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 Money Market Fund BBH Tax Exempt Money Fund (Exact name of Registrant as specified in charter) 140 Broadway, New York, NY 10005 (Address of principal executive offices) Corporation Services Company, 2711 Centerville Road, Suite 400, Wilmington,DE, 19808 (Name and address of agent for service) Registrant's telephone number, including area code: (212) 593-7237 Date of fiscal year end: JUNE 30 Date of reporting period: DECEMBER 31, 2008 Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A Registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A Registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 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 DECEMBER 31, 2008 BBH MONEY MARKET FUND <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO ALLOCATION December 31, 2008 (unaudited) BREAKDOWN BY SECURITY TYPE Percent of U.S. $ Value Net Assets -------------- ---------- Certificates of Deposit ........................ $ 408,672,916 18.1% Commercial Paper ............................... 784,212,490 34.8 Corporate Bonds ................................ 190,954,081 8.5 Municipal Bonds ................................ 269,480,000 12.0 U.S. Government Agency Obligations ............. 158,023,426 7.0 Time Deposits .................................. 235,000,000 10.4 Repurchase Agreements .......................... 200,000,000 8.9 Other Assets in Excess of Liabilities .......... 7,577,989 0.3 -------------- ----- NET ASSETS ..................................... $2,253,920,902 100.0% ============== ===== All data as of December 31, 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 MONEY MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS December 31, 2008 (unaudited) <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value - ------------ -------- -------- ----------- <C> <C> <C> <C> CERTIFICATES OF DEPOSIT (18.1%) $ 20,000,000 Allied Irish Banks .......................... 01/14/09 2.110% $ 20,000,072 15,000,000 Allied Irish Banks .......................... 05/07/09 2.950 15,001,035 5,000,000 Banco Bilbao Vizcaya Argentaria ............. 01/20/09 2.900 5,001,677 20,000,000 Banco Bilbao Vizcaya Argentaria ............. 03/18/09 1.375 20,000,421 10,000,000 Banco Bilbao Vizcaya Argentaria ............. 08/07/09 3.050 10,001,480 10,000,000 Banco Santander ............................. 02/17/09 3.000 10,003,883 5,000,000 Banco Santander ............................. 02/27/09 2.250 4,999,204 5,000,000 Bank of America ............................. 04/22/09 2.150 5,000,000 10,000,000 Bank of America ............................. 05/06/09 2.400 10,000,000 20,000,000 Bank of Ireland ............................. 03/31/09 1.450 20,000,000 12,500,000 Bank of Ireland ............................. 05/07/09 2.590 12,500,000 20,500,000 Barclays Bank, Plc .......................... 01/21/09 3.800 20,500,000 5,000,000 Barclays Bank, Plc .......................... 03/09/09 3.160 5,005,019 10,000,000 Barclays Bank, Plc .......................... 05/05/09 2.870 10,000,000 7,500,000 BNP Paribas ................................. 02/23/09 3.200 7,500,000 10,000,000 BNP Paribas ................................. 02/23/09 3.250 10,000,000 10,000,000 BNP Paribas ................................. 06/03/09 2.380 10,000,000 20,000,000 Citibank NA ................................. 01/20/09 3.750 20,000,000 10,000,000 Citibank NA ................................. 02/17/09 2.200 10,000,000 5,000,000 Citibank NA ................................. 03/16/09 1.770 5,000,000 15,000,000 Credit Suisse ............................... 01/20/09 2.050 15,000,000 22,250,000 DnB Nor Bank ASA ............................ 01/22/09 4.050 22,250,000 10,000,000 DnB Nor Bank ASA ............................ 03/09/09 2.320 10,001,295 30,750,000 Lloyds TSB Bank, Plc ........................ 01/12/09 4.300 30,780,908 10,000,000 Nordea Bank Finland, Plc .................... 01/21/09 3.760 10,006,942 8,600,000 Royal Bank of Canada ........................ 02/02/09 5.290 8,618,607 20,000,000 Royal Bank of Scotland, Plc ................. 03/24/09 3.700 20,002,243 10,000,000 Royal Bank of Scotland, Plc ................. 06/22/09 1.790 10,000,000 10,000,000 Societe Generale ............................ 05/07/09 2.450 10,000,000 21,500,000 Standard Chartered Bank ..................... 01/23/09 3.400 21,500,130 20,000,000 UBS AG ...................................... 01/21/09 3.735 20,000,000 ------------ Total Certificate ........................... 408,672,916 ============ </TABLE> The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT DECEMBER 31, 2008 3 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) December 31, 2008 (unaudited) <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value - ------------ -------- -------- ----------- <C> <C> <C> <C> COMMERCIAL PAPER (34.8%) $ 10,000,000 AT&T, Inc. .................................. 01/07/09 2.411% $ 9,996,000 10,000,000 AT&T, Inc. .................................. 02/03/09 1.253 9,988,542 10,000,000 AT&T, Inc. .................................. 02/04/09 0.851 9,991,972 9,000,000 Brown University ............................ 03/02/09 1.526 8,977,500 6,000,000 Brown-Forman Beverages, Europe, Ltd. ........ 01/12/09 2.158 5,996,058 14,000,000 Brown-Forman Beverages, Europe, Ltd. ........ 02/04/09 1.818 13,976,058 15,000,000 Brown-Forman Beverages, Europe, Ltd. ........ 03/04/09 1.859 14,952,208 16,000,000 City of Chicago, Illinois ................... 01/20/09 3.051 15,974,667 19,917,000 City of Chicago, Illinois ................... 02/02/09 2.999 19,865,658 10,000,000 Coca-Cola Co. ............................... 01/06/09 1.856 9,997,431 20,000,000 Coca-Cola Co. ............................... 01/21/09 2.162 19,976,111 5,000,000 Coca-Cola Co. ............................... 01/22/09 1.152 4,996,646 20,000,000 ConocoPhillips Co. .......................... 01/05/09 1.252 19,997,222 10,000,000 ConocoPhillips Co. .......................... 01/20/09 1.303 9,993,139 15,000,000 Danske Corp. ................................ 01/23/09 3.402 14,969,063 10,000,000 Danske Corp. ................................ 03/10/09 2.522 9,952,778 15,000,000 Danske Corp. ................................ 06/04/09 1.646 14,895,194 10,000,000 De Kalb County, Georgia Development Authority Revenue ......................... 01/07/09 2.000 10,000,000 7,000,000 Emerson Electric Co. ........................ 01/09/09 1.002 6,998,444 7,000,000 Florida Power & Light Co. ................... 01/12/09 0.200 6,999,572 20,000,000 Florida Power & Light Co. ................... 01/22/09 0.250 19,997,083 8,000,000 Harris County, Texas, Metropolitan Transit Authority ......................... 01/05/09 0.750 8,000,000 15,000,000 Hershey Co. ................................. 01/08/09 1.102 14,996,792 20,000,000 Hershey Co. ................................. 01/27/09 1.203 19,982,667 20,000,000 Hewlett-Packard Co. ......................... 01/05/09 0.801 19,998,222 3,010,000 ING (US) Funding LLC ........................ 02/18/09 2.263 3,000,970 5,000,000 ING (US) Funding LLC ........................ 03/02/09 2.136 4,982,292 15,000,000 ING (US) Funding LLC ........................ 03/05/09 2.116 14,944,744 10,000,000 ING (US) Funding LLC ........................ 05/13/09 2.502 9,909,433 16,588,000 Johns Hopkins University .................... 02/10/09 1.550 16,588,000 20,000,000 Lowe's Companies, Inc. ...................... 03/09/09 1.103 19,959,056 </TABLE> The accompanying notes are an integral part of these financial statements. 4 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) December 31, 2008 (unaudited) <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value - ------------ -------- -------- ----------- <C> <C> <C> <C> COMMERCIAL PAPER (continued) $ 24,100,000 Massachusetts Bay Transportation Authority ................................. 02/11/09 2.000% $ 24,100,000 5,000,000 Nashville & Davidson County Health and Educational Facilities Authority............. 01/08/09 3.000 5,000,000 20,027,000 Nebraska Public Power District .............. 01/14/09 2.494 20,009,282 20,000,000 Nordea North America, Inc. .................. 04/10/09 1.204 19,934,000 20,000,000 Parker Hannifin Corp. ....................... 01/23/09 0.350 19,995,722 7,000,000 Parker Hannifin Corp. ....................... 02/10/09 0.400 6,996,889 15,000,000 Pfizer, Inc. ................................ 02/02/09 2.214 14,970,667 20,000,000 Philip Morris International, Inc. ........... 02/02/09 3.026 19,946,667 5,000,000 Philip Morris International, Inc. ........... 02/12/09 0.751 4,995,625 10,000,000 Philip Morris International, Inc. ........... 03/12/09 0.501 9,990,278 15,000,000 Procter & Gamble Co. ........................ 01/06/09 1.907 14,996,042 15,000,000 Procter & Gamble Co. ........................ 01/22/09 1.102 14,990,375 5,000,000 Procter & Gamble Co. ........................ 02/20/09 0.902 4,993,750 40,000,000 Rabobank USA Financial Corp. ................ 02/13/09 0.420 39,979,933 15,850,000 Siemens Capital Co. LLC ..................... 01/06/09 0.200 15,849,560 20,000,000 Siemens Capital Co. LLC ..................... 01/13/09 0.650 19,995,667 20,000,000 Societe Generale ............................ 02/02/09 1.967 19,965,155 5,000,000 Societe Generale ............................ 03/18/09 0.872 4,990,817 15,000,000 Southern Co. ................................ 01/28/09 2.263 14,974,688 10,000,000 Svenska Handelsbanken, Inc. ................. 02/12/09 2.000 9,976,783 10,000,000 Svenska Handelsbanken, Inc. ................. 03/02/09 2.091 9,965,333 15,000,000 Svenska Handelsbanken, Inc. ................. 03/03/09 2.000 14,949,421 20,000,000 Tennessee State School Bond ................. 01/13/09 1.700 20,000,000 10,000,000 Toronto Dominion Holdings USA, Inc........... 01/14/09 1.499 9,994,601 5,000,000 Toronto Dominion Holdings USA, Inc........... 03/12/09 0.496 4,995,188 5,000,000 UBS Finance Delaware LLC .................... 01/07/09 2.156 4,998,208 10,000,000 UBS Finance Delaware LLC .................... 07/31/09 2.880 9,834,717 12,000,000 Yale University ............................. 03/02/09 1.526 11,969,600 ------------ Total Commercial Paper....................... 784,212,490 ------------ </TABLE> The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT DECEMBER 31, 2008 5 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) December 31, 2008 (unaudited) <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value - ------------ -------- -------- ----------- <C> <C> <C> <C> CORPORATE BONDS (8.5%) $ 8,000,000 Bank of America Corp. ....................... 02/15/09 5.875% $ 8,023,466 5,000,000 BellSouth Corp. ............................. 09/15/09 4.200 5,028,337 12,000,000 Calyon(1) ................................... 01/16/09 4.615 11,998,711 10,000,000 Caterpillar Financial Services Corp.(1) ..... 05/18/09 2.296 9,998,490 3,445,000 ConocoPhillips Co. .......................... 03/30/09 6.375 3,473,259 10,000,000 Credit Suisse(1) ............................ 02/20/09 0.140 9,944,215 4,300,000 Credit Suisse USA, Inc. ..................... 01/15/09 3.875 4,301,497 3,341,000 Credit Suisse USA, Inc. ..................... 06/01/09 4.700 3,359,844 3,900,000 Fleet National Bank ......................... 01/15/09 5.750 3,903,900 6,247,000 Goldman Sachs Group, Inc.(1) ................ 03/24/09 1.556 6,243,168 15,000,000 Hewlett-Packard Co.(1) ...................... 06/15/09 2.006 14,995,759 5,000,000 HSBC Finance Corp. .......................... 05/15/09 4.750 5,024,947 7,500,000 IBM International Group Capital LLC(1) ...... 02/13/09 2.225 7,488,165 10,000,000 IBM International Group Capital LLC(1) ...... 07/29/09 3.848 10,020,672 4,760,000 JP Morgan Chase & Co. ....................... 01/15/09 6.000 4,765,205 5,000,000 Nordea Bank Finland, Plc .................... 02/11/09 2.610 5,002,932 19,600,000 Pioneer Hi-Bred International Inc. .......... 01/15/09 5.750 19,620,588 8,600,000 PNC Funding Corp. ........................... 02/15/09 6.125 8,627,546 20,000,000 Toronto Dominion Bank ....................... 04/22/09 3.750 20,000,605 2,100,000 US Bancorp .................................. 04/28/09 5.300 2,116,466 15,000,000 US Bank NA(1) ............................... 09/10/09 2.289 15,000,000 5,000,000 Wells Fargo & Co.(1) ........................ 08/03/09 0.170 4,981,560 2,600,000 Wells Fargo Bank NA(1) ...................... 05/28/09 0.621 2,585,642 4,450,000 Westpac Banking Corp.(1) .................... 08/14/09 5.119 4,449,107 ------------ Total Corporate Bonds........................ 190,954,081 ------------ MUNICIPAL BONDS (12.0%) 6,190,000 Brazos River, Texas, Pollution Control Revenue(1) ........................ 01/07/09 2.500 6,190,000 21,300,000 State of California(1) ...................... 01/02/09 0.750 21,300,000 40,600,000 California State Department of Water Resources(1) .............................. 01/02/09 0.750 40,600,000 10,000,000 Columbia, Alabama, Industrial Development Board Pollution Control Revenue(1) ........................ 01/02/09 0.920 10,000,000 </TABLE> The accompanying notes are an integral part of these financial statements. 6 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) December 31, 2008 (unaudited) <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value - ------------ -------- -------- ----------- <C> <C> <C> <C> MUNICIPAL BONDS (continued) $ 9,995,000 Guilford County, North Carolina(1).. ........ 01/01/09 3.400% $ 9,995,000 10,000,000 Massachusetts Bay Transportation Authority(1) .............................. 01/07/09 1.000 10,000,000 6,000,000 Mecklenburg County, North Carolina(1) ......................... 01/01/09 1.150 6,000,000 10,000,000 Missouri State Health & Educational Facilities Authority(1) ................... 01/02/09 1.750 10,000,000 7,745,000 New Hampshire Health & Education Facilities Authority(1) ................... 01/02/09 0.750 7,745,000 12,055,000 New Hampshire Health & Education Facilities Authority(1) ................... 01/02/09 0.750 12,055,000 8,200,000 New York City Municipal Water Finance Authority(1) ...................... 01/02/09 1.300 8,200,000 15,000,000 New York, New York(1) ....................... 01/02/09 1.500 15,000,000 4,950,000 North Carolina Capital Facilities Finance Agency(1) ......................... 01/01/09 1.200 4,950,000 4,185,000 North Carolina Capital Facilities Finance Agency (Duke Univ. Project)(1) .... 01/01/09 1.200 4,185,000 6,400,000 North Carolina Medical Care Commission(1) ............................. 01/01/09 2.000 6,400,000 20,480,000 Ohio State Higher Educational Facilities Revenue(1) ..................... 01/01/09 1.750 20,480,000 5,000,000 Ohio State Higher Educational Facilities Revenue(1) ..................... 01/02/09 0.850 5,000,000 10,000,000 Oregon State Department of Transportation(1) ......................... 01/01/09 2.500 10,000,000 14,480,000 Pennsylvania Turnpike Commission(1) ............................. 01/01/09 3.280 14,480,000 7,900,000 Philadelphia, Pennsylvania, Hospitals & Higher Education Facilities Authority(1) .. 01/02/09 1.350 7,900,000 14,000,000 Raleigh, North Carolina(1) .................. 01/07/09 1.350 14,000,000 10,000,000 University of Illinois Board of Trustees(1) ............................... 01/07/09 3.500 10,000,000 </TABLE> The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT DECEMBER 31, 2008 7 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) December 31, 2008 (unaudited) <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value - ------------ -------- -------- ----------- <C> <C> <C> <C> MUNICIPAL BONDS (continued) $ 10,000,000 Virginia College Building Authority, Educational Facilities Revenue(1) ......... 01/02/09 0.900% $ 10,000,000 5,000,000 Virginia Commonwealth University(1) ......... 01/02/09 1.050 5,000,000 ------------ Total Municipal Bonds ....................... 269,480,000 ------------ U.S. GOVERNMENT AGENCY OBLIGATIONS (7.0%) 4,300,000 Federal Farm Credit Bank .................... 06/15/09 3.950 4,328,879 8,000,000 Federal Farm Credit Bank .................... 08/03/09 5.250 8,115,073 50,000,000 Federal Home Loan Bank ...................... 01/26/09 2.516 49,913,194 7,940,000 Federal Home Loan Bank ...................... 04/21/09 2.350 7,935,812 8,600,000 Federal Home Loan Bank ...................... 05/07/09 2.750 8,600,000 8,600,000 Federal Home Loan Bank ...................... 05/13/09 2.375 8,594,371 25,000,000 Federal National Mortgage Assoc ............. 03/31/09 2.733 24,833,125 12,800,000 FHLMC ....................................... 05/18/09 2.500 12,800,000 25,000,000 FHLMC ....................................... 02/19/09 2.622 24,911,528 8,000,000 FHLMC ....................................... 04/21/09 0.350 7,991,444 ------------ Total U.S. Government Agency Obligations................................ 158,023,426 ------------ TIME DEPOSITS (10.4%) 20,000,000 Bank of Ireland ............................. 01/02/09 0.150 20,000,000 50,000,000 Dresdner Bank AG ............................ 01/02/09 0.010 50,000,000 50,000,000 HBOS Treasury Services ...................... 01/02/09 0.010 50,000,000 45,000,000 HSBC Bank ................................... 01/02/09 0.031 45,000,000 50,000,000 Royal Bank of Canada ........................ 01/02/09 0.010 50,000,000 20,000,000 Toronto Dominion Bank ....................... 01/02/09 0.010 20,000,000 ------------ Total Time Deposits.......................... 235,000,000 ------------ </TABLE> The accompanying notes are an integral part of these financial statements. 8 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) December 31, 2008 (unaudited) <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value - ------------ -------- -------- ----------- <C> <C> <C> <C> REPURCHASE AGREEMENTS (8.9%) $30,000,000 Barclays (Agreement dated 12/31/08 collateralized by FNMA 7.500%, due 11/01/37, value $30,600,000)........... 01/02/09 0.040% $ 30,000,000 50,000,000 BNP Paribas (Agreement dated 12/31/08 collateralized by FNMA 5.500%-6.000%, due 01/01/34-09/01/38, value $51,000,001).. 01/02/09 0.050 50,000,000 40,000,000 Deutsche Bank (Agreement dated 12/31/08 collateralized by FMAC 6.067%, due 11/01/36, value $40,800,000)........... 01/02/09 0.100 40,000,000 40,000,000 Royal Bank of Canada (Agreement dated 12/31/08 collateralized by FNMA 5.500%, due 12/01/34, value $40,800,000)........... 01/02/09 0.100 40,000,000 40,000,000 Societe Generale (Agreement dated 12/31/08 collateralized by FNMA 6.000%, due 02/01/38, value $40,800,000)........... 01/02/09 0.080 40,000,000 ------------ Total Repurchase Agreements................................. 200,000,000 ------------ TOTAL INVESTMENTS AT AMORTIZED COST.......................................... 99.7% $2,246,342,913 CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................... 0.3 7,577,989 ----- -------------- NET ASSETS................................................................... 100.0% $2,253,920,902 ===== ============== </TABLE> - ---------- (1) Variable rate instrument. Interest rates change on specific dates (such as coupon or interest payment date). The yield shown represents the December 31, 2008 coupon or interest rate. Abbreviations: FHLMC - Federal Home Loan Mortgage Association FMAC - Federal Mortgage Association of Canada FNMA - Federal National Mortgage Association The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT DECEMBER 31, 2008 9 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) December 31, 2008 (unaudited) FAIR VALUE MEASUREMENTS The Fund adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, Fair Value Measurements ("FAS 157"), effective July 1, 2008. For net asset valuation determination purposes, various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below. - -- Level 1 - quoted prices in active markets for identical investments. - -- Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) - -- Level 3 - significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments). The following is a summary of the inputs used as of December 31, 2008 in valuing the Fund's investments carried at value: Investments in Valuation Inputs Securities - ---------------- -------------- Level 1 - Quoted prices ................................... $ 0 Level 2 - Other Significant Observable Inputs ............. 2,246,342,913 Level 3 - Significant Unobservable Inputs ................. 0 -------------- Total .................................................. $2,246,342,913 ============== The accompanying notes are an integral part of these financial statements. 10 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES December 31, 2008 (unaudited) ASSETS: Investments, at amortized cost ........................ $ 2,046,342,913 Repurchase Agreements ................................. 200,000,000 Cash .................................................. 3,320,088 Receivables for: Interest ............................................ 5,082,666 Other assets ........................................ 297,149 --------------- Total Assets ...................................... 2,255,042,816 --------------- LIABILITIES: Payables for: Shareholder servicing fees .......................... 485,585 Investment advisory and administrative fees ......... 387,937 Dividends declared .................................. 96,945 Custody and accounting fees ......................... 93,137 Professional fees ................................... 56,310 Board of Trustees' fees ............................. 1,000 Accrued expenses and other liabilities ................ 1,000 --------------- Total Liabilities ................................. 1,121,914 --------------- NET ASSETS ............................................... $ 2,253,920,902 =============== Net Assets Consist of: Paid-in capital ....................................... $ 2,253,921,587 Undistributed net investment income ................... 12,912 Accumulated net realized loss on investments .......... (13,597) --------------- Net Assets ............................................... $ 2,253,920,902 =============== NET ASSET VALUE AND OFFERING PRICE PER SHARE REGULAR SHARES NET ASSET VALUE ($1,432,995,459 / 1,432,995,458 shares outstanding)... $1.00 ===== INSTITUTIONAL SHARES NET ASSET VALUE ($820,925,443 / 820,925,446 shares outstanding)....... $1.00 ===== The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT DECEMBER 31, 2008 11 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS For the six months ended December 31, 2008 (unaudited) NET INVESTMENT INCOME: Income: Interest and other income ............................... $ 24,098,579 Expenses: Investment advisory and administrative fees ............. 2,410,867 Shareholder servicing fees .............................. 1,714,628 Custody and accounting fees ............................. 210,800 Board of Trustees' fees ................................. 40,034 Professional fees ....................................... 31,013 Miscellaneous expenses .................................. 393,066 ------------ Total Expenses ........................................ 4,800,408 Expense offset arrangement ............................ (16,706) ------------ Net Expenses .......................................... 4,783,702 ------------ Net Investment Income ..................................... 19,314,877 ============ NET REALIZED LOSS: Net realized loss on investments .......................... (13,597) ------------ Net Increase in Net Assets Resulting from Operations ...... $ 19,301,280 ============ The accompanying notes are an integral part of these financial statements. 12 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS <TABLE> <CAPTION> For the six months ended For the December 31, 2008 year ended (unaudited) June 30, 2008 ----------------- --------------- <S> <C> <C> INCREASE IN NET ASSETS: Operations: Net investment income ..................................... $ 19,314,877 $ 95,961,462 Net realized loss on investments .......................... (13,597) -- --------------- --------------- Net increase in net assets resulting from operations ......................................... 19,301,280 95,961,462 --------------- --------------- Dividends and distributions declared: From net investment income: Regular shares .......................................... (11,591,788) (50,922,406) Institutional shares .................................... (7,710,177) (45,039,056) --------------- --------------- Total dividends and distributions declared. ........... (19,301,965) (95,961,462) --------------- --------------- From Fund Share (Principal) Transactions at Net Asset Value of $1.00 per share: Fund shares sold ........................................ 1,415,454,288 4,249,639,531 Fund shares issued in reinvestments of dividends ........ 7,212,523 52,591 Fund shares repurchased ................................. (1,342,642,930) (4,387,608,450) --------------- --------------- Net increase (decrease) in net assets resulting from fund share transactions ........................ 80,023,881 (137,916,328) --------------- --------------- NET ASSETS: Beginning of year ........................................... 2,173,897,706 2,311,814,034 --------------- --------------- End of period ............................................... $ 2,253,920,902 $ 2,173,897,706 =============== =============== </TABLE> The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT DECEMBER 31, 2008 13 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Selected per share data and ratios for a Regular share outstanding throughout each period <TABLE> <CAPTION> For the six months ended December 31, For the years ended June 30, 2008 ---------------------------------------------------------- (unaudited) 2008 2007 2006 2005 2004 ------------ ------ ------ ------ ------ ------ <S> <C> <C> <C> <C> <C> <C> Net asset value, beginning of period ............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 Income from investment operations: Net investment income. .......... 0.01 0.04 0.05 0.04 0.01 0.01 Dividends to shareholders from net investment income. .......... (0.01) (0.04) (0.05) (0.04) (0.01) (0.01) ------ ------ ------ ------ ------ ------ Net asset value, end of period ................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ====== ====== ====== ====== ====== ====== Total return ....................... 0.85% 3.77% 4.97% 3.76% 1.72% 0.59% Ratios/Supplemental data: Net assets, end of period (in millions) ................. $1,433 $1,409 $1,172 $1,506 $1,258 $1,375 Ratio of expenses to average net assets.. .......... 0.53%(1) 0.51% 0.51%(3) 0.53%(3) 0.52%(3) 0.52%(3) Expense offset arrangement ................... 0.00%(1),(2) 0.00%(2) -- -- -- -- ------ ------ ------ ------ ------ ------ Total expenses ................ 0.53%(1) 0.51% 0.51% 0.53% 0.52% 0.52% ====== ====== ====== ====== ====== ====== Ratio of net investment income to average net assets.. .......... 1.69%(1) 3.63% 4.79%(3) 3.75%(3) 1.70%(3) 0.59%(3) </TABLE> - ---------- (1) Annualized. (2) Less than 0.01%. (3) Ratios include the Fund's share income, expenses paid by, and the expense offset arrangement, of the BBH US Money Market Portfolio, which the Fund invested in through June 12, 2007, as appropriate. The accompanying notes are an integral part of these financial statements. 14 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (continued) Selected per share data and ratios for an Institutional share outstanding throughout each period <TABLE> <CAPTION> For the six For the period from months ended January 26, 2007 December 31, (commencement of 2008 For the year ended operations) through (unaudited) June 30, 2008 June 30, 2007 ------------ ------------------ -------------------- <S> <C> <C> <C> Net asset value, beginning of period .................... $ 1.00 $ 1.00 $1.00 Income from investment operations: Net investment income .................. 0.01 0.04 0.02 Dividends to shareholders from net investment income ...................... (0.01) (0.04) (0.02) ------ ------ ------ Net asset value, end of period ............ $ 1.00 $ 1.00 $ 1.00 ====== ====== ====== Total return .............................. 0.97% 4.02% 2.21%(1) Ratios/Supplemental data: Net assets, end of period (in millions) ........................ $ 821 $ 765 $1,140 Ratio of expenses to average net assets ........................... 0.29%(3) 0.26% 0.26%(2),(3) Expense offset arrangement. ............ 0.00%(3),(4) 0.00%(4) -- ------ ------ ------ Total expenses ....................... 0.29%(3) 0.26% 0.26% ====== ====== ====== Ratio of net investment income to average net assets ................... 1.96%(3) 3.86% 5.07%(2),(3) </TABLE> - ---------- (1) Inception to date return. (2) Ratios include the Fund's share income, expenses paid by, and the expense offset arrangement, of the BBH US Money Market Portfolio, which the Fund invested in through June 12, 2007, as appropriate. (3) Annualized. (4) Less than 0.01%. BBH MONEY MARKET FUND The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT DECEMBER 31, 2008 15 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) December 31, 2008 (Unaudited) 1. Organization and Significant Accounting Policies. BBH Money 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. The Trust is an open-end management investment company organized as a Massachusetts business trust on June 7, 1983 and re-organized as a Delaware statutory trust on June 12, 2007. The Fund commenced operations on December 12, 1983. The Declaration of Trust permits the Trustees to create an unlimited number of series, each of which may issue a separate class of shares. The Fund established a new class of shares designated as "Institutional Shares". Institutional Shares opened on December 19, 2006 and commenced operations on January 26, 2007. Regular Shares and Institutional Shares have different operating expenses. At December 31, 2008, there were six series of the Trust. Prior to June 12, 2007 the Fund invested all of its investable assets in the BBH U.S. Money Market Portfolio (the "Portfolio"), a diversified, open-end management investment company having the same investment objectives as the Fund. Effective June 12, 2007, the Fund redeemed its shares of the Portfolio and began investing its assets directly. There were no changes to the Fund's investment policies and restrictions. The Fund recorded its share of the Portfolios' income and expenses daily until the date of the redemption. 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 Fund values its investments at amortized cost, which approximates market value. The amortized cost method values a security at its cost at the time of purchase and thereafter assumes a constant amortization to maturity of any discount or premium. The Fund's use of amortized cost is in compliance with Rule 2a-7 of the Investment Company Act of 1940. B. Investment Transactions 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 consists of interest accrued and discount earned (including both original issue and market discount) and premium amortization on the investments of the Fund, accrued ratably to the date of maturity. 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 16 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) December 31, 2008 (Unaudited) 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. Information regarding repurchase agreements is included in the Portfolio of Investments. D. Federal Income Taxes. Each series of the Trust is treated as a separate entity for federal income tax purposes. It is the Fund's policy to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Accordingly, no federal income tax provision is required. At June 30, 2008, the cost of investments for federal income tax purposes was equal to the amortized cost of investments for financial statement purposes. E. Dividends and Distributions to Shareholders. Dividends from net investment income are declared daily and paid monthly to shareholders. The Fund declared dividends in the amounts of $11,591,788 and $7,710,177 to Regular and Institutional shareholders, respectively, during the six months ended December 31, 2008. The Fund declared dividends in the amounts of $50,922,406 and $45,039,056 to Regular and Institutional shareholders, respectively, during the year ended June 30, 2008. The tax character of the dividends declared in the six months and year ended was 100% ordinary income. The Fund had a net capital loss carryforward of approximately $39,121 which expires as follows: Expiration Date Amount --------------- ------- 06/30/2016 $39,121 The differences between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales and post-October short term capital loss deferral. To the extent that this net capital loss carryover is used to offset future capital gains, it is probable the gains to offset will not be distributed to shareholders since any such distributions may be taxable to shareholders as ordinary income. FINANCIAL STATEMENT DECEMBER 31, 2008 17 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) December 31, 2008 (Unaudited) 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 the 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 December 31, 2008. 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. Investment 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 investment advisory and administrative services calculated daily and paid monthly at an annual rate equivalent to 0.25% on the first $1,000,000,000 of the Fund's average daily net assets and 0.20% of the Fund's average daily net assets in excess of $1,000,000,000. BBH has a subadministration services agreement with Federated Services Company ("FSC") for which FSC receives compensation paid by BBH. For the six months ended December 31, 2008, the Fund incurred $2,410,867 for investment advisory and administrative services. 18 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) December 31, 2008 (Unaudited) 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 the Regular shares' average daily net assets. For the six months ended December 31, 2008, the Fund incurred $1,714,628 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. The custody fee is a transaction based fee with an annual minimum of $20,000, and the accounting fee is calculated at 0.01% per annum on the first $1 billion of net assets and 0.005% per annum on all net assets over $1 billion. For the six months ended December 31, 2008, the Fund incurred $210,800 for custody and accounting services. These fees were reduced by $16,706 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 the agreement the Fund will be charged interest based on LIBOR on the day of the overdraft plus one percent. The total interest paid by the Fund for the six months ended December 31, 2008 was $9,330. 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 December 31, 2008, the Fund incurred $40,034 for Trustees' fees. FINANCIAL STATEMENT DECEMBER 31, 2008 19 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) December 31, 2008 (Unaudited) 3. Capital Stock. The Trust is permitted to issue an unlimited number of Regular Shares and Institutional Shares of capital stock, at no par value. Transactions in shares of capital stock were as follows: Shares ---------------------------------- For the six For the year months ended ended December 31, 2008 June 30, 2008 ----------------- ------------- Regular Shares Capital stock sold ......................... 766,475,815 2,213,057,812 Capital stock issued in connection with reinvestment of dividends ............... 4,219,043 52,591 Capital stock redeemed ..................... (746,648,201) (1,976,287,295) ------------ -------------- Net increase ............................... 24,046,657 236,823,108 ============ ============== Institutional Shares Capital stock sold ......................... 648,978,473 2,036,581,719 Capital stock issued in connection with reinvestment of dividends .......... 2,993,480 -- Capital stock redeemed ..................... (595,994,729) (2,411,321,155) ------------ -------------- Net increase (decrease) .................... 55,977,224 (374,739,436) ============ ============== 20 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES December 31, 2008 (unaudited) EXAMPLE As a shareholder of BBH Money Market Fund (the "Fund"), you may incur two types of costs: (1) transaction costs on purchase payments, reinvested dividends, or other distributions; 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 (July 1, 2008 to December 31, 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. FINANCIAL STATEMENT DECEMBER 31, 2008 21 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES (continued) December 31, 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 July 1, 2008 to July 1, 2008 December 31, 2008 December 31, 2008(1) ------------ ----------------- -------------------- Regular Shares Actual.................. $1,000 $1,008.50 $2.68 Hypothetical(2)......... $1,000 $1,022.53 $2.70 Expenses Paid Beginning Ending During Period Account Value Account Value July 1, 2008 to July 1, 2008 December 31, 2008 December 31, 2008(1) ------------ ----------------- -------------------- Institutional Shares Actual.................. $1,000 $1009.70 $1.47 Hypothetical(2)......... $1,000 $1023.74 $1.48 - ---------- (1) Expenses are equal to the Fund's annualized expense ratio of 0.53% and 0.29% for Regular and Institutional shares, respectively, multiplied by 184/365 (to reflect the one half-year period). (2) Assumes a return of 5% before expenses. For the purpose of the calculation, the applicable annualized expense ratio for each class of shares is subtracted from the assumed return before expenses. 22 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION December 31, 2008 (unaudited) APPROVAL OF INVESTMENT ADVISORY/ADMINISTRATIVE SERVICES AGREEMENT At a meeting held on December 10, 2008, the Board of Trustees (the "Board") of the Trust unanimously approved the continuance of the Investment Advisory/Administrative Services Agreement (the "Agreement") which had been approved by shareholders on May 23, 2007. The following is a summary of the factors the Board took into consideration in making its determination to approve continuance of the Agreement. Nature, Extent and Quality of Services Provided by Brown Brothers Harrriman's Mutual Fund Advisory Department (the "SID") The Board noted that, under the Agreement in respect of each Fund, the SID, subject to the supervision of the Board, is 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 Agreement, Brown Brothers Harriman & Co. ("BBH") provides administrative services to each Fund. The Board considered the scope and quality of services provided by BBH under the 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 continuously evolved in light of regulatory developments and 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 provided to each of the Funds under the 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, securities lending, 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. FINANCIAL STATEMENT DECEMBER 31, 2008 23 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) December 31, 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 and discussed with BBH its approach to obtaining and monitoring best execution. 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' 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. 24 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) December 31, 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 December 10, 2008, which included 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. The Board received detailed performance information for each Fund at each regular Board meeting during the year. Fee Rates The Board considered the fee rates paid by each Fund to BBH. The Board recognized that it is difficult to make comparisons of these fee rates, or of 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 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 Money Market Fund also were noted and considered by the Board in deciding to approve the Agreement: The Board reviewed information showing performance of the BBH Money Market Fund compared to other funds in the iMoneyNet (1st Tier Retail) and (1st Tier Institutional). The comparative information showed that the BBH Money Market Fund had outperformed or performed in line with the averages over all relevant periods. The Board also viewed with favor that the total expense ratio was substantially lower than the averages in the iMoneyNet categories. The Board also noted that the BBH Money Market Fund had maintained a stable net asset value of one dollar at all times. Taking into account these comparisons and the other factors considered, the Board concluded that the BBH Money Market Fund's investment results over time and expense ratios 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 FINANCIAL STATEMENT DECEMBER 31, 2008 25 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) December 31, 2008 (unaudited) 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 trade allocation procedures, which are designed to 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 an oversight committee, and compliance with the 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. The Funds' management and Chief Compliance Officer report to the Board on relevant polices and procedures. 26 <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 that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund's portfolio, as well as a record of how the Fund voted any such proxies during the most recent 12-month period ended June 30, is available upon request by calling the toll-free number listed above. This information is also available from the Edgar database on the SEC's website at www.sec.gov. BROWN [LOGO] BROTHERS HARRIMAN BROWN [LOGO] BROTHERS HARRIMAN Semi-Annual Report DECEMBER 31, 2008 BBH TAX EXEMPT MONEY FUND <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- PORTFOLIO ALLOCATION December 31, 2008 (unaudited) BREAKDOWN BY BOND TYPE Percent of U.S. $ Value Net Assets ------------ ---------- Certificates of Participation .................. $41,587,607 5.3% Education ...................................... 168,608,062 21.6 General Obligations ............................ 208,767,567 26.8 Government Collateral .......................... 41,646,892 5.4 Health Care .................................... 46,400,000 6.0 Miscellaneous .................................. 22,664,872 2.9 Transportation ................................. 65,243,564 8.4 Utilities ...................................... 49,685,000 6.4 Water/Sewer .................................... 50,600,859 6.5 Commercial Paper ............................... 75,081,000 9.6 Other Assets in Excess of Liabilities .......... 8,479,217 1.1 ------------ ----- NET ASSETS ..................................... $778,764,640 100.0% ============ ===== TOP FIVE HOLDINGS BY STATE Percent of U.S. $ Value Net Assets ------------ ---------- North Carolina ................................. $131,449,361 17.1% Texas 78,851,070 .............................. 10.2 Pennsylvania ................................... 50,881,902 6.5 Virginia ....................................... 39,251,681 4.9 Maryland ....................................... 38,556,100 4.7 Other States ................................... 431,295,309 55.5 Other Assets in Excess of Liabilities .......... 8,479,217 1.1 ------------ ----- NET ASSETS ..................................... $778,764,640 100.0% ============ ===== All data as of December 31, 2008. The Fund's breakdown by bond type and top five holdings by state are 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 TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS December 31, 2008 (unaudited) <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value ----------- -------- -------- ----------- <S> <C> <C> <C> MUNICIPAL BONDS (89.3%) CERTIFICATES OF PARTICIPATION (5.3%) $10,000,000 Charlotte, North Carolina(1) ................. 01/01/09 1.500% $ 10,000,000 4,500,000 Mecklenburg County, North Carolina(1) ........ 01/01/09 2.000 4,500,000 2,065,000 North Carolina Infrastructure Finance Corp. .............................. 05/01/09 5.000 2,087,607 6,000,000 Raleigh, North Carolina(1) ................... 01/07/09 1.380 6,000,000 15,000,000 University of Illinois Board of Trustees(1) .. 01/07/09 3.500 15,000,000 4,000,000 Winston-Salem, North Carolina(1) ............. 01/01/09 2.780 4,000,000 ------------ Total Certificates of Participation 41,587,607 ============ EDUCATION (21.6%) 2,000,000 Arizona School Facilities Board Revenue .................................... 07/01/09 5.250 2,042,055 2,010,000 Arizona State Board of Regents ............... 06/01/09 4.000 2,030,339 5,000,000 California Educational Facilities Authority(1) ............................... 01/02/09 0.850 5,000,000 9,850,000 Colorado Springs, Colorado(1) ................ 01/02/09 1.000 9,850,000 2,500,000 Connecticut State Health & Educational Facilities Authority(1) .................... 01/02/09 0.700 2,500,000 5,000,000 Delaware State Economic Development Authority(1) ............................... 01/01/09 1.200 5,000,000 4,770,000 Florida State Board of Education Putters(1) ................................. 01/01/09 1.200 4,770,000 3,000,000 Harris County, Texas, Cultural Education Facilities Finance Corp.(1) ................ 01/02/09 1.100 3,000,000 3,000,000 Massachusetts State Health & Education Facilities Authority(1) .......... 01/01/09 0.950 3,000,0009 3,700,000 Missouri State Health & Educational Facilities Authority(1) .................... 01/02/09 0.900 3,700,000 6,500,000 Missouri State Health & Educational Facilities Authority(1) .................... 01/02/09 0.900 6,500,000 2,400,000 Missouri State Health & Educational Facilities Authority(1) .................... 01/02/09 1.150 2,400,000 4,000,000 Missouri State Health & Educational Facilities Authority(1) .................... 01/02/09 1.150 4,000,000 </TABLE> The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT DECEMBER 31, 2008 3 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) December 31, 2008 (unaudited) <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value ----------- -------- -------- ----------- <S> <C> <C> <C> MUNICIPAL BONDS (continued) EDUCATION (continued) $ 3,000,000 Missouri State Health & Educational Facilities Authority(1) .................... 01/02/09 1.300% $ 3,000,000 10,000,000 Missouri State Health & Educational Facilities Authority(1) .................... 01/07/09 1.750 10,000,000 5,000,000 New Hampshire Health & Education Facilities Authority(1) .................... 01/02/09 1.200 5,000,000 4,000,000 New Hampshire Health & Education Facilities Authority(1) .................... 01/07/09 0.600 4,000,000 3,000,000 New Jersey State Educational Facilities Authority(1) ............................... 01/07/09 1.500 3,000,000 5,500,000 New Jersey State Educational Facilities Authority(1) ............................... 01/07/09 1.500 5,500,000 5,000,000 New York State Dormitory Authority Revenue(1) ................................. 01/01/09 1.170 5,000,000 5,595,000 North Carolina Capital Facilities Finance Agency(1) .................................. 01/01/09 1.180 5,595,000 12,000,000 Northampton County, Pennsylvania, Higher Education Authority91) .............. 01/01/09 2.000 12,000,000 3,000,000 Pennsylvania State University(1) ............. 01/01/09 1.080 3,000,000 12,000,000 South Carolina Educational Facilities Authority(1) ............................... 01/02/09 0.950 12,000,000 3,000,000 Tarrant County, Texas, Cultural Education Facilities Finance Corp.(1) ................ 01/02/09 1.300 3,000,000 4,425,000 University of Delaware(1) .................... 01/02/09 0.950 4,425,000 2,500,000 University of Michigan(1) .................... 01/02/09 1.350 2,500,000 2,000,000 University of Missouri(1) .................... 01/02/09 1.100 2,000,000 10,500,000 University of Pittsburgh(1) .................. 01/01/09 3.150 10,500,000 1,900,000 University of Pittsburgh ..................... 09/15/09 2.500 1,921,902 2,900,000 University of Texas(1) ....................... 01/01/09 0.950 2,900,000 1,000,000 University of Texas .......................... 07/01/09 5.000 1,012,706 1,000,000 University of Texas .......................... 08/15/09 5.000 1,021,060 2,040,000 Utah State Board of Regents(1) ............... 01/01/09 1.150 2,040,000 1,800,000 Virginia College Building Authority, Educational Facilities Revenue(1) .......... 01/02/09 0.900 1,800,0009 </TABLE> The accompanying notes are an integral part of these financial statements. 4 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) December 31, 2008 (unaudited) <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value ----------- -------- -------- ----------- <S> <C> <C> <C> MUNICIPAL BONDS (continued) EDUCATION (continued) $5,500,000 Virginia College Building Authority, Educational Facilities Revenue(1)........... 01/02/09 0.900% $ 5,500,000 8,100,000 Virginia Commonwealth University(1)........... 01/02/09 1.050 8,100,000 ------------ Total Education 168,608,062 ------------ GENERAL OBLIGATIONS (26.8%) 4,730,000 Allen, Texas, Independent School District(1) .................................. 01/01/09 1.700 4,730,000 1,145,000 Anne Arundel County, Maryland ................ 04/01/09 4.000 1,150,982 2,310,000 Anne Arundel County, Maryland ................ 04/01/09 4.000 2,322,069 2,400,000 Buncombe County, North Carolina(1) ........... 01/01/09 2.050 2,400,000 2,400,000 Buncombe County, North Carolina(1) ........... 01/01/09 2.050 2,400,000 2,400,000 Buncombe County, North Carolina(1) ........... 01/01/09 2.050 2,400,000 1,800,000 Chicago, Illinois(1) ......................... 01/02/09 1.100 1,800,000 1,280,000 Clyde Consolidated Independent School District ................................... 02/15/09 3.500 1,282,979 1,800,000 County of Montgomery, Maryland(1) ............ 01/02/09 1.100 1,800,000 1,900,000 County of Montgomery, Maryland(1) ............ 01/02/09 1.300 1,900,000 5,100,000 Cuyahoga County, Ohio(1) ..................... 01/02/09 1.050 5,100,000 6,500,000 Cuyahoga County, Ohio(1) ..................... 01/02/09 1.050 6,500,000 3,915,000 State of Delaware ............................ 01/01/09 5.000 3,915,000 500,000 State of Delaware ............................ 03/01/09 4.250 502,081 4,000,000 Denton, Texas, Independent School District(1) ................................ 01/01/09 1.150 4,000,000 500,000 Durham, North Carolina ....................... 02/01/09 5.000 501,377 3,255,000 Fairfax County, Virginia ..................... 04/01/09 5.000 3,287,106 1,000,000 Fairfax County, Virginia ..................... 04/01/09 5.250 1,007,762 1,000,000 Fairfax County, Virginia ..................... 10/01/09 5.000 1,029,690 1,260,000 State of Florida ............................. 07/01/09 5.000 1,284,935 1,500,000 Florida State Board of Education ............. 06/01/09 5.000 1,524,136 4,500,000 Forsyth County, North Carolina(1) ............ 01/01/09 2.030 4,500,000 3,000,000 Forsyth County, North Carolina(1) ............ 01/01/09 2.600 3,000,000 </TABLE> The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT DECEMBER 31, 2008 5 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) December 31, 2008 (unaudited) <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value ----------- -------- -------- ----------- <S> <C> <C> <C> MUNICIPAL BONDS (continued) GENERAL OBLIGATIONS (continued) $ 2,000,000 State of Georgia(1) .......................... 01/01/09 2.750% $ 2,000,000 4,620,000 State of Georgia ............................. 07/01/09 5.750 4,714,700 2,520,000 Greensboro, North Carolina ................... 03/01/09 5.250 2,533,525 10,000,000 Guilford County, North Carolina(1) ........... 01/07/09 0.800 10,000,000 3,100,000 Howard County, Maryland ...................... 02/15/09 4.000 3,108,251 3,025,000 Howard County, Maryland ...................... 02/15/09 4.250 3,033,580 1,300,000 Keller, Texas, Independent School District(1) ................................ 01/02/09 1.250 1,300,000 2,610,000 Klein, Texas, Independent School District ................................... 08/01/09 3.500 2,636,455 5,000,000 State of Maryland ............................ 02/01/09 5.000 5,014,522 1,000,000 State of Maryland ............................ 03/01/09 5.250 1,005,171 2,000,000 State of Massachusetts(1) .................... 01/07/09 0.700 2,000,000 3,100,000 Mecklenburg County, North Carolina(1) ........ 01/07/09 0.740 3,100,000 1,415,000 Mecklenburg County, North Carolina ........... 02/01/09 5.000 1,419,017 2,450,000 Minneapolis, Minnesota, Special School District No. 1 ............................. 02/01/09 4.000 2,454,700 3,275,000 State of Missouri ............................ 08/01/09 5.000 3,325,875 2,225,000 New Britain, Connecticut ..................... 03/31/09 4.000 2,238,178 2,710,000 New Castle County, Delaware .................. 07/15/09 4.000 2,744,545 905,000 New York State Local Government Assistance Corp. ........................... 04/01/09 5.000 913,915 10,000,000 New York, New York(1) ........................ 01/02/09 1.000 10,000,000 2,000,000 State of North Carolina(1) ................... 01/07/09 0.800 2,000,000 4,000,000 State of North Carolina(1) ................... 01/07/09 0.850 4,000,000 7,000,000 State of North Carolina ...................... 03/01/09 5.000 7,037,650 800,000 State of North Carolina ...................... 03/01/09 5.250 804,185 1,750,000 State of Ohio ................................ 05/01/09 5.500 1,770,913 3,700,000 State of Oregon(1) ........................... 01/02/09 1.300 3,700,000 2,000,000 State of Oregon(1) ........................... 01/02/09 1.300 2,000,000 10,000,000 State of Oregon(1) ........................... 01/07/09 1.500 10,000,000 2,660,000 State of Pennsylvania Putters(1) ............. 01/01/09 1.180 2,660,000 3,000,000 Port Tacoma, Washington(1) ................... 01/02/09 1.050 3,000,000 </TABLE> The accompanying notes are an integral part of these financial statements. 6 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) December 31, 2008 (unaudited) <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value ----------- -------- -------- ----------- <S> <C> <C> <C> MUNICIPAL BONDS (continued) GENERAL OBLIGATIONS (continued) $ 4,500,000 Raleigh, North Carolina(1) ................... 01/07/09 1.350% $ 4,500,000 5,000,000 State of Connecticut ......................... 02/01/09 3.000 5,006,261 7,000,000 State of Texas ............................... 08/28/09 3.000 7,064,032 10,000,000 Union County, North Carolina(1) .............. 01/01/09 3.400 10,000,000 7,000,000 Union County, North Carolina(1) .............. 01/07/09 1.250 7,000,000 5,000,000 State of Virginia ............................ 06/01/09 5.000 5,083,171 1,500,000 Virginia Beach, Virginia ..................... 03/01/09 5.250 1,508,815 2,225,000 Virginia State Public School Authority ....... 07/15/09 4.000 2,251,989 2,000,000 Wake County, North Carolina(1) ............... 01/01/09 1.100 2,000,000 3,000,000 Wake County, North Carolina(1) ............... 01/01/09 1.150 3,000,000 2,500,000 Wilmington, North Carolina(1) ................ 01/07/09 1.380 2,500,000 ------------ Total General Obligations..................... 208,767,567 ------------ GOVERNMENT COLLATERAL (5.4%) 1,175,000 Frederick County, Maryland ................... 07/01/09 5.250 1,206,654 1,660,000 Gainesville & Hall County, Georgia, Hospital Authority ......................... 05/15/09 5.200 1,697,705 1,855,000 Houston, Texas, Independent School District ................................... 02/15/09 4.750 1,862,245 2,525,000 Houston, Texas, Independent School District ................................... 02/15/09 5.250 2,536,390 3,000,000 Houston, Texas, Independent School District ................................... 02/15/09 5.250 3,012,342 1,460,000 Irving, Texas, Waterworks & Sewer Revenue .................................... 06/15/09 5.950 1,499,861 1,005,000 Massachusetts State Water Pollution Abatement .................................. 08/01/09 5.750 1,042,552 4,070,000 Nashville & Davidson County, Tennessee .................................. 05/15/09 5.125 4,163,000 1,000,000 State of New York ............................ 03/15/09 5.000 1,017,984 1,500,000 New York State Urban Development Corp. .......................... 01/01/09 4.750 1,515,000 </TABLE> The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT DECEMBER 31, 2008 7 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) December 31, 2008 (unaudited) <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value ----------- -------- -------- ----------- <S> <C> <C> <C> MUNICIPAL BONDS (continued) GOVERNMENT COLLATERAL (continued) $ 1,000,000 Oklahoma Turnpike Authority .................. 01/01/09 5.250% $ 1,000,000 1,315,000 Oregon State Department of Administrative Services Lottery Revenue ..................... 04/01/09 5.250 1,338,356 2,000,000 Private College & University Authority ....... 11/01/09 5.500 2,093,245 3,000,000 Roswell, Georgia ............................. 02/01/09 5.500 3,039,831 5,000,000 Salem-Kaizer, Oregon, School District No. 24 ....................................... 06/01/09 5.000 5,068,758 2,000,000 Shelby County, Tennessee ..................... 06/01/09 5.000 2,032,990 1,000,000 Virginia Commonwealth Board of Transportation ............................... 05/15/09 5.750 1,027,523 5,000,000 State of Washington .......................... 07/01/09 5.625 5,078,839 1,375,000 Washington, District of Columbia ............. 06/01/09 5.375 1,413,617 ------------ Total Government Collateral .................. 41,646,892 ------------ HEALTH CARE (6.0%) 10,000,000 Charlotte-Mecklenburg, North Carolina, Hospital Authority(1)....................... 01/02/09 1.050 10,000,000 7,400,000 Harris County, Texas, Health Facilities Development Corp.(1)........................ 01/02/09 1.150 7,400,000 5,000,000 Harris County, Texas, Health Facilities Development Corp.(1)........................ 01/02/09 2.500 5,000,000 5,000,000 Lehigh County, Pennsylvania, General Purpose Hospital Revenue(1)................. 01/02/09 0.900 5,000,000 4,000,000 North Carolina Medical Care Commission(1)............................... 01/07/09 0.700 4,000,000 5,000,000 North Carolina Medical Care Commission(1)............................... 01/07/09 0.700 5,000,000 10,000,000 University of Wisconsin Hospitals and Clinics Authority Revenue(1)................ 01/07/09 2.250 10,000,000 ------------ Total Health Care............................. 46,400,000 ------------ </TABLE> The accompanying notes are an integral part of these financial statements. 8 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) December 31, 2008 (unaudited) <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value ----------- -------- -------- ----------- <S> <C> <C> <C> MUNICIPAL BONDS (continued) MISCELLANEOUS (2.9%) $ 5,000,000 Massachusetts State Development Finance Agency Revenue(1) .................. 01/02/09 0.750% $ 5,000,000 2,000,000 Massachusetts State Development Finance Agency Revenue(1) .................. 01/02/09 0.900 2,000,000 2,000,000 Missouri State Development Finance Board(1) ................................... 01/02/09 1.150 2,000,000 4,000,000 Oklahoma State Capital Improvement Authority(1) ............................... 01/02/09 1.050 4,000,000 1,000,000 South Dakota State Building Authority ........ 06/01/09 4.000 1,009,247 3,500,000 Virginia State Public Building Authority ..... 08/01/09 4.000 3,559,806 5,000,000 Virginia State Public Building Authority ..... 08/01/09 5.000 5,095,819 ------------ Total Miscellaneous........................... 22,664,872 ------------ TRANSPORTATION (8.4%) 5,000,000 Illinois State Toll Highway Authority Revenue(1) ................................. 01/01/09 2.250 5,000,000 10,000,000 Illinois State Toll Highway Authority Revenue(1) ................................. 01/01/09 4.000 10,000,000 3,000,000 Maryland State Department of Transportation ............................. 03/01/09 5.000 3,014,871 8,500,000 Massachusetts Bay Transportation Authority(1) ............................... 01/07/09 1.000 8,500,000 3,000,000 Mississippi State Highway Revenue ............ 06/01/09 5.250 3,043,662 2,530,000 New York State Tollway Authority Highway & Bridge Trust Fund ................ 04/01/09 5.250 2,550,031 1,135,000 North Texas Tollway Authority ................ 01/01/09 5.000 1,135,000 5,000,000 Oklahoma Turnpike Authority(1) ............... 01/02/09 1.150 5,000,000 10,000,000 Oregon State Department of Transportation(1) .......................... 01/01/09 2.500 10,000,000 7,000,000 Pennsylvania Turnpike Commission(1)........... 01/01/09 2.750 7,000,000 6,000,000 South Carolina Transportation Infrastructure Bank Revenue(1) ............. 01/02/09 1.150 6,000,000 4,000,000 Triborough Bridge & Tunnel Authority, New York, Revenue(1) ....................... 01/07/09 5.500 4,000,000 ------------ Total Transportation.......................... 65,243,564 ------------ </TABLE> The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT DECEMBER 31, 2008 9 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) December 31, 2008 (unaudited) <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value ----------- -------- -------- ----------- <S> <C> <C> <C> MUNICIPAL BONDS (continued) UTILITIES (6.4%) $10,000,000 Colorado Springs, Colorado, Utilities Revenue(1).................................. 01/01/09 2.250% $ 10,000,000 10,000,000 Florida Municipal Power Agency Revenue(1).................................. 01/02/09 1.100 10,000,000 1,525,000 Gainesville, Florida, Utilities System Revenue(1).................................. 01/02/09 1.500 1,525,000 9,000,000 Gwinnett County, Georgia, Water & Sewerage Authority(1)....................... 01/07/09 0.850 9,000,000 1,360,000 San Antonio, Texas, Electric & Gas Putters(1).............................. 01/01/09 1.200 1,360,000 4,000,000 Snohomish County, Washington, Public Utility District No. 1(1)................... 01/07/09 4.500 4,000,000 5,000,000 Snohomish County, Washington, Public Utility District No. 1(1)................... 01/02/09 1.250 5,000,000 8,800,000 Upper Merion, Pennsylvania, Municipal Utility Authority(1)........................ 01/01/09 1.280 8,800,000 ------------ Total Utilities............................... 49,685,000 ------------ WATER/SEWER (6.5%) 6,000,000 Charleston, South Carolina, Waterworks & Sewer Revenue(1) ........................... 01/01/09 1.200 6,000,000 7,000,000 Forsyth County, North Carolina, Water & Sewerage Authority(1) ...................... 01/01/09 3.000 7,000,000 1,055,000 Iowa State Finance Authority Revenue. ........ 02/01/09 5.000 1,057,633 1,925,000 Los Angeles, California Water & Power Putters(1) ........................... 01/01/09 0.980 1,925,000 4,050,000 Lexington, South Carolina, Waterworks & Sewer Revenue .............................. 04/15/09 3.250 4,050,000 3,000,000 Metropolitan Water District of South California(1) .............................. 01/01/09 2.500 3,000,000 5,000,000 Michigan Municipal Bond, Authority Putters(1) ................................. 01/01/09 1.200 5,000,000 10,000,000 New York City Municipal Water Finance Authority(1) ............................... 01/02/09 0.800 10,000,000 </TABLE> The accompanying notes are an integral part of these financial statements. 10 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) December 31, 2008 (unaudited) <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value ----------- -------- -------- ----------- <S> <C> <C> <C> MUNICIPAL BONDS (continued) WATER/SEWER (continued) $ 2,000,000 Ohio State Water Development Authority.......................... 08/04/09 3.000% $ 2,020,226 10,548,000 Texas Water Development Board Revenue(1)......................... 01/02/09 1.300 10,548,000 ------------ Total Water/Sewer.................... 50,600,859 ------------ Total Municipal Bonds................ 695,204,423 ------------ COMMERCIAL PAPER (9.6%) 2,000,000 Harris County, Texas, Metropolitan Transit Authority .......................... 01/13/09 1.100 2,000,000 3,000,000 Harris County, Texas, Metropolitan Transit Authority .................................. 01/21/09 0.750 3,000,000 4,000,000 Kentucky Asset/Liability Commission........... 02/25/09 2.650 4,000,000 2,000,000 Maryland Health & Higher Educational Facilities Authority ....................... 01/05/09 1.750 2,000,000 8,000,000 Maryland Health & Higher Educational Facilities Authority ....................... 01/23/09 1.750 8,000,000 6,000,000 Memphis, Tennessee ........................... 01/22/09 1.000 6,000,000 3,000,000 Metropolitan Atlanta Rapid Transit Authority .................................. 01/27/09 2.500 3,000,000 5,000,000 Montgomery County, Maryland .................. 03/10/09 1.000 5,000,000 5,000,000 Montgomery County, Ohio ...................... 02/11/09 3.250 5,000,000 8,000,000 Nashville & Davidson County Health and Educational Facilities Authority ............. 01/15/09 2.900 8,000,000 5,171,000 North Carolina Capital Facilities Finance Agency ..................................... 01/06/09 0.600 5,171,000 6,000,000 North Texas Tollway Authority ................ 03/10/09 1.000 6,000,000 1,360,000 Port of Seattle, Washington .................. 01/15/09 0.650 1,360,000 1,500,000 State of Wisconsin ........................... 01/08/09 1.000 1,500,000 4,000,000 Sweetwater County, Wyoming ................... 02/05/09 0.650 4,000,000 </TABLE> The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT DECEMBER 31, 2008 11 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) December 31, 2008 (unaudited) <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value ----------- -------- -------- ----------- <S> <C> <C> <C> MUNICIPAL BONDS (continued) COMMERCIAL PAPER (continued) $4,500,000 Tennessee State School Bond .................. 01/27/09 0.750% $ 4,500,000 1,550,000 Texas Public Finance Authority ............... 01/08/09 1.750 1,550,000 5,000,000 Washington DC Metropolitan Area Transit Authority .................................. 02/04/09 2.300 5,000,000 ------------ Total Commercial Paper ....................... 75,081,000 ------------ TOTAL INVESTMENTS............................................. 98.9% $770,285,423 OTHER ASSETS IN EXCESS OF LIABILITIES......................... 1.1 8,479,217 ----- ------------ NET ASSETS ................................................... 100.0% $778,764,640 ===== ============ </TABLE> - ---------- (1) Variable rate instrument. Interest rates change on specific dates (such as coupon or interest payment date). The yield shown represents the December 31, 2008 coupon or interest rate. The accompanying notes are an integral part of these financial statements. 12 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) December 31, 2008 (unaudited) FAIR VALUE MEASUREMENTS The Fund adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, Fair Value Measurements ("FAS 157"), effective July 1, 2008. For net asset valuation determination purposes, various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below. - -- Level 1 - quoted prices in active markets for identical investments. - -- Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) - -- Level 3 - significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments). The following is a summary of the inputs used as of December 31, 2008 in valuing the Fund's investments carried at value: Investments in Valuation Inputs Securities - ---------------- -------------- Level 1 - Quoted prices .................................... $ -- Level 2 - Other Significant Observable Inputs .............. 770,285,423 Level 3 - Significant Unobservable Inputs .................. -- ------------ Total ................................................... $770,285,423 ============ The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT DECEMBER 31, 2008 13 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES December 31, 2008 (unaudited) ASSETS: Investments, at amortized cost .......................... $770,285,423 Cash .................................................... 4,534,504 Receivables for: Interest .............................................. 3,423,146 Investments sold ...................................... 800,018 Other assets .......................................... 29,689 ------------ Total Assets ........................................ 779,072,780 ------------ LIABILITIES: Payables for: Investment advisory and administrative fees ........... 158,455 Shareholder servicing fees ............................ 112,517 Dividends declared .................................... 21,486 Custody and accounting fees ........................... 12,154 Professional fees ..................................... 2,113 Board of Trustees' fees ............................... 415 Accrued expenses and other liabilities ................ 1,000 ------------ Total Liabilities ................................... 308,140 ------------ NET ASSETS ................................................. $778,764,640 ============ Net Assets Consist of: Paid-in capital ......................................... $778,761,481 Over distributed net investment income .................. (223) Accumulated net realized gain on investments ............ 3,382 ------------ Net Assets ................................................. $778,764,640 ============ NET ASSET VALUE AND OFFERING PRICE PER SHARE ............... $1.00 ===== The accompanying notes are an integral part of these financial statements. 14 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS For the six months ended December 31, 2008 (unaudited) NET INVESTMENT INCOME: Income: Interest and other income ................................ $6,627,881 Expenses: Investment advisory and administrative fees .............. 758,246 Shareholder servicing fees ............................... 758,245 Custody and accounting fees .............................. 59,497 Board of Trustees' fees .................................. 19,467 Professional fees ........................................ 15,758 Miscellaneous expenses ................................... 107,139 ---------- Total Expenses ......................................... 1,718,352 Expense offset arrangement ............................. (24,416) ---------- Net Expenses ........................................... 1,693,936 ---------- Net Investment Income ...................................... 4,933,945 ========== NET REALIZED GAIN: Net realized gain on investments ........................... 3,382 ---------- Net Increase in Net Assets Resulting from Operations ....... $4,937,327 ========== The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT DECEMBER 31, 2008 15 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS <TABLE> <CAPTION> For the six months ended For the December 31, 2008 year ended (unaudited) June 30, 2008 ----------------- -------------- <S> <C> <C> INCREASE IN NET ASSETS: Operations: Net investment income ....................................... $ 4,933,945 $ 9,861,664 Dividends declared from net investment income ................. (4,937,070) (9,858,762) ------------- ------------- Net realized gain on investments ............................ 3,382 -- Net increase in net assets resulting from operations ......................................... 257 2,902 ------------- ------------- From Fund Share (Principal) Transactions at Net Asset Value of $1.00 per share: Fund shares sold .......................................... 397,719,114 732,984,132 Fund shares issued in reinvestments of dividends .......... 2,500,270 6,550 Funds shares repurchased .................................. (168,032,275) (514,652,648) ------------- ------------- Net increase in net assets resulting from fund share transactions ............................... 232,187,109 218,338,034 ------------- ------------- NET ASSETS: Beginning of year ............................................. 546,577,274 328,236,338 ------------- ------------- End of period ................................................. $ 778,764,640 $ 546,577,274 ============= ============= </TABLE> The accompanying notes are an integral part of these financial statements. 16 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Selected per share data and ratios for a share outstanding throughout each period <TABLE> <CAPTION> For the six months ended December 31, For the years ended June 30, 2008 ----------------------------------------------------------- (unaudited) 2008 2007 2006 2005 2004 ------------- ------- ------- ------- ------- ------- <S> <C> <C> <C> <C> <C> <C> Net asset value, beginning of period .......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 Income from investment operations: Net investment income ........................ 0.01 0.02 0.03 0.02 0.01 0.00(1) Dividends to shareholders from net investment income ............................ (0.01) (0.02) (0.03) (0.02) (0.01) (0.00)(1) ------- ------- ------- ------- ------- ------- Net asset value, end of period .................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======= ======= ======= ======= ======= ======= Total return .................................... 0.85% 2.40% 3.03% 2.31% 1.15% 0.42% Ratios/Supplemental data: Net assets, end of period (in millions) .............................. $ 779 $ 547 $ 328 $ 493 $ 438 $ 453 Net expense paid by Fund.. ................... 0.56%(2) 0.55% 0.58% 0.56% 0.56% 0.55% Expense offset arrangement .............................. 0.01%(2) 0.00%(3) 0.01% 0.00%(3) 0.00%(3) 0.00%(3) ------- ------- ------- ------- ------- ------- Total expenses ............................. 0.57%(2) 0.55% 0.59% 0.56% 0.56% 0.55% ======= ======= ======= ======= ======= ======= Ratio of net investment income to average net assets ......................... 1.63%(2) 2.31% 2.98% 2.31% 1.15% 0.42% </TABLE> - ---------- (1) Less than $0.01 per share. (2) Annualized. (3) Less than 0.01%. The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT DECEMBER 31, 2008 17 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS December 31, 2008 (unaudited) 1. Organization and Significant Accounting Policies. BBH Tax Exempt Money 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. The Trust is an open-end management investment company organized as a Massachusetts business trust on June 7, 1983 and re-organized as a Delaware statutory trust on June 12, 2007. The Fund commenced operations on February 22, 1999. The Declaration of Trust permits the Trustees to create an unlimited number of series, each of which may issue a separate class of shares. The Trustees have authorized the issuance of an unlimited number of shares of the Fund without a par value. At December 31, 2008, there were six 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 Fund values its investments at amortized cost, which approximates market value. The amortized cost method values a security at its cost at the time of purchase and thereafter assumes a constant amortization to maturity of any discount or premium. The Fund's use of amortized cost is in compliance with Rule 2a-7 of the Investment Company Act of 1940. B. Investment Transactions 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. The Fund invests primarily in debt securities issued by municipalities. The ability of the issuers of the debt securities to meet their obligation may be affected by economic developments in a specific state or municipality. Interest income consists of interest accrued and discount earned (including both original issue and market discount) and premium amortization on the investments of the Fund, accrued ratably to the date of maturity. C. Federal Income Taxes. Each series of the Trust is treated as a separate entity for federal income tax purposes. It is the Fund's policy to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Accordingly, no federal income tax provision is required. At December 31, 2008, the cost of investments for federal income tax purposes was equal to the amortized cost of investments for financial statement purposes. D. Dividends and Distributions to Shareholders. Dividends from net investment income are declared daily and paid monthly to shareholders. The Fund declared dividends in the amount of $4,937,070 during the six months ended December 31, 2008. The Fund declared dividends in the amount of $9,858,762 for the year ended June 30, 2008. The tax character of the dividends declared in the six months and year ended was 100% tax exempt income. 18 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) December 31, 2008 (unaudited) E. 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 the 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 December 31, 2008. 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. Investment 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 investment advisory and administrative services calculated daily and paid monthly at an annual rate equivalent to 0.25% 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 December 31, 2008, the Fund incurred $758,246 for investment 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 the Fund's average daily net assets. For the six months ended December 31, 2008, the Fund incurred $758,245 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. The custody fee is a transaction based fee with an annual minimum of $20,000, and the accounting fee is calculated at 0.01% per annum on the first $1 billion of net assets and 0.005% per annum on all net assets over $1 billion. For the six months ended December 31, 2008, the Fund incurred $59,497 for custody and accounting services. These fees FINANCIAL STATEMENT DECEMBER 31, 2008 19 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) December 31, 2008 (unaudited) were reduced by $24,416 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 the agreement, the Fund will be charged interest based on LIBOR on the day of overdraft plus one percent. The total interest paid by the Fund for the six months ended December 31, 2008 was $4,768. 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 December 31, 2008, the Fund incurred $19,467 for Trustees' fees. 20 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES December 31, 2008 (unaudited) EXAMPLE As a shareholder of BBH Tax Exempt Money Fund (the "Fund"), you may incur two types of costs: (1) transaction costs on purchase payments, reinvested dividends, or other distributions; 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 (July 1, 2008 to December 31, 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. FINANCIAL STATEMENT DECEMBER 31, 2008 21 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES (continued) December 31, 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 July 1, 2008 to July 1, 2008 December 31, 2008 December 31, 2008(1) ------------- ----------------- -------------------- Actual .............. $1,000 $1,008.50 $2.84 Hypothetical(2) ..... $1,000 $1,022.38 $2.85 - ---------- (1) Expenses are equal to the Fund's annualized expense ratio of 0.56%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one half-year period). (2) Assumes a return of 5% before expenses. For the purpose of the calculation, the applicable annualized expense ratio is subtracted from the assumed return before expenses. 22 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION December 31, 2008 (unaudited) Approval of Investment Advisory/Administrative Services Agreement At a meeting held on December 10, 2008, the Board of Trustees (the "Board") of the Trust unanimously approved the continuance of Investment Advisory/Administrative Services Agreement (the "Agreement") which had been approved by shareholders on May 23, 2007. The following is a summary of the factors the Board took into consideration in making its determination to approve continuance of the Agreement. Nature, Extent and Quality of Services Provided by Brown Brothers Harrriman's Mutual Fund Advisory Department (the "SID") The Board noted that, under the Agreement in respect of each Fund, the SID, subject to the supervision of the Board, is 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 Agreement, Brown Brothers Harriman & Co. ("BBH") provides administrative services to each Fund. The Board considered the scope and quality of services provided by BBH under the 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 continuously evolved in light of regulatory developments and 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 provided to each of the Funds under the 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, securities lending, 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. FINANCIAL STATEMENT DECEMBER 31, 2008 23 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) December 31, 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 and discussed with BBH its approach to obtaining and monitoring best execution. 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' 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 24 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) December 31, 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 December 10, 2008, which included 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. The Board received detailed performance information for each Fund at each regular Board meeting during the year.. Fee Rates The Board considered the fee rates paid by each Fund to BBH. The Board recognized that it is difficult to make comparisons of these fee rates, or of 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 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 Tax Exempt Money Fund also were noted and considered by the Board in deciding to approve the Agreement: The Board reviewed information showing performance of the BBH Tax Exempt Money Fund compared to iMoneyNet (Tax Free Retail). The Fund outperformed or performed in line with the average over all relevant periods. The Board also viewed with favor that the BBH Tax Exempt Money Fund's portfolio of investments had an overall high quality while the BBH Tax Exempt Money Fund's total expense ratio was lower that the iMoneyNet Average. The Board also noted that the BBH Tax Exempt Money Fund had successfully maintained a stable net asset value of one dollar at all times. Taking into account these comparisons and the other factors considered, the Board concluded that the BBH Tax Exempt Money Fund's investment results over time and its total expense ratio had been satisfactory. FINANCIAL STATEMENT DECEMBER 31, 2008 25 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) December 31, 2008 (unaudited) 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 trade allocation procedures, which are designed to 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 an oversight committee, and compliance with the 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. The Funds' management and Chief Compliance Officer report to the Board on relevant policies and procedures. 26 <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 that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund's portfolio, as well as a record of how the Fund voted any such proxies during the most recent 12-month period ended June 30, is available upon request by calling the toll-free number listed above. This information is also available from the Edgar database on the SEC's website 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) Not applicable. (2) Not applicable. (3) 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. 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. TO BE 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 covered by this report 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: 03/06/09 ------------------ 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/ John A. Gehret ------------------------------ John A. Gehret, President (Principal Executive Officer) Date: 03/06/09 ------------------ By (Signature and Title)* /s/ Charles H. Schreiber --------------------------- Charles H. Schreiber, Treasurer (Principal Financial Officer) Date: 03/06/09 ------------------ - - 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 Money Market Fund, and BBH Tax Exempt Money 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 directors (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: 03/06/09 /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 Money Market Fund, and BBH Tax Exempt Money 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 directors (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: 03/06/09 /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 June 30, 2008 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 December 31,2008 (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: 03/06/09 ------------------ /s/ John A. Gehret ======================= John A. Gehret President - Principal Executive Officer Date: 03/06/09 ------------------ /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.
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N-CSR Filing
BBH Limited Duration Fund Class N (BBBMX) N-CSRCertified annual shareholder report (management investment company)
Filed: 6 Mar 09, 12:00am