Charlie Munger died on November 28,just 33 days before his 100th birthday.Though born and raised in Omaha,he spent 80%of his life domiciledelsewhere.Consequently,it was not until 1959 when he was 35 that I first met him.In 1962,he decided that he should take up money management.Three years later he told me correctly!that I had made a dumb decision inbuying control of Berkshire.But,he assured me,since I had already made the move,he would tell me how to correct my mistake.In what I next relate,bear in mind that Charlie and his family did not have adime invested in the small investing partnership that I was then managing and whosemoney I had used for the Berkshire purchase.Moreover,neither of us expected thatCharlie would ever own a share of Berkshire stock.Nevertheless,Charlie,in 1965,promptly advised me:"Warren,forget aboutever buying another company like Berkshire.But now that you control Berkshire,addto it wonderful businesses purchased at fair prices and give up buying fair businessesat wonderful prices.In other words,abandon everything you learned from your hero,Ben Graham.It works but only when practiced at small scale."With much back-slidingI subsequently followed his instructions.Many years later,Charlie became my partner in running Berkshire and,repeatedly,jerked me back to sanity when my old habits surfaced.Until his death,hecontinued in this role and together we,along with those who early on invested withus,ended up far better off than Charlie and I had ever dreamed possible.In reality,Charlie was the "architect"of the present Berkshire,and I acted asthe "general contractor"to carry out the day-by-day construction of his vision.Charlie never sought to take credit for his role as creator but instead let metake the bows and receive the accolades.In a way his relationship with me was partolder brother,part loving father.Even when he knew he was right,he gave me thereins,and when I blundered he never -never -reminded me of my mistake.In the physical world,great buildings are linked to their architect while thosewho had poured the concrete or installed the windows are soon forgotten.Berkshirehas become a great company.Though I have long been in charge of the constructioncrew;Charlie should forever be credited with being the architect.2BERKSHIRE HATHAWAY INC.To the Shareholders of Berkshire Hathaway Inc.:Berkshire has more than three million shareholder accounts.I am charged with writing aletter every year that will be useful to this diverse and ever-changing group of owners,many ofwhom wish to learn more about their investment.Charlie Munger,for decades my partner in managing Berkshire,viewed this obligationidentically and would expect me to communicate with you this year in the regular manner.He andI were of one mind regarding our responsibilities to Berkshire shareholders.Writers find it useful to picture the reader they seek,and often they are hoping to attract amass audience.At Berkshire,we have a more limited target:investors who trust Berkshire withtheir savings without any expectation of resale (resembling in attitude people who save in order tobuy a farm or rental property rather than people who prefer using their excess funds to purchaselottery tickets or "hot"stocks).Over the years,Berkshire has attracted an unusual number of such "lifetime"shareholdersand their heirs.We cherish their presence and believe they are entitled to hear every year both thegood and bad news,delivered directly from their CEO and not from an investor-relations officeror communications consultant forever serving up optimism and syrupy mush.In visualizing the owners that Berkshire seeks,I am lucky to have the perfect mental model,my sister,Bertie.Let me introduce her.For openers,Bertie is smart,wise and likes to challenge my thinking.We have never,however,had a shouting match or anything close to a ruptured relationship.We never will.Furthermore,Bertie,and her three daughters as well,have a large portion of their savingsin Berkshire shares.Their ownership spans decades,and every year Bertie will read what I haveto say.My job is to anticipate her questions and give her honest answers.3