UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-21829
BBH TRUST
BBH Core Select
BBH International Equity Fund
BBH Broad Market 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: OCTOBER 31
Date of reporting period: APRIL 30, 2009
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of any
report that is required to be transmitted to stockholders under Rule 30e-1 under the
Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its regulatory,
disclosure review, inspection, and policymaking roles.
A Registrant is required to disclose the information specified by Form N-CSR, and
the Commission will make this information public. A Registrant is not required to
respond to the collection of information contained in Form N-CSR unless the Form
displays a currently valid Office of Management and Budget ("OMB") control number.
Please direct comments concerning the accuracy of the information collection burden
estimate and any suggestions for reducing the burden to Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB
has reviewed this collection of information under the clearance requirements of 44 U.S.C.
Section 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
BROWN [LOGO] BROTHERS HARRIMAN - -------------------------------------------------------------------------------- Semi-Annual Report APRIL 30, 2009 - -------------------------------------------------------------------------------- <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- PORTFOLIO ALLOCATION April 30, 2009 (unaudited) SECTOR DIVERSIFICATION Percent of U.S. $ Value Net Assets ------------ ---------- Consumer Discretionary............................. $ 17,415,282 10.1% Consumer Staples................................... 47,339,380 27.6 Energy............................................. 10,317,800 6.0 Financials......................................... 27,506,204 16.0 Health Care........................................ 10,168,257 5.9 Industrials........................................ 15,820,270 9.2 Information Technology............................. 28,402,691 16.5 Materials.......................................... 5,492,933 3.2 Cash and Other Assets in Excess of Liabilities..... 9,376,633 5.5 ------------ ----- NET ASSETS......................................... $171,839,450 100.0% ============ ===== All data as of April 30, 2009. The Fund's sector breakdown is expressed as a percentage of net assets and may vary over time. The accompanying notes are an integral part of these financial statements. 2 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS April 30, 2009 (unaudited) Shares Value - -------- ------------ COMMON STOCKS (94.5%) CONSUMER DISCRETIONARY (10.1%) 109,450 Bed, Bath & Beyond, Inc.(1)............................. $ 3,329,469 486,025 Comcast Corp. (Class A)................................. 7,513,946 267,211 Liberty Global, Inc. (Series C)(1)...................... 4,371,572 415,150 Liberty Media Corp. - Interactive A(1).................. 2,200,295 ------------ Total Consumer Discretionary............................ 17,415,282 ------------ CONSUMER STAPLES (27.6%) 148,405 Cadbury, Plc. ADR....................................... 4,465,506 136,375 Coca-Cola Co............................................ 5,870,944 95,904 Costco Wholesale Corp................................... 4,660,934 90,800 Diageo, Plc. ADR........................................ 4,344,780 264,175 Nestle SA ADR........................................... 8,665,495 90,925 PepsiCo, Inc............................................ 4,524,428 201,875 Walgreen Co............................................. 6,344,931 167,904 Wal-Mart Stores, Inc.................................... 8,462,362 ------------ Total Consumer Staples.................................. 47,339,380 ------------ ENERGY (6.0%) 94,800 Occidental Petroleum Corp............................... 5,336,292 143,725 XTO Energy, Inc......................................... 4,981,508 ------------ Total Energy............................................ 10,317,800 ------------ FINANCIALS (16.0%) 125,000 AFLAC, Inc.............................................. 3,611,250 123 Berkshire Hathaway, Inc. (Class A)(1)................... 11,562,000 161,825 Chubb Corp.............................................. 6,303,084 394,625 Progressive Corp.(1).................................... 6,029,870 ------------ Total Financials........................................ 27,506,204 ------------ HEALTH CARE (5.9%) 153,350 Dentsply International, Inc............................. 4,388,877 The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2009 3 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2009 (unaudited) Shares Value - -------- ------------ COMMON STOCKS (continued) HEALTH CARE (continued) 152,450 Novartis AG ADR......................................... $ 5,779,380 ------------ Total Health Care....................................... 10,168,257 ------------ INDUSTRIALS (9.2%) 87,425 W.W. Grainger, Inc...................................... 7,333,209 318,225 Waste Management, Inc................................... 8,487,061 ------------ Total Industrials....................................... 15,820,270 ------------ INFORMATION TECHNOLOGY (16.5%) 110,175 Automatic Data Processing, Inc.......................... 3,878,160 395,015 Dell, Inc.(1)........................................... 4,590,074 480,325 eBay, Inc.(1)........................................... 7,910,953 234,700 Intuit, Inc.(1)......................................... 5,428,611 325,513 Microsoft Corp.......................................... 6,594,893 ------------ Total Information Technology............................ 28,402,691 ------------ MATERIALS (3.2%) 45,600 Ecolab, Inc............................................. 1,757,880 78,550 Vulcan Materials Co..................................... 3,735,053 ------------ Total Materials......................................... 5,492,933 ------------ TOTAL COMMON STOCKS (Identified cost $194,647,195)...... 162,462,817 ------------ TOTAL INVESTMENTS (Identified cost $194,647,195)(2)....... 94.5% $162,462,817 CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............ 5.5 9,376,633 ----- ------------ NET ASSETS................................................ 100.0% $171,839,450 ===== ============ - ---------- (1) Non-income producing security. (2) The aggregate cost for federal income tax purposes is $194,647,195. The aggregate gross unrealized appreciation is $2,717,219 and the aggregate gross unrealized depreciation is $34,901,597, resulting in net unrealized depreciation of $32,184,378. Abbreviations: ADR - American Depositary Receipt. The accompanying notes are an integral part of these financial statements. 4 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2009 (unaudited) FAIR VALUE MEASUREMENTS The Fund adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, Fair Value Measurements ("FAS 157"), effective November 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 April 30, 2009 in valuing the Fund's investment carried at value: Investments in Valuation Inputs Securities - ---------------- -------------- Level 1 - Quoted prices......................................... $162,462,817 Level 2 - Other Significant Observable Inputs................... - Level 3 - Significant Unobservable Inputs....................... - ------------ Total........................................................ $162,462,817 ============ The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2009 5 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES April 30, 2009 (unaudited) ASSETS: Investments in securities, at value (identified cost $194,647,195) $162,462,817 Cash.......................................................... 7,732,297 Receivables for: Investment sold............................................. 1,559,522 Capital stock sold.......................................... 480,099 Dividends................................................... 345,591 ------------ Total Assets.............................................. 172,580,326 ------------ LIABILITIES: Payables for: Investments purchased....................................... 428,510 Capital stock redeemed...................................... 118,015 Investment advisory and administrative fees................. 109,038 Shareholder servicing fees.................................. 34,074 Custody and accounting fees................................. 22,041 Professional fees........................................... 8,615 Board of Trustees' fees..................................... 122 Accrued expenses and other liabilities...................... 20,461 ------------ Total Liabilities......................................... 740,876 ------------ NET ASSETS....................................................... $171,839,450 ============ Net Assets Consist of: Par value..................................................... $ 17,366 Paid-in capital............................................... 206,759,600 Undistributed net investment income........................... 641,362 Accumulated net realized loss on investments.................. (3,394,500) Net unrealized depreciation on investments.................... (32,184,378) ------------ Net Assets....................................................... $171,839,450 ============ NET ASSET VALUE AND OFFERING PRICE PER SHARE CLASS N SHARES ($171,839,450 / 17,365,807 shares outstanding)................ $9.90 ===== The accompanying notes are an integral part of these financial statements. 6 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS For the six months ended April 30, 2009 (unaudited) NET INVESTMENT INCOME: Income: Dividends (net of withholding taxes of $81,529)............. $ 1,761,728 Interest.................................................... 3,426 ------------ Total Income.............................................. 1,765,154 ------------ Expenses: Investment advisory and administrative fees................. 627,843 Shareholder servicing fees.................................. 196,201 Custody and accounting fees................................. 31,907 Board of Trustees' fees..................................... 21,600 Professional fees........................................... 12,523 Miscellaneous expenses...................................... 45,422 ------------ Total Expenses............................................ 935,496 Expense offset arrangement................................ (3,345) ------------ Net Expenses.............................................. 932,151 ------------ Net Investment Income......................................... 833,003 ============ NET REALIZED AND UNREALIZED LOSS: Net realized loss on investments.............................. (3,236,575) Net change in unrealized depreciation of investments.......... (8,386,778) ------------ Net Realized and Unrealized Loss............................ (11,623,353) ------------ Net Decrease in Net Assets Resulting from Operations.......... $(10,790,350) ============ The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2009 7 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS <TABLE> <CAPTION> For the six For the months ended year ended April 30, 2009 October 31, (unaudited) 2008 -------------- ------------- <S> <C> <C> INCREASE IN NET ASSETS: Operations: Net investment income .................................. $ 833,003 $ 217,357 Net realized gain (loss) on investments ................ (3,236,575) 1,450,636 Net change in unrealized depreciation on investments ... (8,386,778) (43,650,797) ------------- ------------- Net decrease in net assets resulting from operations ... (10,790,350) (41,982,804) ------------- ------------- Dividends and distributions declared: From net investment income: Class N ................................................ (362,166) (195,525) From net realized gains: Class N ................................................ (1,152,631) - ------------- ------------- Total dividends and distributions declared ........... (1,514,797) (195,525) ------------- ------------- Capital stock transactions: Net proceeds from sales of capital stock ............... 48,057,162 118,049,777 Net assets value of capital stock issued to shareholders for reinvestment of dividends and distributions ...... 1,357,256 23,574 Net cost of capital stock redeemed ..................... (31,705,551) (31,669,095) ------------- ------------- Net increase in net assets resulting from capital stock transactions ................................. 17,708,867 86,404,256 ------------- ------------- Total increase in net assets ......................... 5,403,720 44,225,927 NET ASSETS: Beginning of year ........................................ 166,435,730 122,209,803 ------------- ------------- End of period (including undistributed net investment income of $641,362 and $170,525, respectively) ......... $ 171,839,450 $ 166,435,730 ============= ============= </TABLE> The accompanying notes are an integral part of these financial statements. 8 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Selected per share data and ratios for a Class N share outstanding throughout each period <TABLE> <CAPTION> For the six months ended For the years ended October 31, April 30, 2009 ----------------------------------------------------------------- (unaudited) 2008 2007 2006 2005 2004 -------------- ------- ------- ------- ------- ------- <S> <C> <C> <C> <C> <C> <C> Net asset value, beginning of year ....... $ 10.71 $ 13.71 $ 11.74 $ 10.20 $ 9.30 $ 8.94 ------- ------- ------- ------- ------- ------- Income from investment operations: Net investment income(1)............... 0.05 0.01 0.02 0.04 0.05 0.02 Net realized and unrealized gain (loss) ......................... (0.77) (2.99) 2.00 1.51 0.91 0.38 ------- ------- ------- ------- ------- ------- Total income (loss) from investment operations. ............ (0.72) (2.98) 2.02 1.55 0.96 0.40 ------- ------- ------- ------- ------- ------- Less dividends and distributions: From net investment income ............ (0.02) (0.02) (0.05) (0.01) (0.06) (0.04) From net realized gains ............... (0.07) - - - - - ------- ------- ------- ------- ------- ------- Total distributions ................. (0.09) (0.02) (0.05) (0.01) (0.06) (0.04) ------- ------- ------- ------- ------- ------- Net asset value, end of period ........... $ 9.90 $ 10.71 $ 13.71 $ 11.74 $ 10.20 $ 9.30 ======= ======= ======= ======= ======= ======= Total return ............................. (6.69)% (21.76)% 17.25% 15.18% 10.31% 4.46% Ratios/Supplemental data: Net assets, end of period (in millions) ....................... $ 172 $ 166 $ 122 $ 83 $ 62 $ 48 Ratio of expenses to average net assets .......................... 1.19%(1),(2) 1.16%(1) 1.16%(1) 1.19%(1) 1.22%(1),(3) 1.20%(3) Ratio of net investment income to average net assets ............... 1.06%(2) 0.14% 0.18% 0.45% 0.47% 0.23% Portfolio turnover rate ............... 6% 31% 18% 53% 59% 57% </TABLE> - ---------- (1) For the six months ended April 30, 2009 and the years ended October 31, 2008, 2007, 2006 and 2005, the Fund's expenses were reduced through an expense offset arrangement with the Fund's custodian; had the arrangement not been in place, the actual expense ratio of the Fund would been 1.19%, 1.18%, 1.19%, 1.24% and 1.27%, respectively. (2) Annualized. (3) Had the expense reimbursement agreement, which terminated on December 31, 2004, not been in place, the ratio of expenses to average net assets would have been as follows: N/A, N/A, N/A, N/A, 1.24% and 1.32%, respectively. The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2009 9 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS April 30, 2009 (unaudited) 1. Organization and Significant Accounting Policies. BBH Core Select (the "Fund") is a separate, diversified series of BBH Trust (the "Trust"), which is registered under the Investment Company Act of 1940, as amended as an open-end management investment company. The Trust was originally organized under the laws of the State of Maryland on July 16, 1990 as BBH Fund, Inc. and re-organized as a Delaware statutory trust on June 12, 2007. The Fund commenced operations on November 2, 1998. On February 20, 2001, the Trustees reclassified the Fund's outstanding shares as "Class N", and established a new class of shares designated as "Class I". As of April 30, 2009, there were no Class I shares outstanding. At April 30, 2009, there were five series of the Trust. The Fund's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements and are based, in part, on the following accounting policies. Actual results could differ from those estimates. A. Valuation of Investments. (1) The value of investments listed on a securities exchange is based on the last sale price on that exchange prior to the time when assets are valued, or in the absence of recorded sales, at the average of readily available closing bid and asked prices on such exchange; (2) unlisted securities are valued at the average of the quoted bid and asked prices in the over-the- counter market; (3) securities or other assets for which market quotations are not readily available are valued at fair value in accordance with procedures established by and under the general supervision and responsibility of the Trust's Board of Trustees; (4) short-term investments which mature in 60 days or less are valued at amortized cost if their original maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if their original maturity when acquired by the Fund was more than 60 days, unless this is determined not to represent fair value by the Trust's Board of Trustees. B. Accounting for Investment and Income. Security transactions are accounted for on the trade date. Realized gains and losses on security transactions are determined on the identified cost method. Dividend income and other distributions from portfolio securities are recorded on the ex- dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of securities received. Distributions received on securities that represent a return of capital or a capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Interest income is accrued daily. Investment income is recorded net of foreign taxes withheld where recovery of such tax is uncertain. C. Securities Lending. The Fund may lend its portfolio securities to broker-dealers, qualified banks and certain institutional investors. The loans are secured by collateral in an amount equal to at least the market value at all times of the loaned securities plus any accrued interest and dividends. During the time the securities are on loan, the Fund will continue to receive the interest and 10 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS April 30, 2009 (unaudited) dividends or amounts equivalent thereto, on the loaned securities while receiving a fee from the borrower or earning interest on the investment of the cash collateral. Loans are subject to termination at the option of the borrower or the Fund. Upon termination of the loan, the borrower will return to the lender securities identical to the loaned securities. The Fund may pay reasonable finders', administrative and custodial fees in connection with a loan of its securities and may share the interest earned on the collateral with the borrower. The Fund bears the risk of delay in recovery of, or even loss of rights in, the securities loaned should the borrower of the securities fail financially. There were no securities on loan as of April 30, 2009. D. Federal Income Taxes. It is the Trust's policy to comply with the requirements of the Internal Revenue Code (the "Code") applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. Accordingly, no federal income tax provision is required. The Fund files a tax return annually using tax accounting methods required under provisions of the Code which may differ from accounting principles generally accepted in the United States of America, the basis on which these financial statements are prepared. Accordingly, the amount of net investment income and net realized gain reported on these financial statements may differ from that reported on the Fund's tax return due to certain book-to-tax differences such as losses deferred due to "wash sale" transactions and utilization of capital loss carry forwards. These differences may result in temporary over-distributions for financial statement purposes and are classified as distributions in excess of accumulated net realized gains or net investment income. These distributions do not constitute a return of capital. Permanent differences are reclassified on the Statement of Assets and Liabilities based upon their tax classification. As such, the character of distributions to shareholders reported in the Financial Highlights table may differ from that reported to shareholders on Form 1099-DIV. E. Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, if any, are paid annually and are recorded on the ex-dividend date. The tax character of distributions paid during the fiscal years ended October 31, 2008 and 2007, respectively, were as follows: Distributions paid from: - -------------------------------------------------------------------------------- Net Total Total Ordinary long-term taxable Tax return distributions income capital gain distributions of capital paid -------- ------------ ------------- ---------- ------------- 2008: $195,525 - $195,525 - $195,525 2007: 350,622 - 350,622 - 350,622 FINANCIAL STATEMENT APRIL 30, 2009 11 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS April 30, 2009 (unaudited) As of October 31, 2008 and 2007, respectively, the components of accumulated earnings/(deficit) on a tax basis were as follows: <TABLE> <CAPTION> Components of accumulated earnings/(deficit): - --------------------------------------------------------------------------------------------------------------------------------- Other Total Undistributed Undistributed Accumulated book/tax Unrealized accumulated ordinary long-term Accumulated capital and temporary appreciation/ earnings/ income capital gain earnings other losses differences (depreciation) (deficit) ------------- ------------ ----------- ------------ ----------- -------------- ----------- <C> <C> <C> <C> <C> <C> <C> <C> 2008: $170,525 $1,151,730 $1,322,255 $ - $(157,024) $(23,797,600) $(22,632,369) 2007: 148,693 $ - 148,693 (437,645) (18,285) 19,853,197 19,545,960 </TABLE> As of October 31, 2008 the Fund did not have a net capital loss carryforward. Total distributions paid may differ from the Statement of Changes in Net Assets because, for tax purposes, dividends are recognized when actually paid. The differences between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales. To the extent future capital gains are offset by capital loss carry forwards, such gains will not be distributed. F. Accounting Developments. In June 2006, the Fund adopted FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund's tax returns to determine whether that tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. The adoption of FIN 48 had no impact on the operations of the Fund for the six months ended April 30, 2009. 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 performance. In September 2008, "FASB Staff Position No. 133-1 and FASB Interpretation No. 45-4" (the "FSP"), "Disclosure about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161," was issued and is effective for fiscal years and interim periods ending after November 15, 2008. The FSP amends FASB Statement 12 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS April 30, 2009 (unaudited) No. 133, "Accounting for Derivative Instruments and Hedging Activities," to require disclosures by sellers of credit derivatives, including credit derivatives embedded in hybrid instruments. The FSP also clarifies the effective date of SFAS 161, whereby disclosures required by SFAS 161 are affective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund's financial statements 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, Brown Brothers Harriman & Co. ("BBH") through a separately identifiable department (the "SID") provides investment advisory and portfolio management services to the Fund. The Fund pays a combined fee for investment advisory and administrative services calculated daily and paid monthly at an annual rate equivalent to 0.80% of the fund's average daily net assets. BBH has a sub-administration services agreement with Federated Services Company ("FSC") for which FSC receives compensation paid by BBH. For the six months ended April 30, 2009, the Fund incurred $627,843 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 Class N shares' average daily net assets. For the six months ended April 30, 2009, the Fund incurred $196,201 for shareholder servicing services. Custody and Accounting Fees. BBH acts as a custodian and shall receive a custody and accounting fee from the Fund calculated daily and paid monthly. BBH holds all cash and investments and calculates the daily net asset value. The custody fee is a transaction based fee with an annual minimum of $30,000, and the accounting fee is calculated at 0.04% per annum on the first $100 million of net assets, 0.02% per annum on the next $400 million of net assets and 0.01% per annum on all net assets over $500 million. For the six months ended April 30, 2009, the Fund incurred $31,907 for custody and accounting services. These fees were reduced by $3,345 as a result of an expense offset arrangement with the Fund's custodian. In the event that the Fund is overdrawn, under the custody agreement with BBH, BBH will make overnight loans to the Fund to cover overdrafts. Pursuant to their agreement the Fund will pay the Federal Funds overnight investment rate on the day of overdraft. The total interest paid by the Fund for the six months ended April 30, 2009 was $99. Securities Lending Fees. The Trust has a security lending agreement with BBH for which BBH receives a fee from the Fund for each security loaned. For the six months ended April 30, 2009, the Fund incurred no security lending fees. FINANCIAL STATEMENT APRIL 30, 2009 13 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS April 30, 2009 (unaudited) Board of Trustees' Fees. Each Trustee receives an annual fee as well as reimbursement for reasonable out-of-pocket expenses from the Fund. For the six months ended April 30, 2009, the Fund incurred $21,600 for these fees. 3. Investment Transactions. For the six months ended April 30, 2009, the cost of purchases and the proceeds of sales of investment securities other than short-term investments were $22,357,473 and $9,998,967, respectively. 4. Securities on Loan. As of April 30, 2009, the Fund had no securities on loan. 5. Capital Stock. The Trust is permitted to issue an unlimited number of Class N shares and Class I shares of capital stock, at no par value. Transactions in Class N shares of capital stock were as follows: SHARES ----------------------------------- For the six months ended For the April 30, 2009 year ended (unaudited) October 31, 2008 -------------- ---------------- Class N Capital stock sold ....................... 5,041,630 9,237,345 Capital stock issued in connection with reinvestment of dividends .............. 133,457 1,653 Capital stock redeemed ................... (3,342,999) (2,619,435) ---------- ---------- Net increase ............................. 1,832,088 6,619,563 ========== ========== 14 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES April 30, 2009 (unaudited) EXAMPLE As a shareholder of BBH Core Select (the "Fund"), you may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (November 1, 2008 to April 30, 2009). 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 hypothet- ical 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 APRIL 30, 2009 15 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES (continued) April 30, 2009 (unaudited) Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Expenses Paid Beginning Ending During Period Account Value Account Value November 1, 2008 November 1, 2008 April 30, 2009 to April 30, 2009(1) ---------------- -------------- -------------------- Class N Actual............... $1,000 $ 933.10 $5.70 Hypothetical(2)...... $1,000 $1,018.89 $5.96 - ---------- (1) Expenses are equal to the Fund's annualized expense ratio of 1.19% for Class N shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). (2) Assumes a return of 5% before expenses. For the purposes of the calculation, the applicable annualized expense ratio for each class of shares is subtracted from the assumed return before expenses. 16 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES (continued) April 30, 2009 (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 Harriman's Mutual Fund Advisory Department (the "SID") and Brown Brothers Harriman & Co. ("BBH") The Board noted that, under the Agreement and with respect to each Fund, the SID, subject to the supervision of the Board, will be responsible for providing a continuous investment program and making purchases and sales of portfolio securities consistent with the Funds' investment objectives and policies. The Board also noted that BBH provides administrative services to each Fund. The Board considered the scope and quality of services provided by the SID and BBH under the Agreement and noted that the scope of services provided had expanded over time. The Board considered the quality of the investment research by the SID, the administrative capabilities provided by BBH and the other resources BBH and the SID have dedicated to performing services for the Funds. The Board concluded that, overall, they were satisfied with the nature, extent and quality of services expected to be provided to each of the Funds under the 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 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 APRIL 30, 2009 17 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES (continued) April 30, 2009 (unaudited) Fall-Out Benefits The Board considered that the SID 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 the SID'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 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 (or fall) proportionally to increases (or 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 provided to the Board 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. 17 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES (continued) April 30, 2009 (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, the Board received detailed performance information for each Fund at each regular Board meeting during the year. At the meeting held on December 10, 2008, the Board reviewed information showing performance of each Fund over the prior 1-, 3-, and 5- year periods and compared the performance information to a securities index over comparable periods. Fee Rates The Board considered the fee rates to be 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 Core Select also were noted and considered by the Board in deciding to approve the Agreement: The Board reviewed the information showing performance of BBH Core Select versus the Standard's & Poor's 500 Index (the "Index"). BBH Core Select outperformed the Index both on a pre-fee and after-fee basis for all relevant periods. The Board spent considerable time in reviewing BBH Core Select's investments and confirming that those investments were consistent with the investment methodology. The Board also noted BBH Core Select's expense ratio was in line with many funds of similar size and investment mandate. Taking into account all of the factors considered, the Board concluded that the BBH Core Select's investment results over time and its total expense ratio had been reasonable. Conflicts of Interest As a general matter, certain conflicts of interest may arise in connection with 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 man- aged 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 con- FINANCIAL STATEMENT APRIL 30, 2009 19 <PAGE> BBH CORE SELECT - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES (continued) April 30, 2009 (unaudited) flicts might include conflicts created by compensation arrangements, use of outside consultants that manage other unaffiliated funds and conflicts relating to selection of brokers or dealers to execute fund portfolio trades and/or specific uses of commissions from Fund portfolio trades. BBH may direct brokerage transactions and/or payment of a portion of client commissions ("soft dollars") to specific brokers or dealers or other providers to pay for research or brokerage services. The use of a broker that provides research and securities transaction services may result in a higher commission than that offered by a broker who does not provide such services. BBH will determine in good faith whether the amount of commission is reasonable in relation to the value of research and brokerage services provided. BBH may enter into advisory and/or referral arrangements with third parties. Such arrangements are typically entered into in accordance with a written agreement and may include compensation paid by BBH to the third party. BBH may pay a solicitation fee for referrals and/or advisory or incentive fees. BBH has adopted and implemented policies and procedures, including trade allocation procedures, which are designed to manage the conflicts associated with handling 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. 20 <PAGE> INVESTMENT ADVISER AND ADMINISTRATOR BROWN BROTHERS HARRIMAN 140 BROADWAY NEW YORK, NY 10005 DISTRIBUTOR EDGEWOOD SERVICES, INC. 4000 ERICSSON DRIVE WARRENDALE, PA 15086-7561 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." A summary 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 APRIL 30, 2009 - -------------------------------------------------------------------------------- BBH INTERNATIONAL EQUITY FUND <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- PORTFOLIO ALLOCATION April 30, 2009 (unaudited) COUNTRY DIVERSIFICATION Percent of U.S. $ Value Net Assets ------------ ---------- Australia ....................................... $ 24,912,768 7.2% Belgium ......................................... 756,210 0.2 Finland ......................................... 1,483,238 0.4 France .......................................... 35,555,079 10.3 Germany ......................................... 16,581,662 4.8 Hong Kong ....................................... 24,598,495 7.1 Italy ........................................... 5,017,287 1.5 Japan ........................................... 100,919,734 29.3 Netherlands ..................................... 4,299,889 1.2 New Zealand ..................................... 1,295,377 0.4 Singapore ....................................... 11,995,811 3.5 South Africa .................................... 1,424,438 0.4 Spain ........................................... 16,037,816 4.7 Sweden .......................................... 7,510,204 2.2 Switzerland ..................................... 21,894,622 6.4 Taiwan .......................................... 4,581,304 1.3 United Kingdom .................................. 49,051,758 14.2 Short-Term Investment ........................... 9,000,000 2.6 Cash and Other Assets in Excess of Liabilities .. 7,903,519 2.3 ------------ ----- NET ASSETS ...................................... $344,819,211 100.0% ============ ===== All data as of April 30, 2009. The Fund's country diversification is expressed as a percentage of net assets and may vary over time. The accompanying notes are an integral part of these financial statements. 2 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- PORTFOLIO ALLOCATION April 30, 2009 (unaudited) SECTOR DIVERSIFICATION Percent of U.S. $ Value Net Assets ------------ ---------- Consumer Discretionary .......................... $31,244,151 9.1% Consumer Staples ................................ 51,039,293 14.9 Diversified Operations .......................... 8,532,169 2.5 Electronics ..................................... 2,919,994 0.8 Energy .......................................... 36,353,935 10.5 Finance ......................................... 46,962,358 13.7 Health Care ..................................... 41,284,053 11.9 Industrials ..................................... 31,927,493 9.2 Information Technology .......................... 13,114,746 3.8 Materials ....................................... 8,559,545 2.4 Telecommunication Services ...................... 33,106,757 9.6 Utilities ....................................... 22,871,198 6.7 Short-Term Investment ........................... 9,000,000 2.6 Cash and Other Assets in Excess of Liabilities .. 7,903,519 2.3 ------------ ----- NET ASSETS ...................................... $344,819,211 100.0% ============ ===== All data as of April 30, 2009. The Fund's sector diversification is expressed as a percentage of net assets and may vary over time. The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2009 3 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS April 30, 2009 (unaudited) Shares Value - -------- ------------ COMMON STOCKS (95.1%) AUSTRALIA (7.2%) CONSUMER STAPLES 1,093,012 Foster's Group, Ltd. ................................. $ 4,213,056 165,909 Wesfarmers, Ltd. ..................................... 2,741,837 ----------- 6,954,893 ----------- ENERGY 172,633 Woodside Petroleum, Ltd. ............................. 4,827,013 ----------- FINANCE 480,000 Lend Lease Corp., Ltd. ............................... 2,540,081 259,652 National Australia Bank, Ltd. ........................ 3,905,010 ----------- 6,445,091 ----------- MATERIALS 434,671 Amcor, Ltd. .......................................... 1,521,453 ----------- TELECOMMUNICATION SERVICES 2,120,320 Telstra Corp., Ltd. .................................. 5,164,318 ----------- Total Australia ...................................... 24,912,768 ----------- BELGIUM (0.2%) FINANCE 305,017 Fortis ............................................... 756,061 112,376 Fortis NPV(1) ........................................ 149 ----------- Total Belgium ........................................ 756,210 ----------- FINLAND (0.4%) MATERIALS 165,742 UPM-Kymmene Oyj ...................................... 1,483,238 ----------- Total Finland ........................................ 1,483,238 ----------- FRANCE (10.3%) CONSUMER STAPLES 136,863 Carrefour SA ......................................... 5,539,778 64,500 Groupe Danone ........................................ 3,077,214 45,000 L'Oreal SA ........................................... 3,215,383 ----------- 11,832,375 ----------- The accompanying notes are an integral part of these financial statements. 4 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2009 (unaudited) Shares Value - -------- ------------ COMMON STOCKS (continued) FRANCE (continued) DIVERSIFIED OPERATIONS 61,000 LVMH Moet Hennessy Louis Vuitton SA .................. $ 4,615,968 ----------- ENERGY 110,371 Total SA ............................................. 5,524,237 ----------- FINANCE 48,969 Societe Generale ..................................... 2,479,996 ----------- HEALTH CARE 83,000 Essilor International SA ............................. 3,575,498 ----------- INDUSTRIALS 109,191 Compagnie de Saint-Gobain ............................ 3,908,300 ----------- TELECOMMUNICATION SERVICES 162,938 France Telecom SA .................................... 3,618,705 ----------- Total France ......................................... 35,555,079 ----------- GERMANY (4.8%) CONSUMER DISCRETIONARY 97,000 Adidas AG ............................................ 3,663,870 ----------- INFORMATION TECHNOLOGY 107,000 SAP AG ............................................... 4,095,840 ----------- TELECOMMUNICATION SERVICES 341,619 Deutsche Telekom AG .................................. 4,119,420 ----------- UTILITIES 65,352 RWE AG ............................................... 4,702,532 ----------- Total Germany ........................................ 16,581,662 ----------- HONG KONG (7.1%) DIVERSIFIED OPERATIONS 670,000 Hutchison Whampoa, Ltd. .............................. 3,916,201 ----------- ENERGY 4,650,000 CNOOC, Ltd. .......................................... 5,173,167 ----------- FINANCE 696,500 Wharf Holdings, Ltd. ................................. 2,299,543 ----------- The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2009 5 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2009 (unaudited) Shares Value - -------- ------------ COMMON STOCKS (continued) HONG KONG (continued) TELECOMMUNICATION SERVICES 370,000 China Mobile, Ltd. ................................... $ 3,201,848 ----------- UTILITIES 525,000 CLP Holdings, Ltd. ................................... 3,544,425 2,100,000 Hong Kong & China Gas Co., Ltd. ...................... 3,909,502 431,500 Hongkong Electric Holdings ........................... 2,553,809 ----------- 10,007,736 ----------- Total Hong Kong ...................................... 24,598,495 ----------- ITALY (1.5%) FINANCE 1,103,188 Intesa Sanpaolo SpA .................................. 3,497,533 627,611 UniCredito Italiano SpA .............................. 1,519,754 ----------- Total Italy .......................................... 5,017,287 ----------- JAPAN (29.3%) CONSUMER DISCRETIONARY 194,000 Denso Corp. .......................................... 4,558,704 165,000 Honda Motor Co., Ltd. ................................ 4,789,974 5,000 Nintendo Co., Ltd. ................................... 1,335,744 216,000 Sekisui House, Ltd. .................................. 1,857,073 80,400 Toyota Motor Corp. ................................... 3,142,741 ----------- 15,684,236 ----------- CONSUMER STAPLES 220,000 Hoya Corp. ........................................... 3,790,804 220,000 Kao Corp. ............................................ 4,132,616 151,800 Seven & I Holdings Co., Ltd. ......................... 3,425,673 43,000 Shimamura Co., Ltd. .................................. 2,967,225 ----------- 14,316,318 ----------- FINANCE 235,000 Aeon Mall Co., Ltd. .................................. 3,075,257 85,000 Daito Trust Construction Co., Ltd. ................... 3,506,254 The accompanying notes are an integral part of these financial statements. 6 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2009 (unaudited) Shares Value - -------- ------------ COMMON STOCKS (continued) JAPAN (continued) FINANCE (continued) 235,000 Mitsubishi Estate Co., Ltd. .......................... $ 3,061,629 259,500 Tokio Marine Holdings, Inc. .......................... 6,848,244 ----------- 16,491,384 ----------- HEALTH CARE 95,200 Astellas Pharma, Inc. ................................ 3,101,166 200,000 Chugai Pharmaceutical Co., Ltd. ...................... 3,702,242 13,500 Eisai Co., Ltd. ...................................... 363,734 213,400 Takeda Pharmaceutical Co., Ltd. ...................... 7,573,822 ----------- 14,740,964 ----------- INDUSTRIALS 173,000 Advantest Corp. ...................................... 2,726,227 140,000 Daikin Industries, Ltd. .............................. 3,730,434 54,000 Fanuc, Ltd. .......................................... 3,881,574 35,600 Hirose Electric Co., Ltd. ............................ 3,697,446 21,505 Keyence Corp. ........................................ 3,789,329 76,000 Secom Co., Ltd. ...................................... 2,806,829 518 West Japan Railway Co. ............................... 1,582,539 ----------- 22,214,378 ----------- INFORMATION TECHNOLOGY 299,500 Canon, Inc. .......................................... 9,018,906 ----------- MATERIALS 68,600 Nitto Denko Corp. .................................... 1,590,848 82,000 Shin-Etsu Chemical Co., Ltd. ......................... 3,964,006 ----------- 5,554,854 ----------- TELECOMMUNICATION SERVICES 646 KDDI Corp. ........................................... 2,898,694 ----------- Total Japan .......................................... 100,919,734 ----------- NETHERLANDS (1.2%) CONSUMER DISCRETIONARY 250,088 Reed Elsevier NV ..................................... 2,753,000 ----------- The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2009 7 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2009 (unaudited) Shares Value - -------- ------------ COMMON STOCKS (continued) NETHERLANDS (continued) FINANCE 167,957 ING Groep NV ......................................... $ 1,546,889 ----------- Total Netherlands .................................... 4,299,889 ----------- NEW ZEALAND (0.4%) TELECOMMUNICATION SERVICES 805,769 Telecom Corp. of New Zealand, Ltd. ................... 1,295,377 ----------- Total New Zealand .................................... 1,295,377 ----------- SINGAPORE (3.5%) FINANCE 675,000 DBS Group Holdings, Ltd. ............................. 4,312,854 482,200 Oversea-Chinese Banking Corp., Ltd. .................. 1,902,199 211,000 United Overseas Bank, Ltd. ........................... 1,627,483 ----------- 7,842,536 ----------- INDUSTRIALS 78,800 Jardine Matheson Holdings, Ltd. ...................... 1,777,019 ----------- TELECOMMUNICATION SERVICES 1,379,000 Singapore Telecommunications, Ltd. ................... 2,376,256 ----------- Total Singapore ...................................... 11,995,811 ----------- SOUTH AFRICA (0.4%) ENERGY 46,963 Sasol, Ltd. .......................................... 1,424,438 ----------- Total South Africa ................................... 1,424,438 ----------- SPAIN (4.7%) CONSUMER DISCRETIONARY 72,000 Inditex SA ........................................... 3,075,169 ----------- FINANCE 321,364 Banco Santander Central Hispano SA ................... 3,036,497 ----------- TELECOMMUNICATION SERVICES 260,530 Telefonica SA ........................................ 4,951,170 ----------- The accompanying notes are an integral part of these financial statements. 8 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2009 (unaudited) Shares Value - -------- ------------ COMMON STOCKS (continued) SPAIN (continued) UTILITIES 629,055 Iberdrola SA ......................................... $ 4,974,980 ----------- Total Spain .......................................... 16,037,816 ----------- SWEDEN (2.2%) CONSUMER DISCRETIONARY 82,000 Hennes & Mauritz AB (B Shares) ....................... 3,690,545 ----------- TELECOMMUNICATION SERVICES 439,800 Telefonaktiebolaget LM Ericsson (B Shares) ........... 3,819,659 ----------- Total Sweden ......................................... 7,510,204 ----------- SWITZERLAND (6.4%) CONSUMER STAPLES 100,000 Nestle SA ............................................ 3,255,025 ----------- HEALTH CARE 32,600 Alcon, Inc. .......................................... 2,999,526 165,000 Nobel Biocare Holding AG ............................. 3,372,286 217,993 Novartis AG .......................................... 8,239,989 ----------- 14,611,801 ----------- INDUSTRIALS 3,600 SGS SA ............................................... 4,027,796 ----------- Total Switzerland .................................... 21,894,622 ----------- TAIWAN (1.3%) ELECTRONICS 276,253 Taiwan Semiconductor Manufacturing Co., Ltd. ADR ..... 2,919,994 ----------- TELECOMMUNICATION SERVICES 87,900 Chunghwa Telecom Co. Ltd. ADR ........................ 1,661,310 ----------- Total Taiwan ......................................... 4,581,304 ----------- The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2009 9 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2009 (unaudited) Shares Value - -------- ------------ COMMON STOCKS (continued) UNITED KINGDOM (14.2%) CONSUMER DISCRETIONARY 357,371 Compass Group, Plc. .................................. $ 1,708,521 378,312 GKN, Plc. ............................................ 668,810 ----------- 2,377,331 ----------- CONSUMER STAPLES 89,000 Reckitt Benckiser, Plc. .............................. 3,505,815 650,000 Tesco, Plc. .......................................... 3,227,778 249,782 Unilever, Plc. ....................................... 4,876,100 845,000 WM Morrison Supermarkets, Plc. ....................... 3,070,989 ----------- 14,680,682 ----------- ENERGY 473,701 BG Group, Plc. ....................................... 7,618,496 705,289 BP, Plc. ............................................. 5,002,355 55,000 Cairn Energy, Plc.(1) ................................ 1,737,531 216,903 Royal Dutch Shell, Plc. (A Shares) ................... 5,046,698 ----------- 19,405,080 ----------- FINANCE 229,350 Aviva, Plc. .......................................... 1,046,925 ----------- HEALTH CARE 350,558 GlaxoSmithKline, Plc. ................................ 5,414,652 416,000 Smith & Nephew, Plc. ................................. 2,941,138 ----------- 8,355,790 ----------- UTILITIES 950,000 Centrica, Plc. ....................................... 3,185,950 ----------- Total United Kingdom ................................. 49,051,758 ----------- TOTAL COMMON STOCKS (Identified cost $376,598,317) ... 327,915,692 ----------- The accompanying notes are an integral part of these financial statements. 10 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2009 (unaudited) Principal Amount Value - ----------- ------------- SHORT-TERM INVESTMENT (2.6%) $9,000,000 Societe Generale Time Deposit 0.200% 05/01/09 ...... $ 9,000,000 ------------ TOTAL SHORT-TERM INVESTMENT (Identified cost $9,000,000) ..................... 9,000,000 ------------ TOTAL INVESTMENTS (Identified cost $385,598,317(2)) .... 97.7% $336,915,692 CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ......... 2.3 7,903,519 ----- ------------ NET ASSETS ............................................. 100.0% $344,819,211 ===== ============ - ---------- (1) Non-income producing security. (2) The aggregate cost for federal income tax purposes is $385,598,317. The aggregate gross unrealized appreciation is $34,408,338 and the aggregate gross unrealized depreciation is $83,090,963, resulting in net unrealized depreciation of $48,682,625. Abbreviations: ADR - American Depositary Receipt. The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2009 11 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2009 (unaudited) FAIR VALUE MEASUREMENTS The Fund adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, Fair Value Measurements ("FAS 157"), effective November 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 April 30, 2009 in valuing the Fund's investment carried at value: Investments Valuation Inputs in Securities - -------------------------- ----------------- Level 1 - Quoted prices .................................... $ 7,580,830 Level 2 - Other Significant Observable Inputs .............. 329,334,862 Level 3 - Significant Unobservable Inputs .................. - ------------ Total ................................................... $336,915,692 ============ The accompanying notes are an integral part of these financial statements. 12 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES April 30, 2009 (unaudited) ASSETS: Investments in securities, at value (identified cost $385,598,317) ............................. $336,915,692 Cash ......................................................... 209,402 Receivables for: Investment sold ............................................ 3,392,794 Capital stock sold ......................................... 3,195,260 Dividends .................................................. 2,536,408 Interest ................................................... 50 ------------ Total Assets ............................................. 346,249,606 ------------ LIABILITIES: Due to Brown Brothers Harriman (identified cost $64,346) ..... 64,346 Payables for: Investment purchased ....................................... 831,229 Investment advisory and administrative fees ................ 208,867 Custody and accounting fees ................................ 139,453 Shareholder servicing fees ................................. 61,566 Capital stock redeemed ..................................... 33,035 Professional fees .......................................... 20,406 Board of Trustees' fees .................................... 154 Accrued expenses and other liabilities ..................... 71,339 ------------ Total Liabilities ........................................ 1,430,395 ------------ NET ASSETS ...................................................... $344,819,211 ============ Net Assets Consist of: Par value .................................................... $ 36,125 Paid-in capital .............................................. 451,428,150 Undistributed net investment income .......................... 2,934,332 Accumulated net realized loss on investments and foreign exchange transactions .............................. (60,885,729) Net unrealized depreciation on investments and foreign currency translations .............................. (48,693,667) ------------ Net Assets ...................................................... $344,819,211 ============ NET ASSET VALUE AND OFFERING PRICE PER SHARE CLASS N SHARES ($321,675,932 / 33,702,654 shares outstanding) ............... $9.54 ===== CLASS I SHARES ($23,143,279 / 2,422,189 shares outstanding) ................. $9.55 ===== The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2009 13 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS For the six months ended April 30, 2009 (unaudited) NET INVESTMENT INCOME: Income: Dividends and other income (net of foreign withholding taxes of $318,794) ........... $ 5,593,021 Interest Income ............................................ 4,045 ------------ Total Income ............................................. 5,597,066 ------------ Expenses: Investment advisory and administrative fees ................ 1,369,589 Shareholder servicing fees ................................. 399,620 Custody and accounting fees ................................ 195,371 Board of Trustees' fees .................................... 28,971 Professional fees .......................................... 15,042 Miscellaneous expenses ..................................... 60,717 ------------ Total Expenses ........................................... 2,069,310 Expense offset arrangement ............................... (6,591) ------------ Net Expenses ............................................. 2,062,719 ------------ Net Investment Income ........................................ 3,534,347 ============ NET REALIZED AND UNREALIZED LOSS: Net realized loss on investments ............................. (59,045,723) Net realized loss on foreign exchange transactions ........... (3,713) ------------ Net realized loss on investments and foreign exchange transactions .................................... (59,049,436) Net change in unrealized appreciation of investments ......... 30,360,495 Net change in unrealized appreciation on foreign currency translations .............................. 5,870,377 ------------ Net change in unrealized appreciation on investments and foreign currency translations ............................ 36,230,872 ------------ Net Realized and Unrealized Loss ........................... (22,818,564) ------------ Net Decrease in Net Assets Resulting from Operations ......... $(19,284,217) ============ The accompanying notes are an integral part of these financial statements. 14 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS <TABLE> <CAPTION> For the six For the months ended year ended April 30, 2009 October 31, (unaudited) 2008 -------------- ------------- <S> <C> <C> DECREASE IN NET ASSETS: Operations: Net investment income .................................. $ 3,534,347 $ 13,478,131 Net realized gain (loss) on investments and foreign exchange transactions ................................ (59,049,436) 14,185,002 Net change in unrealized appreciation (depreciation) on investments and foreign currency translations ..... 36,230,872 (313,622,636) ------------ ------------ Net decrease in net assets resulting from operations ......................................... (19,284,217) (285,959,503) ------------ ------------ Dividends and distributions declared: From net investment income: Class N ................................................ (12,819,934) (10,352,578) Class I ................................................ (1,013,444) (762,747) From net realized gains: Class N ................................................ (11,089,345) (29,955,831) Class I ................................................ (791,571) (1,916,194) ------------ ------------ Total dividends and distributions declared ........... (25,714,294) (42,987,350) ------------ ------------ Capital stock transactions: Net proceeds from sales of capital stock................ 37,953,350 105,933,541 Net assets value of capital stock issued to shareholders for reinvestment of dividends and distributions ...... 25,074,603 1,288,415 Net cost of capital stock redeemed ..................... (110,770,974) (85,445,720) ------------ ------------ Net increase (decrease) in net assets resulting from capital stock transactions ......................... (47,743,021) 21,776,236 ------------ ------------ Total decrease in net assets ......................... (92,741,532) (307,170,617) NET ASSETS: Beginning of year ........................................ 437,560,743 744,731,360 ------------ ------------ End of period (including undistributed net investment income of $2,934,332 and $13,233,363, respectively) .... $344,819,211 $437,560,743 ============ ============ </TABLE> The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2009 15 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Selected per share data and ratios for a Class N share outstanding throughout each period <TABLE> <CAPTION> For the six months ended For the years ended October 31, April 30, 2009 ------------------------------------------------------------------- (unaudited) 2008 2007 2006 2005 2004 -------------- ------- ------- ------- ------- ------- <S> <C> <C> <C> <C> <C> <C> Net asset value, beginning of year ..... $10.73 $18.53 $15.71 $12.59 $10.96 $ 9.28 ------- ------- ------- ------- ------- ------- Income from investment operations: Net investment income(1) ............ 0.10 0.32 0.28 0.25 0.18 0.14 Net realized and unrealized gain (loss) ....................... (0.59) (7.06) 2.95 3.07 1.54 1.64 ------- ------- ------- ------- ------- ------- Total income (loss) from investment operations ............. (0.49) (6.74) 3.23 3.32 1.72 1.78 ------- ------- ------- ------- ------- ------- Less dividends and distributions: From net investment income .......... (0.37) (0.27) (0.24) (0.20) (0.09) (0.10) From net realized gains ............. (0.33) (0.79) (0.17) - - - ------- ------- ------- ------- ------- ------- Total dividends and distributions ................... (0.70) (1.06) (0.41) (0.20) (0.09) (0.10) ------- ------- ------- ------- ------- ------- Net asset value, end of period ......... $ 9.54 $10.73 $18.53 $15.71 $12.59 $10.96 ======= ======= ======= ======= ======= ======= Total return .......................... (4.68)% (38.30)% 21.01% 26.62% 15.77% 19.29% Ratios/Supplemental data: Net assets, end of period (in millions) ..................... $322 $412 $700 $524 $356 $211 Ratio of expenses to average net assets ........................ 1.22%(2),(3) 1.13%(2) 1.17%(2) 1.11%(2) 1.23% 1.30% Ratio of net investment income to average net assets ................ 2.04%(3) 2.09% 1.64% 1.76% 1.49% 1.34% Portfolio turnover rate ............. 6% 19% 16% 10% 5% 81% </TABLE> - ---------- (1) Calculated using average shares outstanding for the year. (2) The ratio of expenses to average net assets for the six months ended April 30, 2009 and the years ended October 31, 2008, 2007 and 2006 reflect fees reduced as a result of an expense offset arrangement with the Fund's custodian. Had this arrangement not been in place, this ratio would have been 1.22%, 1.13%, 1.17%, and 1.17%, respectively. (3) Annualized. The accompanying notes are an integral part of these financial statements. 16 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (continued) Selected per share data and ratios for a Class I share outstanding throughout each period <TABLE> <CAPTION> For the six months ended For the years ended October 31, April 30, 2009 ------------------------------------------------------------------- (unaudited) 2008 2007 2006 2005 2004 -------------- ------- ------- ------- ------- ------- <S> <C> <C> <C> <C> <C> <C> Net asset value, beginning of year ..... $10.77 $18.59 $15.76 $12.62 $10.98 $ 9.30 ------- ------- ------- ------- ------- ------- Income from investment operations: Net investment income(1) ............ 0.11 0.35 0.32 0.29 0.21 0.14 Net realized and unrealized gain (loss) ....................... (0.58) (7.07) 2.96 3.07 1.54 1.66 ------- ------- ------- ------- ------- ------- Total income from investment operations ...................... (0.47) (6.72) 3.28 3.36 1.75 1.80 ------- ------- ------- ------- ------- ------- Less dividends and distributions: From net investment income (0.42) (0.31) (0.28) (0.22) (0.11) (0.12) From net realized gains ............. (0.33) (0.79) (0.17) - - - ------- ------- ------- ------- ------- ------- Total dividends and distributions ................... (0.75) (1.10) (0.45) (0.22) (0.11) (0.12) ------- ------- ------- ------- ------- ------- Net asset value, end of period $ 9.55 $10.77 $18.59 $15.76 $12.62 $10.98 ======= ======= ======= ======= ======= ======= Total return ........................... (4.57)% (38.12)% 21.28% 26.98% 16.05% 19.54% Ratios/Supplemental data: Net assets, end of period (in millions) ..................... $23 $26 $45 $40 $34 $27 Ratio of expenses to average net assets ........................ 0.97%(2),(3) 0.88%(2) 0.91%(2) 0.87%(2) 0.98% 1.05% Ratio of net investment income to average net assets ................ 2.30%(3) 2.32% 1.87% 2.02% 1.73% 1.33% Portfolio turnover rate ................ 6% 19% 16% 10% 5% 81% </TABLE> - ---------- (1) Calculated using average shares outstanding for the year. (2) The ratio of expenses to average net assets for the six months ended April 30, 2009 and the years ended October 31, 2008, 2007 and 2006 reflect fees reduced as a result of an expense offset arrangement with the Fund's custodian. Had this arrangement not been in place, this ratio would have been 0.98%, 0.88%, 0.91%, and 0.94%, respectively. (3) Annualized. The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2009 17 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2009 (unaudited) 1. Organization and Significant Accounting Policies. BBH International Equity Fund (the "Fund") is a separate diversified series of BBH Trust (the "Trust"), which is registered under the Investment Company Act of 1940, as amended as an open-end management investment company. The Trust was originally organized under the laws of the State of Maryland on July 16, 1990 as BBH Fund, Inc. and re-organized as a Delaware statutory trust on June 12, 2007. The Fund commenced operations on June 6, 1997. On February 20, 2001, the Trustees reclassified the Fund's outstanding shares as "Class N," and established a new class of shares designated as "Class I". Class I commenced operations on October 30, 2002. Class N and Class I shares have different operating expenses. Neither Class N shares nor Class I shares convert to any other class of the Fund. At April 30, 2009 there were five series of the Trust. The Fund's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements and are based, in part, on the following accounting policies. Actual results could differ from those estimates. A. Valuation of Investments. The BBH International Equity Fund employs a pricing vendor, Investment Technology Group, Inc. ("ITG"), that uses a fair valuation model to establish daily valuations of portfolio securities. The model looks at each security in the portfolio and determines the correlation between the security and a set of market factors, such as the price of ADRs, futures, exchange-traded funds, and the U.S. market as measured by the 1000 largest domestic stocks. The model evaluates the security's beta compared to these factors to determine which factor should be used in determining its fair value. The model analyzes data for the past 90 days for each factor. The model then determines the difference between the price of the factor at the local market close versus the price at 4 p.m. Eastern Time to calculate a percentage by which the closing price should be adjusted to reflect its fair value. If ITG is unable to price a security, the security will be priced in accordance with the Manual Pricing Procedures. B. Accounting for Investments and Income. Security transactions are accounted for on the trade date. Realized gains and losses on security transactions are determined on the identified cost method. Dividend income and other distributions from portfolio securities are recorded on the ex- dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of securities received. Distributions received on securities that represent a return of capital or a capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Interest income is accrued daily. Investment income is recorded net of foreign taxes withheld where recovery of such tax is uncertain. C. Forward Foreign Currency Exchange Contracts. The Fund may enter into forward foreign currency exchange contracts ("Contracts") in connection with planned purchases or sales of securities, to hedge the U.S. dollar value of portfolio securities denominated in a particular currency, 18 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2009 (unaudited) or to increase or shift its exposure to a currency other than U.S. dollars. The Fund has no specific limitation on the percentage of assets which may be committed to these types of Contracts. The Fund could be exposed to risks if the counterparties to the Contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably. The U.S. dollar values of foreign currency underlying all contractual commitments held by the Fund are determined using forward currency exchange rates supplied by a quotation service. D. Foreign Currency Translations. The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange of such currency against the U.S. dollar to determine the value of investments, assets and liabilities. Purchases and sales of securities, and income and expenses are translated at the prevailing rate of exchange on the respective dates of such transactions. Upon the purchase or sale of a security denominated in foreign currency, the Fund may enter into forward currency exchange contracts for the purchase or sale, for a fixed amount of U.S. dollars of the amount of foreign currency involved in the underlying security transaction. Reported net realized gains and losses arise from the sales of portfolio securities, sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized appreciation or depreciation on foreign currency translations arise from changes in the value of the assets and liabilities, excluding investments in securities, at fiscal year end, arising from changes in the exchange rate. E. Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. F. Securities Lending. The Fund may lend its portfolio securities to broker-dealers, qualified banks and certain institutional investors. The loans are secured by collateral in an amount equal to at least the market value at all times of the loaned securities plus any accrued interest and dividends. During the time the securities are on loan, the Fund will continue to receive the interest and dividends or amounts equivalent thereto, on the loaned securities while receiving a fee from the borrower or earning interest on the investment of the cash collateral. Loans are subject to termination at the option of the borrower or the Fund. Upon termination of the loan, the borrower will return to the lender securities identical to the loaned securities. The Fund may pay reasonable finders', administrative and custodial fees in connection with a loan of its securities and may share the interest earned on the collateral with the borrower. The Fund bears the risk of delay in recovery of, or even loss of rights in, the securities loaned should the borrower of the securities fail financially. There were no securities on loan as of April 30, 2009. FINANCIAL STATEMENT APRIL 30, 2009 19 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2009 (unaudited) G. Federal Income Taxes. It is the Trustees policy to comply with the requirements of the Internal Revenue Code (the "Code") applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. Accordingly, no federal income tax provision is required. The Fund files a tax return annually using tax accounting methods required under provisions of the Code which may differ from accounting principles generally accepted in the United States of America, the basis on which these financial statements are prepared. Accordingly, the amount of net investment income and net realized gain reported on these financial statements may differ from that reported on the Fund's tax return due to certain book-to-tax timing differences such as losses deferred due to "wash sale" transactions and utilization of capital loss carry forwards and the recognition of unrealized gains or losses on open forward foreign currency exchange contracts and passive foreign investment companies at year end. These differences result in temporary over-distributions for financial statement purposes and are classified as distributions in excess of accumulated net realized gains or net investment income. These distributions do not constitute a return of capital. Permanent differences are reclassified on the Statement of Assets & Liabilities based upon their tax classification. As such, the character of distributions to shareholders reported in the Financial Highlights table may differ from that reported to shareholders on Form 1099-DIV. H. Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, if any, were generally declared and paid annually and are recorded on the ex-dividend date. The tax character of distributions paid during the fiscal years ended October 31, 2008 and 2007, respectively, were as follows: Distribution paid from: - -------------------------------------------------------------------------------- Net Total Total Ordinary long-term taxable Tax return distributions income capital gain distributions of capital paid -------- ------------ ------------- ---------- ------------- 2008: $15,365,734 $27,621,616 $42,987,350 - $42,987,350 2007: 8,957,898 6,173,183 15,131,081 - 15,131,081 As of October 31, 2008 and 2007, respectively, the components of accumulated earnings/(deficit) on a tax basis were as follows: <TABLE> <CAPTION> Components of accumulated earnings/(deficit): - ------------------------------------------------------------------------------------------------------------------- Other Total Undistributed Undistributed Accumulated Book/Tax Unrealized accumulated ordinary long-term Accumulated capital and temporary appreciation/ earnings/ income capital gain earnings other losses differences (depreciation) (deficit) ------------- ------------- ----------- ------------ ----------- -------------- ----------- <S> <C> <C> <C> <C> <C> <C> <C> 2008: $13,233,363 $11,878,130 $25,111,493 - $(1,833,508) $(84,924,539) $(61,646,554) 2007: 14,994,642 27,620,467 42,615,109 - (4,012,906) 228,698,097 267,300,300 </TABLE> 20 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2009 (unaudited) Total distributions paid may differ from the Statement of Changes in Net Assets because, for tax purposes, dividends are recognized when actually paid. The differences between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales. I. Accounting Developments. In June 2006, the Fund adopted FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund's tax returns to determine whether that tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. The adoption of FIN 48 had no impact on the operations of the Fund for the six months ended April 30, 2009. 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 and interim periods 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 performance. In September 2008, "FASB Staff Position No. 133-1 and FASB Interpretation No. 45-4" (the "FSP"), "Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161," was issued and is effective for fiscal years and interim periods ending after November 15, 2008. The FSP amends FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities," to require disclosures by sellers of credit derivatives, including credit derivatives embedded in hybrid instruments. The FSP also clarifies the effective date of SFAS 161, whereby disclosures required by SFAS 161 are effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund's financial statements disclosures. FINANCIAL STATEMENT APRIL 30, 2009 21 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2009 (unaudited) 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, Brown Brothers Harriman & Co. ("BBH") through a separately identifiable department (the "SID") provides investment advisory and portfolio management services to the Fund. The Fund pays a combined fee for investment advisory and administrative services calculated daily and paid monthly at an annual rate equivalent to 0.80% of the fund's average daily net assets. BBH has a sub-administration services agreement with Federated Services Company ("FSC") for which FSC receives compensation paid by BBH. For the six months ended April 30, 2009, the Fund incurred $1,369,589 for investment advisory and administrative services. Shareholder Servicing Fees. The Trustee has a shareholder servicing agreement with BBH for which BBH receives a fee from the Fund calculated daily and paid monthly at an annual rate of 0.25% of Class N shares' average daily net assets. For the six months ended April 30, 2009, the Fund incurred $399,620 for shareholder servicing services. Custody and Accounting Fees. BBH acts as a custodian and shall receive a custody and accounting fee from the Fund calculated daily and paid monthly. BBH holds all cash and investments and calculates the daily net asset value. The custody fee is a transaction based fee with an annual minimum of $30,000, and the accounting fee is calculated at 0.04% per annum on the first $100 million of net assets, 0.02% per annum on the next $400 million of net assets and 0.01% per annum on all net assets over $500 million. For the six months ended April 30, 2009, the Fund incurred $195,371 for custody and accounting services. These fees were reduced by $6,591 as a result of an expense offset arrangement with the Fund's custodian. In the event that the Fund is overdrawn, under the custody agreement with BBH, BBH will make overnight loans to the Fund to cover overdrafts. Pursuant to their agreement the Fund will pay the Federal Funds overnight investment rate on the day of overdraft. As of April 30, 2009 the Fund had $64,346 outstanding under such arrangements. The total interest paid by the Fund for the six months ended April 30, 2009 was $5,906. Securities Lending Fees. The Trust has a security lending agreement with BBH for which BBH receives a fee from the Fund for each security loaned. For the six months ended April 30, 2009, the Fund incurred no security lending fees. Board of Trustees' Fees. Each Trustee receives an annual fee as well as reimbursement for reasonable out-of-pocket expenses from the Fund. For the six months ended April 30, 2009, the Fund incurred $28,971 for these fees. 22 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2009 (unaudited) 3. Investment Transactions. For the six months ended April 30, 2009, the cost of purchases and the proceeds of sales of investment securities other than short-term investments were $20,702,592 and $103,789,954, respectively. 4. Securities on Loan. As of April 30, 2009, the Fund had no securities on loan. 5. Capital Stock. The Trust is permitted to issue an unlimited number of Class N shares and Class I shares of capital stock, at no par value. Transactions in shares of capital stock were as follows: <TABLE> <CAPTION> SHARES AMOUNT --------------------------------- --------------------------------- For the six For the six months ended For the months ended For the April 30, 2009 year ended April 30, 2009 year ended (unaudited) October 31, 2008 (unaudited) October 31, 2008 -------------- ---------------- -------------- ---------------- <S> <C> <C> <C> <C> Class N Capital stock sold ...... 4,113,466 6,752,633 $37,953,350 $105,933,541 Capital stock issued in connection with reinvestment of dividends ............. 2,379,304 79,385 23,269,588 1,288,415 Capital stock redeemed .. (11,123,251) (6,265,420) (108,965,959) (85,445,720) ----------- ---------- ------------ ----------- Net increase ............ (4,630,481) 566,598 $(47,743,021) $21,776,236 =========== ========== ============ =========== Class I Capital stock sold ...... - - $ - $ - Capital stock issued in connection with reinvestment of dividends ............. 184,562 - 1,805,015 - Capital stock redeemed .. (184,562) - (1,805,015) - ----------- ---------- ------------ ----------- Net increase ............ - - $ - $ - =========== ========== ============ =========== </TABLE> FINANCIAL STATEMENT APRIL 30, 2009 23 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES April 30, 2009 (unaudited) EXAMPLE As a shareholder of BBH International Equity Fund (the "Fund"), you may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution 12b-1 fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (November 1, 2008 to April 30, 2009). ACTUAL EXPENSES The first line of the table below provides information about actual account values and actual expenses. You may use information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During the Period" to estimate the expenses you paid on your account during the period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid during the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. 24 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES (continued) April 30, 2009 (unaudited) Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Expenses Paid Beginning Ending During Period Account Value Account Value November 1, 2008 November 1, 2008 April 30, 2009 to April 30, 2009(1) ---------------- -------------- -------------------- Class N Actual ............ $1,000 $ 953.20 $5.91 Hypothetical(2) ... $1,000 $1,018.74 $6.11 Expenses Paid Beginning Ending During Period Account Value Account Value November 1, 2008 November 1, 2008 April 30, 2009 to April 30, 2009(1) ---------------- -------------- -------------------- Class I Actual ............ $1,000 $ 954.30 $4.70 Hypothetical(2) ... $1,000 $1,019.98 $4.86 - ---------- (1) Expenses are equal to the Fund's annualized expense ratio of 1.22% and 0.97% for Class N and I shares, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). (2) Assumes a return of 5% before expenses. For the purposes of the calculation, the applicable annualized expense ratio for each class of shares is subtracted from the assumed return before expenses. FINANCIAL STATEMENT APRIL 30, 2009 25 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION April 30, 2009 (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 Harriman's Mutual Fund Advisory Department (the "SID") and Brown Brothers Harriman & Co. ("BBH") The Board noted that, under the Agreement and with respect to each Fund, the SID, subject to the supervision of the Board, will be responsible for providing a continuous investment program and making purchases and sales of portfolio securities consistent with the Funds' investment objectives and policies. The Board also noted that BBH provides administrative services to each Fund. The Board considered the scope and quality of services provided by the SID and BBH under the Agreement and noted that the scope of services provided had expanded over time. The Board considered the quality of the investment research by the SID, administrative capabilities provided by BBH and the other resources BBH and the SID have dedicated to performing services for the Funds. The Board concluded that, overall, they were satisfied with the nature, extent and quality of services expected to be provided to each of the Funds under the Agreement. Subject to the supervision of the Board, the SID oversees the sub-advisers and evaluates their results. The SID reviews portfolio performance and composition, departures of key personnel of the sub-advisers and any other relevant topics. The SID also analyzes and monitors economic trends and monetary policy on a continuous basis. The holdings of the BBH International Equity Fund and the allocation of assets to the sub-advisers are regularly reviewed with the objective of enhancing the total rate of return over a full market cycle and dampening return volatility. Costs of Services Provided and Profitability to BBH At the request of the Board, BBH provided information concerning the profitability of BBH's current investment 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 26 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) April 30, 2009 (unaudited) administers, its business mix, numerous assumptions regarding allocations and the entity's capital structure and cost of capital. In considering profitability information, the Board considered the effect of fall-out benefits on BBH's expenses, as well as the "revenue sharing" arrangements BBH has entered into with certain entities that distribute shares of the Funds. The Board focused on profitability of BBH's relationships with the Funds before taxes and distribution expenses. The Board concluded that it was satisfied that BBH's level of profitability from its relationship with each Fund was not excessive. Fall-Out Benefits The Board considered that the SID 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 the SID'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 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. FINANCIAL STATEMENT APRIL 30, 2009 27 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) April 30, 2009 (unaudited) There may be other economies of scale because many expenses did not rise (or fall) proportionally to increases (or 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 provided to the Board over many years, the Board observed that in the mutual fund industry as a whole, as well as among funds similar to the Funds, there appeared to be no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. In light of the Funds' current size and expense structure, the Board concluded that it was unnecessary at this time to consider breakpoints with respect to the Funds, other than for the BBH Money Market Fund. Investment Results The Board considered the investment results of each of the Funds as compared to investment companies with its peers and with one or more selected securities indices. In addition to the information received by the Board for the meeting held on December 10, 2008, the Board received detailed performance information for each Fund at each regular Board meeting during the year. At the meeting held on December 10, 2008, the Board reviewed information showing performance of each Fund over the prior 1-, 3-, and 5- year periods and compared the performance information to a securities index over comparable periods. 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 the BBH International Equity Fund also were noted and considered by the Board in deciding to approve the Agreement: The Board reviewed the performance of the BBH International Equity Fund's Class N shares and Class I shares versus the MSCI Europe, Australasia and Far East Index (the "Index"). The Board considered the performance of the BBH International Equity Fund and each sub-advisor since adopting a multi-manager approach and employing two sub-advisors in January 2004. The Board recognized that divergence from the Index, particularly during periods of significant market movements, was to be expected because each of 28 <PAGE> BBH INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) April 30, 2009 (unaudited) the sub-advisers has a clearly defined fundamental investment style with only modest concern from tracking error to the Index. The Board reviewed the overall investments of the Fund and concluded that the portfolio was broadly diversified in terms of country exposure, sector exposure and specific company risk. The Board noted that the performance of both share classes before and after all expenses was better than the Index since January 31, 2004. The Board also noted the expense ratio for both share classes were in line with many funds of similar size and investment mandate. Taking into account these comparisons and the other factors considered, the Board concluded that the BBH International Equity Fund's investment results over time and its total expense ratio had been reasonable. Conflicts of Interest As a general matter, certain conflicts of interest may arise in connection with 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 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. BBH may direct brokerage transactions and/or payment of a portion of client commissions ("soft dollars") to specific brokers or dealers or other providers to pay for research or brokerage services. The use of a broker that provides research and securities transaction services may result in a higher commission than that offered by a broker who does not provide such services. BBH will determine in good faith whether the amount of commission is reasonable in relation to the value of research and brokerage services provided. BBH may enter into advisory and/or referral arrangements with third parties. Such arrangements are typically entered into in accordance with a written agreement and may include compensation paid by BBH to the third party. BBH may pay a solicitation fee for referrals and/or advisory or incentive fees. 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. FINANCIAL STATEMENT APRIL 30, 2009 29 <PAGE> INVESTMENT ADVISER AND ADMINISTRATOR BROWN BROTHERS HARRIMAN 140 BROADWAY NEW YORK, NY 10005 DISTRIBUTOR EDGEWOOD SERVICES, INC. 4000 ERICSSON DRIVE WARRENDALE, PA 15086-7561 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." A summary 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 APRIL 30, 2009 - -------------------------------------------------------------------------------- BBH BROAD MARKET FUND <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO ALLOCATION April 30, 2009 (unaudited) BREAKDOWN BY SECURITY TYPE Percent of U.S. $ Value Net Assets ------------ ---------- Asset Backed Securities.......................... $ 54,489,189 11.1% Collateralized Mortgage Backed Securities........ 1,830,870 0.4 Corporate Bonds.................................. 395,688,337 80.6 U.S. Government Agency Obligations............... 7,089,953 1.4 Commercial Paper................................. 500,000 0.1 Cash and Other Assets in Excess of Liabilities... 31,372,293 6.4 ------------ ---------- NET ASSETS....................................... $490,970,642 100.0% ============ ========== All data as of April 30, 2009. The Fund's breakdown by security type is expressed as a percentage of net assets and may vary over time. The accompanying notes are an integral part of these financial statements. 2 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS April 30, 2009 (unaudited) <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value --------- -------- -------- ----- <S> <C> <C> <C> ASSET BACKED SECURITIES (11.1%) $ 750,000 Advanta Business Card Master Trust 2007-D1A(1,2)..................... 01/22/13 1.847% $ 130,098 400,000 American Express Credit Account Master Trust 2006-2............... 01/15/14 5.350 401,994 2,875,000 Banc of America Securities Auto Trust 2006-G1..................... 12/20/10 5.170 2,898,988 5,000,000 Bank of America Credit Card Trust 2008-A9..................... 07/16/12 4.070 5,071,954 291,686 Capital One Auto Finance Trust 2005-BSS.......................... 12/15/10 4.480 291,606 2,000,000 Capital One Multi-Asset Execution Trust 2007-A9..................... 08/15/12 4.950 2,019,148 465,000 Chase Issuance Trust 2007-A3........ 04/15/19 5.230 440,303 6,800,000 Chase Issuance Trust 2008-A10(2).... 08/17/15 1.201 6,272,729 3,245,000 Chase Issuance Trust 2008-A11....... 07/15/15 5.400 3,300,614 1,390,000 Citibank Credit Card Issuance Trust 2006-A4..................... 05/10/13 5.450 1,432,562 560,000 CNH Equipment Trust 2007-B(2)....... 10/17/11 1.051 558,398 4,500,000 CNH Equipment Trust 2009-A.......... 10/17/11 4.060 4,513,225 2,194,799 Connecticut RRB Special Purpose Trust CL&P 2001-1................. 12/30/11 6.210 2,279,150 21,304 Countrywide Asset-Backed Certificates 2004-S1(2)........................ 03/25/20 3.872 20,902 124,724 Countrywide Home Equity Loan Trust 2004-O(2)................... 02/15/34 0.731 59,032 315,079 Credit-Based Asset Servicing and Securitization LLC 2003-CB3(2).... 12/25/32 2.879 174,550 224,615 Daimler Chrysler Auto Trust 2006-D.. 02/08/11 4.980 226,591 75,220 Honda Auto Receivables Owner Trust 2006-1...................... 07/18/11 5.080 76,130 1,916,330 Honda Auto Receivables Owner Trust 2007-2...................... 05/23/11 5.460 1,950,303 4,000,000 Honda Auto Receivables Owner Trust 2008-1...................... 01/18/12 4.470 4,064,040 </TABLE> The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2009 3 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2009 (unaudited) <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value --------- -------- -------- ----- <S> <C> <C> <C> ASSET BACKED SECURITIES (continued) $ 338,325 Household Automotive Trust 2006-1......... 06/17/11 5.430% $ 330,363 1,229,746 Hyundai Auto Receivables Trust 2008-A..... 05/16/11 4.160 1,241,024 3,250,000 MBNA Credit Card Master Note Trust 2004-A7(2).............................. 12/15/11 0.551 3,243,929 1,408,066 Nissan Auto Receivables Owner Trust 2006-B............................ 11/15/11 5.220 1,433,987 2,566,718 Nissan Auto Receivables Owner Trust 2008-B............................ 10/15/10 3.800 2,585,228 4,000,000 Nissan Auto Receivables Owner Trust 2009-1............................ 04/15/11 3.920 4,056,394 429,762 SLM Student Loan Trust 2005-9(2).......... 01/25/19 1.142 429,197 4,537,699 USAA Auto Owner Trust 2006-2.............. 02/15/12 5.370 4,634,586 350,000 Wachovia Auto Owner Trust 2005-B.......... 11/20/12 4.930 352,164 ----------- Total Asset Backed Securities (Identified cost $54,853,873)............. 54,489,189 ----------- COLLATERALIZED MORTGAGE BACKED SECURITIES (0.4%) 1,500,000 Bear Stearns Commercial Mortgage Securities 2006-PW11(2)................. 03/11/39 5.575 1,411,260 420,671 Morgan Stanley Capital I 2006-HQ8......... 03/12/44 5.124 419,610 ----------- Total Collateralized Mortgage Backed Securities (Identified cost $1,928,766).............. 1,830,870 ----------- CORPORATE BONDS (80.6%) AGRICULTURE (3.2%) 5,000,000 Archer Daniels Midland Co................. 03/01/13 7.125 5,514,975 5,000,000 Philip Morris International, Inc.......... 05/16/13 4.875 5,172,595 5,000,000 Reynolds American, Inc.................... 07/15/10 6.500 5,000,525 ----------- 15,688,095 ----------- BANKING (5.8%) 10,000,000 PNC Funding Corp.......................... 06/22/12 2.300 10,032,740 10,000,000 State Street Corp......................... 04/30/12 2.150 9,982,680 </TABLE> The accompanying notes are an integral part of these financial statements. 4 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2009 (unaudited) <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value --------- -------- -------- ----- CORPORATE BONDS (continued) BANKING (continued) <S> <C> <C> <C> <C> $ 6,500,000 US Bancorp................................ 03/13/12 2.250% $ 6,525,896 2,100,000 Wells Fargo & Co.......................... 12/09/11 3.000 2,163,800 ----------- 28,705,116 ----------- BEVERAGES (3.6%) 5,000,000 Coca-Cola Co.............................. 03/15/14 3.625 5,108,345 2,000,000 Coca-Cola Enterprises, Inc................ 03/01/12 3.750 2,028,954 5,000,000 Diageo Finance BV......................... 04/01/13 5.500 5,167,475 185,000 PepsiAmericas, Inc........................ 05/31/11 5.625 194,339 5,000,000 PepsiAmericas, Inc........................ 02/15/14 4.375 4,976,495 ----------- 17,475,608 ----------- COSMETICS / PERSONAL CARE (1.1%) 5,000,000 Procter & Gamble Co....................... 01/15/14 4.600 5,294,930 ----------- DIVERSIFIED FINANCIAL SERVICES (4.8%) 625,000 FIA Card Services NA...................... 06/15/12 6.625 575,079 1,500,000 Goldman Sachs Group, Inc.................. 07/15/11 1.625 1,505,911 5,000,000 IBM International Group Capital LLC....... 10/22/12 5.050 5,353,105 2,725,000 International Lease Finance Corp.......... 09/01/10 4.875 2,376,143 5,000,000 John Deere Capital Corp................... 06/19/12 2.875 5,139,600 5,000,000 John Deere Capital Corp................... 09/09/13 4.900 5,055,870 2,140,000 Textron Financial Corp.................... 02/03/11 5.125 1,803,774 365,000 Travelers Cos., Inc....................... 06/15/12 5.375 368,919 1,290,000 Unilever Capital Corp..................... 11/01/10 7.125 1,385,021 ----------- 23,563,422 ----------- FOOD (4.3%) 5,000,000 Campbell Soup Co.......................... 02/15/11 6.750 5,391,900 5,000,000 General Mills, Inc........................ 09/10/12 5.650 5,267,210 5,000,000 Kellogg Co................................ 04/01/11 6.600 5,330,510 5,000,000 Kroger Co................................. 04/01/11 6.800 5,281,220 ----------- 21,270,840 ----------- </TABLE> The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2009 5 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2009 (unaudited) <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value --------- -------- -------- ----- CORPORATE BONDS (continued) HEALTHCARE PRODUCTS (1.1%) <S> <C> <C> <C> <C> $ 5,000,000 Johnson & Johnson......................... 08/15/12 5.150% $ 5,435,435 ----------- HEALTHCARE SERVICES (2.1%) 5,000,000 UnitedHealth Group, Inc................... 11/15/12 5.500 5,015,040 5,000,000 WellPoint, Inc............................ 08/01/12 6.800 5,146,450 ----------- 10,161,490 ----------- HOUSEHOLD PRODUCTS / WARES (1.1%) 5,000,000 Kimberly-Clark Corp....................... 02/15/12 5.625 5,347,815 ----------- INDUSTRIALS (6.6%) 5,000,000 3M Co..................................... 11/01/11 4.500 5,265,550 4,000,000 Emerson Electric Co....................... 08/15/10 7.125 4,256,604 5,000,000 General Dynamics Corp..................... 02/01/14 5.250 5,306,650 3,000,000 Goodrich Corp............................. 12/15/12 7.625 3,249,282 4,000,000 Lockheed Martin Corp...................... 03/14/13 4.121 4,060,104 5,000,000 Northrop Grumman Systems Corp............. 02/15/11 7.125 5,322,225 5,000,000 Raytheon Co............................... 01/15/11 4.850 5,169,995 ----------- 32,630,410 ----------- INFORMATION TECHNOLOGY (3.4%) 5,000,000 Hewlett-Packard Co........................ 03/01/12 5.250 5,321,915 1,100,000 Intuit, Inc............................... 03/15/12 5.400 1,112,766 5,000,000 Oracle Corp............................... 01/15/11 5.000 5,268,535 5,000,000 Pitney Bowes, Inc......................... 06/15/13 3.875 4,821,865 ----------- 16,525,081 ----------- INSURANCE (0.9%) 75,000 American International Group, Inc......... 10/18/16 5.600 26,081 4,385,000 MetLife, Inc.............................. 12/01/11 6.125 4,345,219 ----------- 4,371,300 ----------- </TABLE> The accompanying notes are an integral part of these financial statements. 6 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2009 (unaudited) <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value --------- -------- -------- ----- CORPORATE BONDS (continued) MATERIALS (2.2%) <S> <C> <C> <C> <C> $ 5,000,000 E.I. Du Pont de Nemours & Co.............. 07/15/13 5.000% $ 5,173,450 5,000,000 Praxair, Inc.............................. 04/01/12 6.375 5,381,505 ----------- 10,554,955 ----------- MEDIA (3.1%) 5,000,000 Comcast Corp.............................. 03/15/11 5.500 5,171,600 5,000,000 Time Warner Cable, Inc.................... 07/02/12 5.400 5,073,295 5,000,000 Walt Disney Co............................ 12/15/13 4.500 5,191,625 ----------- 15,436,520 ----------- OIL & GAS (8.2%) 5,000,000 Chevron Corp.............................. 03/03/14 3.950 5,123,545 5,000,000 ConocoPhillips............................ 02/01/14 4.750 5,272,740 5,000,000 EnCana Corp............................... 10/15/13 4.750 4,952,350 5,000,000 Halliburton Co............................ 10/15/10 5.500 5,208,505 5,000,000 Marathon Oil Corp......................... 02/15/14 6.500 5,187,965 5,000,000 ONEOK Partners LP......................... 04/01/12 5.900 4,883,920 5,000,000 Transocean, Inc........................... 03/15/13 5.250 5,062,145 5,000,000 Weatherford International Ltd............. 03/15/13 5.150 4,695,030 ----------- 40,386,200 ----------- PHARMACEUTICALS (3.5%) 5,000,000 Abbott Laboratories....................... 11/30/12 5.150 5,407,910 1,350,000 Eli Lilly & Co............................ 03/06/12 3.550 1,386,341 5,000,000 GlaxoSmithKline Capital, Inc.............. 05/15/13 4.850 5,186,740 5,000,000 Schering-Plough Corp...................... 12/01/13 5.550 5,301,240 ----------- 17,282,231 ----------- RETAIL (5.4%) 5,000,000 CVS Caremark Corp......................... 08/15/11 5.750 5,290,385 5,000,000 Lowe's Cos, Inc........................... 06/01/10 8.250 5,283,910 </TABLE> The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2009 7 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2009 (unaudited) <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value --------- -------- -------- ----- CORPORATE BONDS (continued) RETAIL (continued) <S> <C> <C> <C> <C> $ 5,000,000 Target Corp............................... 01/15/11 6.350% $ 5,330,360 5,000,000 Walgreen Co............................... 08/01/13 4.875 5,321,120 5,000,000 Wal-Mart Stores, Inc...................... 05/01/13 4.550 5,300,995 ----------- 26,526,770 ----------- TELECOMMUNICATIONS (7.6%) 635,000 AT&T, Inc................................. 09/15/09 4.125 640,933 5,000,000 AT&T, Inc................................. 03/15/11 6.250 5,270,845 5,000,000 British Telecommunications, Plc........... 12/15/10 8.625 5,225,105 5,000,000 Cisco Systems, Inc........................ 02/22/11 5.250 5,315,955 2,500,000 Deutsche Telekom International Finance BV.............................. 06/15/10 8.500 2,628,002 2,500,000 Deutsche Telekom International Finance BV.............................. 07/22/13 5.250 2,562,293 5,000,000 France Telecom S.A........................ 03/01/11 7.750 5,415,465 5,000,000 Verizon Pennsylvania, Inc................. 11/15/11 5.650 5,163,000 5,000,000 Vodafone Group, Plc....................... 02/15/10 7.750 5,185,820 ----------- 37,407,418 ----------- TRANSPORTATION (3.0%) 5,000,000 Burlington Northern Santa Fe Corp......... 07/15/11 6.750 5,259,760 5,000,000 Canadian National Railway Co.............. 03/15/13 4.400 5,074,080 1,350,000 Union Pacific Corp........................ 01/15/11 6.650 1,423,020 270,000 Union Pacific Corp........................ 01/15/12 6.125 276,194 2,555,000 Union Pacific Corp........................ 04/15/12 6.500 2,644,734 ----------- 14,677,788 ----------- UTILITIES (9.6%) 5,000,000 Alabama Power Co.......................... 12/01/10 4.700 5,146,975 5,000,000 Consolidated Edison Co. of New York, Inc........................... 07/01/12 5.625 5,254,840 520,000 Dominion Resources, Inc................... 12/15/10 4.750 532,748 </TABLE> The accompanying notes are an integral part of these financial statements. 8 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2009 (unaudited) <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value --------- -------- -------- ----- CORPORATE BONDS (continued) UTILITIES (continued) <S> <C> <C> <C> <C> $ 5,000,000 Duke Energy Carolinas LLC................. 04/01/10 4.500% $ 5,076,040 5,000,000 FPL Group Capital, Inc.................... 09/01/11 5.625 5,306,525 5,000,000 MidAmerican Energy Co..................... 07/15/12 5.650 5,140,335 5,000,000 PG&E Corp................................. 04/01/14 5.750 5,130,280 5,000,000 Sempra Energy............................. 02/01/13 6.000 5,092,915 5,000,000 Southern California Edison Co............. 01/15/10 7.625 5,151,280 5,000,000 Virginia Electric & Power Co.............. 12/15/10 4.500 5,114,975 ------------ 46,946,913 ------------ Total Corporate Bonds (Identified cost $394,460,911)............ 395,688,337 ------------ U.S. GOVERNMENT AGENCY OBLIGATIONS (1.4%) 175,000 Federal Home Loan Mortgage Corp........... 05/15/28 5.500 179,154 180,000 Federal Home Loan Mortgage Corp........... 01/15/29 5.500 184,896 105,000 Federal Home Loan Mortgage Corp........... 10/15/34 5.500 110,430 93,738 Federal National Mortgage Assoc........... 10/25/21 6.000 98,181 270,000 Federal National Mortgage Assoc........... 03/25/31 5.500 280,130 5,860 Federal National Mortgage Assoc........... 11/25/33 5.500 5,848 494,832 Federal National Mortgage Assoc.(2)....... 07/01/36 5.753 514,581 879,963 Federal National Mortgage Assoc.(2)....... 09/01/36 5.804 912,830 1,185,670 Federal National Mortgage Assoc.(2)....... 01/01/37 5.468 1,235,052 66,469 Federal National Mortgage Assoc........... 02/25/44 5.950 68,483 1,351,675 FHLMC Non Gold Guaranteed(2).............. 04/01/36 5.382 1,404,253 298,533 FHLMC Non Gold Guaranteed(2).............. 12/01/36 5.419 310,736 649,330 FHLMC Non Gold Guaranteed(2).............. 01/01/37 5.483 677,199 1,012,941 FHLMC Non Gold Guaranteed(2).............. 02/01/37 5.442 1,056,560 51,265 General National Mortgage Assoc.(2)....... 08/20/29 4.625 51,620 ------------ Total U.S. Government Agency Obligations (Identified cost $6,843,369).............. 7,089,953 ------------ </TABLE> The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2009 9 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) April 30, 2009 (unaudited) <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value --------- -------- -------- ----- COMMERCIAL PAPER (0.1%) <S> <C> <C> <C> <C> $ 500,000 UBS Finance Delaware LLC(3)............... 05/01/09 0.180% $ 500,000 ------------ Total Commercial Paper (Identified cost $500,000)................ 500,000 ------------ TOTAL INVESTMENTS (Identified cost $458,586,919)(4)..... 93.6% $459,598,349 CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES.......... 6.4 31,372,293 ----- ------------ NET ASSETS.............................................. 100.0% $490,970,642 ===== ============ </TABLE> - ---------- (1) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. Total market value of 144A securities owned at April 30, 2009 was $130,098 or 0.0% of net assets. (2) Variable rate instrument. Interest rates change on specific dates (such as coupon or interest payment date). The yield shown represents the April 30, 2009 coupon or interest rate. (3) Coupon represents a yield to maturity. (4) The aggregate cost for federal income tax purposes is $458,586,919. The aggregate gross unrealized appreciation is $3,804,267 and the aggregate gross unrealized depreciation is $2,792,837, resulting in net unrealized appreciation of $1,011,430. Abbreviations: FHLMC - Federal Home Loan Mortgage Association The accompanying notes are an integral part of these financial statements. 10 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) (continued) April 30, 2009 (unaudited) FAIR VALUE MEASUREMENTS The Fund adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, Fair Value Measurements ("FAS 157"), effective November 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 April 30, 2009 in valuing the Fund's investment carried at value: Investments in Valuation Inputs Securities - -------------------------- -------------- Level 1 - Quoted prices ................................... $ - Level 2 - Other Significant Observable Inputs ............. 458,591,798 Level 3 - Significant Unobservable Inputs ................. 1,006,551 ------------ Total .................................................. $459,598,349 ============ Following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining value: <TABLE> <CAPTION> Other Investments in Financial Securities Instruments* -------------- ------------ <S> <C> <C> Balance as of 10/31/08 ................................. $ 3,629,715 $ - Accrued discounts/premiums ............................. 437 - Realized gain/loss and change in unrealized depreciation (160,445) - Net purchases/sales .................................... (2,463,156) - Net transfers in and/or out of Level 3 ................. - - ----------- -------- Balance as of 04/30/09 ................................. $ 1,006,551 $ - =========== ======== Net change in unrealized depreciation from investments still held as of 4/30/09 ............................ $ (124,757) $ - </TABLE> * Other financial instruments include futures, forwards and swap contracts. The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2009 11 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES April 30, 2009 (unaudited) ASSETS: Investments in securities, at value (identified cost $458,586,919) $ 459,598,349 Cash ................................................... 78,165 Receivables for: Capital stock sold ................................... 24,855,950 Interest ............................................. 5,206,581 Investment sold ...................................... 3,883,192 ------------- Total Assets ....................................... 493,622,237 ------------- LIABILITIES: Payables for: Capital stock redeemed ............................... 1,339,888 Investment purchased ................................. 1,041,922 Investment advisory and administrative fees .......... 109,795 Custody and accounting fees .......................... 64,538 Shareholder servicing fees ........................... 38,001 Professional fees .................................... 17,459 Board of Trustees' fees .............................. 189 Accrued expenses and other liabilities ............... 39,803 ------------- Total Liabilities .................................. 2,651,595 ------------- NET ASSETS ................................................ $ 490,970,642 ============= Net Assets Consist of: Par value .............................................. $ 49,414 Paid-in capital ........................................ 498,438,464 Undistributed net investment income .................... 197,688 Accumulated net realized loss on investments and foreign exchange transactions ........................ (8,726,354) Net unrealized appreciation on investments and foreign currency translations ........................ 1,011,430 ------------- Net Assets ................................................ $ 490,970,642 ============= NET ASSET VALUE AND OFFERING PRICE PER SHARE CLASS N SHARES ($339,776,116 / 34,191,138 shares outstanding) ......... $9.94 ===== CLASS I SHARES ($151,194,526 / 15,222,369 shares outstanding) ......... $9.93 ===== The accompanying notes are an integral part of these financial statements. 12 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS For the six months ended April 30, 2009 (unaudited) NET INVESTMENT INCOME: Income: Interest and other income ............................... $ 6,746,855 ------------ Total Income .......................................... 6,746,855 ------------ Expenses: Investment advisory and administrative fees ............. 482,871 Shareholder servicing fees .............................. 158,298 Custody and accounting fees ............................. 92,537 Board of Trustees' fees ................................. 23,772 Professional fees ....................................... 16,767 Miscellaneous expenses .................................. 61,574 ------------ Total Expenses ........................................ 835,819 Expense offset arrangement ............................ (3,802) ------------ Net Expenses .......................................... 832,017 ------------ Net Investment Income ..................................... 5,914,838 ============ NET REALIZED AND UNREALIZED GAIN: Net realized gain on investments .......................... 4,845,710 Net change in unrealized appreciation on investments ...... 14,300,123 Net change in unrealized appreciation on foreign currency translations ........................... 40 ------------ Net change in unrealized appreciation ................... 14,300,163 ------------ Net Realized and Unrealized Gain .......................... 19,145,873 ------------ Net Increase in Net Assets Resulting from Operations ......... $ 25,060,711 ============ The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2009 13 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS <TABLE> <CAPTION> For the six months ended For the April 30, 2009 year ended (unaudited) October 31, 2008 -------------- ---------------- <S> <C> <C> INCREASE (DECREASE) IN NET ASSETS: Operations: Net investment income............................ $ 5,914,838 $ 13,601,326 Net realized gain (loss) on investments.......... 4,845,710 (3,733,055) Net change in unrealized appreciation (depreciation) on investments and futures contracts........... 14,300,163 (14,587,872) ------------ ------------ Net increase (decrease) in net assets resulting from operations................................ 25,060,711 (4,719,601) ------------ ------------ Dividends and distributions declared: From net investment income: Class N.......................................... (4,275,031) (7,097,397) Class I.......................................... (2,275,830) (5,872,365) ------------ ------------ Total dividends and distributions declared..... (6,550,861) (12,969,762) ------------ ------------ Capital stock transactions: Net proceeds from sales of capital stock......... 233,422,066 91,732,483 Net assets value of capital stock issued to shareholders for reinvestment of dividends and distributions 5,620,156 211,322 Net cost of capital stock redeemed............... (21,473,824) (108,067,830) ------------ ------------ Net increase (decrease) in net assets resulting from capital stock transactions.... 217,568,398 (16,124,025) ------------ ------------ Total increase (decrease) in net assets........ 236,078,248 (33,813,388) NET ASSETS: Beginning of year.................................. 254,892,394 288,705,782 ------------ ------------ End of period (including undistributed net investment income of $197,688 and $833,711, respectively)... $490,970,642 $254,892,394 ============ ============ </TABLE> The accompanying notes are an integral part of these financial statements. 14 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Selected per share data and ratios for a Class N share outstanding throughout each period <TABLE> <CAPTION> For the six months ended For the years ended October 31, April 30, 2009 ------------------------------------------------------------------- (unaudited) 2008 2007 2006 2005 2004 -------------- ------- ------- ------- ------- ------- <S> <C> <C> <C> <C> <C> <C> Net asset value, beginning of year ..... $9.31 $9.92 $10.10 $10.19 $10.57 $10.57 ------- ------- ------- ------- ------- ------- Income from investment operations: Net investment income1 .............. 0.18 0.44 0.46 0.48 0.42 0.43 Net realized and unrealized gain (loss) ....................... 0.64 (0.63) (0.21) (0.03) (0.27) 0.17 ------- ------- ------- ------- ------- ------- Total income (loss) from investment operations. .......... 0.82 (0.19) 0.25 0.45 0.15 0.60 ------- ------- ------- ------- ------- ------- Less dividends and distributions: From net investment income .......... (0.19) (0.42) (0.43) (0.46) (0.41) (0.44) From net realized gains ............. - - - (0.08) (0.12) (0.16) ------- ------- ------- ------- ------- ------- Total dividends and distributions ................... (0.19) (0.42) (0.43) (0.54) (0.53) (0.60) ------- ------- ------- ------- ------- ------- Net asset value, end of period ......... $9.94 $9.31 $9.92 $10.10 $10.19 $10.57 ======= ======= ======= ======= ======= ======= Total return ........................... 8.89% (2.08)% 2.42% 4.64% 1.49% 5.77% Ratios/Supplemental data: Net assets, end of period (in millions) ..................... $340 $160 $168 $147 $149 $110 Ratio of expenses to average net assets ................ 0.57%(2,3) 0.58%(2) 0.61%(2) 0.55%(2) 0.57%(2) 0.55%(4) Ratio of net investment income to average net assets ............. 3.60%(3) 4.42% 4.62% 4.75% 4.06% 4.14% Portfolio turnover rate ............. 123% 185% 275% 325% 211% 210% </TABLE> - ---------- (1) Calculated using average shares outstanding for the period. (2) The ratio of expenses to average net assets for the six months ended April 30, 2009, and the years ended October 31, 2008, 2007, 2006 and 2005 reflect fees reduced as a result of an expense offset arrangement with the Fund's custodian. Has this arrangement not been in place, this ratio would have been 0.57%, 0.58%, 0.62%, 0.56% and 0.58% respectively. (3) Annualized. (4) Had the expense payment agreement, which terminated on December 31, 2004, not been in place, the ratio of expenses to average net assets would have been as follows: N/A, N/A, N/A, N/A, N/A and 0.61%, respectively. The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT APRIL 30, 2009 15 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (continued) Selected per share data and ratios for a Class I share outstanding throughout each period <TABLE> <CAPTION> For the six months ended For the years ended October 31, April 30, 2009 ------------------------------------------------------------------- (unaudited) 2008 2007 2006 2005 2004 -------------- ------- ------- ------- ------- ------- <S> <C> <C> <C> <C> <C> <C> Net asset value, beginning of year ..... $9.31 $9.92 $10.10 $10.19 $10.57 $10.57 ------- ------- ------- ------- ------- ------- Income from investment operations: Net investment income1 .............. 0.19 0.46 0.48 0.50 0.44 0.46 Net realized and unrealized gain (loss) ....................... 0.63 (0.64) (0.20) (0.04) (0.27) 0.15 ------- ------- ------- ------- ------- ------- Total income (loss) from investment operations. .......... 0.82 (0.18) 0.28 0.46 0.17 0.61 ------- ------- ------- ------- ------- ------- Less dividends and distributions: From net investment income .......... (0.20) (0.43) (0.46) (0.47) (0.43) (0.45) From net realized gains ............. - - - (0.08) (0.12) (0.16) ------- ------- ------- ------- ------- ------- Total dividends and distributions ................... (0.20) (0.43) (0.46) (0.55) (0.55) (0.61) ------- ------- ------- ------- ------- ------- Net asset value, end of period ......... $9.93 $9.31 $9.92 $10.10 $10.19 $10.57 ======= ======= ======= ======= ======= ======= Total return ........................... 8.84% (1.92)% 2.58% 4.79% 1.64% 5.91% Ratios/Supplemental data: Net assets, end of period (in millions) ..................... $151 $95 $121 $94 $94 $91 Ratio of expenses to average net assets ................ 0.42%(2,3) 0.42%(2) 0.46%(2) 0.40%(2) 0.42%(2) 0.40%(4) Ratio of net investment income to average net assets ............. 3.81%(3) 4.56% 4.78% 4.92% 4.21% 4.36% Portfolio turnover rate ............. 123% 185% 275% 325% 211% 210% </TABLE> (1) Calculated using average shares outstanding for the period. (2) The ratio of expenses to average net assets for the six months ended April 30, 2009, and the years ended October 31, 2008, 2007, 2006 and 2005 reflect fees reduced as a result of an expense offset arrangement with the Fund's custodian. Has this arrangement not been in place, this ratio would have been 0.42%, 0.42%, 0.47%, 0.41% and 0.44% respectively. (3) Annualized. (4) Had the expense payment agreement, which terminated on December 31, 2004, not been in place, the ratio of expenses to average net assets would have been as follows: N/A, N/A, N/A, N/A, N/A and 0.45%, respectively. The accompanying notes are an integral part of these financial statements. 16 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS April 30, 2009 (unaudited) 1. Organization and Significant Accounting Policies. BBH Broad Market Fund (the "Fund") is a separate diversified series of BBH Trust (the "Trust"), which is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Trust was originally organized under the laws of the State of Maryland on July 16, 1990 as BBH Fund, Inc. and re-organized as a Delaware statutory trust on June 12, 2007. The Fund commenced operations on December 22, 2000. On August 6, 2002, the Trustees reclassified the Fund's outstanding shares as "Class N", and established a new class of shares designated as "Class I". Class I commenced on December 3, 2002. Class N and Class I shares have different operating expenses. Neither Class N shares nor Class I shares convert to any other class of the Fund. At April 30, 2009, there were five series of the Trust. The Fund's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements and are based, in part, on the following accounting policies. Actual results could differ from those estimates. A. Valuation of Investments. Bonds and other fixed income securities, including restricted securities (other than short-term obligations but including listed issues) are valued at their most recent bid prices (sales price if the principal market is an exchange) in the principal market in which such securities are normally traded, on the basis of valuations furnished by a pricing service, use of which has been approved by the Trustees. In making such valuations, the pricing service utilizes both dealer-supplied valuations and electronic data processing techniques which take into account appropriate factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data, without exclusive reliance upon quoted prices or exchange or over-the-counter prices, since such valuations are believed to reflect more accurately the fair value of such securities. Securities or other assets for which market quotations are not readily available are valued at fair value in accordance with procedures established by and under the general supervision and responsibility of the Trustees. Short-term investments which mature in 60 days or less are valued at amortized cost if their original maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if their original maturity when acquired by the Fund was more than 60 days, unless this is determined not to represent fair value by the Trustees. B. Accounting for Investments and Income. Investment transactions are accounted for on the trade date. Realized gains and losses, if any, from investment transactions are determined on the basis of identified cost. Interest income is accrued daily and consists of interest accrued, discount earned (including both original issue and market discount) and premium amortization on the investments of the Fund. Investment income is recorded net of foreign taxes withheld where FINANCIAL STATEMENT APRIL 30, 2009 17 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2009 (unaudited) recovery of such tax is uncertain. Debt obligations may be placed on non-accrual status and related interest income may be reduced by ceasing current accruals and writing off interest receivable when the collection of all or a portion of interest has become doubtful based on consistently applied procedures. A debt obligation is removed from non-accrual status when the issuer resumes interest payments or when collectability of interest is reasonably assured. C. Repurchase Agreements. The Fund may enter into repurchase agreements with primary dealers of U.S. Government Obligations as designated by the Federal Reserve Bank of New York. Repurchase agreements are transactions in which the Fund buys a security from a dealer or bank and agrees to sell the security back at a mutually agreed upon time and price. The repurchase price exceeds the sale price, reflecting the Fund's return on the transaction or effectively the interest rate paid by the dealer to the Fund. This return is unrelated to the interest rate on the underlying security. The Fund will enter into repurchase agreements only with banks and other recognized financial institutions, such as securities dealers, deemed creditworthy by the Investment Adviser. The Fund's custodian or sub-custodian will take possession of the securities subject to repurchase agreements. The Investment Adviser or sub-custodian will monitor the value of the underlying security each day to ensure that the value of the security always equals or exceeds the repurchase price. Repurchase agreements are subject to credit risks. At April 30, 2009, the Fund had no open repurchase agreements. D. Forward Foreign Currency Exchange Contracts. The Fund may enter into forward foreign currency exchange contracts ("contracts") in connection with planned purchases or sales of securities, to hedge the U.S. dollar value of Fund securities denominated in a particular currency, or to increase or shift its exposure to a currency other than U.S. dollars. The Fund has no specific limitation on the percentage of assets which may be committed to these types of contracts. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably. The U.S. dollar values of foreign currency underlying all contractual commitments held by the Fund are determined using forward currency exchange rates supplied by a quotation service. At April 30, 2009, the Fund had no open forward foreign currency exchange contracts. E. Swap Agreements. The Fund may enter into swap agreements. A swap is an exchange of cash payments based on a notional principal amount between the Fund and another party which is based on a specific financial index. These transactions are entered into in an attempt to obtain a particular return when it is considered desirable to do so, possibly at a lower cost to the Fund than if the Fund had invested directly in an instrument that yielded that desired return. Cash payments are exchanged at specified intervals and recorded in the Statement of Operations as realized gains and losses. The expected income or expense is recorded on an accrual basis. The value of the swap is 18 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2009 (unaudited) adjusted daily and the change in value is recorded as unrealized appreciation or depreciation. Risks may arise upon entering into these agreements from the potential inability of counter parties to meet the terms of their contract and from unanticipated changes in the value of the financial index on which the swap agreement is based. Risks may exceed amounts recognized on the Statement of Assets and Liabilities. The Fund may use swaps for both hedging and non-hedging purposes. For hedging purposes, the Fund may use swaps to reduce its exposure to interest and foreign exchange rate fluctuations. For non-hedging purposes, the Fund may use swaps to take a position on anticipated changes in the underlying financial index. At April 30, 2009, the Fund had no open swap agreements. F. Financial Futures Contracts. The Fund may enter into open futures contracts in order to hedge against anticipated future changes in interest rates which otherwise might either adversely affect the value of securities held for the Fund or adversely affect the prices of securities which are intended to be purchased at a later date for the Fund. The contractual amount of the futures contracts represents the investment the Fund has in a particular contract and does not necessarily represent the amounts potentially subject to risk. Trading in futures contracts involves, to varying degrees, risk of loss in excess of any futures variation margin reflected in the Statement of Assets and Liabilities. The measurement of risk associated with futures contracts is meaningful only when all related and offsetting transactions are considered. Gains and losses are realized upon the expiration or closing of the futures contracts. Futures contracts held by the Fund are valued daily at the official settlement price of the exchange on which it is traded. At April 30, 2009, the Fund had no open financial futures contracts. G. Rule 144A Securities. The Fund may purchase securities that are not registered under the 1933 Act, but that can be sold to "qualified institutional buyers" in accordance with the requirements stated in Rule 144A under the 1933 Act (Rule 144A Securities). A Rule 144A Security may be considered illiquid and therefore subject to the 15% limitation on the purchase of illiquid securities, unless it is determined on an ongoing basis that an adequate trading market exists for the security. Guidelines have been adopted and the daily function of determining and monitoring liquidity of Rule 144A Securities has been delegated to the Investment Adviser. All relevant factors will be considered in determining the liquidity of Rule 144A Securities and all investments in Rule 144A Securities will be carefully monitored. Information regarding Rule 144A securities is included at the end of the portfolio of investments. H. Securities Lending. The Fund may lend its portfolio securities to broker-dealers, qualified banks and certain institutional investors. The loans are secured by collateral in an amount equal to at least the market value at all times of the loaned securities plus any accrued interest and dividends. During the time the securities are on loan, the Fund will continue to receive the interest and FINANCIAL STATEMENT APRIL 30, 2009 19 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2009 (unaudited) dividends or amounts equivalent thereto, on the loaned securities while receiving a fee from the borrower or earning interest on the investment of the cash collateral. Loans are subject to termination at the option of the borrower or the Fund. Upon termination of the loan, the borrower will return to the lender securities identical to the loaned securities. The Fund may pay reasonable finders', administrative and custodial fees in connection with a loan of its securities and may share the interest earned on the collateral with the borrower. The Fund bears the risk of delay in recovery of, or even loss of rights in, the securities loaned should the borrower of the securities fail financially. There were no securities on loan as of April 30, 2009. I. Federal Income Taxes. It is the Trust's policy to comply with the requirements of the Internal Revenue Code (the "Code") applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. Accordingly, no federal income tax provision is required. The Fund files a tax return annually using tax accounting methods required under provisions of the Code which may differ from accounting principles generally accepted in the United States of America, the basis on which these financial statements are prepared. Accordingly, the amount of net investment income and net realized gain reported on these financial statements may differ from that reported on the Fund's tax return due to certain book-to-tax timing differences such as losses deferred due to "wash sale" transactions and utilization of capital loss carryforwards. These differences result in temporary over-distributions for financial statement purposes and are classified as distributions in excess of accumulated net realized gains or net investment income. These distributions do not constitute a return of capital. Permanent differences are reclassified on the Statement of Assets & Liabilities based upon their tax classification. As such, the character of distributions to shareholders reported in the Financial Highlights table may differ from that reported to shareholders on Form 1099-DIV. J. Dividends and Distributions to Shareholders. Dividends to shareholders, if any, are generally declared and paid monthly and are recorded on the ex-dividend date. Distributions from net capital gains, if any, are generally declared and paid annually and are recorded on the ex-dividend date. The tax character of distributions paid during the fiscal years ended October 31, 2008 and 2007, respectively, were as follows: Distribution paid from: - -------------------------------------------------------------------------------- Net Total Total Ordinary long-term taxable Tax return distributions income capital gain distributions of capital paid -------- ------------ ------------- ---------- ------------- 2008: $12,969,762 - $12,969,762 - $12,969,762 2007: 11,326,680 - 11,326,680 - 11,326,680 20 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2009 (unaudited) As of October 31, 2008 and 2007, respectively, the components of accumulated earnings/(deficit) on a tax basis were as follows: <TABLE> <CAPTION> Components of accumulated earnings/(deficit): - ------------------------------------------------------------------------------------------------------------------- Other Total Undistributed Undistributed Accumulated Book/Tax Unrealized accumulated ordinary long-term Accumulated capital and temporary appreciation/ earnings/ income capital gain earnings other losses differences (depreciation) (deficit) ------------- ------------- ----------- ------------ ----------- -------------- ----------- <S> <C> <C> <C> <C> <C> <C> <C> 2008: $833,711 - $833,711 $(13,308,121) $(263,943) $(13,288,693) $(26,027,046) 2007: 436,155 - 436,155 (10,771,480) (137,660) (69,955) 10,542,940 </TABLE> The Fund had a net capital loss carryforward of approximately $13,308,121 which expires as follows: Expiration date Amount ---------- ----------- 10/31/2014 $ 5,375,549 10/31/2015 5,395,931 10/31/2016 2,536,641 ----------- $13,308,121 =========== Total distributions paid may differ from the Statement of Changes in Net Assets because, for tax purposes, dividends are recognized when actually paid. The differences between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales. To the extent future capital gains are offset by capital carryforwards, such gains will not be distributed. K. Accounting Developments. In June 2006, the Fund adopted FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund's tax returns to determine whether that tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. The adoption of FIN 48 had no impact on the operations of the Fund for the six months ended April 30, 2009. FINANCIAL STATEMENT APRIL 30, 2009 21 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2009 (unaudited) In March 2008, Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities" ("SFAS 161"), was issued and is effective for fiscal years and interim periods 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 performance. In September 2008, "FASB Staff Position No. 133-1 and FASB Interpretation No. 45-4" (the "FSP"), "Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161," was issued and is effective for fiscal years and interim periods ending after November 15, 2008. The FSP amends FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities," to require disclosures by sellers of credit derivatives, including credit derivatives embedded in hybrid instruments. The FSP also clarifies the effective date of SFAS 161, whereby disclosures required by SFAS 161 are effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund's financial statements 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, Brown Brothers Harriman & Co. ("BBH") through a separately identifiable department (the "SID") provides investment advisory and portfolio management services to the Fund. The Fund pays a combined fee for investment advisory and administrative services calculated daily and paid monthly at an annual rate equivalent to 0.30% of the fund's average daily net assets. BBH has a sub-administration services agreement with Federated Services Company ("FSC") for which FSC receives compensation paid by BBH. For the six months ended April 30, 2009, the Fund incurred $482,871 for investment advisory and administrative services. Shareholder Servicing Fees. The Trust has a shareholder servicing agreement with BBH. BBH receives a fee from the Fund for such services calculated daily and paid monthly at an annual rate of 0.15% of Class N shares' average daily net assets. For the six months ended April 30, 2009, the Fund incurred $158,298 for shareholder servicing services. 22 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2009 (unaudited) Custody and Accounting Fees. BBH acts as a custodian and shall receive a custody and accounting fee from the Fund calculated daily and paid monthly. BBH holds all cash and investments and calculates the daily net asset value. The custody fee is a transaction based fee with an annual minimum of $30,000, and the accounting fee is calculated at 0.04% per annum on the first $100 million of net assets, 0.02% per annum on the next $400 million of net assets and 0.01% per annum on all net assets over $500 million. For the six months ended April 30, 2009, the Fund incurred $92,537 for custody and accounting services. These fees for the Fund were reduced by $3,802 as a result of an expense offset arrangement with the Fund's custodian. In the event that the Fund is overdrawn, under the custody agreement with BBH, BBH will make overnight loans to the Fund to cover overdrafts. Pursuant to their agreement the Fund will pay the Federal Funds overnight investment rate on the day of overdraft. The total interest paid by the Fund for the six months ended April 30, 2009, was $20. Securities Lending Fees. The Trust has a security lending agreement with BBH for which BBH receives a fee from the Fund for each security loaned. For the six months ended April 30, 2009, the Fund incurred no security lending fees. Board of Trustees' Fees. Each Trustee receives an annual fee as well as reimbursement for reasonable out-of-pocket expenses from the Fund. For the six months ended April 30, 2009, the Fund incurred $23,772 for these fees. 3. Investment Transactions. For the six months ended April 30, 2009, the cost of purchases and the proceeds of sales of investment securities other than short-term investments were $555,245,360 and $361,400,459 respectively. 4. Securities on Loan. As of April 30, 2009, the Fund had no securities on loan. FINANCIAL STATEMENT APRIL 30, 2009 23 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) April 30, 2009 (unaudited) 5. Capital Stock. The Trust is permitted to issue an unlimited number of Class N shares and Class I shares of capital stock, at no par value. Transactions in shares of capital stock were as follows: <TABLE> <CAPTION> SHARES AMOUNT --------------------------------- --------------------------------- For the six For the six months ended For the months ended For the April 30, 2009 year ended April 30, 2009 year ended (unaudited) October 31, 2008 (unaudited) October 31, 2008 -------------- ---------------- -------------- ---------------- <S> <C> <C> <C> <C> Class N Capital stock sold .... 18,417,523 4,485,055 $181,863,410 $44,457,271 Capital stock issued in connection with reinvestment of dividends ........... 393,836 22,998 3,891,534 226,737 Capital stock redeemed. (1,752,034) (4,256,876) (17,227,091) (42,061,645) ----------- ---------- ------------- ------------ Net increase .......... 17,059,325 251,177 $168,527,853 $2,622,363 =========== ========== ============= ============ Class I Capital stock sold .... 5,233,025 4,739,971 $51,558,656 $47,275,212 Capital stock issued in connection with reinvestment of dividends ........... 175,026 (1,548) 1,728,622 (15,415) Capital stock redeemed. (429,412) (6,711,398) (4,246,733) (66,006,185) ----------- ---------- ------------- ------------ Net increase .......... 4,978,639 (1,972,975) $49,040,545 $(18,746,388) =========== ========== ============= ============ </TABLE> 24 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES April 30, 2009 (unaudited) EXAMPLE As a shareholder of BBH Broad Market Fund (the "Fund"), you may incur two types of costs: (1) transaction costs on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (November 1, 2008 to April 30, 2009). 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 APRIL 30, 2009 25 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES (continued) April 30, 2009 (unaudited) Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Expenses Paid Beginning Ending During Period Account Value Account Value November 1, 2008 November 1, 2008 April 30, 2009 to April 30, 2009(1) ---------------- -------------- -------------------- Class N Actual............ $1,000 $1,088.90 $2.95 Hypothetical(2)... $1,000 $1,021.97 $2.86 Expenses Paid Beginning Ending During Period Account Value Account Value November 1, 2008 November 1, 2008 April 30, 2009 to April 30, 2009(1) ---------------- -------------- -------------------- Class I Actual............ $1,000 $1,088.40 $2.17 Hypothetical(2)... $1,000 $1,022.71 $2.11 - ---------- (1) Expenses are equal to the Fund's annualized expense ratio of 0.57% and 0.42% for Class N and I shares, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). (2) Assumes a return of 5% before expenses. For the purposes of the calculation, the applicable annualized expense ratio for each class of shares is subtracted from the assumed return before expenses. 26 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION April 30, 2009 (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 Harriman's Mutual Fund Advisory Department (the "SID") and Brown Brothers Harriman & Co. ("BBH") The Board noted that, under the Agreement and with respect to each Fund, the SID, subject to the supervision of the Board, will be responsible for providing a continuous investment program and making purchases and sales of portfolio securities consistent with the Funds' investment objectives and policies. The Board also noted that BBH provides administrative services to each Fund. The Board considered the scope and quality of services to be provided by the SID and BBH under the Agreement and noted that the scope of services provided had expanded over time. The Board considered the quality of the investment research by the SID, the administrative capabilities provided by BBH and the other resources BBH and the SID have dedicated to performing services for the Funds. The Board concluded that, overall, they were satisfied with the nature, extent and quality of services expected to be provided to each of the Funds under the 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 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 APRIL 30, 2009 27 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) April 30, 2009 (unaudited) Fall-Out Benefits The Board considered that the SID 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 the SID'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 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 (or fall) proportionally to increases (or 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 provided to the Board 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 28 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) April 30, 2009 (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, the Board received detailed performance information for each Fund at each regular Board meeting during the year. At the meeting held on December 10, 2008, the Board reviewed information showing performance of each Fund over the prior 1-, 3-, and 5- year periods and compared the performance information to a securities index over comparable periods. 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 the BBH Broad Market Fund also were noted and considered by the Board in deciding to approve the Agreement: The Board reviewed the information showing performance of the BBH Broad Market Fund's Class N shares and Class I shares compared to the Barclays Capital U.S. Aggregate Bond Index. Both classes of the BBH Broad Market Fund modestly underperformed the benchmark over all the relevant periods both on a pre-fee and after-fee basis. The Board noted that the Advisor had made a change to the Fund's portfolio management team in 2008 and that changes had been made to the overall make up of the portfolio to reduce its risk profile. The Board also noted the expense ratio for both share classes were in line with or lower than many funds of similar size and investment mandate. Taking into account these comparisons and the other factors considered, the Board concluded that the BBH Broad Market Fund's investment results over time, the actions taken by the Advisor and its total expense ratio had been reasonable. FINANCIAL STATEMENT APRIL 30, 2009 29 <PAGE> BBH BROAD MARKET FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) April 30, 2009 (unaudited) Conflicts of Interest As a general matter, certain conflicts of interest may arise in connection with 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 man- aged 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 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. BBH may direct brokerage transactions and/or payment of a portion of client commissions ("soft dollars") to specific brokers or dealers or other providers to pay for research or brokerage services. The use of a broker that provides research and securities transaction services may result in a higher commission than that offered by a broker who does not provide such services. BBH will determine in good faith whether the amount of commission is reasonable in relation to the value of research and brokerage services provided. BBH may enter into advisory and/or referral arrangements with third parties. Such arrangements are typically entered into in accordance with a written agreement and may include compensation paid by BBH to the third party. BBH may pay a solicitation fee for referrals and/or advisory or incentive fees. 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, reasonably designed to safeguard a Fund from being negatively affected as a result of any such potential conflicts. 30 <PAGE> INVESTMENT ADVISER AND ADMINISTRATOR BROWN BROTHERS HARRIMAN 140 BROADWAY NEW YORK, NY 10005 DISTRIBUTOR EDGEWOOD SERVICES, INC. 4000 ERICSSON DRIVE WARRENDALE, PA 15086-7561 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." A summary 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
Not applicable.
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 Registrant’s internal control
over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the Registrant as required by Rule
30a-2(a) under the Act (17 CFR 270.30a-2) is filed as Exhibit 12(a)
(2).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act
of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
(Registrant) BBH TRUST
-------------------------------------
By (Signature and Title)* /s/ John A. Gehret
------------------------------
John A. Gehret, President
(Principal Executive Officer)
Date: 07/07/09
------------------
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: 07/07/09
------------------
By (Signature and Title)* /s/ Charles H. Schreiber
---------------------------
Charles H. Schreiber, Treasurer
(Principal Financial Officer)
Date: 07/07/09
------------------
- 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
Core Select, BBH International Equity Fund and BBH Broad Market Fund,
("Registrant");
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations, changes in net
assets, and cash flows (if the financial statements are required to include
a statement of cash flows) of the Registrant as of, and for, the periods
presented in this report;
4. The Registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Rule 30a-3(c) under the Investment Company Act of 1940) and
internal control over financial reporting (as defined in Rule 30a-3(d)
under the Investment Company Act of 1940) for the Registrant and have:
a.) designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b.) designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
c.) evaluated the effectiveness of the Registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of a date
within 90 days prior to the filing date of this report based on such
evaluation; and
d.) disclosed in this report any change in the Registrant's internal control
over financial reporting that occurred during the second fiscal quarter of
the period covered by this report that has materially affected, or is
reasonably likely to materially affect, the Registrant's internal control over
financial reporting; and
5. The Registrant's other certifying officer and I have disclosed to the
Registrant's auditors and the audit committee of the Registrant's board of
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: 07/07/09
/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
Core Select, BBH International Equity Fund and BBH Broad Market Fund,
("Registrant");
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations, changes in net
assets, and cash flows (if the financial statements are required to
include a statement of cash flows)of the Registrant as of, and for, the
periods presented in this report;
4. The Registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Rule 30a-3(c) under the Investment Company Act of 1940) and
internal control over financial reporting (as defined in Rule 30a-3(d)
under the Investment Company Act of 1940) for the Registrant and have:
a.) designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
b.) designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c.) evaluated the effectiveness of the Registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of a date
within 90 days prior to the filing date of this report based on such
evaluation; and
d.) disclosed in this report any change in the Registrant's internal control
over financial reporting that occurred during the second fiscal quarter of
the period covered by this report that has materially affected, or is
reasonably likely to materially affect, the Registrant's internal control
over financial reporting; and
5. The Registrant's other certifying officer and I have disclosed to the
Registrant's auditors and the audit committee of the Registrant's board of
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: 07/07/09
/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 October 31, 2009
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 April 30, 2009
(the "Report") fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the
Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the Registrant.
Date: 07/07/09
------------------
/s/ John A. Gehret
=======================
John A. Gehret
President - Principal Executive Officer
Date: 07/07/09
------------------
/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.