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[graphic omitted]
TWEEDY, BROWNE
GLOBAL VALUE FUND
SEMI-ANNUAL
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SEPTEMBER 30, 1998
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[graphic omitted]
TWEEDY, BROWNE
AMERICAN VALUE FUND
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TWEEDY, BROWNE FUND INC.
Investment Manager's Report .......................................... 1
Results of Shareholder Meeting ....................................... 21
Tweedy, Browne Global Value Fund:
Portfolio of Investments .......................................... 22
Schedule of Forward Exchange Contracts ............................ 32
Statement of Assets and Liabilities ............................... 40
Statement of Operations ........................................... 41
Statements of Changes in Net Assets ............................... 42
Financial Highlights .............................................. 43
Notes to Financial Statements ..................................... 44
Tweedy, Browne American Value Fund:
Portfolio of Investments .......................................... 52
Schedule of Forward Exchange Contracts ............................ 61
Statement of Assets and Liabilities ............................... 64
Statement of Operations ........................................... 65
Statements of Changes in Net Assets ............................... 66
Financial Highlights .............................................. 67
Notes to Financial Statements ..................................... 68
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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 LLC is a member of the NASD and is
the Distributor of the Company.
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TWEEDY, BROWNE FUND INC.
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Investment Manager's Report
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[Photo of Chris Browne, John Spears and Will Browne,
Bob Wyckoff and Tom Shrager]
Chris Browne, John Spears and Will Browne (seated L to R)
Bob Wyckoff and Tom Shrager (back row L to R)
To Our Shareholders:
Normally we begin our letters to shareholders with the statement, "We are
pleased to present . . .", which for the most recent six months of our fiscal
year, seems a bit peculiar. We are pleased to communicate with our
shareholders, but we do wish that every time we did we could report that we
had more money than we had when we last reported. We all recognize that stocks
do not go up in every measured time period despite our wishing they would.
Investment results for six months, twelve months and since inception through
September 30, 1998, for Tweedy, Browne Global Value Fund and Tweedy, Browne
American Value Fund are presented on the following page.
<TABLE>
<CAPTION>
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MORNINGSTAR MORNINGSTAR
FOREIGN WORLD
TWEEDY, BROWNE MSCI EAFE(1) STOCK FUNDS STOCK FUNDS
GLOBAL VALUE US $ HEDGED AVERAGE(2) AVERAGE(3)
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<S> <C> <C> <C> <C> <C>
6 months .................. (17.54)% (13.30)% (16.64)% (15.87)% (16.16)%
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12 months ................. (5.33) (8.34) (7.20) (10.92) (9.93)
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Annualized since inception
(5.33 years)(9) 12.69 5.96 8.43 6.95 9.49
=================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
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MORNINGSTAR MORNINGSTAR
DOMESTIC MID-CAP
TWEEDY, BROWNE S&P S&P RUSSELL STOCK FUNDS VALUE FUNDS
AMERICAN VALUE 500(4) MID-CAP 400(5) 2000(6) AVERAGE(7) AVERAGE(8)
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<S> <C> <C> <C> <C> <C> <C>
6 months ........ (11.98)% (6.96)% (16.29)% (23.89)% (15.37)% (19.73)%
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12 months ....... (0.03) 9.06 (6.31) (18.89) (6.80) (11.76)
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Annualized since inception
(4.83 years)(9) 17.80 20.37 14.62 8.02* 13.03 12.14
=========================================================================================================================
*Does not include the reinvestment of dividends.
</TABLE>
Note: The performance shown represents past performance and is not a guarantee
of future results. The Funds' share price and investment return will
vary with market conditions, and the principal value of shares, when
redeemed, may be more or less than original cost. See page 20 for
footnotes 1 through 9, which describe the indices.
Since the stock market peaked on July 17, the past few months have been
unsettling for many investors with the Dow Jones Industrial Average rising or
falling hundreds of points on any number of days. Furthermore, the results of
the Dow Jones or the Standard & Poor's 500 Stock Index do not tell the full
story. Broader indexes, which include smaller stocks, are down much more than
the large cap-weighted indexes. For example, the Russell 2000, which is
comprised of the 2000 stocks smaller than the 1000 largest stocks in the Russell
3000 Index, is down 23.9% for the six months ended September 30, 1998. For the
calendar year nine months, that index is down 16.0%. Given the proportion of our
assets that are invested in smaller and mid-cap stocks, we are almost surprised
we are not down more than we are. However, we never said the market always goes
up. Long term, we have been more than amply rewarded for owning the kinds of
stocks we own. We see no reason for that to change in the future. We may be
repeating ourselves, but we believe investing is like flying in an airplane.
Occasionally, we will encounter some air turbulence, but that does not prevent
us from reaching our final destination. In times of turbulence, we merely
tighten our seat belts and wait for smoother flying. In times like these, there
really is neither much we can do, nor much we should do. Continuing our airplane
analogy, if we told the pilot to land, which would be equivalent to selling our
stocks, we would not get to our destination. And while no one enjoys air
turbulence, we cannot recall it ever being the cause of a crash. Pilot errors or
faulty aircrafts are the more common causes of accidents. The same can be said
for stock investing.
We are also very pleased to observe that our clients and investors appear to
agree with us. Despite almost daily doses of dire market forecasts, our
shareholders have remained extremely stable. Since the stock market peak on July
17, the number of shares outstanding of the Global Value Fund has only declined
3% through September 30. Over the same time period, the number of shares
outstanding in the American Value Fund has actually increased 1.9%. This may say
something about investors' risk perceptions of U.S. stocks versus foreign
stocks, which is a topic we will discuss later in this report. However, the
current buzz words in the investment world are the so-called "flight to
quality." It may be impossible to measure the amount of time and energy that is
being devoted to scaring the daylights out of the individual investor. However,
as far as we can tell, it is not working. With the exception of some of the
dicier funds, such as emerging market bond funds, mutual funds are not seeing
large redemptions. In our opinion, the individual investor is acting rationally
in the midst of all the turmoil. (We characterize this behavior as rational
because it is the same as ours. One always likes to think of one's self as being
rational.) Who then, we ask, is causing the stock markets to fluctuate so
widely? Given the number of shares traded, with volume exceeding one billion
shares on some days, it can only be the professional money managers. We are at a
loss to comprehend what news can cause money managers to sell at near panic
rates one day, and rush back into the market the next. Perhaps in another life
we will be psychologists and study such behavior. For now, we are seeing enough
cheap stocks falling out of this market correction to keep us busy for some time
to come.
Much of what has occurred deserved to happen. Many stocks were too high and
more rational pricing of future earnings expectations is not all bad. More
rational expectations of future earnings is not so bad either. However, as
always happens, some babies get thrown out with the bathwater. In a rush to
quality, which means the largest companies with the most predictable earnings
forecasts, a lot of good merchandise has been put on the market at bargain
prices. And even the big, safe stocks have not always been a haven in this
market. Almost daily, any company reporting disappointing earnings can see its
stock drop 20% to 30%. The October 12, 1998 issue of The Wall Street Journal
reported that a number of the best growth stocks had not performed so well when
compared to their prior 52-week highs: Lucent Technologies -42%; Gillette -38%;
Cisco Systems -29%; Coke -28%; and Home Depot -26%, as compared to declines of
17% for the S&P 500 and 16% for the Dow Jones Industrials. Smaller companies,
which may not have the ability to "manage" their earnings to meet analysts'
expectations, are perceived as "riskier" and have in many cases been dumped
wholesale by institutional investors. Many bank stocks are also down
significantly, and the brokerage stocks have gone into a tailspin. In a panic,
liquidity dries up, which accounts for some of the more dramatic price declines.
However, there is a silver lining. After bemoaning the lack of investment
opportunities for months, if not years, our value brethren are beginning to talk
about an increase in cheap stocks. We second that opinion.
When the time rolls around for us to write our shareholder letters, we
sometimes wonder what topic we should address. We actually collect stories and
articles we believe are instructive, as well as studies of stocks which point to
successful investment strategies. We especially like Jonathan Clements' articles
in The Wall Street Journal and admire him for his practical, comprehensible
observations and advice. This year, with stories of hedge funds blowing up,
emerging markets such as Russia and Indonesia imploding, and the general
impression that the world has become a riskier place, we thought we would
present our interpretation of risk.
The dictionary defines risk as "the possibility of suffering harm or loss."
This definition is a bit simplistic, so the investment community likes to slice
and dice the definition into numerous variables. There is market risk, which is
fairly easy to understand because, surprise, surprise, stock markets can go
down. There is "risk premium," a mathematical formula, which supposedly measures
the excess return investors expect for holding equities rather than less risky
bonds. And there is systemic risk, which is the risk that an entire financial
system can collapse like it did in Russia and Indonesia. If you are a large
institutional investor, you can afford to pay consultants to measure risk for
you. They can run the "Monte Carlo Simulation," which will supposedly tell you
what the odds are that your account will be worth less in ten years, and various
other formulas that look more like a bunch of letters that fell out of a can of
Greek alphabet soup. The financial community loves mathematical wizardry while
losing sight of the fact that all these formulas are based on assumptions that
just may be "garbage in, garbage out." For example, the following mathematical
formula is called the Garman- Kohlhagen model for a call option on foreign
currency, which appeared in The Financial Analysts Journal in March 1996:
-r(pi) -r(pi)
c = Se N(d1) - Xe N(d2)
2
ln(S/X) + [rd - rf + (o /2)]T
d1 = ------------------------------
_______
o\/ T
2
ln(S/X) + [rd - rf(o /2)]T
d2 = ------------------------------
_______
o\/ T
_______
= d1 - o\/ T
No one at Tweedy, Browne was a math major in college. Rather, we were
arithmetic majors in elementary school. We tend to glaze over when presented
with these formulas and their conclusions. We always try to reduce
explanations of what we do to "plain English" that the average person can
understand. Rocket scientists prefer explanations that Stephen Hawkings would
have to think about. Our guess is that people prefer explanations that they
cannot understand on the assumption that the person presenting the explanation
must be smarter than they are, and thus worthy of veneration. How else can one
explain the success of Long-Term Capital Management, the now infamous hedge
fund which blew up last month with a $3.65 billion bail out, raising money
from some of the most "sophisticated" investors in the world. For our own
money, we consider only two broad types of risk: the risk of not owning stocks
and the risk of permanent capital loss. Everything else is just fluctuation.
The risk of not owning stocks comes from inflation which, generally, is a
slow, insidious erosion of your wealth. For example, we have a client whose
mother inherited $1 million when her husband died in 1947, which is a lot of
money today and was an enormous amount of money then. To protect his widow,
her late husband left his money in trust with a bank and instructed them to
invest it in bonds and pay her the interest. At the time, you probably could
have received 3% in tax-free municipal bonds, yielding our client's mother
$30,000 a year tax free on which she could live very comfortably. In 1947 you
could buy a great house for $25,000, which today would cost more than $1
million. A new Cadillac probably cost $2,500 and a four-year Harvard education
cost less than $10,000. Today, the Cadillac would cost $40,000 or $50,000 (we
are guessing because none of us owns a Cadillac), and four years at Harvard
will set you back $125,000!. (The cost of higher education is something with
which we are all too painfully familiar.) God bless her, 51 years later our
client's mother is still alive and enjoying life. And she is doubly lucky
because her son was very successful and can now afford to contribute to her
support, because her trust fund is still worth $1 million and throws off about
$36,000 a year. If this lady's trust had been invested in the Standard &
Poor's 500 Stock Index, the result would have been very different. Over the
50-year period from 1947 to 1997, the S&P 500 compounded at a 12.9% annual
rate. Approximately four percentage points came from dividends and one percent
came from realized capital gains from stocks that were either taken over or
dropped from the index. If we tax the dividends at a 50% rate and the capital
gains at a 25% rate, the net return is 10.65%. To give our client's mother
money to live on, we will let her spend 3%, which is equivalent to the $30,000
she received from the municipal bonds in 1947. Her net reinvested rate of
compounding would have been 7.65%. Over 50 years, her $1 million would have
grown to $39,875,000. If she continued to spend 3% per year, the bank would be
sending her a check for $1,196,250 this year and she could probably send her
son some money instead of vice versa. Long term, the rate of inflation has
been about 3%. To preserve the purchasing power of her original $1 million,
she would need $4,515,423 in 1998. Instead, the index would have made her 8.8
times that amount of money. If this is enough to make us cry, imagine how her
son must feel.
Along the way, returns can be fairly lumpy. Between 1947 and 1972, the S&P
500 compounded at about 13.5%. Reducing this rate by our estimated taxes and the
3% that was taken out for living expenses, the value of our subject's trust
would have grown to $7,256,000. In the bear market of 1973 and 1974, she might
have seen the value of the trust drop 37% to $4,571,280. Adhering to her 3%
spending rule, she would have received a check for $137,000, down from $217,000
the year before the market went in the tank. However, adjusting her original
$30,000 spendable cash at an inflation rate of 3% would have been $64,700 in
1974. On an inflation adjusted basis, she could have still maintained her
original lifestyle on only one-half of what she would have been given from the
trust, even after a nearly 40% drop in the market. Although it would have taken
several years for this lady's trust to get back to its previous high net asset
value following the 1973-1974 bear market, she would have been so far ahead of
inflation from her beginning point in 1947, it would not have mattered. In the
entire 50-year period ending in 1997, on an annual basis the stock market was up
40 years, a batting average of 80%. Move over Mark McGwire. In every 20-year
period from 1926 to 1995, the S&P 500 Index beat inflation. While the stock
market's gyrations and decline in the past two months may be disconcerting, we
believe investors should keep count of their wealth on an annual basis, not on a
peak-to-trough interim basis. While we all remember the "Crash of 1987," we
should also remember the market was up 5.2% on an annual basis for the year. If
you had been away and out of touch for that year, you would have returned to
find you had a ho-hum investment return in 1987. The important lesson to be
taken from this discussion is that by not being invested in stocks, our client's
mother saw her fortune decline by 77.8% after adjusting for inflation. That is
why we own stocks and not bonds.
University endowment funds and charitable foundations do what we believe our
client's mother should have done. They adopt a spending rule, usually between 4%
and 5%, which is less than their expected long-term rate of return from their
investments. They hope that their rate of return after spending will at least
equal if not exceed the rate of inflation. They have the enormous advantage of
not paying taxes on their investment gains, which helps significantly, but their
principal goal is to maintain the value of the endowment after adjusting for
inflation. However, most universities have an additional problem: they are
dependent on the income from their endowments to balance their operating
budgets. This means they spend everything their spending rule allows. If they
adhered to the 4% or 5% spending rule and their investments declined 20% in any
given year, it would put a big hole in their budgets. In an attempt to smooth
out these possible fluctuations, endowments and foundations have traditionally
done two things. First, they invest part of the assets in bonds, which are
considered to be less volatile and thus safer than stocks. However, the problem
with bonds is that their long-term rate of return has not exceeded inflation by
4% or 5%, which is the amount that is being withdrawn each year. Long term,
bonds are a wasting asset. The second thing endowments in general do is
calculate their 4% or 5% spending limit on the previous three-year average value
of their portfolio. This is a rational way of smoothing out fluctuations in the
portfolio, in essence by reserving some of the gains in the boom years to
subsidize declines in the bad years. Given the high variability of stock market
returns year to year, we think this is a smart thing to do.
There are two other ways by which investors and endowment and foundation
trustees attempt to smooth out investment returns. The first is through market
timing; i.e., getting out of the market just before you think it is going to
fall and getting back in just before you think it is going to go up.
Unfortunately, the empirical data more than suggests that this is not possible.
More often than not, people get out after the market has fallen, and get back in
after it has enjoyed a sustained rise. This is what is happening in the
so-called "flight to quality" we read so much about. Now that Russia, Asia and
various exotic investment instruments have tanked, everyone wants to own only
the 30-year treasury bond. Their appetite for long-term treasuries is so great
that the yield has been driven down to a 30-year low of less than 5%. We have to
ask ourselves whether a 30-year treasury bond is as riskless as many seem to
believe, especially at this point. It is helpful to remember that if interest
rates go up, treasury bonds go down. With interest rates at a 30- year low, is
there a greater chance that rates may go up or down from this point? We do not
have the answer, but it is a bet we do not want to make.
At the risk of repeating ourselves, we believe that attempting to time the
market is not something we know how to do. Market timing is often an emotional
reaction; we prefer the less stressful course of being dispassionate. An
analysis of monthly investment returns of the S&P 500 from 1926 to 1993 by
Sanford Bernstein & Co. showed that out of 816 months, which comprised the
entire 68-year period, the returns in the 60 best months, or a mere 7% of the
time, averaged 11% per month. In the other 756 months, 93% of the time, the
average return was only 1/100 of 1% per month. In a study by Nicholas- Applegate
Capital Management covering a 10-year period from 1983 through 1992,
encompassing 2,526 stock market trading days, the compounded annual return for
the S&P 500 was 16.2% per year. In the same study, the investment returns on the
40 best days, a mere 1.6% of the time, accounted for 12.6% of the 16.2% annually
compounded rate of return. Without those 40 days, the annually compounded rate
of return over the 10-year period falls to 3.6%. Picking the 40 best days out of
2,526 is a lottery no one will win. These odds have not stopped people from
attempting to time the market. A few days ago we read a story about one money
manager with a large following who chose to sell 75% or 80% of his fund's stocks
late in 1997 only to reverse this decision under pressure from his clients a few
months later after the market had risen. He went back in the market just in time
to catch the late July and August downturn. Investing is a field where it is
best to be dispassionate, not passionate; to be realistic about what is humanly
possible and what is not. Predicting the future movement of the stock market
with any specificity, other than long term it probably goes up, is not something
we are aware anyone has done with any consistency.
The second way that institutional investors and some wealthy individuals
attempt to smooth out their investment returns is by investing in assets that
are not correlated to the popular stock market indices. This means finding
investments that provide returns independent of whether the S&P 500 is moving up
or down. Such investments run the gamut from real estate to venture capital,
buyout funds and hedge funds. We do not know much about real estate other than
we all own our own homes. Neither do we know much about venture capital because
analyzing start-up growth companies is about as far away from what we do as
anything. We are also not so sure these two investments are not all that
correlated to the stock market. Real estate gains seem to come when the economy
is healthy, which seems to correlate to strong stock markets. And venture
capital requires a strong stock market so profits on these investments can be
realized through a public stock offering. These investments have the advantage
that, unlike stocks, they cannot be priced every day the market is open and,
therefore, appear less volatile. We have not seen any evidence that these
investments as a class produce excess returns over stocks although, as in
everything, some do better than others. Furthermore, we do not like the idea of
tying up our money for five or 10 years, which is necessary with these
investments.
We do know something about buyout funds, but in general have not been rich
enough to get into the established ones. Additionally, we are averse to
leverage; i.e., borrowing money, for investment. Leverage is a necessary
component of successful buyout investing. We also know something about hedge
funds; a lot more now than we did a few short months ago. We found out things we
thought could never be, as did the people who had invested in them. The
granddaddies of the business like George Soros and Julian Robertson buy stocks
around the world just like we do. They also make macro-economic bets on interest
rates and currencies along with going long and short. And they leverage -- they
borrow money to make investments greater than the value of the net assets under
their management. Because they can invest around the world and go long and short
in a wide variety of financial instruments, their performance can be less
correlated to the S&P 500. Some, such as Soros and Robertson, have been quite
successful over long periods of time. The problem with hedge funds is that past
performance is not necessarily an indication of future performance. Various
studies have shown that merely investing in hedge funds that did well in the
preceding five years offers little insight into how they will do in the next
five years. A particular manager may have merely lucked out betting on a swing
in interest rates or the rise or fall of some currency. Like people who make a
market prediction that works out, such as predicting the crash of 1987, there is
no evidence of future success in making those predictions.
Some consultants recognize this fact and advise their clients who want to
invest in hedge funds to look for the "really smart" managers. However, how do
you determine if someone is really smart? Is the answer determined by where they
went to school and how well they did there? Is it having a Ph.D. or maybe
winning a Nobel Prize in economics? Is it their IQ? That would have led you to
Greenwich, Connecticut and Long-Term Capital Management, the $4 billion hedge
fund that evaporated in August and September and forced a consortium of banks
and investment banks to put up $3.65 billion to avoid what they must have
believed would have been a financial crisis if the fund went through a forced
liquidation. As Fortune magazine editor, Carol Loomis, wrote in "A House Built
on Sand," "In the Greenwich, Connecticut office of Long-Term Capital Management
there may be more IQ points per square foot than in any other institution
extant." All those IQ points did not prevent the fund from blowing up. A friend
of ours who knows one of the Nobel laureates on the Board of Long-Term Capital
told us this individual was so completely convinced of the validity of their
investment theory, he thought it was bulletproof. Our friend offered the
following analogy: Isaac Newton was also convinced of the validity of his theory
of gravity, and he knew that if he threw a ball into the air, it would return to
earth in 10 seconds. However, if a tornado came along and picked up the ball, it
might not return to earth for 55 seconds. It would still return to earth, but if
you bet your entire net worth that it would not take longer than 15 seconds, it
would not matter that you were fundamentally correct. Or, to quote John Maynard
Keynes, "Markets can remain irrational longer than you can remain solvent."
Through the years, we have been presented with numerous investment ideas or
strategies that promised superior rates of return (they all do). Some were "sure
bets," some involved complex mathematical formulas we either did not understand
or did not think were worth our time to try to understand. Sometimes, we could
sense the promoters' frustration at our apparent lack of interest. Some even
seemed to be thinking, "Maybe these Tweedy guys aren't as smart as we thought
they were." We probably are not. We have heard about one successful money
manager who keeps a "slam dunk" file. Every time one of his traders comes into
his office with a proposed trade that is a slam dunk, he makes a note in his
file. He figures the average loss on slam dunk trades is about 20%. In any
event, we have always believed it was better for us to manage our own money in
house, buying the same stocks for ourselves that we buy for our clients and fund
shareholders. We do not have to worry about what is best for the client; we have
to worry about what is best for us because we all own the same stocks.
What killed Long-Term Capital Management was leverage, and the leverage was
on an order never before imagined. On a capital base of $4 billion, these
mathematical wizards had borrowed maybe $200 billion to support various
financial instruments with a face value of $1 trillion. To put that in
perspective, the entire tax collections of the Federal government in 1997 were
$1.72 trillion. However, for their investment theory to produce any kind of
decent result, it needed lots of leverage. By their own admission, the gross
annual return on each dollar invested was about two-thirds of one percent. On an
unleveraged basis, this would not be very appealing. Their strategy was to take
advantage of tiny anomalies in the pricing of supposedly related financial
paper. They would go long one type of security and short another until this
pricing anomaly disappeared and the two securities returned to their traditional
price relationship. As someone recently said, "They were picking up dimes in
front of a steam roller." Now, if this pricing anomaly arose between Russian
bonds and U.S. Treasuries, you could buy the Russian bonds and sell short the
U.S. Treasuries. It did not matter if interest rates went up or down, because
your long position and your short position would move in sympathy to each other.
You just had to wait for the spread, or difference between the yields on the two
securities, to narrow, returning to what the investment model said was their
historical relationship. However, as one hedge fund manager said to us, "Just
because you are long one security and short another, does not mean you are
hedged." If Russia devalued its currency (which it did), and all the world
decided there was too much risk around and rushed to buy U.S. Treasuries, you
would be in big trouble. The value of the Russian bonds you owned would go down,
producing a loss. The value of the U.S. Treasuries you sold short would rise,
producing another loss. Instead of a win-win situation, you would be sitting on
a lose-lose situation. Our explanation may be a little simplistic, but you get
the point. Now if you borrow money so you can make a number of these bets on the
scale of 25 or 50 times your capital, you can understand the magnitude of the
problem if something goes wrong with your theory, even if only temporarily.
Long-Term Capital Management is only one of several of these hedge funds
managed by math jockeys which have gone bust in the past couple of months.
However, judging from the amounts of capital it had under management before the
blowup, it had enormous appeal for some of the most "sophisticated" investors in
the world. These investment theories were highly complex. Just to understand
them, if indeed the investors did, took a nearly genius IQ. The theory promised
well above-average returns at a time when plain vanilla stocks were looking a
bit overpriced. And, it was postulated that it was risk free. This absence of
risk permitted tremendous leverage and increased returns because nothing could
go wrong. Not only were these managers brilliant, lots of other smart people
were investing with them, further confirming the validity of their investment
theories. Remember this the next time you bemoan the fact that only the big guys
get to invest in the great deals.
In our opinion, which nobody asked for, it was all too good to be true.
While we could never presume to pass judgment on the investment theory of
Long-Term Capital, or probably even win a debate with its principals, leverage
of that magnitude cannot be risk free no matter how brilliant the theory. At
least George Soros and Julian Robertson understand that what they do includes
risk. A few years back, a particularly annoying consultant attempted to rub our
faces in what had been back-to-back poor years for value investing, 1989 and
1990, by describing another of these market-neutral, market-independent managers
who could produce 15% to 18% returns year in and year out. Our response was,
"There is no Santa Claus, Virginia." When asked what this manager did, we were
told it was too complicated to explain and he really did not fully understand
it. It worked, but only for a time. The fund was Granite Partners (naming your
fund after something as solid as granite is always a good marketing ploy), which
experienced a 100%! loss in a few short weeks when the S&P 500 was down a couple
of percentage points. (The ! sign after the 100% is not a typographical error.)
We do not think that the volatility of the stock market as measured by the S&P
500 is so great as to justify the risk of losing everything. With the exception
of 1974, the S&P 500 has not had an annual decline greater than 15% since 1937.
At Tweedy, Browne, we think about risk a great deal. We do not want to wake
up one day and find our wealth has evaporated in some unforeseen market blip. It
took us too long to get where we are financially - it has been neither
inherited, nor is there much in the inheritance pipeline. We do not want to lose
what we have. The risk of not owning stocks is a foregone opportunity risk; the
pain is inflicted slowly over time. We understand this well and, therefore,
choose to stay invested. The risk of permanent capital loss such as the math
jockey hedge funds have experienced is much more severe. However, we do not
equate stock market declines with permanent capital loss. We accept the fact
that on a given day, week, month or year, we could see the value of our stocks
decline. We even accept the fact that there could be another bear market like
1973-1974. Having been through periods like that, we realize that we awake to
face a new day. The factor that always seems to be present in a total meltdown
is leverage. We see this in portfolios and we see it with companies in which we
invest. Without leverage, no one with a different agenda or risk tolerance from
you can call an end to the game. While leverage can magnify returns on the way
up, it can also accelerate the losses. If we do not believe we can time markets,
an essential ingredient in the use of leverage, it would be completely
inconsistent for us to go on margin to buy stocks.
The hedge fund math jockeys obviously believed that they would never hit the
brick wall they hit in August and September. Overconfidence in one's own
abilities is well documented by behavioral psychologists. These guys took
overconfidence to its penultimate conclusion. Stories abound in the press of how
they loved to make bets, big bets, on almost anything. It was as if the bigger
the bet, the bigger the high they got from it. Psychologically, we are about as
far from these guys as Beijing is from New York. None of us likes to gamble,
whether it be on the World Series or the stock market. We like to think we are
intelligent, not smart. With a couple of exceptions, our academic careers are
not all that stellar. However, Walter Schloss, who has been our tenant for 44
years and whose rate of compounding over that period is 20%!, never even went to
college.
We also follow a few other simple rules to try to eliminate permanent
capital loss. One is to not invest in companies that are fads. We remember fads
of the '70s, like electronics companies and chip makers, that disappeared as
technology passed them by. We also avoided the biotechnology and software fads
of the '80s, which had similar results. Today, the fad is Internet stocks.
Valuations of these companies make no sense to us. Take Amazon.com as an
example. The company has a market capitalization of $4.9 billion. In 1997, it
had sales of $147 million and lost $27.5 million. We do not think that this one
company, with virtually no tangible assets and no earnings, is worth $1.7
billion more than the combined assets of our two Funds. The biggest most
aggressive bookstore chain, Barnes & Noble, is also in the online book selling
business, albeit they started later than Amazon.com. However, they recently sold
a 50% interest in their Internet business to Bertelsmann AG, the big German
publishing and entertainment company, for $200 million. Some companies in the
Internet business will make it big, becoming to that industry what Microsoft
became to the software industry. But how many software companies have gone out
of business, or are mere shadows of their former market caps? Despite empirical
data demonstrating the riskiness of investing in such companies, lots of people
still do. What might happen to the market value of Amazon.com if Microsoft
announced it was partnering with Barnes & Noble? Remember Netscape, which was
going to own the Internet surfing business? It once traded in the high $70s; now
it is around $20. In our opinion, there is little to no margin for error in
owning what we call these "air ball" stocks. And when they return to earth, it
is our observation they do not go back up. This is permanent capital loss.
We prefer to think like lending officers at the bank (although not like the
ones who loaned all that money to hedge funds). Ben Graham began life as a
credit analyst. When he analyzed a stock, he liked to look for value greater
than the price he was paying. He called this collateral. He believed if you had
enough collateral behind the stock price, your downside was covered, and the
upside would take care of itself. The logic is simple. Following his logic
prevents you from owning Amazon.com despite the fact that many people have made
a lot of money in it. But it also prevents you from owning a whole class of
stocks like Amazon.com, which history tells us is a loser's game.
Another of our rules is to diversify our investments. In general, we adhere
to a rule of never investing more than 3% of our money in any one stock. In
practice, we are usually far more diversified than that. This means if one of
our stocks blows up for some reason we did not foresee, our exposure is only 3%
of our net worth. Historically, blowups have not occurred with much frequency,
although they are not unknown. Some very successful money managers prefer to
make larger, concentrated bets in fewer stocks. Our confidence in our abilities
may not be as great as their confidence is in theirs. People should do what they
feel comfortable doing. We feel comfortable diversifying to a degree others may
feel is excessive. When we ask ourselves, "What is the downside of
diversification?", we do not get an answer that makes us want to change that
policy.
When we began to invest internationally, we had to confront some additional
risks. One is systemic risk which has been in the press lately. This is the risk
that the entire system breaks down. The United States is considered to have the
least systemic risk in the world, which is why so many investors are fleeing to
treasuries. The risk is so low that most people do not even take it into
consideration when buying U.S. stocks. In other countries it can be a different
story. Generally, and with the vast majority of our international assets, we
invest in developed countries. This means countries with a long history of
democratic government, laws protecting shareholders, and a viable market for
their currency. This keeps us out of emerging markets like Russia, Indonesia,
Latin America, and most of the Asian sub-continent. We think these countries are
an investment field filled with land mines. One can make big money one year, and
crash the next. Moreover, in our estimation, the results of investing in
emerging markets have not justified either the risk or the volatility, as the
following table illustrates:
- ------------------------------------------------------------------------------
MORGAN STANLEY EMERGING MARKETS INDEX*
'92 0
14.06
15.34
14.36
13.60
6.58
4.31
0.09
-1.98
4.29
4.93
5.92
'93 5.43
10.22
14.88
16.40
17.77
18.66
19.89
24.98
28.17
35.83
41.50
60.76
'94 63.53
60.47
52.16
52.78
55.93
53.89
60.58
70.86
73.57
71.13
66.45
61.23
'95 50.28
48.50
49.90
51.95
55.47
55.22
56.74
53.43
54.53
51.21
48.70
52.57
'96 57.12
55.84
57.26
64.42
62.48
63.79
57.00
59.21
60.07
57.24
59.04
59.10
'97 65.61
69.65
67.20
67.91
70.38
76.16
77.98
66.43
67.19
49.94
46.10
47.68
'98 40.93
51.99
55.52
53.76
40.19
30.07
33.27
5.58
*In dollars
Source: Lipper Analytical
BIGGEST ONE-MONTH DECLINES IN THE INDEX SINCE 1987
Aug. 1998 -27.69%
Aug. 1990 -18.03%
Oct. 1997 -17.25%
May 1998 -13.57%
Sept. 1990 -12.72%
Aug. 1997 -11.55%
Jan. 1995 -10.95%
Oct. 1998 -10.47%
March 1990 -10.39%
June 1998 -10.12%
- ------------------------------------------------------------------------------
Internationally, we also had to deal with the currency risk, or currency
fluctuations. We opted to be currency agnostics, by which we mean we hedge our
foreign currency exposure back into the dollar. While this means we forego
profits in foreign investments if the U.S. dollar declines, it also means we
avoid losses in foreign stocks due to a decline in their currencies. We are
bottom up stock pickers; we are not global currency speculators.
We have also structured our firm in such a way that no one person can
dramatically alter what we do. Unlike the fund manager we described previously,
who decided to go 80% into cash in late 1997 only to watch the market rise in
early 1998, forcing him back in just in time to catch the decline apparently
against the collective judgment of his analysts, no one among us has that kind
of power. We vote equally. We think this guards against the "chemical imbalance"
factor, which could result in some harmful erratic behavior. It is highly
unlikely that two out of three of us on the Management Committee would "go
overboard" at the same time. We know the saying that "a camel is a horse
designed by a committee," but we believe we operate with an unusual degree of
agreement. We have not assembled a team of people with diverse talents or
opinions. We all think the same way; we also always seem to vote in elections
the same way. Basically, we are fungible. If, heaven forbid, something happened
to one of us, there is little chance of any change in our investment philosophy
or approach. Tweedy, Browne is a pretty quiet, boring place. We have no heated
debates, just calm discussions. We have an investment process that, hopefully,
will continue after us.
Lastly, we derive comfort from the empirical knowledge that the fundamental
financial characteristics of the stocks we own have in the past produced excess
returns when compared to their respective benchmarks over long periods of time.
We believe this is achieved in large measure because we do not concern ourselves
with short-term performance, going into panic mode to try to fix our portfolio
just because in some shorter period we have underperformed. For those among us
who must pay taxes, it is efficient. Nearly all those excess returns earned by
hedge funds are short-term capital gains taxed at the highest rate. In our story
above, the selling and reinvesting fund manager not only mistimed the stock
market, he probably gave his shareholders a big, fat tax bill that might have
been greater than the temporary market decline he was attempting to avoid. The
fundamental financial characteristics of the Tweedy, Browne Funds are as
follows:
In the Global Value Fund, approximately 42% of assets is invested in stocks
with a weighted average price/earnings ratio of 10.3 times earnings. If we owned
100% of these companies and paid out all of their earnings to ourselves as a
dividend, the earnings yield would be 9.7%. Stocks with a price/earnings ratio
of 10.3 times earnings are cheaper than 82% of the 7,072 stocks in the
Worldscope database, with market capitalizations above $100 million in those
countries where the Global Value Fund has investments. A further 32% of assets
is invested in stocks with a weighted average price/book value ratio of 0.64.
Stocks with a price/book value ratio under 0.64 are cheaper than 93% of the
issues in the database.
In the American Value Fund, approximately 43% of assets is invested in
stocks with a weighted average price/earnings ratio of 10.5 times earnings. We
would receive an earnings yield on our money of 9.5% if 100% of the earnings
from these stocks was paid out to us as a dividend. This earnings yield compares
to long-term treasury bond yields in the United States of about 5%. Stocks with
a price/earnings ratio of 10.5 times earnings are cheaper than 84% of the 2,918
stocks in the Worldscope database with market capitalizations above $100 million
that are based in the United States. In addition, 25% of assets is invested in
stocks with a weighted average price/book value ratio of 0.63. Stocks with a
price/book value ratio under 0.63 are cheaper than 97% of the United States
stocks in the database.
The Standard & Poor's 500 Stock Index is priced at 27.1 times earnings
before the deduction of write-offs, and 37 times estimated 1998 earnings after
the deduction of write-offs. If we owned 100% of the Standard & Poor's 500 Stock
Index and paid out all of the earnings to ourselves as a dividend, the earnings
yield on our investment would be around 2.7% to 3.7%. The Standard & Poor's 500
Stock Index ratio of price/tangible book value is 5.6.
We were recently asked by a friend of ours who writes for a national
magazine, "Why invest outside the U.S. at all?" The answer is that sometimes
foreign stocks are cheaper than domestic stocks. As shown in the table on the
following page, the cheapest 10% of stocks in Europe and Japan measured on a
price/book value basis are less expensive than the cheapest 10% in the U.S. The
cheapest 10% of stocks in Europe measured on a price/earnings ratio basis are
less expensive than the cheapest 10% in the U.S.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
UNITED STATES EUROPE JAPAN
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Price/Book Value Ratio
for the cheapest 10% of the companies 1.00 0.80 0.52
- -----------------------------------------------------------------------------------------------------
Price/Earnings Ratio
for the cheapest 10% of the companies 8.8 6.6 11.5
- -----------------------------------------------------------------------------------------------------
Earnings Yield (i.e., earnings divided by stock price) for
the cheapest 10% of the companies 11.4% 15.2% 8.7%
- -----------------------------------------------------------------------------------------------------
Long-term Government Bond Yield 5.0% 5.0% 1.4%
- -----------------------------------------------------------------------------------------------------
Difference between Earnings Yield
and Long-term Government Bond Yield 6.4% 10.2% 7.3%
=====================================================================================================
Source: Bloomberg, October 21, 1998
</TABLE>
We wish we could offer our shareholders some magical way to achieve their
expected or desired rate of return as if it were a passbook savings account.
Unfortunately, we cannot. All we can do, all we know how to do, is what we have
been doing for nearly 30 years. Since we started early, statistically, we still
have a lot of years ahead of us.
THE YEAR 2000. The problem of what will happen to computers when the year
2000 arrives is on everyone's mind, including ours. At Tweedy, Browne, we hired
a software company that partners with our hardware provider, Hewlett- Packard,
to rewrite all of our in-house programs. That process is essentially completed
and we are well into the testing phase. So far, so good. We have also tested all
of our computer hardware for Y2K compliance and are in the process of replacing
any machines that are not compliant. We expect to be finished by the end of this
year. This task was relatively simple for us as compared to a major corporation.
Our database begins in 1970. (Before that we kept records by hand.) Our programs
have been written to read any year less than 70 as 2000 and something. Any year
greater than 70 will be read as 1900 and something. This solves the problem up
until 2070. That should cover most of us. Since the Tweedy, Browne Funds will
probably still be in existence in 2070, we have plenty of time to fix that
problem for the benefit of your children and our children and their children. We
have also had presentations from the Funds' custodian bank, transfer agent, and
fund administration and accounting providers. They are confident that they have
the situation under control. We are sure there will be many glitches in the
computer systems of corporations, some of which will cause temporary
disruptions. However, we are not members of the alarmist camp who believe it
necessary to stock up on dehydrated food, firewood, bottled water, and guns to
protect ourselves from those who did not take similar precautions. Long before
there were computers, there was food in the grocery stores. We believe the same
will hold true in 2000.
On another technological note, you will be able to visit us at our website
shortly at www.tweedy.com, which is presently under construction.
In closing, we would like to tell you, our shareholders, that we enjoy your
letters to us and the feedback you give us on our letters to you. We try to
answer as many as possible if we believe they require an answer. In response to
our question about the use of "agita," many of you responded and the responses
were fairly diverse. Our conclusion is that most people got the "gist" of our
colloquial license. In response to our statement that physical stamina peaks
before mental stamina, we found that we number some Olympic champions among our
shareholders, who are continuing to compete well beyond their twenties. Good
luck. Send us some tickets and we will come out and root for you.
Sincerely,
TWEEDY, BROWNE COMPANY LLC
Christopher H. Browne
William H. Browne
John D. Spears
Thomas H. Shrager
Robert Q. Wyckoff, Jr.
Managing Directors
<PAGE>
FOOTNOTES TO TABLE ON PAGE 2
(1) MSCI EAFE US$ is an unmanaged capitalization-weighted index of companies
representing the stock markets of Europe, Australasia and the Far East.
MSCI EAFE Hedged consists of the results of the MSCI EAFE Index hedged
100% back into U.S. dollars and accounts for interest rate differentials
in forward currency exchange rates. Index results are inclusive of
dividends and net of foreign withholding taxes.
(2) Morningstar Foreign Stock Funds Average consists of the average returns of
all mutual funds in the Morningstar Universe that invest primarily in
equity securities of issuers located outside the U.S.
(3) Morningstar World Stock Funds Average consists of the average returns of
all mutual funds in the Morningstar Universe that invest throughout the
world while maintaining a percentage of assets (normally 25%-50%) in the
U.S.
(4) S&P 500 is an unmanaged capitalization-weighted index composed of 500
widely held common stocks listed on the New York Stock Exchange, American
Stock Exchange and over-the-counter market and includes the reinvestment
of dividends.
(5) S&P Mid-Cap 400 is an unmanaged capitalization-weighted index which
assumes reinvestment of dividends and is generally considered
representative of the mid-range sector of the U.S. stock market.
(6) Russell 2000 is an unmanaged capitalization-weighted index, which assumes
reinvestment of dividends for most periods, that is comprised of the
smallest 2000 companies in the Russell 3000 Index and is generally
considered representative of U.S. small capitalization stocks.
(7) Morningstar Domestic Stock Funds Average consists of the average returns
of all domestic equity mutual funds in the Morningstar Universe.
(8) Morningstar Mid-Cap Value Funds Average consists of the average returns of
all mutual funds in the Morningstar Universe classified as value funds
with median market capitalizations greater than or equal to $1 billion but
less than or equal to $5 billion.
(9) Index information is available at month end only; therefore the closest
month end to inception date of the Funds, May 30, 1993 and November 30,
1993, were used except for the Morningstar Domestic Stock Funds Average
where the closest date with data available was December 31, 1993.
<PAGE>
TWEEDY, BROWNE FUND INC.
- ------------------------------------------------------------------------------
Results of Shareholder Meeting
- ------------------------------------------------------------------------------
The special shareholder meeting held July 29, 1998 resulted in approval of
all items proposed.
For the Tweedy, Browne Global Value Fund a total of 68,591,898.544 votes
were cast in favor of the proposal to approve a new investment advisory
agreement, 749,253.067 were cast against the proposal and 1,319,161.114 votes
abstained. For the Tweedy, Browne American Value Fund, a total of 26,253,729.827
voted for the proposal, 351,271.991 voted against the proposal and 462,019.802
votes abstained.
Additionally, at the meeting, shareholders re-elected the Directors of
Tweedy, Browne Fund Inc. The votes were cast as follows:
IN FAVOR WITHHELD
Bruce A. Beal ........................... 96,463,979.108 1,263,355.237
Christopher H. Browne ................... 96,497,187.748 1,230,146.597
Arthur Lazar ............................ 96,369,161.308 1,358,173.037
Richard B. Salomon ...................... 96,454,553.673 1,272,780.672
Anthony H. Meyer ........................ 96,431,561.323 1,295,773.022
Also at the meeting, shareholders ratified the selection of Ernst & Young
LLP as independent auditors for each Fund for the fiscal year ending March 31,
1999. A total of 95,499,001.470 votes were cast for the proposal and 704,405.912
votes were cast against the proposal and 1,523,926.963 votes abstained.
<PAGE>
TWEEDY BROWNE GLOBAL VALUE FUND
- ------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- ------------------------------------------------------------------------------
September 30, 1998 (Unaudited) [graphic omitted]
MARKET
VALUE
SHARES (NOTE 1)
- ------ ---------
COMMON STOCKS--94.1%
AUSTRALIA--0.0%++
96,353 Carillon Development Ltd. ......................... $ 95,061
--------------
BELGIUM--0.2%
3,940 Ibel .............................................. 248,680
2,726 Spadel SA ......................................... 3,322,461
3,252 Uco Textiles SA ................................... 377,481
--------------
3,948,622
--------------
CANADA--2.2%
72,400 Canadian Western Bank ............................. 851,930
166,500 Corby Distilleries Ltd., Class A .................. 7,858,665
104,600 Corby Distilleries Ltd., Class B .................. 4,662,755
1,728,361 Kaufel Group NV, Class B .......................... 8,780,883
260,700 Melcor Developments Ltd. .......................... 2,990,757
1,391,000 National Bank of Canada, Toronto .................. 20,516,897
258,600 Shirmax Fashions .................................. 762,857
785,883 Westfield Minerals Ltd.! .......................... 772,772
--------------
47,197,516
--------------
DENMARK--0.4%
11,390 Nordvestbank ...................................... 1,183,936
114,800 Unidanmark A/S, Series A .......................... 8,316,875
--------------
9,500,811
--------------
FINLAND--2.6%
6,000 Atria OY .......................................... 43,666
542,027 Huhtamaki Group, Class I .......................... 16,525,213
6,200 Huhtamaki Group, Class K .......................... 182,927
1,036,900 Kesko Ord ......................................... 13,664,890
257,555 Kone Corporation, Class B! ........................ 25,836,556
--------------
56,253,252
--------------
FRANCE--2.8%
28,459 Bongrain SA ....................................... 12,197,150
5,229 Christian Dior, SA ................................ 420,203
221,260 Compagnie Financiere de Paribas ................... 11,932,662
45,108 Compagnie Fives-Lille ............................. 3,004,622
57,700 Compagnie Lebon SA ................................ 2,483,249
188,692 Dollfus Mieg & Cie ................................ 2,090,849
1,150 Fiat France SA .................................... 29,059
35,155 Fin Marc de Lacharriere SA ........................ 3,264,509
57,292 Fonciere Financiere Et de Participation! .......... 3,734,344
11,370 Klepierre ......................................... 1,999,973
5,229 LVMH Moet Hennessey ............................... 714,344
21,145 Mecelec SA ........................................ 325,210
3,115 Nordon Et Cie ..................................... 226,402
36,372 NSC Groupe ........................................ 5,163,709
9,073 Paris Orleans ..................................... 515,235
69,000 Peugeot SA ........................................ 11,779,706
18,699 Precia ............................................ 334,257
9,340 Signaux Girod ..................................... 160,954
49,723 Siparex ........................................... 1,188,955
--------------
61,565,392
--------------
GERMANY--0.8%
15,018 Axel Springer Verlag, Class A ..................... 8,993,084
61,660 Kaufring AG ....................................... 2,473,858
61,140 Linder Holding .................................... 1,244,803
37,085 Sinn AG ........................................... 5,818,300
--------------
18,530,045
--------------
HONG KONG--3.1%
15,811,309 Asean Resources Holdings Ltd. ..................... 1,530,364
26,823,000 CDL Hotels International Ltd. ..................... 6,161,591
1,236,000 Dickson Concepts International Ltd.! .............. 965,027
1,004,000 Grand Hotel Holdings Ltd. ......................... 207,310
4,602,000 Harbour Ring International Holdings ............... 169,261
5,204,000 Jardine International Motor Holdings Ltd. ......... 1,611,811
13,622,500 Jardine Strategic Holdings Ltd. ................... 14,984,750
23,270,310 Semi-Tech (Global) Ltd. ........................... 900,926
10,651,000 Sing Tao Holdings ................................. 1,182,100
37,845,000 South China Morning Post (Holdings) Ltd. .......... 14,896,145
1,687,500 Swire Pacific Ltd., Class A ....................... 5,313,726
20,093,500 Swire Pacific Ltd., Class B ....................... 9,464,856
10,290,500 Wing Hang Bank Ltd. ............................... 11,022,500
--------------
68,410,367
--------------
IRELAND--0.8%
2,733,087 Crean (James) PLC ................................. 4,288,829
2,895,883 Independent Newspapers PLC ........................ 10,386,955
1,105,000 Unidare PLC ....................................... 3,633,130
--------------
18,308,914
--------------
ITALY--3.5%
1,782,500 Arnoldo Mondadori Editore SPA ..................... 20,722,852
150,000 Banca Popolare di Novara! ......................... 999,606
741,850 Banco di Sardegna Risp! ........................... 8,763,866
472,500 Bassetti SPA ...................................... 4,006,081
1,530,230 Cartiere Burgo Ord ................................ 8,584,454
447,000 Cementerie di Augusta! ............................ 758,247
323,000 Cementerie di Barletta Ord ........................ 1,132,990
1,156,450 Cristalleria Artistica ............................ 3,566,068
209,100 Ericsson Italia ................................... 7,334,620
265,000 IMI SPA ........................................... 3,499,833
469,862 Industrie Zignago ................................. 4,753,700
1,234,000 Maffei SPA ........................................ 1,868,961
237,000 Marangoni SPA ..................................... 717,899
8,072,735 Montefibre SPA .................................... 5,428,610
390,000 Vianini Industria SPA ............................. 324,636
493,000 Zucchi ............................................ 4,674,189
--------------
77,136,612
--------------
JAPAN--17.2%
220,000 Agro-Kanesho Company Ltd. ......................... 1,321,370
735,000 Aichi Electric Manufacturing ...................... 1,297,455
440,400 Aiful Corporation ................................. 20,322,432
627,000 Amada Sonoike Company Ltd. ........................ 1,556,880
445,000 Amatsuji Steel Ball Manufacturing Company ......... 3,031,313
22,000 Autobacs Seven Company, Ltd.! ..................... 584,948
323,000 Belluna Company Ltd. .............................. 1,656,107
484,000 Bunka Shutter Company Ltd. ........................ 992,639
47,000 CCI Corporation ................................... 302,948
101,000 Charle Company .................................... 666,182
555,500 Chiyoda Company ................................... 2,685,442
774,040 Chofu Seisakusho Company .......................... 6,945,241
206,200 Cosel Company Ltd. ................................ 1,253,587
270,000 Credia Company Ltd. ............................... 2,630,287
357,000 Daido Metal Company ............................... 996,279
165,000 Daiichi Cement Company Ltd. ....................... 145,028
1,356,000 Danto Corporation ................................. 5,462,736
526,000 Denkyosha ......................................... 2,003,443
189,000 Denyo Company Ltd. ................................ 815,390
1,765,000 Dowa Fire & Marine Insurance Company .............. 4,240,396
453,500 Exedy Corporation ................................. 2,182,381
127,100 Fidelity Japan OTC & Regional Market Fund Ltd. .... 523,652
650,000 Fidelity Japan Values PLC ......................... 262,453
1,095,000 Fuji Coca-Cola Bottling Company ................... 8,156,858
618,000 Fuji Photo Film Ltd. .............................. 21,275,224
332,000 Fujicco Company Ltd. .............................. 4,146,200
2,380,000 Fujisawa Pharmaceutical Company ................... 21,895,477
2,208,000 Fujitec Company Ltd. .............................. 11,288,658
624,000 Fukuda Denshi ..................................... 5,987,475
2,594,000 Gakken Company Ltd. ............................... 2,679,026
2,431,000 Hitachi Koki ...................................... 6,855,411
585,000 Hitachi Medical Corporation ....................... 5,064,787
48,000 Idec Izumi Corporation ............................ 200,403
84,000 Inaba Denkisangyo Company Ltd. .................... 682,952
39,900 Kahma Company Ltd. ................................ 207,500
1,418,000 Kansai Paint Company Ltd. ......................... 2,596,594
128,000 Kansui Kosiado .................................... 712,544
117,000 Kato Sangyo ....................................... 488,482
308,000 Katsuragawa Electric Company ...................... 1,127,999
218,000 Kawagishi Bridge Works ............................ 534,920
2,500 Keiiyu ............................................ 12,818
3,000 Kinki Coca-Cola Bottling Company .................. 32,302
155,100 Kita Kyushu Coca-Cola Bottling .................... 3,408,167
524,000 Koa Fire & Marine Insurance Company ............... 1,535,250
1,591,000 Koito Manufacturing ............................... 6,409,449
313,000 Kokura Enterprises Company ........................ 1,914,338
182,000 Koyosha Inc.! ..................................... 666,545
764,000 Mandom Corporation ................................ 4,532,796
1,941,000 Matsushita Electric Industrial Company ............ 26,372,862
111,000 Matsumoto Yushi-Seiyaku Company ................... 1,723,640
371,000 Meito Sangyo Company .............................. 2,907,673
255,000 Mitsubishi Pencil Company Ltd. .................... 1,905,146
495,000 Morito ............................................ 1,957,883
385,000 Nankai Plywood Company Ltd. ....................... 1,579,198
342,000 Nippon Broadcasting System ........................ 11,999,121
1,155,000 Nippon Cable System ............................... 6,353,452
1,056,000 Nippon Konpo Unyu Soko ............................ 5,646,438
271,000 Nippon Typewriter Company Ltd. .................... 617,330
1,016,400 Nissan Fire & Marine Insurance Company ............ 2,732,238
674,000 Nisshinbo Industries .............................. 2,221,571
8,000 Nissho Electronics Corporation .................... 47,229
90,000 Nissei Plastic Industrial Company ................. 415,309
242,500 Nissin Company Ltd. ............................... 3,373,064
22,000 Nitori Company .................................... 157,920
409,000 Nittetsu Mining ................................... 994,602
551,000 Nitto FC Company .................................. 2,942,164
533,000 Oak ............................................... 995,532
323,000 Osaka Securities Finance .......................... 425,856
319,600 Osaka Steel Company Ltd. .......................... 1,097,912
287,103 Prospect Japan Fund Ltd. .......................... 1,050,797
867,000 Riken Vitamin ..................................... 6,953,781
15,000 Rock Paint ........................................ 67,021
452,000 Sangetsu Company Ltd. ............................. 5,181,322
230,000 Sanko Sangyo ...................................... 1,566,746
32,000 Sanyo Coca-Cola Bottling Company .................. 288,299
605,260 Sanyo Shinpan Finance Company Ltd. ................ 21,856,303
213,000 Sasakura Engineering Company Ltd. ................. 624,062
173,000 Shaddy Company Ltd. ............................... 1,115,107
760,600 Shikoku Coca-Cola Bottling ........................ 7,248,054
455,000 Shingakukai ....................................... 1,209,778
1,229,000 Shin Nikkei Company Ltd. .......................... 810,181
461,800 Shinki Company Ltd. ............................... 4,059,037
2,648,000 Shinogi & Company ................................. 15,342,011
452,000 SK Kaken Company, Ltd. ............................ 3,972,899
712,000 Sonton Food Industry .............................. 4,745,798
406,000 Sotoh Company Ltd. ................................ 1,784,289
3,000 Sundrug Company, Ltd. ............................. 38,455
507,000 Suzuki Motor Corporation .......................... 5,102,494
323,000 Tachi-S ........................................... 1,171,104
183,000 Taisei Fire & Marine Insurance Company ............ 361,912
8,100 Takano Company Ltd. ............................... 74,162
263,200 Takefuji Corporation .............................. 13,263,622
377,000 Takigami Steel Construction ....................... 842,227
261,000 Teikoku Hormone Manufacturing Company ............. 1,338,216
269,000 TENMA Corporation ................................. 2,364,402
252,200 Toa Medical Electronics Company ................... 2,179,791
254,000 Tomita Electric Company Ltd. ...................... 976,744
197,000 Topre Corporation ................................ 679,634
387,000 Torii Company Ltd. ................................ 1,354,961
997,000 Torishima Pump Manufacturing ...................... 2,972,196
198,000 Toso Company Ltd. ................................. 581,564
11,000 Totech Corporation ................................ 27,515
675,000 Toyo Technical Company Ltd. ....................... 2,595,679
859,500 Tsubaki Nakashima Company Ltd.! ................... 4,904,234
379,200 Tsuchiya Home Company ............................. 1,111,005
16,200 Tsutsumi Jewlery Company Ltd. ..................... 172,056
793,000 U-Shin ............................................ 2,375,660
123,500 Yellow Hat Ltd. ................................... 877,458
155,000 Yomeishu Seizo Company Ltd. ....................... 896,905
9,000 Yonkyu Company Ltd. ............................... 83,721
356,000 Zojirushi ......................................... 1,825,307
--------------
376,803,413
--------------
MALAYSIA--0.3%
610,000 Sapura Telecommunications Berhad .................. 138,053
5,928,000 Star Publications (Malaysia) ...................... 6,474,000
1,833,000 Tractor Malaysia Holdings Berhad .................. 530,605
--------------
7,142,658
--------------
NETHERLANDS--5.7%
773,600 Akzo NV Ord ....................................... 27,520,748
535,158 European Vinyls Corporation ....................... 6,677,576
40,625 Heineken Holdings NV, Class A ..................... 1,540,141
873,324 Holdingmaatschappij de Telegraaf .................. 20,124,917
928,935 Koninklijke Bols Wessanen NV ...................... 10,160,650
160,568 Twentsche Kabel Holdings .......................... 4,944,882
828,400 Unilever NV CVA ................................... 52,166,745
124,166 Wegener NV ........................................ 2,439,346
--------------
125,575,005
--------------
NEW ZEALAND--1.2%
17,078,509 Air New Zealand Ltd. .............................. 13,504,162
5,742,400 Carter Holt Harvey Ltd. ........................... 3,793,394
3,388,000 Independent Newspaper ............................. 9,613,623
164,600 Radio Pacific Ltd. ................................ 310,962
--------------
27,222,141
--------------
NORWAY--0.7%
1,225,600 Schibsted ......................................... 15,249,554
--------------
SINGAPORE--4.6%
5,000 CarnaudMetalbox Asia Ltd. ......................... 3,984
6,334,500 Cycle & Carriage Ltd. ............................. 10,244,778
8,271,000 Fraser & Neave Ltd. ............................... 17,737,571
90,000 Isetan (Singapore) Ltd. ........................... 75,711
1,423,000 Keppel Marine Industries Ltd. ..................... 969,461
9,654,000 Overseas Union Bank Ltd. .......................... 13,783,258
3,509,000 Robinson and Company Ord .......................... 7,899,408
4,482,000 Singapore Press Holdings Ltd. ..................... 37,172,986
767,000 Times Publishing .................................. 999,645
3,765,000 United Overseas Bank Ltd. ......................... 10,973,815
--------------
99,860,617
--------------
SOUTH AFRICA--0.5%
3,248,470 Sappi Limited ..................................... 10,390,240
--------------
SPAIN--1.0%
151,997 Fabrica Auto Renault de Espana .................... 4,604,833
190,185 Grupo Anaya SA .................................... 11,456,524
31,598 Indo Internacional SA ............................. 1,656,315
51,846 Omsa .............................................. 434,683
80,898 Prim SA! .......................................... 883,446
376,152 Unipapel SA ....................................... 3,763,243
--------------
22,799,044
--------------
SWEDEN--5.5%
148,685 BRIO AB, Class B .................................. 986,365
59,400 Nolato AB, Class B ................................ 591,082
2,349,100 Pharmacia & Upjohn, Inc. .......................... 118,076,851
138,400 VLT AB, Class B ................................... 1,571,423
--------------
121,225,721
--------------
SWITZERLAND--15.2%
13,450 Attisholz Holding AG! ............................. 6,869,205
33 Bank of International Settlements America ......... 201,409
36,658 Banque Cantonale Vaudoise ......................... 11,286,330
44,480 Compagnie Financiere Richemont AG ................. 57,033,903
2,415 Daetwyler Holding, Bearer ......................... 4,198,783
46,540 Danzas Holding AG, Registered ..................... 11,682,201
80,068 Edipresse SA, Bearer .............................. 19,721,182
8,225 Edipresse SA, Registered .......................... 381,339
11,890 Forbo Holding AG .................................. 4,651,261
2,450 Fotolabo SA ....................................... 656,694
2,200 Golay Buchel Holding, Bearer ...................... 1,673,428
10,780 Helvetia Patria Holding ........................... 8,707,404
23,575 Liechtenstein Global Trust ........................ 23,397,385
29,327 Loeb Holding PC ................................... 6,277,983
57,089 Nestle SA, Registered ............................. 113,896,773
6,698 Novartis, AG, Bearer .............................. 10,776,773
10,329 Novartis, AG, Registered .......................... 16,603,920
45,175 Sairgroup ......................................... 9,310,553
1,180 Sarna Kunsstoff Holding AG, Registered ............ 1,662,634
13,566 SIG Sheizerishe ................................... 7,468,966
3,355 Vetropack Holding AG PC ........................... 498,243
17,695 Zehnder Holding, Bearer ........................... 6,793,937
11,214 Zschokke Holding AG, Registered! .................. 2,558,976
7,040 Zuercher Ziegeleien ............................... 6,119,963
--------------
332,429,245
--------------
THAILAND--0.0%!!
132,300 S & J Enterprises ................................. 43,905
--------------
UNITED KINGDOM--13.8%
10,629,545 Aggregate Industries PLC .......................... 10,842,768
1,543,688 Alumasc Group PLC ................................. 3,661,070
5,787,000 Arjo Wiggins Appleton PLC ......................... 9,986,051
2,147,400 Bernard Matthews PLC .............................. 3,669,047
455,000 British Mohair Holdings PLC ....................... 630,439
7,052,000 British Steel Ord ................................. 12,738,418
10,134,983 BTR PLC ........................................... 18,307,380
458,000 Burtonwood Brewery PLC ............................ 1,078,424
10,290,603 Caradon PLC ....................................... 21,868,806
3,979,658 Carclo Engineering Group PLC ...................... 6,799,642
2,103,400 Concentric PLC .................................... 5,632,182
1,470,000 Courtaulos Textiles Ord ........................... 4,748,377
766,369 Diageo PLC! ....................................... 7,296,258
7,369,666 Dowding & Mills PLC ............................... 5,011,665
1,408,668 Dyson (J&J) PLC, Class A, Non-voting .............. 1,915,900
50,860 EIS Group PLC ..................................... 436,658
1,741,019 Elementis PLC ..................................... 2,382,723
1,583,000 European Motor Holdings PLC ....................... 1,897,336
803,000 Folkes Group PLC .................................. 764,501
427,800 Glaxo Wellcome PLC, Sponsored ADR ................. 24,438,075
1,668,000 Glynwed International PLC ......................... 4,026,787
1,098,479 Hardys & Hansons PLC .............................. 3,931,136
963,441 HSBC Holdings PLC ................................. 17,247,563
100,000 HSBC Holdings PLC ................................. 1,873,509
515,000 Intercare Group PLC ............................... 656,663
350,000 Johnston Group PLC ................................ 1,874,359
4,545,154 McAlpine (Alfred) PLC ............................. 8,499,934
2,626,000 Mirror Group PLC .................................. 6,428,823
1,777,545 Molins PLC ........................................ 3,550,853
2,435,237 Norcros PLC ....................................... 2,401,284
4,052,120 Nycomed Amersham PLC .............................. 26,901,567
13,012 Nycomed Amersham PLC, Sponsored ADR ............... 414,758
584,000 Partridge Fine Art Ord ............................ 704,929
18,562,000 Pilkington PLC .................................... 18,145,413
7,151,800 Rexam PLC ......................................... 22,250,547
3,493,490 Sherwood Group PLC ................................ 2,286,623
369,200 SmithKline Beecham, PLC Units, ADR ................ 20,213,700
779,500 Swan Hill Group PLC ............................... 742,127
175,000 Thistle Hotels PLC ................................ 374,872
3,001,672 Time Products PLC ................................. 3,725,292
600,000 Union PLC ......................................... 627,337
1,537,500 Wolverhampton & Dudley Breweries PLC .............. 10,560,164
--------------
301,543,960
--------------
UNITED STATES--12.0%
221,000 American Express Company .......................... 17,155,125
75,700 American National Insurance Company ............... 6,287,831
514,800 Chase Manhattan Corporation ....................... 22,265,100
81,500 Coca-Cola Bottling Company ........................ 4,833,969
348,300 Comerica, Inc. .................................... 19,091,194
230,400 Federal Home Loan Mortgage Corporation ............ 11,390,400
240,000 Fingerhut Companies, Inc. ......................... 2,640,000
205,616 First Chicago Corporation ......................... 14,084,696
70,000 GATX Corporation .................................. 2,314,375
31,590 Great Atlantic & Pacific Tea Company .............. 766,058
200,000 Harland (John H.) Company ......................... 2,712,500
197,100 Household International Inc. ...................... 7,391,250
125,000 Kmart Corporation! ................................ 1,492,188
505,400 Lehman Brothers Holdings Inc. ..................... 14,277,550
20,450 McDonald's Corporation ............................ 1,220,609
73,125 Mercantile Bancorporation, Inc. ................... 3,537,422
76,416 Metris Companies Inc. ............................. 3,562,896
150,000 NAC Re Corporation ................................ 7,387,500
319,600 Philip Morris Companies Inc. ...................... 14,721,575
460,000 PNC Bank Corporation .............................. 20,700,000
596,000 Popular, Inc. ..................................... 16,837,000
169,000 Ryland Group Inc. ................................. 4,119,375
118,400 Standard Motor Products, Inc. ..................... 2,886,000
185,000 Sun Healthcare Group Inc.! ........................ 1,202,500
74,100 Syms Corporation .................................. 768,788
294,600 Transatlantic Holdings, Inc. ...................... 24,378,150
20,000 Tremont Corporation ............................... 845,000
551,000 UST Inc. .......................................... 16,288,938
52,500 Wells Fargo & Company ............................. 18,637,500
--------------
263,795,489
--------------
TOTAL COMMON STOCKS
(COST $2,082,420,914) ............................. 2,065,027,584
--------------
PREFERRED STOCK--0.7% (COST $20,930,735)
160,556 Villeroy & Boch AG ................................ 15,238,855
--------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TWEEDY, BROWNE GLOBAL VALUE FUND
- ------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- ------------------------------------------------------------------------------
September 30, 1998 (Unaudited)
MARKET
FACE VALUE
VALUE (NOTE 1)
- ----- --------
CONVERTIBLE CORPORATE BONDS--0.0%++
(COST $104,076)
JPY 9,000,000 Shikoku Coca-Cola Bottling, 2.400% due 3/29/02 $ 71,459
--------------
COMMERCIAL PAPER--2.3%
(COST $50,000,000)
$ 50,000,000 General Electric Capital Corporation, 5.750%
due 10/1/98 ................................... 50,000,000
--------------
U.S. TREASURY BILLS--0.6%
3,000,000 5.400%** due 7/22/99 .......................... 2,876,153
10,000,000 5.111%** due 1/7/99 ........................... 9,869,333
--------------
TOTAL U.S. TREASURY BILLS
(COST $12,745,486) ............................ 12,745,486
--------------
REPURCHASE AGREEMENT--2.8%
(COST $60,470,000)
60,470,000 Agreement with UBS Securities, Inc., 5.480%
dated 9/30/98, to be repurchased at
$60,479,205 on 10/1/98, collateralized by
$57,780,000 U.S. Treasury Notes, 6.250% due
1/31/02 (market value $62,292,056) ............ 60,470,000
--------------
TOTAL INVESTMENTS (COST $2,226,671,211*) ............. 100.5 % 2,203,553,384
OTHER ASSETS AND LIABILITIES (NET) ................... (0.5) (11,203,063)
----- --------------
NET ASSETS ........................................... 100.0 % $2,192,350,321
===== ==============
- ----------
* 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
JPY--Japanese Yen
Ord--Ordinary Share
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TWEEDY, BROWNE GLOBAL VALUE FUND
- ------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- ------------------------------------------------------------------------------
September 30, 1998 (Unaudited)
PERCENTAGE OF MARKET VALUE
SECTOR DIVERSIFICATION NET ASSETS (NOTE 1)
- ---------------------- ------------- --------------
COMMON STOCKS:
Food and Beverages ...................... 12.3% $ 269,976,150
Pharmaceuticals ......................... 11.0 240,659,337
Banking ................................. 9.6 210,975,312
Printing and Publishing ................. 8.9 196,066,878
Financial Services ...................... 8.1 178,029,372
Manufacturing ........................... 4.4 95,594,433
Consumer Durables ....................... 3.5 76,600,119
Tobacco ................................. 3.3 73,322,841
Autos ................................... 2.6 56,701,150
Consumer Non-Durables ................... 2.6 56,699,541
Transportation .......................... 2.5 54,921,936
Chemicals ............................... 2.4 51,969,730
Retail .................................. 2.3 50,788,394
Machinery ............................... 2.2 49,008,566
Holdings ................................ 2.1 46,564,224
Engineering and Construction ............ 2.0 44,461,467
Forest Products ......................... 2.0 43,386,586
Insurance ............................... 1.8 39,535,777
Building Materials ...................... 1.8 39,315,288
Textiles ................................ 1.3 29,401,055
Glass Products .......................... 1.0 22,209,724
Mining and Metal Fabrication ............ 1.0 20,966,352
Electronics ............................. 0.8 17,377,289
Health Care ............................. 0.6 12,540,408
Telecommunications ...................... 0.6 12,512,616
Construction Materials .................. 0.6 12,433,860
Wholesale ............................... 0.5 10,746,237
Real Estate ............................. 0.3 5,755,231
Restaurants ............................. 0.1 1,220,609
Leisure ................................. 0.1 1,155,626
Other ................................... 1.8 44,131,476
---- --------------
TOTAL COMMON STOCKS ..................... 94.1 2,065,027,584
---- --------------
PREFERRED STOCK ......................... 0.7 15,238,855
CONVERTIBLE CORPORATE BONDS ............. 0.0!! 71,459
COMMERCIAL PAPER ........................ 2.3 50,000,000
U.S. TREASURY BILLS ..................... 0.6 12,745,486
REPURCHASE AGREEMENT .................... 2.8 60,470,000
OTHER ASSETS AND LIABILITIES (NET) ...... (0.5) (11,203,063)
---- --------------
NET ASSETS .............................. 100.0% $2,192,350,321
===== ==============
- ----------
++ Amount represents less than 0.1% of net assets.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
<TABLE>
TWEEDY, BROWNE GLOBAL VALUE FUND
Schedule of Forward Exchange Contracts
September 30, 1998 (Unaudited)
<CAPTION>
CONTRACT MARKET
VALUE VALUE
CONTRACTS DATE (NOTE 1)
--------- -------- --------
<S> <C> <C> <C>
FORWARD EXCHANGE CONTRACTS TO BUY
821,100 Canadian Dollar ........................ 10/13/98 $ 538,247
3,365,400 Canadian Dollar ........................ 11/16/98 2,205,950
7,844,640 Danish Krona ........................... 12/23/98 1,236,981
6,300,000 Danish Krona ........................... 7/2/99 996,150
38,137,400 Finnish Markka ......................... 10/13/98 7,506,127
33,759,300 Finnish Markka ......................... 11/16/98 6,656,733
19,084,600 Finnish Markka ......................... 11/23/98 3,764,397
10,227,800 Finnish Markka ......................... 12/15/98 2,019,678
16,700,000 Finnish Markka ......................... 12/23/98 3,299,142
45,982,500 French Franc ........................... 10/13/98 8,216,362
186,307,800 French Franc ........................... 11/16/98 33,352,524
41,998,360 French Franc ........................... 11/23/98 7,520,920
14,159,500 French Franc ........................... 12/15/98 2,538,380
5,725,000 French Franc ........................... 12/23/98 1,026,741
23,290,000 French Franc ........................... 12/24/98 4,177,118
17,602,500 French Franc ........................... 1/4/99 3,158,714
111,536,500 French Franc ........................... 1/19/99 20,028,167
41,902,000 French Franc ........................... 2/12/99 7,531,767
29,930,000 French Franc ........................... 3/5/99 5,384,291
17,856,600 French Franc ........................... 3/12/99 3,213,184
30,125,500 French Franc ........................... 3/26/99 5,423,675
1,100,000 French Franc ........................... 3/29/99 198,061
5,451,000 German Mark ............................ 10/13/98 3,266,140
2,000,000 German Mark ............................ 11/16/98 1,200,634
1,900,000 Great Britain Pound Sterling ........... 10/13/98 3,230,880
6,268,021 Great Britain Pound Sterling ........... 11/23/98 10,667,228
3,027,551 Great Britain Pound Sterling ........... 12/23/98 5,155,384
4,311,407 Great Britain Pound Sterling ........... 12/24/98 7,341,701
68,819,100 Hong Kong Dollar ....................... 10/29/98 8,866,963
41,698,400 Hong Kong Dollar ....................... 11/16/98 5,364,713
13,370,500 Hong Kong Dollar ....................... 11/23/98 1,719,024
41,237,500 Hong Kong Dollar ....................... 12/15/98 5,290,543
20,550,000 Hong Kong Dollar ....................... 1/4/99 2,631,006
894,973 Irish Punt ............................. 10/6/98 1,337,561
430,000 Irish Punt ............................. 12/15/98 642,742
33,352,500,000 Italian Lira ........................... 10/29/98 20,212,451
9,133,125,000 Italian Lira ........................... 11/16/98 5,536,203
6,000,000,000 Italian Lira ........................... 11/23/98 3,637,355
7,350,000,000 Italian Lira ........................... 12/15/98 4,457,507
6,748,470 Japanese Yen ........................... 10/1/98 49,430
771,540 Japanese Yen ........................... 10/2/98 5,651
4,027,038 Japanese Yen ........................... 10/5/98 29,503
1,313,820,000 Japanese Yen ........................... 10/13/98 9,638,564
585,500,000 Japanese Yen ........................... 10/29/98 4,306,667
943,550,000 Japanese Yen ........................... 11/16/98 6,957,955
712,350,000 Japanese Yen ........................... 12/15/98 5,275,932
2,222,035,000 Japanese Yen ........................... 12/24/98 16,481,878
94,513 Netherlands Guilder .................... 10/1/98 50,183
88,985 Netherlands Guilder .................... 10/5/98 47,252
5,823,600 Netherlands Guilder .................... 10/29/98 3,097,468
16,000,000 Netherlands Guilder .................... 11/16/98 8,518,536
1,617,599 New Zealand Dollar ..................... 11/16/98 808,087
7,104,515 New Zealand Dollar ..................... 11/23/98 3,549,076
1,440,000 New Zealand Dollar ..................... 12/15/98 719,240
20,896,500 Norwegian Krone ........................ 11/16/98 2,816,100
4,501,500 Singapore Dollar ....................... 10/13/98 2,667,918
1,514,400 Singapore Dollar ....................... 10/29/98 898,184
3,183,000 Singapore Dollar ....................... 12/15/98 1,889,918
8,740,000 Singapore Dollar ....................... 12/24/98 5,190,794
4,273,750 Singapore Dollar ....................... 1/4/99 2,538,955
2,772,000 Singapore Dollar ....................... 1/19/99 1,647,315
8,662,500 Singapore Dollar ....................... 2/26/99 5,151,237
1,500,000 Singapore Dollar ....................... 3/12/99 892,157
967,313 South African Rand ..................... 10/6/98 164,430
14,300,000 South African Rand ..................... 6/8/99 2,206,561
440,730,000 Spanish Peseta ......................... 11/16/98 3,109,564
431,692,500 Spanish Peseta ......................... 12/15/98 3,049,122
218,340,000 Spanish Peseta ......................... 12/23/98 1,542,666
297,080,000 Spanish Peseta ......................... 12/24/98 2,099,083
72,000,000 Spanish Peseta ......................... 3/12/99 510,319
39,676,000 Swedish Krona .......................... 10/13/98 5,063,528
22,499,700 Swedish Krona .......................... 10/29/98 2,873,054
33,651,000 Swedish Krona .......................... 11/16/98 4,299,187
14,961,800 Swedish Krona .......................... 12/15/98 1,913,130
21,300,000 Swedish Krona .......................... 12/23/98 2,724,310
15,500,000 Swedish Krona .......................... 1/4/99 1,983,177
2,903,645 Swiss Franc ............................ 10/2/98 2,103,516
10,845,200 Swiss Franc ............................ 10/29/98 7,883,244
10,772,800 Swiss Franc ............................ 12/15/98 7,870,441
20,304,750 Swiss Franc ............................ 12/23/98 14,846,886
4,900,000 Swiss Franc ............................ 12/24/98 3,583,273
5,000,000 Swiss Franc ............................ 1/4/99 3,660,585
---------------
TOTAL FORWARD EXCHANGE CONTRACTS TO BUY
(CONTRACT AMOUNT $366,600,339) ........................... $ 375,265,420
===============
SEE NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>
<TABLE>
TWEEDY, BROWNE GLOBAL VALUE FUND
Schedule of Forward Exchange Contracts
September 30, 1998 (Unaudited)
<CAPTION>
CONTRACT MARKET
VALUE VALUE
CONTRACTS DATE (NOTE 1)
--------- -------- --------
<S> <C> <C> <C>
FORWARD EXCHANGE CONTRACTS TO SELL
150,871 Australian Dollar ...................... 12/24/98 $ (89,142)
29,690,500 Belgian Franc .......................... 12/15/98 (865,033)
36,860,000 Belgian Franc .......................... 3/5/99 (1,077,509)
54,990,000 Belgian Franc .......................... 6/17/99 (1,613,682)
36,420,000 Belgian Franc .......................... 7/15/99 (1,069,826)
821,100 Canadian Dollar ........................ 10/13/98 (538,247)
10,927,800 Canadian Dollar ........................ 11/16/98 (7,162,947)
7,465,700 Canadian Dollar ........................ 11/23/98 (4,893,606)
5,551,200 Canadian Dollar ........................ 12/15/98 (3,638,523)
2,094,600 Canadian Dollar ........................ 12/23/98 (1,372,864)
2,827,000 Canadian Dollar ........................ 12/24/98 (1,852,893)
4,324,200 Canadian Dollar ........................ 2/12/99 (2,833,973)
1,399,100 Canadian Dollar ........................ 3/26/99 (916,903)
4,198,500 Canadian Dollar ........................ 3/29/99 (2,751,491)
2,574,000 Canadian Dollar ........................ 5/6/99 (1,686,835)
15,104,775 Canadian Dollar ........................ 5/17/99 (9,898,656)
7,920,550 Canadian Dollar ........................ 6/1/99 (5,190,577)
1,754,400 Canadian Dollar ........................ 7/2/99 (1,149,697)
956,410 Canadian Dollar ........................ 7/23/99 (626,726)
7,844,640 Danish Krona ........................... 12/23/98 (1,236,981)
67,890,000 Danish Krona ........................... 7/2/99 (10,734,703)
5,069,250 Danish Krona ........................... 7/23/99 (801,610)
38,137,400 Finnish Markka ......................... 10/13/98 (7,506,127)
33,759,300 Finnish Markka ......................... 11/16/98 (6,656,733)
19,084,600 Finnish Markka ......................... 11/23/98 (3,764,398)
10,227,800 Finnish Markka ......................... 12/15/98 (2,019,678)
36,238,300 Finnish Markka ......................... 12/23/98 (7,159,000)
10,502,400 Finnish Markka ......................... 12/28/98 (2,075,339)
24,537,150 Finnish Markka ......................... 1/19/99 (4,853,614)
16,176,000 Finnish Markka ......................... 2/12/99 (3,203,045)
26,931,500 Finnish Markka ......................... 3/12/99 (5,338,793)
49,074,300 Finnish Markka ......................... 3/26/99 (9,733,469)
21,802,800 Finnish Markka ......................... 3/29/99 (4,324,880)
16,572,000 Finnish Markka ......................... 4/12/99 (3,288,992)
32,566,800 Finnish Markka ......................... 4/23/99 (6,465,982)
7,984,500 Finnish Markka ......................... 6/8/99 (1,587,695)
20,004,050 Finnish Markka ......................... 6/17/99 (3,978,830)
37,579,500 Finnish Markka ......................... 7/15/99 (7,481,552)
10,811,000 Finnish Markka ......................... 8/27/99 (2,155,451)
45,982,500 French Franc ........................... 10/13/98 (8,216,362)
22,214,224 French Franc ........................... 10/30/98 (3,973,438)
186,307,800 French Franc ........................... 11/16/98 (33,352,524)
41,998,360 French Franc ........................... 11/23/98 (7,520,920)
14,159,500 French Franc ........................... 12/15/98 (2,538,380)
5,725,000 French Franc ........................... 12/23/98 (1,026,741)
23,290,000 French Franc ........................... 12/24/98 (4,177,118)
17,602,500 French Franc ........................... 1/4/99 (3,158,714)
111,536,500 French Franc ........................... 1/19/99 (20,028,167)
41,902,000 French Franc ........................... 2/12/99 (7,531,767)
29,930,000 French Franc ........................... 3/5/99 (5,384,291)
17,856,600 French Franc ........................... 3/12/99 (3,213,184)
30,125,500 French Franc ........................... 3/26/99 (5,423,675)
54,126,000 French Franc ........................... 3/29/99 (9,745,672)
45,738,750 French Franc ........................... 4/12/99 (8,239,740)
29,957,500 French Franc ........................... 4/23/99 (5,398,893)
73,211,250 French Franc ........................... 5/17/98 (13,204,759)
105,611,400 French Franc ........................... 6/8/99 (19,061,926)
26,799,750 French Franc ........................... 6/17/99 (4,838,437)
35,737,800 French Franc ........................... 7/2/99 (6,455,216)
34,358,040 French Franc ........................... 7/15/99 (6,208,982)
5,451,000 German Mark ............................ 10/13/98 (3,266,139)
5,155,500 German Mark ............................ 11/16/98 (3,094,934)
2,573,850 German Mark ............................ 11/23/98 (1,545,653)
2,736,000 German Mark ............................ 12/23/98 (1,645,412)
6,217,400 German Mark ............................ 3/5/99 (3,750,602)
6,277,600 German Mark ............................ 3/29/99 (3,790,306)
11,260,800 German Mark ............................ 5/6/99 (6,808,560)
3,492,000 German Mark ............................ 5/17/99 (2,112,153)
12,270,300 German Mark ............................ 6/1/99 (7,425,484)
4,619,160 German Mark ............................ 6/17/99 (2,796,765)
1,740,350 German Mark ............................ 8/2/99 (1,055,363)
815,580 German Mark ............................ 8/27/99 (494,981)
2,435,120 Great Britain Pound Sterling ........... 10/6/98 (4,140,114)
9,483,396 Great Britain Pound Sterling ........... 10/13/98 (16,126,168)
8,191,244 Great Britain Pound Sterling ........... 10/29/98 (13,933,744)
4,117,573 Great Britain Pound Sterling ........... 11/16/98 (7,006,583)
6,268,021 Great Britain Pound Sterling ........... 11/23/98 (10,667,228)
3,027,551 Great Britain Pound Sterling ........... 12/23/98 (5,155,384)
8,622,814 Great Britain Pound Sterling ........... 12/24/98 (14,683,403)
3,042,658 Great Britain Pound Sterling ........... 1/4/99 (5,182,283)
4,022,402 Great Britain Pound Sterling ........... 2/12/99 (6,855,802)
19,880,716 Great Britain Pound Sterling ........... 2/26/99 (33,893,168)
6,180,088 Great Britain Pound Sterling ........... 3/12/99 (10,538,546)
10,805,804 Great Britain Pound Sterling ........... 3/26/99 (18,430,944)
15,177,271 Great Britain Pound Sterling ........... 3/29/99 (25,888,469)
910,747 Great Britain Pound Sterling ........... 5/6/99 (1,554,465)
8,098,679 Great Britain Pound Sterling ........... 5/25/99 (13,827,020)
13,083,297 Great Britain Pound Sterling ........... 6/8/99 (22,342,192)
11,990,408 Great Britain Pound Sterling ........... 7/2/99 (20,486,968)
24,843,949 Great Britain Pound Sterling ........... 7/23/99 (42,496,184)
9,319,664 Great Britain Pound Sterling ........... 8/27/99 (15,974,961)
68,819,100 Hong Kong Dollar ....................... 10/29/98 (8,866,963)
41,698,400 Hong Kong Dollar ....................... 11/16/98 (5,364,713)
13,370,500 Hong Kong Dollar ....................... 11/23/98 (1,719,024)
41,237,500 Hong Kong Dollar ....................... 12/15/98 (5,290,543)
20,550,000 Hong Kong Dollar ....................... 1/4/99 (2,631,006)
118,093,750 Hong Kong Dollar ....................... 3/12/99 (14,996,407)
23,828,400 Hong Kong Dollar ....................... 3/29/99 (3,018,622)
23,991,000 Hong Kong Dollar ....................... 4/12/99 (3,034,134)
19,833,750 Hong Kong Dollar ....................... 4/23/99 (2,505,011)
53,127,650 Hong Kong Dollar ....................... 5/6/99 (6,699,259)
77,895,250 Hong Kong Dollar ....................... 6/1/99 (9,790,015)
30,765,500 Hong Kong Dollar ....................... 7/2/99 (3,850,846)
32,712,400 Hong Kong Dollar ....................... 7/23/99 (4,082,536)
93,345,500 Hong Kong Dollar ....................... 8/2/99 (11,632,998)
35,110,757 Hong Kong Dollar ....................... 9/14/99 (4,347,946)
592,632 Irish Punt ............................. 12/15/98 (885,835)
647,757 Irish Punt ............................. 12/24/98 (968,181)
542,495 Irish Punt ............................. 1/19/99 (810,629)
431,096 Irish Punt ............................. 2/12/99 (643,921)
2,616,505 Irish Punt ............................. 5/6/99 (3,901,889)
2,639,840 Irish Punt ............................. 6/17/99 (3,933,924)
3,289,013 Irish Punt ............................. 8/2/99 (4,898,192)
1,339,160 Irish Punt ............................. 8/13/99 (1,994,073)
33,352,500,000 Italian Lira ........................... 10/29/98 (20,212,450)
9,133,125,000 Italian Lira ........................... 11/16/98 (5,536,203)
23,771,190,000 Italian Lira ........................... 11/23/98 (14,410,710)
13,490,800,000 Italian Lira ........................... 12/15/98 (8,181,679)
6,105,750,000 Italian Lira ........................... 1/4/99 (3,704,647)
7,145,400,000 Italian Lira ........................... 2/12/99 (4,340,970)
10,662,300,000 Italian Lira ........................... 3/5/99 (6,483,010)
44,557,500,000 Italian Lira ........................... 3/29/99 (27,122,074)
19,866,000,000 Italian Lira ........................... 4/12/99 (12,097,814)
12,119,100,000 Italian Lira ........................... 5/17/99 (7,388,814)
5,209,410,000 Italian Lira ........................... 6/1/99 (3,177,753)
2,284,399,000 Italian Lira ........................... 8/27/99 (1,397,789)
32,045,973 Japanese Yen ........................... 10/1/98 (234,726)
10,399,208 Japanese Yen ........................... 10/2/98 (76,172)
8,126,547 Japanese Yen ........................... 10/5/98 (59,536)
1,313,820,000 Japanese Yen ........................... 10/13/98 (9,638,564)
1,060,836,500 Japanese Yen ........................... 10/29/98 (7,803,022)
943,550,000 Japanese Yen ........................... 11/16/98 (6,957,955)
712,350,000 Japanese Yen ........................... 12/15/98 (5,275,932)
2,222,035,000 Japanese Yen ........................... 12/24/98 (16,481,878)
2,849,355,000 Japanese Yen ........................... 1/19/99 (21,214,483)
4,788,000,000 Japanese Yen ........................... 2/26/99 (35,828,136)
7,629,930,000 Japanese Yen ........................... 3/5/99 (57,145,101)
709,890,000 Japanese Yen ........................... 3/12/99 (5,321,493)
367,440,000 Japanese Yen ........................... 3/29/99 (2,760,216)
3,416,175,000 Japanese Yen ........................... 4/12/99 (25,708,499)
3,714,900,000 Japanese Yen ........................... 4/23/99 (27,995,544)
4,131,270,000 Japanese Yen ........................... 5/6/99 (31,184,003)
3,815,400,000 Japanese Yen ........................... 5/25/99 (28,867,149)
5,156,000,000 Japanese Yen ........................... 6/1/99 (39,043,230)
2,475,605,000 Japanese Yen ........................... 6/8/99 (18,762,056)
379,288,000 Japanese Yen ........................... 7/2/99 (2,882,894)
4,761,792,500 Japanese Yen ........................... 7/15/99 (36,254,083)
2,407,984,000 Japanese Yen ........................... 8/2/99 (18,375,596)
2,302,420,000 Japanese Yen ........................... 8/13/99 (17,594,680)
5,823,600 Netherlands Guilder .................... 10/29/98 (3,097,468)
19,233,000 Netherlands Guilder .................... 11/16/98 (10,239,813)
7,729,200 Netherlands Guilder .................... 11/23/98 (4,116,593)
17,159,400 Netherlands Guilder .................... 12/15/98 (9,150,401)
5,591,490 Netherlands Guilder .................... 12/23/98 (2,983,106)
16,064,000 Netherlands Guilder .................... 2/12/99 (8,590,374)
8,012,000 Netherlands Guilder .................... 2/26/99 (4,286,810)
6,007,800 Netherlands Guilder .................... 3/5/99 (3,215,289)
6,030,300 Netherlands Guilder .................... 3/12/99 (3,228,129)
6,073,800 Netherlands Guilder .................... 3/26/99 (3,252,932)
6,148,800 Netherlands Guilder .................... 4/12/99 (3,295,168)
11,812,800 Netherlands Guilder .................... 5/25/99 (6,340,067)
20,743,275 Netherlands Guilder .................... 6/1/99 (11,135,673)
11,410,260 Netherlands Guilder .................... 6/17/99 (6,128,446)
11,613,340 Netherlands Guilder .................... 7/2/99 (6,240,540)
5,380,830 Netherlands Guilder .................... 7/15/99 (2,892,835)
7,063,920 Netherlands Guilder .................... 8/2/99 (3,800,185)
7,595,060 Netherlands Guilder .................... 8/27/99 (4,089,542)
1,617,599 New Zealand Dollar ..................... 11/16/98 (808,087)
7,104,515 New Zealand Dollar ..................... 11/23/98 (3,549,076)
1,631,854 New Zealand Dollar ..................... 12/15/98 (815,066)
10,680,250 New Zealand Dollar ..................... 12/23/98 (5,334,185)
3,516,174 New Zealand Dollar ..................... 3/12/99 (1,759,475)
12,435,601 New Zealand Dollar ..................... 3/26/99 (6,227,282)
3,354,454 New Zealand Dollar ..................... 5/6/99 (1,683,790)
12,514,440 New Zealand Dollar ..................... 6/8/99 (6,297,359)
1,829,268 New Zealand Dollar ..................... 7/2/99 (922,461)
9,914,733 New Zealand Dollar ..................... 8/2/99 (5,015,164)
2,067,825 New Zealand Dollar ..................... 8/27/99 (1,048,894)
1,359,487 New Zealand Dollar ..................... 9/14/99 (691,103)
20,896,500 Norwegian Krone ........................ 11/16/98 (2,816,100)
10,506,000 Norwegian Krone ........................ 12/23/98 (1,412,187)
96,660,880 Norwegian Krone ........................ 8/27/99 (12,852,618)
4,501,500 Singapore Dollar ....................... 10/13/98 (2,667,918)
1,514,400 Singapore Dollar ....................... 10/29/98 (898,184)
3,183,000 Singapore Dollar ....................... 12/15/98 (1,889,918)
8,740,000 Singapore Dollar ....................... 12/24/98 (5,190,794)
4,273,750 Singapore Dollar ....................... 1/4/99 (2,538,955)
2,772,000 Singapore Dollar ....................... 1/19/99 (1,647,315)
8,662,500 Singapore Dollar ....................... 2/26/99 (5,151,237)
6,788,000 Singapore Dollar ....................... 3/12/99 (4,037,306)
4,990,500 Singapore Dollar ....................... 3/26/99 (2,968,679)
12,864,000 Singapore Dollar ....................... 5/6/99 (7,655,439)
10,378,800 Singapore Dollar ....................... 5/25/99 (6,177,221)
22,454,900 Singapore Dollar ....................... 6/8/99 (13,365,439)
1,262,800 Singapore Dollar ....................... 6/17/99 (751,654)
2,620,200 Singapore Dollar ....................... 7/2/99 (1,559,675)
56,464,000 Singapore Dollar ....................... 7/15/99 (33,611,665)
32,740,200 Singapore Dollar ....................... 8/2/99 (19,490,070)
28,210,000 South African Rand ..................... 6/8/99 (4,352,943)
35,490,000 South African Rand ..................... 6/17/99 (5,459,440)
19,600,000 South African Rand ..................... 8/2/99 (2,964,621)
5,865,840 South African Rand ..................... 8/27/99 (879,022)
440,730,000 Spanish Peseta ......................... 11/16/98 (3,109,564)
431,692,500 Spanish Peseta ......................... 12/15/98 (3,049,122)
218,340,000 Spanish Peseta ......................... 12/23/98 (1,542,666)
297,080,000 Spanish Peseta ......................... 12/24/98 (2,099,083)
454,990,000 Spanish Peseta ......................... 3/12/99 (3,224,862)
764,350,000 Spanish Peseta ......................... 3/29/99 (5,421,499)
309,840,000 Spanish Peseta ......................... 4/12/99 (2,198,763)
194,792,000 Spanish Peseta ......................... 5/6/99 (1,383,485)
447,660,000 Spanish Peseta ......................... 6/8/99 (3,183,029)
408,321,000 Spanish Peseta ......................... 6/17/99 (2,904,194)
128,537,000 Spanish Peseta ......................... 7/2/99 (914,683)
150,350,000 Spanish Peseta ......................... 7/15/99 (1,070,372)
5,857,095 Swedish Krona .......................... 10/2/98 (747,225)
39,676,000 Swedish Krona .......................... 10/13/98 (5,063,528)
22,499,700 Swedish Krona .......................... 10/29/98 (2,873,054)
33,651,000 Swedish Krona .......................... 11/16/98 (4,299,187)
14,961,800 Swedish Krona .......................... 12/15/98 (1,913,131)
34,151,850 Swedish Krona .......................... 12/23/98 (4,368,085)
27,328,000 Swedish Krona .......................... 1/4/99 (3,496,533)
60,187,500 Swedish Krona .......................... 2/26/99 (7,709,401)
9,634,800 Swedish Krona .......................... 3/12/99 (1,234,411)
23,798,400 Swedish Krona .......................... 3/26/99 (3,049,697)
31,452,000 Swedish Krona .......................... 3/29/99 (4,030,654)
31,834,000 Swedish Krona .......................... 4/12/99 (4,080,492)
78,088,000 Swedish Krona .......................... 4/23/99 (10,010,910)
22,860,000 Swedish Krona .......................... 5/25/99 (2,931,793)
34,749,450 Swedish Krona .......................... 6/1/99 (4,456,931)
26,928,000 Swedish Krona .......................... 6/17/99 (3,454,256)
23,613,000 Swedish Krona .......................... 7/2/99 (3,029,406)
37,240,450 Swedish Krona .......................... 7/23/99 (4,778,664)
41,257,000 Swedish Krona .......................... 8/27/99 (5,295,407)
122,737 Swiss Franc ............................ 10/5/98 (88,929)
10,845,200 Swiss Franc ............................ 10/29/98 (7,883,244)
10,772,800 Swiss Franc ............................ 12/15/98 (7,870,441)
20,304,750 Swiss Franc ............................ 12/23/98 (14,846,886)
15,163,500 Swiss Franc ............................ 12/24/98 (11,088,758)
34,782,500 Swiss Franc ............................ 1/4/99 (25,464,858)
10,076,500 Swiss Franc ............................ 1/19/99 (7,388,455)
23,953,000 Swiss Franc ............................ 2/12/99 (17,604,979)
25,203,600 Swiss Franc ............................ 3/5/99 (18,561,375)
33,720,750 Swiss Franc ............................ 3/12/99 (24,850,144)
42,810,000 Swiss Franc ............................ 3/26/99 (31,589,014)
45,894,400 Swiss Franc ............................ 3/29/99 (33,874,156)
13,987,800 Swiss Franc ............................ 4/12/99 (10,336,992)
1,454,300 Swiss Franc ............................ 4/23/99 (1,075,748)
32,754,990 Swiss Franc ............................ 5/17/99 (24,277,360)
31,281,800 Swiss Franc ............................ 6/1/99 (23,213,299)
15,577,650 Swiss Franc ............................ 6/8/99 (11,566,039)
5,892,000 Swiss Franc ............................ 7/2/99 (4,382,885)
38,899,350 Swiss Franc ............................ 7/23/99 (28,987,896)
---------------
TOTAL FORWARD EXCHANGE CONTRACTS TO SELL
(CONTRACT AMOUNT $1,933,190,843) ............................... $(1,967,099,672)
===============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
<TABLE>
TWEEDY, BROWNE GLOBAL VALUE FUND
Statement of Assets and Liabilities
September 30, 1998 (Unaudited)
<S> <C> <C>
ASSETS
Investments, at value (Cost $2,226,671,211)
See accompanying schedule .......................... $2,203,553,384
Cash and foreign currency (Cost $7,824,513) ............ 7,834,556
Receivable for investment securities sold .............. 15,512,412
Dividends and interest receivable ...................... 8,416,804
Receivable for Fund shares sold ........................ 1,429,506
Prepaid expenses ....................................... 62,781
--------------
TOTAL ASSETS ....................................... 2,236,809,443
--------------
LIABILITIES
Net unrealized depreciation of forward exchange
contracts ............................................ $25,243,748
Payable for investment securities purchased ............ 11,532,882
Payable for Fund shares redeemed ....................... 5,633,643
Investment advisory fee payable ........................ 1,448,683
Transfer agent fees payable ............................ 121,071
Custodian fees payable ................................. 98,275
Accrued expenses and other payables .................... 380,820
-----------
TOTAL LIABILITIES .................................. 44,459,122
--------------
NET ASSETS ................................................. $2,192,350,321
==============
NET ASSETS CONSIST OF
Undistributed net investment income .................... $ 35,717,756
Accumulated net realized gain on securities, forward
exchange contracts and foreign currencies ............ 190,243,033
Net unrealized depreciation of securities, forward
exchange
contracts, foreign currencies and net other assets ... (46,352,826)
Par value .............................................. 14,008
Paid-in capital in excess of par value ................. 2,012,728,350
--------------
TOTAL NET ASSETS ................................... $2,192,350,321
==============
NET ASSET VALUE, offering and redemption price per share
($2,192,350,321 / 140,077,599 shares of common stock
outstanding) ........................................... $15.65
======
SEE NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>
<TABLE>
TWEEDY, BROWNE GLOBAL VALUE FUND
Statement of Operations
For the Six Months Ended September 30, 1998 (Unaudited)
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $3,915,794) ............ $ 31,663,230
Interest (net of foreign withholding taxes of $85) .................... 5,718,283
-------------
TOTAL INVESTMENT INCOME ........................................... 37,381,513
-------------
EXPENSES
Investment advisory fee .............................. $16,204,604
Custodian fees ....................................... 635,229
Transfer agent fees .................................. 457,535
Administration fee ................................... 428,558
Directors' fees and expenses ......................... 25,931
Legal and audit fees ................................. 21,750
Amortization of organization costs ................... 3,785
Other ................................................ 362,041
---------------
TOTAL EXPENSES .................................................... 18,139,433
-------------
NET INVESTMENT INCOME ..................................................... 19,242,080
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on:
Securities .......................................................... 74,736,868
Forward exchange contracts .......................................... 53,710,893
Foreign currencies .................................................. 280,159
-------------
Net realized gain on investments during the period .................... 128,727,920
-------------
Net change in unrealized appreciation (depreciation) of:
Securities .......................................................... (528,289,163)
Forward exchange contracts .......................................... (103,407,178)
Foreign currencies and net other assets ............................. 2,148,156
-------------
Net unrealized depreciation of investments during the period .......... (629,548,185)
-------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS ........................... (500,820,265)
-------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS ................................................................ $(481,578,185)
=============
SEE NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>
<TABLE>
TWEEDY, BROWNE GLOBAL VALUE FUND
Statements of Changes in Net Assets
<CAPTION>
SIX MONTHS
ENDED YEAR
9/30/98 ENDED
(UNAUDITED) 3/31/98
-------------- --------------
<S> <C> <C>
Net investment income ................................. $ 19,242,080 $ 19,920,077
Net realized gain on securities, forward exchange
contracts and currency transactions during the
period .............................................. 128,727,920 182,967,157
Net unrealized appreciation (depreciation) of
securities, forward exchange contracts, foreign
currencies and net other assets during the period ... (629,548,185) 356,433,551
-------------- --------------
Net increase (decrease) in net assets resulting from
operations .......................................... (481,578,185) 559,320,785
DISTRIBUTIONS:
Dividends to shareholders from net investment
income ............................................. -- (87,707,202)
Dividends in excess of net investment income ........ -- (8,964,368)
Distributions to shareholders from net realized
gain on investments ............................... -- (54,368,991)
Net increase in net assets from Fund share
transactions ........................................ 145,987,764 678,450,026
-------------- --------------
Net increase (decrease) in net assets ................. (335,590,421) 1,086,730,250
NET ASSETS
Beginning of period ................................... 2,527,940,742 1,441,210,492
-------------- --------------
End of period (including undistributed net investment
income of $35,717,756 and $16,475,676,
respectively) ....................................... $2,192,350,321 $2,527,940,742
============== ==============
SEE NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>
<TABLE>
TWEEDY, BROWNE GLOBAL VALUE FUND
Financial Highlights
For a Fund share outstanding throughout each period.
<CAPTION>
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR PERIOD
9/30/98 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 3/31/98 3/31/97 3/31/96(a) 3/31/95 3/31/94(a)(b)
---------- ---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $ 18.98 $ 15.46 $ 14.28 $ 11.52 $ 12.26 $ 10.00
---------- ---------- ---------- -------- -------- --------
Income from investment operations:
Net investment income (loss)(c) ........... 0.13 0.26 0.12 0.15 0.10 (0.00)(d)
Net realized and unrealized gain (loss) on
investments ............................. (3.46) 4.62 2.18 2.81 (0.68) 2.26
---------- ---------- ---------- -------- -------- --------
Total from investment operations ...... (3.33) 4.88 2.30 2.96 (0.58) 2.26
---------- ---------- ---------- -------- -------- --------
DISTRIBUTIONS:
Dividends from net investment income .... -- (0.79) (0.19) -- -- --
Dividends in excess of net investment
income ................................ -- (0.08) (0.36) -- -- --
Distributions from net realized gains ... -- (0.49) (0.57) (0.05) (0.06) --
Distributions in excess of net
realized gains ........................ -- -- -- (0.15) (0.10) --
---------- ---------- ---------- -------- -------- --------
Total distributions ................... -- (1.36) (1.12) (0.20) (0.16) --
---------- ---------- ---------- -------- -------- --------
Net asset value, end of period ............ $ 15.65 $ 18.98 $ 15.46 $ 14.28 $ 11.52 $ 12.26
========== ========== ========== ======== ======== ========
Total return(e) ........................... (17.55)% 33.09% 16.66% 25.88% (4.74)% 22.60%
========== ========== ========== ======== ======== ========
Ratios/Supplemental Data:
Net assets, end of period (in 000's) ...... $2,192,350 $2,527,941 $1,441,210 $950,911 $655,035 $297,434
Ratio of operating expenses to average net
assets(f) ............................... 1.40%(g) 1.42% 1.58% 1.60% 1.65% 1.73%(g)
Ratio of net investment income (loss) to
average net assets ..................... 1.48%(g) 1.05% 0.73% 1.15% 1.08% (0.00)%(g)(h)
Portfolio turnover rate ................... 10% 16% 20% 17% 16% 14%
- ------------
(a) Per share amounts have been calculated using the monthly average share method, which more appropriately presents the per share
data for the period since the use of the undistributed income method does not accord with results of operations.
(b) The Fund commenced operations on June 15, 1993.
(c) Net investment income (loss) for a Fund share outstanding, before the waiver of fees by the administrator and/or investment
adviser for the years ended March 31, 1998 and 1997, and the 7.5-month period ended March 31, 1994 was $0.26, $0.11, and $(0.01)
per share, respectively.
(d) Amount represents less than $(0.01) per share.
(e) Total return represents aggregate total return for the periods indicated.
(f) Annualized expense ratios before the waiver of fees by the administrator and/or investment advisor for the years ended March 31,
1998 and 1997, and the 7.5-month period ended March 31, 1994 were 1.43%, 1.58%, and 1.83%, respectively.
(g) Annualized.
(h) Amount represents less than (0.01)% per share.
SEE NOTES TO FINANCIAL STATEMENTS
</TABLE>
<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, by the Investment Adviser or,
at fair value as determined by or under the direction of the Company's Board
of Directors. Portfolio securities and other assets, listed on a U.S. national
securities exchange or through any system providing for same day publication
of actual prices (and not subject to restrictions against sale by the Fund on
such exchange or system) are valued at the last quoted sale price prior to the
close of regular trading. Portfolio securities and other assets listed on a
foreign exchange or through any system providing for same day publication of
actual prices are valued at the last quoted sale price available before the
time when assets are valued. Portfolio securities and other assets for which
there are no reported sales on the valuation date are valued at the mean
between the last asked price and the last bid price prior to the close of
regular trading. When the Investment Adviser determines that the last sale
price prior to valuation does not reflect current market value, the Investment
Adviser will determine the market value of those securities or assets in
accordance with industry practice and other factors considered relevant by the
Investment Adviser. All other securities and assets for which current market
quotations are not readily available and those securities which are not
readily marketable due to significant legal or contractual restrictions will
be valued by the Investment Adviser or at fair value as determined by or under
the direction of the Board of Directors. Debt securities with a remaining
maturity of 60 days or less are valued at amortized cost, which approximates
market value, or by reference to other factors (i.e. pricing services or
dealer quotations) by the Investment Adviser.
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.
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, OTHER RELATED PARTY TRANSACTIONS AND
ADMINISTRATION FEE
The Company, on behalf of the Fund, has entered into an investment
advisory agreement (the "Advisory Agreement") with Tweedy, Browne Company LLC
("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 Investment 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 $31.1 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. (the "Administrator"), a wholly owned subsidiary of First Data
Corporation. Under the Administration Agreement, the Company pays the
Administrator 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 $500 AND EXCEEDING
$500 MILLION $1 BILLION $1 BILLION
- ------------------------------------------------------------------------------
Administration Fees 0.06% 0.04% 0.02%
- ------------------------------------------------------------------------------
UP TO EXCEEDING
$100 MILLION $100 MILLION
- ------------------------------------------------------------------------------
Accounting Fees 0.03% 0.01%
- ------------------------------------------------------------------------------
Under the terms of the Administration Agreement, the Company will pay for
fund administration services a minimum fee of $40,000 per annum, not to be
aggregated with fees for fund accounting services. The Company will pay a
minimum monthly fee of $4,000 for fund accounting services for the Fund, not
to be aggregated with fees for fund administration services.
No officer, director or employee of Tweedy, Browne, the administrator 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 Fund pays
each director who is not an officer, director or employee of Tweedy, Browne,
the administrator or any of their affiliates $8,000 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"). Tweedy, Browne also serves as the
distributor to the Fund and pays all distribution fees. No distribution fees
are paid by the Fund.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities,
excluding short-term investments for the six months ended September 30, 1998,
aggregated $593,191,749 and $236,948,503, respectively.
At September 30, 1998, the aggregate gross unrealized appreciation for all
securities, in which there was an excess of value over tax cost, was
$431,343,355 and the aggregate gross unrealized depreciation for all
securities, in which there was an excess of tax cost over value, was
$454,461,182.
For the six months ended September 30, 1998, the Fund incurred total
brokerage commissions of $2,427,475.
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:
<TABLE>
<CAPTION>
SIX MONTHS ENDED 9/30/98 YEAR ENDED 3/31/98
------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sold 32,825,703 $ 608,708,120 58,530,975 $1,007,774,368
Reinvested -- -- 8,222,804 133,167,149
Redeemed (25,945,539) (462,720,356) (26,794,022) (462,491,491)
- ------------------------------------------------------------------------------------------------------------
Net increase 6,880,164 $ 145,987,764 39,959,757 $ 678,450,026
- ------------------------------------------------------------------------------------------------------------
</TABLE>
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. At September 30, 1998, all such
costs have been fully amortized.
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 Company and Mellon Trust, 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 no less than three to one. For
the six months ended September 30, 1998, the Fund did not borrow under this
Agreement.
<PAGE>
TWEEDY, BROWNE AMERICAN VALUE FUND
Portfolio of Investments
September 30, 1998 (Unaudited)
[Graphic Omitted]
MARKET
VALUE
SHARES (NOTE 1)
------ --------
COMMON STOCKS--DOMESTIC--71.9%
ADVERTISING--0.2%
6,680 Grey Advertising Inc. ....................... $ 2,187,909
--------------
APPAREL/TEXTILES--0.0%++
45,900 Chic by H.I.S. Inc.+ ........................ 149,158
9,400 Garan Inc. .................................. 263,200
2,000 Thomaston Mills, Inc., Class A .............. 9,375
--------------
421,733
--------------
AUTOMOTIVE PARTS--1.4%
689,000 Dollar Thrifty Automotive Group, Inc.+ ...... 8,009,625
170,400 Standard Motor Products, Inc. ............... 4,153,500
23,300 Standard Products Company ................... 407,750
5,200 Woodward Governor Company ................... 117,650
--------------
12,688,525
--------------
BANKING--9.3%
56,700 BancFirst Corporation ....................... 2,108,531
20,400 Cape Cod Bank & Trust Company ............... 359,550
541,814 Chase Manhattan Corporation ................. 23,433,455
112,650 Comerica, Inc. .............................. 6,174,628
4,500 Community Financial Group--Bank of Nashville 55,969
156,110 First Chicago NBD Corporation ............... 10,693,535
20,400 First Mortgage Corporation+ ................. 91,163
50,850 Mercantile Bancorp, Inc. .................... 2,459,869
42,080 Mid-America Bancorp ......................... 1,036,220
18,000 Peoples Bank Corporation of Indianapolis .... 513,000
246,700 PNC Bank Corporation ........................ 11,101,500
802,520 Popular, Inc. ............................... 22,671,190
36,000 Wells Fargo & Company ....................... 12,780,000
--------------
93,478,610
--------------
BASIC INDUSTRIES--4.8%
100,500 ACX Technologies Inc.+ ...................... 1,293,938
219,200 Alamo Group Inc. ............................ 3,027,700
121,700 Gorman-Rupp Company ......................... 1,916,775
61,400 Monarch Machine Tool Company ................ 429,800
724,000 Rayonier Inc. ............................... 28,236,000
70,200 Sequa Corporation, Class A+ ................. 3,948,750
66,000 Tecumseh Products Company, Class A .......... 3,238,125
66,100 Tecumseh Products Company, Class B .......... 3,404,150
78,000 Tremont Corporation+ ........................ 3,295,500
--------------
48,790,738
--------------
BUSINESS AND COMMERCIAL SERVICES--1.4%
716,000 Harland (John H.) Company ................... 9,710,750
24,400 HUB Services+ ............................... 384,300
5,200 IIC Industries Inc.+ ........................ 44,200
51,000 Norwood Promotional Products, Inc.+ ......... 962,625
12,500 Paris Corporation+ .......................... 32,031
38,600 PriceSmart, Inc.+ ........................... 605,538
123,000 Wallace Computer Services Inc. .............. 2,206,313
--------------
13,945,757
--------------
CHEMICALS--1.7%
680,700 Lilly Industries Inc., Class A .............. 11,997,338
232,900 Oil-Dri Corporation of America .............. 2,984,031
77,500 Stepan Chemical Company ..................... 2,097,344
--------------
17,078,713
--------------
CONSUMER NON-DURABLES--9.2%
142,400 Bairnco Corporation ......................... 792,100
130,400 Coca-Cola Bottling Company .................. 7,734,350
209,200 EKCO Group Inc.+ ............................ 732,200
501,035 Great Atlantic & Pacific Tea Company, Inc. .. 12,150,099
347,500 M & F Worldwide Corporation+ ................ 3,453,281
869,470 Philip Morris Companies, Inc. ............... 40,049,962
910,900 UST Inc. .................................... 26,928,481
57,200 Village Super Market Inc., Class A+ ......... 1,226,225
--------------
93,066,698
--------------
CONSUMER SERVICES--1.9%
512,900 Jones Intercable Inc., Class A+ ............. 12,726,331
498,550 Pinkerton's, Inc. ........................... 6,886,222
--------------
19,612,553
--------------
ELECTRONIC EQUIPMENT--0.1%
8,000 Espey Manufacturing and Electronics Corporation 103,000
27,000 Regal Beloit ................................ 600,750
--------------
703,750
--------------
ENGINEERING AND CONSTRUCTION--2.5%
42,700 Devcon International Corporation+ ........... 96,075
107,300 Harding Lawson Associates Group+ ............ 677,331
150,500 Hovnanian Enterprises, Inc.+ ................ 1,410,938
22,900 Liberty Homes, Inc., Class A ................ 280,525
10,000 Liberty Homes, Inc., Class B ................ 126,250
61,300 M/I Schottenstein Homes Inc.+ ............... 1,134,050
42,000 Oriole Homes Corporation, Class A+ .......... 165,375
91,500 Oriole Homes Corporation, Class B+ .......... 343,125
259,000 RDO Equipment Company+ ...................... 2,347,188
459,700 Ryland Group, Inc. .......................... 11,205,188
468,300 Standard-Pacific Corporation ................ 6,614,738
158,000 Washington Homes, Inc.+ ..................... 799,875
--------------
25,200,658
--------------
FINANCIAL SERVICES--12.9%
382,230 American Express Company .................... 29,670,604
432,300 Credit Acceptance Corporation+ .............. 2,674,856
789,380 Federal Home Loan Mortgage Corporation ...... 39,024,974
493,500 Household International Inc. ................ 18,506,250
18,600 HPSC Inc.+ .................................. 192,975
20,800 Kent Financial Services Inc.+ ............... 130,000
345,550 Lehman Brothers Holdings Inc. ............... 9,761,788
30,000 Letchworth Independent Bancshares Corporation 465,000
137,835 Metris Companies Inc. ....................... 6,426,574
142,000 Morgan, (J.P.) & Co. ........................ 12,016,750
756,000 Phoenix Investment Partners, Ltd. ........... 5,103,000
18,515 Protective Life Corporation ................. 666,540
109,030 ReliaStar Financial Corporation ............. 4,252,170
29,800 Value Line Inc. ............................. 1,128,675
1,604 Whitney Holding Corporation ................. 65,664
--------------
130,085,820
--------------
FOOD AND BEVERAGES--0.1%
40,000 Panamerican Beverages, Inc., Class A ........ 712,500
2,177 United Foods, Inc., Class A+ ................ 6,395
3,269 United Foods, Inc., Class B+ ................ 9,807
--------------
728,702
--------------
FURNITURE--0.7%
29,900 Flexsteel Industries Inc. ................... 317,688
152,350 O' Sullivan Corporation ..................... 1,294,975
598,400 O' Sullivan Industries Holdings, Inc.+ ...... 5,797,000
--------------
7,409,663
--------------
HEALTH CARE--1.9%
158,500 Angelica Corporation ........................ 2,545,906
33,412 Johnson & Johnson ........................... 2,614,489
66,600 Spacelabs Medical Inc.+ ..................... 1,032,300
2,003,400 Sun Healthcare Group Inc.+ .................. 13,022,100
10,666 Wyant Corporation+ .......................... 48,997
--------------
19,263,792
--------------
INSURANCE--9.7%
15,200 Allstate Financial Corporation+ ............. 51,300
463,500 American Annuity Group Inc. ................. 10,573,594
90,450 American General Corporation ................ 5,777,494
77,400 American Indemnity Financial Corporation .... 933,638
115,125 American National Insurance Company ......... 9,562,570
8,260 Kansas City Life Insurance Company .......... 676,288
456,500 Leucadia National Corporation ............... 13,381,156
21,600 Merchants Group Inc. ........................ 415,800
389,500 MMI Companies, Inc. ......................... 6,986,656
97,000 National Western Life Insurance Company+ .... 11,191,375
239,200 NAC Re Corporation .......................... 11,780,600
31,500 Navigators Group Inc.+ ...................... 456,750
16,500 RLI Corporation ............................. 627,000
43,800 SCPIE Holdings Inc. ......................... 1,363,275
80,900 TransFinancial Holdings, Inc.+ .............. 505,625
290,400 Transatlantic Holdings, Inc. ................ 24,030,600
--------------
98,313,721
--------------
INVESTMENT COMPANIES--0.1%
180,500 Ampal-American Israel Corporation-A+ ........ 722,000
10,000 PEC Israel Economic Corporation.+ ........... 256,250
--------------
978,250
--------------
LEISURE AND ENTERTAINMENT--0.1%
35,100 Cable Michigan, Inc.+ ....................... 1,219,725
--------------
METALS AND METAL PRODUCTS--1.6%
724,100 ASARCO Inc. ................................. 13,848,413
4,700 Mestek Inc.+ ................................ 87,538
165,000 Schnitzer Steel Industies Inc. .............. 2,475,000
--------------
16,410,951
--------------
OIL AND GAS--0.4%
8,000 Isramco, Inc.+ .............................. 20,250
5,600 Lufkin Industries, Inc. ..................... 148,400
41,460 Matrix Service Company+ ..................... 194,344
175,200 Penn Virginia Corporation ................... 3,848,925
10,000 Wiser Oil Company ........................... 53,125
--------------
4,265,044
--------------
REAL ESTATE--1.6%
716,500 American Real Estate Partners Ltd. .......... 6,000,688
26,100 Arizona Land Income Corporation, Class A .... 172,913
18,012 Atlantic Realty Trust Inc.+ ................. 150,851
296,700 Castle & Cooke Inc. ......................... 4,450,500
62,000 Echelon International Corporation+ .......... 1,313,625
102,000 Koger Equity Inc. ........................... 1,912,500
13,200 Mays (J.W.), Inc.+ .......................... 118,800
154,400 Price Enterprises Inc. ...................... 781,650
3,623 Public Storage, Inc. ........................ 97,142
36,025 Ramco-Gershenson Properties Trust ........... 589,909
20,000 Reading Entertainment, Inc.+ ................ 168,125
--------------
15,756,703
--------------
RESTAURANT CHAINS--4.1%
434,900 Darden Restaurants Inc. ..................... 6,958,400
553,400 McDonald's Corporation ...................... 33,031,063
83,400 Vicorp Restaurants Inc.+ .................... 1,172,813
--------------
41,162,276
--------------
RETAIL--2.5%
217,000 Discount Auto Parts Inc.+ ................... 5,221,563
117,900 EZCORP Inc., Class A+ ....................... 957,938
432,900 Fingerhut Companies, Inc. ................... 4,761,900
90,100 Government Technology Services, Inc. ........ 349,138
654,000 Jan Bell Marketing Inc.+ .................... 4,251,000
164,000 Kmart Corporation+ .......................... 1,957,750
89,600 Penney (J.C.) Company, Inc. ................. 4,026,400
19,000 Saucony Inc., Class A+ ...................... 90,250
25,000 Saucony Inc., Class B+ ...................... 114,063
130,100 Swiss Army Brands, Inc.+ .................... 1,252,213
158,700 Syms Corporation+ ........................... 1,646,513
138,000 United Retail Group, Inc.+ .................. 1,112,625
--------------
25,741,353
--------------
TECHNOLOGY--0.0%++
44,600 Astrosystems Inc. ........................... 104,531
--------------
TELECOMMUNICATIONS--0.6%
93,600 Commonwealth Telephone Enterprises, Inc. .... 2,202,525
280,800 RCN Corporation+ ............................ 3,667,950
15,300 TCI International Inc.+ ..................... 45,422
--------------
5,915,897
--------------
TRANSPORTATION/TRANSPORTATION SERVICES--3.1%
636,400 GATX Corporation ............................ 21,040,975
53,100 KLLM Transport Services Inc.+ ............... 441,394
53,600 Maritrans Inc. .............................. 380,225
700,000 Wisconsin Central Corporation ............... 9,778,125
--------------
31,640,719
--------------
TOTAL COMMON STOCKS--DOMESTIC
(COST $628,991,853) ......................... 726,172,791
--------------
COMMON STOCKS--FOREIGN
COMMON STOCKS--FOREIGN--18.0%
FINLAND--0.2%
18,300 Huhtamaki Group, Class I .................... 557,927
15,500 Kone Corporation, Class B+ .................. 1,554,878
--------------
2,112,805
--------------
FRANCE--0.1%
900 Bongrain SA ................................. 385,728
2,000 Compagnie Fives-Lille ....................... 133,219
2,300 Peugeot SA .................................. 392,657
--------------
911,604
--------------
HONG KONG--0.2%
1,210,000 CDL Hotels International Ltd. ............... 277,953
478,000 Jardine Strategic Holdings Ltd., ADR ........ 525,800
2,147,200 Semi-Tech (Global) Ltd. ..................... 83,130
1,506,000 South China Morning Post (Holdings) Ltd. .... 592,776
525,000 Swire Pacific Ltd., Class B ................. 247,296
182,000 Wing Hang Bank Ltd. ......................... 194,946
--------------
1,921,901
--------------
IRELAND--0.0%++
202,592 Crean (James) PLC ........................... 317,912
--------------
ITALY--0.1%
72,100 Arnoldo Mondadori Editore SPA ............... 838,215
--------------
JAPAN--6.0%
56,000 Agro-Kanesho Company Ltd. ................... 336,349
63,000 Aichi Electric Company Ltd. ................. 111,210
78,000 Aiful Corporation ........................... 3,599,341
255,000 Amada Sonoike Company, Ltd. ................. 633,181
67,000 Amatsuji Steel Ball Manufacturing Company ... 456,400
104,000 Belluna Company Ltd. ........................ 533,236
62,000 Bunka Shutter Company Ltd. .................. 127,156
33,000 CCI Corporation ............................. 212,708
1,000 Charle Company .............................. 6,596
89,000 Chiyoda Company ............................. 430,251
247,700 Chofu Seisakusho Company .................... 2,222,542
70,500 Credia Company Ltd. ......................... 686,797
134,000 Daido Metal Company ......................... 373,953
140,000 Danto Corporation ........................... 563,999
179,000 Denkyosha ................................... 681,780
61,000 Denyo Company Ltd. .......................... 263,168
58,000 Dowa Fire & Marine Insurance Company ........ 139,344
101,500 Exedy Corporation ........................... 488,449
93,000 Fuji Coca-Cola Bottling Company ............. 692,774
76,800 Fuji Photo Film Company Ltd., ADR ........... 2,635,200
17,000 Fuji Photo Film Ltd. ........................ 585,241
86,000 Fujicco Company Ltd. ........................ 1,074,016
88,000 Fujisawa Pharmaceutical Company ............. 809,581
326,000 Fujitec Company Ltd. ........................ 1,666,713
293,000 Fukuda Denshi ............................... 2,811,426
310,000 Gakken Company Ltd. ......................... 320,161
206,000 Hitachi Koki ................................ 580,919
78,000 Hitachi Medical Corporation ................. 675,305
109,000 Inaba Denkisangyo Company Ltd. .............. 886,211
16,000 Kansai Paint ................................ 29,299
112,000 Katsuragawa Electric Company ................ 410,181
269,000 Kawagishi Bridge Works ...................... 660,062
130,000 Koito Manufacturing ......................... 523,714
53,000 Koyosha Inc. ................................ 194,104
389,000 Mandom Corporation .......................... 2,307,929
95,000 Matsumoto Yushi-Seiyaku Company ............. 1,475,188
19,000 Matsushita Electric Industrial Company ...... 258,158
44,000 Meito Sangyo Company ........................ 344,845
91,000 Mitsubishi Pencil Company Ltd. .............. 679,875
200,000 Morito ...................................... 791,064
58,000 Nankai Plywood Company Ltd. ................. 237,905
107,000 Nippon Cable System ......................... 588,588
118,000 Nippon Konpo Unyu Soko ...................... 630,947
45,150 Nissan Fire & Marine Insurance Company ...... 121,370
19,000 Nissie Plastic Y50 .......................... 87,676
48,300 Nissin Company Ltd. ......................... 671,831
52,000 Nitto FC Company ............................ 277,663
139,000 Oak ......................................... 259,623
116,000 Osaka Steel Company Ltd. .................... 398,491
185,000 Prospect Japan Fund Ltd., ADR ............... 677,100
119,000 Riken Vitamin ............................... 954,441
19,000 Sangetsu Company Ltd. ....................... 217,799
31,000 Sanko Sangyo Company ........................ 211,170
130,600 Sanyo Shinpan Finance Company Ltd. .......... 4,716,045
63,800 Shikoku Coca-Cola Bottling .................. 607,975
99,000 Shin Nikkei Company Ltd. .................... 65,263
82,000 Shinki Company .............................. 720,747
192,000 Shinogi & Company ........................... 1,112,412
73,000 SK Kaken Company Ltd. ....................... 641,641
220,000 Sonton Food Industry ........................ 1,466,398
200,000 Sotoh Company Ltd. .......................... 878,960
186,000 Tachi-S ..................................... 674,382
103,700 Takefuji Corporation ........................ 5,225,827
1,000 Takigami Steel Construction Company Ltd. .... 2,234
141,000 Teikoku Hormone Manufacturing Company ....... 722,945
73,000 TENMA Corporation ........................... 641,641
125,900 Toa Medical Electronics Company ............. 1,088,167
111,000 Tomita Electric Company Ltd. ................ 426,845
10,000 Torii Company Ltd. .......................... 35,012
162,000 Torishima Pump Manufacturing ................ 482,945
64,000 Toso Company Ltd. ........................... 187,980
78,000 Toyo Technical Company Ltd. ................. 299,945
188,000 Tsubaki Nakashima Company Ltd.+ ............. 1,072,712
220,800 Tsuchiya Home Company ....................... 646,914
214,000 U-Shin ...................................... 641,099
152,000 Yomeishu Seizo Company Ltd. ................. 879,546
45,000 Zojirushi ................................... 230,727
--------------
61,081,392
--------------
MALAYSIA--0.1%
485,000 Star Publications (Malaysia) ................ 529,671
--------------
NETHERLANDS--1.1%
21,000 European Vinyls Corporation ................. 262,033
62,500 Heineken Holdings NV, Class A ............... 2,369,448
36,500 Telegraaf Holdings CVA ...................... 841,108
120,800 Unilever NV, ADR ............................ 7,399,000
--------------
10,871,589
--------------
NEW ZEALAND--0.1%
712,000 Air New Zealand Ltd. ........................ 562,986
--------------
SINGAPORE--0.2%
518,000 Cycle & Carriage Ltd. ....................... 837,761
264,000 Fraser & Neave Ltd. ......................... 566,161
266,000 Overseas Union Bank Ltd. .................... 379,775
94,800 Robinson and Company Ord .................... 213,412
--------------
1,997,109
--------------
SPAIN--0.0%++
32,000 Unipapel SA ................................. 320,147
--------------
SWEDEN--4.0%
804,300 Pharmacia & Upjohn, Inc., Depository Shares . 40,427,914
--------------
SWITZERLAND--3.3%
3,650 Compagnie Financiere Richemont AG ........... 4,680,165
2,000 Danzas Holding AG ........................... 502,028
2,000 Edipresse SA, Bearer ........................ 492,611
269,000 Nestle, ADR ................................. 26,833,744
10,666 Novartis AG, ADR ............................ 857,282
2,500 Sairgroup ................................... 515,249
--------------
33,881,079
--------------
UNITED KINGDOM--2.6%
875,000 British Steel Ord ........................... 1,580,561
292,337 BTR PLC ..................................... 528,064
315,000 Caradon PLC ................................. 669,414
274,000 Carclo Engineering Group PLC ................ 468,156
172,000 Concentric PLC .............................. 460,557
445,000 Dowding & Mills PLC ......................... 302,618
60,000 Elementis PLC ............................... 82,115
163,670 Glaxo Wellcome PLC, Sponsored ADR ........... 9,349,649
142,000 Hardys & Hansons PLC ........................ 508,177
41,000 HSBC Holdings PLC ........................... 733,984
189,385 McAlpine (Alfred) PLC ....................... 354,171
50,000 Molins PLC .................................. 99,881
187,307 Nycomed ASA, ADR, Class B ................... 5,970,411
494,000 Pilkington PLC .............................. 482,913
120,000 Rexam PLC ................................... 373,342
65,000 SmithKline Beecham, PLC Units, ADR .......... 3,558,750
150,000 Thistle Hotels PLC .......................... 321,319
--------------
25,844,082
--------------
TOTAL COMMON STOCKS--FOREIGN
(COST $169,352,234).......................... 181,618,406
--------------
PREFERRED STOCK--0.2% (COST $1,601,833)
154,400 Price Enterprises Inc. ...................... 2,065,100
--------------
COMMON STOCK RIGHTS--0.0%++ (COST $0.00)
93,600 Commonwealth Telephone Enterprises,
Expires 10/23/98 .......................... 269,100
--------------
FACE
VALUE
COMMERCIAL PAPER--4.9% (COST $50,000,000)
$50,000,000 General Electric Capital Corporation,
5.750% due 10/1/98 ........................ 50,000,000
--------------
U.S. TREASURY BILL--0.1% (COST $986,988)
1,000,000 5.089%** due 1/7/99 ......................... 986,988
--------------
REPURCHASE AGREEMENT--4.7%
(COST $47,333,000)
47,333,000 Agreement with UBS Securities, Inc.,
5.480% dated 9/30/98, to be repurchased at
$47,340,205 on 10/1/98, collateralized by
$29,085,000 U.S. Treasury Notes,
12.500% due 8/15/14 (market value $48,442,683) 47,333,000
--------------
TOTAL INVESTMENTS (COST $898,265,908*) .............. 99.8% 1,008,445,385
OTHER ASSETS AND LIABILITIES (NET) .................. 0.2 1,988,026
----- --------------
NET ASSETS .......................................... 100.0% $1,010,433,411
===== ==============
- ------------
* 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
Ord--Ordinary Shares
<PAGE>
TWEEDY, BROWNE AMERICAN VALUE FUND
SCHEDULE OF FORWARD EXCHANGE CONTRACTS
September 30, 1998 (Unaudited)
CONTRACT MARKET
VALUE VALUE
CONTRACTS DATE (NOTE 1)
--------- ---- --------
FORWARD EXCHANGE CONTRACTS TO BUY
5,980,750 Finnish Markka ..................... 10/29/98 $ 1,178,235
4,739,600 French Franc ....................... 10/29/98 847,721
942,868 Great Britain Pound Sterling ....... 10/29/98 1,603,869
1,783,000 Great Britain Pound Sterling ....... 12/23/98 3,036,134
8,429,000 Hong Kong Dollar ................... 1/19/99 1,077,387
5,740,000 Hong Kong Dollar ................... 2/12/99 731,590
97,000 Irish Punt ......................... 1/19/99 144,943
188,000,000 Italian Lira ....................... 10/29/98 113,933
209,531,000 Japanese Yen ....................... 10/29/98 1,541,213
1,231,000,000 Japanese Yen ....................... 12/24/98 9,130,905
3,210,000 Netherlands Guilder ................ 10/29/98 1,707,342
555,000 New Zealand Dollar ................. 6/8/99 279,280
16,588,800 Norwegian Krone .................... 10/29/98 2,238,550
1,721,500 Singapore Dollar ................... 12/30/98 1,022,596
1,740,000 Singapore Dollar ................... 2/12/99 1,034,483
117,064,000 Spanish Peseta ..................... 10/29/98 825,440
14,603,300 Swedish Krona ...................... 10/29/98 1,864,739
14,000,000 Swedish Krona ...................... 12/23/98 1,790,626
4,690,800 Swiss Franc ........................ 10/29/98 3,409,685
560,000 Swiss Franc ........................ 12/23/98 409,473
--------------
TOTAL FORWARD EXCHANGE CONTRACTS TO BUY
(CONTRACT AMOUNT $33,446,120) ..................... $ 33,988,144
==============
FORWARD EXCHANGE CONTRACTS TO SELL
7,879,250 Finnish Markka ..................... 10/29/98 $ (1,552,253)
2,156,800 Finnish Markka ..................... 2/12/99 (427,073)
2,726,350 Finnish Markka ..................... 3/26/99 (540,748)
2,985,290 Finnish Markka ..................... 4/23/99 (592,715)
2,129,200 Finnish Markka ..................... 6/8/99 (423,385)
8,051,715 French Franc ....................... 10/29/98 (1,440,123)
1,795,800 French Franc ....................... 2/12/99 (322,790)
2,097,025 French Franc ....................... 4/23/99 (377,922)
1,727,095 French Franc ....................... 6/17/99 (311,810)
942,868 Great Britain Pound Sterling ....... 10/29/98 (1,603,869)
6,478,959 Great Britain Pound Sterling ....... 12/23/98 (11,032,521)
1,423,311 Great Britain Pound Sterling ....... 2/12/99 (2,425,899)
1,358,780 Great Britain Pound Sterling ....... 3/5/99 (2,316,768)
740,969 Great Britain Pound Sterling ....... 3/26/99 (1,263,836)
303,545 Great Britain Pound Sterling ....... 3/29/99 (517,769)
373,808 Great Britain Pound Sterling ....... 6/8/99 (638,348)
614,893 Great Britain Pound Sterling ....... 7/2/99 (1,050,614)
558,989 Great Britain Pound Sterling ....... 7/23/99 (956,164)
8,429,000 Hong Kong Dollar ................... 1/19/99 (1,077,387)
10,603,450 Hong Kong Dollar ................... 2/12/99 (1,351,460)
3,971,400 Hong Kong Dollar ................... 3/29/99 (503,104)
5,553,450 Hong Kong Dollar ................... 4/23/99 (701,403)
325,497 Irish Punt ......................... 1/19/99 (486,377)
861,150,000 Italian Lira ....................... 10/29/98 (521,878)
357,270,000 Italian Lira ....................... 2/12/99 (217,049)
347,853,675 Italian Lira ....................... 6/17/99 (212,313)
209,531,000 Japanese Yen ....................... 10/29/98 (1,541,213)
2,765,650,000 Japanese Yen ....................... 12/24/98 (20,514,126)
371,655,000 Japanese Yen ....................... 1/19/99 (2,767,106)
719,880,000 Japanese Yen ....................... 2/12/99 (5,377,004)
731,760,000 Japanese Yen ....................... 3/5/99 (5,480,587)
490,800,000 Japanese Yen ....................... 3/26/99 (3,685,546)
367,440,000 Japanese Yen ....................... 3/29/99 (2,760,216)
681,065,000 Japanese Yen ....................... 4/23/99 (5,132,516)
1,877,850,000 Japanese Yen ....................... 5/6/99 (14,174,547)
912,065,000 Japanese Yen ....................... 6/8/99 (6,912,336)
361,530,000 Japanese Yen ....................... 7/23/99 (2,755,349)
3,968,000 Netherlands Guilder ................ 10/29/98 (2,110,508)
1,928,100 Netherlands Guilder ................ 12/23/98 (1,028,657)
3,947,700 Netherlands Guilder ................ 12/30/98 (2,106,975)
3,036,900 Netherlands Guilder ................ 3/26/99 (1,626,466)
2,022,700 Netherlands Guilder ................ 3/29/99 (1,083,396)
1,183,080 Netherlands Guilder ................ 6/8/99 (635,256)
879,428 Netherlands Guilder ................ 8/27/99 (473,526)
1,925,298 New Zealand Dollar ................. 6/8/99 (968,825)
16,588,800 Norwegian Krone .................... 10/29/98 (2,238,550)
1,721,500 Singapore Dollar ................... 12/30/98 (1,022,596)
2,789,600 Singapore Dollar ................... 2/12/99 (1,658,502)
499,050 Singapore Dollar ................... 3/26/99 (296,868)
1,381,840 Singapore Dollar ................... 6/8/99 (822,489)
117,064,000 Spanish Peseta ..................... 10/29/98 (825,440)
68,602,500 Spanish Peseta ..................... 4/23/99 (487,021)
14,603,300 Swedish Krona ...................... 10/29/98 (1,864,739)
28,080,410 Swedish Krona ...................... 12/23/98 (3,591,537)
15,597,800 Swedish Krona ...................... 12/30/98 (1,995,445)
28,105,000 Swedish Krona ...................... 2/12/99 (3,599,023)
19,657,500 Swedish Krona ...................... 3/29/99 (2,519,159)
2,376,000 Swedish Krona ...................... 6/17/99 (304,787)
43,579,250 Swedish Krona ...................... 7/23/99 (5,592,053)
14,027,380 Swedish Krona ...................... 8/27/99 (1,800,438)
2,425,900 Swiss Franc ........................ 10/29/98 (1,763,357)
2,030,475 Swiss Franc ........................ 12/23/98 (1,484,689)
6,252,075 Swiss Franc ........................ 12/30/98 (4,574,885)
2,879,000 Swiss Franc ........................ 1/19/99 (2,110,987)
1,409,000 Swiss Franc ........................ 2/12/99 (1,035,587)
2,854,000 Swiss Franc ........................ 3/26/99 (2,105,934)
2,151,300 Swiss Franc ........................ 3/29/99 (1,587,851)
1,745,160 Swiss Franc ........................ 4/23/99 (1,290,897)
5,381,370 Swiss Franc ........................ 6/8/99 (3,995,541)
2,201,850 Swiss Franc ........................ 7/23/99 (1,640,824)
--------------
TOTAL FORWARD EXCHANGE CONTRACTS TO SELL
(CONTRACT AMOUNT $167,150,000) .................... $ (164,208,932)
==============
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TWEEDY, BROWNE AMERICAN VALUE FUND
Statement of Assets and Liabilities
September 30, 1998 (Unaudited)
ASSETS
Investments, at value (Cost $898,265,908)
See accompanying schedule .............................. $1,008,445,385
Net unrealized appreciation of forward exchange
contracts ................................................ 3,483,092
Dividends and interest receivable .......................... 2,087,390
Receivable for Fund shares sold ............................ 1,908,735
Receivable for investment securities sold .................. 1,108,359
Prepaid expenses ........................................... 25,345
Unamortized organization costs ............................. 3,218
--------------
TOTAL ASSETS ........................................... 1,017,061,524
--------------
LIABILITIES
Payable for Fund shares redeemed ........... $2,862,454
Payable for investment securities purchased 2,022,867
Due to custodian ........................... 963,112
Investment advisory fee payable ............ 660,424
Transfer agent fees payable ................ 55,573
Custodian fees payable ..................... 14,630
Accrued expenses and other payables ........ 49,053
----------
TOTAL LIABILITIES .................................. 6,628,113
--------------
NET ASSETS ................................................. $1,010,433,411
==============
NET ASSETS CONSIST OF
Undistributed net investment income .................... $ 5,398,538
Accumulated net realized gain on securities, forward
exchange
contracts and foreign currencies ..................... 13,351,825
Net unrealized appreciation on securities, forward
exchange
contracts, foreign currencies and net other assets ... 113,702,069
Par value .............................................. 4,983
Paid-in capital in excess of par value ................. 877,975,996
--------------
TOTAL NET ASSETS ................................... $1,010,433,411
==============
NET ASSET VALUE, offering and redemption price per share
($1,010,433,411 / 49,832,222 shares of common stock
outstanding) ........................................... $20.28
======
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TWEEDY, BROWNE AMERICAN VALUE FUND
Statement of Operations
For the Six Months Ended September 30, 1998 (Unaudited)
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $201,542) .... $ 8,283,280
Interest .................................................... 2,796,116
--------------
TOTAL INVESTMENT INCOME ................................. 11,079,396
--------------
EXPENSES
Investment advisory fee ...................... $6,788,518
Administration fee ........................... 263,469
Transfer agent fees .......................... 179,193
Custodian fees ............................... 140,563
Legal and audit fees ......................... 33,250
Directors' fees and expenses ................. 15,423
Amortization of organization costs ........... 9,762
Other ........................................ 114,028
----------
TOTAL EXPENSES ............................. 7,544,206
--------------
NET INVESTMENT INCOME ......................................... 3,535,190
--------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on:
Securities .............................................. 9,097,506
Forward exchange contracts .............................. 817,866
Foreign currencies and other net assets ................. 40,165
--------------
Net realized gain on investments during the period ........ 9,955,537
--------------
Net change in unrealized appreciation (depreciation) of:
Securities .............................................. (153,702,130)
Forward exchange contracts .............................. (622,822)
Foreign currencies and net other assets ................. 38,533
--------------
Net unrealized depreciation of investments during the
period .................................................. (154,286,419)
--------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS ............... (144,330,882)
--------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS ................................................. $(140,795,692)
=============
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TWEEDY, BROWNE AMERICAN VALUE FUND
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
SIX MONTHS
ENDED YEAR
9/30/98 ENDED
(UNAUDITED) 3/31/98
-------------- --------------
<S> <C> <C>
Net investment income ............................... $ 3,535,190 $ 4,232,973
Net realized gain on securities, forward exchange
contracts and currency transactions during the
period ............................................ 9,955,537 15,187,523
Net unrealized appreciation (depreciation) of
securities, forward exchange contracts, foreign
currencies and net other assets during the period . (154,286,419) 203,651,397
-------------- --------------
Net increase (decrease) in net assets resulting from
operations ........................................ (140,795,692) 223,071,893
DISTRIBUTIONS:
Dividends to shareholders from net investment
income .......................................... -- (5,448,502)
Distributions to shareholders from net realized
gain on investments ............................. -- (13,982,759)
Net increase in net assets from Fund share
transactions ...................................... 139,991,383 465,129,709
-------------- --------------
Net increase (decrease) in net assets ............... (804,309) 668,770,341
NET ASSETS
Beginning of period ................................. 1,011,237,720 342,467,379
-------------- --------------
End of period (including undistributed net investment
income of $5,398,538 and $1,863,348, respectively) $1,010,433,411 $1,011,237,720
============== ==============
SEE NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>
TWEEDY, BROWNE AMERICAN VALUE FUND
<TABLE>
Financial Highlights
For a Fund share outstanding throughout each period.
<CAPTION>
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR PERIOD
9/30/98 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 3/31/98 3/31/97 3/31/96(a) 3/31/95(a) 3/31/94(b)
--------------- ------------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 23.04 $ 16.22 $ 14.29 $ 10.71 $ 9.71 $ 10.00
---------- ---------- -------- -------- ------- -------
Income from investment operations:
Net investment income (c) 0.07 0.11 0.13 0.15 0.13 0.01
Net realized and
unrealized gain (loss)
on investments ........ (2.83) 7.31 2.39 3.56 0.93 (0.30)
---------- ---------- -------- -------- ------- -------
Total from investment
operations ........ (2.76) 7.42 2.52 3.71 1.06 (0.29)
---------- ---------- -------- -------- ------- -------
DISTRIBUTIONS:
Dividends from net
investment income ... -- (0.17) (0.17) (0.11) (0.06) --
Distributions from
net realized gains .. -- (0.43) (0.42) (0.02) -- --
---------- ---------- -------- -------- ------- -------
Total distributions . -- (0.60) (0.59) (0.13) (0.06) --
---------- ---------- -------- -------- ------- -------
Net asset value, end
of period ............. $ 20.28 $ 23.04 $ 16.22 $ 14.29 $ 10.71 $ 9.71
========== ========== ======== ======== ======= =======
Total return(d) ......... (11.98)% 46.14% 17.75% 34.70% 11.02% (2.90)%
========== ========== ======== ======== ======= =======
Ratios/Supplemental Data:
Net assets, end of
period (in 000's) ..... $1,010,433 $1,011,238 $342,467 $201,599 $58,856 $16,133
Ratio of operating
expenses to average
net assets(e) ......... 1.39%(f) 1.39% 1.39% 1.39% 1.74% 2.26%(f)
Ratio of net
investment income to
average net assets .... 0.65%(f) 0.69% 0.92% 1.13% 1.25% 0.64%(f)
Portfolio turnover
rate .................. 3% 6% 16% 9% 4% 0%(g)
- ------------
(a) Per share amounts have been calculated using the monthly average share method, which more appropriately presents the per
share data for the period since the use of the undistributed income method does not accord with results of operations.
(b) The Fund commenced operations on December 8, 1993.
(c) Net investment income (loss) for a Fund share outstanding, before the waiver of fees by the investment adviser and/or
administrator and/or custodian for the years ended March 31, 1998, 1997, 1996 and 1995 and the 3.75-month period ended March
31, 1994 was $0.11, $0.11, $0.12, $0.11 and $(0.01) per share, 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 custodian for the years ended March 31,
1998, 1997, 1996 and 1995 and the 3.75-month period ended March 31, 1994 were 1.41%, 1.52%, 1.61%, 1.94% and 3.51%,
respectively.
(f) Annualized.
(g) Amount rounds to less than 1.0%.
SEE NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>
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, by the Investment Adviser or,
at fair value as determined by or under the direction of the Company's Board
of Directors. Portfolio securities and other assets, listed on a U.S. national
securities exchange or through any system providing for same day publication
of actual prices (and not subject to restrictions against sale by the Fund on
such exchange or system) are valued at the last quoted sale price prior to the
close of regular trading. Portfolio securities and other assets listed on a
foreign exchange or through any system providing for same day publication of
actual prices are valued at the last quoted sale price available before the
time when assets are valued. Portfolio securities and other assets for which
there are no reported sales on the valuation date are valued at the mean
between the last asked price and the last bid price prior to the close of
regular trading. When the Investment Adviser determines that the last sale
price prior to valuation does not reflect current market value, the Investment
Adviser will determine the market value of those securities or assets in
accordance with industry practice and other factors considered relevant by the
Investment Adviser. All other securities and assets for which current market
quotations are not readily available and those securities which are not
readily marketable due to significant legal or contractual restrictions will
be valued by the Investment Adviser or at fair value as determined by or under
the direction of the Board of Directors. Debt securities with a remaining
maturity of 60 days or less are valued at amortized cost, which approximates
market value, or by reference to other factors (i.e. pricing services or
dealer quotations) by the Investment Adviser.
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 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.
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, OTHER RELATED PARTY TRANSACTIONS AND
ADMINISTRATION FEE
The Company, on behalf of the Fund, has entered into an investment
advisory agreement (the "Advisory Agreement") with Tweedy, Browne Company LLC
("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 Investment 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 $26.5 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. (the "Administrator"), a wholly owned subsidiary of First Data
Corporation. Under the Administration Agreement, the Company pays the
Administrator 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 $500 AND EXCEEDING
$500 MILLION $1 BILLION $1 BILLION
- -------------------------------------------------------------------------------
Administration Fees 0.06% 0.04% 0.02%
- -------------------------------------------------------------------------------
UP TO EXCEEDING
$100 MILLION $100 MILLION
- -------------------------------------------------------------------------------
Accounting Fees 0.03% 0.01%
- -------------------------------------------------------------------------------
Under the terms of the Administration Agreement, the Company will pay for
fund administration services a minimum fee of $40,000 per annum, not to be
aggregated with fees for fund accounting services. The Company will pay for a
minimum monthly fee of $3,000 for fund accounting services for the Fund, not
to be aggregated with fees for fund administration services.
No officer, director or employee of Tweedy, Browne, the Administrator 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 Fund pays
each director who is not an officer, director or employee of Tweedy, Browne,
the Administrator or any of their affiliates $8,000 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 Trust, 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, 1998, Boston Safe did not waive any custody
fees. Tweedy, Browne also serves as the distributor to the Fund and pays all
distribution fees. No distribution fees are paid by the Fund.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities,
excluding short-term investments for the six months ended September 30, 1998,
aggregated $179,796,583 and $26,568,907, respectively.
At September 30, 1998, the aggregate gross unrealized appreciation for all
securities, in which there was an excess of value over tax cost, was
$193,281,150 and the aggregate gross unrealized depreciation for all
securities, in which there was an excess of tax cost over value, was
$83,101,673.
For the six months ended September 30, 1998, the Fund incurred total
brokerage commissions of $280,649.
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:
<TABLE>
<CAPTION>
SIX MONTHS ENDED 9/30/98 YEAR ENDED 3/31/98
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sold 14,044,960 $ 321,385,181 29,306,959 $ 598,418,949
Reinvested -- -- 854,761 17,761,820
Redeemed (8,103,242) (181,393,798) (7,390,306) (151,051,060)
- ------------------------------------------------------------------------------------------------------------
Net Increase 5,941,718 $ 139,991,383 22,771,414 $ 465,129,709
- ------------------------------------------------------------------------------------------------------------
</TABLE>
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. LINE OF CREDIT
Effective October 1, 1996, the Company and Mellon Trust, N.A. have entered
into a Line of Credit Agreement (the "Agreement") which provides 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 Company 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. For the six months ended September 30, 1998, the Fund did not
borrow under this Agreement.
<PAGE>
TWEEDY, BROWNE FUND INC.
52 Vanderbilt Avenue, NY, NY 10017
800-432-4789
