BACK TO THE BOUTIQUE INVESTOR BLOG Looking Back on 30 Years of International Value Investing Roger R. de Bree Andrew Ewert MANAGING DIRECTOR Frank H. Hawrylak, CFA Jay Hill, CFA Thomas H. Shrager John D. Spears Bob Wyckoff MANAGING DIRECTOR Tweedy, Browne Company reflects on 30 years of the Tweedy, Browne International Value Fund (TBGVX), shares how momentum in their story began, and why it is just as relevant in today’s market. On June 15th, our flagship fund, the Tweedy, Browne International Value Fund, celebrated its 30th anniversary. We established this Fund in the summer of 1993 with the aim of providing investors access to value-oriented equities outside of the United States. At the time, it was one of the few U.S.-based funds providing a value-oriented approach in international markets. It also had the distinguishing characteristic of hedging perceived foreign currency exposure back into the U.S. dollar where practicable. Our Approach We did not venture abroad looking for currency diversification but rather were attracted by what appeared, at the time, to be compelling non-U.S. equity valuations. Empirical studies showed you could hedge foreign currency exposure in developed markets at little cost to the investor regarding foregone returns. History has largely confirmed the findings of those studies, as the Fund’s hedged benchmark has actually outperformed its unhedged counterpart since TBGVX’s inception. Accolades Our Fund received a boost from Money Magazine in the fall of 1993 when Bill Sheeline, one of its lead writers, included the Fund in its Forecast Issue as one of the funds investors should consider in 1994. Carla Fried, another Money Magazine journalist, followed up in May of 1994, including TBGVX in her article entitled “The Next Great Funds” suggesting that the International Value Fund may be a logical successor to the Templeton Growth Fund, run by the legendary Sir John Templeton. Our Firm’s phones began to ring and, as they say, the rest is history. We had the incredible good fortune along the way to be covered by Morningstar, who nominated the International Value Fund’s portfolio management team for the coveted International Manager of the Year Award four separate times. The portfolio management team of the Fund won the award twice in two different decades. One of the very few investment teams to be awarded more than once.1 A Look at Performance We are proud of the Fund’s index-besting record since its inception in 1993. Over the last 30-plus years, the Fund produced cumulative returns net of fees nearly double those produced by its hedged benchmark, the MSCI EAFE Index (Hedged to USD) (1,013.51% v. 571.27%), almost triple those produced by the more commonly used MSCI EAFE Index (in USD) (1,013.51% v. 340.29%), and more than double the returns produced by the Foreign Stock Fund Average (1,013.51% v. 441.39%). The Fund has also been highly tax efficient since its inception, besting its benchmark index, the MSCI EAFE Index (Hedged to USD), as well as the unhedged MSCI EAFE Index, net of fees, and net of taxes on distributions and sale of Fund shares (7.03% v. 6.48% and 5.01%). It is tough enough to beat indexes net of fees, but to beat them net of fees and taxes on distributions and sale of Fund shares is, in our view, a more compelling measure of investment skill. Annual Total Returns for Periods Ending 09/30/2023 Total Annual Fund Operating Expense Ratios. As of 03/31/2023: 1.40% (gross), 1.40% (net) Source: After-tax returns are calculated using the historical highest individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Returns after taxes on distributions are adjusted for federal income taxes associated with fund distributions but do not reflect the federal income tax impact of gains or losses recognized when fund shares are sold. Returns after taxes on distributions and sale of fund shares are adjusted for federal income taxes associated with fund distributions and reflect the federal income tax impact of gains or losses recognized when fund shares are sold. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown, and the after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. The performance shown, before and after taxes, represents past performance and is not a guarantee of future results. Looking Ahead The last decade-plus has proven to be a difficult period for non-U.S. equity returns. While investors in our Funds made solid absolute returns, they paled in comparison to the returns available in U.S. equities. The returns of the S&P 500® were more than double the returns produced by the MSCI EAFE Index (in USD) and our Funds. However, it’s important for investors to realize that historically the S&P 500 has not always outperformed the MSCI EAFE Index. A review of rolling 10-year returns for the S&P 500 and the MSCI EAFE Index back to the start of 1970 reveals that the MSCI EAFE Index outperformed the S&P 500 in roughly 44% of rolling 10-year periods.3 If the past is prologue, non-U.S. investors may be due for better returns. Non-U.S. equity valuations today remain compelling relative to their U.S. counterparts. We hope to take full advantage of what we view as an ongoing “sea change” in our capital markets and remain optimistic about our future and equity returns moving forward. LEARN MORE ABOUT TWEEDY, BROWNE 1 Established in 1988, the Morningstar Fund Manager of the Year award recognizes portfolio managers who demonstrate excellent investment skill and the courage to differ from the consensus to benefit investors. To qualify for the award, managers’ funds must have not only posted impressive returns for the year, but the managers also must have a record of delivering outstanding long‐term risk‐adjusted performance and of aligning their interests with shareholders’. The Fund Manager of the Year award winners are chosen based on Morningstar’s proprietary research and in depth qualitative evaluation by its fund analysts. Investment decisions for the Funds are made by Tweedy, Browne’s Investment Committee, which is comprised of Roger R. de Bree, Frank H. Hawrylak, Andrew Ewert, Jay Hill, Thomas H. Shrager, John D. Spears and Robert Q. Wyckoff, Jr. The Investment Committee acts by consensus of its available members. There are no lead portfolio managers. Roger de Bree and Jay Hill were appointed to the Investment Committee in 2013; Frank Hawrylak was appointed to the Investment Committee in 2014; and Andrew Ewert was appointed to the Investment Committee in 2022. 2 Based on 10-year rolling returns, calculated monthly, for the period from 12/31/1969 through 06/30/2023 (523 measurement periods). Monthly index data provided by S&P Global and MSCI. Rolling 10-year returns calculated by Tweedy, Browne. After-tax returns are calculated using the historical highest individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Returns after taxes on distributions are adjusted for federal income taxes associated with fund distributions, but do not reflect the federal income tax impact of gains or losses recognized when fund shares are sold. Returns after taxes on distributions and sale of fund shares are adjusted for federal income taxes associated with fund distributions and reflect the federal income tax impact of gains or losses recognized when fund shares are sold. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown, and the after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Investors cannot invest directly in an index, unlike an index fund. Index returns are not adjusted to reflect the deduction of taxes that an investor would pay on distributions or the sale of securities comprising the index. The performance shown, before and after taxes, represents past performance and is not a guarantee of future results. Investment 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. Current performance may be higher or lower than the performance data quoted. Please click here or call 1 -800-432-4789 to obtain performance data that is current as of the most recent month-end. The Fund does not impose any front-end or deferred sales charges. The expense ratios shown above reflect the inclusion of acquired fund fees and expenses (i.e., the fees and expenses attributable to investing cash balances in money market funds) and may differ from those shown in the Funds’ financial statements. Tweedy, Browne has voluntarily agreed, effective May 22, 2020 through at least July 31, 2024, to waive the Fund’s fees whenever the Fund’s average daily net assets (“ADNA”) exceed $6 billion. Under the arrangement, the advisory fee payable by the Fund is as follows: 1.25% on the first $6 billion of the Fund’s ADNA; 0.80% on the next $1 billion of the Fund’s ADNA (ADNA over $6 billion up to $7 billion); 0.70% on the next $1 billion of the Fund’s ADNA (ADNA over $7 billion up to $8 billion); and 0.60% on the remaining amount, if any, of the Fund’s ADNA (ADNA over $8 billion). The performance data shown above would have been lower had certain fees and expenses not been waived during certain periods. Inception date for the Fund was June 15, 1993. Prior to 2004, information with respect to the MSCI EAFE Index was available at month end only; therefore, the closest month end to the inception date of the Fund, May 31, 1993, was used. The S&P 500 Index is a market capitalization weighted index composed of 500 widely held common stocks that assumes the reinvestment of dividends. The index is generally considered representative of US large capitalization stocks. The MSCI EAFE Index is an unmanaged, free float-adjusted capitalization weighted index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE Index (Hedged to USD) consists of the results of the MSCI EAFE Index 100% hedged back into U.S. dollars and accounts for interest differentials in forward currency exchange rates. The MSCI EAFE Index (USD) reflects the return of the MSCI EAFE Index for a U.S. dollar investor. Index results are inclusive of dividends and net of foreign withholding taxes. Index figures do not reflect any deduction for fees, expenses or taxes. Since September 30, 2003, the Foreign Stock Fund Average is calculated by Tweedy, Browne based on data provided by Morningstar and reflects average returns or portfolio turnover rates of all mutual funds in the Morningstar Foreign Large-Value, Foreign Large-Blend, Foreign Large-Growth, Foreign Small/Mid-Value, Foreign Small/Mid-Blend, and Foreign Small/Mid-Growth categories. Funds in these categories typically invest in international stocks and devote no less than 70% of assets to international markets. These funds may or may not be hedged to the U.S. dollar, which will affect reported returns. References to “Foreign Stock Funds” or the “Foreign Stock Fund Average” that predate September 30, 2003 are references to Morningstar’s Foreign Stock Funds and Foreign Stock Fund Average, respectively, while references to Foreign Stock Funds and the Foreign Stock Fund Average for the period beginning September 30, 2003 refer to Foreign Stock Funds and the Foreign Stock Fund Average as calculated by Tweedy, Browne. This article contains opinions and statements on investment techniques, economics, market conditions and other matters. There is no guarantee that these opinions and statements will prove to be correct, and some of them are inherently speculative. None of them should be relied upon as statements of fact. Current and future portfolio holdings are subject to risk. The securities of small, less well-known companies may be more volatile than those of larger companies. In addition, investing in foreign securities involves additional risks beyond the risks of investing in securities of U.S. markets. These risks include economic and political considerations not typically found in U.S. markets, including currency fluctuation, political uncertainty, and different financial and accounting standards, regulatory environments, and overall market and economic factors. Force majeure events such as pandemics and natural disasters are likely to increase the risks inherent in investments and could have a broad negative impact on the world economy and business activity in general. Value investing involves the risk that the market will not recognize a security’s intrinsic value for a long time, or that a security thought to be undervalued may actually be appropriately priced when purchased. Dividends are not guaranteed, and a company currently paying dividends may cease paying dividends at any time. Diversification does not guarantee a profit or protect against a loss in declining markets. There can be no guarantee of safety of principal or a satisfactory rate of return. The Managing Directors and employees of Tweedy, Browne Company LLC may have a financial interest in the securities mentioned herein because, where consistent with the Firm’s Code of Ethics, the Managing Directors and employees may own these securities in their personal securities trading accounts or through their ownership of various pooled vehicles that own these securities. Past performance is no guarantee of future results.