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 BBH Core Select BBH International Equity Fund BBH Real Return Fund BBH Broad Market Fund (Exact name of Registrant as specified in charter) 140 Broadway New York, NY 10005 (Address of principal executive offices) Charles H.Schreiber, Principal Financial Officer, BBH Trust, 140 Broadway, New York, NY 10005 Mailing address: 140 Broadway, New York, NY, 10005 (Name and address of agent for service) Corporation Services Company, 2711 Centerville Road, Suite 400, Wilmington, DE, 19808 Registrant's telephone number, including area code: (212) 593-7237 Date of fiscal year end: OCTOBER 31 Date of reporting period: APRIL 30, 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, 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. Section 3507. ITEM 1. REPORTS TO STOCKHOLDERS. BROWN [LOGO] BROTHERS HARRIMAN Semi-Annual Report APRIL 30, 2008 ---------- BBH CORE SELECT <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- PORTFOLIO ALLOCATION April 30, 2008 (unaudited) SECTOR DIVERSIFICATION Percent of U.S. $ Value Net Assets ------------ ---------- Consumer Discretionary............................ $ 26,303,214 16.0% Consumer Staples.................................. 34,664,699 21.1 Energy............................................ 9,997,417 6.1 Financials........................................ 22,640,894 13.8 Health Care....................................... 8,220,658 5.0 Industrials....................................... 11,890,779 7.2 Information Technology............................ 25,580,820 15.5 Materials......................................... 3,935,461 2.4 Short-Term Investment............................. 13,500,000 8.2 Cash and Other Assets in Excess of Liabilities.... 7,739,893 4.7 ------------ ---------- NET ASSETS........................................ $164,473,835 100.0% ============ ========== All data as of April 30, 2008. The Fund's sector breakdown is expressed as a percentage of net assets and may vary over time. The accompanying notes are an integral part of these financial statements. 2 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS April 30, 2008 (unaudited) Shares Value ------ ----- COMMON STOCKS (87.1%) CONSUMER DISCRETIONARY (16.0%) 104,400 Bed, Bath & Beyond, Inc.(1)........................ $ 3,393,000 336,050 Comcast Corp. (Class A)............................ 6,905,827 259,925 Liberty Global, Inc. (Series C)(1)................. 8,629,510 287,675 Liberty Media Corp. - Interactive A(1)............. 4,352,523 66,850 Time Warner, Inc................................... 992,722 52,800 Viacom, Inc. (Class B)(1).......................... 2,029,632 ------------- Total Consumer Discretionary....................... 26,303,214 ------------- CONSUMER STAPLES (21.1%) 129,000 Cadbury Schweppes, Plc. ADR........................ 5,946,900 56,000 Coca-Cola Co. ..................................... 3,296,720 65,129 Costco Wholesale Corp. ............................ 4,640,441 71,475 Nestle SA ADR...................................... 8,526,496 44,500 PepsiCo, Inc. ..................................... 3,049,585 158,754 Wal-Mart Stores, Inc. ............................. 9,204,557 ------------- Total Consumer Staples............................. 34,664,699 ------------- ENERGY (6.1%) 69,650 Occidental Petroleum Corp.......................... 5,795,576 67,925 XTO Energy, Inc. .................................. 4,201,841 ------------- Total Energy....................................... 9,997,417 ------------- FINANCIALS (13.8%) 45,275 AFLAC, Inc......................................... 3,018,484 88 Berkshire Hathaway, Inc. (Class A)(1).............. 11,778,800 88,625 Chubb Corp......................................... 4,694,466 173,125 Progressive Corp................................... 3,149,144 ------------- Total Financials................................... 22,640,894 ------------- HEALTH CARE (5.0%) 60,175 Amgen, Inc.(1)..................................... 2,519,527 113,275 Novartis AG ADR.................................... 5,701,131 ------------- Total Health Care.................................. 8,220,658 ------------- The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2008 3 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2008 (unaudited) Shares Value ------ ----- INDUSTRIALS (7.2%) 38,400 W.W. Grainger, Inc. ................................. $ 3,329,664 237,150 Waste Management, Inc. .............................. 8,561,115 ------------- Total Industrials.................................... 11,890,779 ------------- INFORMATION TECHNOLOGY (15.5%) 75,125 Automatic Data Processing, Inc....................... 3,320,525 278,890 Dell, Inc.(1)........................................ 5,195,721 149,250 Intuit, Inc.(1)...................................... 4,025,273 180,788 Microsoft Corp....................................... 5,156,074 342,749 Western Union Co..................................... 7,883,227 ------------- Total Information Technology......................... 25,580,820 ------------- MATERIALS (2.4%) 43,100 Praxair, Inc. ....................................... 3,935,461 ------------- Total Materials...................................... 3,935,461 ------------- TOTAL COMMON STOCKS (Identified cost $126,454,179)... 143,233,942 ------------- Principal Amount ------ SHORT-TERM INVESTMENT (8.2%) $13,500,000 U.S. Treasury Bill 1.263% 05/01/08................... 13,500,000 ------------- TOTAL SHORT-TERM INVESTMENT (Identified cost $13,500,000)........................ 13,500,000 ------------- TOTAL INVESTMENTS (Identified cost $139,954,179)(2)...... 95.3% $156,733,942 CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES........... 4.7 7,739,893 ----- ------------- NET ASSETS............................................... 100.0% $164,473,835 ===== ============= - ---------- (1) Non-income producing security. (2) The aggregate cost for federal income tax purposes is $139,954,179, the aggregate gross unrealized appreciation is $23,153,740, and the aggregate gross unrealized depreciation is $6,373,978, resulting in net unrealized appreciation of $16,779,762. ADR - American Depositary Receipt. The accompanying notes are an integral part of these financial statements. 4 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES April 30, 2008 (unaudited) ASSETS: Investments in securities, at value (identified cost $139,954,179)................................. $156,733,942 Cash........................................................... 1,030,925 Receivables for: Capital stock sold........................................... 7,479,789 Dividends.................................................... 173,047 ------------ Total Assets............................................... 165,417,703 ------------ LIABILITIES: Payables for: Investments purchased........................................ 437,458 Capital stock redeemed....................................... 229,417 Investment advisory fees..................................... 159,996 Shareholder servicing fees................................... 61,537 Administrative fees.......................................... 36,923 Custody and accounting fees.................................. 10,838 Professional fees............................................ 6,699 Board of Trustees' fees...................................... 1,000 ------------ Total Liabilities.......................................... 943,868 ------------ NET ASSETS........................................................ $164,473,835 ============= Net Assets Consist of: Par value...................................................... $ 12,435 Paid-in capital................................................ 148,254,095 Undistributed net investment income............................ 202,515 Accumulated net realized loss on investments................... (774,972) Net unrealized appreciation on investments..................... 16,779,762 ------------ Net Assets........................................................ $164,473,835 ============= NET ASSET VALUE AND OFFERING PRICE PER CLASS N SHARE ($164,473,835 / 12,435,353 shares outstanding)................. $13.23 ====== The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2008 5 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS For the six months ended April 30, 2008 (unaudited) NET INVESTMENT INCOME: Income: Dividends and other income (net of withholding tax $53,813). $ 843,826 Interest.................................................... 137,648 Other income................................................ 20,209 ------------ Total Income.............................................. 1,001,683 ------------ Expenses: Investment advisory fees.................................... 431,381 Shareholder servicing fees.................................. 165,916 Administrative fees......................................... 99,550 Custody and accounting fees................................. 24,746 Board of Trustees' fees..................................... 8,971 Professional fees........................................... 2,678 Miscellaneous expenses...................................... 34,249 ------------ Total Expenses............................................ 767,491 Expense offset arrangement................................ (15,155) ------------ Net Expenses.............................................. 752,336 ------------ Net Investment Income......................................... 249,347 ------------ NET REALIZED AND UNREALIZED LOSS: Net realized loss on investments.............................. (319,042) Net change in unrealized depreciation on investments.......... (3,073,434) ------------ Net Realized and Unrealized Loss............................ (3,392,476) ------------ Net Decrease in Net Assets Resulting from Operations.......... $ (3,143,129) ============= The accompanying notes are an integral part of these financial statements. 6 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS For the six For the months ended year ended April 30, 2008 October 31, (unaudited) 2007 -------------- ----------- INCREASE IN NET ASSETS: Operations: Net investment income......................... $ 249,347 $ 183,148 Net realized gain (loss) on investments....... (319,042) 5,592,528 Net change in unrealized appreciation (depreciation)on investments................ (3,073,434) 10,551,809 -------------- ------------ Net increase (decrease) in net assets resulting from operations................... (3,143,129) 16,327,485 -------------- ------------ Dividends and distributions to Class N shareholders declared from net investment income:............................ (195,525) (350,622) -------------- ------------ Capital stock transactions: Net proceeds from sales of capital stock...... 59,021,107 46,694,371 Net asset value of capital stock issued to shareholders for reinvestment of distributions............................ 70,312 36,137 Net cost of capital stock redeemed............ (13,488,733) (23,479,800) -------------- ------------ Net increase in net assets resulting from capital stock transactions................ 45,602,686 23,250,708 -------------- ------------ Total increase in net assets................ 42,264,032 39,227,571 NET ASSETS: Beginning of year............................... 122,209,803 82,982,232 -------------- ------------ End of period (including undistributed net investment income of $202,515 and $148,693, respectively)....................... $164,473,835 $122,209,803 ============== ============ The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2008 7 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Selected per share data and ratios for a Class N share outstanding throughout each period <TABLE> <CAPTION> For the six months ended For the years ended October 31, April 30, 2008 ---------------------------------------------------- (unaudited) 2007 2006 2005 2004 2003 -------------- ---- ---- ---- ---- ---- <S> <C> <C> <C> <C> <C> <C> Net asset value, beginning of year $13.71 $11.74 $10.20 $ 9.30 $8.94 $7.79 Income from investment operations: Net investment income..... 0.02 0.02 0.04 0.05 0.02 0.04 Net realized and unrealized gain (loss)............. (0.48) 2.00 1.51 0.91 0.38 1.12 ------ ------ ------ ------ ----- ----- Total income (loss) from investment operations. (0.46) 2.02 1.55 0.96 0.40 1.16 ------ ------ ------ ------ ----- ----- Less dividends and distributions: From net investment income (0.02) (0.05) (0.01) (0.06) (0.04) (0.01) ------ ------ ------ ------ ----- ----- Net asset value, end of period $13.23 $13.71 $11.74 $10.20 $9.30 $8.94 ====== ====== ====== ====== ===== ===== Total return................. (3.35)% 17.25% 15.18% 10.31% 4.46% 14.34% Ratios/Supplemental data: Net assets, end of period (in millions)........... $164 $122 $83 $62 $48 $47 Expenses as a percentage of average net assets...... 1.13%(1),(2) 1.16%(1) 1.19%(1) 1.22%(1),(3) 1.20%(3) 1.20%(3) Ratio of net investment income to average net assets... 0.38%(2) 0.18% 0.45% 0.47% 0.23% 0.42% Portfolio turnover rate... 19%(2) 18% 53% 59% 57% 44% </TABLE> - ---------- (1) For the six months ended April 30, 2008, and the years ended October 31, 2007, 2006 and 2005, the Fund's expenses were reduced through an expense offset arrangement with the Fund's custodian; had the arrangement not been in place, the actual expense ratio of the Fund would have been 1.16%, 1.19%, 1.24% and 1.27%, respectively. (2) Annualized. (3) Had the expense reimbursement agreement, which terminated on December 31, 2004, not been in place, the ratio of expenses to average net assets would have been as follows: N/A N/A N/A 1.24% 1.32% 1.36% The accompanying notes are an integral part of these financial statements. 8 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS April 30, 2008 (unaudited) 1. Organization and Significant Accounting Policies. BBH Core Select (the "Fund") is a separate, diversified series of BBH Trust (the "Trust"), which is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Trust was originally organized under the laws of the State of Maryland on July 16, 1990 as BBH Fund, Inc. and re-organized as a Delaware statutory trust on June 12, 2007. The Fund commenced operations on November 2, 1998. On February 20, 2001, the Trustees reclassified the Fund's outstanding shares as "Class N", and established a new class of shares designated as "Class I". As of April 30, 2008, there were no Class I shares outstanding. At April 30, 2008, there were seven series of the Trust. The Fund's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements and are based, in part, on the following accounting policies. Actual results could differ from those estimates. A. Valuation of Investments. (1) The value of investments listed on a securities exchange is based on the last sale price on that exchange prior to the time when assets are valued, or in the absence of recorded sales, at the average of readily available closing bid and asked prices on such exchange; (2) unlisted securities are valued at the average of the quoted bid and asked prices in the over-the-counter market; (3) securities or other assets for which market quotations are not readily available are valued at fair value in accordance with procedures established by and under the general supervision and responsibility of the Trust's Board of Trustees; (4) short-term investments which mature in 60 days or less are valued at amortized cost if their original maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if their original maturity when acquired by the Fund was more than 60 days, unless this is determined not to represent fair value by the Trust's Board of Trustees. B. Accounting for Investments and Income. Security transactions are accounted for on the trade date. Realized gains and losses on security transactions are determined on the identified cost method. Dividend income and other distributions from portfolio securities are recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of securities received. Distributions received on securities that represent a return of capital or a capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Interest income is accrued daily. Investment income is recorded net of foreign taxes withheld where recovery of such tax is uncertain. C. Securities Lending. The Fund may lend its portfolio securities to broker-dealers, qualified banks and certain institutional investors. The loans are secured by collateral in an amount equal to at least the market value at all times of the loaned securities plus any accrued interest and dividends. During the time the securities are on loan, the Fund will continue to receive the interest and FINANCIAL STATEMENT APRIL 30, 2008 9 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2008 (unaudited) dividends or amounts equivalent thereto, on the loaned securities while receiving a fee from the borrower or earning interest on the investment of the cash collateral. Loans are subject to termination at the option of the borrower or the Fund. Upon termination of the loan, the borrower will return to the lender securities identical to the loaned securities. The Fund may pay reasonable finders', administrative and custodial fees in connection with a loan of its securities and may share the interest earned on the collateral with the borrower. The Fund bears the risk of delay in recovery of, or even loss of rights in, the securities loaned should the borrower of the securities fail financially. There were no securities on loan as of April 30, 2008. D. 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 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 accounting principles generally accepted in the United States of America, the basis on which these financial statements are prepared. Accordingly, the amount of net investment income and net realized gain reported on these financial statements may differ from that reported on the Fund's tax return due to certain book-to-tax differences such as losses deferred due to "wash sale" transactions and utilization of capital loss carryforwards. These differences may 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 return of capital. Permanent differences are reclassified on the Statement of Assets and 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. E. Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, if any, are paid annually and are recorded on the ex-dividend date. The tax character of distributions paid during the fiscal years ended October 31, 2007 and 2006, respectively, were as follows: Distribution paid from: ----------------------- Net Total Total Ordinary long term taxable Tax return distributions income capital gain distributions of capital paid --------- ------------ ------------- ---------- ------------- 2007: $350,622 - $350,622 - $350,622 2006: 48,978 - 48,978 - 48,978 10 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2008 (unaudited) As of October 31, 2007 and 2006, respectively, the components of accumulated earnings/(deficit) on a tax basis were as follows: <TABLE> <CAPTION> Components of accumulated earnings/(deficit): --------------------------------------------- Total Undistributed Undistributed Accumulated Unrealized accumulated ordinary long-term Accumulated capital and appreciation/ earnings/ income capital gains earnings other losses (depreciation ) (deficit) ------------- ------------- ----------- ------------- --------------- ------------- <S> <C> <C> <C> <C> <C> <C> 2007: $148,693 - $148,693 $ (437,645) $19,834,912 $19,545,960 2006: 316,167 - 316,167 (6,039,537) 9,292,467 3,569,097 </TABLE> The Fund had net capital loss carryforwards of approximately $437,645 which expires as follows: Expiration date Amount ---------- -------- 10/31/2011 $347,756 10/31/2012 89,889 -------- $437,645 ======== Total distributions paid may differ from the Statement of Changes in Net Assets because, for tax purposes, dividends are recognized when actually paid. The differences between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. F. Accounting Developments. In June 2006, the Fund adopted FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund's tax returns to determine whether that tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. The adoption of FIN 48 had no impact on the operations of the Fund for the period ended April 30, 2008. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 FINANCIAL STATEMENT APRIL 30, 2008 11 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2008 (unaudited) defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the implication of SFAS 157. At this time its impact on the Fund's financial statements has not yet been determined. In March 2008, Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161), was issued and is effective for fiscal years beginning after November 15, 2008. SFAS 161 requires enhanced disclosures to provide information about the reasons the Fund invests in derivative instruments, the accounting treatment and the effect derivatives have on financial performance. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund's financial statement disclosures. 2. Transactions with Affiliates. Advisory and Administrative Fees. Effective June 12, 2007, under a combined Investment Advisory and Administrative Services Agreement ("Agreement") with the Trust, a separately identifiable department within Brown Brothers Harriman & Co. ("BBH") provides investment advice, and portfolio management and administrative services to the Fund. BBH receives a combined fee from the Fund for advisory and administrative services calculated daily and paid monthly at an annual rate equivalent to 0.80% of the fund's average daily net assets. Prior to June 12, 2007 under a separate agreement that covered only advisory fees, BBH received a fee from the Fund calculated daily and paid monthly at an annual rate of 0.65% of the Fund's average daily net assets and Brown Brothers Harriman Trust Company, LLC ("BBHTC") the Fund's administrator, under a separate agreement that covered only administrative services, received a fee from the Fund calculated daily and paid monthly at an annual rate equivalent to 0.15% of the Fund's average daily net assets. BBH has a sub-administration services agreement with Federated Services Company ("FSC") for which FSC receives compensation paid by BBH. For the six months ended April 30, 2008, the Fund incurred $530,931 for advisory and administrative services. Shareholder Servicing Fees. The Trust has a shareholder servicing agreement with BBH for which BBH receives a fee from the Fund calculated daily and paid monthly at an annual rate of 0.25% of Class N shares' average daily net assets. For the six months ended April 30, 2008, the Fund incurred $165,916 for shareholder servicing services. Custody and Accounting Fees. BBH acts as a custodian and shall receive a custody and accounting fee from the Fund calculated daily and paid monthly. BBH holds all cash and investments and calculates the daily net asset value. The custody fee is a transaction based fee with an annual minimum of $30,000, and the accounting fee is calculated at 0.04% per annum on the first $100 million of net assets, 0.02% per annum on the next $400 million of net assets and 0.01% per annum on all net assets over $500 million. Custody and accounting fees were reduced by $15,155 as a result of an expense 12 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2008 (unaudited) offset arrangement with the Fund's custodian. For the six months ended April 30, 2008, the Fund incurred $24,746 for custody and accounting services. 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 overdraft. The total interest paid by the Fund for the six months ended April 30, 2008 was $568. Securities Lending Fees. The Trust has a security lending agreement with BBH for which BBH receives a fee from the Fund for each security loaned. For the six months ended April 30, 2008, the Fund incurred no security lending fees. Board of Trustees' Fees. Each Trustee receives an annual fee as well as reimbursement for reasonable out-of-pocket expenses from the Fund. For the six months ended April 30, 2008, the Fund incurred $8,971 for these fees. 3. Investment Transactions. For the six months ended April 30, 2008, the cost of purchases and the proceeds of sales of investment securities other than short-term investments were $47,163,697 and $11,893,575, respectively. 4. Securities on Loan. As of April 30, 2008, the Fund had no securities on loan. 5. Capital Stock. BBH Fund, Inc. was permitted to issue 2,500,000,000 shares of capital stock, par value $.001 per share, of which 277,777,778 shares were classified as Class N shares of the Fund and 277,777,778 shares were classified as Class I shares of the Fund. There have been no transactions in Class I shares of capital stock as of April 30, 2008. The Trust offers unlimited shares without par value. Transactions in Class N shares of capital stock were as follows: SHARES ----------------------------------- For the six months ended For the April 30, 2008 year ended (unaudited) October 31, 2007 ------------- ---------------- Capital stock sold........................ 4,560,757 3,718,102 Capital stock issued in connection with reinvestment of distributions...... 5,298 3,021 Capital stock redeemed.................... (1,044,858) (1,876,256) ------------- ---------------- Net increase.............................. 3,521,197 1,844,867 ============= ================ FINANCIAL STATEMENT APRIL 30, 2008 13 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES April 30, 2008 (unaudited) EXAMPLE As a shareholder of BBH Core Select, you may incur two types of costs: (1) transaction costs on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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 (November 1, 2007 to April 30, 2008). ACTUAL EXPENSES The first line of the table below provides information about actual account values and actual expenses. You may use information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your 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 the Period" to estimate the expenses you paid on your account during the period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid during the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. 14 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES (continued) April 30, 2008 (unaudited) Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Expenses Paid Beginning Ending During Period Account Value Account Value November 1, 2007 November 1, 2007 April 30, 2008 to April 30, 2008(1) ---------------- -------------- -------------------- Class N Actual.............. $1,000 $1,033.50 $5.71 Hypothetical(2)..... $1,000 $1,019.24 $5.67 - ---------- (1) Expenses are equal to the Fund's annualized expense ratio of 1.13% for Class N shares, multiplied by the average account value over the period, multiplied by 182/366 (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 is subtracted from the assumed return before expenses. FINANCIAL STATEMENT APRIL 30, 2008 15 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION April 30, 2008 (unaudited) Approval of Investment Advisory/Administrative Services Agreement At a meeting held on December 11, 2006, the Board of Trustees (the "Board") of the Trust unanimously approved a new Combined Investment Advisory/Administrative Services Agreement ("Combined Agreement"). The Board determined that the terms of the Combined Agreement will be substantially identical to those of the current advisory and administration agreements of the Funds, noting that the most significant difference in the Combined Agreement is a single fee for both advisory and administrative services. The following is a summary of the factors the Board took into consideration in making its determination to approve the new Combined Agreement. Nature, Extent and Quality of Services Provided by Brown Brothers Harriman & Co. ("BBH") The Board noted that, under the Combined Agreement in respect of each Fund, BBH, subject to the supervision of the Board, will be responsible for providing a continuous investment program and making purchases and sales of portfolio securities consistent with the Funds' investment objective and policies. Under the Combined Agreement, BBH also provides administrative services to each Fund. The Board considered the scope and quality of services to be provided by BBH under the Combined Agreement and noted that the scope of services provided had expanded over time, primarily, as a result of regulatory developments. The Board noted that, for example, BBH is responsible for maintaining and monitoring its own and, to varying degrees, the Funds' compliance program, and these compliance programs have recently been refined and enhanced in light of new regulatory requirements. The Board considered the quality of the investment research and administrative capabilities of BBH and the other resources it has dedicated to performing services for the Funds. The Board concluded that, overall, they were satisfied with the nature, extent and quality of services expected to be provided to each of the Funds under the Combined Agreement. Costs of Services Provided and Profitability to BBH At the request of the Board, BBH provided information concerning the profitability of BBH's current investment company advisory and other fees. The Board also reviewed BBH's profitability data for each Fund, which also included the effect of revenue generated by the shareholder servicing, administration, custody and other fees paid by the Fund. The Board discussed the difficulty of making comparisons of profitability because comparative information is not generally publicly available and is affected by numerous factors, including the structure of the service provider, the types of funds it manages and administers, its business mix, numerous assumptions regarding allocations and the entity's capital structure and cost of capital. In considering profitability information, the Board considered the effect of fall-out benefits on BBH's expenses, as well as the "revenue sharing" arrangements BBH has entered into with certain entities that distribute shares of the Funds. The Board focused on profitability of BBH's relationships with the Funds before taxes and distribution expenses. The Board concluded that it was satisfied that BBH's level of profitability from its relationship with each Fund was not excessive. 16 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) April 30, 2008 (unaudited) Fall-Out Benefits The Board considered that BBH does not allocate the Funds' portfolio transactions for third party research, although it did benefit from proprietary research received from brokers that execute the Funds' purchases and sales of securities. The Board recognized that the aggregate amount of commissions generated by Fund transactions was unlikely to result in the Funds receiving from full service broker dealers substantial discounts on commission rates. The Board received and reviewed information concerning BBH's policies with respect to allocating portfolio brokerage. The Board also considered that BBH receives shareholder servicing fees from certain funds, and is the Funds' administrator, custodian and securities lending agent. The Board noted that BBH retained no portion of the 12b-1 fees paid by any Fund that operated with a Rule 12b-1 plan. The Board recognized that BBH's profitability would be somewhat lower if it did not receive proprietary research for commissions or, if it did not receive the other benefits described above. The Board recognized that most Fund shareholders were also BBH clients, and that substantial assets are invested in the Funds as a result of an overall investment management program for the shareholder. The Board noted that the Funds also derive reputational and other benefits from their association with BBH and their use of the BBH name, which is licensed to the Funds by BBH. Thus, the Board did not believe that BBH revenues associated with its clients should be fairly regarded as "fallout" benefit from the Funds. Economies of Scale The Board noted that the Funds' combined fee schedules, other than the fee schedule for BBH Money Market Fund, do not contain breakpoints. As a result, if assets increase, the fee rates would not be reduced for these Funds on the incremental assets. With respect to the BBH Money Market Fund, the breakpoint will be reviewed every three (3) years by the Board, and may be adjusted upwards to take into account the effects of inflation or such other basis as may be appropriate, subject to the approval of shareholders to the extent required by the 1940 Act. There may be other economies of scale because many expenses did not rise (and fall) proportionally to increases (and decreases) in total net assets. The Board noted that BBH had priced its services in recognition of the fact that it was largely its own clients who were shareholders and, accordingly, sought to assure that the cost of these services and total expenses for each Fund were fair and reasonable. In addition, the Board noted that over the years BBH had supported certain Funds through fee waivers and expense reimbursements. Based on information they had been provided over many years, the Board observed that in the mutual fund industry as a whole, as well as among funds similar to the Funds, there appeared to be no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. In light of the Funds' current size and expense structure, the Board concluded that it was unnecessary at this time to consider breakpoints with respect to the Funds, other than for the BBH Money Market Fund. FINANCIAL STATEMENT APRIL 30, 2008 17 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) April 30, 2008 (unaudited) Investment Results The Board considered the investment results of each of the Funds as compared to investment companies with its peers and with one or more selected securities indices. In addition to the information received by the Board for the meeting held on October 2, 2006, the Board received detailed performance information for each Fund at each regular Board meeting during the year. At the meeting held on October 2, 2006, the Board reviewed information showing performance of each Fund compared to its peers over the prior 1-, 3-, and 5- year periods and compared the performance information to one or more securities indices over comparable periods. Combined Fee Rate The Board considered the fee rate to be paid by each Fund to BBH. The Board recognized that it is difficult to make comparisons of these fee rates, and the combined advisory and administration fees, because there are variations in the services that are included in the fees paid by other funds. The Board considered the depth and range of services provided under the Combined Agreement. For example, in addition to a continuous investment program, BBH provides, among other things, officers (including the Funds' Chief Compliance Officer and officers to provide required certifications) and administrative services, such as shareholder communications, and tax compliance, with the attendant costs and exposure to liability. BBH also coordinates the provision of services to the Funds by nonaffiliated service providers. The following factors specific to BBH Core Select also were noted and considered by the Board in deciding to approve the Combined Agreement: The Board reviewed the comparative performance of BBH Core Select versus the Standard's and Poor's 500 Index (the "Index"). The Board viewed favorably management's decision to implement a new portfolio construction methodology in the second quarter of 2004, a methodology which puts greater emphasis on fundamental valuation considerations and less emphasis on tracking error to a broad market index such as the Index. The Board also reviewed favorably BBH's decision to have a Partner and Managing Director of the firm be the co-managers of BBH Core Select beginning in the fourth quarter of 2005. The Board also appreciated that the strategy of long-term, low turnover investing in cash generative companies at prices that have a margin of safety to intrinsic value should provide the shareholders with long-term appreciation at a relatively modest level of risk. The Board recognized that divergence from the benchmark was to be expected because of the manager's clearly defined fundamental investment style with very little concern for tracking error to the broad market. The Board spent considerable time in reviewing BBH Core Select's investments and confirming that those investments were consistent with the new investment methodology. They concurred that the new portfolio construction methodology and its implementation will need to be judged over a three to five year timeframe. The Board also noted BBH Core Select's expense 18 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) April 30, 2008 (unaudited) ratio was in line with many funds of similar size and investment mandate. Taking into account all of the factors considered, the Board concluded that BBH Core Select's recent investment results and its total expense ratio were acceptable and that they retained confidence in the manager to achieve BBH Core Select's investment objective. Conflicts of Interest As a general matter, certain conflicts of interest may arise in connection with a portfolio manager's management of a Fund's investments, on the one hand, and the investments of other accounts for which the portfolio manager is responsible, on the other. For example, it is possible that the various accounts managed could have different investment strategies that, at times, might conflict with one another to the possible detriment of the Fund. Alternatively, to the extent that the same investment opportunities might be desirable for more than one account, possible conflicts could arise in determining how to allocate them. Other potential conflicts might include conflicts created by specific portfolio manager compensation arrangements, and conflicts relating to selection of brokers or dealers to execute Fund portfolio trades and/or specific uses of commissions from Fund portfolio trades (for example, research, or "soft dollars"). BBH has adopted and implemented policies and procedures, including brokerage and trade allocation policies and procedures, which it believes address the conflicts associated with managing multiple accounts for multiple clients. In addition, BBH monitors a variety of areas, including compliance with account investment guidelines, the inclusion only of securities approved for purchase by the BBH's Fixed Income Credit Committee, and compliance with the BBH's Code of Ethics. Finally, BBH has structured the portfolio managers' compensation in a manner, and the Funds have adopted policies and procedures, reasonably designed to safeguard a Fund from being negatively affected as a result of any such potential conflicts. FINANCIAL STATEMENT APRIL 30, 2008 19 <PAGE> INVESTMENT ADVISER AND ADMINISTRATOR BROWN BROTHERS HARRIMAN 140 BROADWAY NEW YORK, NY 10005 DISTRIBUTOR EDGEWOOD SERVICES, INC. 5800 CORPORATE DRIVE PITTSBURGH, PA 15237-7000 SHAREHOLDER SERVICING AGENT BROWN BROTHERS HARRIMAN 140 BROADWAY NEW YORK, NY 10005 (800) 625-5759 To obtain information or make shareholder inquiries: By telephone: Call 1-800-575-1265 By E-mail send your request to: bbhfunds@bbh.com On the internet: www.bbhfunds.com This report is submitted for the general information of shareholders and is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. Nothing herein contained is to be considered an offer of sale or a solicitation of an offer to buy shares of the Fund. Such offering is made only by the prospectus, which includes details as to offering price and other material information. The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on "Form N-Q." Information on Form N-Q is available without charge and upon request by calling the Funds at the toll-free number listed above. A text only version can be viewed online or downloaded from the SEC's website at http://www.sec.gov; and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC (call 1-800-SEC-0330 for information on the operation of the Public Reference Room). You may also access this information from the BBH website at BBH.com by clicking on "BBH Mutual Funds" and selecting "Online Documents/Holdings Information." A copy of the Fund's Proxy Voting Policy is available upon request by calling the toll-free number listed above. A text-only version of the policy can be viewed online or downloaded from the SEC at www.sec.gov. BROWN [LOGO] BROTHERS HARRIMAN BROWN [LOGO] BROTHERS HARRIMAN Semi-Annual Report APRIL 30, 2008 BBH INTERNATIONAL EQUITY FUND <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- PORTFOLIO ALLOCATION April 30, 2008 (unaudited) COUNTRY DIVERSIFICATION Percent of U.S. $ Value Net Assets ------------ --------- Australia ........................................ $ 53,477,806 7.8% Belgium .......................................... 7,707,436 1.1 Finland .......................................... 4,025,318 0.6 France ........................................... 61,133,601 9.0 Germany .......................................... 23,242,157 3.4 Hong Kong ........................................ 50,432,555 7.4 Italy ............................................ 16,972,370 2.5 Japan ............................................ 202,497,055 29.6 Netherlands ...................................... 21,345,186 3.1 New Zealand ...................................... 2,813,379 0.4 Singapore ........................................ 13,155,027 1.9 South Africa ..................................... 3,485,040 0.5 Spain ............................................ 35,080,335 5.1 Sweden ........................................... 10,456,676 1.6 Switzerland ...................................... 32,297,809 4.7 Taiwan ........................................... 7,396,801 1.1 United Kingdom ................................... 121,242,819 17.7 Short-Term Investments ........................... 18,677,397 2.7 Liabilities In Excess of Other Assets ............ (1,225,662) (0.2) ------------ ----- NET ASSETS ....................................... $684,213,105 100.0% ============ ===== All data as of April 30, 2008. The Fund's country diversification is expressed as a percentage of net assets and may vary over time. The accompanying notes are an integral part of these financial statements. 2 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- PORTFOLIO ALLOCATION April 30, 2008 (unaudited) SECTOR DIVERSIFICATION Percent of U.S. $ Value Net Assets ------------ --------- Consumer Discretionary ........................... $ 50,367,823 7.4% Consumer Staples ................................. 90,937,698 13.3 Diversified Operations ........................... 13,167,722 1.9 Electronics ...................................... 4,321,443 0.6 Energy ........................................... 83,192,526 12.2 Finance .......................................... 142,208,226 20.8 Health Care ...................................... 79,581,128 11.7 Industrials ...................................... 54,405,108 8.0 Information Technology ........................... 24,174,745 3.5 Materials ........................................ 23,614,015 3.4 Telecommunication Services ....................... 58,159,556 8.5 Utilities ........................................ 42,631,380 6.2 Short-Term Investments ........................... 18,677,397 2.7 Liabilities In Excess of Other Assets ............ (1,225,662) (0.2) ------------ ----- NET ASSETS ....................................... $684,213,105 100.0% ============ ===== All data as of April 30, 2008. The Fund's sector diversification is expressed as a percentage of net assets and may vary over time. The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2008 3 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS April 30, 2008 (unaudited) Shares Value - ----------- ------------ COMMON STOCKS (97.5%) AUSTRALIA (7.8%) CONSUMER STAPLES 1,451,938 Foster's Group, Ltd. ............................. $ 6,936,795 120,726 Wesfarmers, Ltd. ................................. 4,230,120 ------------ 11,166,915 ------------ ENERGY 264,226 Woodside Petroleum, Ltd. ......................... 13,941,440 ------------ FINANCE 480,000 Lend Lease Corp., Ltd. ........................... 5,583,231 287,560 National Australia Bank, Ltd. .................... 8,130,648 ------------ 13,713,879 ------------ MATERIALS 587,491 Amcor, Ltd. ...................................... 3,726,947 ------------ TELECOMMUNICATION SERVICES 2,551,056 Telstra Corp. .................................... 10,928,625 ------------ Total Australia .................................. 53,477,806 ------------ BELGIUM (1.1%) FINANCE 284,420 Fortis ........................................... 7,705,687 112,376 Fortis(1) ........................................ 1,749 ------------ Total Belgium .................................... 7,707,436 ------------ FINLAND (0.6%) MATERIALS 210,045 UPM-Kymmene Oyj .................................. 4,025,318 ------------ Total Finland .................................... 4,025,318 ------------ FRANCE (9.0%) CONSUMER DISCRETIONARY 72,749 Renault SA ....................................... 7,449,948 ------------ CONSUMER STAPLES 83,212 Carrefour SA ..................................... 5,818,369 25,000 L'Oreal SA ....................................... 2,957,785 ------------ 8,776,154 ------------ The accompanying notes are an integral part of these financial statements. 4 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2008 (unaudited) Shares Value - ----------- ------------ COMMON STOCKS (continued) FRANCE (continued) DIVERSIFIED OPERATIONS 58,000 LVMH Moet Hennessy Louis Vuitton SA .............. $ 6,607,398 ------------ ENERGY 140,519 Total SA ......................................... 11,770,177 ------------ FINANCE 51,695 Societe Generale ................................. 6,011,326 12,923 Societe Generale(1) .............................. 1,468,710 ------------ 7,480,036 ------------ HEALTH CARE 110,000 Essilor International SA ......................... 6,829,330 ------------ INDUSTRIALS 66,764 Compagnie de Saint-Gobain ........................ 5,355,894 ------------ TELECOMMUNICATION SERVICES 219,237 France Telecom SA ................................ 6,864,664 ------------ Total France ..................................... 61,133,601 ------------ GERMANY (3.4%) INFORMATION TECHNOLOGY 128,000 SAP AG ........................................... 6,438,406 ------------ TELECOMMUNICATION SERVICES 349,278 Deutsche Telekom AG .............................. 6,252,781 ------------ UTILITIES 92,006 RWE AG ........................................... 10,550,970 ------------ Total Germany..................................... 23,242,157 ------------ HONG KONG (7.4%) DIVERSIFIED OPERATIONS 670,000 Hutchison Whampoa, Ltd. .......................... 6,560,324 ------------ ENERGY 7,330,000 CNOOC, Ltd. ...................................... 12,999,360 ------------ FINANCE 919,500 Wharf Holdings, Ltd. ............................. 4,630,794 ------------ The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2008 5 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2008 (unaudited) Shares Value - ----------- ------------ COMMON STOCKS (continued) HONG KONG (continued) TELECOMMUNICATION SERVICES 420,000 China Mobile, Ltd. ............................... $ 7,239,984 ------------ UTILITIES 1,000,000 CLP Holdings, Ltd. ............................... 7,906,853 2,350,000 Hong Kong & China Gas Co. ........................ 6,853,464 672,500 Hong Kong Electric Holdings ...................... 4,241,776 ------------ 19,002,093 ------------ Total Hong Kong .................................. 50,432,555 ------------ ITALY (2.5%) FINANCE 1,431,131 Intesa Sanpaolo SpA .............................. 10,660,692 839,174 UniCredito Italiano SpA .......................... 6,311,678 ------------ Total Italy ...................................... 16,972,370 ------------ JAPAN (29.6%) CONSUMER DISCRETIONARY 138,000 Denso Corp. ...................................... 4,807,175 144,000 Honda Motor Co., Ltd. ............................ 4,562,629 121,800 Toyota Motor Corp. ............................... 6,162,271 ------------ 15,532,075 ------------ CONSUMER STAPLES 233,000 Hoya Corp. ....................................... 6,448,281 169,000 Ito En, Ltd.(2) .................................. 2,919,485 273,000 Kao Corp. ........................................ 7,355,378 211,400 Seven & I Holdings Co., Ltd. ..................... 6,281,755 43,000 Shimamura Co., Ltd. .............................. 3,817,152 ------------ 26,822,051 ------------ FINANCE 273,000 Aeon Mall Co., Ltd. .............................. 8,560,180 135,000 Daito Trust Construction Co., Ltd. ............... 6,231,126 349,600 Millea Holdings, Inc. ............................ 14,674,100 The accompanying notes are an integral part of these financial statements. 6 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2008 (unaudited) Shares Value - ----------- ------------ COMMON STOCKS (continued) JAPAN (continued) FINANCE (continued) 301,000 Mitsubishi Estate Co., Ltd. ...................... $ 8,634,847 550,000 Mitsubishi UFJ Financial Group, Inc. ............. 6,015,709 ------------ 44,115,962 ------------ HEALTH CARE 291,600 Astellas Pharma, Inc. ............................ 11,913,379 170,000 Eisai Co., Ltd. .................................. 6,008,285 302,100 Takeda Pharmaceutical Co., Ltd. .................. 15,955,068 ------------ 33,876,732 ------------ INDUSTRIALS 173,000 Advantest Corp. .................................. 4,762,765 140,000 Daikin Industries, Ltd. .......................... 6,991,222 72,000 Fanuc, Ltd. ...................................... 7,585,341 35,600 Hirose Electric Co., Ltd. ........................ 4,216,441 30,450 Keyence Corp. .................................... 7,753,647 65,000 Murata Manufacturing Co., Ltd. ................... 3,400,138 137,000 Secom Co., Ltd. .................................. 6,376,776 764 West Japan Railway Co. ........................... 3,290,622 ------------ 44,376,952 ------------ INFORMATION TECHNOLOGY 356,100 Canon, Inc. ...................................... 17,736,339 ------------ MATERIALS 202,200 Nitto Denko Corp. ................................ 8,290,800 122,000 Shin-Etsu Chemical Co., Ltd. ..................... 7,570,950 ------------ 15,861,750 ------------ TELECOMMUNICATION SERVICES 652 KDDI Corp. ....................................... 4,175,194 ------------ Total Japan ...................................... 202,497,055 ------------ NETHERLANDS (3.1%) CONSUMER DISCRETIONARY 329,882 Reed Elsevier NV ................................. 6,216,354 ------------ The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2008 7 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2008 (unaudited) Shares Value - ----------- ------------ COMMON STOCKS (continued) NETHERLANDS (continued) CONSUMER STAPLES 134,000 Heineken Holding NV .............................. $ 6,842,294 ------------ FINANCE 218,336 ING Groep NV ..................................... 8,286,538 ------------ Total Netherlands................................. 21,345,186 ------------ NEW ZEALAND (0.4%) TELECOMMUNICATION SERVICES 951,924 Telecom Corp. of New Zealand, Ltd.(2) ............ 2,813,379 ------------ Total New Zealand ................................ 2,813,379 ------------ SINGAPORE (1.9%) FINANCE 450,000 DBS Group Holdings, Ltd. ......................... 6,561,044 588,200 Oversea-Chinese Banking Corp., Ltd. .............. 3,823,355 ------------ 10,384,399 ------------ INDUSTRIALS 90,000 Jardine Matheson Holdings, Ltd. .................. 2,770,628 ------------ Total Singapore .................................. 13,155,027 ------------ SOUTH AFRICA (0.5%) ENERGY 61,481 Sasol, Ltd. ...................................... 3,485,040 ------------ Total South Africa ............................... 3,485,040 ------------ SPAIN (5.1%) CONSUMER DISCRETIONARY 125,000 Inditex SA ....................................... 6,810,816 ------------ FINANCE 453,273 Banco Santander Central Hispano SA ............... 9,778,045 ------------ TELECOMMUNICATION SERVICES 387,732 Telefonica SA .................................... 11,213,749 ------------ The accompanying notes are an integral part of these financial statements. 8 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2008 (unaudited) Shares Value - ----------- ------------ COMMON STOCKS (continued) SPAIN (continued) UTILITIES 499,039 Iberdrola SA ..................................... $ 7,277,725 ------------ Total Spain ...................................... 35,080,335 ------------ SWEDEN (1.6%) CONSUMER DISCRETIONARY 82,000 Hennes & Mauritz AB (B shares) ................... 4,860,854 ------------ TELECOMMUNICATION SERVICES 2,199,000 Telefonaktiebolaget LM Ericsson (B shares) ....... 5,595,822 ------------ Total Sweden ..................................... 10,456,676 ------------ SWITZERLAND (4.7%) CONSUMER STAPLES 17,100 Nestle SA ........................................ 8,143,708 ------------ HEALTH CARE 133,500 Nobel Biocare Holding AG ......................... 4,796,088 345,787 Novartis AG ...................................... 17,456,379 ------------ 22,252,467 ------------ INDUSTRIALS 1,365 SGS SA ........................................... 1,901,634 ------------ Total Switzerland ................................ 32,297,809 ------------ TAIWAN (1.1%) ELECTRONICS 384,470 Taiwan Semiconductor Manufacturing Co., Ltd. ADR ....................................... 4,321,443 ------------ TELECOMMUNICATION SERVICES 120,555 Chunghwa Telecom Co., Ltd. ADR ................... 3,075,358 ------------ Total Taiwan ..................................... 7,396,801 ------------ The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2008 9 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2008 (unaudited) Shares Value - ----------- ------------ COMMON STOCKS (continued) UNITED KINGDOM (17.7%) CONSUMER DISCRETIONARY 514,499 Compass Group, Plc. .............................. $ 3,457,565 518,905 GKN, Plc. ........................................ 2,908,070 1,200,000 Kingfisher, Plc. ................................. 3,132,141 ------------ 9,497,776 ------------ CONSUMER STAPLES 116,000 Reckitt Benckiser Plc. ........................... 6,746,022 770,000 Tesco, Plc. ...................................... 6,495,882 306,446 Unilever, Plc. ................................... 10,297,822 1,000,000 WM Morrison Supermarkets, Plc. ................... 5,646,850 ------------ 29,186,576 ------------ ENERGY 712,061 BG Group, Plc. ................................... 17,281,626 1,284,699 BP, Plc. ......................................... 15,563,742 202,795 Royal Dutch Shell, Plc. .......................... 8,151,141 ------------ 40,996,509 ------------ FINANCE 210,391 Aviva, Plc. ...................................... 2,607,415 508,995 HBOS, Plc. ....................................... 4,684,133 799,687 Lloyds TSB Group, Plc. ........................... 6,780,179 751,446 Royal Bank of Scotland Group, Plc. ............... 5,067,040 ------------ 19,138,767 ------------ HEALTH CARE 751,780 GlaxoSmithKline, Plc. ............................ 16,622,599 ------------ UTILITIES 1,000,000 Centrica, Plc. ................................... 5,800,592 ------------ Total United Kingdom ............................. 121,242,819 ------------ TOTAL COMMON STOCKS (Identified cost $519,098,450) ................... 666,761,370 ------------ The accompanying notes are an integral part of these financial statements. 10 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2008 (unaudited) Principal Amount Value - ----------- ------------ SHORT-TERM INVESTMENTS (2.7%) $ 4,177,397 Brown Brothers Investment Trust Securities Lending Fund(3) ................................ $ 4,177,397 14,500,000 Royal Bank of Canada Time Deposit 2.400%, 05/01/08 ....................................... 14,500,000 ------------ TOTAL SHORT-TERM INVESTMENTS (Identified cost $18,677,397) .................... 18,677,397 ------------ TOTAL INVESTMENTS (Identified cost $537,775,847)(4) ... 100.2% $685,438,767 LIABILITIES IN EXCESS OF OTHER ASSETS.................. (0.2) (1,225,662) ------ ------------ NET ASSETS............................................. 100.0% $684,213,105 ====== ============ - ---------- (1) Non-income producing security. (2) Security, or a portion thereof, on loan. (3) Brown Brothers Harriman & Co., acts as agent for the securities lending program. (4) The aggregate cost for federal income tax purposes is $537,775,847, the aggregate gross unrealized appreciation is $193,991,702, and the aggregate gross unrealized depreciation is $46,328,782, resulting in net unrealized appreciation of $147,662,920. ADR - American Depositary Receipt. A summary of obligations under open forward foreign currency exchange contracts outstanding at April 30, 2008 is as follows: Unrealized Notional Market Appreciation/ Description Value Value (Depreciation) - ----------- --------- ----------- -------------- Sell Contracts Euro settling 07/31/08 (8,469,000) (13,128,909) $30,011 GBP British Pound settling 07/31/08 (4,535,000) (8,941,511) 28,538 ------- $58,549 ======= The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2008 11 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES April 30, 2008 (unaudited) <TABLE> <S> <C> ASSETS: Investments in securities, at value (identified cost $537,775,847) ......... $685,438,767 Cash ....................................................................... 138,559 Foreign currency, at value (identified cost $118,055) ...................... 118,055 Receivables for: Investment sold .......................................................... 5,816,641 Dividends and other receivables .......................................... 4,198,717 Capital stock sold ....................................................... 521,426 Unrealized appreciation of forward foreign exchange currency contracts ... 58,549 ------------ Total Assets ........................................................... 696,290,714 ------------ LIABILITIES: Payable upon return of securities loaned ................................... 4,177,397 Payables for: Investments purchased .................................................... 6,118,724 Investment advisory fees ................................................. 702,071 Capital stock redeemed ................................................... 319,329 Shareholder servicing fees ............................................... 255,393 Administrative fees ...................................................... 162,016 Custody and accounting fees .............................................. 97,409 Professional fees ........................................................ 80,977 Board of Trustees' fees .................................................. 16,057 Accrued expenses and other liabilities ................................... 148,236 ------------ Total Liabilities ...................................................... 12,077,609 ------------ NET ASSETS .................................................................... $684,213,105 ============ Net Assets Consist of: Par value .................................................................. $ 42,872 Paid-in capital ............................................................ 520,147,466 Undistributed net investment income ........................................ 2,451,156 Accumulated net realized gain on investments and foreign exchange transactions ............................................ 13,935,675 Net unrealized appreciation on investments and foreign currency translations ............................................ 147,635,936 ------------ Net Assets .................................................................... $684,213,105 ============ NET ASSET VALUE AND OFFERING PRICE PER SHARE CLASS N SHARES ($645,466,926 / 40,449,428 shares outstanding) ............................. $15.96 ====== CLASS I SHARES ($38,746,179 / 2,422,189 shares outstanding) ............................... $16.00 ====== </TABLE> The accompanying notes are an integral part of these financial statements. 12 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS For the six months ended April 30, 2008 (unaudited) <TABLE> <S> <C> <C> NET INVESTMENT INCOME: Income: Dividends and other income (net of foreign withholding taxes of $855,347) ... $ 9,880,668 Interest and other income ................................................... 129,011 Securities lending income ................................................... 30,273 ------------ Total Income .............................................................. 10,039,952 ------------ Expenses: Investment advisory fees .................................................... 2,173,197 Shareholder servicing fees .................................................. 787,018 Administrative fees ......................................................... 501,507 Custody and accounting fees ................................................. 214,068 Professional fees ........................................................... 54,001 Board of Trustees' fees ..................................................... 35,217 Miscellaneous expenses ...................................................... 83,852 ------------ Total Expenses ............................................................ 3,848,860 Expense offset arrangement ................................................ (13,837) ------------ Net Expenses .............................................................. 3,835,023 ------------ Net Investment Income ......................................................... 6,204,929 ============ NET REALIZED AND UNREALIZED LOSS: Net realized gain on investments .............................................. 13,973,472 Net realized gain on foreign exchange transactions ............................ 593,577 ------------ Net realized gain on investments and foreign exchange transactions .......... 14,567,049 Net change in unrealized depreciation on investments and foreign currency translations ............................................... (81,062,161) ------------ Net Realized and Unrealized Loss ............................................ (66,495,112) ------------ Net Decrease in Net Assets Resulting from Operations .......................... $(60,290,183) ============ </TABLE> The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2008 13 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS <TABLE> <CAPTION> For the six For the months ended year ended April 30, 2008 October 31, (unaudited) 2007 ------------- ------------ <S> <C> <C> INCREASE IN NET ASSETS: Operations: Net investment income .................................... $ 6,204,929 $ 10,709,451 Net realized gain on investments and foreign exchange transactions .................................. 14,567,049 31,121,732 Net change in unrealized appreciation (depreciation) on investments and foreign currency translations ....... (81,062,161) 83,442,888 ------------- ------------ Net increase (decrease) in net assets resulting from operations ........................................... (60,290,183) 125,274,071 ------------- ------------ Dividends and distributions declared: From net investment income: Class N .................................................. (10,352,578) (8,234,635) Class I .................................................. (762,747) (723,263) From net realized gains: Class N .................................................. (29,955,831) (5,732,846) Class I .................................................. (1,916,194) (440,337) ------------- ------------ Total dividends and distributions declared ............. (42,987,350) (15,131,081) ------------- ------------ Capital stock transactions: Net proceeds from sales of capital stock ................. 138,752,818 125,535,007 Net asset value of capital stock issued to shareholders for reinvestment of dividends and distributions ........ 17,345,081 325,815 Net cost of capital stock redeemed ....................... (113,338,621) (54,902,468) ------------- ------------ Net increase in net assets resulting from capital stock transactions ........................... 42,759,278 70,958,354 ------------- ------------ Total increase (decrease) in net assets ................ (60,518,255) 181,101,344 NET ASSETS: Beginning of year .......................................... 744,731,360 563,630,016 ------------- ------------ End of period (including undistributed net investment income of $2,451,156 and $7,361,552, respectively) ....... $ 684,213,105 $744,731,360 ============= ============ </TABLE> The accompanying notes are an integral part of these financial statements. 14 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Selected per share data and ratios for a Class N share outstanding throughout each period <TABLE> <CAPTION> For the six months ended For the years ended October 31, April 30, 2008 ----------------------------------------------------------- (unaudited) 2007 2006 2005 2004 2003 -------------- ------ ------ ------ ------ ----- <S> <C> <C> <C> <C> <C> <C> Net asset value, beginning of year ... $18.53 $15.71 $12.59 $10.96 $ 9.28 $8.03 ------ ------ ------ ------ ------ ----- Income from investment operations: Net investment income(1) .......... 0.15 0.28 0.25 0.18 0.14 0.08 Net realized and unrealized gain (loss) ..................... (2.45) 2.95 3.07 1.54 1.64 1.19 ------ ------ ------ ------ ------ ----- Total income (loss) from investment operations ........... (2.30) 3.23 3.32 1.72 1.78 1.27 ------ ------ ------ ------ ------ ----- Less dividends and distributions: From net investment income ........ (0.27) (0.24) (0.20) (0.09) (0.10) (0.02) From net realized gains ........... -- (0.17) -- -- -- -- ------ ------ ------ ------ ------ ----- Total distributions ............. (0.27) (0.41) (0.20) (0.09) (0.10) (0.02) ------ ------ ------ ------ ------ ----- Net asset value, end of period ....... $15.96 $18.53 $15.71 $12.59 $10.96 $9.28 ====== ====== ====== ====== ====== ===== Total return ......................... (8.22)% 21.01% 26.62% 15.77% 19.29% 15.87% Ratios/Supplemental data: Net assets, end of period (in millions) ................... $645 $700 $524 $356 $211 $98 Ratio of expenses to average net assets ...................... 1.16%(2),(3) 1.17%(3) 1.11%(3) 1.23% 1.30% 1.28% Ratio of net investment income to average net assets .............. 1.84%(2) 1.64% 1.76% 1.49% 1.34% 0.98% Portfolio turnover rate ........... 19%(2) 16% 10% 5% 81% 74% </TABLE> - ---------- (1) Calculated using average shares outstanding for the year. (2) Annualized. (3) The ratio of expenses to average net assets for the six months ended April 30, 2008 and years ended October 31, 2007 and 2006 reflect fees reduced as a result of an expense offset arrangement with the Fund's custodian. Had this arrangement not been in place, this ratio would have been 1.17%, 1.17% and 1.17%, respectively. The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2008 15 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (continued) Selected per share data and ratios for a Class I share outstanding throughout each period <TABLE> <CAPTION> For the six months ended For the years ended October 31, April 30, 2008 ----------------------------------------------------------- (unaudited) 2007 2006 2005 2004 2003 -------------- ------ ------ ------ ------ ----- <S> <C> <C> <C> <C> <C> <C> Net asset value, beginning of year ... $18.59 $15.76 $12.62 $10.98 $ 9.30 $8.03 ------ ------ ------ ------ ------ ----- Income from investment operations: Net investment income(1) .......... 0.16 0.32 0.29 0.21 0.14 0.11 Net realized and unrealized gain (loss) ..................... (2.44) 2.96 3.07 1.54 1.66 1.18 ------ ------ ------ ------ ------ ----- Total income (loss) from investment operations ......... (2.28) 3.28 3.36 1.75 1.80 1.29 ------ ------ ------ ------ ------ ----- Less dividends and distributions: From net investment income (0.31) (0.28) (0.22) (0.11) (0.12) (0.02) From net realized gains ........... -- (0.17) -- -- -- -- ------ ------ ------ ------ ------ ----- Total distributions ............. (0.31) (0.45) (0.22) (0.11) (0.12) (0.02) ------ ------ ------ ------ ------ ----- Net asset value, end of period $16.00 $18.59 $15.76 $12.62 $10.98 $9.30 ====== ====== ====== ====== ====== ===== Total return ......................... (8.07)% 21.28% 26.98% 16.05% 19.54% 16.18% Ratios/Supplemental data: Net assets, end of period (in millions) ................... $39 $45 $40 $34 $27 $58 Ratio of expenses to average net assets ...................... 0.91%(2),(3) 0.91%(3) 0.87%(3) 0.98% 1.05% 1.05% Ratio of net investment income to average net assets .............. 2.05%(2) 1.87% 2.02% 1.73% 1.33% 1.34% Portfolio turnover rate .............. 19%(2) 16% 10% 5% 81% 74% </TABLE> - ---------- (1) Calculated using average shares outstanding for the year. (2) Annualized. (3) The ratio of expenses to average net assets for the six months ended April 30, 2008 and years ended October 31, 2007 and 2006 reflect fees reduced as a result of an expense offset arrangement with the Fund's custodian. Had this arrangement not been in place, this ratio would have been 0.92%, 0.91% and 0.94%, respectively. The accompanying notes are an integral part of these financial statements. 16 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS April 30, 2008 (unaudited) 1. Organization and Significant Accounting Policies. BBH International Equity Fund (the "Fund") is a separate diversified series of BBH Trust (the "Trust"), which is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Trust was originally organized under the laws of the State of Maryland on July 16, 1990 and re-organized as a Delaware statutory trust on June 12, 2007. The Fund commenced operations on June 6, 1997. On February 20, 2001, the Trustees reclassified the Fund's outstanding shares as "Class N," and established a new class of shares designated as "Class I". Class I commenced operations on October 30, 2002. Class N and Class I shares have different operating expenses. Neither Class N shares nor Class I shares convert to any other class of the Fund. At April 30, 2008, there were seven series of the Trust. The Fund's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements and are based, in part, on the following accounting policies. Actual results could differ from those estimates. A. Valuation of Investments. The BBH International Equity Fund employs a pricing vendor (ITG Inc.) that uses a fair valuation model to establish daily valuations of portfolio securities. The model looks at each security in the portfolio and determines daily valuations of portfolio securities. The model looks at each security in the portfolio and determines the correlation between the security and a set of market factors, such as the price of ADRs, futures, exchange-traded funds, and the U.S. market as measured by the 1000 largest domestic stocks. The model evaluates the security's beta compared to these factors to determine which factor should be used in determining its fair value. The model analyzes data for the past 90 days for each factor. The model then determines the difference between the price of the factor at the local market close versus the price at 4 p.m. Eastern Time to calculate a percentage by which the closing price should be adjusted to reflect its fair value. If ITG is unable to price a security, the security will be priced in accordance with the Manual Pricing Procedures. B. Accounting for Investments and Income. Security transactions are accounted for on the trade date. Realized gains and losses on security transactions are determined on the identified cost method. Dividend income and other distributions from portfolio securities are recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of securities received. Distributions received on securities that represent a return of capital or a capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Interest income is accrued daily. Investment income is recorded net of foreign taxes withheld where recovery of such tax is uncertain. FINANCIAL STATEMENT APRIL 30, 2008 17 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2008 (unaudited) C. Forward Foreign Currency Exchange Contracts. The Fund may enter into forward foreign currency exchange contracts ("Contracts") in connection with planned purchases or sales of securities, to hedge the U.S. dollar value of portfolio securities denominated in a particular currency, or to increase or shift its exposure to a currency other than U.S. dollars. The Fund has no specific limitation on the percentage of assets which may be committed to these types of Contracts. The Fund could be exposed to risks if the counterparties to the Contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably. The U.S. dollar values of foreign currency underlying all contractual commitments held by the Fund are determined using forward currency exchange rates supplied by a quotation service. Information regarding forward foreign currency exchange Contracts is included at the end of the Portfolio of Investments. D. Foreign Currency Translations. The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange of such currency against the U.S. dollar to determine the value of investments, assets and liabilities. Purchases and sales of securities, and income and expenses are translated at the prevailing rate of exchange on the respective dates of such transactions. Upon the purchase or sale of a security denominated in foreign currency, the Fund may enter into forward currency exchange contracts for the purchase or sale, for a fixed amount of U.S. dollars of the amount of foreign currency involved in the underlying security transaction. Reported net realized gains and losses arise from the sales of portfolio securities, sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized appreciation or depreciation on foreign currency translations arise from changes in the value of the assets and liabilities, excluding investments in securities, at fiscal year end, arising from changes in the exchange rate. E. Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. F. Securities Lending. The Fund may lend its portfolio securities to broker-dealers, qualified banks and certain institutional investors. The loans are secured by collateral in an amount equal to at least the market value at all times of the loaned securities plus any accrued interest and dividends. During the time the securities are on loan, the Fund will continue to receive the interest and dividends or amounts equivalent thereto, on the loaned securities while receiving a fee from the borrower or earning interest on the investment of the cash collateral. Loans are subject to termination at the option of the borrower or the Fund. Upon termination of the loan, the borrower 18 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2008 (unaudited) will return to the lender securities identical to the loaned securities. The Fund may pay reasonable finders', administrative and custodial fees in connection with a loan of its securities and may share the interest earned on the collateral with the borrower. The Fund bears the risk of delay in recovery of, or even loss of rights in, the securities loaned should the borrower of the securities fail financially. Information regarding securities lending is included at the end of the Portfolio of Investments. G. Federal Income Taxes. It is the Trustees policy to comply with the requirements of the Internal Revenue Code (the "Code") applicable to regulated investment companies and to distribute 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 accounting principles generally accepted in the United States of America, the basis on which these financial statements are prepared. Accordingly, the amount of net investment income and net realized gain reported on 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 and the recognition of unrealized gains or losses on open forward foreign currency exchange contracts and passive foreign investment companies at year end. 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 return of capital. Permanent differences are reclassified on 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. H. Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, if any, are generally declared and paid annually and are recorded on the ex-dividend date. The tax character of distributions paid during the fiscal years ended October 31, 2007 and 2006, respectively, were as follows: Distribution paid from: - -------------------------------------------------------------------------------- Net Total Total Ordinary long term taxable Tax return distributions income capital gain distributions of capital paid ---------- ------------ ------------- ---------- ------------- 2007: $8,957,898 $6,173,183 $15,131,081 -- $15,131,081 2006: 6,336,749 -- 6,336,749 -- 6,336,749 FINANCIAL STATEMENT APRIL 30, 2008 19 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2008 (unaudited) As of October 31, 2007 and 2006, respectively, the components of accumulated earnings/(deficit) on a tax basis were as follows: <TABLE> <CAPTION> Components of accumulated earnings/(deficit): - --------------------------------------------------------------------------------------------------------------- Total Undistributed Undistributed Accumulated Unrealized accumulated ordinary long-term Accumulated capital and appreciation/ earnings/ income capital gains earnings other losses (depreciation) (deficit) ------------ ------------- ----------- ------------ -------------- ------------ <C> <C> <C> <C> <C> <C> 2007: $14,994,642 $27,620,467 $42,615,109 -- $224,685,191 $267,300,300 2006: 8,612,204 6,171,571 14,783,775 -- 142,373,535 157,157,310 </TABLE> Total distributions paid may differ from the Statement of Changes in Net Assets because, for tax purposes, dividends are recognized when actually paid. The differences between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales, PFICs marked to market and forward currency marked to market. I. Accounting Developments. In June 2006, the Fund adopted FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund's tax returns to determine whether that tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. The adoption of FIN 48 had no impact on the operations of the Fund for the period ended April 30, 2008. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued 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 implication of SFAS 157. At this time its impact on the Fund's financial statements has not yet been determined. In March 2008, Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161), was issued and is effective for fiscal years beginning after November 15, 2008. SFAS 161 requires enhanced disclosures to provide information about the reasons the Fund invests in derivative instruments, the accounting treatment and the effect derivatives have on financial performance. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund's financial statement disclosures. 20 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2008 (unaudited) 2. Transactions with Affiliates. Advisory and Administrative Fees. Effective June 12, 2007, under a combined Investment Advisory and Administrative Services Agreement ("Agreement") with the Trust, a separately identifiable department within Brown Brothers Harriman & Co. ("BBH") provides investment advice, portfolio management and administrative services to the Fund. BBH receives a combined fee from the Fund for advisory and administrative services calculated daily and paid monthly at an annual rate equivalent to 0.80% of the Fund's average daily net assets. Prior to June 12, 2007, under a separate agreement that covered only advisory fees, BBH received a fee from the Fund calculated daily and paid monthly at an annual rate of 0.65% of the Fund's average daily net assets and Brown Brothers Harriman Trust Company, LLC ("BBHTC") the Fund's administrator, under a separate agreement that covered only administrative services, received a fee from the Fund calculated daily and paid monthly at an annual rate equivalent to 0.15% of the Fund's average daily net assets. BBH has a sub-advisory agreement with Walter Scott & Partners Limited ("Walter Scott"), and Mondrian Investment Partners Limited ("Mondrian"), for which Walter Scott and Mondrian receive compensation paid by BBH. BBH has a sub-administration services agreement with Federated Services Company ("FSC") for which FSC receives compensation paid by BBH. For the six months ended April 30, 2008, the Fund incurred $2,674,704 for advisory and administrative services. Shareholder Servicing Fees. The Trustee has a shareholder servicing agreement with BBH for which BBH receives a fee from the Fund calculated daily and paid monthly at an annual rate of 0.25% of Class N shares' average daily net assets. For the six months ended April 30, 2008, the Fund incurred $787,018 for shareholder servicing services. Custody and Accounting Fees. BBH acts as a custodian and shall receive a custody and accounting fee from the Fund calculated daily and paid monthly. BBH holds all cash and investments and calculates the daily net asset value. The custody fee is a transaction based fee with an annual minimum of $30,000, and the accounting fee is calculated at 0.04% per annum on the first $100 million of net assets, 0.02% per annum on the next $400 million of net assets and 0.01% per annum on all net assets over $500 million. For the six-months ended April 30, 2008, the Fund incurred $214,068 for custody and accounting services. These fees were reduced by $13,837 as a result of an expense offset arrangement with the Fund's custodian. 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 overdraft. The total interest paid by the Fund for the six months ended April 30, 2008 was $2,750. Securities Lending Fees. The Trust has a security lending agreement with BBH for which BBH receives a fee from the Fund for each security loaned. For the six months ended April 30, 2008, the Fund paid $1,918 to BBH for security lending services. FINANCIAL STATEMENT APRIL 30, 2008 21 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2008 (unaudited) Board of Trustees' Fees. Each Trustee receives an annual fee as well as reimbursement for reasonable out-of-pocket expenses from the Fund. For the six months ended April 30, 2008, the Fund incurred $35,217 for these fees. 3. Investment Transactions. For the six months ended April 30, 2008, the cost of purchases and the proceeds of sales of investment securities other than short-term investments were $67,941,800 and $63,361,509, respectively. There were no purchases or sales of U.S. government obligations during the period. 4. Securities on Loan. As of April 30, 2008, the Fund had securities on loan with an aggregate market value of $3,956,472. The Fund received $4,177,397 in cash as collateral for securities on loan which was used to purchase highly liquid short-term investments in accordance with the Fund's security lending procedures. 5. Capital Stock. BBH Fund, Inc. was permitted to issue 2,500,000,000 shares of capital stock, par value $.001 per share, of which 277,777,778 shares were classified as Class N shares of the Fund and 277,777,778 shares were classified as Class I shares of the Fund. The Trust offers unlimited shares without par value. Transactions in shares of capital stock were as follows: <TABLE> <CAPTION> SHARES AMOUNT ----------------------------------- ----------------------------------- For the six For the For the six For the months ended year ended months ended year ended April 30, 2008 October 31, 2007 April 30, 2008 October 31, 2007 -------------- ---------------- -------------- ---------------- <S> <C> <C> <C> <C> Class N Capital stock sold ........ 3,419,648 7,488,347 $ 135,152,818 $124,535,007 Capital stock issued in connection with reinvestment of dividends ............ 1,068,705 20,453 17,345,081 325,815 Capital stock redeemed .... (1,805,462) (3,073,266) (109,738,621) (51,902,267) --------- --------- ------------- ------------ Net increase .............. 2,682,891 4,435,534 $ 42,759,278 $ 72,958,555 ========= ========= ============= ============ </TABLE> 22 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2008 (unaudited) <TABLE> <CAPTION> SHARES AMOUNT ----------------------------------- ----------------------------------- For the For the For the For the year ended year ended year ended year ended April 30, 2008 October 31, 2007 April 30, 2008 October 31, 2007 -------------- ---------------- -------------- ---------------- <S> <C> <C> <C> <C> Class I Capital stock sold ........ -- 63,172 -- $ 1,000,000 Capital stock issued in connection with reinvestment of dividends ............ -- -- -- -- Capital stock redeemed .... -- (171,080) -- (3,000,201) -------- ----------- Net decrease .............. -- (107,908) -- $(2,000,201) ======== =========== </TABLE> FINANCIAL STATEMENT APRIL 30, 2008 23 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES April 30, 2008 (unaudited) EXAMPLE As a shareholder of BBH International Equity Fund (the "Fund"), you may incur two types of costs: (1) transaction costs on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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 (November 1, 2007 to April 30, 2008). ACTUAL EXPENSES The first line of the table below provides information about actual account values and actual expenses. You may use information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your 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 the Period" to estimate the expenses you paid on your account during the period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid during the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. 24 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES (continued) April 30, 2008 (unaudited) Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Class N Expenses Paid Beginning Ending During Period Account Value Account Value November 1, 2007 November 1, 2007 April 30, 2008 to April 30, 2008(1) ---------------- -------------- -------------------- Actual ............ $1,000 $1,082.20 $6.01 Hypothetical(2) ... $1,000 $1,019.10 $5.82 Class I Expenses Paid Beginning Ending During Period Account Value Account Value November 1, 2007 November 1, 2007 April 30, 2008 to April 30, 2008(1) ---------------- -------------- -------------------- Actual ............. $1,000 $1,080.70 $4.71 Hypothetical(2) .... $1,000 $1,020.34 $4.57 - ---------- (1) Expenses are equal to the Fund's annualized expense ratio of 1.16% and 0.91% for Class N and I shares, respectively, multiplied by the average account value over the period, multiplied by 182/366 (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 is subtracted from the assumed return before expenses. FINANCIAL STATEMENT APRIL 30, 2008 25 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION April 30, 2008 (unaudited) Approval of Investment Advisory/Administrative Services Agreement At a meeting held on December 11, 2006, the Board of Trustees (the "Board") of the Trust unanimously approved a new Combined Investment Advisory/Administrative Services Agreement ("Combined Agreement"). The Board determined that the terms of the Combined Agreement will be substantially identical to those of the current advisory and administration agreements of the Funds, noting that the most significant difference in the Combined Agreement is a single fee for both advisory and administrative services. The following is a summary of the factors the Board took into consideration in making its determination to approve the new Combined Agreement. Nature, Extent and Quality of Services Provided by Brown Brothers Harriman & Co. ("BBH") The Board noted that, under the Combined Agreement in respect of each Fund, BBH, subject to the supervision of the Board, will be responsible for providing a continuous investment program and making purchases and sales of portfolio securities consistent with the Funds' investment objective and policies. In addition, subject to the supervision of the Board, BBH is permitted to supervise one or more subadvisers and evaluate holdings and performance results on a continuous basis for BBH International Equity Fund. Under the Combined Agreement, BBH also provides administrative services to each Fund. The Board considered the scope and quality of services to be provided by BBH under the Combined Agreement and noted that the scope of services provided had expanded over time, primarily, as a result of regulatory developments. The Board noted that, for example, BBH is responsible for maintaining and monitoring its own and, to varying degrees, the Funds' compliance program, and these compliance programs have recently been refined and enhanced in light of new regulatory requirements. The Board considered the quality of the investment research and administrative capabilities of BBH and the other resources it has dedicated to performing services for the Funds. The Board concluded that, overall, they were satisfied with the nature, extent and quality of services expected to be provided to each of the Funds under the Combined Agreement. Subject to the supervision of the Board, BBH oversees the sub-advisers and evaluates their results. BBH reviews portfolio performance, characteristics, departures of key personnel of the sub-advisers and any other relevant topics. BBH also analyzes and monitors economic trends and monetary policy on a continuous basis. The holdings of the BBH International Equity Fund and the allocation of assets to the sub-advisers are regularly reviewed with the objective of enhancing the total rate of return over a full market cycle and dampening return volatility. Costs of Services Provided and Profitability to BBH At the request of the Board, BBH provided information concerning the profitability of BBH's current investment company advisory and other fees. The Board also reviewed BBH's profitability data for each Fund, which also included the effect of revenue generated by the shareholder servicing, administration, custody 26 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) April 30, 2008 (unaudited) and other fees paid by the Fund. The Board discussed the difficulty of making comparisons of profitability because comparative information is not generally publicly available and is affected by numerous factors, including the structure of the service provider, the types of funds it manages and administers, its business mix, numerous assumptions regarding allocations and the entity's capital structure and cost of capital. In considering profitability information, the Board considered the effect of fall-out benefits on BBH's expenses, as well as the "revenue sharing" arrangements BBH has entered into with certain entities that distribute shares of the Funds. The Board focused on profitability of BBH's relationships with the Funds before taxes and distribution expenses. The Board concluded that it was satisfied that BBH's level of profitability from its relationship with each Fund was not excessive. Fall-Out Benefits The Board considered that BBH does not allocate the Funds' portfolio transactions for third party research, although it did benefit from proprietary research received from brokers that execute the Funds' purchases and sales of securities. The Board recognized that the aggregate amount of commissions generated by Fund transactions was unlikely to result in the Funds receiving from full service broker dealers substantial discounts on commission rates. The Board received and reviewed information concerning BBH's policies with respect to allocating portfolio brokerage. The Board also considered that BBH receives shareholder servicing fees from certain funds, and is the Funds' administrator, custodian and securities lending agent. The Board noted that BBH retained no portion of the 12b-1 fees paid by any Fund that operated with a Rule 12b-1 plan. The Board recognized that BBH's profitability would be somewhat lower if it did not receive proprietary research for commissions or, if it did not receive the other benefits described above. The Board recognized that most Fund shareholders were also BBH clients, and that substantial assets are invested in the Funds as a result of an overall investment management program for the shareholder. The Board noted that the Funds also derive reputational and other benefits from their association with BBH and their use of the BBH name, which is licensed to the Funds by BBH. Thus, the Board did not believe that BBH revenues associated with its clients should be fairly regarded as "fallout" benefit from the Funds. Economies of Scale The Board noted that the Funds' combined fee schedules, other than the fee schedule for BBH Money Market Fund, do not contain breakpoints. As a result, if assets increase, the fee rates would not be reduced for these Funds on the incremental assets. With respect to the BBH Money Market Fund, the breakpoint will be reviewed every three (3) years by the Board, and may be adjusted upwards to take into account the effects of inflation or such other basis as may be appropriate, subject to the approval of shareholders to the extent required by the 1940 Act. FINANCIAL STATEMENT APRIL 30, 2008 27 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) April 30, 2008 (unaudited) There may be other economies of scale because many expenses did not rise (and fall) proportionally to increases (and decreases) in total net assets. The Board noted that BBH had priced its services in recognition of the fact that it was largely its own clients who were shareholders and, accordingly, sought to assure that the cost of these services and total expenses for each Fund were fair and reasonable. In addition, the Board noted that over the years BBH had supported certain Funds through fee waivers and expense reimbursements. Based on information they had been provided over many years, the Board observed that in the mutual fund industry as a whole, as well as among funds similar to the Funds, there appeared to be no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. In light of the Funds' current size and expense structure, the Board concluded that it was unnecessary at this time to consider breakpoints with respect to the Funds, other than for the BBH Money Market Fund. Investment Results The Board considered the investment results of each of the Funds as compared to investment companies with its peers and with one or more selected securities indices. In addition to the information received by the Board for the meeting held on October 2, 2006, the Board received detailed performance information for each Fund at each regular Board meeting during the year. At the meeting held on October 2, 2006, the Board reviewed information showing performance of each Fund compared to its peers over the prior 1-, 3-, and 5- year periods and compared the performance information to one or more securities indices over comparable periods. Combined Fee Rate The Board considered the fee rate to be paid by each Fund to BBH The Board recognized that it is difficult to make comparisons of these fee rates, and the combined advisory and administration fees, because there are variations in the services that are included in the fees paid by other funds. The Board considered the depth and range of services provided under the Combined Agreement. For example, in addition to a continuous investment program, BBH provides, among other things, officers (including the Funds' Chief Compliance Officer and officers to provide required certifications) and administrative services, such as shareholder communications, and tax compliance, with the attendant costs and exposure to liability. BBH also coordinates the provision of services to the Funds by nonaffiliated service providers. The following factors specific to the BBH International Equity Fund also were noted and considered by the Board in deciding to approve the Combined Agreement: The Board reviewed the performance of the BBH International Equity Fund's Class N shares and Class I shares versus the MSCI Europe, Australasia and Far East Index (the "Index") The Board considered the performance of the BBH International Equity Fund and each sub-advisor since adopting a multi-manager 28 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) April 30, 2008 (unaudited) approach and employing two sub-advisors in January 2004. The Board recognized that divergence from the Index, particularly during periods of significant market movements, was to be expected because each of the sub-advisers has a clearly defined fundamental investment style with only modest concern for tracking error to the Index. The Board reviewed the overall investments of the Fund and concluded that the portfolio was broadly diversified in terms of country exposure, sector exposure and specific company risk. The Board noted that the performance of both share classes before all expenses was better than the Index since January 31, 2004, but observed that on an after-fee basis the Fund had trailed the Index. The Board also noted the expense ratio for both share classes were in line with many funds of similar size and investment mandate. Taking into account these comparisons and the other factors considered, the Board concluded that the BBH International Equity Fund's recent investment results and its total expense ratio had been satisfactory. Conflicts of Interest As a general matter, certain conflicts of interest may arise in connection with a portfolio manager's management of a Fund's investments, on the one hand, and the investments of other accounts for which the portfolio manager is responsible, on the other. For example, it is possible that the various accounts managed could have different investment strategies that, at times, might conflict with one another to the possible detriment of the Fund. Alternatively, to the extent that the same investment opportunities might be desirable for more than one account, possible conflicts could arise in determining how to allocate them. Other potential conflicts might include conflicts created by specific portfolio manager compensation arrangements, and conflicts relating to selection of brokers or dealers to execute Fund portfolio trades and/or specific uses of commissions from Fund portfolio trades (for example, research, or "soft dollars"). BBH has adopted and implemented policies and procedures, including brokerage and trade allocation policies and procedures, which it believes address the conflicts associated with managing multiple accounts for multiple clients. In addition, BBH monitors a variety of areas, including compliance with account investment guidelines, the inclusion only of securities approved for purchase by the BBH's Fixed Income Credit Committee, and compliance with the BBH's Code of Ethics. Finally, BBH has structured the portfolio managers' compensation in a manner, and the Funds have adopted policies and procedures, reasonably designed to safeguard a Fund from being negatively affected as a result of any such potential conflicts. FINANCIAL STATEMENT APRIL 30, 2008 29 <PAGE> INVESTMENT ADVISER AND ADMINISTRATOR BROWN BROTHERS HARRIMAN 140 BROADWAY NEW YORK, NY 10005 DISTRIBUTOR EDGEWOOD SERVICES, INC. 5800 CORPORATE DRIVE PITTSBURGH, PA 15237-7000 SHAREHOLDER SERVICING AGENT BROWN BROTHERS HARRIMAN 140 BROADWAY NEW YORK, NY 10005 (800) 625-5759 To obtain information or make shareholder inquiries: By telephone: Call 1-800-575-1265 By E-mail send your request to: bbhfunds@bbh.com On the internet: www.bbhfunds.com This report is submitted for the general information of shareholders and is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. Nothing herein contained is to be considered an offer of sale or a solicitation of an offer to buy shares of the Fund. Such offering is made only by the prospectus, which includes details as to offering price and other material information. The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on "Form N-Q." Information on Form N-Q is available without charge and upon request by calling the Funds at the toll-free number listed above. A text only version can be viewed online or downloaded from the SEC's website at http://www.sec.gov; and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC (call 1-800-SEC-0330 for information on the operation of the Public Reference Room). You may also access this information from the BBH website at BBH.com by clicking on "BBH Mutual Funds" and selecting "Online Documents/Holdings Information." A copy of the Fund's Proxy Voting Policy is available upon request by calling the toll-free number listed above. A text-only version of the policy can be viewed online or downloaded from the SEC at www.sec.gov. BROWN [LOGO] BROTHERS HARRIMAN BROWN [LOGO] BROTHERS HARRIMAN Semi-Annual Report APRIL 30, 2008 BBH REAL RETURN FUND <PAGE> BBH REAL RETURN FUND - -------------------------------------------------------------------------------- PORTFOLIO ALLOCATION April 30, 2008 (unaudited) BREAKDOWN BY SECURITY TYPE Percent of U.S. $ Value Net Assets ------------ --------- Asset Backed Securities .......................... $ 2,865,771 2.1% Corporate Bond ................................... 7,358,932 5.3 U.S. Treasury Notes and Bonds .................... 126,071,984 90.9 Cash and Other Assets in Excess of Liabilities ... 2,421,945 1.7 ------------ ----- NET ASSETS ....................................... $138,718,632 100.0% ============ ===== All data as of April 30, 2008. The Fund's breakdown by security type is expressed as a percentage of net assets and may vary over time. The accompanying notes are an integral part of these financial statements. 2 <PAGE> BBH REAL RETURN FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS April 30, 2008 (unaudited) (expressed in U.S. dollars) Principal Amount Value - ----------- ----------- U.S. TREASURY NOTES AND BONDS (90.9%) $18,719,724 1.625%, 1/15/2015(1) .............................. $ 19,266,696 8,120,137 1.875%, 7/15/2013(1) .............................. 8,529,319 13,506,299 1.875%, 7/15/2015(1) .............................. 14,110,922 12,909,971 2.000%, 4/15/2012(1) .............................. 13,576,655 22,461 2.000%, 7/15/2014(1) .............................. 23,690 2,186,489 2.000%, 1/15/2016(1) .............................. 2,296,668 5,652,874 2.000%, 1/15/2026(1) .............................. 5,617,544 1,805,536 2.375%, 1/15/2017(1) .............................. 1,948,003 18,901,100 2.375%, 1/15/2025(1) .............................. 19,884,543 10,423,819 2.375%, 1/15/2027(1) .............................. 10,961,292 5,477,054 2.500%, 7/15/2016(1) .............................. 5,970,416 1,787,468 2.625%, 7/15/2017(1) .............................. 1,966,632 13,233,420 3.375%, 1/15/2012(1) .............................. 14,577,433 748,031 3.500%, 1/15/2011(1) .............................. 814,126 5,009,231 3.875%, 4/15/2029(1) .............................. 6,528,045 ------------ Total U.S. Treasury Notes and Bonds (Identified cost $119,408,817) .................... 126,071,984 ------------ ASSET BACKED SECURITIES (2.1%) 2,900,000 Advanta Business Card Master Trust 2005-C1 3.310%, 8/22/11(2) ................ 2,655,250 1,202,980 Greenpoint Mortgage Funding Trust 2006-HE1 2.888%, 3/12/37(2) ............... 210,521 ------------ Total Asset Backed Securities (Identified cost $4,102,981) ...................... 2,865,771 ------------ The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2008 3 <PAGE> BBH REAL RETURN FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2008 (unaudited) (expressed in U.S. dollars) Principal Amount Value - ----------- ----------- CORPORATE BOND (5.3%) FINANCE (5.3%) $ 9,157,000 SLM Corp. 6.400%, 01/31/2014(2) ................... $ 7,358,932 ------------ Total Corporate Bond (Identified cost $9,147,185) ...................... 7,358,932 ------------ TOTAL INVESTMENTS (Identified cost $132,658,983)(3) .... 98.3% $136,296,687 CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ......... 1.7 2,421,945 ----- ------------ NET ASSETS ............................................. 100.0% $138,718,632 ====== ============ - ---------- (1) Inflation Protected Security. (2) Variable rate instrument. Interest rates change on specific dates (such as coupon or interest payment date). The yield shown represents the April 30, 2008 coupon or interest rate. (3) The aggregate cost for federal income tax purposes is $132,658,983, the aggregate gross unrealized appreciation is $6,708,334 and the aggregate gross unrealized depreciation is $3,070,630, resulting in net unrealized appreciation of $3,637,704. The accompanying notes are an integral part of these financial statements. 4 <PAGE> BBH REAL RETURN FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2008 (unaudited) (expressed in U.S. dollars) At April 30, 2008, the Fund had the following open swap agreements: Amount Due Notional from (to) Broker Amount Description at Value - --------- ----------- ---------------- 4,300,000 Agreement with Lehman Brothers to receive 0.390% interest in exchange for providing protection against default on a bond issued by Bear Stearns Companies, Inc. $ (71,722) 8,000,000 Agreement with Goldman Sachs terminating 06/20/14 to pay 2.120% interest in exchange for receiving 7 yr protection against default on a bond from SLMA Corporation. 502,959 4,300,000 Agreement with Goldman Sachs to receive 1.545% interest in exchange for providing protection against default on a bond issued by Bear Stearns Companies, Inc. (114,647) 5,350,000 Agreement with Lehman Brothers to pay 0.165% interest in exchange for receiving protection against default on a bond issued by American Express Company. 182,151 5,350,000 Agreement with Goldman Sachs to receive 0.470% interest in exchange for providing protection against default on a bond issued by American Express Company. (120,888) --------- $ 377,853 ========= As of April 30, 2008, the Fund had segregated sufficient cash to cover any accrued but unpaid net amounts owed to a swap counterparty. The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2008 5 <PAGE> BBH REAL RETURN FUND - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES April 30, 2008 (unaudited) <TABLE> <S> <C> ASSETS: Investments in securities, at value (identified cost $132,658,983) ... $136,296,687 Cash ................................................................. 113,418 Foreign currency at value (identified cost $5) ....................... 5 Segregated cash ...................................................... 2,243,468 Receivables for: Interest and other receivables ..................................... 715,091 Swap agreements .................................................... 377,853 Capital stock sold ................................................. 32,735 ------------ Total Assets ..................................................... $139,779,257 ------------ LIABILITIES: Payables for: Capital stock redeemed ............................................. 597,159 Custody and accounting fees ........................................ 173,087 Investment advisory fees ........................................... 67,993 Shareholder servicing fees ......................................... 58,924 Professional fees .................................................. 35,300 Administrative fees ................................................ 27,195 Board of Trustees' fees ............................................ 23,877 Accrued expenses and other liabilities ............................. 77,090 ------------ Total Liabilities ................................................ 1,060,625 ------------ NET ASSETS .............................................................. $138,718,632 ============ Net Assets Consist of: Par value ............................................................ $ 13,326 Paid-in capital ...................................................... 162,870,047 Undistributed net investment income .................................. 1,586,697 Accumulated net realized loss on investments and foreign exchange transactions ...................................... (29,770,281) Net unrealized appreciation on investments and foreign currency translations ...................................... 4,018,843 ------------ Net Assets .............................................................. $138,718,632 ============ CLASS N SHARES NET ASSET VALUE ($129,634,547 / 12,456,632 shares outstanding) ....................... $10.41 ====== CLASS I SHARES NET ASSET VALUE ($9,084,085 / 868,936 shares outstanding) ............................ $10.45 ====== </TABLE> The accompanying notes are an integral part of these financial statements. 6 <PAGE> BBH REAL RETURN FUND - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS For the six months ended April 30, 2008 (unaudited) <TABLE> <S> <C> NET INVESTMENT INCOME: Income: Interest and other income ............................................... $ 5,714,962 ----------- Total Income .......................................................... 5,714,962 ----------- Expenses: Investment advisory fees ................................................ 258,323 Shareholder servicing fees .............................................. 204,650 Administrative fees ..................................................... 103,329 Custody and accounting fees ............................................. 193,842 Board of Trustees' fees ................................................. 26,910 Professional fees ....................................................... 16,658 Miscellaneous expenses .................................................. 123,269 ----------- Total Expenses ........................................................ 926,981 Expense offset arrangement ............................................ (5,314) ----------- Net Expenses .......................................................... 921,667 ----------- Net Investment Income ..................................................... 4,793,295 ----------- NET REALIZED AND UNREALIZED GAIN: Net realized gain on investments, futures contracts and swap agreements ... 8,554,977 Net realized loss on foreign exchange transactions ........................ (384,054) ----------- Net realized gain ....................................................... 8,170,923 ----------- Net change in unrealized depreciation on investments, swap agreements and futures contracts ................................... (721,445) Net change in unrealized depreciation on foreign currency translations ................................................... (48,404) ----------- Net change in unrealized depreciation ................................... (769,849) ----------- Net Realized and Unrealized Gain ...................................... 7,401,074 ----------- Net Increase in Net Assets Resulting from Operations ...................... $12,194,369 =========== </TABLE> The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2008 7 <PAGE> BBH REAL RETURN FUND - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS <TABLE> <CAPTION> For the six For the months ended year ended April 30, 2008 October 31, (unaudited) 2007 -------------- ------------- <S> <C> <C> INCREASE (DECREASE) IN NET ASSETS: Operations: Net investment income ...................................... $ 4,793,295 $ 12,182,394 Net realized gain (loss) on investments, foreign exchange transactions, futures contracts and swap agreements ...... 8,170,923 (10,856,433) Net change in unrealized appreciation (depreciation) on investments, foreign currency translations and futures contracts ........................................ (769,849) 2,811,829 ------------- ------------- Net increase in net assets resulting from operations ....... 12,194,369 4,137,790 ------------- ------------- Dividends and distributions declared: From net investment income: Class N .................................................... (3,047,641) (8,170,933) Class I .................................................... (707,577) (3,702,005) Class A .................................................... -- (2,183) From net realized gains Class N .................................................... -- -- Class I .................................................... -- -- Class A .................................................... -- -- ------------- ------------- Total dividends and distributions declared ............... (3,755,218) (11,875,121) ------------- ------------- Capital stock transactions: Net proceeds from sales of capital stock ................... 8,259,984 37,895,788 Net asset value of capital stock issued to shareholders for reinvestment of dividends and distributions ........................................ 3,380,348 9,269,309 Net cost of capital stock redeemed ......................... (159,145,696) (245,269,850) ------------- ------------- Net decrease in net assets resulting from capital stock transactions ............................... (147,505,364) (198,104,753) ------------- ------------- Total decrease in net assets ............................. (139,066,213) (205,842,084) NET ASSETS: Beginning of year ............................................ 277,784,845 483,626,929 ------------- ------------- End of period (including undistributed net investment income of $1,586,697 and $548,620, respectively). .......... $ 138,718,632 $ 277,784,845 ============= ============= </TABLE> The accompanying notes are an integral part of these financial statements. 8 <PAGE> BBH REAL RETURN FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Selected per share data and ratios for a Class N share outstanding throughout each period <TABLE> <CAPTION> For the six months ended For the years ended October 31, April 30, 2008 -------------------------------------------------------------- (unaudited) 2007 2006 2005 2004 2003 -------------- ------ ------ ------ ------ ------ <S> <C> <C> <C> <C> <C> <C> Net asset value, beginning of year .... $10.16 $10.39 $11.00 $11.32 $11.32 $10.89 ------ ------ ------ ------ ------ ------ Income from investment operations: Net investment income(1) ........... 0.21 0.32 0.52 0.46 0.38 0.35 Net realized and unrealized gain (loss) ...................... 0.25 (0.19) (0.31) (0.14) 0.45 0.71 ------ ------ ------ ------ ------ ------ Total income from investment operations ..................... 0.46 0.13 0.21 0.32 0.83 1.06 ------ ------ ------ ------ ------ ------ Less dividends and distributions: From net investment income ......... (0.21) (0.36) (0.52) (0.45) (0.40) (0.33) From net realized gains ............ -- -- (0.30) (0.19) (0.43) (0.30) ------ ------ ------ ------ ------ ------ Total dividends and distributions ..... (0.21) (0.36) (0.82) (0.64) (0.83) (0.63) ------ ------ ------ ------ ------ ------ Net asset value, end of period ........ $10.41 $10.16 $10.39 $11.00 $11.32 $11.32 ====== ====== ====== ====== ====== ====== Total return .......................... 4.50% 1.30% 1.91% 2.91% 7.77% 10.05% Ratios/Supplemental data: Net assets, end of period (in millions) .................... $130 $200 $357 $489 $373 $380 Expenses as a percentage of average net assets ............... 1.07%(2),(3) 0.83%(2) 0.71%(2) 0.71%(2) 0.72%(2) 0.67%(2),(4) Ratio of net investment income to average net assets ............ 3.97%(3) 3.16% 4.97% 4.10% 3.43% 3.43% Portfolio turnover rate ............... 95%(3) 268% 496%(5) 572% 553% 393% </TABLE> - ---------- (1) Calculated using average shares outstanding for the period. (2) The ratio of expenses to average net assets for the six months ended April 30, 2008, and the years ended October 31, 2007, 2006, 2005, 2004 and 2003 reflect fees reduced as a result of an expense offset arrangement with the Fund's custodian. Had this arrangement not been in place, this ratio would have been 0.53%, 0.84%, 0.71%, 0.71%, 0.72% and 0.67%, respectively. (3) Annualized. (4) Had the expense payment agreement which terminated on July 31, 2003 not been in place, the ratio of expenses to average net assets would have been as follows: <TABLE> <S> <C> <C> <C> <C> <C> <C> N/A N/A N/A N/A N/A 0.72% </TABLE> (5) 2006 year amount has been restated to align disclosure with current period presentation. The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2008 9 <PAGE> BBH REAL RETURN FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (continued) Selected per share data and ratios for a Class I share outstanding throughout each period <TABLE> <CAPTION> For the six months ended For the years ended October 31, April 30, 2008 -------------------------------------------------------------- (unaudited) 2007 2006 2005 2004 2003 -------------- ------ ------ ------ ------ ------ <S> <C> <C> <C> <C> <C> <C> Net asset value, beginning of year .... $10.20 $10.42 $11.03 $11.33 $11.34 $10.90 ------ ------ ------ ------ ------ ------ Income from investment operations: Net investment income(1) ........... 0.22 0.39 0.56 0.49 0.43 0.38 Net realized and unrealized gain (loss) ...................... 0.25 (0.24) (0.34) (0.12) 0.41 0.72 ------ ------ ------ ------ ------ ------ Total income from investment operations ........ 0.47 0.15 0.22 0.37 0.84 1.10 ------ ------ ------ ------ ------ ------ Less dividends and distributions: From net investment income ......... (0.22) (0.37) (0.53) (0.48) (0.42) (0.36) From net realized gains ............ -- -- (0.30) (0.19) (0.43) (0.30) ------ ------ ------ ------ ------ ------ Total dividends and distributions ..... (0.22) (0.37) (0.83) (0.67) (0.85) (0.66) ------ ------ ------ ------ ------ ------ Net asset value, end of period ........ $10.45 $10.20 $10.42 $11.03 $11.33 $11.34 ====== ====== ====== ====== ====== ====== Total return .......................... 4.61% 1.53% 2.11% 3.30% 7.99% 10.27% Ratios/Supplemental data: Net assets, end of period (in millions) .................... $9 $78 $120 $96 $83 $55 Expenses as a percentage of average net assets ............... 0.85%(2),(3) 0.58%(2) 0.46%(2) 0.46%(2) 0.47%(2) 0.42%(2),(4) Ratio of net investment income to average net assets ............ 4.18%(3) 3.76% 5.36% 4.33% 3.78% 3.16% Portfolio turnover rate ............... 95%(3) 268% 496%(5) 572% 553% 393% </TABLE> - ---------- (1) Calculated using average shares outstanding for the year. (2) The ratio of expenses to average net assets for the six months ended April 30, 2008, and the years ended October 31, 2007, 2006, 2005, 2004 and 2003 reflect fees reduced as a result of an expense offset arrangement with the Fund's custodian. Had this arrangement not been in place, this ratio would have been 0.43%, 0.59%, 0.45%, 0.46%, 0.46% and 0.42%, respectively. (3) Annualized. (4) Had the expense payment agreement which terminated on July 31, 2003 not been in place, the ratio of expenses to average net assets would have been as follows: <TABLE> <S> <C> <C> <C> <C> <C> <C> N/A N/A N/A N/A N/A 0.47% </TABLE> (5) 2006 year amount has been restated to align disclosure with current period presentation. BBH REAL RETURN FUND The accompanying notes are an integral part of these financial statements. 10 <PAGE> BBH REAL RETURN FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS April 30, 2008 (unaudited) 1. Organization and Significant Accounting Policies. BBH Real Return Fund (the "Fund") is a separate, diversified series of BBH Trust (the "Trust"), which is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Trust was originally organized under the laws of the state of Maryland on July 16, 1990 as BBH Fund, Inc. and re-organized as a Delaware statutory trust on June 12, 2007. The Fund commenced operations on July 23, 1992. On February 20, 2001, the Trustees reclassified the Fund's outstanding shares as "Class N", and established a new class of shares designated as "Class I". Class I commenced operations on August 16, 2001. Class N and Class I have different operating expenses. Class N and Class I shares do not convert to any other class of the Fund. All shares of Class A were redeemed on April 2, 2007 and the Class was closed. At April 30, 2008, there were seven series of the Trust. The Fund's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements and are based, in part, on the following accounting policies. Actual results could differ from those estimates. A. Valuation of Investments. Bonds and other fixed income securities, including restricted securities (other than short-term obligations but including listed issues) are valued at their most recent bid prices (sales price if the principal market is an exchange) in the principal market in which such securities are normally traded, on the basis of valuations furnished by a pricing service, use of which has been approved by the Trustees. In making such valuations, the pricing service utilizes both dealer-supplied valuations and electronic data processing techniques which take into account appropriate factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data, without exclusive reliance upon quoted prices or exchange or over-the-counter prices, since such valuations are believed to reflect more accurately the fair value of such securities. Securities or other assets for which market quotations are not readily available are valued at fair value in accordance with procedures established by and under the general supervision and responsibility of the Trust's Board of Trustees. Short-term investments which mature in 60 days or less are valued at amortized cost if their original maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if their original maturity when acquired by the Fund was more than 60 days, unless this is determined not to represent fair value by the Trustees. B. Accounting for Investment and Income. Investment transactions are accounted for on the trade date. Realized gains and losses, if any, from investment transactions are determined on the basis of identified cost. Interest income is accrued daily and consists of interest accrued, discount earned (including both original issue and market discount) and premium amortization on the investments of the Fund. Investment income is recorded net of foreign taxes withheld where recovery of such FINANCIAL STATEMENT APRIL 30, 2008 11 <PAGE> BBH REAL RETURN FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2008 (unaudited) tax is uncertain. Debt obligations may be placed on non-accrual status and related interest income may be reduced by ceasing current accruals and writing off interest receivable when the collection of all or a portion of interest has become doubtful based on constantly applied procedures. A debt obligation is removed from non-accrual status when the issuer resumes interest payments or when collectibility of interest is reasonably assured. C. Repurchase Agreements. The Fund may enter into repurchase agreements with primary dealers of U.S. Government Obligations as designated by the Federal Reserve Bank of New York. 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 exceeds the sale price, reflecting the Fund's return on the transaction or effectively the interest rate paid by the dealer to the Fund. This return is unrelated to the interest 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 or sub-custodian will monitor the value of the underlying security each day to ensure that the value of the security always equals or exceeds the repurchase price. Repurchase agreements are subject to credit risks. At April 30, 2008, the Fund had no open repurchase agreements. D. Reverse Repurchase Agreements. The Fund may enter into reverse repurchase agreements with primary dealers of U.S. Government Obligations as designated by the Federal Reserve Bank of New York. Interest on the value of reverse repurchase agreements issued and outstanding is based upon competitive market rates at the time of issuance. At the time the Fund enters into a reverse repurchase agreement, it establishes and maintains a segregated account with the lender containing liquid high grade securities having a value not less than the repurchase price, including accrued interest, of the reverse repurchase agreement. Information regarding reverse repurchase agreements is included in the Portfolio of Investments. Reverse repurchase agreements constitute debt. At April 30, 2008, the Fund had no open reverse repurchase agreements. E. Forward Foreign Currency Exchange Contracts. The Fund may enter into forward foreign currency exchange contracts ("Contracts") in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Fund has to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Fund has no specific limitation on the percentage of assets which may be committed to these types of Contracts. The Fund could be exposed to risks if the counterparties to the Contracts are unable to meet the terms of their Contracts or if the value of the foreign currency changes unfavorably. The U.S. dollar values of foreign currency underlying all contractual 12 <PAGE> BBH REAL RETURN FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2008 (unaudited) commitments held by the Fund are determined using forward currency exchange rates supplied by a quotation service. At April 30, 2008, the Fund had no open forward foreign currency exchange contracts. F. Swap Agreements. The Fund may enter into swap agreements. A swap is an exchange of cash payments based on a notional principal amount between the Fund and another party which is based on a specific financial index. These transactions are entered into in an attempt to obtain a particular return when it is considered desirable to do so, possibly at a lower cost to the Fund than if the Fund had invested directly in an instrument that yielded that desired return. Cash payments are exchanged at specified intervals and recorded in the Statement of Operations as realized gains and losses. The expected income or expense is recorded on an accrual basis. The value of the swap is adjusted daily and the change in value is recorded as unrealized appreciation or depreciation. Risks may arise upon entering into these agreements from the potential inability of counter parties to meet the terms of their contract and from unanticipated changes in the value of the financial index on which the swap agreement is based. Risks may exceed amounts recognized on the Statement of Assets and Liabilities. The Fund may use swaps for both hedging and non-hedging purposes. For hedging purposes, the Fund may use swaps to reduce its exposure to interest and foreign exchange rate fluctuations. For non-hedging purposes, the Fund may use swaps to take a position on anticipated changes in the underlying financial index. Information regarding swap agreements is included at the end of the Portfolio of Investments. G. Financial Futures Contracts. The Fund may enter into open futures contracts in order to hedge against anticipated future changes in interest rates which otherwise might either adversely affect the value of securities held for the Fund or adversely affect the prices of securities which are intended to be purchased at a later date for the Fund. The contractual amount of the futures contracts represents the investment the Fund has in a particular contract and does not necessarily represent the amounts potentially subject to risk. Trading in futures contracts involves, to varying degrees, risk of loss in excess of any futures variation margin reflected in the Statement of Assets and Liabilities. The measurement of risk associated with futures contracts is meaningful only when all related and offsetting transactions are considered. Gains and losses are realized upon the expiration or closing of the futures contracts. Futures contracts held by the Fund are valued daily at the official settlement price of the exchange on which it is traded. At April 30, 2008, the Fund had no open financial futures contracts. H. Rule 144A Securities. The Fund may purchase securities that are not registered under the 1933 Act, but that can be sold to "qualified institutional buyers" in accordance with the requirements stated in Rule 144A under the 1933 Act (Rule 144A Securities). A Rule 144A Security may be considered illiquid and therefore subject to the 15% limitation on the purchase of illiquid securities, FINANCIAL STATEMENT APRIL 30, 2008 13 <PAGE> BBH REAL RETURN FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2008 (unaudited) unless it is determined on an ongoing basis that an adequate trading market exists for the security. Guidelines have been adopted and the daily function of determining and monitoring liquidity of Rule 144A Securities has been delegated to the Investment Adviser. All relevant factors will be considered in determining the liquidity of Rule 144A Securities and all investments in Rule 144A Securities will be carefully monitored. I. Inflation-Adjusted Debt Securities. The Fund generally invests in inflation-adjusted debt securities issued by the U.S. Treasury. The Fund may also invest in inflation-adjusted debt securities issued by U.S. Government agencies and instrumentalities other than the U.S. Treasury and by other entities such as U.S. and foreign corporations and foreign governments. The principal value of these debt securities is adjusted by references to changes in the Consumer Price Index or another general price wage index. These debt securities typically pay a fixed rate of interest, but this fixed rate is applied to the inflation-adjusted principal amount. The principal paid at maturity of the debt security is typically equal to the inflation-adjusted principal amount, or the security's original par value, whichever is greater. Other types inflation-adjusted securities may use other methods to adjust for other measures of inflation. J. Securities Lending. The Fund may lend its portfolio securities to broker-dealers, qualified banks and certain institutional investors. The loans are secured by collateral in an amount equal to at least the market value at all times of the loaned securities plus any accrued interest and dividends. During the time the securities are on loan, the Fund will continue to receive the interest and dividends or amounts equivalent thereto, on the loaned securities while receiving a fee from the borrower or earning interest on the investment of the cash collateral. Loans are subject to termination at the option of the borrower or the Fund. Upon termination of the loan, the borrower will return to the lender securities identical to the loaned securities. The Fund may pay reasonable finders', administrative and custodial fees in connection with a loan of its securities and may share the interest earned on the collateral with the borrower. The Fund bears the risk of delay in recovery of, or even loss of rights in, the securities loaned should the borrower of the securities fail financially. There were no securities on loan as of April 30, 2008. K. 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 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 accounting principles generally accepted in the United States of America, the basis on which these financial statements are prepared. 14 <PAGE> BBH REAL RETURN FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2008 (unaudited) Accordingly, the amount of net investment income and net realized gain reported on these financial statements may differ from that reported on the Fund's tax return due to certain book-to-tax differences such as losses deferred due to "wash sale" transactions and utilization of capital loss carryforwards. These differences may result in temporary over-distributions for financial statement purposes and are classified as distributions in excess of accumulated net investment income or net realized gains. These distributions do not constitute a return of capital. Permanent differences are reclassified on the statement of assets and 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. L. Dividends and Distributions to Shareholders. Dividends to shareholders from net investment income are declared and paid monthly and are recorded on the ex-dividend date. Distributions from net capital gains, if any, are generally paid and declared annually and are recorded on the ex-dividend date. The tax character of distributions paid during the fiscal years ended October 31, 2007 and 2006, respectively, were as follows: Distribution paid from: - -------------------------------------------------------------------------------- Net Total Total Ordinary long term taxable Tax return distributions income capital gain distributions of capital paid ----------- ------------ ------------- ---------- ------------- 2007: $11,875,121 $ -- $11,875,121 -- $11,875,121 2006: 34,781,656 7,721,420 42,503,076 -- 42,503,076 As of October 31, 2007 and 2006, respectively, the components of accumulated earnings/(deficit) on a tax basis were as follows: <TABLE> <CAPTION> Components of accumulated earnings/(deficit): - -------------------------------------------------------------------------------------------------------------- Total Undistributed Undistributed Accumulated Unrealized accumulated ordinary long-term Accumulated capital and appreciation/ earnings/ income capital gains earnings other losses (depreciation) (deficit) ------------- ------------- ----------- ------------- -------------- ------------ <S> <C> <C> <C> <C> <C> 2007: $ 16,823 -- $ 16,823 $(37,249,081) $4,138,089 $(33,094,169) 2006: 620,012 -- 620,012 (26,897,710) 1,041,491 (25,236,207) </TABLE> FINANCIAL STATEMENT APRIL 30, 2008 15 <PAGE> BBH REAL RETURN FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2008 (unaudited) The Fund had a net capital loss carryforward of approximately $37,249,081 which expires as follows: Expiration date Amount ----------- ----------- 10/31/2014 $26,897,710 10/31/2015 10,351,371 ----------- $37,249,081 =========== Total distributions paid may differ from the Statement of Changes in Net Assets because, for tax purposes, dividends are recognized when actually paid. The differences between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales, forward currency contracts marked to market and futures marked to market. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. M. Accounting Developments. In June 2006, the Fund adopted FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund's tax returns to determine whether that tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. The adoption of FIN 48 had no impact on the operations of the Fund for the period ended April 30, 2008. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued 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 implication of SFAS 157. At this time its impact on the Fund's financial statements has not yet been determined. In March 2008, Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161), was issued and is effective for fiscal years beginning after November 15, 2008. SFAS 161 requires enhanced disclosures to provide information about the reasons the Fund invests in derivative instruments, the accounting treatment and the effect derivatives have on financial performance. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund's financial statement disclosures. 16 <PAGE> BBH REAL RETURN FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2008 (unaudited) 2. Transactions with Affiliates. Advisory and Administrative Fees. Effective June 12, 2007, under a combined Investment Advisory and Administrative Services Agreement ("Agreement") with the Trust, a separately identifiable department within Brown Brothers Harriman & Co. ("BBH") provides investment advice, and portfolio management and administrative services to the Fund. BBH receives a combined fee from the Fund for advisory and administrative services calculated daily and paid monthly at an annual rate equivalent to 0.35% of the fund's average daily net assets. Prior to June 12, 2007, under a separate agreement that covered only advisory fees, BBH received a fee from the Fund calculated daily and paid monthly at an annual rate of 0.25% of the Fund's average daily net assets and Brown Brothers Harriman Trust Company, LLC ("BBHTC") the Fund's administrator, under a separate agreement that covered only administrative services, received a fee from the Fund calculated daily and paid monthly at an annual rate equivalent to 0.10% of the Fund's average daily net assets. BBH has a sub-administration services agreement with Federated Services Company ("FSC") for which FSC receives compensation paid by BBH. For the six months ended April 30, 2008, the Fund incurred $361,652 for advisory and administrative services. Shareholder Servicing Fees. The Trust has a shareholder servicing agreement with BBH for which BBH receives a fee from the Fund calculated daily and paid monthly at an annual rate of 0.25% of Class N shares' average daily net assets. For the six months ended April 30, 2008, the Fund incurred $204,650 for shareholder servicing services. Custody and Accounting Fees. BBH acts as a custodian and shall receive a custody and accounting fee from the Fund calculated daily and paid monthly. BBH holds all cash and investments and calculates the daily net asset value. The custody fee is a transaction based fee with an annual minimum of $30,000, and the accounting fee is calculated at 0.04% per annum on the first $100 million of net assets, 0.02% per annum on the next $400 million of net assets and 0.01% per annum on all net assets over $500 million. For the six months ended April 30, 2008, the Fund incurred $193,842 for custody and accounting services. These fees were reduced by $5,314 as a result of an expense offset arrangement with the Fund's custodian. 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 overdraft. The total interest paid by the Fund for the six months ended April 30, 2008 was $10,469. Securities Lending Fees. The Trust has a security lending agreement with BBH for which BBH receives a fee from the Fund for each security loaned. For the six months ended April 30, 2008, the Fund incurred no security lending fees. FINANCIAL STATEMENT APRIL 30, 2008 17 <PAGE> BBH REAL RETURN FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2008 (unaudited) Board of Trustees' Fees. Each Trustee receives an annual fee as well as reimbursement for reasonable out-of-pocket expenses from the Fund. For the six months ended April 30, 2008, the Fund incurred $26,910 for these fees. 3. Investment Transactions. For the six months ended April 30, 2008, the cost of purchases and the proceeds of sales of investment securities other than short-term investments were $101,249 and $316,130, respectively. 4. Securities on Loan. As of April 30, 2008, the Fund had no securities on loan. 5. Capital Stock. BBH Fund, Inc. was permitted to issue 2,500,000,000 shares of capital stock, par value $.001 per share, of which 277,777,778 shares were classified as Class N shares of the Fund, 277,777,778 shares were classified as Class I shares of the Fund. The Trust offers unlimited shares without par value. Transactions in shares of capital stock were as follows: <TABLE> <CAPTION> SHARES AMOUNT ----------------------------------- ----------------------------------- For the six For the six months ended For the months ended For the April 30, 2008 year ended April 30, 2008 year ended (unaudited) October 31, 2007 (unaudited) October 31, 2007 -------------- ---------------- -------------- ---------------- <S> <C> <C> <C> <C> Class N Capital stock sold ........ 611,979 2,888,008 $ 6,929,763 $ 29,493,130 Capital stock issued in connection with reinvestment of dividends ............... 316,462 660,807 2,918,279 6,701,988 Capital stock redeemed (8,099,890) (18,326,328) (85,416,521) (188,584,152) ---------- ----------- ------------ ------------- Net decrease .............. (7,171,449) (14,777,513) $(75,568,479) $(152,389,034) ========== =========== ============ ============= </TABLE> 18 <PAGE> BBH REAL RETURN FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2008 (unaudited) <TABLE> <CAPTION> SHARES AMOUNT ----------------------------------- ----------------------------------- For the six For the six months ended For the months ended For the April 30, 2008 year ended April 30, 2008 year ended (unaudited) October 31, 2007 (unaudited) October 31, 2007 -------------- ---------------- -------------- ---------------- <S> <C> <C> <C> <C> Class I Capital stock sold ........ 125,784 805,791 $ 1,330,221 $ 8,303,256 Capital stock issued in connection with re-investment of dividends ............... 43,732 252,185 462,069 2,565,493 Capital stock redeemed .... (6,981,444) (4,835,255) (73,729,175) (49,614,918) ---------- ---------- ------------ ------------ Net decrease .............. (6,811,928) (3,777,279) $(71,936,885) $(38,746,169) ========== ========== ============ ============ </TABLE> FINANCIAL STATEMENT APRIL 30, 2008 19 <PAGE> BBH REAL RETURN FUND - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES April 30, 2008 (unaudited) EXAMPLE As a shareholder of BBH Real Return Fund (the "Fund"), you may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution 12b-1 fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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 (November 1, 2007 to April 30, 2008). ACTUAL EXPENSES The first line of the table below provides information about actual account values and actual expenses. You may use information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your 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 the Period" to estimate the expenses you paid on your account during the period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid during the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. 20 <PAGE> BBH REAL RETURN FUND - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES (continued) April 30, 2008 (unaudited) Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Expenses Paid Beginning Ending During Period Account Value Account Value November 1, 2007 November 1, 2007 April 30, 2008 to April 30, 2008(1) ---------------- -------------- -------------------- Class N Actual ............ $1,000 $1,045.00 $2.69 Hypothetical(2) ... $1,000 $1,022.23 $2.66 Expenses Paid Beginning Ending During Period Account Value Account Value November 1, 2007 November 1, 2007 April 30, 2008 to April 30, 2008(1) ---------------- -------------- -------------------- Class I Actual ............ $1,000 $1,046.10 $2.19 Hypothetical(2) ... $1,000 $1,022.73 $2.16 - ---------- (1) Expenses are equal to the Fund's annualized expense ratio of 1.07% and 0.85% for Class N and I shares, respectively, multiplied by the average account value over the period, multiplied by 182/366 (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. FINANCIAL STATEMENT APRIL 30, 2008 21 <PAGE> BBH REAL RETURN FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION April 30, 2008 (unaudited) Approval of Investment Advisory/Administrative Services Agreement At a meeting held on December 11, 2006, the Board of Trustees (the "Board") of the Trust unanimously approved a new Combined Investment Advisory/Administrative Services Agreement ("Combined Agreement"). The Board determined that the terms of the Combined Agreement will be substantially identical to those of the current advisory and administration agreements of the Funds, noting that the most significant difference in the Combined Agreement is a single fee for both advisory and administrative services. The following is a summary of the factors the Board took into consideration in making its determination to approve the new Combined Agreement. Nature, Extent and Quality of Services Provided by Brown Brothers Harriman & Co. ("BBH") The Board noted that, under the Combined Agreement in respect of each Fund, BBH, subject to the supervision of the Board, will be responsible for providing a continuous investment program and making purchases and sales of portfolio securities consistent with the Funds' investment objective and policies. Under the Combined Agreement, BBH also provides administrative services to each Fund. The Board considered the scope and quality of services to be provided by BBH under the Combined Agreement and noted that the scope of services provided had expanded over time, primarily, as a result of regulatory developments. The Board noted that, for example, BBH is responsible for maintaining and monitoring its own and, to varying degrees, the Funds' compliance program, and these compliance programs have recently been refined and enhanced in light of new regulatory requirements. The Board considered the quality of the investment research and administrative capabilities of BBH and the other resources it has dedicated to performing services for the Funds. The Board concluded that, overall, they were satisfied with the nature, extent and quality of services expected to be provided to each of the Funds under the Combined Agreement. Costs of Services Provided and Profitability to BBH At the request of the Board, BBH provided information concerning the profitability of BBH's current investment company advisory and other fees. The Board also reviewed BBH's profitability data for each Fund, which also included the effect of revenue generated by the shareholder servicing, administration, custody and other fees paid by the Fund. The Board discussed the difficulty of making comparisons of profitability because comparative information is not generally publicly available and is affected by numerous factors, including the structure of the service provider, the types of funds it manages and administers, its business mix, numerous assumptions regarding allocations and the entity's capital structure and cost of capital. In considering profitability information, the Board considered the effect of fall-out benefits on BBH's expenses, as well as the "revenue sharing" arrangements BBH has entered into with certain entities that distribute shares of the Funds. The Board focused on profitability of BBH's relationships with the Funds before taxes and distribution expenses. The Board concluded that it was satisfied that BBH's level of profitability from its relationship with each Fund was not excessive. 22 <PAGE> BBH REAL RETURN FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) April 30, 2008 (unaudited) Fall-Out Benefits The Board considered that BBH does not allocate the Funds' portfolio transactions for third party research, although it did benefit from proprietary research received from brokers that execute the Funds' purchases and sales of securities. The Board recognized that the aggregate amount of commissions generated by Fund transactions was unlikely to result in the Funds receiving from full service broker dealers substantial discounts on commission rates. The Board received and reviewed information concerning BBH's policies with respect to allocating portfolio brokerage. The Board also considered that BBH receives shareholder servicing fees from certain funds, and is the Funds' administrator, custodian and securities lending agent. The Board noted that BBH retained no portion of the 12b-1 fees paid by any Fund that operated with a Rule 12b-1 plan. The Board recognized that BBH's profitability would be somewhat lower if it did not receive proprietary research for commissions or, if it did not receive the other benefits described above. The Board recognized that most Fund shareholders were also BBH clients, and that substantial assets are invested in the Funds as a result of an overall investment management program for the shareholder. The Board noted that the Funds also derive reputational and other benefits from their association with BBH and their use of the BBH name, which is licensed to the Funds by BBH. Thus, the Board did not believe that BBH revenues associated with its clients should be fairly regarded as "fallout" benefit from the Funds. Economies of Scale The Board noted that the Funds' combined fee schedules, other than the fee schedule for BBH Money Market Fund, do not contain breakpoints. As a result, if assets increase, the fee rates would not be reduced for these Funds on the incremental assets. With respect to the BBH Money Market Fund, the breakpoint will be reviewed every three (3) years by the Board, and may be adjusted upwards to take into account the effects of inflation or such other basis as may be appropriate, subject to the approval of shareholders to the extent required by the 1940 Act. There may be other economies of scale because many expenses did not rise (and fall) proportionally to increases (and decreases) in total net assets. The Board noted that BBH had priced its services in recognition of the fact that it was largely its own clients who were shareholders and, accordingly, sought to assure that the cost of these services and total expenses for each Fund were fair and reasonable. In addition, the Board noted that over the years BBH had supported certain Funds through fee waivers and expense reimbursements. Based on information they had been provided over many years, the Board observed that in the mutual fund industry as a whole, as well as among funds similar to the Funds, there FINANCIAL STATEMENT APRIL 30, 2008 23 <PAGE> BBH REAL RETURN FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) April 30, 2008 (unaudited) appeared to be no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. In light of the Funds' current size and expense structure, the Board concluded that it was unnecessary at this time to consider breakpoints with respect to the Funds, other than for the BBH Money Market Fund. Investment Results The Board considered the investment results of each of the Funds as compared to investment companies with its peers and with one or more selected securities indices. In addition to the information received by the Board for the meeting held on October 2, 2006, the Board received detailed performance information for each Fund at each regular Board meeting during the year. At the meeting held on October 2, 2006, the Board reviewed information showing performance of each Fund compared to its peers over the prior 1-, 3-, and 5- year periods and compared the performance information to one or more securities indices over comparable periods. Combined Fee Rate The Board considered the fee rate to be paid by each Fund to BBH. The Board recognized that it is difficult to make comparisons of these fee rates, and the combined advisory and administration fees, because there are variations in the services that are included in the fees paid by other funds. The Board considered the depth and range of services provided under the Combined Agreement. For example, in addition to a continuous investment program, BBH provides, among other things, officers (including the Funds' Chief Compliance Officer and officers to provide required certifications) and administrative services, such as shareholder communications, and tax compliance, with the attendant costs and exposure to liability. BBH also coordinates the provision of services to the Funds by nonaffiliated service providers. The following factors specific to the BBH Real Return Fund also were noted and considered by the Board in deciding to approve the Combined Agreement: The Board reviewed the information showing performance of the BBH Real Return Fund's Class N shares and Class I shares compared to the Citibank Inflation-Linked Securities Index. Over all the relevant periods, the classes of the BBH Real Return Fund on a pre-fee basis outperformed the benchmark by a meaningful amount but on an after-fee basis generally underperformed the benchmark by a modest amount. The Board viewed this performance with favor and noted the benchmark has no fees. The Board also noted the expense ratio for all share classes were in line with or lower than many funds of similar size and investment mandate. Taking into account these comparisons and the other factors considered, the Board concluded that the BBH Real Return Fund's investment results over time and its total expense ratio had been satisfactory. 24 <PAGE> BBH REAL RETURN FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) April 30, 2008 (unaudited) Conflicts of Interest As a general matter, certain conflicts of interest may arise in connection with a portfolio manager's management of a Fund's investments, on the one hand, and the investments of other accounts for which the portfolio manager is responsible, on the other. For example, it is possible that the various accounts managed could have different investment strategies that, at times, might conflict with one another to the possible detriment of the Fund. Alternatively, to the extent that the same investment opportunities might be desirable for more than one account, possible conflicts could arise in determining how to allocate them. Other potential conflicts might include conflicts created by specific portfolio manager compensation arrangements, and conflicts relating to selection of brokers or dealers to execute fund portfolio trades and/or specific uses of commissions from Fund portfolio trades (for example, research, or "soft dollars"). BBH has adopted and implemented policies and procedures, including brokerage and trade allocation policies and procedures, which it believes address the conflicts associated with managing multiple accounts for multiple clients. In addition, BBH monitors a variety of areas, including compliance with account investment guidelines, the inclusion only of securities approved for purchase by the BBH's Fixed Income Credit Committee, and compliance with the BBH's Code of Ethics. Finally, BBH has structured the portfolio managers' compensation in a manner, and the Funds have adopted policies and procedures, reasonably designed to safeguard a Fund from being negatively affected as a result of any such potential conflicts. FINANCIAL STATEMENT APRIL 30, 2008 25 <PAGE> INVESTMENT ADVISER AND ADMINISTRATOR BROWN BROTHERS HARRIMAN 140 BROADWAY NEW YORK, NY 10005 DISTRIBUTOR EDGEWOOD SERVICES, INC. 5800 CORPORATE DRIVE PITTSBURGH, PA 15237-7000 SHAREHOLDER SERVICING AGENT BROWN BROTHERS HARRIMAN 140 BROADWAY NEW YORK, NY 10005 (800) 625-5759 To obtain information or make shareholder inquiries: By telephone: Call 1-800-575-1265 By E-mail send your request to: bbhfunds@bbh.com On the internet: www.bbhfunds.com This report is submitted for the general information of shareholders and is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. Nothing herein contained is to be considered an offer of sale or a solicitation of an offer to buy shares of the Fund. Such offering is made only by the prospectus, which includes details as to offering price and other material information. The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on "Form N-Q." Information on Form N-Q is available without charge and upon request by calling the Funds at the toll-free number listed above. A text only version can be viewed online or downloaded from the SEC's website at http://www.sec.gov; and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC (call 1-800-SEC-0330 for information on the operation of the Public Reference Room). You may also access this information from the BBH website at BBH.com by clicking on "BBH Mutual Funds" and selecting "Online Documents/Holdings Information." A copy of the Fund's Proxy Voting Policy is available upon request by calling the toll-free number listed above. A text-only version of the policy can be viewed online or downloaded from the SEC at www.sec.gov. BROWN [LOGO] BROTHERS HARRIMAN BROWN [LOGO] BROTHERS HARRIMAN Semi-Annual Report APRIL 30, 2008 BBH BROAD MARKET FUND <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO ALLOCATION April 30, 2008 (unaudited) BREAKDOWN BY SECURITY TYPE Percent of U.S. $ Value Net Assets --------------- ------------ Asset Backed Securities............................ $ 26,596,266 8.2% Collateralized Mortgage Backed Securities.......... 2,278,856 0.7 Corporate Bonds.................................... 90,617,461 27.8 Foreign Government Bond............................ 618,450 0.2 Municipal Bond..................................... 1,520,298 0.5 U.S. Government Agency Obligations................. 159,965,883 49.1 U.S. Treasury Notes and Bonds...................... 43,222,747 13.3 Commercial Paper................................... 23,595,083 7.2 Liabilities in Excess of Cash and Other Assets..... (22,786,053) (7.0) ------------- ----------- NET ASSETS......................................... $325,628,991 100.0% ============= =========== All data as of April 30, 2008. The Fund's breakdown by security type is expressed as a percentage of net assets and may vary over time. The accompanying notes are an integral part of these financial statements. 2 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS April 30, 2008 (unaudited) (expressed in U.S. dollars) Principal Maturity Interest Amount Date Rate Value - ----------- --------- -------- ---------- ASSET BACKED SECURITIES (8.2%) $ 2,380,000 Advanta Business Card Master Trust 2005-C1(1).................. 08/22/11 3.310% $2,179,136 750,000 Advanta Business Card Master Trust 2007-D1A(1),(2)............. 01/22/13 4.200 379,650 400,000 American Express Credit Account Master Trust 2006-2............... 01/15/14 5.350 407,842 2,875,000 Banc of America Securities Auto Trust 2006-G1..................... 12/20/10 5.170 2,910,684 970,000 Capital One Auto Finance Trust 2005-BSS.................... 12/15/10 4.480 942,771 592,915 Capital One Auto Finance Trust 2006-A...................... 11/15/10 5.330 585,351 1,030,000 Capital One Multi-Asset Execution Trust............................. 08/15/13 4.790 921,767 465,000 Chase Issuance Trust 2007-A3........ 04/15/19 5.230 448,410 1,204,834 CIT Equipment Collateral 2005-EF1(1) 09/20/10 2.840 1,200,950 1,390,000 Citibank Credit Card Issuance Trust 2006-A4..................... 05/10/13 5.450 1,419,181 147,050 Countrywide Asset-Backed Certificates 2004-S1(1)........... 03/25/20 3.872 141,760 48,944 Countrywide Asset-Backed Certificates 2004-13(1)........... 02/25/31 3.989 48,585 146,557 Countrywide Home Equity Loan Trust 2004-O(1)................... 02/15/34 2.996 121,508 315,079 Credit-Based Asset Servicing and Securitization LLC 2003-CB3(1).... 12/25/32 2.879 264,240 601,490 Greenpoint Mortgage Funding Trust 2006-HE1(1)................. 03/12/37 2.888 105,261 199,948 GS Auto Loan Trust 2005-1........... 05/17/10 4.450 200,672 90,000 Honda Auto Receivables Owner Trust 2006-1...................... 07/18/11 5.080 91,059 822,675 Household Automotive Trust 2006-1... 06/17/11 5.430 801,984 1,268,689 Hyundai Auto Receivables Trust 2004-A...................... 08/15/11 3.460 1,239,155 The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2008 3 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2008 (unaudited) (expressed in U.S. dollars) Principal Maturity Interest Amount Date Rate Value - ------------ ---------- -------- -------- ASSET BACKED SECURITIES (continued) $ 284,890 Navistar Financial Corp. Owner Trust 2004-A...................... 03/15/11 2.590% $ 277,891 1,560,000 Nissan Auto Receivables Owner Trust 2006-B...................... 11/15/11 5.220 1,582,214 292,481 Residential Asset Securities Corp. 2006-EMX4(1)................ 06/25/36 2.935 289,088 1,353,191 SLM Student Loan Trust 2005-9(1).... 01/25/19 2.970 1,350,009 410,789 Triad Auto Receivables Owner Trust 2004-A...................... 09/13/10 2.500 390,992 2,257,272 UPFC Auto Receivables Trust 2006-A.. 05/15/12 5.490 2,175,674 5,571,880 USAA Auto Owner Trust 2005-1........ 11/15/11 4.130 5,588,056 350,000 Wachovia Auto Owner Trust 2005-B.... 11/20/12 4.930 352,570 180,363 Wells Fargo Financial Auto Owner Trust 2005-A...................... 01/15/10 4.090 179,806 ---------- Total Asset Backed Securities (Identified cost $27,881,446)....... 26,596,266 ---------- COLLATERALIZED MORTGAGE BACKED SECURITIES (0.7%) 1,500,000 Bear Stearns Commercial Mortgage Securities 2006-PW11(1)........... 03/11/39 5.409 1,506,933 770,942 Morgan Stanley Capital I 2006-HQ8... 03/12/44 5.124 771,923 ---------- Total Collateralized Mortgage Backed Securities (Identified cost $2,279,259)........ 2,278,856 ---------- CORPORATE BONDS (27.8%) AGRICULTURE (0.2%) 600,000 Reynolds American, Inc.............. 07/15/15 7.300 623,284 ---------- AUTO MANUFACTURERS (0.3%) 1,000,000 DaimlerChrysler NA Holding Corp..... 06/15/10 4.875 1,010,034 100,000 DaimlerChrysler NA Holding Corp..... 11/15/13 6.500 104,468 ---------- 1,114,502 ---------- The accompanying notes are an integral part of these financial statements. 4 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2008 (unaudited) (expressed in U.S. dollars) Principal Maturity Interest Amount Date Rate Value - ------------ ---------- -------- -------- CORPORATE BONDS (continued) BANKING (0.6%) $ 230,000 Branch Banking & Trust Co........... 09/15/16 5.625% $ 220,870 75,000 PNC Funding Corp.................... 02/01/17 5.625 71,969 670,000 Popular North America, Inc.......... 10/01/08 3.875 667,185 280,000 Wachovia Corp....................... 10/15/16 5.625 267,933 190,000 Wells Fargo & Co.................... 09/15/16 5.125 189,172 555,000 Wells Fargo Bank NA................. 05/16/16 5.750 574,373 ----------- 1,991,502 ----------- BEVERAGES (1.0%) 1,695,000 Diageo Finance BV................... 04/01/13 5.500 1,754,013 1,470,000 Molson Coors Capital Finance ULC.... 09/22/10 4.850 1,473,721 185,000 PepsiAmericas, Inc.................. 05/31/11 5.625 190,367 ----------- 3,418,101 ----------- COMMERCIAL SERVICES (0.3%) 1,085,000 Western Union Co.................... 11/17/11 5.400 1,084,545 ----------- COSMETICS / PERSONAL CARE (0.5%) 495,000 Estee Lauder Cos., Inc.............. 05/15/17 5.550 487,751 1,275,000 Procter & Gamble Co................. 03/05/37 5.550 1,264,021 ----------- 1,751,772 ----------- DIVERSIFIED FINANCIAL SERVICES (7.0%) 330,000 American Express Co................. 09/12/16 5.500 321,186 965,000 Associates Corp. of North America... 11/01/08 6.250 972,498 1,245,000 AXA Financial, Inc.................. 08/01/10 7.750 1,339,885 185,000 ConocoPhillips Canada Funding Co. I. 10/15/16 5.625 192,750 1,525,000 FIA Card Services NA................ 06/15/12 6.625 1,619,663 250,000 General Electric Capital Corp....... 09/15/17 5.625 254,715 2,540,000 Goldman Sachs Group, Inc............ 01/15/12 6.600 2,665,306 2,850,000 HSBC Finance Corp................... 11/27/12 6.375 2,933,599 2,725,000 International Lease Finance Corp.... 09/01/10 4.875 2,703,407 370,000 JP Morgan Chase & Co................ 05/01/15 5.250 368,923 2,775,000 Merrill Lynch & Co., Inc............ 07/25/11 5.770 2,807,129 The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2008 5 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2008 (unaudited) (expressed in U.S. dollars) Principal Maturity Interest Amount Date Rate Value - ------------ ---------- -------- -------- CORPORATE BONDS (continued) DIVERSIFIED FINANCIAL SERVICES (continued) $ 2,220,000 Morgan Stanley...................... 04/01/14 4.750% $ 2,083,221 2,640,000 Textron Financial Corp.............. 02/03/11 5.125 2,697,130 365,000 Travelers Cos., Inc................. 06/15/12 5.375 371,704 1,290,000 Unilever Capital Corp............... 11/01/10 7.125 1,399,760 ----------- 22,730,876 ----------- FINANCE (1.4%) 750,000 iStar Financial, Inc.(1)............ 09/15/09 3.140 671,486 80,000 iStar Financial, Inc................ 10/15/13 5.950 69,600 4,615,000 SLM Corp.(1)........................ 01/31/14 6.400 3,708,799 ----------- 4,449,885 ----------- FOOD (1.3%) 780,000 ConAgra Foods, Inc.................. 09/15/11 6.750 827,869 310,000 Hershey Co.......................... 09/01/11 5.300 320,113 695,000 Kraft Foods, Inc.................... 08/11/17 6.500 727,390 1,470,000 Safeway, Inc........................ 11/01/08 4.125 1,472,209 800,000 Tesco, Plc.(2)...................... 11/15/37 6.150 777,625 ----------- 4,125,206 ----------- FOREST PRODUCTS & PAPER (0.1%) 148,000 International Paper Co.............. 10/30/12 5.850 145,487 ----------- HEALTHCARE PRODUCTS (0.3%) 1,075,000 Amgen, Inc.......................... 06/01/17 5.850 1,082,462 ----------- HEALTHCARE SERVICES (0.5%) 405,000 UnitedHealth Group, Inc............. 06/15/17 6.000 402,448 1,100,000 WellPoint, Inc...................... 06/15/17 5.875 1,076,059 ----------- 1,478,507 ----------- HOUSEHOLD PRODUCTS / WARES (0.5%) 60,000 Clorox Co........................... 10/15/12 5.450 60,610 675,000 Fortune Brands, Inc................. 01/15/11 5.125 670,769 905,000 Kimberly-Clark Corp................. 08/01/17 6.125 968,452 ------------ 1,699,831 ------------ The accompanying notes are an integral part of these financial statements. 6 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2008 (unaudited) (expressed in U.S. dollars) Principal Maturity Interest Amount Date Rate Value - ------------ ---------- -------- -------- CORPORATE BONDS (continued) INDUSTRIALS (0.6%) $ 290,000 Emerson Electric Co................. 12/01/16 5.125% $ 289,292 485,000 Honeywell International, Inc........ 03/15/16 5.400 499,171 900,000 Lockheed Martin Corp................ 05/01/36 7.200 1,040,153 ----------- 1,828,616 ----------- INFORMATION TECHNOLOGY (0.2%) 630,000 International Business Machines Corp..................... 09/14/17 5.700 656,379 ----------- INSURANCE (1.1%) 75,000 American International Group, Inc... 10/18/16 5.600 74,457 565,000 Commerce Group, Inc................. 12/09/13 5.950 564,774 810,000 Everest Reinsurance Holdings, Inc... 10/15/14 5.400 785,757 555,000 Hartford Financial Services Group, Inc........................ 10/15/16 5.500 550,785 1,385,000 MetLife, Inc........................ 12/01/11 6.125 1,462,919 ----------- 3,438,692 ----------- MATERIALS (0.3%) 985,000 Dow Chemical Co..................... 10/01/12 6.000% 1,019,922 ----------- MEDIA (1.5%) 1,410,000 Comcast Corp........................ 03/15/11 5.500 1,419,523 985,000 COX Communications, Inc............. 10/01/12 7.125 1,047,198 390,000 Time Warner Cable, Inc.............. 05/01/17 5.850 387,017 2,115,000 Time Warner, Inc.................... 04/15/11 6.750 2,172,023 ----------- 5,025,761 ----------- OIL & GAS (2.0%) 35,000 Apache Corp......................... 04/15/13 5.250 35,917 500,000 Canadian Natural Resources, Ltd..... 01/15/32 7.200 545,733 825,000 EnCana Corp......................... 02/01/38 6.500 845,710 1,440,000 Halliburton Co...................... 10/15/10 5.500 1,487,416 1,005,000 Marathon Oil Corp................... 10/01/17 6.000 1,023,723 1,013,000 Pemex Project Funding Master Trust.. 02/01/09 7.875 1,035,277 The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2008 7 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2008 (unaudited) (expressed in U.S. dollars) Principal Maturity Interest Amount Date Rate Value - ------------ ---------- -------- -------- CORPORATE BONDS (continued) OIL & GAS (continued) $ 725,000 Petronas Capital, Ltd.(2)........... 05/22/12 7.000% $ 793,043 635,000 Transocean, Inc..................... 04/15/18 7.375 704,300 ---------- 6,471,119 ---------- PHARMACEUTICALS (1.6%) 325,000 Bristol-Myers Squibb Co............. 05/01/38 6.125 327,901 2,735,000 Eli Lilly & Co...................... 03/15/17 5.200 2,770,432 850,000 Schering-Plough Corp................ 09/15/17 6.000 858,346 1,285,000 WYETH............................... 03/15/11 6.950 1,374,353 ---------- 5,331,032 ---------- REAL ESTATE (0.2%) 780,000 Brookfield Asset Management, Inc.... 06/15/12 7.125 796,141 ---------- REITS (0.2%) 650,000 Simon Property Group LP............. 06/15/08 7.000 656,046 ---------- RETAIL (0.6%) 360,000 Lowe's Cos, Inc..................... 10/15/16 5.400 362,281 800,000 Target Corp......................... 01/15/38 7.000 858,872 820,000 Wal-Mart Stores, Inc................ 04/15/38 6.200 834,594 ---------- 2,055,747 ---------- SAVINGS & LOANS (0.4%) 1,225,000 Washington Mutual, Inc.............. 01/15/09 4.000 1,197,438 ---------- SEMICONDUCTORS (0.2%) 600,000 National Semiconductor Corp......... 06/15/12 6.150 602,324 ---------- TELECOMMUNICATIONS (3.0%) 635,000 AT&T, Inc........................... 09/15/09 4.125 636,650 1,660,000 AT&T, Inc........................... 03/15/11 6.250 1,730,723 480,000 AT&T, Inc........................... 09/15/14 5.100 481,494 1,485,000 Deutsche Telekom International Finance BV........................ 06/15/10 8.000 1,590,806 The accompanying notes are an integral part of these financial statements. 8 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2008 (unaudited) (expressed in U.S. dollars) Principal Maturity Interest Amount Date Rate Value - ------------ ---------- -------- -------- CORPORATE BONDS (continued) TELECOMMUNICATIONS (continued) $ 435,000 France Telecom S.A.................. 03/01/11 7.750% $ 470,359 365,000 GTE California, Inc................. 05/01/08 7.000 365,000 1,180,000 GTE California, Inc................. 01/15/09 5.500 1,189,715 675,000 KT Corp.(2)......................... 07/15/15 4.875 636,328 112,000 Motorola, Inc....................... 11/15/10 7.625 113,402 1,300,000 New Cingular Wireless Services, Inc. 03/01/11 7.875 1,406,347 580,000 Telecom Italia Capital SA........... 01/15/10 4.000 569,972 585,000 Verizon Communications, Inc......... 04/01/17 5.500 587,377 ---------- 9,778,173 ---------- TRANSPORTATION (0.6%) 635,000 MISC Capital Ltd.(2)................ 07/01/09 5.000 642,254 800,000 Norfolk Southern Corp............... 05/15/17 7.700 917,203 270,000 Union Pacific Corp.................. 01/15/12 6.125 280,326 ---------- 1,839,783 ---------- UTILITIES (1.3%) 520,000 Dominion Resources, Inc............. 12/15/10 4.750 526,032 525,000 Duke Energy Carolinas LLC........... 04/15/38 6.050 529,996 650,000 EDP Finance BV(2)................... 11/02/12 5.375 659,173 165,000 Florida Power & Light Co............ 11/01/17 5.550 171,650 665,000 Midamerican Energy Co............... 07/15/12 5.650 691,568 850,000 Pacific Gas & Electric Co........... 02/15/38 6.350 879,989 735,000 Sempra Energy....................... 02/01/13 6.000 765,920 ---------- 4,224,328 ---------- Total Corporate Bonds (Identified cost $90,111,121)....... 90,617,461 ---------- FOREIGN GOVERNMENT BOND (0.2%) 570,000 Mexico Government International Bond 01/16/13 6.375 618,450 ---------- Total Foreign Government Bond (Identified cost $572,479).......... 618,450 ---------- The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2008 9 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2008 (unaudited) (expressed in U.S. dollars) Principal Maturity Interest Amount Date Rate Value - ------------ ---------- -------- -------- MUNICIPAL BOND (0.5%) $ 1,485,000 Mississippi Development Bank Special Obligation................ 07/01/12 5.240% $ 1,520,298 ---------- Total Municipal Bond (Identified cost $1,489,783)........ 1,520,298 ---------- U.S. GOVERNMENT AGENCY OBLIGATIONS (49.1%) 3,000,000 Federal Home Loan Bank.............. 05/20/11 2.625 2,946,669 10,000,000 Federal Home Loan Mortgage Corp..... 05/21/09 5.250 10,260,810 4,600,000 Federal Home Loan Mortgage Corp..... 03/15/11 5.625 4,902,882 30,942 Federal Home Loan Mortgage Corp..... 08/15/13 4.000 31,013 94,833 Federal Home Loan Mortgage Corp..... 08/15/13 4.500 95,269 4,400,000 Federal Home Loan Mortgage Corp..... 11/17/17 5.125 4,646,145 175,000 Federal Home Loan Mortgage Corp..... 05/15/28 5.500 178,453 180,000 Federal Home Loan Mortgage Corp..... 01/15/29 5.500 182,723 1,550,000 Federal Home Loan Mortgage Corp..... 07/15/32 6.250 1,837,198 105,000 Federal Home Loan Mortgage Corp..... 10/15/34 5.500 105,960 250,000 Federal National Mortgage Assoc..... 05/01/08 3.720 249,388 6,750,000 Federal National Mortgage Assoc..... 09/15/12 4.375 6,997,880 48,600 Federal National Mortgage Assoc..... 04/01/17 6.500 50,573 4,200,000 Federal National Mortgage Assoc..... 06/12/17 5.375 4,539,616 3,196,779 Federal National Mortgage Assoc..... 02/01/20 5.000 3,221,317 3,533,921 Federal National Mortgage Assoc..... 02/01/20 5.000 3,561,046 146,054 Federal National Mortgage Assoc..... 03/01/20 4.500 144,710 7,180,330 Federal National Mortgage Assoc..... 06/01/20 5.000 7,235,445 123,588 Federal National Mortgage Assoc..... 10/25/21 6.000 127,873 3,700,000 Federal National Mortgage Assoc. (TBA 15YR)....................... 05/01/23 5.000 3,718,500 6,268 Federal National Mortgage Assoc..... 12/01/28 7.500 6,774 3,972 Federal National Mortgage Assoc..... 04/01/29 7.500 4,293 4,676 Federal National Mortgage Assoc..... 04/01/29 7.500 5,054 1,500,000 Federal National Mortgage Assoc..... 11/15/30 6.625 1,838,928 13,973 Federal National Mortgage Assoc..... 12/01/30 7.500 15,093 538,362 Federal National Mortgage Assoc..... 01/25/31 6.000 540,357 The accompanying notes are an integral part of these financial statements. 10 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2008 (unaudited) (expressed in U.S. dollars) Principal Maturity Interest Amount Date Rate Value - ------------ ---------- -------- -------- U.S. GOVERNMENT AGENCY OBLIGATIONS (continued) $ 270,000 Federal National Mortgage Assoc..... 03/25/31 5.500% $ 273,068 204,800 Federal National Mortgage Assoc..... 07/01/32 7.000 217,247 269,807 Federal National Mortgage Assoc..... 11/01/32 6.500 280,863 108,447 Federal National Mortgage Assoc..... 10/01/33 6.000 111,400 42,836 Federal National Mortgage Assoc..... 11/25/33 5.500 42,899 123,928 Federal National Mortgage Assoc..... 03/01/34 4.500 118,283 245,912 Federal National Mortgage Assoc..... 07/01/34 6.500 255,221 246,542 Federal National Mortgage Assoc..... 09/01/34 6.500 255,875 815,271 Federal National Mortgage Assoc..... 06/01/35 5.500 821,153 14,175 Federal National Mortgage Assoc..... 11/01/35 6.500 14,690 232,512 Federal National Mortgage Assoc..... 11/01/35 6.500 240,951 243,707 Federal National Mortgage Assoc..... 11/01/35 6.500 252,552 239,998 Federal National Mortgage Assoc..... 12/01/35 6.500 248,709 248,298 Federal National Mortgage Assoc..... 01/01/36 6.500 257,232 17,702 Federal National Mortgage Assoc..... 02/01/36 6.500 18,339 225,131 Federal National Mortgage Assoc..... 02/01/36 6.500 233,302 251,024 Federal National Mortgage Assoc..... 02/01/36 6.500 260,056 264,351 Federal National Mortgage Assoc..... 02/01/36 6.500 273,945 221,179 Federal National Mortgage Assoc..... 03/01/36 6.500 229,137 290,254 Federal National Mortgage Assoc..... 03/01/36 6.500 300,697 212,701 Federal National Mortgage Assoc..... 04/01/36 6.500 220,354 302,928 Federal National Mortgage Assoc..... 04/01/36 6.500 313,828 274,036 Federal National Mortgage Assoc..... 05/01/36 6.500 283,896 908,523 Federal National Mortgage Assoc..... 05/01/36 6.500 941,212 220,091 Federal National Mortgage Assoc..... 06/01/36 6.500 228,010 234,605 Federal National Mortgage Assoc..... 06/01/36 6.500 243,046 243,613 Federal National Mortgage Assoc..... 06/01/36 6.500 252,378 244,330 Federal National Mortgage Assoc..... 06/01/36 6.500 253,121 259,039 Federal National Mortgage Assoc..... 06/01/36 6.500 268,359 352,322 Federal National Mortgage Assoc..... 06/01/36 6.500 364,998 597,245 Federal National Mortgage Assoc.(1). 07/01/36 5.726 611,047 247,687 Federal National Mortgage Assoc..... 08/01/36 6.500 256,599 433,459 Federal National Mortgage Assoc..... 08/01/36 6.500 449,055 The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2008 11 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2008 (unaudited) (expressed in U.S. dollars) Principal Maturity Interest Amount Date Rate Value - ------------ ---------- -------- -------- U.S. GOVERNMENT AGENCY OBLIGATIONS (continued) $ 473,784 Federal National Mortgage Assoc..... 08/01/36 6.500% $ 490,831 1,070,596 Federal National Mortgage Assoc.(1). 09/01/36 5.801 1,098,137 138,633 Federal National Mortgage Assoc..... 09/01/36 6.500 143,621 248,329 Federal National Mortgage Assoc..... 09/01/36 6.500 257,264 402,852 Federal National Mortgage Assoc..... 09/01/36 6.500 417,347 200,310 Federal National Mortgage Assoc..... 10/01/36 6.500 207,518 428,368 Federal National Mortgage Assoc..... 10/01/36 6.500 443,781 446,583 Federal National Mortgage Assoc..... 10/01/36 6.500 462,652 425,310 Federal National Mortgage Assoc..... 11/01/36 6.500 440,613 442,836 Federal National Mortgage Assoc..... 11/01/36 6.500 458,770 457,724 Federal National Mortgage Assoc..... 11/01/36 6.500 474,193 480,615 Federal National Mortgage Assoc..... 11/01/36 6.500 497,908 4,209,310 Federal National Mortgage Assoc..... 12/01/36 6.000 4,308,147 279,137 Federal National Mortgage Assoc..... 12/01/36 6.500 289,180 404,865 Federal National Mortgage Assoc..... 12/01/36 6.500 419,432 476,049 Federal National Mortgage Assoc..... 12/01/36 6.500 493,178 1,490,554 Federal National Mortgage Assoc.(1). 01/01/37 5.503 1,521,797 434,386 Federal National Mortgage Assoc..... 01/01/37 6.500 450,015 394,429 Federal National Mortgage Assoc..... 03/01/37 6.500 408,537 14,596,436 Federal National Mortgage Assoc..... 06/01/37 5.500 14,691,797 10,032,194 Federal National Mortgage Assoc..... 07/01/37 6.000 10,265,624 8,651,241 Federal National Mortgage Assoc..... 07/01/37 6.500 8,960,679 9,208,227 Federal National Mortgage Assoc..... 08/01/37 6.000 9,422,485 22,085,000 Federal National Mortgage Assoc. (TBA 30YR)........................ 05/01/38 5.000 21,691,622 2,400,000 Federal National Mortgage Assoc. (TBA 30YR)........................ 05/01/38 6.500 2,483,251 87,215 Federal National Mortgage Assoc..... 02/25/44 5.950 88,689 512,954 FHLMC Gold Pool..................... 05/01/19 4.000 495,702 1,678,944 FHLMC Gold Pool..................... 05/01/19 4.000 1,622,477 967,049 FHLMC Gold Pool..................... 12/01/19 4.000 934,524 2,805,253 FHLMC Gold Pool..................... 02/01/20 4.000 2,710,904 516,957 FHLMC Gold Pool..................... 04/01/20 4.000 497,794 The accompanying notes are an integral part of these financial statements. 12 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2008 (unaudited) (expressed in U.S. dollars) Principal Maturity Interest Amount Date Rate Value - ------------ ---------- -------- -------- U.S. GOVERNMENT AGENCY OBLIGATIONS (continued) $ 70,018 FHLMC Gold Pool..................... 01/01/22 4.000% $ 67,400 1,406,456 FHLMC Gold Pool..................... 10/01/34 5.500 1,422,573 165,475 FHLMC Gold Pool..................... 11/01/35 5.000 162,920 95,718 FHLMC Gold Pool..................... 12/01/35 5.000 94,240 128,285 FHLMC Gold Pool..................... 12/01/35 5.000 126,304 1,702,193 FHLMC Non Gold Guaranteed(1)........ 04/01/36 5.410 1,738,809 347,416 FHLMC Non Gold Guaranteed(1)........ 12/01/36 5.397 353,943 707,379 FHLMC Non Gold Guaranteed(1)........ 01/01/37 5.489 720,817 1,210,543 FHLMC Non Gold Guaranteed(1)........ 02/01/37 5.470 1,233,286 61,155 General National Mortgage Assoc.(1). 08/20/29 5.625 61,631 ----------- Total U.S. Government Agency Obligations (Identified cost $157,756,134)...... 159,965,883 ----------- U.S. TREASURY NOTES AND BONDS (13.3%) 1,200,000 U.S. Treasury Bonds................. 02/15/23 7.125 1,555,219 485,000 U.S. Treasury Bonds................. 08/15/23 6.250 583,705 210,000 U.S. Treasury Bonds................. 02/15/26 6.000 248,079 4,310,000 U.S. Treasury Bonds................. 02/15/31 5.375 4,849,086 4,605,000 U.S. Treasury Bonds................. 02/15/36 4.500 4,612,916 2,065,000 U.S. Treasury Notes................. 03/31/11 4.750 2,197,935 5,000,000 U.S. Treasury Notes................. 11/30/12 3.375 5,075,390 300,000 U.S. Treasury Notes................. 08/15/16 4.875 326,578 21,610,000 U.S. Treasury Notes................. 08/15/17 4.750 23,281,404 730,000 United States Treasury Inflation Indexed Bonds..................... 11/15/17 8.493 492,435 ----------- Total U.S. Treasury Notes and Bonds (Identified cost $42,849,551)....... 43,222,747 ----------- The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2008 13 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2008 (unaudited) (expressed in U.S. dollars) Principal Maturity Interest Amount Date Rate Value - ------------ --------- -------- -------- COMMERCIAL PAPER (7.2%) $ 2,000,000 BNP Paribas Finance, Inc.......... 05/07/08 2.722% $ 1,999,093 5,000,000 ConocoPhillips.................... 05/05/08 2.201 4,998,778 6,850,000 Deutsche Bank Financial LLC....... 05/01/08 2.300 6,850,000 3,450,000 FPL Group Capital, Inc............ 05/05/08 2.301 3,449,118 2,000,000 NYSE Euronext..................... 05/01/08 2.251 2,000,000 2,000,000 Philip Morris International, Inc.. 05/14/08 2.443 1,998,238 2,300,000 Stanley Works..................... 05/02/08 2.250 2,299,856 ----------- Total Commercial Paper (Identified cost $23,595,084)....... 23,595,083 ------------ TOTAL INVESTMENTS (Identified cost $346,534,857)(3) 107.0% $348,415,044 LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS............ (7.0) (22,786,053) ------ ------------ NET ASSETS................................................ 100.0% $325,628,991 ====== ============ - ---------- (1) Variable rate instrument. Interest rates change on specific dates (such as coupon or interest payment date). The yield shown represents the April 30, 2008 coupon or interest rate. (2) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. Total market value of 144A securities owned at April 30, 2008 was $3,888,073 or 1.2% of net assets. (3) The aggregate cost for federal income tax purposes is $346,534,857, the aggregate gross unrealized appreciation is $4,508,215, and the aggregate gross unrealized depreciation is $2,628,028, resulting in net unrealized appreciation of $1,880,187. The accompanying notes are an integral part of these financial statements. 14 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2008 (unaudited) (expressed in U.S. dollars) At April 30, 2008, the Fund had the following open swap agreements: <TABLE> Amount Due Notional from (to) Broker Amount Description at Value ------ ----------- -------- <S> <C> <C> 12,870,000 Agreement with Goldman Sachs to pay 3.250% interest in exchange for receiving protection against the default of an index of the bonds of 100 non investment grade entities based in North America. $565,613 2,600,000 Agreement with Goldman Sachs to pay 2.030% interest in exchange for receiving protection against default on a bond from SLM Corporation. 174,048 1,300,000 Agreement with Goldman Sachs terminating 06/20/14 to pay 3.080% interest in exchange for receiving 7 yr protection against default on a bond from SLMA Corporation. 25,268 12,870,000 Agreement with Lehman Brothers to receive 3.250% interest in exchange for providing protection against the default of an index of the bonds of 100 non investment grade entities based in North America. (710,400) 3,650,000 Agreement with Lehman Brothers to pay 0.165% interest in exchange for receiving protection against default on a bond issued by American Express Company. 124,271 3,650,000 Agreement with Goldman Sachs to receive 0.470% interest in exchange for providing protection against default on a bond issued by American Express Company. (82,475) ---------- $ 96,325 ========== </TABLE> As of April 30, 2008, the Fund had segregated sufficient cash to cover any accrued but unpaid net amounts owed to a swap counterparty. The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2008 15 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES April 30, 2008 (unaudited) ASSETS: Investments in securities, at value (identified cost $346,534,857)................................. $348,415,044 Cash........................................................... 257,293 Foreign currency, at value (identified cost $22,170)........... 23,055 Segregated cash................................................ 1,450,131 Receivables for: Interest and other receivables............................... 2,850,809 Investments sold............................................. 2,083,352 Capital stock sold........................................... 930,000 Swap premium received........................................ 144,788 Swap agreements.............................................. 96,325 ------------- Total Assets............................................... 356,250,797 ------------- LIABILITIES: Payables for: Investments purchased.......................................... 30,233,380 Capital stock redeemed......................................... 75,285 Investment advisory fees....................................... 107,796 Custody and accounting fees.................................... 57,265 Administrative fees............................................ 53,898 Shareholder servicing fees..................................... 41,888 Professional fees.............................................. 27,976 Board of Trustees' fees........................................ 4,265 Dividend distributions......................................... 313 Accrued expenses and other liabilities......................... 19,740 ------------- Total Liabilities.......................................... 30,621,806 ------------- NET ASSETS........................................................ $325,628,991 ============= Net Assets Consist of: Par value...................................................... $ 32,840 Paid-in capital................................................ 334,241,290 Undistributed net investment income............................ 1,608,861 Accumulated net realized loss on investments................... (12,211,507) Net unrealized appreciation on investments and foreign currency translations........................................ 1,957,507 ------------- Net Assets........................................................ $325,628,991 ============= NET ASSET VALUE AND OFFERING PRICE PER SHARE CLASS N SHARES NET ASSET VALUE ($171,332,093 / 17,274,607 shares outstanding)................. $9.92 ======== CLASS I SHARES NET ASSET VALUE ($154,296,898 / 15,565,772 shares outstanding)................. $9.91 ======== The accompanying notes are an integral part of these financial statements. 16 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS For the six months ended April 30, 2008 (unaudited) NET INVESTMENT INCOME: Income: Interest and other income (net of withholding taxes of $999).......................... $ 7,930,687 ------------ Total Income.............................................. 7,930,687 ------------ Expenses: Investment advisory fees.................................... 318,442 Administrative fees......................................... 159,221 Shareholder servicing fees.................................. 125,275 Custody and accounting fees................................. 115,401 Professional fees........................................... 18,250 Board of Trustees' fees..................................... 14,653 Miscellaneous expenses...................................... 66,381 ------------ Total Expenses............................................ 817,623 Expense offset arrangement................................ (6,764) ------------ Net Expenses.............................................. 810,859 ------------ Net Investment Income......................................... 7,119,828 ------------ NET REALIZED AND UNREALIZED LOSS: Net realized loss on investments and swap agreements.......... (1,635,648) Net change in unrealized appreciation on investments and foreign currency translations........................... 658,368 ------------ Net Realized and Unrealized Loss............................ (977,280) ------------ Net Increase in Net Assets Resulting from Operations.......... $ 6,142,548 ============ The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2008 17 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS <TABLE> For the six months ended For the April 30, 2008 year ended (unaudited) October 31, 2007 -------------- ---------------- <S> <C> <C> INCREASE (DECREASE) IN NET ASSETS: Operations: Net investment income......................................... $ 7,119,828 $ 12,185,548 Net realized loss on investments and swap agreements............................................. (1,635,648) (5,053,855) Net change in unrealized appreciation (depreciation) on investments and foreign currency translations............ 658,368 (361,679) ------------ ------------ Net increase in net assets resulting from operations.......... 6,142,548 6,770,014 ------------ ------------ Dividends and distributions declared: From net investment income: Class N....................................................... (3,264,327) (6,668,697) Class I....................................................... (3,185,637) (4,657,983) ------------ ------------ Total dividends and distributions declared.................. (6,449,964) (11,326,680) ------------ ------------ Capital stock transactions: Net proceeds from sales of capital stock...................... 71,547,620 85,260,256 Net asset value of capital stock issued to shareholders for reinvestment of dividends and distributions............. 2,212,387 395,914 Net cost of capital stock redeemed............................ (36,529,382) (33,205,938) ------------ ------------ Net increase in net assets resulting from capital stock transactions........................... 37,230,625 52,450,232 ------------ ------------ Total increase in net assets................................ 36,923,209 47,893,566 NET ASSETS: Beginning of year............................................... 288,705,782 240,812,216 ------------ ------------ End of period (including undistributed net investment income of $1,608,861 and $938,997, respectively).............. $325,628,991 $288,705,782 ============ ============ </TABLE> The accompanying notes are an integral part of these financial statements. 18 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Selected per share data and ratios for a Class N share outstanding throughout each period <TABLE> For the six months ended For the years ended October 31, April 30, 2008 -------------------------------------------------------------- (unaudited) 2007 2006 2005 2004 2003 -------------- ------ ------ ------ ------ ------ <S> <C> <C> <C> <C> <C> <C> Net asset value, beginning of year................... $ 9.92 $10.10 $10.19 $10.57 $10.57 $10.25 ------ ------ ------ ------ ------ ------- Income from investment operations: Net investment income(1).. 0.22 0.46 0.48 0.42 0.43 0.59 Net realized and unrealized gain (loss)............. (0.03) (0.21) (0.03) (0.27) 0.17 0.33 ------ ------ ------ ------ ------ ------- Total income from investment operations............ 0.19 0.25 0.45 0.15 0.60 0.92 ------ ------ ------ ------ ------ ------- Less dividends and distributions: From net investment income (0.19) (0.43) (0.46) (0.41) (0.44) (0.60) From net realized gains... - - (0.08) (0.12) (0.16) - ------ ------ ------ ------ ------ ------- Total dividends and distributions......... (0.19) (0.43) (0.54) (0.53) (0.60) (0.60) ------ ------ ------ ------ ------ ------- Net asset value, end of period $ 9.92 $ 9.92 $10.10 $10.19 $10.57 $10.57 ====== ====== ====== ====== ====== ====== Total return................. 1.96% 2.42% 4.64% 1.49% 5.77% 9.33% Ratios/Supplemental data: Net assets, end of period (in millions)........... $171 $168 $147 $149 $110 $115 Expenses as a percentage of average net assets...... 0.62%(2),(3) 0.61%(2) 0.55%(2) 0.57%(2) 0.55%(4) 0.55%(4) Ratio of net investment income to average net assets... 4.38%(3) 4.62% 4.75% 4.06% 4.14% 5.55% Portfolio turnover rate... 202%(3) 275% 325% 211% 210% 249%(5) </TABLE> - ---------- (1) Calculated using average shares outstanding for the period. (2) The ratio of expenses to average net assets for the six months ended April 30, 2008 and the years ended October 31, 2007, 2006 and 2005 reflect fees reduced as a result of an expense offset arrangement with the Fund's custodian. Had this arrangement not been in place, this ratio would have been 0.31%, 0.62%, 0.56%, and 0.58%, respectively. (3) Annualized. (4) Had the expense payment agreement, which terminated on December 31, 2004, not been in place, the ratio of expenses to average net assets would have been as follows: <TABLE> <CAPTION> N/A N/A N/A N/A 0.61% 0.62% </TABLE> (5) Portfolio turnover rate is a weighted average of the Fund's portfolio turnover and that of the Broad Market Fund (the "Portfolio") in which the Fund invested through December 3, 2002. FINANCIAL HIGHLIGHTS (continued) Selected per share data and ratios for a Class I share outstanding throughout each period The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2008 19 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (continued) Selected per share data and ratios for a Class I share outstanding throughout each period <TABLE> <CAPTION> For the period from For the six December 3, 2002 months ended For the years ended October 31, (commencement of April 30, 2008 -------------------------------------- operations) to (unaudited) 2007 2006 2005 2004 October 31, 2003 ----------- ------ ------ ------ ------ ------------------- <S> <C> <C> <C> <C> <C> <C> Net asset value, beginning of year.................. $ 9.92 $10.10 $10.19 $10.57 $10.57 $10.22 ------ ------ ------ ------ ------ ------ Income from investment operations: Net investment income(1). 0.23 0.48 0.50 0.44 0.46 0.53 ------ ------ ------ ------ gain (loss)............ (0.04) (0.20) (0.04) (0.27) 0.15 0.34 ------ ------ ------ ------ ------ ------ Total income from investment operations........... 0.19 0.28 0.46 0.17 0.61 0.87 ------ ------ ------ ------ ------ ------ Less dividends and distributions: From net investment income (0.20) (0.46) (0.47) (0.43) (0.45) (0.52) From net realized gains.. - - (0.08) (0.12) (0.16) - ------ ------ ------ ------ ------ ------ Total dividends and distributions........ (0.20) (0.46) (0.55) (0.55) (0.61) (0.52) ------ ------ ------ ------ ------ ------ Net asset value, end of period $ 9.91 $ 9.92 $10.10 $10.19 $10.57 $10.57 ====== ====== ====== ====== ====== ====== Total return................ 1.94% 2.58% 4.79% 1.64% 5.91% 9.48% Ratios/Supplemental Data: Net assets, end of period (in millions)............ $154 $121 $94 $94 $91 $87 Expenses as a percentage of average net assets..... 0.45%(2),(3) 0.46%(2) 0.40%(2) 0.42%(2) 0.40%(4) 0.40%(4) Ratio of net investment income to average net assets.. 4.55%(3) 4.78% 4.92% 4.21% 4.36% 5.42% Portfolio turnover rate.. 202%(3) 275% 325% 211% 210% 249%(5) </TABLE> - ---------- (1) Calculated using average shares outstanding for the period. (2) The ratio of expenses to average net assets for the six months ended April 30, 2008 and the years ended October 31, 2007, 2006 and 2005 reflect fees reduced as a result of an expense offset arrangement with the Fund's custodian. Had this arrangement not been in place, this ratio would have been 0.23%, 0.47%, 0.41%, and 0.44%, respectively. (3) Annualized. (4) Had the expense payment agreement, which terminated on December 31, 2004, not been in place, the ratio of expenses to average net assets would have been as follows: <TABLE> <CAPTION> N/A N/A N/A N/A 0.45% 0.46% </TABLE> (5) Portfolio turnover rate is a weighted average of the Fund's portfolio turnover and that of the Portfolio in which the Fund invested through December 3, 2002. The accompanying notes are an integral part of these financial statements. 20 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2008 (unaudited) 1. Organization and Significant Accounting Policies. BBH Broad Market Fund (the "Fund") is a separate diversified series of BBH Trust (the "Trust"), which is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Trust was originally organized under the laws of the State of Maryland on July 16, 1990 as BBH Fund, Inc. and re-organized as a Delaware statutory trust on June 12, 2007. The Fund commenced operations on December 22, 2000. On August 6, 2002, the Trustees reclassified the Fund's outstanding shares as "Class N", and established a new class of shares designated as "Class I". Class I commenced on December 3, 2002. Class N and Class I shares have different operating expenses. Neither Class N shares nor Class I shares convert to any other class of the Fund. At April 30, 2008, there were seven series of the Trust. The Fund's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements and are based, in part, on the following accounting policies. Actual results could differ from those estimates. A. Valuation of Investments. Bonds and other fixed income securities, including restricted securities (other than short-term obligations but including listed issues) are valued at their most recent bid prices (sales price if the principal market is an exchange) in the principal market in which such securities are normally traded, on the basis of valuations furnished by a pricing service, use of which has been approved by the Trustees. In making such valuations, the pricing service utilizes both dealer-supplied valuations and electronic data processing techniques which take into account appropriate factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data, without exclusive reliance upon quoted prices or exchange or over-the-counter prices, since such valuations are believed to reflect more accurately the fair value of such securities. Securities or other assets for which market quotations are not readily available are valued at fair value in accordance with procedures established by and under the general supervision and responsibility of the Trustees. Short-term investments which mature in 60 days or less are valued at amortized cost if their original maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if their original maturity when acquired by the Fund was more than 60 days, unless this is determined not to represent fair value by the Trustees. B. Accounting for Investments and Income. Investment transactions are accounted for on the trade date. Realized gains and losses, if any, from investment transactions are determined on the basis of identified cost. Interest income is accrued daily and consists of interest accrued, discount earned (including both original issue and market discount) and premium amortization on the investments of the Fund. Investment income is recorded net of foreign taxes withheld where FINANCIAL STATEMENT APRIL 30, 2008 21 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2008 (unaudited) recovery of such tax is uncertain. Debt obligations may be placed on non-accrual status and related interest income may be reduced by ceasing current accruals and writing off interest receivable when the collection of all or a portion of interest has become doubtful based on consistently applied procedures. A debt obligation is removed from non-accrual status when the issuer resumes interest payments or when collectibility of interest is reasonably assured. C. Repurchase Agreements. The Fund may enter into repurchase agreements with primary dealers of U.S. Government Obligations as designated by the Federal Reserve Bank of New York. 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 exceeds the sale price, reflecting the Fund's return on the transaction or effectively the interest rate paid by the dealer to the Fund. This return is unrelated to the interest 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 or sub-custodian will monitor the value of the underlying security each day to ensure that the value of the security always equals or exceeds the repurchase price. Repurchase agreements are subject to credit risks. At April 30, 2008, the Fund had no open repurchase agreements. D. Forward Foreign Currency Exchange Contracts. The Fund may enter into forward foreign currency exchange contracts ("contracts") in connection with planned purchases or sales of securities, to hedge the U.S. dollar value of Fund securities denominated in a particular currency, or to increase or shift its exposure to a currency other than U.S. dollars. The Fund has no specific limitation on the percentage of assets which may be committed to these types of contracts. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably. The U.S. dollar values of foreign currency underlying all contractual commitments held by the Fund are determined using forward currency exchange rates supplied by a quotation service. At April 30, 2008, the Fund had no open forward foreign currency exchange contracts. E. Swap Agreements. The Fund may enter into swap agreements. A swap is an exchange of cash payments based on a notional principal amount between the Fund and another party which is based on a specific financial index. These transactions are entered into in an attempt to obtain a particular return when it is considered desirable to do so, possibly at a lower cost to the Fund than if the Fund had invested directly in an instrument that yielded that desired return. Cash payments are exchanged at specified intervals and recorded in the Statement of Operations as realized gains and losses. The expected income or expense is recorded on an accrual basis. The value of the swap is adjusted daily and the change in value is recorded as unrealized appreciation or depreciation. Risks 22 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2008 (unaudited) may arise upon entering into these agreements from the potential inability of counter parties to meet the terms of their contract and from unanticipated changes in the value of the financial index on which the swap agreement is based. Risks may exceed amounts recognized on the Statement of Assets and Liabilities. The Fund may use swaps for both hedging and non-hedging purposes. For hedging purposes, the Fund may use swaps to reduce its exposure to interest and foreign exchange rate fluctuations. For non-hedging purposes, the Fund may use swaps to take a position on anticipated changes in the underlying financial index. Information regarding swap agreements is included at the end of the Portfolio of Investments. F. Financial Futures Contracts. The Fund may enter into open futures contracts in order to hedge against anticipated future changes in interest rates which otherwise might either adversely affect the value of securities held for the Fund or adversely affect the prices of securities which are intended to be purchased at a later date for the Fund. The contractual amount of the futures contracts represents the investment the Fund has in a particular contract and does not necessarily represent the amounts potentially subject to risk. Trading in futures contracts involves, to varying degrees, risk of loss in excess of any futures variation margin reflected in the Statement of Assets and Liabilities. The measurement of risk associated with futures contracts is meaningful only when all related and offsetting transactions are considered. Gains and losses are realized upon the expiration or closing of the futures contracts. Futures contracts held by the Fund are valued daily at the official settlement price of the exchange on which it is traded. At April 30, 2008, the Fund had no open financial futures contracts. G. Rule 144A Securities. The Fund may purchase securities that are not registered under the 1933 Act, but that can be sold to "qualified institutional buyers" in accordance with the requirements stated in Rule 144A under the 1933 Act (Rule 144A Securities). A Rule 144A Security may be considered illiquid and therefore subject to the 15% limitation on the purchase of illiquid securities, unless it is determined on an ongoing basis that an adequate trading market exists for the security. Guidelines have been adopted and the daily function of determining and monitoring liquidity of Rule 144A Securities has been delegated to the Investment Adviser. All relevant factors will be considered in determining the liquidity of Rule 144A Securities and all investments in Rule 144A Securities will be carefully monitored. Information regarding Rule 144A securities is included at the end of the Portfolio of Investments. H. Securities Lending. The Fund may lend its portfolio securities to broker-dealers, qualified banks and certain institutional investors. The loans are secured by collateral in an amount equal to at least the market value at all times of the loaned securities plus any accrued interest and dividends. During the time the securities are on loan, the Fund will continue to receive the interest and dividends or amounts equivalent thereto, on the loaned securities while receiving a fee from the borrower or earning interest on the investment of the cash collateral. Loans are subject to FINANCIAL STATEMENT APRIL 30, 2008 23 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2008 (unaudited) termination at the option of the borrower or the Fund. Upon termination of the loan, the borrower will return to the lender securities identical to the loaned securities. The Fund may pay reasonable finders', administrative and custodial fees in connection with a loan of its securities and may share the interest earned on the collateral with the borrower. The Fund bears the risk of delay in recovery of, or even loss of rights in, the securities loaned should the borrower of the securities fail financially. There were no securities on loan as of April 30, 2008. I. 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 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 accounting principles generally accepted in the United States of America, the basis on which these financial statements are prepared. Accordingly, the amount of net investment income and net realized gain reported on 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 return of capital. Permanent differences are reclassified on 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. J. Dividends and Distributions to Shareholders. Dividends to shareholders are generally declared and paid monthly and are recorded on the ex-dividend date. Distributions from net capital gains, if any, are generally declared and paid annually and are recorded on the ex-dividend date. The tax character of distributions paid during the fiscal years ended October 31, 2007 and 2006, respectively, were as follows: Distribution paid from: - -------------------------------------------------------------------------------- Net Total Total Ordinary long term taxable Tax return distributions income capital gain distributions of capital paid ------ ------------ ------------- ---------- -------------- 2007: $11,326,680 $ - $11,326,680 - $11,326,680 2006: 12,915,003 572,521 13,487,524 - 13,487,524 24 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2008 (unaudited) As of October 31, 2007 and 2006, respectively, the components of accumulated earnings/(deficit) on a tax basis were as follows: <TABLE> Components of accumulated earnings/(deficit): --------------------------------------------------------------------------------------------- Total Undistributed Undistributed Accumulated Unrealized accumulated ordinary long-term Accumulated capital and appreciation/ earnings/ income capital gains earnings other losses (depreciation) (deficit) ------------- ------------- ----------- ------------ -------------- ----------- <S> <C> <C> <C> <C> <C> <C> 2007: $436,155 - $436,155 $(10,771,480) $ (207,615) $(10,542,940) 2006: 530,515 - 530,515 (5,783,575) 1,612,752 (3,640,308) </TABLE> Total distributions paid differ from the Statement of Changes in Net Assets because for tax purposes dividends are recognized when actually paid. The differences between book-basis and tax-basis unrealized appreciation/ (depreciation) is attributable primarily to the tax deferral of losses on wash sales, forward currency contracts marked to market and futures marked to market. The Fund had net capital loss carryforwards of approximately $10,771,480 which expires as follows: Expiration date Amount ----------- ------------- 10/31/2014 $ 5,375,549 10/31/2015 5,395,931 ------------- $10,771,480 ============= To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. K. Accounting Developments. In June 2006, the Fund adopted FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund's tax returns to determine whether that tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. The adoption of FIN 48 had no impact on the operations of the Fund for the period ended April 30, 2008. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued 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 implication of SFAS 157. At this time its impact on the Fund's financial statements has not yet been determined. FINANCIAL STATEMENT APRIL 30, 2008 25 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2008 (unaudited) In March 2008, Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161), was issued and is effective for fiscal years beginning after November 15, 2008. SFAS 161 requires enhanced disclosures to provide information about the reasons the Fund invests in derivative instruments, the accounting treatment and the effect derivatives have on financial performance. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund's financial statement disclosures. 2. Transactions with Affiliates. Advisory and Administrative Fees. Effective June 12, 2007, under a combined Investment Advisory and Administrative Services Agreement ("Agreement") with the Trust, a separately identifiable department within Brown Brothers Harriman & Co. ("BBH") provides investment advice, and portfolio management and administrative services to the Fund. BBH receives a combined fee from the Fund for advisory and administrative services calculated daily and paid monthly at an annual rate equivalent to 0.30% of the fund's average daily net assets. Prior to June 12, 2007 under a separate agreement that covered only advisory fees, BBH received a fee from the Fund calculated daily and paid monthly at an annual rate of 0.20% of the Fund's average daily net assets and Brown Brothers Harriman Trust Company, LLC ("BBHTC") the Fund's administrator, under a separate agreement that covered only administrative services, received a fee from the Fund calculated daily and paid monthly at an annual rate equivalent to 0.10% of the Fund's average daily net assets. BBH has a sub-administration services agreement with Federated Services Company ("FSC") for which FSC receives compensation paid by BBH. For the six months ended April 30, 2008, the Fund incurred $477,663 for advisory and administrative services. Shareholder Servicing Fees. The Trust has a shareholder servicing agreement with BBH. BBH receives a fee from the Fund for such services calculated daily and paid monthly at an annual rate of 0.15% of Class N shares' average daily net assets. For the six months ended April 30, 2008, the Fund incurred $125,275 for shareholder servicing services. Custody and Accounting Fees. BBH acts as a custodian and receive a custody and accounting fee from the Fund calculated daily and paid monthly. BBH holds all cash and investments and calculates the daily net asset value. The custody fee is a transaction based fee with an annual minimum of $30,000, and the accounting fee is calculated at 0.04% per annum on the first $100 million of net assets, 0.02% per annum on the next $400 million of net assets and 0.01% per annum on all net assets over $500 million. For the six months ended April 30, 2008, the Fund incurred $115,401 for custody and accounting services. These fees for the Fund were reduced by $6,764 as a result of an expense offset arrangement with the Fund's custodian. 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 overdraft. The total interest paid by the Fund for the six months ended April 30, 2008 was $4,378. 26 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2008 (unaudited) Securities Lending Fees. The Trust has a security lending agreement with BBH for which BBH receives a fee from the Fund for each security loaned. For the six months ended April 30, 2008, the Fund incurred no security lending fees. Board of Trustees' Fees. Each Trustee receives an annual fee as well as reimbursement for reasonable out-of-pocket expenses from the Fund. For the six months ended April 30, 2008, the Fund incurred $14,653 for these fees. 3. Investment Transactions. For the six months ended April 30, 2008, the cost of purchases and the proceeds of sales of investment securities other than short-term investments were 332,137,173 and $388,904,786 respectively. 4. Securities on Loan. As of April 30, 2008, the Fund had no securities on loan. 5. Capital Stock. BBH Fund, Inc. was permitted to issue 2,500,000,000 shares of capital stock, par value $.001 per share, of which 277,777,778 shares were classified as Class N shares of the Fund and 277,777,778 were classified as Class I shares of the Fund. The Trust offers unlimited shares without par value. Transactions in shares of capital stock were as follows: SHARES AMOUNT -------------------------- --------------------------- For the six For the For the six For the months ended year ended months ended year ended April 30, 2008 October 31, April 30, 2008 October 31, (unaudited) 2007 (unaudited) 2007 -------------- ----------- -------------- ---------- Class N Capital stock sold..... 2,591,476 4,662,728 $ 26,041,613 $ 46,611,159 Capital stock issued in connection with reinvestment of dividends............ 103,692 37,982 1,032,292 380,499 Capital stock redeemed.(2,301,197) (2,351,936) (23,012,844) (23,516,924) -------------- ----------- -------------- ---------- Net increase........... 393,971 2,348,774 $ 4,061,061 $ 23,474,734 ============== =========== ============== =========== Class I Capital stock sold..... 4,571,271 3,880,649 $ 45,506,007 $ 8,649,097 Capital stock issued in connection with reinvestment of dividends............ 118,544 1,548 1,180,095 15,415 Capital stock redeemed.(1,340,748) (977,038) (13,500,000) (9,689,014) -------------- ----------- -------------- ---------- Net increase........... 3,349,067 2,905,159 $ 33,186,102 $ 28,975,498 ============== =========== ============== =========== FINANCIAL STATEMENT APRIL 30, 2008 27 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES April 30, 2008 (unaudited) EXAMPLE As a shareholder of BBH Broad Market Fund (the "Fund"), you may incur two types of costs: (1) transaction costs on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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 (November 1, 2007 to April 30, 2008). ACTUAL EXPENSES The first line of the table below provides information about actual account values and actual expenses. You may use information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your 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 the Period" to estimate the expenses you paid on your account during the period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid during the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. 28 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES (continued) April 30, 2008 (unaudited) Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Expenses Paid Beginning Ending During Period Account Value Account Value November 1, 2007 November 1, 2007 April 30, 2008 to April 30, 2008(1) ---------------- -------------- -------------------- Class N Actual............. $1,000 $1,019.60 $1.56 Hypothetical(2).... $1,000 $1,023.32 $1.56 Expenses Paid Beginning Ending During Period Account Value Account Value November 1, 2007 November 1, 2007 April 30, 2008 to April 30, 2008(1) ---------------- -------------- -------------------- Class I Actual............. $1,000 $1,019.40 $1.15 Hypothetical(2).... $1,000 $1,023.72 $1.16 - ---------- (1) Expenses are equal to the Fund's annualized expense ratio of 0.62% and 0.45% for Class N and I shares, respectively, multiplied by the average account value over the period, multiplied by 182/366 (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. FINANCIAL STATEMENT APRIL 30, 2008 29 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION April 30, 2008 (unaudited) Approval of Investment Advisory/Administrative Services Agreement At a meeting held on December 11, 2006, the Board of Trustees (the "Board") of the Trust unanimously approved a new Combined Investment Advisory/Administrative Services Agreement ("Combined Agreement"). The Board determined that the terms of the Combined Agreement will be substantially identical to those of the current advisory and administration agreements of the Funds, noting that the most significant difference in the Combined Agreement is a single fee for both advisory and administrative services. The following is a summary of the factors the Board took into consideration in making its determination to approve the new Combined Agreement. Nature, Extent and Quality of Services Provided by Brown Brothers Harriman & Co. ("BBH") The Board noted that, under the Combined Agreement in respect of each Fund, BBH, subject to the supervision of the Board, will be responsible for providing a continuous investment program and making purchases and sales of portfolio securities consistent with the Funds' investment objective and policies. Under the Combined Agreement, BBH also provides administrative services to each Fund. The Board considered the scope and quality of services to be provided by BBH under the Combined Agreement and noted that the scope of services provided had expanded over time, primarily, as a result of regulatory developments. The Board noted that, for example, BBH is responsible for maintaining and monitoring its own and, to varying degrees, the Funds' compliance program, and these compliance programs have recently been refined and enhanced in light of new regulatory requirements. The Board considered the quality of the investment research and administrative capabilities of BBH and the other resources it has dedicated to performing services for the Funds. The Board concluded that, overall, they were satisfied with the nature, extent and quality of services expected to be provided to each of the Funds under the Combined Agreement. Costs of Services Provided and Profitability to BBH At the request of the Board, BBH provided information concerning the profitability of BBH's current investment company advisory and other fees. The Board also reviewed BBH's profitability data for each Fund, which also included the effect of revenue generated by the shareholder servicing, administration, custody and other fees paid by the Fund. The Board discussed the difficulty of making comparisons of profitability because comparative information is not generally publicly available and is affected by numerous factors, including the structure of the service provider, the types of funds it manages and administers, its business mix, numerous assumptions regarding allocations and the entity's capital structure and cost of capital. In considering profitability information, the Board considered the effect of fall-out benefits on BBH's expenses, as well as the "revenue sharing" arrangements BBH has entered into with certain entities that distribute shares of the Funds. The Board focused on profitability of BBH's relationships with the Funds before taxes and distribution expenses. The Board concluded that it was satisfied that BBH's level of profitability from its relationship with each Fund was not excessive. 30 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) April 30, 2008 (unaudited) Fall-Out Benefits The Board considered that BBH does not allocate the Funds' portfolio transactions for third party research, although it did benefit from proprietary research received from brokers that execute the Funds' purchases and sales of securities. The Board recognized that the aggregate amount of commissions generated by Fund transactions was unlikely to result in the Funds receiving from full service broker dealers substantial discounts on commission rates. The Board received and reviewed information concerning BBH's policies with respect to allocating portfolio brokerage. The Board also considered that BBH receives shareholder servicing fees from certain funds, and is the Funds' administrator, custodian and securities lending agent. The Board noted that BBH retained no portion of the 12b-1 fees paid by any Fund that operated with a Rule 12b-1 plan. The Board recognized that BBH's profitability would be somewhat lower if it did not receive proprietary research for commissions or, if it did not receive the other benefits described above. The Board recognized that most Fund shareholders were also BBH clients, and that substantial assets are invested in the Funds as a result of an overall investment management program for the shareholder. The Board noted that the Funds also derive reputational and other benefits from their association with BBH and their use of the BBH name, which is licensed to the Funds by BBH. Thus, the Board did not believe that BBH revenues associated with its clients should be fairly regarded as "fallout" benefit from the Funds. Economies of Scale The Board noted that the Funds' combined fee schedules, other than the fee schedule for BBH Money Market Fund, do not contain breakpoints. As a result, if assets increase, the fee rates would not be reduced for these Funds on the incremental assets. With respect to the BBH Money Market Fund, the breakpoint will be reviewed every three (3) years by the Board, and may be adjusted upwards to take into account the effects of inflation or such other basis as may be appropriate, subject to the approval of shareholders to the extent required by the 1940 Act. There may be other economies of scale because many expenses did not rise (and fall) proportionally to increases (and decreases) in total net assets. The Board noted that BBH had priced its services in recognition of the fact that it was largely its own clients who were shareholders and, accordingly, sought to assure that the cost of these services and total expenses for each Fund were fair and reasonable. In addition, the Board noted that over the years BBH had supported certain Funds through fee waivers and expense reimbursements. Based on information they had been provided over many years, the Board observed that in the mutual fund industry as a whole, as well as among funds similar to the Funds, there FINANCIAL STATEMENT APRIL 30, 2008 31 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) April 30, 2008 (unaudited) appeared to be no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. In light of the Funds' current size and expense structure, the Board concluded that it was unnecessary at this time to consider breakpoints with respect to the Funds, other than for the BBH Money Market Fund. Investment Results The Board considered the investment results of each of the Funds as compared to investment companies with its peers and with one or more selected securities indices. In addition to the information received by the Board for the meeting held on October 2, 2006, the Board received detailed performance information for each Fund at each regular Board meeting during the year. At the meeting held on October 2, 2006, the Board reviewed information showing performance of each Fund compared to its peers over the prior 1-, 3-, and 5- year periods and compared the performance information to one or more securities indices over comparable periods. Combined Fee Rate The Board considered the fee rate to be paid by each Fund to BBH. The Board recognized that it is difficult to make comparisons of these fee rates, and the combined advisory and administration fees, because there are variations in the services that are included in the fees paid by other funds. The Board considered the depth and range of services provided under the Combined Agreement. For example, in addition to a continuous investment program, BBH provides, among other things, officers (including the Funds' Chief Compliance Officer and officers to provide required certifications) and administrative services, such as shareholder communications, and tax compliance, with the attendant costs and exposure to liability. BBH also coordinates the provision of services to the Funds by nonaffiliated service providers. The following factors specific to the BBH Broad Market Fund also were noted and considered by the Board in deciding to approve the Combined Agreement: The Board reviewed the information showing performance of the BBH Broad Market Fund's Class N shares and Class I shares compared to the Lehman Aggregate Index. Both classes of the BBH Broad Market Fund on a pre-fee basis outperformed the benchmark over all relevant periods and on an after-fee basis performed roughly in line with or modestly exceeded the benchmark over all relevant periods. The Board viewed with favor this performance and noted the benchmark has no fees. The Board also noted the expense ratio for both share classes were in line with or lower than many funds of similar size and investment mandate. Taking into account these comparisons and the other factors considered, the Board concluded that the BBH Broad Market Fund's investment results over time and its total expense ratio had been satisfactory. 32 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) April 30, 2008 (unaudited) Conflicts of Interest As a general matter, certain conflicts of interest may arise in connection with a portfolio manager's management of a fund's investments, on the one hand, and the investments of other accounts for which the portfolio manager is responsible, on the other. For example, it is possible that the various accounts managed could have different investment strategies that, at times, might conflict with one another to the possible detriment of the Fund. Alternatively, to the extent that the same investment opportunities might be desirable for more than one account, possible conflicts could arise in determining how to allocate them. Other potential conflicts might include conflicts created by specific portfolio manager compensation arrangements, and conflicts relating to selection of brokers or dealers to execute fund portfolio trades and/or specific uses of commissions from Fund portfolio trades (for example, research, or "soft dollars"). BBH has adopted and implemented policies and procedures, including brokerage and trade allocation policies and procedures, which it believes address the conflicts associated with managing multiple accounts for multiple clients. In addition, BBH monitors a variety of areas, including compliance with account investment guidelines, the inclusion only of securities approved for purchase by the BBH's Fixed Income Credit Committee, and compliance with the BBH's Code of Ethics. Finally, BBH has structured the portfolio managers' compensation in a manner, and the Funds have adopted policies and procedures, reasonably designed to safeguard a Fund from being negatively affected as a result of any such potential conflicts. FINANCIAL STATEMENT APRIL 30, 2008 33 <PAGE> INVESTMENT ADVISER AND ADMINISTRATOR BROWN BROTHERS HARRIMAN 140 BROADWAY NEW YORK, NY 10005 DISTRIBUTOR EDGEWOOD SERVICES, INC. 5800 CORPORATE DRIVE PITTSBURGH, PA 15237-7000 SHAREHOLDER SERVICING AGENT BROWN BROTHERS HARRIMAN 140 BROADWAY NEW YORK, NY 10005 (800) 625-5759 To obtain information or make shareholder inquiries: By telephone: Call 1-800-575-1265 By E-mail send your request to: bbhfunds@bbh.com On the internet: www.bbhfunds.com This report is submitted for the general information of shareholders and is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. Nothing herein contained is to be considered an offer of sale or a solicitation of an offer to buy shares of the Fund. Such offering is made only by the prospectus, which includes details as to offering price and other material information. The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on "Form N-Q." Information on Form N-Q is available without charge and upon request by calling the Funds at the toll-free number listed above. A text only version can be viewed online or downloaded from the SEC's website at http://www.sec.gov; and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC (call 1-800-SEC-0330 for information on the operation of the Public Reference Room). You may also access this information from the BBH website at BBH.com by clicking on "BBH Mutual Funds" and selecting "Online Documents/Holdings Information." A copy of the Fund's Proxy Voting Policy is available upon request by calling the toll-free number listed above. A text-only version of the policy can be viewed online or downloaded from the SEC at www.sec.gov. BROWN [LOGO] BROTHERS HARRIMAN ITEM 2. CODE OF ETHICS. (a) The Registrant 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. (b) No answer required. (c) Not applicable. (d) Not applicable. (e) Not applicable. (f) (1) A copy of the code of ethics referenced in Item 2(a) of this Form N-CSR is available and can be mailed, free of charge, to anyone by calling (800) 575-1265. (2) Not applicable. (3) Not applicable. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. (a)(1) The Registrant's Board of Trustees has designated two members of the audit committee as financial experts. (2) The following Trustees have been designated as audit committee financial experts by the Board of Trustees who are independent for purposes of this Item 3 of Form N-CSR: audit committee members Arthur D. Miltenberger and David P. Feldman are the designated audit committee financial experts. (3) Not applicable. (b) No answer required. (c) No answer required. (d) No answer required. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. INFORMATION PROVIDED BY D&T ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. (a) Not applicable. (b) Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS 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) Based upon their evaluation of the Registrant's disclosure controls and procedures as conducted within 90 days of the filing date of this Form N-CSR, the Registrant's principal financial officer and principal executive officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the Registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. (b) There were no significant changes in the Registrant's internal controls or in other factors that occurred during the second fiscal quarter of the period that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting. ITEM 12. EXHIBITS. (a)(1) Not applicable. (a)(2) A separate certification for each principal executive officer and principal financial officer of the Registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2) is filed as Exhibit 12(a) (2). 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/ John A. Gehret ------------------------------ John A. Gehret, President (Principal Executive Officer) Date: 07/03/08 ------------------ 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/ Charles H. Schreiber ----------------------------- Charles H. Schreiber, Treasurer (Principal Financial Officer) Date: 07/03/08 ------------------ - - Print name and title of each signing officer under his or her signature. EXHIBIT 12(a) (1) A copy of the code of ethics is available and can be mailed, free of charge, to anyone by calling (800) 575-1265. EXHIBIT 12(a) (2) SECTION 302 CERTIFICATION OF PRINCIPLE EXECUTIVE OFFICER. I, John A. Gehret, certify that: 1. I have reviewed this report on Form N-CSR of BBH Trust on behalf of: BBH Core Select, BBH International Equity Fund, BBH Real Return Fund, and BBH Broad Market Fund, ("Registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report; 4. The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have: a.) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b.) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c.) evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d.) disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the 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; and 5. The Registrant's other certifying officer and I have disclosed to the Registrant's auditors and the audit committee of the Registrant's board of trustees (or persons performing the equivalent functions): a.) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize, and report financial information; and b.) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. Date: 07/03/08 /s/ John A. Gehret ======================= John A. Gehret President - Principal Executive Officer EXHIBIT 12(a) (2) SECTION 302 CERTIFICATION OF PRINCIPLE FINANCIAL OFFICER. I, Charles H. Schreiber, certify that: 1. I have reviewed this report on Form N-CSR of BBH Trust on behalf of: BBH Core Select, BBH International Equity Fund, BBH Real Return Fund, and BBH Broad Market Fund, ("Registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report; 4. The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have: a.) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b.) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c.) evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d.) disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the 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; and 5. The Registrant's other certifying officer and I have disclosed to the Registrant's auditors and the audit committee of the Registrant's board of trustees (or persons performing the equivalent functions): a.) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize, and report financial information; and b.) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. Date: 07/03/08 /s/ Charles H. Schreiber ========================== Charles H. Schreiber Treasurer - Principal Financial Officer SECTION 906 CERTIFICATIONS This certification is provided pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, 18 U.S.C. (section) 1350, and accompanies the report on Form N-CSR
for the fiscal year ended October 31, 2007 of the BBH Trust (the Registrant). Pursuant to 18 U.S.C.ss. 1350, the undersigned officers of the Registrant,
hereby certify, to the best of our knowledge, that the Registrant's Report on
Form N-CSR for the period ended October 31, 2007 (the "Report") fully complies
with the requirements of Section 13(a) or 15(d), as applicable, of the Securities
Exchange Act of 1934 and that the information contained in the Report fairly
presents, in all material respects, the financial condition and results of
operations of the Registrant. Date: 07/03/08 ------------------ /s/ John A. Gehret ========================= John A. Gehret President - Principal Executive Officer Date: 07/03/08 ------------------ /s/ Charles H. Schreiber ========================== Charles H. Schreiber Treasurer - Principal Financial Officer This certification is being furnished solely pursuant to 18 U.S.C.ss. 1350 and is not being filed as part of the Report or as a separate disclosure document.