N-CSR 1 tweedy_ncsr308.txt TWEEDY BROWN 3-08 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-07458 --------- TWEEDY, BROWNE FUND INC. ----------------------------------------------------- (Exact name of registrant as specified in charter) 350 Park Avenue, 9th Floor NEW YORK, NEW YORK 10022 ----------------------------------------------------- (Address of principal executive offices) (Zip code) M. Gervase Rosenberger Tweedy, Browne Company LLC 350 Park Avenue, 9th Floor NEW YORK, NEW YORK 10022 ----------------------------------------------------- (Name and address of agent for service) registrant's telephone number,including area code: 212-916-0600 ------------ Date of fiscal year end: MARCH 31 -------- Date of reporting period: MARCH 31, 2008 -------------- Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. REPORTS TO STOCKHOLDERS. The Report to Shareholders is attached herewith. -------------------------------------------------------------------------------- ----------------------------------------------------------------- ANNUAL REPORT Tweedy, Browne Global Value Fund Tweedy, Browne Value Fund Tweedy, Browne Worldwide High Dividend Yield Value Fund MARCH 31, 2008 -------------------------------------------------------------------------------- TWEEDY, BROWNE FUND INC. -------------------------------------------------------------------------------- ANNUAL REPORT ............................................................................................................. II-1 TWEEDY, BROWNE FUND INC. Investment Adviser's Note .............................................................................................. II-2 Expense Information .................................................................................................... II-5 TWEEDY, BROWNE GLOBAL VALUE FUND Portfolio Highlights ................................................................................................... II-6 Perspective on Assessing Investment Results ............................................................................ II-7 Portfolio of Investments ............................................................................................... II-8 Sector Diversification ................................................................................................. II-11 Portfolio Composition .................................................................................................. II-11 Schedule of Forward Exchange Contracts ................................................................................. II-12 TWEEDY, BROWNE VALUE FUND Portfolio Highlights ................................................................................................... II-13 Perspective on Assessing Investment Results ............................................................................ II-14 Portfolio of Investments ............................................................................................... II-15 Sector Diversification ................................................................................................. II-16 Portfolio Composition .................................................................................................. II-16 Schedule of Forward Exchange Contracts ................................................................................. II-17 TWEEDY, BROWNE WORLDWIDE HIGH DIVIDEND YIELD VALUE FUND Portfolio Highlights ................................................................................................... II-18 Perspective on Assessing Investment Results ............................................................................ II-19 Portfolio of Investments ............................................................................................... II-20 Sector Diversification ................................................................................................. II-21 Portfolio Composition .................................................................................................. II-21 TWEEDY, BROWNE FUND INC. Statements of Assets and Liabilities ................................................................................... II-22 Statements of Operations ............................................................................................... II-23 Statements of Changes in Net Assets .................................................................................... II-24 Financial Highlights ................................................................................................... II-25 Notes to Financial Statements .......................................................................................... II-27 Investment in the Fund by the Investment Adviser and Related Parties ................................................... II-29 Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm .................................... II-31 Other Information ...................................................................................................... II-32
TWEEDY, BROWNE FUND INC. -------------------------------------------------------------------------------- TWEEDY, BROWNE GLOBAL VALUE FUND TWEEDY, BROWNE VALUE FUND TWEEDY, BROWNE WORLDWIDE HIGH DIVIDEND YIELD VALUE FUND ANNUAL REPORT MARCH 31, 2008 II-1 TWEEDY, BROWNE FUND INC. -------------------------------------------------------------------------------- INVESTMENT ADVISER'S NOTE To Our Shareholders: We are pleased to present the Annual Report to Shareholders for the Tweedy, Browne Global Value Fund, Tweedy, Browne Value Fund and Tweedy, Browne Worldwide High Dividend Yield Value Fund for the year ended March 31, 2008. Investment results* for the past six months and the last one, three, five and ten years, and results since inception of each Fund are presented in the tables below: -------------------------------------------------------------------------------- TWEEDY, BROWNE MSCI EAFE MSCI EAFE PERIOD ENDED GLOBAL VALUE INDEX HEDGED INDEX 3/31/08 FUND TO US$(1)(2) IN US$(1)(2) -------------------------------------------------------------------------------- 6 Months -11.03% -17.55% -10.50% -------------------------------------------------------------------------------- 1 Year -6.35 -14.05 -2.70 -------------------------------------------------------------------------------- 3 Years 9.32 10.07 13.32 -------------------------------------------------------------------------------- 5 Years 17.36 15.35 21.40 -------------------------------------------------------------------------------- 10 Years 8.68 3.63 6.18 -------------------------------------------------------------------------------- Since Inception (6/15/93)(3) 11.86 6.76 7.35 -------------------------------------------------------------------------------- Total Annual Fund Operating Expense Ratio as of 3/31/07 was 1.37%+ -------------------------------------------------------------------------------- Total Annual Fund Operating Expense Ratio as of 3/31/08 was 1.37%+ ================================================================================ -------------------------------------------------------------------------------- MSCI WORLD PERIOD ENDED TWEEDY, BROWNE INDEX HEDGED 3/31/08 VALUE FUND TO US$(1)(4) S&P 500(1)(5) -------------------------------------------------------------------------------- 6 Months -9.98% -14.57% -12.46% -------------------------------------------------------------------------------- 1 Year -5.41 -9.22 -5.08 -------------------------------------------------------------------------------- 3 Years 4.01 N/A 5.84 -------------------------------------------------------------------------------- 5 Years 9.15 N/A 11.30 -------------------------------------------------------------------------------- 10 Years 3.93 N/A 3.50 -------------------------------------------------------------------------------- Since Inception (12/8/93)(3) 9.52 N/A 9.53 -------------------------------------------------------------------------------- Total Annual Fund Operating Expense Ratio as of 3/31/07 was 1.38%+ -------------------------------------------------------------------------------- Total Annual Fund Operating Expense Ratio as of 3/31/08 was 1.37%+ ================================================================================ -------------------------------------------------------------------------------- TWEEDY, BROWNE MSCI WORLD PERIOD ENDED WORLDWIDE HIGH DIVIDEND INDEX 3/31/08 YIELD VALUE FUND IN US$(1)(4) -------------------------------------------------------------------------------- 6 Months -3.85% -11.26% -------------------------------------------------------------------------------- Since Inception (9/5/07)(3) -2.69 -6.72 -------------------------------------------------------------------------------- 30-Day Standardized Yield as of 3/31/08: 2.90% -------------------------------------------------------------------------------- Gross Annual Operating Expense Ratio for current fiscal year ending 3/31/08 was 1.86%+ ++ -------------------------------------------------------------------------------- Net Annual Operating Expense Ratio for current fiscal year ending 3/31/08 was 1.37%+ ++ ================================================================================ * THE PRECEDING PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NOT A GUARANTEE OF FUTURE RESULTS. TOTAL RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THE RETURNS SHOWN DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA SHOWN. PLEASE VISIT WWW.TWEEDY.COM TO OBTAIN PERFORMANCE DATA, WHICH IS CURRENT TO THE MOST RECENT MONTH END. SEE PAGE II-4 FOR FOOTNOTES 1 THROUGH 5, WHICH DESCRIBE THE INDICES AND INCEPTION DATES OF EACH FUND. RESULTS ARE ANNUALIZED FOR ALL PERIODS GREATER THAN ONE YEAR. + THE FUNDS DO NOT IMPOSE ANY FRONT-END OR DEFERRED SALES CHARGE. HOWEVER, THE GLOBAL VALUE FUND AND THE WORLDWIDE HIGH DIVIDEND YIELD VALUE FUND IMPOSE A 2% REDEMPTION FEE ON PROCEEDS FROM REDEMPTIONS OR EXCHANGES MADE WITHIN 60 DAYS OF PURCHASE. ++ The Adviser has contractually agreed to waive its investment advisory fee and/or to reimburse expenses of the Worldwide High Dividend Yield Value Fund to the extent necessary to maintain the total annual fund operating expenses (excluding brokerage, interest, taxes and extraordinary expenses) at no more than 1.37%. This arrangement will continue at least through March 31, 2009. In this arrangement, the Worldwide High Dividend Yield Value Fund has agreed, during the two-year period following any waiver or reimbursement by the Adviser, to repay such amount to the extent that after giving effect to such repayment such adjusted total annual fund operating expenses would not exceed 1.37% on an annualized basis. The performance data shown above would be lower had fees and expenses not been waived and/or reimbursed. PERFORMANCE: RESULTS AND ATTRIBUTION While all three of our Funds were not immune to the downturn over the last year, all three significantly outperformed their respective benchmarks as the credit crisis unfolded. The Tweedy, Browne Global Value Fund finished this roller coaster period down 6.35% while the MSCI EAFE Index hedged back into U.S. dollars was down 14.05% during the period. The Tweedy, Browne Value Fund marginally underperformed the S&P 500 for the year, but held up very well against the MSCI World Index hedged back into U.S. dollars, declining 5.41% versus 9.22% for the index. The Value Fund now has approximately 35% of its net assets invested in non- U.S. companies. The new Tweedy, Browne Worldwide High Dividend Yield Value Fund which began operations on September 5th of last year has also gotten off to a good relative start, declining since its inception 2.69% versus a decline of 6.72% for the MSCI World Index. While negative results are nothing to boast about, we were gratified that the Funds held up fairly well during perhaps one of the most volatile periods that we have experienced in our 30 plus years of investing. The subprime mortgage crisis has spawned an unprecedented level of equity market volatility over the last eight months. Since the bursting of the credit bubble back in August, the MSCI EAFE Index has had 17 days of gains or losses in excess of 2%. In contrast, in the first half of the 2007 calendar year, there were only three such days, and in the combined years of 2005 and 2006 there were a total of just six such days. This increased volatility was not confined to the -------------------------------------------------------------------------------- II-2 international markets. The S&P 500 also had 26 days during the last eight months with gains or losses in excess of 2%. This compares to two days in the first half of 2007, and only two such days for the combined years 2005 and 2006. Needless to say, this kind of market churn generally produces pricing opportunities for value investors such as ourselves. Ebullient markets such as we had over the last five years just prior to the inception of the credit crisis are generally not the kind of environment in which value investing shines, at least not on a relative basis, and this proved to be the case particularly in our Value Fund. For the one, three and five-year annualized periods ending June 30, 2007 for instance, our Value Fund underperformed the S&P 500 and the MSCI World Index hedged to U.S. dollars despite generating solid absolute returns. During rapidly rising markets, we and other value investors often have a hard time finding undervalued stocks, which leads to rising cash positions, which in turn drag down portfolio returns. As you will recall, we closed our doors to new investors in early 2005, preferring not to dilute our existing shareholders' returns by taking on new money that we believed could not effectively be put to work. With the recent market downturn, our Value Fund is now starting to gain considerable ground on its benchmark indices. Over the long term, we believe that how one performs in difficult environments is as important, or perhaps even more important than how one performs in the bull market phase, and in that respect, we believe we have more than held our own. The most recent downturn over the last nine months is no exception. While we have faced declines in our Funds, these have not been as significant as the declines in the broad market indices. Between June 30, 2007 and March 31, 2008, when most of the carnage occurred, the MSCI EAFE Index (Hedged to U.S. dollars), the MSCI World Index (Hedged to U.S. dollars), and the S&P 500 declined 19.23%, 14.54% and 10.68%, respectively. In contrast, our Global Value and Value Funds finished this same period down an estimated 11.60% and 10.05%, respectively. The Worldwide High Dividend Yield Value Fund also held up well during this period declining 2.69% since its inception on September 5, 2007 versus a decline of 6.72% for the MSCI World Index in U.S. dollars.(6) The downturn in our Funds was muted, at least in part, due to the fact that we have had modest direct exposure to the subprime problem. With the exception of our holdings in AIG, HSBC and Bank of America, which, we believe, have manageable amounts of capital invested in subprime mortgages and have many other compensating competitive advantages, we have had very little investment in those areas of the market that were the most affected.(7) The returns for our portfolios over the last year were fueled, in large part, by solid returns in our food, beverage, and industrial holdings, and continued strength in our Finnish, Dutch, Mexican and South Korean stocks. Our significant underweighting in Japan also held us in good stead, as this market has been under pressure over the last year or so. Our financial stocks, which were down in double digits, still fared better than their index counterparts. Our lack of any meaningful exposure to energy stocks, aside from those in our high dividend yield portfolios, was a drag on our relative results. Those energy stocks that we did own in the Worldwide High Dividend Yield Value Fund underperformed their peers. Our significant weighting in media stocks also did not serve us well during this period. Larger capitalization securities now account for roughly two-thirds of net assets in the Global Value Fund versus one- third in smaller and medium capitalization companies. Five years ago, the reverse was the case with smaller and medium capitalization companies accounting for two-thirds of net assets. This change in composition has come about simply because there is more value to be found today in larger companies. We sold a number of our smaller companies as they surged in price over the last five years. Another segment of our Funds' portfolios that produced attractive returns over the last year were our South Korean stocks. The values we have been able to uncover in this most developed of developing nations have been nothing less than extraordinary. Even in the short run, value has been borne out by rapidly advancing stock prices. Stocks such as Samsung SDI, Dongah Tire & Rubber, Taeyoung Engineering, Hanil Cement and Youngone Corporation, among others, produced attractive returns for our Global Value Fund. Despite these gains, a number of the stocks in our Funds were dragged down in price during the year, not surprisingly some of our financial, retail and media-related holdings. Stocks such as Comcast (Value), Axel Springer (Global Value), Mediaset (Global Value, Value and Worldwide High Dividend Yield Value), Mondadori (Global Value, Value and Worldwide High Dividend Yield Value), Home Depot (Value and Worldwide High Dividend Yield Value), and AIG (Global Value and Value) all finished the year in negative territory, despite what we feel are very attractive long-term fundamentals for each of them. Thank you for investing alongside us, and for your continued confidence. Very truly yours, TWEEDY, BROWNE COMPANY LLC Christopher H. Browne William H. Browne John D. Spears Thomas H. Shrager Robert Q. Wyckoff, Jr. MANAGING DIRECTORS APRIL 24, 2008 -------------------------------------------------------------------------------- II-3 Notes: (1) Indexes are unmanaged, and the figures for the indexes shown include reinvestment of dividends and capital gains distributions and do not reflect any fees or expenses. Investors cannot invest directly in an index. We strongly recommend that these factors be considered before an investment decision is made. (2) MSCI EAFE Index US$ is an unmanaged capitalization-weighted index of companies representing the stock markets of Europe, Australasia and the Far East. MSCI EAFE Index Hedged consists of the results of the MSCI EAFE Index hedged 100% back into US dollars and accounts for interest rate differentials in forward currency exchange rates. Results for both indexes are inclusive of dividends and net of foreign withholding taxes. (3) Inception dates for the Global Value Fund, Value Fund and Worldwide High Dividend Yield Value Fund were June 15, 1993, December 8, 1993, and September 5, 2007, respectively. Information with respect to MSCI EAFE indexes used is available at month end only; therefore the closest month end to the Global Value Fund's inception date, May 31, 1993, was used. (4) The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. As of March 2008, the MSCI World Index consisted of the following 23 developed market country indices: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom, and the United States. The MSCI World Index (US$) reflects the return of this index for a US dollar investor. MSCI World Index (Hedged to US$) consists of the results of the MSCI World Index with its foreign currency exposure hedged 100% back into U.S. dollars. The index accounts for interest rate differentials in forward currency exchange rates. Results for this index are inclusive of dividends and net of foreign withholding taxes. (5) S&P 500 Index 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. (6) Returns shown are for a specific time period where the Funds outperformed their relevant indexes. While the Funds outperformed the relevant indexes for the period shown, there have been previous periods when the Funds underperformed these indices. Since past performance is not indicative of future results, there can be no guarantee that the Funds will outperform their relevant indexes in the future. Please refer to page 2 of the letter for the Funds' standardized performance results. (7) As of March 31, 2008, Tweedy, Browne Global Value Fund, Tweedy, Browne Value Fund, and Tweedy, Browne Worldwide High Dividend Yield Value Fund had invested the following percentages of its net assets, respectively, in the following portfolio holdings: AIG (2.8%, 3.5%, 0.0%); HSBC (1.3%, 0.0%, 1.7%); Bank of America (0.0%, 2.0%, 1.6%); Samsung SDI (1.0%, 0.0%, 0.0%); Dongah Tire & Rubber (0.0%, 0.0%, 0.0%); Taeyoung Engineering (0.0%, 0.0%, 0.0%); Hanil Cement (0.4%, 0.0%, 0.0%); Youngone Corporation (0.3%, 0.0%, 0.0%); Comcast (0.0%, 4.0%, 0.0%); Axel Springer (2.9%, 0.0%, 0.0%); Mediaset (2.2%, 0.6%, 3.0%); Mondadori (1.5%, 0.5%, 1.9%); Home Depot (0.0%, 4.1%, 0.9%). Investing in foreign securities involves additional risks beyond the risks of investing in US securities markets. These risks include currency fluctuations; political uncertainty; different accounting and financial standards; different regulatory environments; and different market and economic factors in various non-U.S. countries. In addition, the securities of small, less well-known companies may be more volatile than those of larger companies. Investors should refer to the Funds' prospectus for a description of risk factors associated with investments in securities held by the Funds. Tweedy, Browne Global Value Fund, Tweedy, Browne Value Fund, and Tweedy, Browne Worldwide High Dividend Yield Value Fund are distributed by Tweedy, Browne Company LLC. This material must be preceded or accompanied by a prospectus for Tweedy, Browne Fund Inc. -------------------------------------------------------------------------------- II-4 TWEEDY, BROWNE FUND INC. -------------------------------------------------------------------------------- EXPENSE INFORMATION A shareholder of the Global Value Fund, Value Fund or Worldwide High Dividend Yield Value Fund (collectively, the "Funds") incurs two types of costs: (1) transaction costs and (2) ongoing costs, including management fees and other Fund expenses. The Example below is intended to help a shareholder understand their ongoing costs (in U.S. dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period of October 1, 2007 to March 31, 2008. ACTUAL EXPENSES The first part of the table presented below, under the heading "Actual Expenses", provides information about actual account values and actual expenses. The information in this line may be used with the amount a shareholder invested to estimate the expenses that were paid by the shareholder over the period. Simply divide the shareholder's account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses paid during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second part of the table presented below, under the heading "Hypothetical Expenses", provides information about hypothetical account values and hypothetical expenses based on each Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not each Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses paid by the shareholder of the Funds for the period. This information may be used to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table below are meant to highlight a shareholder's ongoing costs only and do not reflect redemption fees. Redemptions from the Global Value Fund and the Worldwide High Dividend Yield Value Fund, including exchange redemptions, within 60 days of purchase are subject to a redemption fee equal to 2% of the redemption proceeds, which will be retained by the Funds. There are no other transactional expenses associated with the purchase and sale of shares charged by the Funds, such as commissions, sales loads and/or redemption fees on shares held longer than 60 days. Other mutual funds may have such transactional charges. Therefore, the second part of the table is useful in comparing ongoing costs only, and will not help a shareholder determine the relative total costs of owning different funds. In addition, if redemption fees were included, a shareholder's costs would have been higher.
---------------------------------------------------------------------------------------------------------- HYPOTHETICAL EXPENSES ACTUAL EXPENSES (5% RETURN BEFORE EXPENSES) ---------------------------------------------------------------------------------------------------------- EXPENSES EXPENSES BEGINNING ENDING PAID DURING BEGINNING ENDING PAID DURING ACCOUNT ACCOUNT PERIOD* ACCOUNT ACCOUNT PERIOD* VALUE VALUE 10/1/07 - VALUE VALUE 10/1/07 - EXPENSE 10/1/07 3/31/08 3/31/08 10/1/07 3/31/08 3/31/08 RATIO ---------------------------------------------------------------------------------------------------------- Global Value Fund $ 1,000 $ 890 $ 6.47 $ 1,000 $ 1,018 $ 6.91 1.37% ---------------------------------------------------------------------------------------------------------- Value Fund $ 1,000 $ 900 $ 6.51 $ 1,000 $ 1,018 $ 6.91 1.37% ---------------------------------------------------------------------------------------------------------- Worldwide High Dividend Yield Value Fund (+) $ 1,000 $ 962 $ 6.72 $ 1,000 $ 1,018 $ 6.91 1.37% ----------------------------------------------------------------------------------------------------------
(+) THE TWEEDY, BROWNE WORLDWIDE HIGH DIVIDEND YIELD VALUE FUND COMMENCED OPERATIONS ON SEPTEMBER 5, 2007. * EXPENSES ARE EQUAL TO EACH FUND'S ANNUALIZED EXPENSE RATIO, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE PERIOD, DIVIDED BY 366 (TO REFLECT THE ONE-HALF YEAR PERIOD). -------------------------------------------------------------------------------- II-5 [MAP] TWEEDY, BROWNE GLOBAL VALUE FUND -------------------------------------------------------------------------------- PORTFOLIO HIGHLIGHTS (UNAUDITED) March 31, 2008 HYPOTHETICAL ILLUSTRATION OF $10,000 INVESTED IN TWEEDY, BROWNE GLOBAL VALUE FUND VS. MORGAN STANLEY CAPITAL INTERNATIONAL ("MSCI") EUROPE, AUSTRALASIA AND FAR EAST ("EAFE") INDEX (IN US DOLLARS AND HEDGED) 6/15/93 THROUGH 3/31/08 [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Tweedy, Browne INDEX: MSCI EAFE INDEX: MSCI EAFE Date Global Value Fund* INDEX (IN US DOLLARS)* INDEX (HEDGED)* 6/1/93 10000.00 9843.98 9964.00 9/1/93 10310.00 10496.90 10555.00 3/1/94 12260.00 10957.70 10839.90 9/1/94 12300.00 11528.70 10857.40 3/1/95 11678.30 11678.30 10032.70 9/1/95 12874.60 12196.10 11290.10 3/1/96 14700.90 13056.70 12764.80 9/1/96 15174.40 13246.60 13339.70 3/1/97 17149.30 13246.60 14363.60 9/1/97 19878.10 14860.20 16601.20 3/1/98 22823.50 15711.40 18480.90 9/1/98 18819.10 13621.30 15406.30 3/1/99 23514.30 16664.10 19365.40 9/1/99 26648.70 17837.50 20443.80 3/1/00 28612.70 20845.30 25338.20 9/30/00 30551.90 18404.60 24398.40 3/31/01 30094.50 15455.60 21791.30 9/30/01 27549.00 13152.00 17920.00 3/31/02 31361.00 14141.00 20111.00 9/30/02 24673.80 11287.80 14162.80 3/31/03 23565.00 10856.00 12929.00 9/30/03 29228.00 14000.00 15639.00 3/31/04 35003.00 17102.00 17751.00 9/30/04 35975.00 17092.00 17905.00 3/31/05 40167.00 19678.00 19801.00 9/30/05 43486.00 21501.00 23087.00 3/31/06 48299.00 24481.00 27012.00 9/30/06 49601.00 29426.00 30722.00 3/31/07 56029.00 29426.00 30722.00 09/30/07 58977.00 31990.00 32051.00 03/31/08 52473.10 28757.80 26423.00 -------------------------------------------------------------------------------- MSCI EAFE INDEX REPRESENTS THE CHANGE IN MARKET CAPITALIZATIONS OF EUROPE, AUSTRALASIA AND THE FAR EAST (EAFE), INCLUDING DIVIDENDS REINVESTED MONTHLY, NET AFTER FOREIGN WITHHOLDING TAXES. INDEX AND AVERAGE INFORMATION IS AVAILABLE AT MONTH END ONLY; THEREFORE, THE CLOSEST MONTH END TO INCEPTION DATE OF THE FUND, MAY 31, 1993, HAS BEEN USED. -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN* WITHOUT THE FUND ACTUAL WAIVERS** -------- ------ --------- Inception (6/15/93) through 3/31/08 11.86% 11.85% Year Ended 3/31/08 (6.35)% (6.35)% ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- AGGREGATE TOTAL RETURN* YEAR INCEPTION ENDED (6/15/93)- 3/31/08 3/31/08 ------- ---------- The Fund (6.35)% 424.73% MSCI EAFE (in US Dollars) (2.70)% 186.32% MSCI EAFE (Hedged) (14.05)% 164.07% -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- NOTE: THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT A GUARANTEE OF FUTURE RESULTS. THE FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE MORE OR LESS THAN ORIGINAL COST. * ASSUMES THE REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS AND IS NET OF FOREIGN WITHHOLDING TAX. ** THE ADVISER WAIVED A PORTION OF ITS FEE FROM JUNE 15, 1993 THROUGH MARCH 31, 1994. THE ADMINISTRATOR WAIVED A PORTION OF ITS FEE FROM FEBRUARY 15, 1997 THROUGH MAY 15, 1997. SEE NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- II-6 [MAP] TWEEDY, BROWNE GLOBAL VALUE FUND -------------------------------------------------------------------------------- PERSPECTIVE ON ASSESSING INVESTMENT RESULTS March 31, 2008 In accordance with rules and guidelines set out by the United States (US) Securities and Exchange Commission, we have provided a comparison of the historical investment results of Tweedy, Browne Global Value Fund to the historical investment results of the most appropriate broad-based securities indices, the Morgan Stanley Capital International (MSCI) Europe, Australasia and the Far East (EAFE) Index in US dollars and hedged into US dollars. However, the historical results of the MSCI EAFE indices in large measure represent the investment results of stocks that we do not own. Any portfolio which does not own exactly the same stocks in exactly the same proportions as the index to which the particular portfolio is being compared is not likely to have the same results as the index. The investment behavior of a diversified portfolio of undervalued stocks tends to be correlated to the investment behavior of a broad index; i.e., when the index is up, probably more than one-half of the stocks in the entire universe of public companies in all the countries that are included in the same index will be up, albeit, in greater or lesser percentages than the index. Similarly, when the index declines, probably more than one-half of the stocks in the entire universe of public companies in all the countries that are included in the index will be down in greater or lesser percentages than the index. But it is almost a mathematical truth that "different stocks equal different results." We believe that favorable or unfavorable historical investment results in comparison to an index are not necessarily predictive of future comparative investment results. In ARE SHORT-TERM PERFORMANCE AND VALUE INVESTING MUTUALLY EXCLUSIVE?, Eugene Shahan analyzed the investment performance of seven money managers, about whom Warren Buffett wrote in his article, THE SUPER- INVESTORS OF GRAHAM AND DODDSVILLE. Over long periods of time, the seven managers significantly outperformed the market as measured by the Dow Jones Industrial Average (the "DJIA") or the Standard & Poor's 500 Stock Index (the "S&P 500") by between 7.7% and 16.5% annually. (The goal of most institutional money managers is to outperform the market by 2% to 3%.) However, for periods ranging from 13 years to 28 years, this group of managers underperformed the market between 7.7% and 42% of the years. Six of the seven investment managers underperformed the market between 28% and 42% of the years. In today's environment, they would have lost many of their clients during their periods of underperformance. Longer term, it would have been the wrong decision to fire any of those money managers. In examining the seven long-term investment records, unfavorable investment results as compared to either index did not predict the future favorable comparative investment results which occurred, and favorable investment results in comparison to the DJIA or the S&P 500 were not always followed by future favorable comparative results. Stretches of consecutive annual underperformance ranged from one to six years. Mr. Shahan concluded: UNFORTUNATELY, THERE IS NO WAY TO DISTINGUISH BETWEEN A POOR THREE-YEAR STRETCH FOR A MANAGER WHO WILL DO WELL OVER 15 YEARS, FROM A POOR THREE-YEAR STRETCH FOR A MANAGER WHO WILL CONTINUE TO DO POORLY. NOR IS THERE ANY REASON TO BELIEVE THAT A MANAGER WHO DOES WELL FROM THE OUTSET CANNOT CONTINUE TO DO WELL, AND CONSISTENTLY. SEE NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- II-7 [MAP] TWEEDY, BROWNE GLOBAL VALUE FUND -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS March 31, 2008
MARKET VALUE SHARES (NOTE 2) ------------ --------------- COMMON STOCKS--94.7% BELGIUM--3.2% 1,646,311 KBC Groep NV ....................................................... $ 214,276,863 --------------- CANADA--1.2% 100,000 Melcor Developments Ltd. ........................................... 1,546,708 1,631,760 National Bank of Canada, Toronto ................................... 76,081,476 --------------- 77,628,184 --------------- CZECH REPUBLIC--0.0%+ 2,800 Philip Morris CR a.s. .............................................. 1,263,288 --------------- FINLAND--7.7% 2,435,000 Cargotec Corporation, B Share ...................................... 119,957,771 1,000,000 Huhtamaki Oyj ...................................................... 10,743,317 9,340,000 Kone Oyj, Class B .................................................. 384,646,564 --------------- 515,347,652 --------------- FRANCE--7.0% 433,783 BNP Paribas SA ..................................................... 43,915,124 2,192,565 CNP Assurances ..................................................... 271,269,510 122,200 Nexans SA .......................................................... 14,464,403 1,000 NSC Groupe ......................................................... 104,185 1,825,000 Sanofi-Aventis ..................................................... 137,419,386 --------------- 467,172,608 --------------- GERMANY--4.1% 64,173 Boewe Systec AG .................................................... 2,080,495 42,354 KSB AG ............................................................. 28,757,016 265,714 Linde AG ........................................................... 37,678,851 63,276 Merck KGaA ......................................................... 7,827,659 1,560,342 Springer (Axel) Verlag AG .......................................... 192,851,536 --------------- 269,195,557 --------------- HONG KONG--2.1% 8,226,564 Jardine Strategic Holdings Ltd. .................................... 138,370,806 200,000 Swire Pacific Ltd., Class B ........................................ 445,595 --------------- 138,816,401 --------------- IRELAND--0.6% 11,955,638 Independent News & Media PLC ....................................... 39,404,407 1,111,317 Unidare PLC ++ ..................................................... 105,657 --------------- 39,510,064 --------------- ITALY--5.0% 3,561,000 Banco Popolare Scarl ............................................... 59,191,066 925,100 Maffei SPA ......................................................... 3,444,810 15,720,000 Mediaset SPA ....................................................... 145,968,404 12,147,709 Mondadori (Arnoldo) Editore SPA .................................... 102,980,943 2,470,700 Natuzzi SPA, Sponsored ADR ++ ...................................... 9,141,590 1,005,000 Sol SPA ............................................................ 7,166,173 805,250 Vincenzo Zucchi SPA ++ ............................................. 3,674,785 --------------- 331,567,771 --------------- JAPAN--5.7% 1,594,700 Canon, Inc. ........................................................ 73,538,685 414,900 Chofu Seisakusho Company Ltd. ...................................... 8,332,598 530 Coca-Cola Central Japan Company Ltd. ............................... 4,557,995 MARKET VALUE SHARES (NOTE 2) ------------ --------------- COMMON STOCKS JAPAN (CONTINUED) 410,900 Daikoku Denki Company Ltd. ......................................... $ 3,608,043 5,251,000 Fujitec Company Ltd. ............................................... 29,542,975 570,600 Fukuda Denshi Company Ltd. ......................................... 13,987,683 1,203,000 Hi-Lex Corporation ................................................. 16,799,819 1,512,500 Honda Motor Company Ltd. ........................................... 43,231,652 22,100 Hurxley Corporation ................................................ 267,327 319,000 Inaba Seisakusho Company Ltd. ...................................... 3,413,221 321,000 Katsuragawa Electric Company Ltd. .................................. 1,964,023 1,461,000 Kawasumi Laboratories Inc. ......................................... 8,792,274 1,849,500 Kuroda Electric Company Ltd. ....................................... 24,434,546 69,100 Mandom Corporation ................................................. 2,082,684 477,000 Matsumoto Yushi-Seiyaku Company Ltd. ............................... 7,562,224 21,670 Medikit Company Ltd. ............................................... 4,637,273 121,800 Meito Sangyo Company Ltd. .......................................... 2,581,986 36,240 Milbon Company Ltd. ................................................ 793,723 307,100 Mirai Industry Company Ltd. ........................................ 3,532,722 55,000 Nankai Plywood Company Ltd. ........................................ 347,566 40,000 Nippon Antenna Company Ltd. ........................................ 245,140 162,780 Nippon Kanzai Company Ltd. ......................................... 4,832,621 1,253,000 Nippon Konpo Unyu Soko Company Ltd. .................................................... 17,208,530 685,500 Nitto FC Company Ltd. .............................................. 2,995,856 451,000 Sangetsu Company Ltd. .............................................. 9,832,421 314,800 Shikoku Coca-Cola Bottling Company Ltd. .................................................... 3,760,458 289,300 Shingakukai Company Ltd. ........................................... 1,421,286 204,000 SK Kaken Company Ltd. .............................................. 6,087,105 612,000 Sonton Food Industry Company Ltd. .................................. 4,918,873 528,500 T. Hasegawa Company Ltd. ........................................... 9,339,745 2,946,000 Takata Corporation ................................................. 65,114,784 106,300 Tenma Corporation .................................................. 1,404,375 --------------- 381,170,213 --------------- MEXICO--3.7% 1,921,351 Coca-Cola Femsa SA de CV, Sponsored ADR +++ ............................................... 108,229,702 14,623,380 Embotelladoras Arca SA de CV ....................................... 56,346,063 151,327 Grupo Aeroportuario del Sureste SA de CV, ADR ................................................... 8,624,126 30,132,400 Grupo Continental SA ++ ............................................ 72,741,952 --------------- 245,941,843 --------------- NETHERLANDS--13.4% 2,093,000 Akzo Nobel NV ...................................................... 168,543,726 23,620 Crown Van Gelder Gemeenschappelijk Bezit NV ........................................................ 552,053 5,477,810 Heineken Holding NV ................................................ 276,455,416 2,810,041 Heineken NV ........................................................ 163,814,049 450,000 Imtech NV .......................................................... 11,986,404 50,000 Randstad Holding NV ................................................ 2,350,695 4,374,175 Telegraaf Media Groep NV ........................................... 142,088,430 288,708 TKH Group NV ....................................................... 6,802,656 3,612,751 Unilever NV, CVA ................................................... 121,762,686 --------------- 894,356,115 ---------------
SEE NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- II-8 [MAP] TWEEDY, BROWNE GLOBAL VALUE FUND -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS March 31, 2008
MARKET VALUE SHARES (NOTE 2) ------------ --------------- COMMON STOCKS NORWAY--1.0% 2,302,000 Schibsted ASA ...................................................... $ 68,855,020 --------------- SINGAPORE--2.3% 33,542,550 Fraser and Neave Ltd. .............................................. 118,043,295 2,400,000 Jardine Cycle & Carriage Ltd. ...................................... 34,028,226 --------------- 152,071,521 --------------- SOUTH KOREA--5.3% 8,615 Asia Cement Company, Ltd. .......................................... 507,148 23,260 Daehan City Gas Company Ltd. ....................................... 738,655 93,346 Dong Ah Tire & Rubber Company Ltd. ................................. 902,026 280,921 Hanil Cement Company Ltd. .......................................... 26,181,661 8,791 Hyundai Elevator Company Ltd. ...................................... 710,133 8,003,555 Korea Exchange Bank ................................................ 106,676,353 23,200 Sam Young Electronics Company, Ltd. ................................ 267,057 36,890 Samchully Company Ltd. ............................................. 5,848,165 886,070 Samsung SDI Company, Ltd. .......................................... 69,697,433 241,172 SK Telecom Company, Ltd. ........................................... 45,416,851 3,479,352 SK Telecom Company, Ltd., ADR ...................................... 75,188,797 55,630 Taegu Department Store Company Ltd. ++ ................................................. 808,878 363,340 Taeyoung Engineering & Construction ................................ 2,971,731 2,159,497 Youngone Corporation ............................................... 17,509,730 --------------- 353,424,618 --------------- SWEDEN--0.0%+ 33,000 Cloetta Fazer AB, B Shares ......................................... 1,274,378 --------------- SWITZERLAND--15.2% 45,065 AFG Arbonia-Foster Holding AG, Bearer .......................................................... 13,441,358 2,021,000 Compagnie Financiere Richemont AG .................................. 113,815,985 570,116 Daetwyler Holding AG, Bearer ....................................... 44,615,518 92,315 Edipresse SA, Bearer ............................................... 35,374,738 82,113 Forbo Holding AG ................................................... 43,586,598 29,327 Loeb Holding AG .................................................... 7,264,663 186,990 Medisize Holding AG ................................................ 16,627,845 875,160 Nestle SA, Registered .............................................. 439,106,365 8 Neue Zuercher Zeitung ++ ........................................... 620,124 2,368,760 Novartis AG, Registered ............................................ 121,904,741 45,425 Phoenix Mecano AG .................................................. 22,906,546 179,979 PubliGroupe SA, Registered ......................................... 56,047,249 182,827 Siegfried Holding AG ............................................... 27,912,519 7,400 Sika AG, Bearer .................................................... 14,589,758 473,990 Tamedia AG ......................................................... 54,681,016 --------------- 1,012,495,023 --------------- UNITED KINGDOM--11.7% 2,535,000 AGA Foodservice Group PLC .......................................... 15,807,849 7,123,125 BBA Group PLC ...................................................... 21,306,795 3,979,658 Carclo PLC ......................................................... 6,565,003 11,378,577 Clinton Cards PLC .................................................. 13,229,849 8,225,426 Diageo PLC ......................................................... 166,097,531 3,675,000 Ennstone PLC ....................................................... 2,154,718 15,690,684 G4S PLC ............................................................ 70,347,608 969,024 GlaxoSmithKline PLC ................................................ 20,530,655 593,139 GlaxoSmithKline PLC, Sponsored ADR ................................. 25,166,888 MARKET VALUE SHARES (NOTE 2) ------------ --------------- COMMON STOCKS UNITED KINGDOM (CONTINUED) 923,006 Headlam Group PLC .................................................. $ 6,971,066 5,037,262 HSBC Holdings PLC .................................................. 83,096,686 15,740,603 Lloyds TSB Group PLC ............................................... 141,094,140 263,075 Partridge Fine Arts PLC ++ ......................................... 98,665 779,500 Raven Mount PLC .................................................... 1,154,206 24,695,000 Signet Group PLC ................................................... 30,307,985 12,262,000 Trinity Mirror PLC ................................................. 71,894,290 5,038,361 TT Electronics PLC ................................................. 9,738,453 2,879,718 Unilever PLC ....................................................... 97,242,118 --------------- 782,804,505 --------------- UNITED STATES--5.3% 3,085,645 American Express Company ........................................... 134,904,400 4,257,094 American International Group, Inc. ................................. 184,119,316 75,700 American National Insurance Company ................................ 8,077,190 3,926,230 Sun-Times Media Group Inc., Class A ++ ............................. 2,826,886 49,884 Torchmark Corporation .............................................. 2,998,527 269,276 Transatlantic Holdings Inc. ........................................ 17,866,463 --------------- 350,792,782 --------------- MISCELLANEOUS--0.2% Undisclosed Securities* ............................................ 10,017,316 --------------- TOTAL COMMON STOCKS (COST $3,635,167,852) .............................................. 6,307,981,722 --------------- PREFERRED STOCKS--0.4% 154,144 Adris Grupa d.d. ................................................... 12,866,049 11,800 KSB AG, Vorzugsakt ................................................. 7,179,958 700,000 Villeroy & Boch AG ................................................. 9,882,901 --------------- TOTAL PREFERRED STOCKS (COST $17,582,512) ................................................. 29,928,908 --------------- REGISTERED INVESTMENT COMPANY--4.0% 266,501,595 Dreyfus Government Prime Cash Management ................................................. 266,501,595 --------------- TOTAL REGISTERED INVESTMENT COMPANY (COST $266,501,595) ................................................ 266,501,595 --------------- FACE VALUE ------------ U.S. TREASURY BILLS--5.2% $335,000,000 3.205% ** due 5/8/08 +++ ........................................... 334,493,276 14,000,000 1.535% ** due 8/28/08 +++ .......................................... 13,911,352 --------------- TOTAL U.S. TREASURY BILLS (COST $347,661,621) ................................................ 348,404,628 ---------------
SEE NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- II-9 [MAP] TWEEDY, BROWNE GLOBAL VALUE FUND -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS March 31, 2008
MARKET VALUE FACE VALUE (NOTE 2) ------------ --------------- REPURCHASE AGREEMENTS--0.8% $ 50,000,000 Agreement with Bank of America Corp., 1.25% dated 3/31/08, to be repurchased at $50,001,736 on 4/1/08, collateralized by $50,000,158 U.S. Treasury Notes, 4.625% due 11/16/09 (market value $51,000,162) ......................................... $ 50,000,000 3,130,000 Agreement with UBS Warburg LLC, 1.44% dated 3/31/08, to be repurchased at $3,130,125 on 4/1/08, collateralized by $3,130,000 U.S. Treasury Notes, 6.875% due 8/15/25 (market value $3,193,330) .......................................... 3,130,000 --------------- TOTAL REPURCHASE AGREEMENTS (COST $53,130,000) ................................................. 53,130,000 --------------- TOTAL INVESTMENTS (COST $4,320,043,580***) ............................................... 105.1% 7,005,946,853 UNREALIZED DEPRECIATION ON FORWARD CONTRACTS (NET) ................................................ (5.7) (378,434,683) OTHER ASSETS AND LIABILITIES (NET) ........................................ 0.6 36,358,325 ----- --------------- NET ASSETS ................................................................ 100.0% $ 6,663,870,495 ===== ===============
---------- * "UNDISCLOSED SECURITIES" REPRESENTS ISSUERS, GENERALLY SMALLER CAPITALIZATION ISSUERS, WHERE DISCLOSURE MAY BE DISADVANTAGEOUS TO THE FUND'S ACCUMULATION OR DISPOSITION PROGRAM. ** RATE REPRESENTS ANNUALIZED YIELD AT DATE OF PURCHASE. *** AGGREGATE COST FOR FEDERAL TAX PURPOSES IS $4,318,213,005. + AMOUNT REPRESENTS LESS THAN 0.1% OF THE NET ASSETS. ++ NON-INCOME PRODUCING SECURITY. +++ AT MARCH 31, 2008, LIQUID ASSETS TOTALING $135,121,390 HAVE BEEN DESIGNATED AS COLLATERAL FOR OPEN FORWARD CONTRACTS. ABBREVIATIONS: ADR -- AMERICAN DEPOSITORY RECEIPT CVA -- CERTIFICAATEN VAN AANDELEN (SHARE CERTIFICATES) SEE NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- II-10 [MAP] TWEEDY, BROWNE GLOBAL VALUE FUND -------------------------------------------------------------------------------- SECTOR DIVERSIFICATION (UNAUDITED) March 31, 2008
PERCENTAGE OF MARKET VALUE SECTOR DIVERSIFICATION NET ASSETS (NOTE 2) ---------------------- ------------- --------------- COMMON STOCKS: Media ................................................. 13.8% $ 918,556,477 Beverage .............................................. 12.8 852,003,166 Capital Goods ......................................... 11.8 788,618,428 Banks ................................................. 10.9 724,331,708 Food .................................................. 10.1 676,226,151 Insurance ............................................. 7.3 484,331,006 Materials ............................................. 4.9 324,442,891 Pharmaceuticals, Biotechnology & Life Sciences ........ 4.7 312,849,329 Diversified Financials ................................ 4.1 273,275,206 Consumer Durables & Apparel ........................... 3.8 250,289,450 Technology Hardware & Equipment ....................... 2.8 187,170,120 Automobiles & Components .............................. 1.9 126,048,281 Telecommunication Services ............................ 1.8 120,605,648 Retailing ............................................. 1.3 85,745,258 Commercial Services & Supplies ........................ 1.2 77,629,589 Transportation ........................................ 0.7 47,139,451 Health Care Equipment & Services ...................... 0.7 44,045,075 Utilities ............................................. 0.1 6,586,820 Household & Personal Products ......................... 0.0+ 2,876,407 Real Estate ........................................... 0.0+ 1,992,303 Consumer Services ..................................... 0.0+ 1,688,613 Tobacco ............................................... 0.0+ 1,263,288 Semiconductors & Semiconductor Equipment .............. 0.0+ 267,057 ---------- --------------- TOTAL COMMON STOCKS ................................... 94.7 6,307,981,722 ---------- --------------- PREFERRED STOCKS ...................................... 0.4 29,928,908 REGISTERED INVESTMENT COMPANY ......................... 4.0 266,501,595 U.S. TREASURY BILLS ................................... 5.2 348,404,628 REPURCHASE AGREEMENTS ................................. 0.8 53,130,000 UNREALIZED DEPRECIATION ON FORWARD CONTRACTS (NET) .... (5.7) (378,434,683) OTHER ASSETS AND LIABILITIES (NET) .................... 0.6 36,358,325 ---------- --------------- NET ASSETS ............................................ 100.0% $ 6,663,870,495 ========== ===============
---------- + AMOUNT REPRESENTS LESS THAN 0.1% OF NET ASSETS -------------------------------------------------------------------------------- PORTFOLIO COMPOSITION (UNAUDITED) March 31, 2008 [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Belgium 3% Canada 1% Finland 8% France 7% Germany 4% Hong Kong 2% Ireland 1% Italy 5% Japan 6% Mexico 4% Netherlands 14% Norway 1% Singapore 2% South Korea 5% Switzerland 15% United Kingdom 12% United States 5% Cash Equivalents and Other Assets and Liabilities (Net)++ 6% Croatia 0%+ Czech Republic 0%+ Sweden 0%+ Miscellaneous 0%+ + AMOUNT REPRESENTS LESS THAN 1% OF NET ASSETS ++ INCLUDES UNREALIZED DEPRECIATION ON FORWARD CONTRACTS (NET) SEE NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- II-11 [MAP] TWEEDY, BROWNE GLOBAL VALUE FUND -------------------------------------------------------------------------------- SCHEDULE OF FORWARD EXCHANGE CONTRACTS March 31, 2008
CONTRACT MARKET VALUE CONTRACTS VALUE DATE (NOTE 2) -------------- ----------- ---------------- FORWARD EXCHANGE CONTRACTS TO BUY 70,000,000 Danish Krone ........................ 5/14/08 $ 14,846,525 20,000,000 European Union Euro ................. 4/17/08 31,672,857 47,000,000 European Union Euro ................. 4/23/08 74,416,013 100,000,000 European Union Euro ................. 5/5/08 158,251,635 30,000,000 European Union Euro ................. 5/14/08 47,452,512 7,000,000 Great Britain Pound Sterling ........ 4/23/08 13,889,465 12,000,000 Great Britain Pound Sterling ........ 5/14/08 23,769,766 5,000,000 Great Britain Pound Sterling ........ 5/20/08 9,898,951 30,000,000 Great Britain Pound Sterling ........ 7/7/08 59,158,266 170,000,000 Hong Kong Dollar .................... 5/14/08 21,872,474 130,000,000 Hong Kong Dollar .................... 5/23/08 16,729,432 210,000,000 Hong Kong Dollar .................... 7/29/08 27,056,566 165,000,000 Hong Kong Dollar .................... 8/19/08 21,265,699 195,000,000 Hong Kong Dollar .................... 9/2/08 25,137,682 2,000,000,000 Japanese Yen ........................ 4/17/08 20,115,422 3,550,000,000 Japanese Yen ........................ 5/16/08 35,765,634 5,600,000,000 Japanese Yen ........................ 5/23/08 56,440,349 100,000,000 Norwegian Krone ..................... 5/16/08 19,597,845 75,000,000 Norwegian Krone ..................... 6/11/08 14,661,882 16,500,000 Singapore Dollar .................... 4/23/08 11,985,734 15,000,000 Singapore Dollar .................... 8/19/08 10,934,534 60,000,000 Singapore Dollar .................... 9/16/08 43,764,458 24,000,000 Swiss Franc ......................... 4/17/08 24,268,546 ---------------- TOTAL (Contract Amount $777,083,021) ................. $ 782,952,247 ================ FORWARD EXCHANGE CONTRACTS TO SELL 4,000,000 Canadian Dollar ..................... 4/23/08 $ (3,896,611) 7,000,000 Canadian Dollar ..................... 5/5/08 (6,817,340) 7,000,000 Canadian Dollar ..................... 5/23/08 (6,814,628) 9,500,000 Canadian Dollar ..................... 6/3/08 (9,246,300) 13,000,000 Canadian Dollar ..................... 11/18/08 (12,611,960) 17,000,000 Canadian Dollar ..................... 12/19/08 (16,482,005) 17,000,000 Canadian Dollar ..................... 3/9/09 (16,454,588) 34,000,000 Danish Krone ........................ 4/17/08 (7,220,067) 70,000,000 Danish Krone ........................ 5/14/08 (14,846,525) 48,000,000 Danish Krone ........................ 5/16/08 (10,179,354) 83,000,000 Danish Krone ........................ 5/23/08 (17,595,021) 20,000,000 European Union Euro ................. 4/17/08 (31,672,857) 47,000,000 European Union Euro ................. 4/23/08 (74,416,012) 100,000,000 European Union Euro ................. 5/5/08 (158,251,636) 50,000,000 European Union Euro ................. 5/14/08 (79,087,520) 45,000,000 European Union Euro ................. 5/16/08 (71,171,113) 30,000,000 European Union Euro ................. 5/20/08 (47,437,205) 82,000,000 European Union Euro ................. 5/23/08 (129,640,784) 100,000,000 European Union Euro ................. 7/7/08 (157,717,661) 100,000,000 European Union Euro ................. 7/15/08 (157,644,464) 100,000,000 European Union Euro ................. 7/22/08 (157,580,472) 30,000,000 European Union Euro ................. 8/7/08 (47,230,320) 115,000,000 European Union Euro ................. 9/2/08 (180,777,106) 145,000,000 European Union Euro ................. 9/15/08 (227,764,599) 100,000,000 European Union Euro ................. 10/1/08 (156,939,011) 60,000,000 European Union Euro ................. 10/7/08 (94,135,662) 100,000,000 European Union Euro ................. 12/19/08 (156,332,343) 75,000,000 European Union Euro ................. 1/12/09 (117,111,103) 100,000,000 European Union Euro ................. 2/2/09 (155,987,016) 40,000,000 European Union Euro ................. 3/3/09 (62,306,024) 7,000,000 Great Britain Pound Sterling ........ 4/23/08 (13,889,465) 12,000,000 Great Britain Pound Sterling ........ 5/14/08 (23,769,766) 5,000,000 Great Britain Pound Sterling ........ 5/20/08 (9,898,951) 30,000,000 Great Britain Pound Sterling ........ 7/7/08 (59,158,266) 16,000,000 Great Britain Pound Sterling ........ 7/29/08 (31,492,995) 22,000,000 Great Britain Pound Sterling ........ 9/15/08 (43,128,510) 20,000,000 Great Britain Pound Sterling ........ 10/1/08 (39,156,710) 35,000,000 Great Britain Pound Sterling ........ 10/14/08 (68,459,632) 20,000,000 Great Britain Pound Sterling ........ 10/20/08 (39,102,750) 4,500,000 Great Britain Pound Sterling ........ 10/28/08 (8,793,007) 52,000,000 Great Britain Pound Sterling ........ 12/19/08 (101,224,110) 10,000,000 Great Britain Pound Sterling ........ 1/12/09 (19,432,078) 15,000,000 Great Britain Pound Sterling ........ 2/2/09 (29,103,356) CONTRACT MARKET VALUE CONTRACTS VALUE DATE (NOTE 2) -------------- ----------- ---------------- 14,000,000 Great Britain Pound Sterling ........ 3/3/09 $ (27,105,439) 170,000,000 Hong Kong Dollar .................... 5/14/08 (21,872,474) 130,000,000 Hong Kong Dollar .................... 5/23/08 (16,729,432) 210,000,000 Hong Kong Dollar .................... 7/29/08 (27,056,566) 165,000,000 Hong Kong Dollar .................... 8/19/08 (21,265,699) 195,000,000 Hong Kong Dollar .................... 9/2/08 (25,137,682) 55,000,000 Hong Kong Dollar .................... 10/2/08 (7,093,390) 150,000,000 Hong Kong Dollar .................... 2/24/09 (19,385,683) 2,000,000,000 Japanese Yen ........................ 4/17/08 (20,115,423) 3,550,000,000 Japanese Yen ........................ 5/16/08 (35,765,634) 5,600,000,000 Japanese Yen ........................ 5/23/08 (56,440,350) 4,000,000,000 Japanese Yen ........................ 6/16/08 (40,362,534) 3,000,000,000 Japanese Yen ........................ 8/19/08 (30,351,017) 2,500,000,000 Japanese Yen ........................ 9/2/08 (25,306,343) 900,000,000 Japanese Yen ........................ 9/16/08 (9,115,268) 2,300,000,000 Japanese Yen ........................ 10/20/08 (23,324,521) 1,500,000,000 Japanese Yen ........................ 2/2/09 (15,271,268) 10,542,970,000 Japanese Yen ........................ 2/19/09 (107,404,506) 2,000,000,000 Japanese Yen ........................ 3/3/09 (20,383,757) 264,000,000 Mexican Peso ........................ 4/4/08 (24,736,921) 170,000,000 Mexican Peso ........................ 4/17/08 (15,901,444) 295,000,000 Mexican Peso ........................ 5/16/08 (27,489,288) 165,000,000 Mexican Peso ........................ 5/20/08 (15,367,470) 145,000,000 Mexican Peso ........................ 9/2/08 (13,327,988) 245,000,000 Mexican Peso ........................ 10/23/08 (22,373,292) 225,000,000 Mexican Peso ........................ 12/19/08 (20,403,092) 140,000,000 Mexican Peso ........................ 1/12/09 (12,657,953) 300,000,000 Mexican Peso ........................ 1/20/09 (27,097,642) 260,000,000 Mexican Peso ........................ 2/3/09 (23,444,475) 315,000,000 Mexican Peso ........................ 3/3/09 (28,307,099) 100,000,000 Norwegian Krone ..................... 5/16/08 (19,597,845) 115,000,000 Norwegian Krone ..................... 6/11/08 (22,481,553) 145,000,000 Norwegian Krone ..................... 9/16/08 (28,065,837) 110,000,000 Norwegian Krone ..................... 10/7/08 (21,246,612) 80,000,000 Norwegian Krone ..................... 10/28/08 (15,420,926) 16,500,000 Singapore Dollar .................... 4/23/08 (11,985,734) 15,000,000 Singapore Dollar .................... 8/19/08 (10,934,534) 65,000,000 Singapore Dollar .................... 9/16/08 (47,411,496) 15,000,000 Singapore Dollar .................... 10/2/08 (10,944,775) 30,000,000 Singapore Dollar .................... 10/14/08 (21,894,649) 44,000,000 Singapore Dollar .................... 11/18/08 (32,133,986) 10,151,200,000 South Korean Won .................... 4/23/08 (10,255,671) 30,000,000,000 South Korean Won .................... 5/16/08 (30,315,381) 18,000,000,000 South Korean Won .................... 7/7/08 (18,194,581) 21,000,000,000 South Korean Won .................... 9/25/08 (21,236,552) 20,000,000,000 South Korean Won .................... 10/7/08 (20,226,310) 28,000,000,000 South Korean Won .................... 10/14/08 (28,317,613) 53,000,000,000 South Korean Won .................... 10/23/08 (53,603,094) 73,000,000,000 South Korean Won .................... 12/19/08 (73,847,232) 15,000,000,000 South Korean Won .................... 2/2/09 (15,176,776) 33,000,000,000 South Korean Won .................... 3/3/09 (33,392,717) 30,000,000,000 South Korean Won .................... 3/13/09 (30,358,210) 24,000,000 Swiss Franc ......................... 4/17/08 (24,268,546) 24,000,000 Swiss Franc ......................... 4/23/08 (24,269,547) 41,000,000 Swiss Franc ......................... 7/15/08 (41,440,563) 13,000,000 Swiss Franc ......................... 7/22/08 (13,138,594) 27,000,000 Swiss Franc ......................... 7/29/08 (27,285,571) 90,000,000 Swiss Franc ......................... 8/7/08 (90,942,142) 30,000,000 Swiss Franc ......................... 9/2/08 (30,304,637) 75,000,000 Swiss Franc ......................... 9/16/08 (75,748,846) 65,000,000 Swiss Franc ......................... 9/25/08 (65,641,899) 40,000,000 Swiss Franc ......................... 10/2/08 (40,391,209) 35,000,000 Swiss Franc ......................... 10/7/08 (35,339,828) 30,000,000 Swiss Franc ......................... 10/14/08 (30,288,305) 27,000,000 Swiss Franc ......................... 10/20/08 (27,257,180) 28,000,000 Swiss Franc ......................... 10/28/08 (28,263,532) 25,000,000 Swiss Franc ......................... 11/18/08 (25,227,863) 40,000,000 Swiss Franc ......................... 1/12/09 (40,333,396) 14,000,000 Swiss Franc ......................... 1/20/09 (14,115,095) ---------------- TOTAL (Contract Amount $4,479,565,481) ............... $ (4,863,869,390) ================
SEE NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- II-12 [MAP] TWEEDY, BROWNE VALUE FUND -------------------------------------------------------------------------------- PORTFOLIO HIGHLIGHTS March 31, 2008 HYPOTHETICAL ILLUSTRATION OF $10,000 INVESTED IN TWEEDY, BROWNE VALUE FUND VS. STANDARD & POOR'S 500 STOCK INDEX ("S&P 500") 12/8/93 THROUGH 3/31/08 [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] DATE TWEEDY, BROWNE INDEX: VALUE FUND* S&P 500* 11/8/93 10000.00 10000.00 3/31/94 9710.00 9737.00 9/30/94 10260.00 10256.00 3/31/95 10779.80 11253.00 9/30/95 13064.60 13307.00 3/31/96 14519.90 14865.00 9/30/96 15170.20 16013.00 3/31/97 17096.60 17813.00 9/30/97 21997.90 22489.00 3/31/98 24985.40 26362.00 9/30/98 21992.30 24524.00 3/31/99 24712.10 31229.00 9/30/99 25716.00 31342.00 3/31/00 25017.90 36831.00 9/30/00 28027.60 35506.00 3/31/01 28723.50 28847.00 9/30/01 27728.00 26054.00 3/31/02 30087.00 28917.00 9/30/02 23514.90 20716.00 3/31/03 23720.00 21757.00 9/30/03 27625.00 25770.00 3/31/04 31341.00 29398.00 9/30/04 31096.00 29345.00 3/31/05 32650.00 31365.00 9/30/05 33855.00 32941.00 3/31/06 35071.00 35043.00 9/30/06 36950.00 39189.00 3/31/07 38846.00 38761.00 09/30/07 40814.90 42494.80 03/31/08 36737.00 36791.00 ---------- THE S&P 500 IS AN 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. HYPOTHETICAL ILLUSTRATION OF $10,000 INVESTED IN TWEEDY, BROWNE VALUE FUND VS. MSCI WORLD INDEX (HEDGED TO US $) 11/30/2006 THROUGH 3/31/2008 [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] DATE TWEEDY, BROWNE MCSI WORLD INDEX VALUE FUND* (HEDGED TO US$) 11/30/06 10000.00 10000.00 12/31/06 10147.00 10271.10 1/31/07 10234.30 10462.70 2/28/07 10142.20 10347.40 3/31/07 10280.10 10512.80 4/30/07 10734.50 10892.90 5/31/07 10980.30 11267.80 6/30/07 10809.00 11166.60 7/31/07 10517.20 10829.70 8/31/07 10717.00 10832.90 9/30/07 10800.60 11171.50 10/31/07 10809.20 11418.80 11/30/07 10467.60 10930.60 12/31/07 10207.00 10847.20 1/31/08 9988.57 9931.54 2/29/08 9612.00 9758.77 3/31/08 9724.00 9543.00 ---------- EFFECTIVE DECEMBER 11, 2006, THE TWEEDY, BROWNE VALUE FUND RECEIVED PERMISSION FROM THE FUND'S BOARD OF DIRECTORS TO ELIMINATE THE 20% RESTRICTION ON NON-US INVESTMENTS. IT IS THE INVESTMENT ADVISOR'S INTENTION TO CONTINUE TO OPERATE THE FUND AS A MOSTLY US PORTFOLIO AND TO THIS END WILL OPERATE UNDER A POLICY OF MAINTAINING A MINIMUM OF 50% OF FUND ASSETS INVESTED IN US SECURITIES. HOWEVER, THE FUND IS NOW MORE GLOBAL IN NATURE THAN IT HAS BEEN IN PREVIOUS YEARS. WITH THE VALUE FUND'S MORE GLOBAL STRUCTURE, AN ADDITIONAL HYPOTHETICAL ILLUSTRATION OF $10,000 INVESTED IN THE FUND AND ANOTHER, MORE RELEVANT INDEX IS PROVIDED. THE ABOVE ILLUSTRATION OF THE GROWTH OF $10,000 IN THE TWEEDY, BROWNE VALUE FUND IS COMPARED TO THE MSCI WORLD INDEX (HEDGED TO US$) WHICH HAS A MEANINGFUL REPRESENTATION IN BOTH US AND NON-US STOCKS. THIS COMPARISON BEGINS ON NOVEMBER 30, 2006, WHICH WAS THE APPROXIMATE POINT IN TIME OF THE MANDATE CHANGE FOR THE VALUE FUND. ------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN* WITHOUT THE FUND ACTUAL WAIVERS** -------- ------ --------- Inception (12/8/93) through 3/31/08 9.52% 9.45% Year Ended 3/31/08 (5.41)% (5.41)% ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- AGGREGATE TOTAL RETURN* YEAR INCEPTION ENDED (12/8/93)- 3/31/08 3/31/08 ------- ---------- The Fund (5.41)% 267.43% S&P 500 (5.08)% 267.91% ------------------------------------------------------------------------------- ---------- NOTE: THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT A GUARANTEE OF FUTURE RESULTS. THE FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE MORE OR LESS THAN ORIGINAL COST. * ASSUMES THE REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS AND IS NET OF FOREIGN WITHHOLDING TAX. ** THE ADVISER WAIVED A PORTION OF ITS FEE FROM DECEMBER 8, 1993 THROUGH MARCH 31, 1999. THE ADMINISTRATOR AND CUSTODIAN WAIVED A PORTION OF THEIR RESEPECTIVE FEE FROM APRIL 1, 1995 THROUGH MAY 15, 1997. SEE NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- II-13 [MAP] TWEEDY, BROWNE VALUE FUND -------------------------------------------------------------------------------- PERSPECTIVE ON ASSESSING INVESTMENT RESULTS March 31, 2008 In accordance with rules and guidelines set out by the United States (US) Securities and Exchange Commission, we have provided a comparison of the historical investment results of Tweedy, Browne Value Fund to the historical investment results of the most appropriate broad-based securities market index, the Standard & Poor's 500 Stock Index (the "S&P 500"). The S&P 500 is an index composed of 500 widely held common stocks listed on the New York Stock Exchange, American Stock Exchange and over-the-counter market. The MSCI World Index (Hedged to US $) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. We include results of the MSCI World Index since November 30, 2006, which was the approximate date of the Value Fund's mandate change from a restriction of 20% non-U.S. investments. However, the historical results of the S&P 500 and the MSCI World Index in large measure represent the investment results of stocks that we do not own. Any portfolio which does not own exactly the same stocks in exactly the same proportions as the index to which the particular portfolio is being compared is not likely to have the same results as the index. The investment behavior of a diversified portfolio of undervalued stocks tends to be correlated to the investment behavior of a broad index; i.e., when the index is up, probably more than one-half of the stocks in the entire universe of public companies that are included in the same index will be up, albeit, in greater or lesser percentages than the index. Similarly, when the index declines, probably more than one-half of the stocks in the entire universe of public companies that are included in the index will be down in greater or lesser percentages than the index. But it is almost a mathematical truth that "different stocks equal different results." We believe that favorable or unfavorable historical investment results in comparison to an index are not necessarily predictive of future comparative investment results. In ARE SHORT-TERM PERFORMANCE AND VALUE INVESTING MUTUALLY EXCLUSIVE?, Eugene Shahan analyzed the investment performance of seven money managers, about whom Warren Buffett wrote in his article, THE SUPER INVESTORS OF GRAHAM AND DODDSVILLE. Over long periods of time, the seven managers significantly outperformed the market as measured by the Dow Jones Industrial Average (the "DJIA") or the S&P 500 by between 7.7% and 16.5% annually. (The goal of most institutional money managers is to outperform the market by 2% to 3%.) However, for periods ranging from 13 years to 28 years, this group of managers underperformed the market between 7.7% and 42% of the years. Six of the seven investment managers underperformed the market between 28% and 42% of the years. In today's environment, they would have lost many of their clients during their periods of underperformance. Longer term, it would have been the wrong decision to fire any of those money managers. In examining the seven long-term investment records, unfavorable investment results as compared to either index did not predict the future favorable comparative investment results which occurred, and favorable investment results in comparison to the DJIA or the S&P 500 were not always followed by future favorable comparative results. Stretches of consecutive annual underperformance ranged from one to six years. Mr. Shahan concluded: UNFORTUNATELY, THERE IS NO WAY TO DISTINGUISH BETWEEN A POOR THREE-YEAR STRETCH FOR A MANAGER WHO WILL DO WELL OVER 15 YEARS, FROM A POOR THREE-YEAR STRETCH FOR A MANAGER WHO WILL CONTINUE TO DO POORLY. NOR IS THERE ANY REASON TO BELIEVE THAT A MANAGER WHO DOES WELL FROM THE OUTSET CANNOT CONTINUE TO DO WELL, AND CONSISTENTLY. SEE NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- II-14 [MAP] TWEEDY, BROWNE VALUE FUND -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS March 31, 2008 MARKET VALUE SHARES (NOTE 2) ----------- -------------- COMMON STOCKS--92.7% FRANCE--2.0% 220,000 Sanofi-Aventis, ADR ............................. $ 8,258,800 -------------- ITALY--1.1% 253,300 Mediaset SPA .................................... 2,352,023 264,000 Mondadori (Arnoldo) Editore SPA ................. 2,238,033 -------------- 4,590,056 -------------- NETHERLANDS--9.7% 573,000 Heineken Holding NV ............................. 28,918,300 323,571 Unilever NV, ADR ................................ 10,914,050 -------------- 39,832,350 -------------- SOUTH KOREA--3.5% 318,400 Korea Exchange Bank ............................. 4,243,833 467,163 SK Telecom Company, Ltd., ADR ................... 10,095,392 -------------- 14,339,225 -------------- SWITZERLAND--9.2% 302,400 Nestle SA, Registered, Sponsored ADR ............ 37,931,846 -------------- UNITED KINGDOM--9.6% 276,000 Diageo PLC, Sponsored ADR ....................... 22,444,320 487,000 Lloyds TSB Group PLC ............................ 4,365,325 376,200 Trinity Mirror PLC .............................. 2,205,728 308,880 Unilever PLC, Sponsored ADR ..................... 10,415,434 -------------- 39,430,807 -------------- UNITED STATES--57.6% 406,003 American Express Company ........................ 17,750,451 329,361 American International Group, Inc. .............. 14,244,863 63,462 American National Insurance Company ............. 6,771,395 15,200 Anheuser-Busch Companies, Inc. .................. 721,240 213,245 Bank of America Corporation ..................... 8,084,118 55,219 Burlington Northern Santa Fe Corporation ........ 5,092,296 858,590 Comcast Corporation, Special Class A ............ 16,287,452 164,671 Con-Way, Inc. ................................... 8,147,921 10,000 ConocoPhillips .................................. 762,100 344,736 Federated Investors Inc., Class B ............... 13,499,862 72,560 FinishMaster Inc. ............................... 1,814,000 608,850 Home Depot, Inc. ................................ 17,029,535 69,124 Johnson & Johnson ............................... 4,484,074 357,000 Leucadia National Corporation ................... 16,143,540 56,652 National Western Life Insurance Company, Class A ............................. 12,281,587 98,000 Norfolk Southern Corporation .................... 5,323,360 119,906 PNC Financial Services Group Inc. ............... 7,862,236 55,225 Ramco-Gershenson Properties Trust, REIT ......... 1,165,800 185,088 Rayonier Inc., REIT ............................. 8,040,223 228,376 Torchmark Corporation ........................... 13,727,681 229,032 Transatlantic Holdings Inc. ..................... 15,196,273 MARKET VALUE SHARES (NOTE 2) ----------- -------------- COMMON STOCKS UNITED STATES--(CONTINUED) 259,154 UniFirst Corporation ............................ $ 9,612,022 276,425 Wal-Mart Stores, Inc. ........................... 14,562,069 620,600 Wells Fargo & Company ........................... 18,059,460 -------------- 236,663,558 -------------- TOTAL COMMON STOCKS (COST $216,242,190) ............................. 381,046,642 -------------- REGISTERED INVESTMENT COMPANY--4.1% 16,651,206 Dreyfus Government Prime Cash Management .............................. 16,651,206 -------------- TOTAL REGISTERED INVESTMENT COMPANY (COST $16,651,206) .............................. 16,651,206 -------------- FACE VALUE ---------- U.S. TREASURY BILLS--4.0% $14,000,000 3.205% * due 5/8/08 + ........................... 13,978,823 2,500,000 1.535% * due 8/28/08 + .......................... 2,484,170 -------------- TOTAL U.S. TREASURY BILLS (COST $16,429,366) .............................. 16,462,993 -------------- REPURCHASE AGREEMENT--0.3% (COST $1,383,000) 1,383,000 Agreement with UBS Warburg LLC, 1.44% dated 3/31/08, to be repurchased at $1,383,055 on 4/1/08, collateralized by $1,383,000 U.S. Treasury Note, 5.250% due 2/15/29 (market value $1,411,223) ....................... 1,383,000 -------------- TOTAL INVESTMENTS (COST $250,705,762**) ............................ 101.1% 415,543,841 UNREALIZED DEPRECIATION ON FORWARD CONTRACTS (NET) .......................... (1.1) (4,404,365) OTHER ASSETS AND LIABILITIES (NET) .................. 0.0++ 98,014 ----- -------------- NET ASSETS .......................................... 100.0% $ 411,237,490 ===== ============== ---------- * RATE REPRESENTS ANNUALIZED YIELD AT DATE OF PURCHASE. ** AGGREGATE COST FOR FEDERAL TAX PURPOSES IS $250,705,762. + AT MARCH 31, 2008, LIQUID ASSETS TOTALLING $3,981,901 HAVE BEEN DESIGNATED AS COLLATERAL FOR OPEN FORWARD CONTRACTS. ++ AMOUNT REPRESENTS LESS THAN 0.1% OF NET ASSETS. ABBREVIATIONS: ADR -- AMERICAN DEPOSITORY RECEIPT REIT -- REAL ESTATE INVESTMENT TRUST SEE NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- II-15 [MAP] TWEEDY, BROWNE VALUE FUND -------------------------------------------------------------------------------- SECTOR DIVERSIFICATION (UNAUDITED) March 31, 2008 PERCENTAGE OF MARKET VALUE SECTOR DIVERSIFICATION NET ASSETS (NOTE 2) ---------------------- ------------- -------------- COMMON STOCKS: Insurance ....................................... 15.1% $ 62,221,799 Food ............................................ 14.5 59,261,330 Diversified Financials .......................... 13.6 55,477,971 Beverage ........................................ 12.7 52,083,860 Banks ........................................... 8.4 34,530,854 Media ........................................... 5.6 23,083,236 Transportation .................................. 4.5 18,563,577 Retailing ....................................... 4.1 17,029,535 Food & Staples Retailing ........................ 3.5 14,562,069 Pharmaceuticals, Biotechnology & Life Sciences .. 3.1 12,742,874 Telecommunication Services ...................... 2.5 10,095,392 Consumer Durables & Apparel ..................... 2.3 9,612,022 Real Estate ..................................... 2.2 9,206,023 Automobiles & Components ........................ 0.4 1,814,000 Energy .......................................... 0.2 762,100 ------------- ------------- TOTAL COMMON STOCKS ............................. 92.7 381,046,642 ------------- ------------- REGISTERED INVESTMENT COMPANY ................... 4.1 16,651,206 U.S. TREASURY BILLS ............................. 4.0 16,462,993 REPURCHASE AGREEMENT ............................ 0.3 1,383,000 UNREALIZED DEPRECIATION ON FORWARD CONTRACTS (NET) ......................................... (1.1) (4,404,365) OTHER ASSETS AND LIABILITIES (NET) .............. 0.0+ 98,014 ------------- ------------- NET ASSETS ...................................... 100.0% $ 411,237,490 ============= ============= ---------- + AMOUNT REPRESENTS LESS THAN 0.1% OF NET ASSETS -------------------------------------------------------------------------------- PORTFOLIO COMPOSITION (UNAUDITED) March 31, 2008 [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] France 2% Italy 1% Netherlands 10% South Korea 3% Switzerland 9% United Kingdom 10% United States 58% Cash Equivalents and Other Assets and Liabilities (Net)+ 7% + INCLUDES UNREALIZED DEPRECIATION ON FORWARD CONTRACTS (NET) SEE NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- II-16 [MAP] TWEEDY, BROWNE VALUE FUND -------------------------------------------------------------------------------- SCHEDULE OF FORWARD EXCHANGE CONTRACTS March 31, 2008
CONTRACT MARKET VALUE CONTRACTS VALUE DATE (NOTE 2) -------------- ---------- ------------- FORWARD EXCHANGE CONTRACTS TO BUY 500,000 Great Britain Pound Sterling ................................ 4/4/08 $ 993,472 4,500,000 Great Britain Pound Sterling ................................ 4/23/08 8,928,941 ------------ TOTAL (Contract Amount $9,940,980) ........................................... $ 9,922,413 ============ FORWARD EXCHANGE CONTRACTS TO SELL 1,700,000 European Union Euro ......................................... 5/14/08 $ (2,688,976) 5,250,000 European Union Euro ......................................... 7/14/08 (8,276,814) 8,000,000 European Union Euro ......................................... 7/22/08 (12,606,438) 4,000,000 European Union Euro ......................................... 11/18/08 (6,262,794) 1,600,000 European Union Euro ......................................... 12/19/08 (2,501,317) 500,000 Great Britain Pound Sterling ................................ 4/4/08 (993,472) 4,500,000 Great Britain Pound Sterling ................................ 4/23/08 (8,928,942) 1,800,000 Great Britain Pound Sterling ................................ 5/14/08 (3,565,465) 4,000,000 Great Britain Pound Sterling ................................ 7/22/08 (7,877,869) 4,600,000 Great Britain Pound Sterling ................................ 11/18/08 (8,974,690) 1,700,000,000 South Korean Won ............................................ 5/14/08 (1,717,860) 3,200,000,000 South Korean Won ............................................ 3/3/09 (3,238,082) 9,000,000,000 South Korean Won ............................................ 3/13/09 (9,107,463) 1,500,000 Swiss Franc ................................................. 4/16/08 (1,516,774) 4,000,000 Swiss Franc ................................................. 5/14/08 (4,044,934) 2,500,000 Swiss Franc ................................................. 7/22/08 (2,526,653) 2,500,000 Swiss Franc ................................................. 9/2/08 (2,525,386) 4,000,000 Swiss Franc ................................................. 10/7/08 (4,038,837) ------------ TOTAL (Contract Amount $87,006,968) .......................................... $(91,392,766) ============
SEE NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- II-17 [MAP] TWEEDY, BROWNE WORLDWIDE HIGH DIVIDEND YIELD VALUE FUND -------------------------------------------------------------------------------- PORTFOLIO HIGHLIGHTS March 31, 2008 HYPOTHETICAL ILLUSTRATION OF $10,000 INVESTED IN TWEEDY, BROWNE WORLDWIDE HIGH DIVIDEND YIELD VALUE FUND VS. MORGAN STANLEY CAPITAL INTERNATIONAL ("MSCI") WORLD INDEX (IN US DOLLARS) 9/5/07 THROUGH 3/31/08 [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] DATE TB WORLDWIDE DIVIDEND HIGH DIVIDEND YIELD VALUE FUND INDEX: MSCI WORLD INDEX* 09/05/07 10000.00 10000.00 09/30/07 10120.00 10475.50 03/31/08 9731.00 9296.00 ---------- THE MSCI WORLD INDEX IS A FREE FLOAT-ADJUSTED MARKET CAPITALIZATION WEIGHED INDEX THAT IS DESIGNED TO MEASURE EQUITY MARKET PERFORMANCE OF DEVELOPED MARKETS. ------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN* WITHOUT THE FUND ACTUAL WAIVERS** -------- ------- --------- Inception (9/5/07) through 3/31/08 (2.69)% (2.96)% Year Ended 3/31/08 (2.69)% (2.96)% ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- AGGREGATE TOTAL RETURN* YEAR INCEPTION ENDED (9/5/07)- 3/31/08 3/31/08 ------- --------- The Fund (2.69)% (2.69)% MSCI World (in US Dollars) (6.72)% (6.72)% ------------------------------------------------------------------------------- ---------- NOTE: THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT A GUARANTEE OF FUTURE RESULTS. THE FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE MORE OR LESS THAN ORIGINAL COST. * ASSUMES THE REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS AND IS NET OF FOREIGN WITHHOLDING TAX. ** THE ADVISER HAS WAIVED A PORTION OF ITS FEES SINCE INCEPTION, SEPTEMBER 5, 2007. SEE NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- II-18 [MAP] TWEEDY, BROWNE WORLDWIDE HIGH DIVIDEND YIELD VALUE FUND -------------------------------------------------------------------------------- PERSPECTIVE ON ASSESSING INVESTMENT RESULTS March 31, 2008 In accordance with rules and guidelines set out by the United States (US) Securities and Exchange Commission, we have provided a comparison of the historical investment results of Tweedy, Browne Worldwide High Dividend Yield Value Fund to the historical investment results of the most appropriate broad-based securities indices, the Morgan Stanley Capital International (MSCI) World Index (in US dollars). However, the historical results of the MSCI World Index (in US dollars) in large measure represent the investment results of stocks that we do not own. Any portfolio which does not own exactly the same stocks in exactly the same proportions as the index to which the particular portfolio is being compared is not likely to have the same results as the index. The investment behavior of a diversified portfolio of undervalued stocks tends to be correlated to the investment behavior of a broad index; i.e., when the index is up, probably more than one-half of the stocks in the entire universe of public companies in all the countries that are included in the same index will be up, albeit, in greater or lesser percentages than the index. Similarly, when the index declines, probably more than one-half of the stocks in the entire universe of public companies in all the countries that are included in the index will be down in greater or lesser percentages than the index. But it is almost a mathematical truth that "different stocks equal different results." We believe that favorable or unfavorable historical investment results in comparison to an index are not necessarily predictive of future comparative investment results. In ARE SHORT-TERM PERFORMANCE AND VALUE INVESTING MUTUALLY EXCLUSIVE?, Eugene Shahan analyzed the investment performance of seven money managers, about whom Warren Buffett wrote in his article, THE SUPER- INVESTORS OF GRAHAM AND DODDSVILLE. Over long periods of time, the seven managers significantly outperformed the market as measured by the Dow Jones Industrial Average (the "DJIA") or the Standard & Poor's 500 Stock Index (the "S&P 500") by between 7.7% and 16.5% annually. (The goal of most institutional money managers is to outperform the market by 2% to 3%.) However, for periods ranging from 13 years to 28 years, this group of managers underperformed the market between 7.7% and 42% of the years. Six of the seven investment managers underperformed the market between 28% and 42% of the years. In today's environment, they would have lost many of their clients during their periods of underperformance. Longer term, it would have been the wrong decision to fire any of those money managers. In examining the seven long-term investment records, unfavorable investment results as compared to either index did not predict the future favorable comparative investment results which occurred, and favorable investment results in comparison to the DJIA or the S&P 500 were not always followed by future favorable comparative results. Stretches of consecutive annual underperformance ranged from one to six years. Mr. Shahan concluded: UNFORTUNATELY, THERE IS NO WAY TO DISTINGUISH BETWEEN A POOR THREE-YEAR STRETCH FOR A MANAGER WHO WILL DO WELL OVER 15 YEARS, FROM A POOR THREE-YEAR STRETCH FOR A MANAGER WHO WILL CONTINUE TO DO POORLY. NOR IS THERE ANY REASON TO BELIEVE THAT A MANAGER WHO DOES WELL FROM THE OUTSET CANNOT CONTINUE TO DO WELL, AND CONSISTENTLY. SEE NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- II-19 [MAP] TWEEDY, BROWNE WORLDWIDE HIGH DIVIDEND YIELD VALUE FUND -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS March 31, 2008
MARKET VALUE SHARES (NOTE 2) -------------- ------------ COMMON STOCKS--83.3% CANADA--3.5% 56,100 IGM Financial, Inc. ......................................... $ 2,470,795 ------------ FRANCE--5.9% 56,000 Sanofi-Aventis, ADR ......................................... 2,102,240 28,025 Total SA .................................................... 2,088,919 ------------ 4,191,159 ------------ GERMANY--4.9% 41,000 Deutsche Post AG ............................................ 1,257,111 11,200 Muenchener Rueckversicherungs- Gesellschaft AG .............. 2,198,507 ------------ 3,455,618 ------------ IRELAND--3.0% 635,700 Independent News & Media PLC ................................ 2,095,194 ------------ ITALY--7.9% 63,440 Eni SPA ..................................................... 2,171,329 228,065 Mediaset SPA ................................................ 2,117,703 152,900 Mondadori (Arnoldo) Editore SPA ............................. 1,296,194 ------------ 5,585,226 ------------ MEXICO--5.8% 453,900 Embotelladoras Arca SA de CV ................................ 1,748,944 523,800 Kimberly-Clark de Mexico SA de CV, Class A .................. 2,320,285 ------------ 4,069,229 ------------ NETHERLANDS--8.1% 19,280 Akzo Nobel NV ............................................... 1,552,567 49,800 ING Groep NV, CVA ........................................... 1,871,771 67,900 Unilever NV, CVA ............................................ 2,288,474 ------------ 5,712,812 ------------ SOUTH KOREA--4.6% 134,100 Korea Exchange Bank ......................................... 1,787,368 65,900 SK Telecom Company, Ltd., ADR ............................... 1,424,099 ------------ 3,211,467 ------------ SPAIN--2.0% 49,000 Telefonica SA ............................................... 1,413,111 ------------ UNITED KINGDOM--15.1% 185,250 BP PLC ...................................................... 1,885,121 94,800 GlaxoSmithKline PLC ......................................... 2,008,522 73,657 HSBC Holdings PLC ........................................... 1,215,075 233,530 Lloyds TSB Group PLC ........................................ 2,093,294 179,495 Pearson PLC ................................................. 2,431,248 809,195 Signet Group PLC ............................................ 993,119 ------------ 10,626,379 ------------ MARKET VALUE SHARES (NOTE 2) -------------- ------------ COMMON STOCKS UNITED STATES--20.1% 16,625 Altria Group, Inc. .......................................... $ 369,075 29,029 Bank of America Corporation ................................. 1,100,489 82,915 General Electric Company .................................... 3,068,684 49,660 Genuine Parts Company ....................................... 1,997,325 23,000 Home Depot, Inc. ............................................ 643,310 59,010 Masco Corporation ........................................... 1,170,168 16,625 Philip Morris International, Inc. + ......................... 840,893 32,390 Reynolds American Inc. ...................................... 1,911,982 57,020 US Bancorp .................................................. 1,845,167 22,245 UST Inc. .................................................... 1,212,798 ------------ 14,159,891 ------------ MISCELLANEOUS--2.4% Undisclosed Security * ...................................... 1,659,920 ------------ TOTAL COMMON STOCKS (COST $61,294,379) .......................................... 58,650,801 ------------ REGISTERED INVESTMENT COMPANY--3.7% 2,600,000 Dreyfus Government Prime Cash Management .................... 2,600,000 ------------ TOTAL REGISTERED INVESTMENT COMPANY (COST $2,600,000) ........................................... 2,600,000 ------------ FACE VALUE -------------- U.S. TREASURY BILL--7.1% $ 5,000,000 0.815% ** due 4/17/08 ....................................... 4,999,333 ------------ TOTAL U.S. TREASURY BILL (COST $4,999,333) ........................................... 4,999,333 ------------ TOTAL INVESTMENTS (COST $68,893,712***) ..................................................... 94.1% 66,250,134 OTHER ASSETS AND LIABILITIES (NET) ........................................... 5.9 4,136,194 ----- ------------ NET ASSETS ................................................................... 100.0% $ 70,386,328 ===== ============
---------- * "UNDISCLOSED SECURITY" REPRESENTS AN ISSUER, GENERALLY A SMALLER CAPITALIZATION ISSUER, WHERE DISCLOSURE MAY BE DISADVANTAGEOUS TO THE FUND'S ACCUMULATION OR DISPOSITION PROGRAM. ** RATE REPRESENTS ANNUALIZED YIELD AT DATE OF PURCHASE. *** AGGREGATE COST FOR FEDERAL TAX PURPOSES IS $68,893,712. + NON-INCOME PRODUCING SECURITY. ABBREVIATION: ADR -- AMERICAN DEPOSITORY RECEIPT CVA -- CERTIFICAATEN VAN AANDELEN (SHARE CERTIFICATES) SEE NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- II-20 [MAP] TWEEDY, BROWNE WORLDWIDE HIGH DIVIDEND YIELD VALUE FUND -------------------------------------------------------------------------------- SECTOR DIVERSIFICATION (UNAUDITED) March 31, 2008 PERCENTAGE OF MARKET VALUE SECTOR DIVERSIFICATION NET ASSETS (NOTE 2) ---------------------- ------------- ------------ COMMON STOCKS: Media ............................................ 11.3% $ 7,940,339 Banks ............................................ 9.9 6,940,904 Energy ........................................... 8.7 6,145,369 Diversified Financials ........................... 7.7 5,443,055 Tobacco .......................................... 6.2 4,334,748 Capital Goods .................................... 5.9 4,238,852 Pharmaceuticals, Biotechnology & Life Sciences ... 5.8 4,110,762 Insurance ........................................ 5.5 3,858,427 Retailing ........................................ 5.2 3,633,754 Telecommunication Services. ...................... 4.0 2,837,210 Household & Personal Products .................... 3.3 2,320,285 Food ............................................. 3.3 2,288,474 Beverage ......................................... 2.5 1,748,944 Materials ........................................ 2.2 1,552,567 Transportation ................................... 1.8 1,257,111 ------------- ------------ TOTAL COMMON STOCKS .............................. 83.3 58,650,801 ------------- ------------ REGISTERED INVESTMENT COMPANY .................... 3.7 2,600,000 U.S. TREASURY BILL ............................... 7.1 4,999,333 OTHER ASSETS AND LIABILITIES (NET) ............... 5.9 4,136,194 ------------- ------------ NET ASSETS ....................................... 100.0% $ 70,386,328 ============= ============ -------------------------------------------------------------------------------- PORTFOLIO COMPOSITION (UNAUDITED) March 31, 2008 [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Canada 3% France 6% Germany 5% Ireland 3% Italy 8% Mexico 6% Netherlands 8% South Korea 5% Spain 2% Miscellaneous 2% United Kingdom 15% United States 20% Cash Equivalents and Other Assets and Liabilites (Net) 17% SEE NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- II-21 TWEEDY, BROWNE FUND INC. -------------------------------------------------------------------------------- STATEMENTS OF ASSETS AND LIABILITIES March 31, 2008
WORLDWIDE HIGH GLOBAL VALUE VALUE DIVIDEND YIELD FUND FUND VALUE FUND (a) --------------- ------------- -------------- ASSETS Investments, at cost ...................................................... $ 4,320,043,580 $ 250,705,762 $ 68,893,712 =============== ============= ============== Investments, at value (Note 2) Securities ............................................................. $ 6,952,816,853 $ 414,160,841 $ 66,250,134 Repurchase Agreements .................................................. 53,130,000 1,383,000 -- --------------- ------------- -------------- Total Investments ......................................................... 7,005,946,853 415,543,841 66,250,134 Cash ...................................................................... 3,913 1 3,759,574 Foreign currency (b) ...................................................... 17,362,996 14 2,198 Dividends and interest receivable ......................................... 21,799,424 657,399 489,311 Receivable for investment securities sold ................................. 9,070,551 -- -- Recoverable foreign withholding taxes ..................................... 5,195,941 -- 6,997 Receivable for Fund shares sold ........................................... 4,141,543 68,985 249,529 Unrealized appreciation of forward exchange contracts (Note 2) ............ 43,848,470 1,450,385 -- Receivable for Fund redemption fee proceeds ............................... -- -- 2,383 Prepaid expense ........................................................... 51,920 3,169 -- --------------- ------------- -------------- TOTAL ASSETS ........................................................... 7,107,421,611 417,723,794 70,760,126 --------------- ------------- -------------- LIABILITIES Unrealized depreciation of forward exchange contracts (Note 2) ............ $ 422,283,153 $ 5,854,750 $ -- Payable for Fund shares redeemed .......................................... 15,449,525 260,268 1,381 Investment advisory fee payable (Note 3) .................................. 4,442,597 276,593 38,481 Transfer agent fees payable (Note 3) ...................................... 355,586 35,684 2,119 Custodian fees payable (Note 3) ........................................... 388,074 3,370 921 Payable for investment securities purchased ............................... -- -- 324,866 Administration and accounting fees payable (Note 3) ....................... 130,215 8,167 1,470 Accrued expenses and other payables ....................................... 501,966 47,472 4,560 --------------- ------------- -------------- TOTAL LIABILITIES ...................................................... 443,551,116 6,486,304 373,798 --------------- ------------- -------------- NET ASSETS ................................................................... $ 6,663,870,495 $ 411,237,490 $ 70,386,328 =============== ============= ============== NET ASSETS CONSIST OF Undistributed net investment income ....................................... $ 14,412,014 $ 465,314 $ 499,106 Accumulated net realized gain (loss) on securities, forward exchange contracts and foreign currencies ....................................... 461,484,646 19,752,712 (230,572) Net unrealized appreciation of securities, forward exchange contracts, foreign currencies and net other assets ................................ 2,308,019,531 160,433,476 (2,647,312) Par value ................................................................. 24,490 1,967 726 Paid-in capital in excess of par value .................................... 3,879,929,814 230,584,021 72,764,380 --------------- ------------- -------------- TOTAL NET ASSETS ....................................................... $ 6,663,870,495 $ 411,237,490 $ 70,386,328 =============== ============= ============== CAPITAL STOCK, (common stock outstanding) .................................... 244,902,610 19,672,593 7,258,535 =============== ============= ============== NET ASSET VALUE, offering and redemption price per share ..................... $ 27.21 $ 20.90 $ 9.70 =============== ============= ==============
---------- (a) The Tweedy, Browne Worldwide High Dividend Yield Value Fund commenced operations on September 5, 2007. (b) Foreign currency held at cost for the Global Value Fund, Value Fund and Worldwide High Dividend Yield Value Fund were $17,464,289, $10 and $2,106, respectively. SEE NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- II-22 TWEEDY, BROWNE FUND INC. -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS For the Year Ended March 31, 2008
WORLDWIDE HIGH GLOBAL VALUE VALUE DIVIDEND YIELD FUND FUND VALUE FUND (a) --------------- ------------- -------------- INVESTMENT INCOME Dividends ................................................................. $ 205,962,569 $ 8,952,912 $ 875,050 Foreign witholding taxes .................................................. (20,431,133) (406,995) (37,146) Interest .................................................................. 38,597,879 2,156,395 285,142 --------------- ------------- -------------- TOTAL INVESTMENT INCOME ............................................. 224,129,315 10,702,312 1,123,046 --------------- ------------- -------------- EXPENSES Investment advisory fee (Note 3) .......................................... 99,326,048 6,092,860 374,607 Custodian fees (Note 3) ................................................... 4,426,914 42,602 14,820 Transfer agent fees (Note 3) .............................................. 1,925,768 253,443 26,603 Administration and accounting fees (Note 3) ............................... 1,742,253 108,083 7,531 Legal and audit fees ...................................................... 411,130 28,669 2,610 Directors' fees and expenses (Note 3) ..................................... 243,298 49,183 11,378 Organizational expenses ................................................... -- -- 87,363 Other ..................................................................... 893,666 84,915 32,367 --------------- ------------- -------------- Total Expenses before waivers ....................................... 108,969,077 6,659,755 557,279 Less: Investment advisory fees waived and/or expenses reimbursed (Note 3) .................................................... -- -- (146,360) --------------- ------------- -------------- NET EXPENSES ........................................................ 108,969,077 6,659,755 410,919 --------------- ------------- -------------- NET INVESTMENT INCOME ........................................................ 115,160,238 4,042,557 712,127 --------------- ------------- -------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (Notes 2 and 4): Net realized gain (loss) on: Securities ............................................................. 1,192,862,264 50,436,677 (230,572) Forward exchange contracts ............................................. (317,407,032) (5,663,444) -- Foreign currencies and net other assets ................................ 939,203 13,508 4,838 --------------- ------------- -------------- Net realized gain (loss) on investments during the year/period ............ 876,394,435 44,786,741 (225,734) --------------- ------------- -------------- Net unrealized appreciation (depreciation) of: Securities ............................................................. (1,130,498,105) (69,853,870) (2,643,578) Forward exchange contracts ............................................. (287,780,064) (2,361,568) -- Foreign currencies and net other assets ................................ 360,953 (239) (3,734) --------------- ------------- -------------- Net unrealized depreciation of investments during the year/period ......... (1,417,917,216) (72,215,677) (2,647,312) --------------- ------------- -------------- NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS .............................. (541,522,781) (27,428,936) (2,873,046) --------------- ------------- -------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ......................... $ (426,362,543) $ (23,386,379) $ (2,160,919) =============== ============= ==============
---------- (a) The Tweedy, Browne Worldwide High Dividend Yield Value Fund commenced operations on September 5, 2007. SEE NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- II-23 TWEEDY, BROWNE FUND INC. -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS
WORLDWIDE HIGH DIVIDEND YIELD GLOBAL VALUE FUND VALUE FUND VALUE FUND --------------------------------- ----------------------------- -------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED 3/31/2008 3/31/2007 3/31/2008 3/31/2007 3/31/2008(a) --------------- --------------- ------------- ------------- -------------- Net investment income ......................... $ 115,160,238 $ 121,325,157 $ 4,042,557 $ 4,239,259 $ 712,127 Net realized gain (loss) on securities, forward exchange contracts and currency transactions during the year/period ............................ 876,394,435 531,631,518 44,786,741 48,644,928 (225,734) Net unrealized appreciation (depreciation) of securities, forward exchange contracts, foreign currencies and net other assets during the year/period ..................... (1,417,917,216) 539,412,026 (72,215,677) 1,187,224 (2,647,312) --------------- --------------- ------------- ------------- -------------- Net increase (decrease) in net assets resulting from operations .................. (426,362,543) 1,192,368,701 (23,386,379) 54,071,411 (2,160,919) DISTRIBUTIONS: Dividends to shareholders from net investment income ...................... (110,718,203) (113,448,043) (3,498,339) (5,549,495) (197,387) Distributions to shareholders from net realized gain on investments ........... (668,961,240) (92,487,665) (44,343,810) (39,621,758) -- Net increase (decrease) in net assets from Fund share transactions .................... (454,010,757) (723,921,015) (33,060,554) (41,542,642) 72,739,240 Redemption Fees. .............................. 234,553 214,209 -- -- 5,394 --------------- --------------- ------------- ------------- -------------- Net increase (decrease) in net assets ......... (1,659,818,190) 262,726,187 (104,289,082) (32,642,484) 70,386,328 NET ASSETS Beginning of year/period. ..................... 8,323,688,685 8,060,962,498 515,526,572 548,169,056 -- --------------- --------------- ------------- ------------- -------------- End of year/period ............................ $ 6,663,870,495 $ 8,323,688,685 $ 411,237,490 $ 515,526,572 $ 70,386,328 =============== =============== ============= ============= ============== Undistributed Net Investment Income at end of year/period ...................... $ 14,412,014 $ 18,857,934 $ 465,314 $ -- $ 499,106 =============== =============== ============= ============= ==============
---------- (a) The Tweedy, Browne Worldwide High Dividend Yield Value Fund commenced operations on September 5, 2007. SEE NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- II-24 TWEEDY, BROWNE FUND INC. -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS TWEEDY, BROWNE GLOBAL VALUE FUND For a Fund share outstanding throughout each year.
YEAR YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED 3/31/08 3/31/07 3/31/06 3/31/05 3/31/04 ---------- ---------- ---------- ---------- ---------- Net asset value, beginning of year ....................... $ 32.31 $ 28.56 $ 24.08 $ 21.23 $ 14.44 ---------- ---------- ---------- ---------- ---------- INCOME FROM INVESTMENT OPERATIONS: Net investment income .................................... 0.50 0.47 0.34 0.31(a) 0.20 Net realized and unrealized gain (loss) on investments ... (2.24) 4.06 4.51 2.81 6.78 ---------- ---------- ---------- ---------- ---------- Total from investment operations ...................... (1.74) 4.53 4.85 3.12 6.98 ---------- ---------- ---------- ---------- ---------- DISTRIBUTIONS: Dividends from net investment income ..................... (0.48) (0.43) (0.37) (0.27) (0.20) Distributions from net realized gains .................... (2.88) (0.35) -- -- -- ---------- ---------- ---------- ---------- ---------- Total distributions ................................... (3.36) (0.78) (0.37) (0.27) (0.20) ---------- ---------- ---------- ---------- ---------- Redemption fees .......................................... 0.00(b) 0.00(b) 0.00(b) 0.00(b) 0.01 ---------- ---------- ---------- ---------- ---------- Net asset value, end of year ............................. $ 27.21 $ 32.31 $ 28.56 $ 24.08 $ 21.23 ========== ========== ========== ========== ========== Total return (c) ......................................... (6.35)% 16.01% 20.24% 14.75% 48.53% ========== ========== ========== ========== ========== RATIOS/SUPPLEMENTAL DATA: Net assets, end of year (in 000s) ........................ $6,663,870 $8,323,689 $8,060,962 $6,707,322 $5,352,702 Ratio of operating expenses to average net assets ........ 1.37% 1.37% 1.38% 1.39% 1.39% Ratio of net investment income to average net assets ..... 1.45% 1.53% 1.33% 1.41%(a) 1.08% Portfolio turnover rate .................................. 9% 13% 6% 13% 8%
---------- (a) For year ended 3/31/05, investment income per share reflects a special dividend which amounted to $0.13 per share. Excluding the special dividend, the ratio of net investment income to average net assets would have been 0.78% per share. (b) Amount represents less than $0.01 per share. (c) Total return represents aggregate total return for the periods indicated. -------------------------------------------------------------------------------- TWEEDY, BROWNE VALUE FUND For a Fund share outstanding throughout each year.
YEAR YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED 3/31/08 3/31/07 3/31/06 3/31/05 3/31/04 ---------- ---------- ---------- ---------- ---------- Net asset value, beginning of year ....................... $ 24.65 $ 24.27 $ 24.67 $ 24.38 $ 18.53 ---------- ---------- ---------- ---------- ---------- INCOME FROM INVESTMENT OPERATIONS: Net investment income .................................... 0.22 0.21 0.30(a) 0.35(b) 0.27 Net realized and unrealized gain(loss) on investments .... (1.43) 2.38 1.49 0.69 5.68 ---------- ---------- ---------- ---------- ---------- Total from investment operations ...................... (1.21) 2.59 1.79 1.04 5.95 ---------- ---------- ---------- ---------- ---------- DISTRIBUTIONS: Dividends from net investment income ..................... (0.19) (0.27) (0.33) (0.39) (0.10) Distributions from net realized gains .................... (2.35) (1.94) (1.86) (0.36) -- ---------- ---------- ---------- ---------- ---------- Total distributions ................................... (2.54) (2.21) (2.19) (0.75) (0.10) ---------- ---------- ---------- ---------- ---------- Net asset value, end of year ............................. $ 20.90 $ 24.65 $ 24.27 $ 24.67 $ 24.38 ========== ========== ========== ========== ========== Total return (c) ......................................... (5.41)% 10.76% 7.41% 4.18% 32.13% ========== ========== ========== ========== ========== RATIOS/SUPPLEMENTAL DATA: Net assets, end of year (in 000s) ........................ $ 411,237 $ 515,527 $ 548,169 $ 659,077 $ 728,668 Ratio of operating expenses to average net assets ........ 1.37% 1.38% 1.36% 1.37% 1.38% Ratio of net investment income to average net assets ..... 0.83% 0.80% 1.08%(a) 1.30%(b) 1.09% Portfolio turnover rate .................................. 11% 9% 9% 4% 3%
---------- (a) For year ended 3/31/06, investment income per share reflects a special dividend which amounted to $0.05 per share. Excluding the special dividend, the ratio of net investment income to average net assets would have been 0.88% per share. (b) For year ended 3/31/05, investment income per share reflects a special dividend which amounted to $0.22 per share. Excluding the special dividend, the ratio of net investment income to average net assets would have been 0.45% per share. (c) Total return represents aggregate total return for the periods indicated. SEE NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- II-25 TWEEDY, BROWNE FUND INC. -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS TWEEDY, BROWNE WORLDWIDE HIGH DIVIDEND YIELD VALUE FUND For a Fund share outstanding throughout the period. PERIOD ENDED 3/31/08 (a) ----------- Net asset value, beginning of period ......................... $ 10.00 ----------- INCOME FROM INVESTMENT OPERATIONS: Net investment income ........................................ 0.10 Net realized and unrealized gain (loss) on investments ....... (0.37) ----------- Total from investment operations ......................... (0.27) ----------- DISTRIBUTIONS: Dividends from net investment income ......................... (0.03) Distributions from net realized gains ........................ -- ----------- Total distributions ...................................... (0.03) ----------- Redemption fees .............................................. 0.00(b) ----------- Net asset value, end of period ............................... $ 9.70 =========== Total return (c) ............................................. (2.69)% =========== RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (in 000s) .......................... $ 70,386 Ratio of operating expenses to average net assets ............ 1.37%(d) Ratio of operating expenses to average net assets excluding waivers and/or reimbursement of expenses .................. 1.86%(d) Ratio of net investment income to average net assets ......... 2.38%(d) Portfolio turnover rate ...................................... 2% ---------- (a) The Tweedy, Browne Worldwide High Dividend Yield Value Fund commenced operations on September 5, 2007. (b) Amount represents less than $0.01 per share. (c) Total return represents aggregate total return for the period indicated. (d) Annualized. SEE NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- II-26 TWEEDY, BROWNE FUND INC. -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 1. ORGANIZATION Tweedy, Browne Fund Inc. (the "Company") is an open-end management investment company registered with the United States ("U.S.") 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. Tweedy, Browne Global Value Fund ("Global Value Fund"), Tweedy, Browne Value Fund ("Value Fund"), and Tweedy, Browne Worldwide High Dividend Yield Value Fund ("Worldwide High Dividend Yield Value Fund"), (collectively, the "Funds"), are each a diversified series of the Company. The Funds commenced operations as follows: -------------------------------------------------------------------------------- COMMENCEMENT OF FUND OPERATIONS -------------------------------------------------------------------------------- Global Value Fund 06/15/93 -------------------------------------------------------------------------------- Value Fund 12/08/93 -------------------------------------------------------------------------------- Worldwide High Dividend Yield Value Fund 09/05/07 -------------------------------------------------------------------------------- The Global Value Fund seeks long-term capital growth by investing primarily in foreign securities that Tweedy, Browne Company LLC ("Tweedy, Browne" or the "Investment Adviser") believes are undervalued. The Value Fund seeks long-term capital growth by investing primarily in U.S. and foreign securities that Tweedy, Browne believes are undervalued. The Worldwide High Dividend Yield Value Fund seeks long-term capital growth by investing in U.S. and foreign securities that Tweedy, Browne believes to have above-average dividend yields and valuations that are reasonable. 2. SIGNIFICANT ACCOUNTING POLICIES The preparation of financial statements in accordance with accounting principles generally accepted in the United States 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 Funds in the preparation of their financial statements. PORTFOLIO VALUATION Generally, the Funds' investments are valued at market value 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, comparable foreign securities exchange or through any system providing for contemporaneous publication of actual prices (and not subject to restrictions against sale by the Fund on such exchange or system) are valued at the last sale price prior to the close of regular trading on the principal exchange or system for such security or asset or, if applicable, the NASDAQ Official Closing Price ("NOCP"). Portfolio securities and other assets, which are readily marketable but for which there are no reported sales on the valuation date, whether because they are not traded in a system providing for same day publication of sales or because there were no sales reported on such date, are generally valued at the mean between the last asked price and the last bid price prior to the close of regular trading. Securities and other assets for which current market quotations are not readily available and those securities which are generally not readily marketable due to significant legal or contractual restrictions, will be valued at fair value as determined by the Investment Adviser under the direction of the Board of Directors. Securities and other assets for which the most recent market quotations may not be reliable (including because the last sales price does not reflect current market value at the time of valuing the Funds' asset due to developments since such last price) may be valued at fair value if the Investment Adviser concluded that fair valuation will likely result in a more accurate net asset valuation. Debt securities purchased with a remaining maturity of more than 60 days are valued through pricing obtained by pricing services approved by the Funds' Board of Directors. Debt securities purchased 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 Funds may engage in repurchase agreement transactions. Under the terms of a typical repurchase agreement, a Fund acquires 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 Funds' holding period. The value of the collateral held on behalf of the Fund is at all times at least equal 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 Funds' Investment Adviser 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 Funds 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 -------------------------------------------------------------------------------- II-27 TWEEDY, BROWNE FUND INC. -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS transactions and the difference between the amounts of interest and dividends recorded on the books of the Funds 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 Funds may enter into forward exchange contracts for non-trading purposes in order to reduce their exposure to fluctuations in foreign currency exchange on their 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 Funds' 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. Large, nonrecurring dividends recognized by a Fund are presented separately on the Statement of Operations as "special dividends" and the impact of these dividends to net investment income per share is presented in the financial highlights. Interest income is recorded on the accrual basis. Dividend income and interest income may be subject to foreign withholding taxes. The Funds' custodian applies for refunds on behalf of each Fund where available. Tweedy, Browne is reimbursed by the Funds for the cost of settling transactions in U.S. securities for the Funds through its clearing broker. For the year ended March 31, 2008, Global Value Fund, Value Fund and Worldwide High Dividend Yield Fund reimbursed Tweedy, Browne $1,897, $2,109 and $1,258, respectively, for such transaction charges. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income, if any, will be declared and paid annually for the Global Value Fund and Value Fund and semi-annually for the Worldwide High Dividend Yield Value Fund. Distributions from realized capital gains after utilization of capital loss carryforwards, if any, will be declared and paid annually for each of the Funds. 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 dividends and capital gain distributions are determined in accordance with income tax regulations which may differ from accounting principles generally accepted in the United States. 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. The character of distributions paid on a tax basis during December 2007 for fiscal year 2008 is as follows: -------------------------------------------------------------------------------- WORLDWIDE HIGH DISTRIBUTIONS GLOBAL DIVIDEND YIELD PAID FROM: VALUE FUND VALUE FUND VALUE FUND -------------------------------------------------------------------------------- Investment Income $ 110,718,203 $ 3,498,339 $ 197,387 Short-term capital gain -- -- -- -------------------------------------------------------------------------------- Ordinary Income 110,718,203 3,498,339 197,387 -------------------------------------------------------------------------------- Long-term capital gain 668,961,240 44,343,810 -- -------------------------------------------------------------------------------- Total Distributions $ 779,679,443 $ 47,842,149 $ 197,387 ================================================================================ The character of distributions paid on a tax basis during December 2006 for fiscal year 2007 is as follows: -------------------------------------------------------------------------------- DISTRIBUTIONS PAID FROM: GLOBAL VALUE FUND VALUE FUND -------------------------------------------------------------------------------- Investment Income $ 113,448,043 $ 5,521,019 Short-term capital gain -- 230,023 -------------------------------------------------------------------------------- Ordinary Income 113,448,043 5,751,042 -------------------------------------------------------------------------------- Long-term capital gain 92,487,665 39,420,211 -------------------------------------------------------------------------------- Total Distributions $ 205,935,708 $ 45,171,253 ================================================================================ As of March 31, 2008, the components of distributable earnings on a tax basis were as follows: -------------------------------------------------------------------------------- WORLDWIDE HIGH GLOBAL DIVIDEND YIELD VALUE FUND VALUE FUND VALUE FUND -------------------------------------------------------------------------------- Undistributed ordinary income $ 14,412,014 $ 483,541 $ 561,020 Undistributed realized gain 95,083,572 15,348,347 -- Unrealized appreciation/depreciation 2,687,733,848 164,838,079 (2,643,578) Accumulated capital and other losses -- (18,227) (230,572) -------------------------------------------------------------------------------- Total $2,797,229,434 $180,651,740 $ (2,313,130) ================================================================================ -------------------------------------------------------------------------------- II-28 TWEEDY, BROWNE FUND INC. -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS FEDERAL INCOME TAXES Each Fund has qualified and intends to continue to qualify as a regulated investment company by complying with the requirements of the U.S. 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. In June 2006, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109 ("FIN 48"). FIN 48 applies to all registered investment companies and establishes the minimum threshold for recognizing, and a system for measuring, the benefits of tax-return positions in the financial statements. FIN 48 became effective for the Funds on September 30, 2007. Management has analyzed the Funds' tax positions taken on federal income tax returns for all open tax years (through tax years ended March 31, 2008) and has concluded that as of March 31, 2008, no provision for income tax is required in the Funds' financial statements. Additionally, the Funds are not aware of any events that are reasonably possible to occur in the next twelve months that would result in the amounts of any unrecognized tax benefits significantly increasing or decreasing for the Funds. EXPENSES Expenses directly attributable to each Fund as a diversified series of the Company are charged to such Fund. Other expenses of the Company are allocated to each series based on the average net assets of each series or other equitable allocation method. 3. INVESTMENT ADVISORY FEE, OTHER RELATED PARTY TRANSACTIONS AND ADMINISTRATION FEE The Company, on behalf of each Fund, has entered into separate investment advisory agreements with Tweedy, Browne (each, an "Advisory Agreement"). Under each Advisory Agreement, the Company pays Tweedy, Browne a fee at the annual rate of 1.25% of the value of each Fund's average daily net assets. The fee is payable monthly, provided each 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. For the year ended March 31, 2008, Tweedy, Browne received $99,326,048 and $6,092,860 for Global Value Fund and Value Fund, respectively. For the period from September 5, 2007 through March 31, 2008, Tweedy Browne received $228,247 which was net of fees waived of $146,360 for Worldwide High Dividend Yield Value Fund. The Adviser has contractually agreed to waive its investment advisory fee and/or to reimburse expenses of the Worldwide High Dividend Yield Value Fund to the extent necessary to maintain the total annual fund operating expenses (excluding brokerage, interest, taxes and extraordinary expenses) at no more than 1.37%. This arrangement will continue at least through March 31, 2009. In this arrangement, the Worldwide High Dividend Yield Value Fund has agreed, during the two-year period following any waiver or reimbursement by the Adviser, to repay such amount to the extent that after giving effect to such repayment such adjusted total annual fund operating expenses would not exceed 1.37% on an annualized basis. At March 31, 2008, the amount of potential recovery expiring March 31, 2010, was $146,360. The current and retired managing directors and their families, as well as employees of Tweedy, Browne, have approximately $91.6 million, $45.1 million and $6.8 million of their own money invested in Global Value Fund, Value Fund and Worldwide High Dividend Yield Value Fund, respectively, as of March 31, 2008. The Company, on behalf of the Funds, has entered into an administration agreement (the "Administration Agreement") with PFPC Inc. (the "Administrator"), an indirect, majority-owned subsidiary of PNC Financial Services Group Inc. Under the Administration Agreement, the Company pays the Administrator an administration fee and a fund accounting fee computed daily and payable monthly at the following annual rates of the aggregate average daily net assets of the Funds, allocated according to each Funds' net assets: -------------------------------------------------------------------------------- BETWEEN BETWEEN $1 BILLION $5 BILLION UP TO AND AND EXCEEDING $1 BILLION $5 BILLION $10 BILLION $10 BILLION -------------------------------------------------------------------------------- Administration Fees 0.0300% 0.0180% 0.0100% 0.0090% Accounting Fees 0.0075% 0.0060% 0.0050% 0.0040% ================================================================================ 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 Company pays each Non-Interested Director $75,000 annually to be paid quarterly in $18,750 increments plus out-of-pocket expenses for their services as directors. The annual fee of $75,000 paid to each Non-Interested Director is divided proportionately between the Funds. The current allocation ratio of the annual fee is 80% paid by Global Value Fund, 15% paid by Value Fund, and 5% paid by Worldwide High Dividend Yield Value Fund. Total Directors' fees paid by each Fund for the year ended March 31, 2008, excluding any out-of-pocket expenses, were $240,000, $48,750 and $11,250, respectively. Mellon Trust of New England, N.A. ("MTONE"), a direct, wholly-owned subsidiary of The Bank of New York Mellon Corporation, serves as the Funds' custodian pursuant to a custody agreement (the "Custody Agreement"). PFPC Inc. also serves as the Funds' transfer agent. Tweedy, Browne also serves as the distributor to the Funds and pays all distribution fees. No distribution fees are paid by the Funds. -------------------------------------------------------------------------------- II-29 TWEEDY, BROWNE FUND INC. -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 4. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of investment securities, excluding short-term investments, for the year ended March 31, 2008, are as follows: -------------------------------------------------------------------------------- WORLDWIDE HIGH GLOBAL DIVIDEND YIELD VALUE FUND VALUE FUND VALUE FUND -------------------------------------------------------------------------------- Purchases $ 686,599,453 $46,865,602 $62,119,102 -------------------------------------------------------------------------------- Sales 1,302,908,365 83,050,312 617,094 ================================================================================ The aggregate gross unrealized appreciation and depreciation and net unrealized appreciation/(depreciation) as computed on a federal income tax basis, at March 31, 2008 for each Fund is as follows: -------------------------------------------------------------------------------- NET GROSS GROSS APPRECIATION/ APPRECIATION DEPRECIATION (DEPRECIATION) -------------------------------------------------------------------------------- Global Value Fund $2,987,804,460 $ (300,070,612) $2,687,733,848 -------------------------------------------------------------------------------- Value Fund $ 178,589,879 $ (13,751,800) $ 164,838,079 -------------------------------------------------------------------------------- Worldwide High Dividend Yield Value Fund $ 1,636,969 $ (4,280,547) $ (2,643,578) ================================================================================ 5. CAPITAL STOCK The Company is authorized to issue $1.4 billion shares of $0.0001 par value capital stock, of which 600,000,000, 400,000,000 and 400,000,000 of the unissued shares have been designated as shares of the Global Value Fund, Value Fund and Worldwide High Dividend Yield Value Fund, respectively. Redemptions from the Global Value Fund and the Worldwide High Dividend Yield Value Fund, including exchange redemptions, within 60 days of purchase are subject to a redemption fee equal to 2% of the redemption proceeds, which will be retained by each Fund. Changes in shares outstanding for the year ended March 31, 2008 were as follows: -------------------------------------------------------------------------------- GLOBAL VALUE FUND -------------------------------------------------------------------------------- SHARES AMOUNT -------------------------------------------------------------------------------- Sold 17,608,959 $ 553,900,749 Reinvested 24,655,422 737,443,820 Redeemed (54,963,288) (1,745,355,326) -------------------------------------------------------------------------------- Net Decrease (12,698,907) $ (454,010,757) ================================================================================ -------------------------------------------------------------------------------- VALUE FUND -------------------------------------------------------------------------------- SHARES AMOUNT -------------------------------------------------------------------------------- Sold 705,881 $ 17,040,395 Reinvested 2,042,923 44,923,865 Redeemed (3,989,699) (95,024,814) -------------------------------------------------------------------------------- Net Decrease (1,240,895) $ (33,060,554) ================================================================================ -------------------------------------------------------------------------------- WORLDWIDE HIGH DIVIDEND YIELD VALUE FUND -------------------------------------------------------------------------------- SHARES AMOUNT -------------------------------------------------------------------------------- Sold 8,328,156 $ 82,942,823 Reinvested 18,984 190,598 Redeemed (1,088,605) (10,394,181) -------------------------------------------------------------------------------- Net Increase 7,258,535 $ 72,739,240 ================================================================================ Changes in shares outstanding for the Global Value Fund and the Value Fund for the year ended March 31, 2007 were as follows: -------------------------------------------------------------------------------- GLOBAL VALUE FUND VALUE FUND -------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT -------------------------------------------------------------------------------- Sold 21,616,948 $ 640,713,070 710,487 $ 17,777,508 Reinvested 6,186,427 191,284,317 1,736,914 42,467,545 Redeemed (52,475,756) (1,555,918,402) (4,119,879) (101,787,695) -------------------------------------------------------------------------------- Net Decrease (24,672,381) $ (723,921,015) (1,672,478) $ (41,542,642) ================================================================================ 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, not generally being subject to uniform standards, practices and requirements with respect to accounting, auditing and financial reporting, 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 a Fund), war, seizure, political and social instability and diplomatic developments. 7. SECURITIES LENDING The Funds may lend securities to brokers, dealers and other financial organizations to earn additional income. Each security out on loan is collateralized with segregated assets held with the borrower in an amount equal to or greater than the current market value of the loaned securities. At March 31, 2008, the Funds did not have any securities out on loan. 8. NEW ACCOUNTING PRONOUNCEMENTS In September 2006, Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" ("SFAS 157") was issued by the FASB and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Funds' financial statement disclosures. -------------------------------------------------------------------------------- II-30 TWEEDY, BROWNE FUND INC. -------------------------------------------------------------------------------- REPORT OF PRICEWATERHOUSECOOPERS LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders of Tweedy, Browne Global Value Fund, Tweedy, Browne Value Fund and Tweedy, Browne Worldwide High Dividend Yield Value Fund and the Board of Directors of Tweedy, Browne Fund Inc.: In our opinion, the accompanying statements of assets and liabilities, including the portfolios of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Tweedy, Browne Global Value Fund, Tweedy, Browne Value Fund and Tweedy, Browne Worldwide High Dividend Yield Value Fund (the "Funds", each a series of Tweedy, Browne Fund Inc.) at March 31, 2008 and the results of each of their operations, the changes in each of their net assets and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at March 31, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights of the Tweedy, Browne Global Value Fund and Tweedy, Browne Value Fund for the year ended March 31, 2004 were audited by other independent accountants whose report dated May 10, 2004 expressed an unqualified opinion on those highlights. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Boston, Massachusetts May 16, 2008 -------------------------------------------------------------------------------- II-31 TWEEDY, BROWNE FUND INC. -------------------------------------------------------------------------------- OTHER INFORMATION (UNAUDITED) YEAR ENDED MARCH 31, 2008 1. TAX INFORMATION For the fiscal year ended March 31, 2008, the amount of long-term capital gain designated by the Funds which is taxable at a 15% rate gain for federal income tax purposes was: -------------------------------------------------------------------------------- FUND -------------------------------------------------------------------------------- Global Value Fund $ 727,575,277 -------------------------------------------------------------------------------- Value Fund $ 47,277,108 -------------------------------------------------------------------------------- Worldwide High Dividend Yield Value Fund $ -- ================================================================================ Of the ordinary income (including short-term capital gain) distributions made by the Funds during the fiscal year ended March 31, 2008, the percentage that qualifies for the dividend received deduction available to corporate shareholders was: -------------------------------------------------------------------------------- FUND -------------------------------------------------------------------------------- Global Value Fund 2.996% -------------------------------------------------------------------------------- Value Fund 100.000% -------------------------------------------------------------------------------- Worldwide High Dividend Yield Value Fund 41.230% ================================================================================ For the fiscal year ended March 31, 2008, the percentage of the distributions paid by the Funds that qualifies for the 15% dividend tax rate was:. -------------------------------------------------------------------------------- FUND -------------------------------------------------------------------------------- Global Value Fund 100% -------------------------------------------------------------------------------- Value Fund 100% -------------------------------------------------------------------------------- Worldwide High Dividend Yield Value Fund 100% ================================================================================ If the Fund meets the requirements of Section 853 of the Internal Revenue Code of 1986, as amended, the Funds may elect to pass through to its shareholders credits for foreign taxes paid. For the fiscal year ended March 31, 2008, the Tweedy, Browne Global Value Fund derived $199,587,508 of gross income from foreign sources and paid foreign taxes of $20,431,133 (representing $0.8874 and $0.0908 per share, respectively). 2. PORTFOLIO INFORMATION The Company files the Funds' complete schedule of portfolio holdings with the Securities and Exchange Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The Company's Form N-Q is available (1) on the SEC's website at http://www.sec.gov; (2) for review and copying at the SEC's Public Reference Room ("PRR") in Washington, DC; or (3) by calling the Fund at 1-800-432-4789. Information regarding the operation of the PRR may be obtained by calling 1-202-551-8090. 3. PROXY VOTING INFORMATION The policies and procedures that the Company uses to determine how to vote proxies relating to portfolio securities held by the Funds are included in the Company's Statement of Additional Information, which is available without charge and upon request by calling the Fund at 1-800-432-4789. Information regarding how the Funds voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, at http://www.sec.gov. 4. DIRECTORS AND OFFICERS INFORMATION Information pertaining to the Directors and officers* of the Company is set forth on the following pages. The Board of Directors oversees the Company's business and investment activities and is responsible for protecting the interest of the Fund's shareholders. You can find more information about the Directors in the Company's Statement of Additional Information, which is available free of charge by calling 1-800-432-4789. --------------- * The term "officer" means the president, vice president, secretary, treasurer, controller or any other officer who performs a policy making function. -------------------------------------------------------------------------------- II-32 TWEEDY, BROWNE FUND INC. -------------------------------------------------------------------------------- OTHER INFORMATION (UNAUDITED)
NON-INTERESTED DIRECTORS ------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN FUND COMPLEX OTHER TERM OF 1 OVERSEEN BY TRUSTEESHIPS/ OFFICE AND DIRECTOR OR DIRECTORSHIPS NAME, ADDRESS, AGE AND LENGTH OF PRINCIPAL OCCUPATION(S) NOMINEE FOR HELD BY POSITION(S) WITH COMPANY TIME SERVED DURING PAST 5 YEARS DIRECTOR DIRECTOR ------------------------------------------------------------------------------------------------------------------------------ Paul F. Balser 7 years Partner, Ironwood Manufacturing Fund, 3 Director, Janus Capital Ironwood Partners LLC LP (private equity investments), since Group Inc. (asset 420 Lexington Avenue 2003; Partner, Ironwood Management Fund management) New York, NY 10170 (private equity investments), since Birthdate: 2/12/1942 2007; Partner, Ironwood Partners LLC Director (private equity investments), since 2001; Partner, Generation Partners (private equity investments) from August 1995 to September 30, 2004. Bruce A. Beal 14 years Partner and Chairman, The Beal 3 None The Beal Companies Companies (real estate development and 177 Milk Street investment companies); Real estate Boston, MA 02109 consultant. Birthdate: 6/28/1936 Director John C. Hover II 5 years Former Executive Vice President, United 3 Director, Excelsior 72 North Main Street States Trust Company of New York Venture Partners III, LLC; New Hope, PA 18938 (Retired since 2001). Director, Excelsior Birthdate: 5/13/1943 Venture Investors III, LLC Director Richard B. Salomon 13 years Partner, Wolf, Block, Schorr and 3 None Wolf, Block, Schorr and Solis-Cohen LLP (law firm) since April Solis-Cohen LLP 2005. Prior to 2005, Partner, Salans 250 Park Avenue (law firm) since prior to 2000. New York, NY 10177 Birthdate: 12/19/1947 Director ------------------------------------------------------------------------------------------------------------------------------ INTERESTED DIRECTORS 2 Christopher H. Browne 3 14 years Managing Director, Tweedy, Browne 3 N/A Tweedy, Browne Company LLC. Company LLC 350 Park Avenue New York, NY 10022 Birthdate: 12/19/1946 Chairman Thomas H. Shrager Since April Managing Director, Tweedy, Browne 3 N/A Tweedy, Browne 2008 Company LLC. Company LLC 350 Park Avenue New York, NY 10022 Birthdate: 5/7/1957 Director
-------------------------------------------------------------------------------- II-33 TWEEDY, BROWNE FUND INC. -------------------------------------------------------------------------------- OTHER INFORMATION (UNAUDITED)
OFFICERS WHO ARE NOT DIRECTORS ----------------------------------------------------------------------------------------------------------------------------- NUMBER OF PORTFOLIOS IN FUND COMPLEX OTHER TERM OF 1 OVERSEEN BY TRUSTEESHIPS/ OFFICE AND DIRECTOR OR DIRECTORSHIPS NAME, ADDRESS, AGE AND LENGTH OF PRINCIPAL OCCUPATION(S) NOMINEE FOR HELD BY POSITION(S) WITH COMPANY TIME SERVED DURING PAST 5 YEARS DIRECTOR DIRECTOR ----------------------------------------------------------------------------------------------------------------------------- William H. Browne 3 Since April Managing Director, Tweedy, Browne N/A N/A Tweedy, Browne 2007 Company LLC. Company LLC William H. Browne serves as Chairman of 350 Park Avenue the Board of Directors of funds managed New York, NY 10022 by the Funds' investment adviser that Birthdate: 9/19/1944 are part of an offshore fund complex President registered for public sale in certain European jurisdictions. Patricia A. Rogers 3 years Chief Compliance Officer of the Funds N/A N/A Tweedy, Browne since June 2004; Associate General Company LLC Counsel, Tweedy, Browne Company LLC. 350 Park Avenue New York, NY 10022 Birthdate: 7/18/1966 Chief Compliance Officer M. Gervase Rosenberger 14 years Executive Vice President, Tweedy, N/A N/A Tweedy, Browne Browne Company LLC since 2001; General Company LLC Counsel and Chief Compliance Officer, 350 Park Avenue Tweedy, Browne Company LLC until 2001. New York, NY 10022 Birthdate: 3/21/1951 Chief Operating Officer, Vice President and Secretary John D. Spears 14 years Managing Director, Tweedy, Browne N/A N/A Tweedy, Browne Company LLC. Company LLC 350 Park Avenue New York, NY 10022 Birthdate: 9/7/1948 Vice President Robert Q. Wyckoff, Jr. 5 years Managing Director, Tweedy, Browne N/A N/A Tweedy, Browne Company LLC. Company LLC 350 Park Avenue New York, NY 10022 Birthdate: 11/26/1952 Treasurer
---------- 1 Directors serve for a term until the earliest of the next annual meeting of stockholders and the election and qualification of their successors, or their: (i) removal, (ii) resignation or (iii) death. 2 "Interested person" of the Company as defined in the Investment Company Act of 1940, as amended ("1940 Act"). Messrs. Christopher H. Browne and Thomas H. Shrager are each an "interested person" because of their affiliation with Tweedy, Browne Company LLC, which acts as the Funds' investment adviser and distributor. 3 Mr. Christopher H. Browne and Mr. William H. Browne are brothers. -------------------------------------------------------------------------------- II-34 This page left blank intentionally. TWEEDY, BROWNE FUND INC. 350 Park Avenue, New York, NY 10022 800-432-4789 www.tweedy.com -------------------------------------------------------------------------------- ITEM 2. CODE OF ETHICS. (a) The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. (c) There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics description. (d) The registrant has not granted any waivers, including an implicit waiver, from a provision of the code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item's instructions. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. As of the end of the period covered by the report, the registrant's board of directors has determined that Paul Balser is qualified to serve as an audit committee financial expert serving on its audit committee and that he is "independent," as defined by Item 3 of Form N-CSR. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. AUDIT FEES ---------- (a) The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years are $173,000 for 2008 and $117,500 for 2007. AUDIT-RELATED FEES ------------------ (b) The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item are $4,410 for 2008 and $6,813 for 2007. TAX FEES -------- (c) The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning are $14,750 for 2008 and $9,370 for 2007. ALL OTHER FEES -------------- (d) The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item are $2,975 for 2008 and $4,050 for 2007. (e)(1) Disclose the audit committee's pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. The Fund's Audit Committee reviews, negotiates and approves in advance the scope of work, any related engagement letter and the fees to be charged by the independent auditors for audit services and, subject to any de minimis exceptions, permitted non-audit services for the Fund and for permitted non-audit services for the Fund's investment adviser and any affiliates thereof that provide services to the Fund if such non-audit services have a direct impact on the operations or financial reporting of the Fund. (e)(2) The percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows: (b) 100% (c) 100% (d) 100% (f) The percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was less than fifty percent. (g) The aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant was $0 for 2008 and $0 for 2007.. (h) The registrant's audit committee of the board of directors has considered whether the provision of non-audit services that were rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. INVESTMENTS. (a) Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form. (b) Not applicable. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant's board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant's second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a)(1) Code of ethics, or any amendment thereto, that is the subject of disclosure required by Item 2 is attached hereto. (a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. (a)(3) Not applicable. (b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (registrant) TWEEDY, BROWNE FUND INC. By (Signature and Title)* /S/ WILLIAM H. BROWNE ------------------------------------------------------- William H. Browne, President (principal executive officer) Date June 5, 2008 ---------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /S/ WILLIAM H. BROWNE ------------------------------------------------------- William H. Browne, President (principal executive officer) Date June 5, 2008 ---------------------------------------------------------------------------- By (Signature and Title)* /S/ ROBERT Q. WYCKOFF, JR. ------------------------------------------------------- Robert Q. Wyckoff, Jr., Treasurer (principal financial officer) Date June 5, 2008 ---------------------------------------------------------------------------- * Print the name and title of each signing officer under his or her signature.