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:811-21829
BBH TRUST
On behalf of the following series:
BBH U.S. Government Money Market Fund
(Exact name of registrant as specified in charter)
140 Broadway, New York, NY 10005
(Address of principal executive offices) (Zip Code)
Corporation Services Company
2711 Centerville Road, Suite 400, Wilmington, DE 19808
(Name and address of agent for service)
Registrant's telephone number, including area code:(800) 575-1265
Date of fiscal year end: June 30
Date of reporting period:December 31, 2018
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, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Report to Stockholders.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other Fund communications electronically from the Fund by calling 1-800-575-1265 or from your financial intermediary.
You may elect to receive all future reports in paper free of charge. You can inform the Fund by calling 1-800-575-1265 or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper may apply to all funds in the fund complex or held with your financial intermediary.
BBH U.S. GOVERNMENT MONEY MARKET FUND
PORTFOLIO ALLOCATION
December 31, 2018 (unaudited)
U.S. $ Value | Percent of Net Assets | |||||||||
U.S. Government Agency Obligations | $ | 224,837,145 | 8.4 | % | ||||||
U.S. Treasury Bills | 2,245,501,645 | 84.3 | ||||||||
Repurchase Agreements | 175,000,000 | 6.6 | ||||||||
Cash and Other Assets in Excess of Liabilities | 17,589,639 | 0.7 | ||||||||
NET ASSETS | $ | 2,662,928,429 | 100.0 | % |
The accompanying notes are an integral part of these financial statements.
BBH U.S. GOVERNMENT MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
December 31, 2018 (unaudited)
Principal Amount | Maturity Date | Interest Rate | Value | |||||||||||||||
U.S. GOVERNMENT AGENCY OBLIGATIONS (8.4%) | ||||||||||||||||||
$ 50,000,000 | Federal Home Loan Bank Discount Notes1 | 01/04/19 | 2.121 | % | $ | 49,991,167 | ||||||||||||
120,000,000 | Federal Home Loan Bank Discount Notes1,2 | 01/09/19 | 2.325 | 119,938,145 | ||||||||||||||
25,000,000 | Federal Home Loan Bank Discount Notes1 | 01/25/19 | 2.302 | 24,961,833 | ||||||||||||||
30,000,000 | Federal Home Loan Bank Discount Notes1 | 01/28/19 | 2.404 | 29,946,000 | ||||||||||||||
Total U.S. Government Agency Obligations (Identified cost $224,837,145) | 224,837,145 | |||||||||||||||||
U.S. TREASURY BILLS (84.3%) | ||||||||||||||||||
165,000,000 | U.S. Treasury Bill1,2 | 01/02/19 | 2.245 | 164,989,748 | ||||||||||||||
125,000,000 | U.S. Treasury Bill1 | 01/03/19 | 2.187 | 124,984,896 | ||||||||||||||
125,000,000 | U.S. Treasury Bill1,2 | 01/08/19 | 2.259 | 124,945,267 | ||||||||||||||
115,000,000 | U.S. Treasury Bill1,2 | 01/10/19 | 2.184 | 114,937,635 | ||||||||||||||
150,000,000 | U.S. Treasury Bill1,2 | 01/15/19 | 2.287 | 149,866,961 | ||||||||||||||
150,000,000 | U.S. Treasury Bill1,2 | 01/17/19 | 2.256 | 149,850,344 | ||||||||||||||
135,000,000 | U.S. Treasury Bill1,2 | 01/22/19 | 2.311 | 134,818,455 | ||||||||||||||
125,000,000 | U.S. Treasury Bill1,2 | 01/24/19 | 2.282 | 124,818,779 | ||||||||||||||
60,000,000 | U.S. Treasury Bill1,2 | 01/29/19 | 2.366 | 59,889,960 | ||||||||||||||
75,000,000 | U.S. Treasury Bill1 | 01/31/19 | 2.291 | 74,857,719 | ||||||||||||||
150,000,000 | U.S. Treasury Bill1,2 | 02/05/19 | 2.329 | 149,661,557 | ||||||||||||||
105,000,000 | U.S. Treasury Bill1,2 | 02/07/19 | 2.274 | 104,756,440 | ||||||||||||||
100,000,000 | U.S. Treasury Bill1 | 02/12/19 | 2.345 | 99,727,467 | ||||||||||||||
135,000,000 | U.S. Treasury Bill1,2 | 02/14/19 | 2.333 | 134,617,093 | ||||||||||||||
65,000,000 | U.S. Treasury Bill1,2 | 02/19/19 | 2.340 | 64,793,690 | ||||||||||||||
120,000,000 | U.S. Treasury Bill1,2 | 02/21/19 | 2.343 | 119,603,631 | ||||||||||||||
50,000,000 | U.S. Treasury Bill1 | 02/28/19 | 2.371 | 49,809,808 | ||||||||||||||
120,000,000 | U.S. Treasury Bill1,2 | 03/07/19 | 2.344 | 119,495,031 |
The accompanying notes are an integral part of these financial statements.
BBH U.S. GOVERNMENT MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS (continued)
December 31, 2018 (unaudited)
Principal Amount | Maturity Date | Interest Rate | Value | |||||||||||||||
U.S. TREASURY BILLS (continued) | ||||||||||||||||||
$ 85,000,000 | U.S. Treasury Bill1,2 | 03/14/19 | 2.389 | % | $ | 84,596,345 | ||||||||||||
75,000,000 | U.S. Treasury Bill1,2 | 03/21/19 | 2.354 | 74,614,902 | ||||||||||||||
20,000,000 | U.S. Treasury Bill1 | 04/11/19 | 2.433 | 19,865,917 | ||||||||||||||
Total U.S. Treasury Bills (Identified cost $2,245,501,645) | 2,245,501,645 | |||||||||||||||||
REPURCHASE AGREEMENTS (6.6%) | ||||||||||||||||||
55,000,000 | BNP Paribas (Agreement dated 12/31/18 collateralized by FHLMC 2.500%-6.500%, due 03/01/23-09/01/48, original par $62,201,783, value $23,753,302, FNMA 3.500-5.000%, due 08/01/27-11/01/48, original par $26,996,960, value $25,282,284, GNMA 3.000%-5.500%, due 08/15/23-05/20/48, original par $13,059,180, value $7,064,414) | 01/02/19 | 3.000 | 55,000,000 | ||||||||||||||
65,000,000 | National Australia Bank, Ltd. (Agreement dated 12/31/18 collateralized by U.S. Treasury Notes 2.250%, due 08/15/27, original par $68,210,000, value $66,300,00 | 01/02/19 | 2.900 | 65,000,000 |
The accompanying notes are an integral part of these financial statements.
BBH U.S. GOVERNMENT MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS (continued)
December 31, 2018 (unaudited)
Principal Amount | Maturity Date | Interest Rate | Value | |||||||||||||||
REPURCHASE AGREEMENTS (continued) | ||||||||||||||||||
$ 55,000,000 | Societe Generale (Agreement dated 12/31/18 collateralized by FAMC 1.700%, due 02/28/19, original par $10,610,000, value $10,662,107, FCSB 2.750%, due 10/12/21, original par $1,488,000, value $1,501,419, FHLMC 1.550%-4.000%, due 09/30/21-09/01/43, original par $144,051 value $140,751, FNMA 1.750%, due 09/12/19, original par $298,000, value $297,696, GNMA 3.480%-7.000%, due 07/15/27-03/20/64, original par $18,748,301, value $4,191,847, REFC 0.000%, due 01/15/26-04/15/30, original par $18,989,000, value $13,429,063, U.S. Treasury Securities 0.000%-1.125%, due 01/03/19-04/15/21, original par $24,970,600, value $25,877,117) | 01/02/19 | 2.900 | % | $ | 55,000,000 | ||||||||||||
Total Repurchase Agreements (Identified cost $175,000,000) | 175,000,000 | |||||||||||||||||
TOTAL INVESTMENTS (Identified cost 2,645,338,790)3 | 99.3 | % | $ | 2,645,338,790 | ||||||||||||||
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES | 0.7 | % | 17,589,639 | |||||||||||||||
NET ASSETS | 100.0 | % | $ | 2,662,928,429 |
1 | Coupon represents a yield to maturity. |
2 | Coupon represents a weighted average yield. |
3 | The cost of securities for federal income tax purpose is substantially the same as for financial reporting purposes. |
The accompanying notes are an integral part of these financial statements.
BBH U.S. GOVERNMENT MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS (continued)
December 31, 2018 (unaudited)
— | Level 1 – unadjusted quoted prices in active markets for identical assets and liabilities. |
— | Level 2 – significant other observable inputs (including quoted prices for similar assets and liabilities, interest rates, prepayment speeds, credit risk, etc.). |
— | Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of assets and liabilities). |
The accompanying notes are an integral part of these financial statements.
BBH U.S. GOVERNMENT MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS (continued)
December 31, 2018 (unaudited)
Investments, at value | Unadjusted Quoted Prices in Active Markets for Identical Investments (Level 1)* | Significant Other Observable Inputs (Level 2)* | Significant Unobservable Inputs (Level 3)* | Balance as of December 31, 2018 | ||||||||||||||
U.S. Government Agency Obligations | $ | — | $ | 224,837,145 | $ | — | $ | 224,837,145 | ||||||||||
U.S. Treasury Bills | — | 2,245,501,645 | — | 2,245,501,645 | ||||||||||||||
Repurchase Agreements | — | 175,000,000 | — | 175,000,000 | ||||||||||||||
Total Investment, at value | $ | — | $ | 2,645,338,790 | $ | — | $ | 2,645,338,790 |
* | The Fund’s policy is to disclose transfers between levels based on valuations at the end of the reporting period. There were no transfers between Levels 1, 2 or 3 during the period ended December 31, 2018. |
The accompanying notes are an integral part of these financial statements.
BBH U.S. GOVERNMENT MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2018 (unaudited)
ASSETS: | |||||||
Investments, at amortized cost which approximates fair value | $ | 2,470,338,790 | |||||
Repurchase agreements (Identified cost $175,000,000) | 175,000,000 | ||||||
Cash | 19,121,165 | ||||||
Receivables for: | |||||||
Interest | 14,250 | ||||||
Other assets | 73,916 | ||||||
Prepaid assets | 13,575 | ||||||
Total Assets | 2,664,561,696 | ||||||
LIABILITIES: | |||||||
Payables for: | |||||||
Investment advisory and administrative fees | 1,300,389 | ||||||
Dividends declared | 212,726 | ||||||
Professional fees | 44,464 | ||||||
Shareholder servicing fees | 19,142 | ||||||
Transfer agent fees | 7,081 | ||||||
Board of Trustees’ fees | 343 | ||||||
Accrued expenses and other liabilities | 49,122 | ||||||
Total Liabilities | 1,633,267 | ||||||
NET ASSETS | $ | 2,662,928,429 | |||||
Net Assets Consist of: | |||||||
Paid-in capital | $ | 2,662,964,240 | |||||
Distributions in excess of net investment income | (35,811 | ) | |||||
Net Assets | $ | 2,662,928,429 | |||||
NET ASSET VALUE AND OFFERING PRICE PER SHARE | |||||||
REGULAR SHARES | |||||||
($40,302,745 ÷ 40,308,365 shares outstanding) | $1.00 | ||||||
INSTITUTIONAL SHARES | |||||||
($2,622,625,684 ÷ 2,622,661,893 shares outstanding) | $1.00 |
The accompanying notes are an integral part of these financial statements.
BBH U.S. GOVERNMENT MONEY MARKET FUND
STATEMENT OF OPERATIONS
For the six months ended December 31, 2018 (unaudited)
NET INVESTMENT INCOME: | ||||||
Income: | ||||||
Interest income | $ | 22,242,687 | ||||
Expenses: | ||||||
Investment advisory and administrative fees | 2,327,629 | |||||
Shareholder servicing fees | 44,253 | |||||
Custody and fund accounting fees | 41,702 | |||||
Professional fees | 35,489 | |||||
Board of Trustees’ fees | 24,118 | |||||
Transfer agent fees | 14,530 | |||||
Miscellaneous expenses | 61,749 | |||||
Total Expenses | 2,549,470 | |||||
Expense offset arrangement | (157,035 | ) | ||||
Net Expenses | 2,392,435 | |||||
Net Investment Income | 19,850,252 | |||||
NET REALIZED LOSS: | ||||||
Net realized loss on investments | (2,132 | ) | ||||
Net Increase in Net Assets Resulting from Operations | $ | 19,848,120 |
The accompanying notes are an integral part of these financial statements.
BBH U.S. GOVERNMENT MONEY MARKET FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended December 31, 2018 (unaudited) | For the year ended June 30, 2018 | |||||||||
INCREASE IN NET ASSETS: | ||||||||||
Operations: | ||||||||||
Net investment income | $ | 19,850,252 | $ | 18,087,309 | ||||||
Net realized loss on investments | (2,132 | ) | (24,553 | ) | ||||||
Net increase in net assets resulting from operations | 19,848,120 | 18,062,756 | ||||||||
Distributions declared: | ||||||||||
Regular Shares | (348,954 | ) | (401,368 | ) | ||||||
Institutional Shares | (19,499,166 | ) | (17,697,175 | ) | ||||||
Total distributions declared | (19,848,120 | ) | (18,098,543 | ) | ||||||
From Fund Share (Principal) Transactions at Net Asset Value of $1.00 per share: | ||||||||||
Fund shares sold and fund shares issued in connection with reinvestments of dividends | 3,655,738,808 | 5,919,315,185 | ||||||||
Fund shares repurchased | (2,764,190,961 | ) | (5,669,393,124 | ) | ||||||
Net increase in net assets resulting from fund share transactions | 891,547,847 | 249,922,061 | ||||||||
Total increase in net assets | 891,547,847 | 249,886,274 | ||||||||
NET ASSETS: | ||||||||||
Beginning of period | 1,771,380,582 | 1,521,494,308 | ||||||||
End of period | $ | 2,662,928,429 | $ | 1,771,380,582 | 1 |
The accompanying notes are an integral part of these financial statements.
BBH U.S. GOVERNMENT MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a Regular Share outstanding throughout each period.
For the years ended June 30, | |||||||||||||||||||||||||||
For the six months ended December 31, 2018 (unaudited) | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | |||||||||||||||
Income from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.01 | 0.01 | 0.00 | 2 | 0.00 | 2 | 0.00 | 2 | 0.00 | 2 | |||||||||||||||||
Distributions to shareholders: | |||||||||||||||||||||||||||
From net investment income | (0.01 | ) | (0.01 | ) | 0.00 | 2 | 0.00 | 2 | 0.00 | 2 | 0.00 | 2 | |||||||||||||||
From net realized gains | — | — | — | — | 0.00 | 2 | — | ||||||||||||||||||||
Total distributions | (0.01 | ) | (0.01 | ) | 0.00 | 2 | 0.00 | 2 | 0.00 | 2 | 0.00 | 2 | |||||||||||||||
Net asset value, end of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | |||||||||||||||
Total return | 0.80 | %3 | 0.81 | % | 0.08 | % | 0.01 | % | 0.01 | % | 0.01 | % | |||||||||||||||
Ratios/Supplemental data: | �� | ||||||||||||||||||||||||||
Net assets, end of period (in millions) | $ | 40 | $ | 62 | $ | 67 | $ | 49 | $ | 1,127 | $ | 1,151 | |||||||||||||||
Ratio of expenses to average net assets before reductions | 0.48 | %4 | 0.50 | % | 0.48 | % | 0.48 | % | 0.51 | % | 0.50 | % | |||||||||||||||
Expense reimbursement5 | —% | —% | 0.10 | % | 0.38 | % | 0.44 | % | 0.43 | % | |||||||||||||||||
Expense offset arrangement | 0.01 | %4 | 0.02 | % | 0.00 | %6 | 0.00 | %6 | 0.00 | %6 | 0.00 | %6 | |||||||||||||||
Ratio of expenses to average net assets after reductions | 0.47 | %4 | 0.48 | % | 0.38 | % | 0.10 | % | 0.07 | % | 0.07 | % | |||||||||||||||
Ratio of net investment income to average net assets | 1.58 | %4 | 0.78 | % | 0.08 | % | 0.01 | % | 0.01 | % | 0.01 | % |
1 | Calculated using average shares outstanding for the period. |
2 | Less than $0.01 per share. |
3 | Not annualized. |
4 | Annualized. |
5 | During the period ended December 31, 2018 and years ended June 30, 2018, 2017, 2016, 2015 and 2014, the investment advisory and administrative fee/shareholder servicing fee waivers, as a result of a minimum yield agreement, were $—, $—, $50,768, $2,511,954, $5,166,811 and $5,511,949, respectively. |
6 | Less than 0.01%. |
The accompanying notes are an integral part of these financial statements.
BBH U.S. GOVERNMENT MONEY MARKET FUND
FINANCIAL HIGHLIGHTS (continued)
Selected per share data and ratios for an Institutional Share outstanding throughout each period.
For the years ended June 30, | |||||||||||||||||||||||||||
For the six months ended December 31, 2018 (unaudited) | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | |||||||||||||||
Income from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.01 | 0.01 | 0.00 | 2 | 0.00 | 2 | 0.00 | 2 | 0.00 | 2 | |||||||||||||||||
Distributions to shareholders: | |||||||||||||||||||||||||||
From net investment income | (0.01 | ) | (0.01 | ) | 0.00 | 2 | 0.00 | 2 | 0.00 | 2 | 0.00 | 2 | |||||||||||||||
From net realized gains | — | — | — | — | 0.00 | 2 | — | ||||||||||||||||||||
Total distributions | (0.01 | ) | (0.01 | ) | 0.00 | 2 | 0.00 | 2 | 0.00 | 2 | 0.00 | 2 | |||||||||||||||
Net asset value, end of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | |||||||||||||||
Total return | 0.93 | %3 | 1.06 | % | 0.22 | % | 0.02 | % | 0.01 | % | 0.01 | % | |||||||||||||||
Ratios/Supplemental data: Net assets, end of period (in millions) | $ | 2,623 | $ | 1,710 | $ | 1,455 | $ | 1,605 | $ | 438 | $ | 467 | |||||||||||||||
Ratio of expenses to average net assets before reductions | 0.23 | %4 | 0.26 | % | 0.24 | % | 0.25 | % | 0.26 | % | 0.26 | % | |||||||||||||||
Expense reimbursement5 | — | — | — | 0.05 | % | 0.19 | % | 0.19 | % | ||||||||||||||||||
Expense offset arrangement | 0.01 | %4 | 0.02 | % | 0.00 | %6 | 0.00 | %6 | 0.00 | %6 | 0.00 | %6 | |||||||||||||||
Ratio of expenses to average net assets after reductions | 0.22 | %4 | 0.24 | % | 0.24 | % | 0.20 | % | 0.07 | % | 0.07 | % | |||||||||||||||
Ratio of net investment income to average net assets | 1.86 | %4 | 1.07 | % | 0.21 | % | 0.03 | % | 0.01 | % | 0.01 | % |
1 | Calculated using average shares outstanding for the period. |
2 | Less than $0.01 per share. |
3 | Not annualized. |
4 | Annualized. |
5 | During the period ended December 31, 2018 and years ended June 30, 2018, 2017, 2016, 2015 and 2014, the investment advisory and administrative fee waivers, as a result of a minimum yield agreement, were $—, $—, $—, $573,823, $1,015,043, and $1,046,949, respectively. |
6 | Less than 0.01%. |
The accompanying notes are an integral part of these financial statements.
BBH U.S. GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 2018 (unaudited)
1. | Organization.The Fund is a separate series of BBH Trust (the “Trust”), which is registered under the 1940 Act, as an open-end management investment company. The Trust was originally organized as a Massachusetts business trust on June 7, 1983 and re-organized as a Delaware statutory trust on June 12, 2007. The Fund commenced operations on December 12, 1983. The Declaration of Trust permits the Board of Trustees of the Trust (the “Board”) to create an unlimited number of series, each of which may issue a separate class of shares. The Fund currently offers two classes of shares, Regular Shares and Institutional Shares. At December 31, 2018, there were seven series of the Trust. |
In July 2014, the U.S. Securities and Exchange Commission (the “SEC”) adopted amendments to the governing rules for money market funds, such amendments becoming effective over a two-year implementation period. As part of these rule changes, effective April 1, 2016, the Fund converted to a government money market fund and in so doing changed its name to the BBH U.S. Government Money Market Fund. |
2. | Significant Accounting Policies. The Fund’s financial statements are prepared in accordance with Generally Accepted Accounting Principles in the United States of America (“GAAP”). The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 Financial Services — Investment Companies. The following summarizes significant accounting policies of the Fund: |
A. | Valuation of Investments. The Fund values its investments at amortized cost, which approximates fair value. The amortized cost method values a security at its cost at the time of purchase and thereafter assumes a constant amortization to maturity of any discount or premium. The Fund’s use of amortized cost is in compliance with Rule 2a-7 of the 1940 Act. In the event that security valuations do not approximate fair value, securities may be valued as determined in accordance with procedures adopted by the Board. |
B. | Accounting for Investments and Income. Investment transactions are accounted for on the trade date. Realized gains and losses on investment transactions are determined based on the identified cost method. Interest income is accrued as earned and consists of interest accrued, accretion of discount on debt securities (including both original issue and market discount) and premium amortization on the investments of the Fund. |
C. | Fund Expenses. Most expenses of the Trust can be directly attributed to a specific fund. Expenses which cannot be directly attributed to a fund are apportioned amongst each fund in the Trust on a net assets basis. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known. |
BBH U.S. GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2018 (unaudited)
D. | Repurchase Agreements. The Fund may enter into repurchase agreements. Repurchase agreements are transactions in which the Fund buys a security from a dealer or bank and agrees to sell the security back at a mutually agreed upon time and price. The repurchase price normally is in excess of the purchase price, reflecting an agreed upon interest rate. The rate is effective for the period of time that assets of the Fund are invested in the agreement and is not related to the coupon rate on the underlying security. The Fund will enter into repurchase agreements only with banks and other recognized financial institutions, such as securities dealers, deemed creditworthy by the investment adviser. The Fund’s custodian or sub-custodian will take possession of the securities subject to repurchase agreements. The investment adviser, custodian or sub-custodian will monitor the marked-to-market value of the underlying collateral each day to ensure that the value of the security always equals or exceeds the repurchase price. |
E. | Federal Income Taxes. It is the Trust’s policy to comply with the requirements of the Internal Revenue Code (the “Code”) applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Accordingly, no federal income tax provision is required. The Fund files a tax return annually using tax accounting methods required under provisions of the Code, which may differ from GAAP, which is the basis on which these financial statements are prepared. Accordingly, the amount of net investment income and net realized gain reported in these financial statements may differ from that reported on the Fund’s tax return, due to certain book-to-tax timing differences such as losses deferred due to “wash sale” transactions and utilization of capital loss carryforwards. These differences result in temporary over-distributions for financial statement purposes and are classified as distributions in excess of accumulated net realized gains or net investment income. These distributions do not constitute a |
BBH U.S. GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2018 (unaudited)
return of capital. Permanent differences are reclassified in the Statement of Assets & Liabilities based upon their tax classification. As such, the character of distributions to shareholders reported in the Financial Highlights table may differ from that reported to shareholders on Form 1099-DIV. |
F. | Dividends and Distributions to Shareholders. Dividends and distributions from net investment income to shareholders are declared daily and paid monthly to shareholders. Distributions from net capital gains, if any, are generally declared and paid annually and are recorded on the ex-dividend date. The Fund declared dividends in the amounts of $348,954 and $19,499,166 to Regular and Institutional shareholders, respectively, during the six months ended December 31, 2018. |
Distributions paid from: | ||||||||||||||||||||
Ordinary income | Net long-term capital gain | Total taxable distributions | Total Distributions paid | |||||||||||||||||
2018: | $ | 18,098,543 | $ | — | $ | 18,098,543 | $ | 18,098,543 | ||||||||||||
2017: | 4,246,392 | — | 4,246,392 | 4,246,392 |
BBH U.S. GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2018 (unaudited)
Undistributed ordinary income | Undistributed long-term capital gain | Retained earnings/ (accumulated deficit) | Accumulated capital and other losses | Other book/tax temporary differences | Book unrealized appreciation/ (depreciation) | Total retained earnings/ (accumulated deficit) | ||||||||||||||||||||||||
2018: | $ | 228,081 | $ | — | $ | 228,081 | $ | (38,080 | ) | $ | (225,812 | ) | $ | — | $ | (35,811 | ) | |||||||||||||
2017: | �� | 62,795 | — | 62,795 | (13,121 | ) | (49,698 | ) | — | (24 | ) |
G. | Use of Estimates. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from these estimates. |
3. | Fees and Other Transactions with Affiliates. |
A. | Investment Advisory and Administrative Fees. Effective June 12, 2007, under a combined Investment Advisory and Administrative Services Agreement (“Agreement”) with the Trust, Brown Brothers Harriman & Co. (“BBH”) through a separately identifiable department (“SID” or “Investment Adviser”) provides investment advisory and portfolio management services to the Fund. BBH also |
BBH U.S. GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2018 (unaudited)
provides administrative services to the Fund. The Fund pays a combined fee for investment advisory and administrative services calculated daily and paid monthly at an annual rate equivalent to 0.25% on the first $1,000,000,000 of the Fund’s average daily net assets and 0.20% of the Fund’s average daily net assets in excess of $1,000,000,000. For the six months ended December 31, 2018, the Fund incurred $2,327,629 for services under the Agreement. |
B. | Investment Advisory and Administrative Fee Waiver. BBH has voluntarily agreed to waive its Investment Advisory and Administrative Fee and credit daily to the Fund an amount necessary to maintain the minimum annualized yield of the Fund at 1 basis point (0.01%). The amount credited each day will offset to the daily accrual of the Investment Advisory and Administrative Fee. This is a voluntary waiver that can be changed at any time at the sole discretion of BBH. For the six months ended December 31, 2018, BBH did not waive any fees because the Fund’s annualized yield exceeded 0.01%. |
C. | Shareholder Servicing Fees. The Trust has a shareholder servicing agreement with BBH. BBH receives a fee from the Regular Shares of the Fund calculated daily and paid monthly at an annual rate of 0.20% of the Regular Shares’ average daily net assets. For the six months ended December 31, 2018, the Regular Shares of the Fund incurred $44,253 in shareholder servicing fees. |
D. | Shareholder Servicing Fee Waiver. BBH has voluntarily agreed to waive its Shareholder Servicing Fee for the Regular Shares only when the Investment Advisory and Administrative Fee waiver described above is not enough to maintain the minimum daily yield of the Fund at 1 basis point (0.01%). The amount credited each day will offset to the daily accrual of the Shareholder Servicing Fee. This is a voluntary waiver that can be changed at any time at the sole discretion of BBH. For the six months ended December 31, 2018, BBH did not waive any fees. |
E. | Custody and Fund Accounting Fees. BBH acts as a custodian and fund accountant and receives custody and fund accounting fees from the Fund calculated daily and paid monthly. BBH holds all of the Fund’s cash and investments and calculates the Fund’s daily net asset value. The custody fee is an asset and transaction based fee. The fund accounting fee is an asset based fee calculated at 0.004% per annum of average daily net assets. For the six months ended December 31, 2018, the Fund incurred $41,702 in custody and fund accounting fees. These fees for the Fund were reduced by $157,035 as a result of an expense offset arrangement with the Fund’s custodian. The credit amount (if any) is disclosed in the Statement of Operations as a reduction to the Fund’s expenses. In the event that the Fund is overdrawn, under the custody agreement with BBH, BBH will make overnight loans to the Fund to cover overdrafts. Pursuant to their agreement, the Fund will pay the Federal Funds overnight investment rate on the day of the overdraft. Overdraft fees are included in the “Miscellaneous Expenses” in the Statement of Operations. The total interest |
BBH U.S. GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2018 (unaudited)
incurred by the Fund for the six months ended December 31, 2018 was $24,383. This amount is included in the “Custody and fund accounting fees” in the Statement of Operations. |
F. | Board of Trustees’ Fees. Each Trustee who is not an “interested person” as defined under the 1940 Act (referred to here as an “Independent Trustee”) receives an annual fee as well as reimbursement for reasonable out-of-pocket expenses from the Fund. For the six months ended December 31, 2018, the Fund incurred $24,118 in Independent Trustee compensation and reimbursements. |
4. | Shares of Beneficial Interest. The Trust is permitted to issue an unlimited number of Regular Shares and Institutional Shares of beneficial interest, at no par value. Transactions in Regular Shares and Institutional Shares were as follows: |
For the six months ended December 31, 2018 (unaudited) | For the year ended June 30, 2018 | ||||||||||||||||||
Shares | Dollars | Shares | Dollars | ||||||||||||||||
Regular Shares | |||||||||||||||||||
Shares sold | 96,700,451 | $ | 96,700,451 | 196,612,835 | $ | 196,612,835 | |||||||||||||
Shares issued in connection with reinvestments of dividends | 212,162 | 212,162 | 248,045 | 248,045 | |||||||||||||||
Shares redeemed | (118,338,359 | ) | (118,338,359 | ) | (201,832,295 | ) | (201,832,295 | ) | |||||||||||
Net decrease | (21,425,746 | ) | $ | (21,425,746 | ) | (4,971,415 | ) | $ | (4,971,415 | ) | |||||||||
Institutional Shares | |||||||||||||||||||
Shares sold | 3,558,772,795 | $ | 3,558,772,795 | 5,722,226,237 | $ | 5,722,226,237 | |||||||||||||
Shares issued in connection with reinvestments of dividends | 53,400 | 53,400 | 228,068 | 228,068 | |||||||||||||||
Shares redeemed | (2,645,852,602 | ) | (2,645,852,602 | ) | (5,467,560,829 | ) | (5,467,560,829 | ) | |||||||||||
Net increase | 912,973,593 | $ | 912,973,593 | 254,893,476 | $ | 254,893,476 |
5. | Principal Risk Factors and Indemnifications. |
A. | Principal Risk Factors. Investing in the Fund may involve certain risks, as discussed in the Fund’s prospectus, including but not limited to, those described below: |
BBH U.S. GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2018 (unaudited)
provide financial support to the Fund and you should not expect that BBH as the Fund’s sponsor will provide financial support to the Fund at any time. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. Please refer to the Fund’s prospectus for a complete description of the principal risks of investing in the Fund.
B. | Indemnifications. Under the Trust’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Fund, and shareholders are indemnified against personal liability for the obligations of the Trust. Additionally, in the normal course of business, the Fund enters into agreements with service providers that may contain indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss from such claims is considered remote. |
BBH U.S. GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2018 (unaudited)
6. | Money Market Reform. Money market funds are required to comply with SEC-adopted amendments to the governing rules for money market funds. Government money market funds, such as BBH U.S. Government Money Market Fund, are permitted to continue to transact fund shares at a NAV calculated using the amortized cost valuation method. The Fund’s Board of Trustees has determined not to impose any liquidity-based redemption fees or redemption gates on the Fund as permitted by the SEC amendments. As a government money market fund, the Fund must invest 99.5% or more of its total assets in cash, government securities, and/or repurchase agreements that are collateralized fully by cash or government securities. |
7. | Recent Pronouncements. |
A. | ASU 2018-13. On August 28, 2018, the Financial Accounting Standards Board issued an Accounting Standards Update, ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement (the “ASU 2018-13”). ASU 2018-13 modifies the disclosure objective paragraphs of Accounting Standards Codification 820 to eliminate (1) “at a minimum” from the phrase “an entity shall disclose at a minimum” and (2) other similar “open ended” disclosure requirements to promote the appropriate exercise of discretion by entities. ASU 2018-13 also eliminates and modifies other requirements under ASU 2018-13. ASU 2018-13 is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application is permitted and Management is currently evaluating the application of ASU 2018-13 and its impact, if any, on the Fund’s financial statements. |
B. | Regulation S-X. In October 2018, the U.S. Securities and Exchange Commission adopted amendments to certain disclosure requirements that had become “redundant, duplicative, overlapping, outdated or superseded, in light of the other Commission disclosure requirements, U.S. GAAP or changes in the information environment”. The compliance date for the amendments to Regulation S-X is November 5, 2018 (for reporting period end dates of September 30, 2018 and after). |
8. | Subsequent Events. Management has evaluated events and transactions that have occurred since December 31, 2018 through the date the financial statements were issued and determined that there were none that would require recognition or additional disclosure in the financial statements. |
BBH U.S. GOVERNMENT MONEY MARKET FUND
DISCLOSURE OF FUND EXPENSES
December 31, 2018 (unaudited)
BBH U.S. GOVERNMENT MONEY MARKET FUND
DISCLOSURE OF FUND EXPENSES (continued)
December 31, 2018 (unaudited)
Beginning Account Value July 1, 2018 | Ending Account Value December 31, 2018 | Expenses Paid During Period July 1, 2018 to December 31, 20181 | ||||||||||||
Regular Shares | ||||||||||||||
Actual | $ | 1,000 | $ | 1,008 | $ | 2.38 | ||||||||
Hypothetical2 | $ | 1,000 | $ | 1,023 | $ | 2.40 |
Beginning Account Value July 1, 2018 | Ending Account Value December 31, 2018 | Expenses Paid During Period July 1, 2018 to December 31, 20181 | ||||||||||||
Institutional Shares | ||||||||||||||
Actual | $ | 1,000 | $ | 1,009 | $ | 1.11 | ||||||||
Hypothetical2 | $ | 1,000 | $ | 1,024 | $ | 1.12 |
1 | Expenses are equal to the Fund’s annualized net expense ratio of 0.47% and 0.22% for Regular and Institutional Shares, respectively, multiplied by 184/365 (to reflect the one half-year period). |
2 | Assumes a return of 5% before expenses. For the purpose of the calculation, the applicable annualized expense ratio for each class of shares is subtracted from the assumed return before expenses. |
BBH U.S. GOVERNMENT MONEY MARKET FUND
DISCLOSURE OF ADVISOR SELECTION
December 31, 2018 (unaudited)
BBH U.S. GOVERNMENT MONEY MARKET FUND
DISCLOSURE OF ADVISOR SELECTION (continued)
December 31, 2018 (unaudited)
BBH U.S. GOVERNMENT MONEY MARKET FUND
DISCLOSURE OF ADVISOR SELECTION (continued)
December 31, 2018 (unaudited)
group in the 2-, 3-, 4- and 5-year periods. In evaluating the performance of the Fund, the Board considered risk expectations for the Fund in light of relevant regulatory and market factors and in the context of Fund expenses and the Investment Adviser’s profitability.
BBH U.S. GOVERNMENT MONEY MARKET FUND
DISCLOSURE OF ADVISOR SELECTION (continued)
December 31, 2018 (unaudited)
as a whole, as well as among funds similar to the Fund, there appeared to be no uniformity or pattern in the fees and asset levels at which breakpoints apply. In light of the Fund’s current size and expense structure, the Board concluded that the current breakpoints for the Fund were reasonable. The Board concluded that the fees paid by the Fund to the Investment Adviser were reasonable based on the comparative performance, expense information, the cost of the services provided and the profits to be realized by the Investment Adviser.
BBH U.S. GOVERNMENT MONEY MARKET FUND
CONFLICTS OF INTEREST
December 31, 2018 (unaudited)
BBH U.S. GOVERNMENT MONEY MARKET FUND
CONFLICTS OF INTEREST (continued)
December 31, 2018 (unaudited)
BBH U.S. GOVERNMENT MONEY MARKET FUND
CONFLICTS OF INTEREST (continued)
December 31, 2018 (unaudited)
example, in negotiating fee arrangements with affiliated service providers, BBH may have an incentive to agree to higher fees than it would in the case of unaffiliated providers. BBH acting in its capacity as the Fund’s administrator is the primary valuation agent of the Fund. BBH values securities and assets in the Fund according to the Fund’s valuation policies. Because the Investment Adviser and BBH’s advisory and administrative fees are calculated by reference to the Fund’s net assets, BBH and its affiliates may have an incentive to seek to overvalue certain assets.
BBH U.S. GOVERNMENT MONEY MARKET FUND
CONFLICTS OF INTEREST (continued)
December 31, 2018 (unaudited)
Administrator Brown Brothers Harriman & Co. 140 Broadway New York, NY 10005 Distributor Alps Distributors, Inc. 1290 Broadway, Suite 1100 Denver, Co 80203 Shareholder Servicing Agent Brown Brothers Harriman & Co. 140 Broadway New York, NY 10005 1-800-575-1265 | Investment Adviser Brown Brothers Harriman Mutual Fund Advisory Department 140 Broadway New York, NY 10005 |
By telephone: | Call 1-800-575-1265 | |||
By E-mail send your request to: | bbhfunds@bbh.com | |||
On the internet: | www.bbhfunds.com |
Item 2. Code of Ethics.
Not required for this semi-annual report on Form N-CSR.
|
Item 3. Audit Committee Financial Expert.
Not required for this semi-annual report on Form N-CSR.
|
Item 4. Principal Accountant Fees and Services.
Not required for this semi-annual report on Form N-CSR.
|
Item 5. Audit Committee of Listed Registrants.
(a) | Not required for this semi-annual report on Form N-CSR.
|
(b) | Not required. |
Item 6. Investments.
(a) | This schedule is included as part of the report to shareholders filed under Item 1 of this Form N-CSR.
|
(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.
Not applicable. |
Item 11. Controls and Procedures.
(a) | The Registrant’s principal executive and financial officers 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”)) are effective, as of a date within 90 days of the filing date of this Form N-CSR, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
|
(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) that occurred during the Registrant's second fiscal quarter of the period covered by this Form N-CSR, that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting. |
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable. |
Item 13. Exhibits.
(a)(1) | Not required for this semi-annual report on Form N-CSR.
|
(a)(2) | Certifications required by Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are filed as Exhibit 12(a)(2) to this Form N-CSR.
|
(a)(3) | Not applicable. |
(a)(4) | Not applicable. |
(b) | Certifications required by Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are furnished as Exhibit 12(b) to this Form N-CSR. |
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) BBH Trust
By: (Signature and Title)
/s/Jean-Pierre Paquin
Jean-Pierre Paquin
Title: President (Principal Executive Officer)
Date: March 11, 2019
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/Jean-Pierre Paquin
Jean-Pierre Paquin
Title: President (Principal Executive Officer)
Date: March 11, 2019
By: (Signature and Title)
/s/Charles H. Schreiber
Charles H. Schreiber
Title: Treasurer (Principal Financial Officer)
Date: March 11, 2019