
dividends recorded on the books of the Fund and the amount actually received.
The portion of foreign currency gains and losses related to fluctuation in the
exchange rates between the initial purchase trade date and subsequent sale trade
date is included in realized gains and losses on investment securities sold.
FORWARD EXCHANGE CONTRACTS The Fund has entered into forward exchange
contracts for non-trading purposes in order to reduce its exposure to
fluctuations in foreign currency exchange on its portfolio holdings. Forward
exchange contracts are valued at the forward rate and are marked-to-market
daily. The change in market value is recorded by the Fund as an unrealized gain
or loss. When the contract is closed, the Fund records a realized gain or loss
equal to the difference between the value of the contract at the time that it
was opened and the value of the contract at the time that it was closed.
The use of forward exchange contracts does not eliminate fluctuations in the
underlying prices of the Fund's investment securities, but it does establish a
rate of exchange that can be achieved in the future. Although forward exchange
contracts limit the risk of loss due to a decline in the value of the hedged
currency, they also limit any potential gain that might result should the value
of the currency increase. In addition, the Fund could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their contracts.
The Fund currently enters into such contracts with Mellon Bank Corporation
("Mellon Bank") and Brown Brothers Harriman & Co.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME Securities transactions are
recorded as of the trade date. Realized gains and losses from securities
transactions are recorded on the identified cost basis. Dividend income and
distributions to shareholders are recorded on the ex-dividend date. Interest
income is recorded on the accrual basis. Dividend income and interest income may
be subject to foreign withholding taxes. The Fund's custodian applies for
refunds where available. If the Fund meets the requirements of Section 853 of
the Internal Revenue Code of 1986, as amended, the Fund may elect to pass
through to its shareholders credits for foreign taxes paid.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment
income, if any, and distributions from realized capital gains after utilization
of capital loss carryforwards, if any, will be declared and paid annually.
Additional distributions of net investment income and capital gains from the
Fund may be made at the discretion of the Board of Directors in order to avoid
the application of a 4% non-deductible Federal excise tax on certain
undistributed amounts of ordinary income and capital gains. Income distributions
and capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund, timing differences and
differing characterization of distributions made by the Fund.
FEDERAL INCOME TAXES The Fund intends to qualify as a regulated investment
company, if such qualification is in the best interest of its shareholders, by
complying with the requirements of the Internal Revenue Code of 1986, as
amended, applicable to regulated investment companies and by distributing
substantially all of its taxable income to its shareholders.
Therefore, no Federal income tax provision is required.
EXPENSES Expenses directly attributable to each Fund as a diversified series
of the Company are charged to that Fund. Other expenses of the Company are
allocated to each Fund based on the average net assets of each Fund.
2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND OTHER RELATED PARTY
TRANSACTIONS
The Company, on behalf of the Fund, has entered into an investment advisory
agreement (the "Advisory Agreement") with Tweedy, Browne Company L.P. ("Tweedy,
Browne"). Under the Advisory Agreement, the Company pays Tweedy, Browne a fee at
the annual rate of 1.25% of the value of its average daily net assets. The fee
is payable monthly, provided the 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 the Fund and unpaid.
The current and retired general partners and their families, as well as
employees of Tweedy, Browne, the investment adviser to the Fund, have
approximately $20.9 million of their own money invested in the Fund.
The Company on behalf of the Fund has entered into an administration
agreement (the "Administration Agreement") with First Data Investor Services
Group, Inc. ("FDISG"), a wholly owned subsidiary of First Data Corporation.
Under the Administration Agreement, the Company pays FDISG an administrative fee
and a fund accounting fee computed daily and payable monthly at the following
annual rates of the value of the average daily net assets of the Fund.
FEES ON ASSETS
----------------------------------------------
BETWEEN
UP TO $200 AND EXCEEDING
$200 MILLION $500 MILLION $500 MILLION
- ------------------------------------------------------------------------------
Administration Fees 0.12% 0.10% 0.08%
- ------------------------------------------------------------------------------
BETWEEN
UP TO $50 AND EXCEEDING
$50 MILLION $100 MILLION $100 MILLION
- ------------------------------------------------------------------------------
Accounting Fees 0.08% 0.06% 0.04%
- ------------------------------------------------------------------------------
Under the terms of the Administration Agreement, the Company will pay for
Fund Administration Services, a minimum fee of $40,000 per Fund per annum, not
to be aggregated with fees for Fund Accounting Services. The Company will pay
for Fund Accounting Services a minimum fee of $20,000 per Fund per annum, not to
be aggregated with fees for Fund Administration Services.
No officer, director or employee of Tweedy, Browne, FDISG or any parent or
subsidiary of those corporations receives any compensation from the Company for
serving as a director or officer of the Company. The Company pays each director
who is not an officer, director or employee of Tweedy, Browne, FDISG or any of
their affiliates $2,000 per annum plus $500 per Regular or Special Board Meeting
attended in person or by telephone, plus out-of-pocket expenses.
Boston Safe Deposit and Trust Company ("Boston Safe"), an indirect wholly
owned subsidiary of Mellon Bank, serves as the Fund's custodian pursuant to a
custody agreement (the "Custody Agreement"). Unified Advisers, Inc., serves as
the Fund's transfer agent. Tweedy, Browne also serves as the distributor to the
Fund and pays all distribution fees. No distribution fees are paid by the Fund.
For the six months ended September 30, 1996, the Fund incurred total
brokerage commissions of $974,550.
3. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of investment securities,
excluding short-term investments for the six months ended September 30, 1996,
aggregated $215,609,501 and $91,596,361, respectively.
At September 30, 1996, the aggregate gross unrealized appreciation for all
securities, in which there was an excess of value over tax cost, was
$166,085,364 and the aggregate gross unrealized depreciation for all securities,
in which there was an excess of tax cost over value, was $44,382,456.
4. CAPITAL STOCK
The Company is authorized to issue one billion shares of $0.0001 par value
capital stock, of which 600,000,000 of the unissued shares have been designated
as shares of the Fund. Changes in shares outstanding for the Fund were as
follows:
SIX MONTHS ENDED 9/30/96 YEAR ENDED 3/31/96
--------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------
Sold 15,178,664 $221,384,168 29,891,616 $381,433,296
Reinvested -- -- 854,225 11,062,218
Redeemed (7,641,040) (111,456,551) (21,057,222) (268,509,201)
- -----------------------------------------------------------------------------
Net increase 7,537,624 $109,927,617 9,688,619 $123,986,313
- -----------------------------------------------------------------------------
5. ORGANIZATION COSTS
The Fund bears all costs in connection with its organization including the
fees and expenses of registering and qualifying its shares for distribution
under Federal and state securities regulations. All such costs have been
deferred and are being amortized over a five-year period using the straight-line
method from the commencement of operations of the Fund. In the event that any of
the initial shares of the Fund are redeemed during such amortization period, the
Fund will be reimbursed for any unamortized organization costs in the same
proportion as the number of shares redeemed bears to the number of initial
shares held at the time of redemption.
6. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments
involves economic and political risks and considerations not typically
associated with investing in U.S. companies and the U.S. Government. These
considerations include changes in exchange rates and exchange rate controls
(which may include suspension of the ability to transfer currency from a given
country), costs incurred in conversions between currencies, non-negotiable
brokerage commissions, less publicly available information, different accounting
standards, lower trading volume, delayed settlements and greater market
volatility, the difficulty of enforcing obligations in other countries, less
securities regulation, different tax provisions (including withholding on
dividends paid to the Fund), war, expropriation, political and social
instability and diplomatic developments.
7. LINE OF CREDIT
The Fund and Mellon Bank, N.A. have entered into a Line of Credit Agreement
(the "Agreement") which provides the Fund with a $50 million line of credit,
primarily for temporary or emergency purposes, including the meeting of
redemption requests that might otherwise require the untimely disposition of
securities. The Fund may borrow up to the lesser of $50 million or one-third of
its net assets. Interest is payable at the bank's Money Market Rate plus 0.75%
on an annualized basis. Under the Agreement, the Fund is charged a facility fee
equal to 0.10% annually of the unutilized credit. The Agreement requires, among
other provisions, the Fund to maintain a ratio of net assets (not including
funds borrowed pursuant to the Agreement) to aggregated amount of indebtedness
pursuant to the Agreement of not less than three to one. For the six months
ended September 30, 1996, the Fund did not borrow under this Agreement. On
October 1, 1996, the Agreement was amended to make the $50 million aggregate
principal amount of the line of credit available to Tweedy, Browne American
Value Fund. No other substantive changes to the Agreement were effected.
<PAGE>
TWEEDY, BROWNE GLOBAL VALUE FUND
- -------------------------------------------------------------------------------
Portfolio of Investments
- -------------------------------------------------------------------------------
September 30, 1996 (Unaudited)
[logo]
MARKET
VALUE
SHARES (NOTE 1)
------ --------
COMMON STOCKS--DOMESTIC--87.4%
BANKING--17.4%
55,000 BancFirst Corporation .......................... $ 1,347,500
306,560 BanPonce Corporation, New ...................... 8,277,120
10,000 Cape Cod Bank & Trust Company .................. 207,500
86,507 Chase Manhattan Corporation .................... 6,931,373
78,900 Comerica, Inc. ................................. 4,063,350
4,500 Community Financial Group--Bank of Nashville ... 48,375
111,410 First Chicago NBD Corporation .................. 5,041,303
20,400 First Mortgage Corporation+ .................... 104,550
32,900 Mercantile Bancorporation, Inc. ................ 1,710,800
25,000 Mid-America Bancorporation ..................... 418,750
9,000 Peoples Bank Corporation of Indianapolis ....... 297,000
223,700 PNC Bank Corporation ........................... 7,465,987
70,760 Salomon Inc. ................................... 3,228,425
4,300 Suffolk Bancorp ................................ 143,513
18,125 Transworld Bancorp+ ............................ 253,750
10,600 Wells Fargo & Company .......................... 2,756,000
------------
42,295,296
------------
FINANCIAL SERVICES--13.4%
164,930 American Express Company ....................... 7,628,012
101,370 Federal Home Loan Mortgage Corporation ......... 9,921,588
46,800 Household International Inc. ................... 3,849,300
18,300 HPSC Inc.+ ..................................... 118,950
387,600 Jan Bell Marketing Inc.+ ....................... 847,875
20,100 Kent Financial Services Inc.+ .................. 152,006
335,150 Lehman Brothers Holdings Inc. .................. 8,546,325
10,000 Letchworth Independent Bancshares Corporation .. 292,500
6,965 Norex American Inc.+ ........................... 186,314
6,615 Stifel Financial Corporation ................... 50,853
23,100 Value Line Inc. ................................ 811,388
1,604 Whitney Holding Corporation .................... 52,531
------------
32,457,642
------------
INSURANCE--12.0%
15,000 Allstate Financial Corporation+ ................ 82,500
115,000 American Annuity Group Inc. .................... 1,538,125
75,100 American Indemnity Financial Corporation ....... 769,775
106,625 American National Insurance Company ............ 7,250,500
600 Amwest Insurance Group Inc. .................... 6,975
20,600 Kansas City Life Insurance Company ............. 1,143,300
20,900 Merchants Group Inc. ........................... 386,650
50,100 National Western Life Insurance Company+ ....... 3,738,713
30,500 Provident Companies Inc. ....................... 1,143,750
13,000 RLI Corporation ................................ 338,000
74,000 Security-Connecticut Corporation ............... 2,321,750
107,800 Transatlantic Holdings, Inc. ................... 7,330,400
106,700 USLIFE Corporation ............................. 3,201,000
------------
29,251,438
------------
CONSUMER NON-DURABLES--7.1%
138,100 Bairnco Corporation ............................ 880,388
60,700 Coca-Cola Bottling Company ..................... 2,306,600
202,900 EKCO Group Inc. ................................ 938,412
76,600 Fuji Photo Film Company Ltd., ADR .............. 2,315,250
42,235 Great Atlantic & Pacific Tea Company, Inc. ..... 1,092,831
19,000 Hyde Athletic Industries Inc., Class A+ ........ 90,250
25,000 Hyde Athletic Industries Inc., Class B+ ........ 118,750
118,035 Nestle, ADR .................................... 6,558,320
49,800 OroAmerica Inc.+ ............................... 311,250
49,559 Polaroid Corporation ........................... 2,180,595
10,800 TCC Industries Inc.+ ........................... 20,250
55,500 Village Super Market Inc., Class A+ ............ 520,312
------------
17,333,208
------------
RETAIL--5.7%
110,914 Ben Franklin Retail Stores Inc.+ ............... 31,195
85,000 Best Products Corporation Inc.+ ................ 29,219
80,000 Burlington Coat Factory Warehouse+ ............. 880,000
1,000 Dart Group Corporation, Class A ................ 95,063
114,300 EZCORP Inc., Class A+ .......................... 742,950
218,500 Fingerhut Companies, Inc. ...................... 2,895,125
40,000 Good Guys Inc.+ ................................ 320,000
19,000 Government Technology Services, Inc. ........... 116,375
159,000 Kmart Corporation .............................. 1,629,750
32,300 Luria (L) and Sons Inc.+ ....................... 145,350
9,700 Mercantile Stores Company Inc. ................. 523,800
52,000 Penney (J.C.) Company, Inc. .................... 2,814,500
17,500 Seaman Furniture Company+ ...................... 323,750
126,200 Swiss Army Brands, Inc. ........................ 1,609,050
153,900 Syms Corporation+ .............................. 1,269,675
136,000 United Retail Group, Inc. ...................... 391,000
------------
13,816,802
------------
HEALTH CARE--5.3%
10,000 Ciba-Geigy AG, Sponsored ADR ................... 636,250
30,000 Glaxo Wellcome PLC, Sponsored ADR .............. 933,750
65,735 Horizon/CMS Healthcare Corporation+ ............ 788,820
8,000 Hosposable Products, Inc. ...................... 40,000
33,412 Johnson & Johnson .............................. 1,712,365
205,600 Nycomed ASA, ADR, Class B ...................... 2,441,500
135,000 Regency Health Services, Inc. .................. 1,501,875
367,400 Sun Healthcare Group Inc.+ ..................... 4,776,200
7,500 Trans Leasing International, Inc. .............. 27,187
------------
12,857,947
------------
BASIC INDUSTRIES--4.8%
97,400 ACX Technologies Inc.+ ......................... 1,692,325
5,235 Binks Manufacturing Company .................... 115,824
25,000 Blessings Corporation .......................... 225,000
48,300 Gorman-Rupp Company ............................ 670,163
59,500 Monarch Machine Tool Company ................... 595,000
25,000 Sequa Corporation, Class A+ .................... 1,115,625
75,700 Tremont Corporation+ ........................... 2,583,262
29,800 Unilever NV, ADR ............................... 4,697,225
------------
11,694,424
------------
CHEMICALS--4.8%
172,300 Lilly Industries Inc., Class A ................. 2,864,488
96,550 Philip Morris Companies Inc. ................... 8,665,363
------------
11,529,851
------------
LEISURE AND ENTERTAINMENT--3.5%
143,000 Alliance Entertainment Corporation+ ............ 804,375
136,100 C-TEC Corporation+ ............................. 3,538,600
105,743 Hasbro Inc. .................................... 3,925,709
48,103 Savoy Pictures Entertainment Inc.+ ............. 120,258
------------
8,388,942
------------
ENGINEERING AND CONSTRUCTION--2.8%
12,500 Atkinson (Guy F.) Company California+ .......... 151,563
22,000 Devcon International Corporation+ .............. 151,250
104,000 Harding Lawson Associates Group ................ 624,000
15,000 Hovnanian Enterprises, Inc.+ ................... 88,125
4,080 Oilgear Company ................................ 61,710
40,700 Oriole Homes Corporation, Class A+ ............. 315,425
43,800 Oriole Homes Corporation, Class B+ ............. 339,450
151,600 Ryland Group, Inc. ............................. 2,255,050
474,500 Standard-Pacific Corporation ................... 2,728,375
------------
6,714,948
------------
REAL ESTATE--2.2%
220,000 American Real Estate Partners Ltd. ............. 1,980,000
25,700 Arizona Land Income Corporation, Class A ....... 138,137
18,012 Atlantic Realty Trust Inc.+ .................... 168,863
13,200 Mays (J.W.), Inc.+ ............................. 155,100
130,800 Price Enterprises Inc.+ ........................ 2,109,150
3,623 Public Storage, Inc. ........................... 81,970
36,025 Ramco-Gershenson Properties .................... 607,922
19,700 Reading Company, Class A+ ...................... 206,850
------------
5,447,992
------------
CONSUMER SERVICES--2.2%
186,000 Jones Intercable Inc., Class A+ ................ 2,534,250
119,400 Pinkerton's, Inc. .............................. 2,835,750
------------
5,370,000
------------
OIL AND GAS--2.1%
80,000 Isramco, Inc.+ ................................. 47,500
1,900 Lufkin Industries, Inc. ........................ 39,425
155,400 Matrix Service Company+ ........................ 893,550
84,900 Penn Virginia Corporation ...................... 3,056,400
2,245 Resource America, Inc., Class A ................ 28,624
71,400 Wiser Oil Company .............................. 1,026,375
------------
5,091,874
------------
BUSINESS AND COMMERCIAL SERVICES--1.5%
1,300 IIC Industries Inc.+ ........................... 49,400
226,400 Kinder Care Learning Centers, Inc.+ ............ 3,622,400
12,500 Paris Corporation+ ............................. 48,438
------------
3,720,238
------------
TECHNOLOGY--0.5%
44,600 Astrosystems Inc.+ ............................. 267,600
28,800 Digital Equipment Corporation+ ................. 1,029,600
------------
1,297,200
------------
RESTAURANT CHAINS--0.5%
80,900 Vicorp Restaurants Inc.+ ....................... 1,173,050
------------
ADVERTISING--0.4%
4,280 Grey Advertising Inc. .......................... 1,014,360
------------
METALS AND METAL PRODUCTS--0.3%
14,000 American Metals Service, Inc.+ ................. 12,600
108,600 Proler International Corporation+ .............. 733,050
------------
745,650
------------
AUTOMOTIVE PARTS--0.3%
23,000 Standard Products Company ...................... 580,750
1,300 Woodward Governor Company ...................... 122,200
------------
702,950
------------
TRANSPORTATION/TRANSPORTATION SERVICES--0.2%
51,500 KLLM Transport Services Inc.+ .................. 605,125
------------
APPAREL/TEXTILES--0.1%
44,400 Chic by H.I.S. Inc.+ ........................... 194,250
8,700 Garan Inc. ..................................... 145,725
2,000 Thomaston Mills, Inc., Class A ................. 21,000
------------
360,975
------------
FURNITURE--0.1%
29,000 Flexsteel Industries Inc. ...................... 340,750
------------
FOOD AND BEVERAGES--0.1%
40,000 United Foods, Inc., Class A+ ................... 77,500
25,000 United Foods, Inc., Class B+ ................... 48,437
7,000 Western Beef Inc.+ ............................. 66,500
------------
192,437
------------
ELECTRONIC EQUIPMENT--0.1%
8,000 Espey Manufacturing and Electronics Corporation 126,000
------------
TELECOMMUNICATIONS--0.0%++
15,000 TCI International Inc.+ ........................ 99,375
------------
TOTAL COMMON STOCKS--DOMESTIC
(COST $174,877,433) ............................. 212,628,474
------------
COMMON STOCKS--FOREIGN--5.8%
JAPAN--1.7%
63,000 Aichi Electric Company Ltd. .................... 318,894
49,000 Amada Sonoike Company Ltd. ..................... 296,318
12,000 Chofu Seisakusho Company ....................... 282,745
58,000 Dowa Fire & Marine Insurance Company ........... 298,262
17,000 Fuji Photo Film Ltd. ........................... 516,305
53,000 Koyosha Inc.+ .................................. 332,378
19,000 Matsushita Electric Industrial Company ......... 318,312
32,000 Morito ......................................... 349,758
43,000 Nissan Fire & Marine Insurance Company ......... 290,853
36,000 Oak & Company .................................. 245,117
62,000 Osaka Securities Finance ....................... 338,828
15,000 Sankyo Company Ltd. ............................ 382,996
5,000 Shikoku Coca-Cola Bottling ..................... 64,953
19,000 Toyo Technical Company Ltd. .................... 195,753
------------
4,231,472
------------
UNITED KINGDOM--1.0%
145,000 McAlpine (Alfred) PLC .......................... 340,453
32,000 SmithKline Beecham, PLC Units, ADR ............. 1,948,000
------------
2,288,453
------------
SWITZERLAND--0.8%
2,000 Danzas Holding AG PC ........................... 384,018
1,000 Edipresse SA, Bearer ........................... 414,293
1,500 Magazine Zum Globus PC ......................... 758,873
500 Swissair AG, Registered+ ....................... 410,708
------------
1,967,892
------------
NETHERLANDS--0.7%
10,900 Heineken Holdings NV, Class A .................. 1,783,046
------------
FINLAND--0.7%
15,500 Kone Corporation, Class B ...................... 1,594,352
------------
FRANCE--0.4%
7,200 Compagnie Financiere de Suez ................... 286,996
2,725 Klepierre ...................................... 336,042
2,300 Peugeot SA ..................................... 253,354
------------
876,392
------------
ITALY--0.2%
71,000 Arnoldo Mondadori Editore SPA .................. 515,050
15,000 Franco Tosi SPA ................................ 92,073
------------
607,123
------------
SPAIN--0.2%
5,000 Argentaria ..................................... 207,036
16,000 Unipapel SA .................................... 266,501
------------
473,537
------------
SINGAPORE--0.1%
78,000 Robinson and Company Ord ....................... 326,800
------------
TOTAL COMMON STOCKS--FOREIGN
(COST $12,325,800) .............................. 14,149,067
------------
PREFERRED STOCK--0.0%++
(COST $16,100)
1,400 Grant Geophysical Inc., Preferred ............... 26,075
------------
FACE
VALUE
------
COMMERCIAL PAPER--6.2%
$ 3,750,000 General Electric Capital Corporation, 5.800% due
10/1/96 ........................................ 3,750,000
11,300,000 Prudential Securities, 5.750% due 10/1/96 ...... 11,300,000
------------
TOTAL COMMERCIAL PAPER
(COST $15,050,000) .............................. 15,050,000
------------
U.S. TREASURY BILLS--0.2%
200,000 5.630%** due 5/1/97 ............................ 193,722
350,000 5.600%** due 8/1/97 ............................ 333,305
------------
TOTAL U.S. TREASURY BILLS
(COST $527,027) ................................. 527,027
------------
TOTAL INVESTMENTS (COST $202,796,360*) .................. 99.6% 242,380,643
OTHER ASSETS AND LIABILITIES (NET) ...................... 0.4 870,230
----- ------------
NET ASSETS .............................................. 100.0% $243,250,873
===== ============
- ----------
* Aggregate cost for Federal tax purposes.
** Rate represents annualized yield at date of purchase.
+ Non-income producing security.
++ Amount represents less than 0.1% of net assets.
Abbreviation:
ADR--American Depository Receipt
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TWEEDY, BROWNE AMERICAN VALUE FUND
- ------------------------------------------------------------------------------
Schedule of Forward Exchange Contracts
- ------------------------------------------------------------------------------
September 30, 1996 (Unaudited)
CONTRACT MARKET
VALUE VALUE
CONTRACTS DATE (NOTE 1)
- ---------- -------- --------
FORWARD EXCHANGE CONTRACTS TO SELL
911,820 Finnish Markka ...................... 2/28/97 $ (201,511)
2,147,265 Finnish Markka ...................... 4/15/97 (475,975)
4,464,000 Finnish Markka ...................... 8/29/97 (998,739)
980,600 French Franc ........................ 10/31/96 (190,178)
3,029,280 French Franc ........................ 8/29/97 (598,047)
127,828 Great Britain Pound Sterling ........ 10/31/96 (200,007)
418,500,000 Italian Lira ........................ 10/31/96 (274,038)
544,148,500 Italian Lira ........................ 8/29/97 (351,629)
192,800,000 Japanese Yen ........................ 10/31/96 (1,735,585)
100,600,000 Japanese Yen ........................ 12/27/96 (913,313)
30,345,000 Japanese Yen ........................ 2/28/97 (277,981)
55,814,250 Japanese Yen ........................ 4/15/97 (514,574)
67,990,000 Japanese Yen ........................ 8/29/97 (639,364)
231,690 Netherlands Guilder ................. 10/31/96 (135,583)
482,550 Netherlands Guilder ................. 2/28/97 (285,041)
750,353 Netherlands Guilder ................. 4/15/97 (444,856)
1,972,080 Netherlands Guilder ................. 8/29/97 (1,181,545)
6,478,500 Norwegian Krone ..................... 6/16/97 (999,566)
414,900 Singapore Dollar .................... 10/31/96 (295,054)
38,001,000 Spanish Peseta ...................... 10/31/96 (295,324)
218,500 Swiss Franc ......................... 10/31/96 (174,736)
1,010,070 Swiss Franc ......................... 12/27/96 (812,897)
173,115 Swiss Franc ......................... 2/28/97 (140,305)
951,040 Swiss Franc ......................... 8/29/97 (787,078)
------------
TOTAL FORWARD EXCHANGE CONTRACTS TO SELL
(CONTRACT AMOUNT $13,500,000) .................. $(12,922,926)
============
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TWEEDY, BROWNE AMERICAN VALUE FUND
- ------------------------------------------------------------------------------
Statement of Assets and Liabilities
- -------------------------------------------------------------------------------
September 30, 1996 (Unaudited)
ASSETS
Investments, at value (Cost $202,796,360) (Note 1)
See accompanying schedule ................... $242,380,643
Cash and foreign currency (Cost $19,848) ........ 9,687
Net unrealized appreciation of forward exchange
contracts (Note 1) ............................ 577,074
Dividends and interest receivable ............... 386,097
Receivable for Fund shares sold ................. 175,414
Unamortized organization costs (Note 5) ......... 42,157
Prepaid expense ................................. 4,732
------------
TOTAL ASSETS ................................ 243,575,804
------------
LIABILITIES
Investment advisory fee payable (Note 2) ........ $221,022
Administration fee payable (Note 2) ............. 25,694
Accrued shareholder reports expense ............. 21,095
Custodian fees payable (Note 2) ................. 16,276
Transfer agent fees payable (Note 2) ............ 6,700
Accrued Directors' fees and expenses (Note 2) ... 3,333
Accrued expenses and other payables ............. 30,811
-------
TOTAL LIABILITIES ........................... 324,931
------------
NET ASSETS .......................................... $243,250,873
============
NET ASSETS CONSIST OF
Undistributed net investment income ............. $ 1,358,798
Accumulated net realized gain on securities,
forward exchange contracts and foreign
currencies .................................... 8,359,911
Net unrealized appreciation of securities,
forward exchange contracts, foreign currencies
and net other assets .......................... 40,151,083
Par value ....................................... 1,629
Paid-in capital in excess of par value .......... 193,379,452
------------
TOTAL NET ASSETS ............................ $243,250,873
============
NET ASSET VALUE, offering and redemption price per share
($243,250,873 / 16,290,092 shares of common stock
outstanding) .................................... $14.93
======
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TWEEDY, BROWNE AMERICAN VALUE FUND
- ------------------------------------------------------------------------------
Statement of Operations
- ------------------------------------------------------------------------------
For the six months ended September 30, 1996 (Unaudited)
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $42,859) ... $ 2,059,797
Interest .................................................. 459,123
-----------
TOTAL INVESTMENT INCOME ............................... 2,518,920
-----------
EXPENSES
Investment advisory fee (Note 2) .............. $1,378,435
Administration fee (Note 2) ................... 162,412
Transfer agent fees (Note 2) .................. 44,703
Custodian fees (Note 2) ....................... 30,577
Legal and audit fees .......................... 16,159
Amortization of organization costs (Note 5) ... 9,761
Directors' fees and expenses (Note 2) ......... 3,946
Other ......................................... 62,412
Waiver of fees by investment adviser,
administrator and custodian (Note 2) ........ (177,084)
----------
TOTAL EXPENSES ........................................ 1,531,321
-----------
NET INVESTMENT INCOME ......................................... 987,599
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(Notes 1 and 3)
Net realized gain on:
Securities .............................................. 5,579,247
Forward exchange contracts .............................. 514,358
Foreign currencies ...................................... 4,825
-----------
Net realized gain on investment during the period ......... 6,098,430
-----------
Net change in unrealized appreciation (depreciation) of:
Securities .............................................. 2,636,140
Forward exchange contracts .............................. 2,961
Foreign currencies and net other assets ................. (10,094)
-----------
Net unrealized appreciation of investments during the
period .................................................. 2,629,007
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS ............... 8,727,437
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $9,715,036
==========
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TWEEDY, BROWNE AMERICAN VALUE FUND
- ------------------------------------------------------------------------------
Statement of Changes in Net Assets
- ------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR
9/30/96 ENDED
(UNAUDITED) 3/31/96
-------------- --------------
Net investment income ........................ $ 987,599 $ 1,550,882
Net realized gain on securities, forward
exchange contracts and foreign currencies
during the period .......................... 6,098,430 2,569,270
Net unrealized appreciation of securities,
forward exchange contracts, foreign currencies
and net other assets during the period ..... 2,629,007 34,254,651
------------ ------------
Net increase in net assets resulting from
operations ................................. 9,715,036 38,374,803
DISTRIBUTIONS:
Dividends to shareholders from net
investment income ........................ -- (1,344,358)
Distributions to shareholders from net
realized gain on investments ............. -- (253,652)
Net increase in net assets from Fund share
transactions (Note 4)....................... 31,937,330 105,965,682
------------ ------------
Net increase in net assets ................... 41,652,366 142,742,475
NET ASSETS
Beginning of period .......................... 201,598,507 58,856,032
------------ ------------
End of period (including undistributed net
investment income of $1,358,798 and
$371,199, respectively) .................... $243,250,873 $201,598,507
============ ============
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TWEEDY, BROWNE AMERICAN VALUE FUND
- ------------------------------------------------------------------------------
Financial Highlights
- ------------------------------------------------------------------------------
For a Fund share outstanding throughout each period.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR YEAR PERIOD
9/30/96 ENDED ENDED ENDED
(UNAUDITED) 3/31/96(f) 3/31/95(f) 3/31/94(a)
----------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period ......................... $ 14.29 $ 10.71 $ 9.71 $ 10.00
-------- -------- -------- --------
Income from investment operations:
Net investment income(c) .......... 0.06 0.15 0.13 0.01
Net realized and unrealized gain
(loss) on investments ........... 0.58 3.56 0.93 (0.30)
-------- -------- -------- --------
Total from investment operations 0.64 3.71 1.06 (0.29)
-------- -------- -------- --------
DISTRIBUTIONS:
Dividends from net investment
income ........................ -- (0.11) (0.06) --
Distributions from net realized
gains ......................... -- (0.02) -- --
-------- -------- -------- --------
Total distributions ........... -- (0.13) (0.06) --
-------- -------- -------- --------
Net asset value, end of period .... $ 14.93 $ 14.29 $ 10.71 $ 9.71
======== ======== ======== ========
Total return(d) ................... 4.48% 34.70% 11.02% (2.90)%
======== ======== ======== ========
Ratios/Supplemental Data:
Net assets, end of period (in 000's) $243,251 $201,599 $ 58,856 $ 16,133
Ratio of operating expenses
to average net assets(e) ........ 1.39%(b) 1.39% 1.74% 2.26%(b)
Ratio of net investment income
to average net assets ........... 0.90%(b) 1.13% 1.25% 0.64%(b)
Portfolio turnover rate ........... 0% 9% 4% 0%
Average commission rate
(per share of security)(g) ...... $ 0.0327 $ 0.0341 N/A N/A
<FN>
- ----------
(a) The Fund commenced operations on December 8, 1993.
(b) Annualized.
(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 six months ended September 30, 1996, the years ended March 31, 1996
and 1995 and the 3.75-month period ended March 31, 1994 was $0.05, $0.12, $0.11 and $(0.01), respectively.
(d) Total return represents aggregate total return for the periods indicated.
(e) Annualized expense ratios before the waiver of fees by the investment adviser and/or administrator and/or custodian
for the six months ended September 30, 1996, the years ended March 31, 1996 and 1995 and the 3.75-month period ended
March 31, 1994 were 1.55%, 1.61%, 1.94% and 3.51%, respectively.
(f) 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.
(g) Average commission rate (per share of security) as required by amended disclosure requirements effective September 1, 1995.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TWEEDY, BROWNE AMERICAN VALUE FUND
- ------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited)
- ------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Tweedy, Browne American Value Fund (the "Fund") is a diversified series of
Tweedy, Browne Fund Inc. (the "Company"). The Company is an open-end management
investment company registered with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended. The Company was organized as a
Maryland corporation on January 28, 1993. The Fund commenced operations on
December 8, 1993. The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates. The
following is a summary of significant accounting policies consistently followed
by the Fund in the preparation of its financial statements.
PORTFOLIO VALUATION Generally, the Fund's investments are valued at market
value or, in the absence of market value with respect to any portfolio
securities, at fair value as determined by or under the direction of the
Company's Board of Directors. Portfolio securities that are traded primarily on
a domestic exchange are valued at the last sale price on that exchange or, if
there were no sales during the day, at the mean between the last ask price and
the last bid price prior to the close of regular trading. Over-the-counter
securities and securities listed or traded on certain foreign exchanges whose
operations are similar to the United States ("U.S.") over-the-counter market are
valued at the mid price between the bid and ask prices. Portfolio securities
that are traded primarily on foreign exchanges generally are valued at the
preceding closing values of such securities on their respective exchanges,
except that when an occurrence subsequent to the time that a value was so
established is likely to have changed such value, then the fair value of those
securities will be determined by consideration of other factors by or under the
direction of the Company's Board of Directors. Short-term investments that
mature in 60 days or less are valued at amortized cost.
REPURCHASE AGREEMENTS The Fund engages in repurchase agreement transactions.
Under the terms of a typical repurchase agreement, the Fund takes possession of
an underlying debt obligation subject to an obligation of the seller to
repurchase, and the Fund to resell, the obligation at an agreed-upon price and
time, thereby determining the yield during the Fund's holding period. This
arrangement results in a fixed rate of return that is not subject to market
fluctuations during the Fund's holding period. The value of the collateral is at
least equal at all times to the total amount of the repurchase obligations,
including interest. In the event of counterparty default, the Fund has the right
to use the collateral to offset losses incurred. There is potential loss to the
Fund in the event the Fund is delayed or prevented from exercising its rights to
dispose of the collateral securities, including the risk of a possible decline
in the value of the underlying securities during the period while the Fund seeks
to assert its rights. The Fund's investment adviser, acting under the
supervision of the Company's Board of Directors, reviews the value of the
collateral and the creditworthiness of those banks and dealers with which the
Fund enters into repurchase agreements to evaluate potential risks.
FOREIGN CURRENCY The books and records of the Fund are maintained in U.S.
dollars. Foreign currencies, investments and other assets and liabilities are
translated into U.S. dollars at the exchange rates prevailing at the end of the
period, and purchases and sales of investment securities, income and expenses
are translated on the respective dates of such transactions. Unrealized gains
and losses which result from changes in foreign currency exchange rates have
been included in the unrealized appreciation (depreciation) of currencies and
net other assets. Net realized foreign currency gains and losses resulting from
changes in exchange rates include foreign currency gains and losses between
trade date and settlement date on investment securities transactions, foreign
currency transactions and the difference between the amounts of interest and
dividends recorded on the books of the Fund and the amount actually received.
The portion of foreign currency gains and losses related to fluctuation in the
exchange rates between the initial purchase trade date and subsequent sale trade
date is included in realized gains and losses on investment securities sold.
FORWARD EXCHANGE CONTRACTS The Fund has entered into forward exchange
contracts for non-trading purposes in order to reduce its exposure to
fluctuations in foreign currency exchange on its portfolio holdings. Forward
exchange contracts are valued at the forward rate and are marked-to-market
daily. The change in market value is recorded by the Fund as an unrealized gain
or loss. When the contract is closed, the Fund records a realized gain or loss
equal to the difference between the value of the contract at the time that it
was opened and the value of the contract of the time that it was closed.
The use of forward exchange contracts does not eliminate fluctuations in the
underlying prices of the Fund's investment securities, but it does establish a
rate of exchange that can be achieved in the future. Although forward exchange
contracts limit the risk of loss due to a decline in the value of the hedged
currency, they also limit any potential gain that might result should the value
of the currency increase. In addition, the Fund could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their contracts.
The Fund currently enters into such contracts with Mellon Bank Corporation
("Mellon Bank") and Brown Brothers Harriman & Co.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME Securities transactions are
recorded as of the trade date. Realized gains and losses from securities
transactions are recorded on the identified cost basis. Dividend income and
distributions to shareholders are recorded on the ex-dividend date. Interest
income is recorded on the accrual basis. Dividend income and interest income may
be subject to foreign withholding taxes.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment
income, if any, and distributions from realized capital gains after utilization
of capital loss carryforwards, if any, will be declared and paid annually.
Additional distributions of net investment income and capital gains from the
Fund may be made at the discretion of the Board of Directors in order to avoid
the application of a 4% non-deductible Federal excise tax on certain
undistributed amounts of ordinary income and capital gains. Income distributions
and capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund, timing differences and
differing characterization of distributions made by the Fund.
FEDERAL INCOME TAXES The Fund intends to qualify as a regulated investment
company, if such qualification is in the best interest of its shareholders, by
complying with the requirements of the Internal Revenue Code of 1986, as
amended, applicable to regulated investment companies and by distributing
substantially all of its taxable income to its shareholders. Therefore, no
Federal income tax provision is required.
EXPENSES Expenses directly attributable to each Fund as a diversified series
of the Company are charged to that Fund. Other expenses of the Company are
allocated to each Fund based on the average net assets of each Fund.
2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND OTHER RELATED PARTY
TRANSACTIONS
The Company on behalf of the Fund has entered into an investment advisory
agreement (the "Advisory Agreement") with Tweedy, Browne Company L.P. ("Tweedy,
Browne"). Under the Advisory Agreement, the Company pays Tweedy, Browne a fee at
the annual rate of 1.25% of the value of its average daily net assets. The fee
is payable monthly, provided the 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 the Fund and unpaid. From time to time, Tweedy, Browne may
voluntarily waive a portion of its fee otherwise payable to it. For the six
months ended September 30, 1996, Tweedy, Browne voluntarily waived fees of
$155,340.
The current and retired general partners and their families, as well as
employees of Tweedy, Browne, the investment adviser to the Fund, have
approximately $20.8 million of their own money invested in the Fund.
The Company on behalf of the Fund has entered into an administration
agreement (the "Administration Agreement") with First Data Investor Services
Group, Inc. ("FDISG"), a wholly owned subsidiary of First Data Corporation.
Under the Administration Agreement, the Company pays FDISG an administrative fee
and a fund accounting fee computed daily and payable monthly at the following
annual rates of the value of the average daily net assets of the Fund.
FEES ON ASSETS
------------------------------------------------------
BETWEEN
UP TO $200 AND EXCEEDING
$200 MILLION $500 MILLION $500 MILLION
- ------------------------------------------------------------------------------
Administration Fees 0.10% 0.08% 0.06%
- ------------------------------------------------------------------------------
UP TO EXCEEDING
$100 MILLION $100 MILLION
- ------------------------------------------------------------------------------
Accounting Fees 0.06% 0.04%
- ------------------------------------------------------------------------------
For the six months ended September 30, 1996, FDISG voluntarily waived
administration fees of $18,303.
Under the terms of the Administration Agreement, the Company will pay for
Fund Administration Services, a minimum fee of $40,000 per Fund per annum, not
to be aggregated with fees for Fund Accounting Services. The Company will pay
for Fund Accounting Services a minimum fee of $40,000 per Fund per annum, not to
be aggregated with fees for Fund Administration Services.
No officer, director or employee of Tweedy, Browne, FDISG or any parent or
subsidiary of those corporations receives any compensation from the Company for
serving as a director or officer of the Company. The Company pays each director
who is not an officer, director or employee of Tweedy, Browne, FDISG or any of
their affiliates $2,000 per annum plus $500 per Regular or Special Board Meeting
attended in person or by telephone, plus out-of-pocket expenses.
Boston Safe Deposit and Trust Company ("Boston Safe"), an indirect wholly
owned subsidiary of Mellon Bank, serves as the Fund's custodian pursuant to a
custody agreement (the "Custody Agreement"). From time to time, Boston Safe may
voluntarily waive a portion of its fee otherwise payable to it. For the six
months ended September 30, 1996, Boston Safe voluntarily waived fees of $3,441.
Unified Advisers, Inc., serves as the Fund's transfer agent. Tweedy, Browne also
serves as the distributor to the Fund and pays all distribution fees. No
distribution fees are paid by the Fund.
For the six months ended September 30, 1996, the Fund incurred total
brokerage commissions of $87,294.
3. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of investment securities,
excluding short-term investments for the six months ended September 30, 1996,
aggregated $50,026,381 and $13,287,463, respectively.
At September 30, 1996, the aggregate gross unrealized appreciation for all
securities, in which there was an excess of value over tax cost, was $43,650,134
and the aggregate gross unrealized depreciation for all securities, in which
there was an excess of tax cost over value, was $4,065,851.
4. CAPITAL STOCK
The Company is authorized to issue one billion shares of $0.0001 par value
capital stock, of which 400,000,000 of the unissued shares have been designated
as shares of the Fund. Changes in shares outstanding for the Fund were as
follows:
SIX MONTHS ENDED 9/30/96 YEAR ENDED 3/31/96
------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------
Sold 3,561,559 $51,838,584 12,329,516 $153,231,522
Reinvested -- -- 112,691 1,493,159
Redeemed (1,375,185) (19,901,254) (3,834,573) (48,758,999)
- ------------------------------------------------------------------------------
Net Increase 2,186,374 $31,937,330 8,607,634 $105,965,682
- ------------------------------------------------------------------------------
5. ORGANIZATION COSTS
The Fund bears all costs in connection with its organization including the
fees and expenses of registering and qualifying its shares for distribution
under Federal and state securities regulations. All such costs have been
deferred and are being amortized over a five-year period using the straight-line
method from the commencement of operations of the Fund. In the event that any of
the initial shares of the Fund are redeemed during such amortization period, the
Fund will be reimbursed for any unamortized organization costs in the same
proportion as the number of shares redeemed bears to the number of initial
shares held at the time of redemption.
6. SUBSEQUENT EVENT
Effective October 1, 1996, the Company and Mellon Bank, N.A. amended a Line
of Credit Agreement (the "Agreement") with respect to Tweedy, Browne Global
Value Fund to include the Fund. The Agreement provides the Fund with a $50
million line of credit, primarily for temporary or emergency purposes, including
the meeting of redemption requests that might otherwise require the untimely
disposition of securities. The Fund may borrow up to the lesser of $50 million
or one-third of its net assets. Interest is payable at the bank's Money Market
Rate plus 0.75% on an annualized basis. Under the Agreement, the Fund is charged
a facility fee equal to 0.10% annually of the unutilized credit. The Agreement
requires, among other provisions, the Fund to maintain a ratio of net assets
(not including funds borrowed pursuant to the Agreement) to aggregated amount of
indebtedness pursuant to the Agreement of no less than three to one.
<PAGE>
TWEEDY, BROWNE FUND INC.
52 Vanderbilt Avenue, NY, NY 10017
800-432-4789 or 800-873-8242
