UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-21829
BBH TRUST
BBH Money Market Fund
BBH Tax Exempt Money Fund
(Exact name of Registrant as specified in charter)
140 Broadway,
New York, NY 10005
(Address of principal executive offices)
Corporation Services Company,
2711 Centerville Road, Suite 400, Wilmington,
DE, 19808
(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 593-7237
Date of fiscal year end: JUNE 30
Date of reporting period: JUNE 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.
[LOGO] BROWN BROTHERS HARRIMAN - -------------------------------------------------------------------------------- Annual Report JUNE 30, 2009 - -------------------------------------------------------------------------------- BBH MONEY MARKET FUND <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE June 30, 2009 For the 12-month period ended June 30, 2009, the BBH Money Market Fund (the "Fund") produced a total return of 1.10%(1) and 1.35%(1) for its regular and institutional shares, respectively. We believe the performance of the Fund was competitive within the industry while maintaining a high degree of liquidity throughout the period. The Fund seeks to maximize income while attempting to preserve capital and maintain liquidity by investing primarily in a diversified portfolio of liquid, high-quality, short-term debt securities. To that end, the Fund's investments include securities issued or guaranteed as to principal and interest by the U.S. government or its agencies, certificates of deposit and commercial paper issued by large, well capitalized global banks, commercial paper issued by large credit worthy U.S. corporations, and repurchase agreements backed by U.S. government and agency collateral. During the reporting period, the money markets faced an unparalleled credit environment, including the failure of a prominent money market fund to maintain a net asset value of $1.00 per share, triggered by the bankruptcy of Lehman Brothers. Also during this period, the U.S. Government placed the nation's two largest mortgage guarantors, Freddie Mac and Fannie Mae, as well as the largest insurance company, AIG, in conservatorship. All three firms were active issuers of paper in the money markets. Risk premiums quickly rose to abnormally high levels, even for securities deemed to be of very high credit quality, resulting in a period where liquidity became unavailable for all but government supported securities. To combat the credit crisis, the Federal Reserve took several unprecedented actions including cutting its target interest rate to zero and creating a number of liquidity facilities designed to ease strains on the money markets. These programs ultimately proved highly successful, reestablishing liquidity in the money markets and substantially lowering risk premiums. At its height, the spread between high quality money market credit and U.S. Treasury bills, referred to as the TED spread, rose to a record 460 basis points in early October. By the end of the reporting period, the TED spread had recovered to a more normal 40 basis points. Ironically, the welcomed easing of risk premiums has led to a new challenge facing money market funds which is to provide a viable return in the midst of historically low interest rates. Throughout this difficult environment, the investment team for the BBH Money Market Fund maintained what it believed to be a conservative investment strategy, which enabled the Fund to largely avoid some of the more distressed areas of the markets and provide uninterrupted liquidity to its shareholders. Brown Brothers Harriman & Co. continues to perform its own rigorous credit assessment of all securities purchased for the Fund and does not soley rely on the rating agencies to determine credit quality. As a result, the investment team has been able to deliver a consistently competitive return and ample liquidity even with the recent adverse conditions present in the money markets. - ---------- (1) Performance data quoted represents no guarantee of future results. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual Fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month end performance and after tax returns, contact the Fund at 1-800-625-5759. 2 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM June 30, 2009 To the Trustees of the BBH Trust and Shareholders of BBH Money Market Fund We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of BBH Money Market Fund (a series of BBH Trust) (the "Fund") as of June 30, 2009, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of June 30, 2009, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other audit procedures. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of BBH Money Market Fund as of June 30, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP Boston, Massachusetts August 18, 2009 FINANCIAL STATEMENT JUNE 30, 2009 3 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO ALLOCATION June 30, 2009 BREAKDOWN BY SECURITY TYPE AND OTHER ASSETS <TABLE> <CAPTION> Percent of U.S. $ Value Net Assets -------------- ---------- <S> <C> <C> Certificates of Deposit ........................................................ $ 916,706,281 33.9% Commercial Paper ............................................................... 689,553,178 25.5 Corporate Bonds ................................................................ 109,503,233 4.0 Municipal Bonds ................................................................ 407,588,708 15.1 U.S. Government Agency Obligations ............................................. 28,015,700 1.0 Time Deposits .................................................................. 310,300,000 11.5 Repurchase Agreements .......................................................... 220,000,000 8.1 Cash and Other Assets in Excess of Liabilities ................................. 24,736,083 0.9 -------------- ----- NET ASSETS ..................................................................... $2,706,403,183 100.0% ============== ===== </TABLE> All data as of June 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. 4 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS June 30, 2009 <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value --------- -------- -------- ----- <S> <C> <C> <C> <C> CERTIFICATES OF DEPOSIT (33.9%) $ 70,000,000 Australia & New Zealand Banking Group................. 09/24/09 0.330% $ 70,001,649 10,000,000 Banco Bilbao Vizcaya Argentaria....................... 08/07/09 3.050 10,000,251 17,600,000 Banco Bilbao Vizcaya Argentaria....................... 08/20/09 1.105 17,600,122 23,200,000 Banco Bilbao Vizcaya Argentaria....................... 02/11/10 1.205 23,200,718 15,000,000 Banco Bilbao Vizcaya Argentaria....................... 03/19/10 0.905 15,000,540 15,000,000 Bank of America....................................... 07/06/09 1.050 15,000,000 20,000,000 Bank of America....................................... 10/07/09 1.100 20,000,000 20,000,000 Bank of America....................................... 02/08/10 1.220 20,000,000 45,997,000 Bank of Montreal...................................... 09/15/09 0.350 45,998,938 45,000,000 Barclays Bank, Plc.................................... 12/15/09 0.815 45,000,000 22,350,000 BNP Paribas........................................... 07/27/09 1.120 22,350,000 12,000,000 BNP Paribas........................................... 12/07/09 0.480 12,000,000 21,000,000 BNP Paribas........................................... 02/16/10 0.840 21,000,000 30,000,000 Citibank NA........................................... 07/22/09 0.900 30,000,000 10,000,000 Citibank NA........................................... 08/12/09 0.750 10,000,000 10,000,000 Citibank NA........................................... 08/18/09 0.570 10,000,000 10,000,000 Citibank NA........................................... 09/08/09 0.550 10,000,000 30,000,000 Deutsche Bank AG...................................... 07/22/09 0.620 30,000,000 29,000,000 Deutsche Bank AG(1)................................... 01/25/10 1.592 29,103,164 25,000,000 DnB NorBank ASA....................................... 09/25/09 0.300 25,000,000 22,600,000 DnB NorBank ASA....................................... 02/11/10 1.380 22,600,000 20,000,000 DnB NorBank ASA....................................... 06/25/10 1.130 20,000,000 45,000,000 Lloyds TSB Bank, Plc.................................. 09/10/09 0.590 45,000,000 25,000,000 Lloyds TSB Bank, Plc.................................. 10/23/09 0.760 25,000,000 18,000,000 Nordea Bank Finland, Plc.............................. 10/06/09 1.950 18,024,188 5,000,000 Nordea Bank Finland, Plc.............................. 10/13/09 1.300 4,997,105 20,000,000 Nordea Bank Finland, Plc.............................. 05/21/10 1.070 19,999,994 20,000,000 Rabobank Nederland NV................................. 09/04/09 1.010 20,000,359 25,000,000 Rabobank Nederland NV................................. 10/09/09 1.000 25,003,456 25,000,000 Royal Bank of Scotland, Plc........................... 07/09/09 1.650 25,000,826 18,000,000 Royal Bank of Scotland, Plc........................... 11/30/09 1.260 18,000,000 25,000,000 Royal Bank of Scotland, Plc........................... 05/11/10 1.940 25,000,000 22,500,000 Societe Generale...................................... 05/14/10 0.990 22,500,000 25,000,000 Svenska Handelsbanken, Inc............................ 09/17/09 0.350 25,001,080 </TABLE> The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT JUNE 30, 2009 5 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) June 30, 2009 <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value --------- -------- -------- ----- <S> <C> <C> <C> <C> CERTIFICATES OF DEPOSIT (continued) $ 11,300,000 Toronto Dominion Bank................................. 09/14/09 1.000% $ 11,300,000 20,000,000 Toronto Dominion Bank................................. 11/13/09 1.630 20,009,623 30,000,000 Toronto Dominion Bank................................. 01/12/10 0.600 30,012,954 25,000,000 UBS AG ............................................... 07/13/09 1.540 25,000,083 8,000,000 UBS AG ............................................... 10/16/09 1.765 8,000,118 25,000,000 UBS AG ............................................... 05/24/10 1.975 25,001,113 -------------- Total Certificates of Deposit......................... 916,706,281 -------------- COMMERCIAL PAPER (25.5%) 20,000,000 Austin, Texas, Independent School District............................................ 07/22/09 0.400 20,000,000 60,000,000 Automatic Data Processing, Inc.(2).................... 07/01/09 0.150 60,000,000 17,800,000 Brown University(3)................................... 07/01/09 0.595 17,800,000 21,000,000 Brown-Forman Corp.(2)................................. 07/02/09 0.300 20,999,825 21,000,000 Brown-Forman Corp.(2)................................. 07/06/09 0.300 20,999,125 20,549,000 City of Chicago, Illinois(2).......................... 10/06/09 2.004 20,441,032 5,253,000 City of Dallas, Texas................................. 08/27/09 0.400 5,253,000 50,000,000 Danske Corp.(2)....................................... 08/17/09 0.310 49,979,764 15,000,000 Danske Corp.(2)....................................... 09/03/09 0.350 14,990,667 10,000,000 De Kalb County, Georgia Development Authority........................................... 07/08/09 0.850 10,000,000 30,000,000 Hewlett-Packard Co.(2)................................ 07/01/09 0.180 30,000,000 10,000,000 Hewlett-Packard Co.(2)................................ 07/02/09 0.200 9,999,944 62,000,000 ING (US) Funding LLC(2)............................... 07/10/09 0.420 61,993,490 10,000,000 ING (US) Funding LLC(2)............................... 08/21/09 0.300 9,995,750 16,588,000 Johns Hopkins University.............................. 08/13/09 0.480 16,588,000 40,000,000 National Australia Funding Delaware, Inc.(2)................................... 07/21/09 0.460 39,989,778 15,992,000 Nebraska State Public Power District(2)............... 07/14/09 0.701 15,987,958 5,000,000 Nordea North America, Inc.(2)......................... 07/15/09 0.521 4,998,989 20,000,000 Nordea North America, Inc.(2)......................... 09/09/09 0.310 19,987,944 10,200,000 Parker Hannifin Corp.(2).............................. 07/01/09 0.180 10,200,000 24,000,000 Parker Hannifin Corp.(2).............................. 07/13/09 0.220 23,998,240 10,000,000 Rabobank USA Financial Corp.(2)....................... 07/02/09 0.210 9,999,942 </TABLE> The accompanying notes are an integral part of these financial statements. 6 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) June 30, 2009 <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value --------- -------- -------- ----- <S> <C> <C> <C> <C> COMMERCIAL PAPER (continued) $ 10,000,000 Rabobank USA Financial Corp.(2)....................... 07/15/09 0.400% $ 9,998,444 45,000,000 Siemens Capital Co. LLC(2)............................ 07/06/09 0.170 44,998,937 20,000,000 Societe Generale(2)................................... 07/02/09 1.064 19,999,411 5,000,000 Societe Generale(2)................................... 08/17/09 1.125 4,992,689 5,000,000 Societe Generale(2)................................... 08/21/09 1.339 4,990,579 25,000,000 Southern Co.(2)....................................... 07/16/09 0.200 24,997,917 43,000,000 Svenska Handelsbanken, Inc.(2)........................ 07/13/09 0.681 42,990,253 20,405,000 Tennessee State School Bond........................... 09/17/09 0.400 20,405,000 10,000,000 UBS Finance Delaware LLC(2)........................... 07/31/09 2.880 9,976,500 12,000,000 Yale University(2).................................... 07/01/09 0.672 12,000,000 -------------- Total Commercial Paper................................ 689,553,178 -------------- CORPORATE BONDS (4.0%) 15,000,000 American Express Bank(1),(4).......................... 12/10/10 1.173 15,164,820 5,000,000 BellSouth Corp........................................ 09/15/09 4.200 5,008,380 1,000,000 Berkshire Hathaway Finance Corp....................... 01/15/10 4.125 1,018,349 6,200,000 ConocoPhillips Co..................................... 05/25/10 8.750 6,643,917 4,500,000 EI Du Pont de Nemours & Co............................ 10/15/09 6.875 4,581,257 30,000,000 General Electric Capital Corp.(1),(4)................. 12/09/10 1.263 30,296,714 10,000,000 IBM International Group Capital LLC(1)................ 07/29/09 1.394 10,002,770 14,500,000 Praxair, Inc.(1)...................................... 05/26/10 0.751 14,500,000 2,800,000 Procter & Gamble Co................................... 09/15/09 6.875 2,837,201 15,000,000 US Bank NA(1)......................................... 09/10/09 0.750 15,000,000 4,450,000 Westpac Banking Corp.(1).............................. 08/14/09 1.439 4,449,825 -------------- Total Corporate Bonds................................. 109,503,233 -------------- MUNICIPAL BONDS (15.1%) 6,190,000 Brazos River, Texas, Pollution Control(1)............. 07/01/09 0.550 6,190,000 1,700,000 Buncombe County, North Carolina(1).................... 07/02/09 0.470 1,700,000 2,000,000 Buncombe County, North Carolina(1).................... 07/02/09 0.470 2,000,000 2,000,000 Buncombe County, North Carolina(1).................... 07/02/09 0.470 2,000,000 2,000,000 Buncombe County, North Carolina(1).................... 07/02/09 0.470 2,000,000 6,000,000 Charleston, South Carolina, Waterworks & Sewer(1).......................................... 07/02/09 0.320 6,000,000 </TABLE> The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT JUNE 30, 2009 7 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) June 30, 2009 <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value --------- -------- -------- ----- <S> <C> <C> <C> <C> MUNICIPAL BONDS (continued) $ 7,000,000 Charlotte, North Carolina(1).......................... 07/02/09 0.320% $ 7,000,000 2,000,000 Charlotte, North Carolina(1).......................... 07/02/09 0.350 2,000,000 7,800,000 Chicago, Illinois(1).................................. 07/01/09 0.180 7,800,000 11,650,000 Chicago, Illinois, Board of Education(1).............. 07/01/09 0.180 11,650,000 10,000,000 Columbia, Alabama, Industrial Development Board Pollution Control(1).............. 07/01/09 0.320 10,000,000 2,500,000 Delaware State Economic Development Authority(1)........................................ 07/02/09 0.320 2,500,000 5,000,000 Delaware State Economic Development Authority(1)........................................ 07/02/09 0.320 5,000,000 5,000,000 Georgia State Municipal Electric Authority........................................... 06/21/10 2.250 5,016,700 3,500,000 Guilford County, North Carolina(1).................... 07/02/09 0.320 3,500,000 17,300,000 Harris County, Texas, Health Facilities Development Corp.(1)................................ 07/01/09 0.180 17,300,000 2,745,000 Houston, Texas, Higher Education Finance Corp.(1).................................... 07/01/09 0.250 2,745,000 3,826,000 Illinois State Finance Authority(1)................... 07/02/09 0.200 3,826,000 10,000,000 Illinois State Finance Authority(1)................... 07/02/09 0.240 10,000,000 14,410,000 Kansas State Department of Transportation & Highway(1)......................... 07/01/09 0.250 14,410,000 16,940,000 Massachusetts State Health & Educational Facilities Authority(1)................. 07/02/09 0.250 16,940,000 4,200,000 Mecklenburg County, North Carolina(1)................. 07/02/09 0.270 4,200,000 6,000,000 Mecklenburg County, North Carolina(1)................. 07/02/09 0.300 6,000,000 10,000,000 Missouri State Development Finance Board(1).................................... 07/01/09 0.180 10,000,000 21,100,000 Missouri State Health & Educational Facilities Authority(1)............................. 07/01/09 0.350 21,099,931 10,000,000 Missouri State Health & Educational Facilities Authority(1)............................. 07/01/09 0.620 10,000,000 10,290,000 New Hampshire State Health & Education Facilities Authority(1)............................. 07/01/09 0.250 10,290,000 </TABLE> The accompanying notes are an integral part of these financial statements. 8 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) June 30, 2009 <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value --------- -------- -------- ----- <S> <C> <C> <C> <C> MUNICIPAL BONDS (continued) $ 3,900,000 New Jersey State Educational Facilities Authority(1)........................................ 07/01/09 0.250% $ 3,900,000 5,500,000 New York State Dormitory Authority(1)................. 07/02/09 0.750 5,500,000 8,785,000 Newport Mesa, California, Unified School District..................................... 01/07/10 2.000 8,801,077 5,000,000 North Carolina State Capital Facilities Finance Agency(1)................................... 07/02/09 0.220 5,000,000 6,400,000 North Carolina State Medical Care Commission(1)....................................... 07/02/09 0.270 6,400,000 2,500,000 Northampton County, Pennsylvania, Higher Education Authority(1)....................... 07/02/09 0.250 2,500,000 10,480,000 Ohio State Higher Educational Facilities(1)........... 07/02/09 0.450 10,480,000 21,000,000 Oklahoma State Turnpike Authority(1).................. 07/01/09 0.180 21,000,000 20,000,000 Oklahoma State Turnpike Authority(1).................. 07/01/09 0.230 20,000,000 20,240,000 Pennsylvania State Turnpike Commission(1)............. 07/02/09 0.700 20,240,000 7,900,000 Philadelphia, Pennsylvania, Hospitals & Higher Education Facilities Authority(1)............ 07/01/09 0.180 7,900,000 11,900,000 Philadelphia, Pennsylvania, Hospitals & Higher Education Facilities Authority(1)............ 07/01/09 0.180 11,900,000 4,500,000 Raleigh, North Carolina(1)............................ 07/01/09 0.250 4,500,000 3,500,000 Raleigh, North Carolina(1)............................ 07/01/09 0.280 3,500,000 10,000,000 Raleigh, North Carolina(1)............................ 07/01/09 0.280 10,000,000 20,000,000 San Diego County, California, Regional Transportation Commission(1)........................ 07/02/09 0.350 20,000,000 6,900,000 Union County, North Carolina(1)....................... 07/01/09 0.600 6,900,000 6,600,000 Union County, North Carolina(1)....................... 07/02/09 0.270 6,600,000 10,000,000 Virginia State College Building Authority, Educational Facilities(1)........................... 07/01/09 0.320 10,000,000 6,610,000 Wake County, North Carolina(1)........................ 07/02/09 0.280 6,610,000 10,000,000 Washington State Health Care Facilities Authority(1)........................................ 07/01/09 0.370 10,000,000 4,690,000 Winston-Salem, North Carolina(1)...................... 07/02/09 0.650 4,690,000 -------------- Total Municipal Bonds................................. 407,588,708 -------------- </TABLE> The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT JUNE 30, 2009 9 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) June 30, 2009 <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value --------- -------- -------- ----- <S> <C> <C> <C> <C> U.S. GOVERNMENT AGENCY OBLIGATIONS (1.0%) $ 8,000,000 Federal Farm Credit Bank.............................. 08/03/09 5.250% $ 8,017,745 20,000,000 Federal Home Loan Bank(2)............................. 07/24/09 0.160 19,997,955 -------------- Total U.S. Government Agency Obligations........................................... 28,015,700 -------------- TIME DEPOSITS (11.5%) 60,000,000 Allied Irish Banks, Plc............................... 07/01/09 0.550 60,000,000 60,000,000 Bank of Ireland....................................... 07/01/09 0.350 60,000,000 60,000,000 Bank of Scotland, Plc................................. 07/01/09 0.188 60,000,000 30,300,000 Canadian Imperial Bank of Commerce.................... 07/01/09 0.050 30,300,000 40,000,000 Commerzbank AG........................................ 07/01/09 0.180 40,000,000 60,000,000 Royal Bank of Canada.................................. 07/01/09 0.180 60,000,000 -------------- Total Time Deposits................................... 310,300,000 -------------- REPURCHASE AGREEMENTS (8.1%) 50,000,000 Barclays (Agreement dated 06/30/09 collateralized by U.S. Treasury 0.000%, due 08/15/09-08/15/25, value $51,000,001).................................... 07/01/09 0.010 50,000,000 50,000,000 BNP Paribas (Agreement dated 06/30/09 collateralized by FMAC 5.833%, due 07/01/36, value $10,904,759 and FNMA 5.550%-6.162%, due 08/01/36-08/01/37, value $40,095,241).................................... 07/01/09 0.030 50,000,000 20,000,000 Deutsche Bank (Agreement dated 06/30/09 collateralized by FMAC 5.339%-7.000%, due 04/01/27-04/01/37, value $8,817,334; FNMA 4.500%-7.000%, due 07/01/35-08/01/37, value $8,386,592 and GNMA 7.000%, due 09/15/38, value $3,196,074) .................................... 07/01/09 0.090 20,000,000 </TABLE> The accompanying notes are an integral part of these financial statements. 10 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) June 30, 2009 <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value --------- -------- -------- ----- <S> <C> <C> <C> <C> REPURCHASE AGREEMENTS (continued) $ 50,000,000 Royal Bank of Canada (Agreement dated 06/30/09 collateralized by FHLB 0.000%-5.000%, due 01/04/10-06/25/19, value $49,103,554; FHLMC 5.000%, due 07/25/11, value $73,308; FMAC 0.000%, due 06/30/14-12/30/16, value $401,339 and FNMA 3.000%-5.000%, due 12/16/09-06/30/14, value $1,422,749).................. 07/01/09 0.100% $ 50,000,000 50,000,000 Societe Generale (Agreement dated 06/30/09 collateralized by FNMA 5.500%, due 10/01/38, value $51,000,001)...................... 07/01/09 0.080 50,000,000 -------------- Total Repurchase Agreements........................... 220,000,000 -------------- TOTAL INVESTMENTS AT AMORTIZED COST................................................ 99.1% $2,681,667,100 CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES..................................... 0.9 24,736,083 ----- -------------- NET ASSETS......................................................................... 100.0% $2,706,403,183 ===== ============== </TABLE> - ---------- (1) Variable rate instrument. The maturity dates reflect earlier of reset dates or stated maturity dates. Interest rates change on specific dates (such as coupon or interest payment date). The yield shown represents the June 30, 2009 coupon or interest rate. (2) Coupon represents a yield to maturity. (3) Coupon represents a weighted average rate. (4) Guaranteed by the FDIC under the TLGP. Abbreviations: FDIC - Federal Deposit Insurance Corporation FHLB - Federal Home Loan Bank FHLMC - Federal Home Loan Mortgage Association FMAC - Federal Mortgage Association of Canada FNMA - Federal National Mortgage Association GNMA - Government National Mortgage Association TLGP - Temporary Liquidity Guarantee Program The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT JUNE 30, 2009 11 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) June 30, 2009 FAIR VALUE MEASUREMENTS The Fund adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" ("FAS 157"), effective July 1, 2008. For net asset valuation determination purposes, various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below. - -- Level 1 - quoted prices in active markets for identical investments. - -- Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) - -- Level 3 - significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments). The following table summarizes the valuation of the Fund's investments by the above fair value hierarchy levels as of June 30, 2009: <TABLE> <CAPTION> Quoted Prices in Other Active Markets Significant Significant for Identical Observable Unobservable Investments Inputs Inputs Balance as of Investments, at value (Level 1) (Level 2) (Level 3) 06/30/2009 - --------------------- ---------------- -------------- ------------ -------------- <S> <C> <C> <C> <C> Certificates of Deposit ........................................ -- $ 916,706,281 -- $ 916,706,281 Commercial Paper ............................................... -- 689,553,178 -- 689,553,178 Corporate Bonds ................................................ -- 109,503,233 -- 109,503,233 Municipal Bonds ................................................ -- 407,588,708 -- 407,588,708 U.S. Government Agency Obligations ............................. -- 28,015,700 -- 28,015,700 Time Deposits .................................................. -- 310,300,000 -- 310,300,000 Repurchase Agreements .......................................... -- 220,000,000 -- 220,000,000 -------- -------------- -------- -------------- Total .......................................................... -- $2,681,667,100 -- $2,681,667,100 ======== ============== ======== ============== </TABLE> The accompanying notes are an integral part of these financial statements. 12 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES June 30, 2009 ASSETS: Investments, at amortized cost .......................... $ 2,461,667,100 Repurchase agreements ................................... 220,000,000 Cash .................................................... 343,236 Receivables for: Investment sold ...................................... 31,283,837 Interest ............................................. 2,680,540 Other assets ......................................... 219,440 --------------- Total Assets ...................................... 2,716,194,153 --------------- LIABILITIES: Payables for: Investment purchased ................................. 8,801,077 Investment advisory and administrative fees .......... 450,693 Shareholder servicing fees ........................... 313,914 Custody and accounting fees .......................... 100,065 Dividends declared ................................... 37,722 Professional fees .................................... 33,415 Board of Trustees' fees .............................. 462 Accrued expenses and other liabilities ............... 53,622 --------------- Total Liabilities ................................. 9,790,970 --------------- NET ASSETS ................................................. $ 2,706,403,183 =============== Net Assets Consist of: Paid-in capital ......................................... $ 2,706,403,867 Over distributed net investment income .................. (37,722) Accumulated net realized gain on investments ............ 37,038 --------------- Net Assets ................................................. $ 2,706,403,183 =============== NET ASSET VALUE AND OFFERING PRICE PER SHARE REGULAR SHARES ($1,717,045,274 / 1,717,045,269 shares outstanding) ..... $1.00 ===== INSTITUTIONAL SHARES ($989,357,909 / 989,357,914 shares outstanding) ......... $1.00 ===== The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT JUNE 30, 2009 13 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS For the year ended June 30, 2009 NET INVESTMENT INCOME: Income: Interest and other income .............................. $ 35,874,256 ------------ Expenses: Investment advisory and administrative fees ............ 5,026,075 Shareholder servicing fees ............................. 3,524,475 Treasury guarantee program fees ........................ 681,473 Custody and accounting fees ............................ 349,420 Board of Trustees' fees ................................ 108,339 Professional fees ...................................... 12,430 Miscellaneous expenses ................................. 71,170 ------------ Total Expenses ...................................... 9,773,382 Expense offset arrangement .......................... (50,189) ------------ Net Expenses ........................................ 9,723,193 ------------ Net Investment Income ..................................... 26,151,063 ============ NET REALIZED GAIN: Net realized gain on investments .......................... 146,084 ------------ Net Increase in Net Assets Resulting from Operations ...... $ 26,297,147 ============ The accompanying notes are an integral part of these financial statements. 14 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS <TABLE> <CAPTION> For the years ended June 30, ----------------------------------------- 2009 2008 --------------- --------------- <S> <C> <C> INCREASE (DECREASE) IN NET ASSETS: Operations: Net investment income .................................................... $ 26,151,063 $ 95,961,462 Net realized gain on investments ......................................... 146,084 -- --------------- --------------- Net increase in net assets resulting from operations .................................................... 26,297,147 95,961,462 --------------- --------------- Dividends and distributions declared: From net investment income: Regular Shares ........................................................ (15,193,911) (50,922,406) Institutional Shares .................................................. (11,103,920) (45,039,056) --------------- --------------- Total dividends and distributions declared .......................... (26,297,831) (95,961,462) --------------- --------------- From Fund share (Principal) Transactions at Net Asset Value of $1.00 per share: Fund shares sold ...................................................... 3,902,488,244 4,249,639,531 Fund shares issued in reinvestments of dividends ...................... 9,968,094 52,591 Fund shares repurchased ............................................... (3,379,950,177) (4,387,608,450) --------------- --------------- Net increase (decrease) in net assets resulting from fund shares transactions ..................................... 532,506,161 (137,916,328) --------------- --------------- Total increase (decrease) in net assets .......................... 532,505,477 (137,916,328) NET ASSETS: Beginning of year ........................................................... 2,173,897,706 2,311,814,034 --------------- --------------- End of year (including over distributed net investment income of $(37,722) and $0, respectively) ................................ $ 2,706,403,183 $ 2,173,897,706 =============== =============== </TABLE> The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT JUNE 30, 2009 15 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Selected per share data and ratios for a Regular share outstanding throughout each year <TABLE> <CAPTION> For the years ended June 30, -------------------------------------------------------------- 2009 2008 2007 2006 2005 ------ ------ ------ ------ ------ <S> <C> <C> <C> <C> <C> Net asset value, beginning of year ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 Income from investment operations: Net investment income(1) ................... 0.01 0.04 0.05 0.04 0.01 Dividends to shareholders from net investment income .......................... (0.01) (0.04) (0.05) (0.04) (0.01) ------ ------ ------ ------ ------ Net asset value, end of year .................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ====== ====== ====== ====== ====== Total return .................................. 1.10% 3.77% 4.97% 3.76% 1.72% Ratios/Supplemental data: Net assets, end of year (in millions) ...... $1,717 $1,409 $1,172 $1,506 $1,258 Ratio of expenses to average net assets .... 0.52% 0.51% 0.51%(2) 0.53%(2) 0.52%(2) Expense offset arrangement ................. 0.00%(3) 0.00%(3) -- -- -- ------ ------ ------ ------ ------ Total expenses .......................... 0.52% 0.51% 0.51% 0.53% 0.52% ====== ====== ====== ====== ====== Ratio of net investment income to average net assets ...................... 1.07% 3.63% 4.79%(2) 3.75%(2) 1.70%(2) </TABLE> - ---------- (1) Calculated using average shares outstanding for the year. (2) Ratios include the Fund's share of income, expenses paid by, and the expense offset arrangement, of the BBH U.S. Money Market Portfolio, which the Fund invested in through June 12, 2007, as appropriate. (3) Less than 0.01%. The accompanying notes are an integral part of these financial statements. 16 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (continued) Selected per share data and ratios for an Institutional share outstanding throughout each year/period <TABLE> <CAPTION> For the period from For the years ended January 26, 2007 June 30, (commencement of ------------------------ operations) through 2009 2008 June 30, 2007 ------ ------ ------------------- <S> <C> <C> <C> Net asset value, beginning of year/period ......................... $ 1.00 $ 1.00 $ 1.00 Income from investment operations: Net investment income(1) ....................................... 0.01 0.04 0.02 Dividends to shareholders from net investment income .............. (0.01) (0.04) (0.02) ------ ------ ------ Net asset value, end of year/period ............................... $ 1.00 $ 1.00 $ 1.00 ====== ====== ====== Total return ...................................................... 1.35% 4.02% 2.21%(2) Ratios/Supplemental data: Net assets, end of year/period (in millions) ................... $ 989 $ 765 $1,140 Ratio of expenses to average net assets ..................... 0.27% 0.26% 0.26%(3),(4) Expense offset arrangement .................................. 0.00%(5) 0.00%(5) -- ------ ------ ------ Total expenses ........................................... 0.27% 0.26% 0.26% ====== ====== ====== Ratio of net investment income to average net assets .............. 1.29% 3.86% 5.07%(3),(4) </TABLE> - ---------- (1) Calculated using average shares outstanding for the year. (2) Inception to date return. (3) Ratios include the Fund's share of income, expenses paid by, and the expense offset arrangement, of the BBH U.S. Money Market Portfolio, which the Fund invested in through June 12, 2007, as appropriate. (4) Annualized. (5) Less than 0.01%. The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT JUNE 30, 2009 17 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS June 30, 2009 1. Organization. BBH Money Market Fund (the "Fund") is a separate, diversified series of BBH Trust (the "Trust"), which is registered under the Investment Company Act of 1940, as amended. The Trust is an open-end management investment company organized as a Massachusetts business trust on June 7, 1983 and re-organized as a Delaware statutory trust on June 12, 2007. The Fund commenced operations on December 12, 1983. The Declaration of Trust permits the Trustees to create an unlimited number of series, each of which may issue a separate class of shares. The Fund established a new class of shares designated as "Institutional Shares". Institutional Shares opened on December 19, 2006 and commenced operations on January 26, 2007. Regular Shares and Institutional Shares have different operating expenses. At June 30, 2009, there were five series of the Trust. Prior to June 12, 2007 the Fund invested all of its investable assets in the BBH U.S. Money Market Portfolio (the "Portfolio"), a diversified, open-end management investment company having the same investment objectives as the Fund. Effective June 12, 2007, the Fund redeemed its shares of the Portfolio and began investing its assets directly. There were no changes to the Fund's investment policies and restrictions. The Fund recorded its share of the Portfolio's income and expenses daily until the date of the redemption. 2. Significant Accounting Policies. The Fund's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The following summarizes the significant accounting policies of the Fund: A. Valuation of Investments. The Fund values its investments at amortized cost, which approximates fair value. The amortized cost method values a security at its cost at the time of purchase and thereafter assumes a constant amortization to maturity of any discount or premium. The Fund's use of amortized cost is in compliance with Rule 2a-7 of the Investment Company Act of 1940, as amended. B. Investment Transactions and Income. Investment transactions are accounted for on the trade date. Realized gains and losses, if any, from investment transactions are determined on the basis of identified cost. Interest income consists of interest accrued and discount earned (including both original issue and market discount) and premium amortization on the investments of the Fund, accrued ratably to the date of maturity. C. Fund Expenses. Expenses are accrued in the period to which they relate and adjustments are made when actual amounts are known. Expenses are then recognized as incurred. D. 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 18 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2009 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 collateralizing the repurchase agreements. The Investment Adviser or sub-custodian will monitor the value of the underlying security each day to ensure that the value of the security always equals or exceeds the repurchase price. Repurchase agreements are subject to credit risks. Information regarding repurchase agreements is included in the Portfolio of Investments. E. Federal Income Taxes. Each series of the Trust is treated as a separate entity for federal income tax purposes. It is the Fund's policy to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Accordingly, no federal income tax provision is required. At June 30, 2009, the cost of investments for federal income tax purposes was equal to the amortized cost of investments for financial statement purposes. The Fund is subject to the provisions of FASB Interpretation No. 48 ("FIN 48") "Accounting for Uncertainty in Income Taxes -- an interpretation of FASB Statement No. 109". FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The Fund did not have any unrecognized tax benefits at June 30, 2009, nor were there any increases or decreases in unrecognized tax benefits for the year then ended. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as an income tax expense in the Statements of Operations. During the year ended June 30, 2009, the Fund did not incur any such interest or penalties. The Fund is subject to examination by U.S. federal and state tax authorities for returns filed for the prior three fiscal years. F. Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, are declared daily and paid monthly to shareholders. The tax character of distributions paid during the fiscal years ended June 30, 2009 and 2008, respectively, were as follows: <TABLE> <CAPTION> Distributions paid from: ------------------------------------------------------------------------------------- Net Total Tax Total Ordinary long-term taxable exempt distributions income capital gain distributions distributions paid ----------- ------------ ------------- ------------- ------------- <S> <C> <C> <C> <C> <C> 2009: $26,297,831 -- $26,297,831 -- $26,297,831 2008: 95,961,462 -- 95,961,462 -- 95,961,462 </TABLE> FINANCIAL STATEMENT JUNE 30, 2009 19 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2009 As of June 30, 2009 and 2008, 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> 2009: $ 37,038 -- $ 37,038 -- -- -- $ 37,038 2008: 239,167 -- 239,167 -- -- -- 239,167 </TABLE> As of June 30, 2009 the Fund did not have a net capital loss carryforward. To the extent future capital gains are offset by capital loss carry forwards, such gains will not be distributed. G. Use of Estimates. The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates. H. U.S. Treasury Temporary Guarantee Program. The Fund currently participates in the U.S. Department of the Treasury's Temporary Guarantee Program for Money Market Funds (the "Program"). Subject to certain conditions and limitations, amounts held in the Fund by shareholders as of the close of business on September 19, 2008 are guaranteed against loss under the Program in the event that the Fund's net asset value per share falls below $0.995 and remains below $0.995 until the Fund is liquidated (a "Guarantee Event"). In the event that a Guarantee Event is triggered, a shareholder's shares covered by the Program will be the lesser of (i) the amount held in the Fund as of close of business on September 19, 2008, or (ii) the amount held in the Fund on the date the Program's guarantee is triggered. In this event and subject to the limitations of the Program, a shareholder who has remained invested in the Fund since September 19, 2008 would receive an increase in his or her account value with respect to each covered share of the Fund, equal to the difference between the amount received in the liquidation and $1.00 per share. As of December 31, 2008, assets available to the Program to support all participating money market funds do not exceed approximately $50 billion and the Program covers approximately $3 trillion in assets held in money market funds. The Program's guarantee only applies to shareholders invested in the Fund as of the close of business on September 19, 2008. The extension period for the Program commenced on May 1, 2009 and terminates on September 18, 2009 (the "Extension Period"). Participation in the Extension Period required payment to the U.S. Department of Treasury in the amount of 0.015% based on the net asset value of the Fund as of September 19, 2008. 20 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2009 I. Accounting Developments. 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, "Disclosure about Credit Derivatives and Certain Guarantees: An Amendment to FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161," (the "FSP") 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. The Fund has adopted FAS 161 and management has determined there is no material impact to the financial statements for the year ended June 30, 2009. 3. Fees and Other 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 0.25% on the first $1,000,000,000 of the Fund's average daily net assets and 0.20% of the Fund's average daily net assets in excess of $1,000,000,000. BBH has a sub-administration services agreement with Federated Services Company ("FSC") for which FSC receives compensation paid by BBH. For the year ended June 30, 2009, the Fund incurred $5,026,075 for investment advisory and administrative services. Shareholder Servicing Fees. The Trust has a shareholder servicing agreement with BBH for which BBH receives a fee from the Fund calculated daily and paid monthly at an annual rate of 0.25% of the Regular shares' average daily net assets. For the year ended June 30, 2009, the Fund incurred $3,524,475 for shareholder servicing services. Custody and Accounting Fees. BBH acts as a custodian and shall receive a custody and accounting fee from the Fund calculated daily and paid monthly. The custody fee is a transaction based fee with an annual minimum of $20,000, and the accounting fee is calculated at 0.01% per annum on the first $1 billion of net assets and 0.005% per annum on all net assets over $1 billion. For the year ended FINANCIAL STATEMENT JUNE 30, 2009 21 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2009 June 30, 2009, the Fund incurred $349,420 for custody and accounting services. These fees were reduced by $50,189 as a result of an expense offset arrangement with the Fund's custodian. In the event that the Fund is overdrawn, under the custody agreement with BBH, BBH will make overnight loans to the Fund to cover overdrafts. Pursuant to the agreement the Fund will be charged interest based on LIBOR on the day of the overdraft plus one percent. The total interest paid by the Fund for the year ended June 30, 2009 was $7,015. 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 year ended June 30, 2009, the Fund incurred $108,339 for Trustees' fees. 3. Capital Stock. The Trust is permitted to issue an unlimited number of Regular Shares and Institutional Shares of capital stock, at no par value. Transactions in shares of capital stock were as follows: <TABLE> <CAPTION> Shares For the years ended June 30, ------------------------------------------ 2009 2008 -------------- -------------- <S> <C> <C> Regular Shares Fund shares sold ........................................................... 2,484,068,377 2,213,057,812 Fund shares issued in reinvestments of dividends ........................... 5,639,074 52,591 Fund shares repurchased .................................................... (2,181,610,983) (1,976,287,295) -------------- -------------- Net increase ............................................................... 308,096,468 236,823,108 ============== ============== Institutional Shares Fund shares sold ........................................................... 1,418,419,867 2,036,581,719 Fund shares issued in reinvestments of dividends ........................... 4,329,020 -- Fund shares repurchased .................................................... (1,198,339,195) (2,411,321,155) -------------- -------------- Net increase ............................................................... 224,409,692 (374,739,436) ============== ============== </TABLE> 4. Subsequent Event. In accordance with the provisions set forth in FASB Statement of Financial Accounting Standards No. 165 "Subsequent Events", adopted by the Fund as of June 30, 2009, management has evaluated the possibility of subsequent events existing in the Fund's financial statements through August 18, 2009. Effective July 6, 2009, the SID voluntarily began to waive its Investment Advisory and Administrative Fee to credit daily to the Fund an amount which would maintain the daily basis point return to the Fund at a minimum of 1 basis point. The amount credited each day will be offset to the daily accrual of the Investment Advisory and Administrative Fee. This is a voluntary waiver that can be changed at any time at the sole discretion of the SID. 22 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES June 30, 2009 (unaudited) EXAMPLE As a shareholder of BBH Money Market Fund (the "Fund"), you may incur two types of costs: (1) transaction costs on purchase payments, reinvested dividends, or other distributions; and exchange fees; and (2) ongoing costs, including management fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2009 to June 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 JUNE 30, 2009 23 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES (continued) June 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. <TABLE> <CAPTION> Expenses Paid Beginning Ending During Period Account Value Account Value January 1, 2009 to January 1, 2009 June 30, 2009 June 30, 2009(1) --------------- ------------- ---------------- <S> <C> <C> <C> Regular Shares Actual.......................... $1,000 $1,002.50 $2.53 Hypothetical(2)................. $1,000 $1,022.27 $2.56 </TABLE> <TABLE> <CAPTION> Expenses Paid Beginning Ending During Period Account Value Account Value January 1, 2009 to January 1, 2009 June 30, 2009 June 30, 2009(1) --------------- ------------- ---------------- <S> <C> <C> <C> Institutional Shares Actual.......................... $1,000 $1,003.70 $1.29 Hypothetical(2)................. $1,000 $1,023.51 $1.30 </TABLE> - ---------- (1) Expenses are equal to the Fund's annualized expense ratio of 0.51% and 0.26% for Regular and Institutional shares, respectively, multiplied by 181/365 (to reflect the one half-year period). (2) Assumes a return of 5% before expenses. For the purpose of the calculation, the applicable annualized expense ratio for each class of shares is subtracted from the assumed return before expenses. 24 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION June 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 company advisory and other fees. The Board also reviewed BBH's profitability data for each Fund, which also included the effect of revenue generated by the shareholder servicing, administration, fund accounting, 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 JUNE 30, 2009 25 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) June 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, fund accountant 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 Investment Company Act of 1940, as amended. There may be other economies of scale because many expenses did not rise (and fall) proportionally to increases (and decreases) in total net assets. The Board noted that BBH had priced its services in recognition of the fact that it was largely its own clients who were shareholders and, accordingly, sought to assure that the cost of these services and total expenses for each Fund were fair and reasonable. In addition, the Board noted that over the years BBH had supported certain Funds through fee waivers and expense reimbursements. Based on information they had been provided over many years, the Board observed that in the mutual fund industry as a whole, as well as among funds similar to the Funds, there 26 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) June 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 and administrative services, such as shareholder communications, and tax compliance, with the attendant costs and exposure to liability. BBH also coordinates the provision of services to the Funds by nonaffiliated service providers. The following factors specific to BBH Money Market Fund also were noted and considered by the Board in deciding to approve the Agreement: The Board reviewed information showing performance of the BBH Money Market Fund compared to other funds in the iMoneyNet (1st Tier Retail) and (1st Tier Institutional). The comparative information showed that the BBH Money Market Fund had outperformed or performed in line with the averages over all relevant periods. The Board also viewed with favor that the total expense ratio was substantially lower than the averages in these categories. The Board also noted that the BBH Money Market Fund had maintained a stable net asset value of one dollar at all times. Taking into account these comparisons and the other factors considered, the Board concluded that the BBH Money Market Fund's investment results over time and expense ratios had been satisfactory. FINANCIAL STATEMENT JUNE 30, 2009 27 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) June 30, 2009 (unaudited) Conflicts of Interest As a general matter, certain conflicts of interest may arise in connection with the 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 between the Fund and its affiliated and unaffiliated service providers (e.g., conflicting duties of loyalty). By way of example, compensation and delegation of responsibility arrangements may create conflicts relating to selection of brokers or dealers to execute Fund portfolio trades and/or specific uses of commissions from Fund portfolio trades, administration of investment advice and valuation of securities. The SID may direct brokerage transactions and/or payment of a portion of client commissions ("softdollars") 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. The SID will determine in good faith whether the amount of commission is reasonable in relation to the value of research and brokerage services provided and whether the services provide lawful and appropriate assistance in its investment decision-making responsibilities. The SID may enter into advisory and/or referral arrangements with third parties. Such arrangements may include compensation paid by the SID to the third party. The SID may pay a solicitation fee for referrals and/or advisory or incentive fees. The Trust manages these conflicts. For example, the Funds have 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. 28 <PAGE> BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- ADDITIONAL FEDERAL TAX INFORMATION June 30, 2009 (unaudited) In January 2010, the Fund will report on Form 1099 the tax status of all distributions made during the calendar year 2009. Shareholders should use the information on Form 1099 for their income tax returns. FINANCIAL STATEMENT JUNE 30, 2009 29 <PAGE> TRUSTEES AND OFFICERS OF BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- (unaudited) Information pertaining to the Trustees of the BBH Trust (the "Trust") and executive officers of the Trust is set forth below. Part B to the Registration Statement of the BBH Money Market Fund includes additional information about the Fund's Trustees and is available upon request without charge by contacting the Fund at 1-800-625-5759. <TABLE> <CAPTION> Term of Number of Office Funds in and Fund Other Position(s) Length Complex Directorships Name, Birth Date Held with of Time Principal Occupation(s) Overseen by Held by and Address Trust Served# During Past 5 Years Trustee^ Trustee - -------------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> Joseph V. Shields Jr. Chairman of Since 2007 Managing Director, Chairman and 5 None Birth Date: March 17, 1938 the Board Chief Executive Officer of Shields & Company and Trustee Shields & Company (member of New 140 Broadway York Stock Exchange); Chairman of New York, NY 10005 Capital Management Associates, Inc. (registered investment adviser); Director of Flower Foods, Inc. (New York Stock Exchange listed company). David P. Feldman Trustee Since 2007 Director of Jeffrey Co. (1992 to 5 Director of Birth Date: November 16, 1939 present); Director of QMED (1999 Dreyfus C/O BBH & Co. to May 2007). Mutual Funds 140 Broadway (59 Funds) New York, NY 10005 Alan G. Lowy Trustee Since 2007 Private Investor. 5 None Birth Date: April 17, 1939 4111 Clear Valley Drive Encino, CA 91436 Arthur D. Miltenberger Trustee Since 2007 Retired; Trustee, R.K. Mellon 5 None Birth Date: November 8, 1938 Family Trust (1981 to June 2003); 503 Darlington Road Director of Aerostructures Ligonier, PA 15658 Corporation (aircraft manufacturer) (1996 to July 2003). Samuel F. Pryor, IV Trustee Since 2007 Private Investor. 5 None Birth Date: June 12, 1955 130 East 67th Street New York, NY 10021 </TABLE> 30 <PAGE> TRUSTEES AND OFFICERS OF BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- (unaudited) <TABLE> <CAPTION> Term of Number of Office Funds in and Fund Other Position(s) Length Complex Directorships Name, Birth Date Held with of Time Principal Occupation(s) Overseen by Held by and Address Trust Served# During Past 5 Years Trustee^ Trustee - -------------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> H. Whitney Wagner Trustee Since 2007 President, Clear Brook Advisors, 5 None Birth Date: March 3, 1956 a registered investment advisor. Clear Brook Advisors 75 Rockefeller Plaza, 14th Floor New York, NY 10019 Officers John A. Gehret President Since 2008 President and Principal Executive N/A N/A Birth Date: April 11, 1959 and Officer of the Trust; Joined 140 Broadway Principal Brown Brothers Harriman & Co. New York, NY 10005 Executive ("BBH & Co.") in 1981 and has Officer been a Partner of the firm since 1998. Charles H. Schreiber Treasurer Since 2007 Treasurer and Principal Financial N/A N/A Birth Date: December 10, 1957 and Officer of the Trust; Senior Vice 140 Broadway Principal President of BBH & Co. since New York, NY 10005 Financial September 2001; Joined BBH & Co. Officer in 1999. Mark B. Nixon Assistant Since 2007 Assistant Secretary and Assistant N/A N/A Birth Date: January 14, 1963 Secretary, Treasurer of the Trust; Vice 140 Broadway Assistant President of BBH & Co. (since New York, NY 10005 Treasurer October 2006); Accounting Manager, Reserve Funds (August 2005-September 2006); Assistant Controller, Reserve Funds (February 2005 - August 2005); Private Consultant (December 2001 - February 2005). Beth Haddock Chief Since 2007 Chief Compliance Officer of the N/A N/A Birth Date: December 10, 1965 Compliance Trust (September 2007-present); 140 Broadway Officer Chief Compliance Officer for the New York, NY 10005 FINRA/NYSE and SEC compliance programs and Associate Compliance Director for the global compliance program (April 2005 - present); Deputy General Counsel of AXA Advisors/ AXA Financial (November 1997-April 2005). </TABLE> FINANCIAL STATEMENT JUNE 30, 2009 31 <PAGE> TRUSTEES AND OFFICERS OF BBH MONEY MARKET FUND - -------------------------------------------------------------------------------- (unaudited) <TABLE> <CAPTION> Term of Number of Office Funds in and Fund Other Position(s) Length Complex Directorships Name, Birth Date Held with of Time Principal Occupation(s) Overseen by Held by and Address Trust Served# During Past 5 Years Trustee^ Trustee - -------------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> Sue M. Rim-An Anti-Money Since 2008 Anti-Money Laundering Officer, N/A N/A Birth Date: September 10, 1970 Laundering Vice President of BBH & Co. 140 Broadway Officer (September 2007 - present); AML New York, NY 10005 Officer at UBS Investment Bank (April 2006 - August 2007); AML Officer & Vice President in Private Client Services at Bear Stearns & Co (June 1992 - April 2006). Gail C. Jones Secretary Since 2007 Secretary of the Trust; Counsel, N/A N/A Birth Date: October 26, 1953 ReedSmith, LLP (since October 1001 Liberty Avenue 2002); Corporate Counsel (January Pittsburgh, PA 15222-3779 1997 to September 2002) and Vice President (January 1999 to September 2002) of Federated Services Company. George M. Polatas Vice Since 2008 Vice President of the Trust N/A N/A Birth Date: March 3, 1962 President (since June 2008); Assistant Vice 1001 Liberty Avenue President of Federated Services Pittsburgh, PA 15222-3779 Company; Vice President of various funds distributed by Edgewood Services, Inc (January 1997 to present). Theodore J. Boudria Assistant Since 2008 Assistant Treasurer of the Trust; N/A N/A Birth Date: June 26, 1968 Treasurer Senior Vice President (since 70 Franklin Street 2009); Joined BBH & Co. in 1995. Boston, MA 02110 </TABLE> - -------------------------------------------------------------------------------- # Each Trustee of the Trust holds office until he or she attains the age of 70 (72, in the case of Trustees who were elected as such before January 1, 2000), or until he or she sooner dies, resigns or is removed from office in accordance with the provisions of the Trust's Declaration of Trust. All officers of the Trust hold office for one year and until their respective successors are chosen and qualified (subject to the ability of the Trustees to remove any officer in accordance with the Trust's By-laws). ^ The Fund Complex consists of the Trust, which has five series and each is counted as one "Fund" for purposes of this table. 32 <PAGE> ADMINISTRATOR INVESTMENT ADVISER BROWN BROTHERS HARRIMAN MUTUAL FUND ADVISORY DEPARTMENT (SID) 140 BROADWAY OF BROWN BROTHERS HARRIMAN NEW YORK, NY 10005 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 Funds website at www.bbhfunds.com. 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. [LOGO] BROWN BROTHERS HARRIMAN
[LOGO] BROWN BROTHERS HARRIMAN - -------------------------------------------------------------------------------- Annual Report JUNE 30, 2009 - -------------------------------------------------------------------------------- BBH TAX EXEMPT MONEY FUND <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE June 30, 2009 For the 12-month period ended June 30, 2009, the BBH Tax Exempt Money Fund (the "Fund") produced a total return of 1.06%(1). We believe the performance of the Fund was competitive within the industry while maintaining a high degree of liquidity throughout the period. The Fund seeks to maximize income while attempting to preserve capital and maintain liquidity by investing primarily in a diversified portfolio of liquid, high-quality, short-term debt securities. The municipal money markets were not immune to the contagion of credit crisis triggered in taxable markets by the default of Lehman Brothers in September. In particular, variable rate demand notes (VRDN), a structured security common in tax-exempt money market funds which have historically provided reliable liquidity, high credit quality and attractive yields, came under great scrutiny. At the heart of the problem was the key role played by banks in sustaining an orderly market for these securities. VRDN programs typically have long-maturity dates but maintain an unconditional put option of 1, 7, or 30, days making them eligible for money market funds. To ensure that investor's wishing to put back securities receive liquidity, each program enters in to an arrangement with a bank or broker-dealer to act as a buyer of last resort and handle the remarketing function. As the economic viability of many banks that participated widely in these markets came in to question during the Fall of 2008, so too did investor confidence in the VRDN programs for which they provided liquidity. Within a week of the Lehman Brothers default, SIFMA, an indication rate of high quality VRDNs increased to an unprecedented level of nearly 8% or 750 basis points above the Federal Funds Rate. The Federal Reserve and the U.S. Treasury reacted to the general credit crisis in the money markets by creating several liquidity facilities and the TARP, which indirectly benefited the tax-exempt money markets by stabilizing the banking system. By the end of the reporting period, the "SIFMA rate" had recovered to 0.35% and VRDN programs with high-quality underlying issuers were trading normally. Ironically, the welcomed easing of risk premiums has led to a new challenge facing money market funds which is to provide a viable return in the midst of historically low interest rates. Throughout this difficult environment, the investment team for the Fund maintained what it believed to be a conservative investment strategy, which enabled the Fund to largely avoid some of the more distressed areas of the markets and provide uninterrupted liquidity to its shareholders. Brown Brothers Harriman & Co. continues to perform its own rigorous credit assessment of all securities purchased for the Fund and does not solely rely on the rating agencies to determine credit quality. As a result, the investment team has been able to deliver a consistently competitive return and ample liquidity even with the recent adverse conditions present in the money markets. During the period, BBH waived its investment advisory/administrative fee in order to maintain a stable return. This voluntary waiver can be changed at any time at the sole discretion of the investment team. Additionally, in anticipation of significant shareholder redemptions, the investment team increased the Fund's overnight liquidity from time to time. - ---------- (1) Performance data quoted represents no guarantee of future results. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual Fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month end performance and after tax returns, contact the Fund at 1-800-625-5759. 2 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM June 30, 2009 To the Trustees of the BBH Trust and Shareholders of BBH Tax Exempt Money Fund We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of BBH Tax Exempt Money Fund (a series of BBH Trust) (the "Fund") as of June 30, 2009, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of June 30, 2009, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other audit procedures. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of BBH Tax Exempt Money Fund as of June 30, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP Boston, Massachusetts August 18, 2009 FINANCIAL STATEMENT JUNE 30, 2009 3 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- PORTFOLIO ALLOCATION June 30, 2009 BREAKDOWN BY BOND TYPE AND OTHER ASSETS <TABLE> <CAPTION> Percent of U.S. $ Value Net Assets ------------ ---------- <S> <C> <C> Education ........................................................................ $126,637,192 45.6% General Obligations .............................................................. 41,103,483 14.8 Government Collateral ............................................................ 22,521,254 8.1 Health Care ...................................................................... 20,750,000 7.5 Industrial ....................................................................... 20,305,000 7.3 Miscellaneous .................................................................... 18,605,000 6.7 Transportation ................................................................... 13,750,920 4.9 Utilities ........................................................................ 3,460,000 1.2 Water/Sewer ...................................................................... 500,000 0.2 Commercial Paper ................................................................. 3,500,000 1.3 Cash and Other Assets in Excess of Liabilities ................................... 6,704,649 2.4 ------------ ----- NET ASSETS ....................................................................... $277,837,498 100.0% ============ ===== </TABLE> TOP FIVE HOLDINGS BY STATE <TABLE> <CAPTION> Percent of U.S. $ Value Net Assets ------------ ---------- <S> <C> <C> Ohio ............................................................................. $ 23,915,256 8.6% Massachusetts .................................................................... 22,489,928 8.1 New York ......................................................................... 22,453,552 8.1 Texas ............................................................................ 21,641,497 7.8 Missouri ......................................................................... 20,735,000 7.6 Other States ..................................................................... 159,897,616 57.4 Cash and Other Assets in Excess of Liabilities ................................... 6,704,649 2.4 ------------ ----- NET ASSETS ....................................................................... $277,837,498 100.0% ============ ===== </TABLE> All data as of June 30, 2009. The Fund's breakdown by bond type and top five holdings by state are expressed as a percentage of net assets and may vary over time. The accompanying notes are an integral part of these financial statements. 4 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS June 30, 2009 <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value - -------------- -------- -------- ------------ <S> <C> <C> <C> <C> MUNICIPAL BONDS (96.3%) EDUCATION (45.6%) $ 1,600,000 Allegheny County, Pennsylvania, Higher Education Building Authority(1).................. 07/01/09 0.180% $ 1,600,000 5,880,000 Colorado Springs, Colorado(1)...................... 07/01/09 0.300 5,880,000 3,100,000 Connecticut State Health & Educational Facilities Authority(1).......................... 07/01/09 0.150 3,100,000 5,100,000 Connecticut State Health & Educational Facilities Authority(1).......................... 07/01/09 0.170 5,100,000 3,200,000 Houston, Texas, Higher Education Finance Corp.(1) ................................ 07/01/09 0.250 3,200,000 3,500,000 Massachusetts State Health & Educational Facilities Authority(1).............. 07/01/09 0.150 3,500,000 10,000,000 Massachusetts State Health & Educational Facilities Authority(1).............. 07/01/09 0.200 10,000,000 7,235,000 Massachusetts State Health & Educational Facilities Authority(1).............. 07/02/09 0.180 7,235,000 1,100,000 Missouri State Health & Educational Facilities Authority(1).......................... 07/01/09 0.180 1,100,000 2,690,000 Missouri State Health & Educational Facilities Authority(1).......................... 07/01/09 0.180 2,690,000 5,800,000 Missouri State Health & Educational Facilities Authority(1).......................... 07/01/09 0.180 5,800,000 5,500,000 Missouri State Health & Educational Facilities Authority(1).......................... 07/01/09 0.270 5,500,000 800,000 Nashville & Davidson County, Tennessee, Health & Educational Facilities Board(1).............................. 07/02/09 0.170 800,000 125,000 New Jersey State Educational Facilities Authority(1).......................... 07/01/09 0.250 125,000 1,200,000 North Carolina Capital Facilities Finance Agency(1)................................ 07/02/09 0.170 1,200,000 5,250,000 North Carolina Educational Facilities Finance Agency(1)................................ 07/02/09 0.170 5,250,000 750,000 State of Ohio...................................... 12/01/09 5.500 765,256 </TABLE> The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT JUNE 30, 2009 5 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) June 30, 2009 <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value - -------------- -------- -------- ------------ <S> <C> <C> <C> <C> MUNICIPAL BONDS (continued) EDUCATION (continued) $ 4,300,000 Ohio State Higher Educational Facility Commission(1).................................... 07/01/09 0.180% $ 4,300,000 4,700,000 Ohio State University(1)........................... 07/01/09 0.170 4,700,000 4,260,000 Oklahoma State Capital Improvement Authority(1)..................................... 07/01/09 0.320 4,260,000 4,500,000 Oklahoma State Capital Improvement Authority(1)..................................... 07/01/09 0.320 4,500,000 3,600,000 Philadelphia, Pennsylvania, Hospitals & Higher Education Facilities Authority(1)......... 07/01/09 0.180 3,600,000 1,600,000 Private Colleges & Universities Authority(1)..................................... 07/01/09 0.170 1,600,000 8,125,000 Private Colleges & Universities Authority(1)..................................... 07/16/09 0.170 8,125,000 990,000 Purdue University(1)............................... 07/01/09 0.180 990,000 8,725,000 Purdue University(1)............................... 07/01/09 0.330 8,725,000 2,000,000 Rhode Island State Health & Educational Building Corp.(1).................... 07/02/09 0.170 2,000,000 2,890,000 Shaler Area, Pennsylvania, School District(1)...................................... 07/02/09 0.570 2,890,000 3,000,000 South Carolina Educational Facilities Authority(1)..................................... 07/01/09 0.320 3,000,000 1,295,000 University of Michigan(1).......................... 07/16/09 0.190 1,295,000 1,000,000 University of Missouri(1).......................... 07/01/09 0.300 1,000,000 1,800,000 University of Texas(1)............................. 07/01/09 0.170 1,800,000 2,000,000 University of Texas(1)............................. 07/02/09 0.100 2,000,000 3,250,000 University of Texas(1)............................. 07/02/09 0.170 3,250,000 2,040,000 Utah State Board of Regents(1)..................... 07/02/09 0.250 2,040,000 1,600,000 Virginia Commonwealth University(1)................ 07/01/09 0.300 1,600,000 495,000 Virginia State Public School Authority............. 08/01/09 5.250 496,936 1,620,000 Washington County, Pennsylvania(1)................. 07/02/09 0.170 1,620,000 ------------ Total Education.................................... 126,637,192 ------------ </TABLE> The accompanying notes are an integral part of these financial statements. 6 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) June 30, 2009 <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value - -------------- -------- -------- ------------ <S> <C> <C> <C> <C> MUNICIPAL BONDS (continued) GENERAL OBLIGATIONS (14.8%) $ 600,000 Alexandria, Virginia............................... 01/01/10 5.000% $ 613,483 1,700,000 Buncombe County, North Carolina(1)................. 07/02/09 0.470 1,700,000 5,000,000 Chicago, Illinois(1)............................... 07/01/09 0.200 5,000,000 5,000,000 Chicago, Illinois(1)............................... 07/01/09 0.200 5,000,000 1,260,000 State of Florida................................... 07/01/09 5.000 1,260,000 1,000,000 Greensboro, North Carolina(1)...................... 07/01/09 0.350 1,000,000 1,000,000 Illinois Finance Authority(1)...................... 07/01/09 0.180 1,000,000 3,330,000 New York, New York(1).............................. 07/01/09 0.130 3,330,000 2,900,000 New York, New York(1).............................. 07/01/09 0.180 2,900,000 4,600,000 New York, New York(1).............................. 07/01/09 0.280 4,600,000 10,000,000 State of Ohio(1)................................... 07/01/09 0.170 10,000,000 3,700,000 State of Oregon(1)................................. 07/01/09 0.180 3,700,000 1,000,000 Union County, North Carolina(1).................... 07/02/09 0.270 1,000,000 ------------ Total General Obligations.......................... 41,103,483 ------------ GOVERNMENT COLLATERAL (8.1%) 1,500,000 State of California................................ 10/01/09 5.875 1,534,954 900,000 State of Illinois.................................. 01/01/10 6.000 924,203 905,000 Lowell, Massachusetts.............................. 02/15/10 5.550 941,907 780,000 Lowell, Massachusetts.............................. 02/15/10 5.800 813,021 1,040,000 Lubbock, Texas, Health Facilities Development Corp................................. 07/01/09 6.500 1,060,800 2,345,000 Maine State Health & Higher Educational Facilities Authority............................. 07/01/09 6.000 2,368,450 1,715,000 Michigan State Hospital Finance Authority........................................ 08/15/09 6.000 1,743,693 2,600,000 Nassau Health Care Corp............................ 08/01/09 5.750 2,663,552 600,000 New Hampshire State Municipal Bond Bank........................................ 01/15/10 5.500 621,949 1,840,000 North Carolina State Medical Care Commission ...................................... 11/01/09 7.625 1,915,499 800,000 North East, Texas, Independent School District.................................. 02/01/10 6.000 825,116 </TABLE> The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT JUNE 30, 2009 7 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) June 30, 2009 <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value - -------------- -------- -------- ------------ <S> <C> <C> <C> <C> MUNICIPAL BONDS (continued) GOVERNMENT COLLATERAL (continued) $ 4,850,000 North East, Texas, Independent School District ................................ 02/01/10 6.000% $ 5,005,581 1,000,000 Pennsylvania State Higher Educational Facilities Authority............................. 07/01/09 5.375 1,000,000 500,000 Richmond, California, Wastewater................... 08/01/09 5.200 511,902 575,000 State of Washington................................ 01/01/10 6.000 590,627 ------------ Total Government Collateral........................ 22,521,254 ------------ HEALTH CARE (7.5%) 8,200,000 California Statewide Communities Development Authority(1)......................... 07/01/09 0.200 8,200,000 3,900,000 Charlotte-Mecklenburg, North Carolina, Hospital Authority(1)............................ 07/01/09 0.280 3,900,000 4,150,000 Cuyahoga County, Ohio(1)........................... 07/01/09 0.180 4,150,000 2,500,000 Harris County, Texas, Health Facilities Development Corp.(1)............................. 07/01/09 0.180 2,500,000 2,000,000 Washington State Health Care Facilities Authority(1).......................... 07/01/09 0.370 2,000,000 ------------ Total Health Care.................................. 20,750,000 ------------ INDUSTRIAL (7.3%) 2,000,000 Columbia, Alabama, Industrial Development Board Pollution Control(1)....................................... 07/01/09 0.320 2,000,000 8,305,000 Loudoun County, Virginia, Industrial Development Authority(1)......................... 07/01/09 0.120 8,305,000 6,100,000 Valdez, Alaska, Marine Terminal(1)................. 07/01/09 0.170 6,100,000 3,900,000 Valdez, Alaska, Marine Terminal(1)................. 07/16/09 0.110 3,900,000 ------------ Total Industrial................................... 20,305,000 ------------ MISCELLANEOUS (6.7%) 5,000,000 Indiana State Finance Authority(1)................. 07/01/09 0.550 5,000,000 4,645,000 Missouri State Development Finance Board(1) ................................ 07/01/09 0.180 4,645,000 </TABLE> The accompanying notes are an integral part of these financial statements. 8 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) June 30, 2009 <TABLE> <CAPTION> Principal Maturity Interest Amount Date Rate Value - -------------- -------- -------- ------------ <S> <C> <C> <C> <C> MUNICIPAL BONDS (continued) MISCELLANEOUS (continued) $ 8,960,000 New York, New York, City Transitional Finance Authority(1)............................. 07/01/09 0.180% $ 8,960,000 ------------ Total Miscellaneous................................ 18,605,000 ------------ TRANSPORTATION (4.9%) 250,000 Colorado State Public Highway Authority E-470 ................................ 09/01/09 3.000 250,920 10,000,000 Kansas State Department of Transportation & Highway(1)...................... 07/16/09 0.170 10,000,000 3,500,000 Oklahoma State Turnpike Authority(1)............... 07/01/09 0.180 3,500,000 ------------ Total Transportation............................... 13,750,920 ------------ UTILITIES (1.2%) 1,360,000 Orlando, Florida, Utilities Commission............. 07/01/09 5.000 1,360,000 2,100,000 Upper Merion, Pennsylvania, Municipal Utility Authority(1)............................. 07/02/09 0.270 2,100,000 ------------ Total Utilities.................................... 3,460,000 ------------ WATER/SEWER (0.2%) 500,000 Metropolitan Water District of Southern California.............................. 07/01/09 4.000 500,000 ------------ Total Water/Sewer.................................. 500,000 ------------ Total Municipal Bonds.............................. 267,632,849 ------------ COMMERCIAL PAPER (1.3%) 1,500,000 Connecticut State Health & Educational Facilities Authority(2).......................... 08/24/09 0.300 1,500,000 2,000,000 Harris County, Texas(2)............................ 07/02/09 0.200 2,000,000 ------------ Total Commercial Paper............................. 3,500,000 ------------ TOTAL INVESTMENTS AT AMORTIZED COST............................................. 97.6% $271,132,849 CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES.................................. 2.4 6,704,649 ----- ------------ NET ASSETS...................................................................... 100.0% $277,837,498 ===== ============ </TABLE> - ---------- (1) Variable rate instrument. The maturity dates reflect earlier of reset dates or stated maturity dates. Interest rates change on specific dates (such as coupon or interest payment date). The yield shown represents the June 30, 2009 coupon or interest rate. (2) Coupon represents a yield to maturity. The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT JUNE 30, 2009 9 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS (continued) June 30, 2009 FAIR VALUE MEASUREMENTS The Fund adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" ("FAS 157"), effective July 1, 2008. For net asset valuation determination purposes, various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below. - -- Level 1 - quoted prices in active markets for identical investments. - -- Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) - -- Level 3 - significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments). The following table summarizes the valuation of the Fund's investments by the above fair value hierarchy levels as of June 30, 2009: <TABLE> <CAPTION> Quoted Prices in Other Active Markets Significant Significant for Identical Observable Unobservable Investments Inputs Inputs Balance as of Investments, at value (Level 1) (Level 2) (Level 3) 06/30/2009 - --------------------- ---------------- ------------ ------------ ------------- <S> <C> <C> <C> <C> Municipal Bonds ................... -- $267,632,849 -- $267,632,849 Commercial Paper .................. -- 3,500,000 -- 3,500,000 -------- ------------ -------- ------------ Total.............................. -- $271,132,849 -- $271,132,849 ======== ============ ======== ============ </TABLE> The accompanying notes are an integral part of these financial statements. 10 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES June 30, 2009 ASSETS: Investments, at amortized cost ............................ $271,132,849 Cash ...................................................... 1,360,273 Receivables for: Investment sold ........................................ 6,000,148 Interest ............................................... 680,889 ------------ Total Assets ........................................ 279,174,159 ============ LIABILITIES: Payables for: Investment purchased ................................... 990,081 Shareholder servicing fees ............................. 116,896 Investment advisory and administrative fees ............ 114,346 Custody and accounting fees ............................ 55,407 Professional fees ...................................... 35,090 Board of Trustees' fees ................................ 550 Accrued expenses and other liabilities ................. 24,291 ------------ Total Liabilities ................................... 1,336,661 ------------ NET ASSETS ................................................... $277,837,498 ============ Net Assets Consist of: Paid-in capital ........................................... $277,770,529 Undistributed net investment income ....................... 1,170 Accumulated net realized gain on investments .............. 65,799 ------------ Net Assets ................................................... $277,837,498 ============ NET ASSET VALUE AND OFFERING PRICE PER SHARE ($277,837,498 / 277,831,213 shares outstanding) ........... $1.00 ===== The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT JUNE 30, 2009 11 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS For the year ended June 30, 2009 NET INVESTMENT INCOME: Income: Interest and other income ............................... $ 10,389,814 ------------ Expenses: Shareholder servicing fees .............................. 1,706,846 Investment advisory and administrative fees ............. 1,704,377 Treasury guarantee program fees ......................... 214,594 Custody and accounting fees ............................. 168,089 Professional fees ....................................... 53,520 Board of Trustees' fees ................................. 53,138 Miscellaneous expenses .................................. 144,351 ------------ Total Expenses ....................................... 4,044,915 Expense offset arrangement ........................... (31,051) Investment advisory and administrative fee waiver .... (2,550) ------------ Net Expenses ......................................... 4,011,314 ------------ Net Investment Income ...................................... 6,378,500 ============ NET REALIZED GAIN: Net realized gain on investments ........................... 202,642 ------------ Net Increase in Net Assets Resulting from Operations ....... $ 6,581,142 ============ The accompanying notes are an integral part of these financial statements. 12 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS <TABLE> <CAPTION> For the years ended June 30, -------------------------------------- 2009 2008 ------------- ------------- <S> <C> <C> INCREASE (DECREASE) IN NET ASSETS: Operations: Net investment income ...................................................... $ 6,378,500 $ 9,861,664 Net realized gain on investments ........................................... 202,642 -- ------------- ------------- Net increase in net assets resulting from operations ...................................................... 6,581,142 9,861,664 ------------- ------------- Dividends and distributions declared: From net investment income: ................................................ (6,580,887) (9,858,762) ------------- ------------- From Fund Share (Principal) Transactions at Net Asset Value of $1.00 per share: Fund shares sold ........................................................ 683,653,819 732,984,132 Fund shares issued in reinvestments of dividends ........................ 3,186,453 6,550 Fund shares repurchased ................................................. (955,580,303) (514,652,648) ------------- ------------- Net increase (decrease) in net assets resulting from fund share transactions ....................................... (268,740,031) 218,338,034 ------------- ------------- Total increase (decrease) in net assets .............................. (268,739,776) 218,340,936 NET ASSETS: Beginning of year ............................................................. 546,577,274 328,236,338 ------------- ------------- End of year (including undistributed net investment income of $(1,170) and $2,902, respectively) .............................................................. $ 277,837,498 $ 546,577,274 ============= ============= </TABLE> The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENT JUNE 30, 2009 13 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Selected per share data and ratios for a share outstanding throughout each year <TABLE> <CAPTION> For the years ended June 30, ----------------------------------------------------- 2009 2008 2007 2006 2005 ----- ----- ----- ----- ----- <S> <C> <C> <C> <C> <C> Net asset value, beginning of year................. $1.00 $1.00 $1.00 $1.00 $1.00 Income from investment operations: Net investment income(1)........................ 0.01 0.02 0.03 0.02 0.01 Dividends to shareholders from net investment income............................... (0.01) (0.02) (0.03) (0.02) (0.01) ----- ----- ----- ----- ----- Net asset value, end of year................. $1.00 $1.00 $1.00 $1.00 $1.00 ===== ===== ===== ===== ===== Total return....................................... 1.06% 2.40% 3.03% 2.31% 1.15% Ratios/Supplemental data: Net assets, end of year (in millions)........... $278 $547 $328 $493 $438 Net expense paid by Fund........................ 0.59% 0.55% 0.58% 0.56% 0.56% Expense offset arrangement................... 0.00%(2) 0.00%(2) 0.01% 0.00%(2) 0.00%(2) ----- ----- ----- ----- ----- Total expenses............................... 0.59% 0.55% 0.59% 0.56% 0.56% ==== ==== ==== ==== ==== Ratio of net investment income to average net assets........................... 0.94% 2.31% 2.98% 2.31% 1.15% </TABLE> - ---------- (1) Calculated using average shares outstanding for the year. (2) Less than 0.01%. The accompanying notes are an integral part of these financial statements. 14 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS June 30, 2009 1. Organization. BBH Tax Exempt Money Fund (the "Fund") is a separate, diversified series of BBH Trust (the "Trust"), which is registered under the Investment Company Act of 1940, as amended. The Trust is an open-end management investment company organized as a Massachusetts business trust on June 7, 1983 and re-organized as a Delaware statutory trust on June 12, 2007. The Fund commenced operations on February 22, 1999. The Declaration of Trust permits the Trustees to create an unlimited number of series, each of which may issue a separate class of shares. The Trustees have authorized the issuance of an unlimited number of shares of the Fund without a par value. At June 30, 2009, there were five series of the Trust. 2. Significant Accounting Policies. The Fund's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The following summarizes the significant accounting policies of the Fund: A. Valuation of Investments. The Fund values its investments at amortized cost, which approximates fair value. The amortized cost method values a security at its cost at the time of purchase and thereafter assumes a constant amortization to maturity of any discount or premium. The Fund's use of amortized cost is in compliance with Rule 2a-7 of the Investment Company Act of 1940 as amended. B. Investment Transactions and Income. Investment transactions are accounted for on the trade date. Realized gains and losses, if any, from investment transactions are determined on the basis of identified cost. The Fund invests primarily in debt securities issued by municipalities. The ability of the issuers of the debt securities to meet their obligation may be affected by economic developments in a specific state or municipality. Interest income consists of interest accrued and discount earned (including both original issue and market discount) and premium amortization on the investments of the Fund, accrued ratably to the date of maturity. C. Fund Expenses. Expenses are accrued in the period to which they relate and adjustments are made when actual amounts are known. Expenses are then recognized as incurred. D. Federal Income Taxes. Each series of the Trust is treated as a separate entity for federal income tax purposes. It is the Fund's policy to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Accordingly, no federal income tax provision is required. At June 30, 2009, the cost of investments for federal income tax purposes was equal to the amortized cost of investments for financial statement purposes. The Fund is subject to the provisions of FASB Interpretation No. 48 ("FIN 48") "Accounting for Uncertainty in Income Taxes -- an interpretation of FASB Statement No. 109". FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The Fund did not have any unrecognized tax benefits at June 30, 2009, nor were there any increases or decreases in unrecognized tax benefits for the year FINANCIAL STATEMENT JUNE 30, 2009 15 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2009 then ended. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as an income tax expense in the Statements of Operations. During the year ended June 30, 2009, the Fund did not incur any such interest or penalties. The Fund is subject to examination by U.S. federal and state tax authorities for returns filed for the prior three fiscal years. E. Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, are declared daily and paid monthly to shareholders. The tax character of distributions paid during the fiscal years ended June 30, 2009 and 2008, respectively, were as follows: <TABLE> <CAPTION> Distributions paid from: - ----------------------------------------------------------------------------------------------- Net Total Total Ordinary long-term taxable Tax exempt distributions income capital gain distributions distributions paid -------- ------------ ------------- ------------- ------------- <S> <C> <C> <C> <C> <C> 2009: $413,955 -- $413,955 $6,166,932 $6,580,887 2008: -- -- - 9,858,762 9,858,762 </TABLE> As of June 30, 2009 and 2008, 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> 2009: $ 65,543 $256 $ 65,799 -- -- -- $ 65,799 2008: 104,874 -- 104,874 -- -- -- 104,874 </TABLE> As of June 30, 2009 the Fund did not have a net capital loss carryforward. The tax character of the dividends declared in both years was 93.71% tax exempt. To the extent future capital gains are offset by capital loss carry forwards, such gains will not be distributed. F. Use of Estimates. The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates. 16 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2009 G. U.S. Treasury Temporary Guarantee Program. The Fund currently participates in the U.S. Department of the Treasury's Temporary Guarantee Program for Money Market Funds (the "Program"). Subject to certain conditions and limitations, amounts held in the Fund by shareholders as of the close of business on September 19, 2008 are guaranteed against loss under the Program in the event that the Fund's net asset value per share falls below $0.995 and remains below $0.995 until the Fund is liquidated (a "Guarantee Event"). In the event that a Guarantee Event is triggered, a shareholder's shares covered by the Program will be the lesser of (i) the amount held in the Fund as of close of business on September 19, 2008, or (ii) the amount held in the Fund on the date the Program's guarantee is triggered. In this event and subject to the limitations of the Program, a shareholder who has remained invested in the Fund since September 19, 2008 would receive an increase in his or her account value with respect to each covered share of the Fund, equal to the difference between the amount received in the liquidation and $1.00 per share. As of December 31, 2008, assets available to the Program to support all participating money market funds were approximately $50 billion and the Program covers approximately $3 trillion in assets held in money market funds. The Program's guarantee only applies to shareholders invested in the Fund as of the close of business on September 19, 2008. The extension period for the Program commenced on May 1, 2009 and terminates on September 18, 2009 (the "Extension Period"). Participation in the Extension Period required payment to the U.S. Department of Treasury in the amount of 0.015% based on the net asset value of the Fund as of September 19, 2008. H. Accounting Developments. 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, "Disclosure about Credit Derivatives and Certain Guarantees: An Amendment to FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161," (the "FSP") 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. The Fund has adopted FAS 161 and management has determined there is no material impact to the financial statements for the year ended June 30, 2009. FINANCIAL STATEMENT JUNE 30, 2009 17 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2009 3. Fees and Other 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 0.25% of the Fund's average daily net assets. BBH has a sub-administration services agreement with Federated Services Company ("FSC") for which FSC receives compensation paid by BBH. For the year ended June 30, 2009, the Fund incurred $1,704,377 for investment advisory and administrative services. Investment Advisory and Administrative Fee Waiver. Effective June 4, 2009, the SID voluntarily began to waive its Investment Advisory and Administrative Fee to credit daily to the Fund an amount which would maintain the daily basis point return to the Fund at a minimum of 1 basis point. The amount credited each day will be offset to the daily accrual of the Investment Advisory and Administrative Fee. This is a voluntary waiver that can be changed at any time at the sole discretion of the SID. For the year ended June 30, 2009, this fee waiver amount was $2,550. Shareholder Servicing Fees. The Trust has a shareholder servicing agreement with BBH for which BBH receives a fee from the Fund calculated daily and paid monthly at an annual rate of 0.25% of the Fund's average daily net assets. For the year ended June 30, 2009, the Fund incurred $1,706,846 for shareholder servicing services. Custody and Accounting Fees. BBH acts as a custodian and shall receive a custody and accounting fee from the Fund calculated daily and paid monthly. The custody fee is a transaction based fee with an annual minimum of $20,000, and the accounting fee is calculated at 0.01% per annum on the first $1 billion of net assets and 0.005% per annum on all net assets over $1 billion. For the year ended June 30, 2009, the Fund incurred $168,089 for custody and accounting services. These fees were reduced by $31,051 as a result of an expense offset arrangement with the Fund's custodian. In the event that the Fund is overdrawn, under the custody agreement with BBH, BBH will make overnight loans to the Fund to cover overdrafts. Pursuant to the agreement, the Fund will be charged interest based on LIBOR on the day of overdraft plus one percent. The total interest paid by the Fund for the year ended June 30, 2009 was $8,435. 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 year ended June 30, 2009, the Fund incurred $53,138 for Trustees' fees. 18 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2009 4. Capital Stock. The Trust is permitted to issue an unlimited number of shares of capital stock, at no par value. Transactions in shares of capital stock were as follows: <TABLE> <CAPTION> Shares For the years ended June 30, --------------------------------------- 2009 2008 ------------ ------------ <S> <C> <C> Fund shares sold ............................................................. 683,653,819 732,984,132 Fund shares issued in reinvestments of dividends ............................. 3,186,453 6,550 Fund shares repurchased ...................................................... (955,580,303) (514,652,648) ------------ ------------ Net increase (decrease) ...................................................... (268,740,031) 218,338,034 ============ ============ </TABLE> 5. Subsequent Event. In accordance with the provisions set forth in FASB statement of Financial Accounting Standards No. 165 "Subsequent Events", adopted by the Fund as of June 30, 2009, management has evaluated the possibility of subsequent events existing in the Fund's financial statements through August 18, 2009. Management has determined that there are no material events that would require disclosure in the Fund's financial statements through this date. FINANCIAL STATEMENT JUNE 30, 2009 19 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES June 30, 2009 (unaudited) EXAMPLE As a shareholder of BBH Tax Exempt Money Fund (the "Fund"), you may incur two types of costs: (1) transaction costs on purchase payments, reinvested dividends, or other distributions; and exchange fees; and (2) ongoing costs, including management fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2009 to June 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. 20 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES (continued) June 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. <TABLE> <CAPTION> Expenses Paid Beginning Ending During Period Account Value Account Value January 1, 2009 January 1, 2009 June 30, 2009 to June 30, 2009(1) --------------- ------------- ------------------- <S> <C> <C> <C> Actual.......................... $1,000 $1,002.00 $3.03 Hypothetical(2)................. $1,000 $1,021.77 $3.06 </TABLE> - ---------- (1) Expenses are equal to the Fund's annualized expense ratio of 0.61%, 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 purpose of the calculation, the applicable annualized expense ratio is subtracted from the assumed return before expenses. FINANCIAL STATEMENT JUNE 30, 2009 21 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION June 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 company advisory and other fees. The Board also reviewed BBH's profitability data for each Fund, which also included the effect of revenue generated by the shareholder servicing, administration, fund accounting, 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. 22 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) June 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, fund accountant 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 Investment Company Act of 1940, as amended. There may be other economies of scale because many expenses did not rise (and fall) proportionally to increases (and decreases) in total net assets. The Board noted that BBH had priced its services in recognition of the fact that it was largely its own clients who were shareholders and, accordingly, sought to assure that the cost of these services and total expenses for each Fund were fair and reasonable. In addition, the Board noted that over the years BBH had supported certain Funds through fee waivers and expense reimbursements. Based on information they had been provided over many years, the Board observed that in the mutual fund industry as a whole, as well as among funds similar to the Funds, there appeared to be no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. In light of the Funds' current size and expense structure, the Board concluded that it was unnecessary at this time to consider breakpoints with respect to the Funds, other than for the BBH Money Market Fund. FINANCIAL STATEMENT JUNE 30, 2009 23 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) June 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 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, and administrative services, such as shareholder communications, and tax compliance, with the attendant costs and exposure to liability. BBH also coordinates the provision of services to the Funds by nonaffiliated service providers. The following factors specific to BBH Tax Exempt Money Fund (the "Fund") also were noted and considered by the Board in deciding to approve the Agreement: The Board reviewed information showing performance of the Fund compared to iMoneyNet (Tax Free Retail). The Fund outperformed or performed in line with the average over all relevant periods. The Board also viewed with favor that the Fund's portfolio of investments had an overall high quality while the Fund's total expense ratio was lower that the iMoneyNet Average. The Board also noted that the Fund had successfully maintained a stable net asset value of one dollar at all times. Taking into account these comparisons and the other factors considered, the Board concluded that the Fund's investment results over time and its total expense ratio had been satisfactory. Conflicts of Interest As a general matter, certain conflicts of interest may arise in connection with a portfolio manager's management of a Fund's investments, on the one hand, and the investments of other accounts for which the portfolio manager is responsible, on the other. For example, it is possible that the various accounts managed could have different investment strategies that, at times, might conflict with one another to the possible detriment of the Fund. Alternatively, to the extent that the same investment opportunities might be desirable for more than one account, possible conflicts could arise in determining how to allocate them. Other potential conflicts might include conflicts between the Fund and its affiliated and unaffiliated 24 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- DISCLOSURE OF ADVISOR SELECTION (continued) June 30, 2009 (unaudited) service providers (e.g., conflicting duties of loyalty). By way of example, compensation and delegation of responsibility arrangements may create conflicts relating to selection of brokers or dealers to execute Fund portfolio trades and/or specific uses of commissions from Fund portfolio trades, administration of investment advice and valuation of securities. The SID may direct brokerage transactions and/or payment of a portion of client commissions ("softdollars") 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. The SID will determine in good faith whether the amount of commission is reasonable in relation to the value of research and brokerage services provided and whether the services provide lawful and appropriate assistance in its investment decision-making responsibilities. The SID may enter into advisory and/or referral arrangements with third parties. Such arrangements may include compensation paid by the SID to the third party. The SID may pay a solicitation fee for referrals and/or advisory or incentive fees. The Trust manages these conflicts. For example, the Funds have 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. FINANCIAL STATEMENT JUNE 30, 2009 25 <PAGE> BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- ADDITIONAL FEDERAL TAX INFORMATION June 30, 2009 (unaudited) The percentage of tax-exempt dividends paid by BBH Tax Exempt Money Fund for the year ended June 30, 2009 was 93.71%. In January 2010, the Fund will report on Form 1099 the tax status of all distributions made during the calendar year 2009. Shareholders should use the information on Form 1099 for their income tax returns. The differences between book-basis and tax-basis is attributable primarily to post-October long term capital loss deferral and current year distribution payable. 26 <PAGE> TRUSTEES AND OFFICERS OF BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- (unaudited) Information pertaining to the Trustees of the BBH Trust (the "Trust") and executive officers of the Trust is set forth below. Part B to the Registration Statement of the BBH Tax Exempt Money Fund includes additional information about the Fund's Trustees and is available upon request without charge by contacting the Fund at 1-800-625-5759. <TABLE> <CAPTION> Number of Term of Funds in Office Fund and Complex Other Position(s) Length Overseen Directorships Name, Birth Date Held with of Time Principal Occupation(s) by Held by and Address Trust Served# During Past 5 Years Trustee^ Trustee - ---------------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> Joseph V. Shields Jr. Chairman of Since 2007 Managing Director, Chairman and 5 None Birth Date: March 17, 1938 the Board Chief Executive Officer of Shields & Company and Trustee Shields & Company (member of 140 Broadway New York Stock Exchange); New York, NY 10005 Chairman of Capital Management Associates, Inc. (registered investment adviser); Director of Flower Foods, Inc. (New York Stock Exchange listed company). David P. Feldman Trustee Since 2007 Director of Jeffrey Co. (1992 5 Director of Birth Date: November 16, 1939 to present); Director of QMED Dreyfus C/O BBH & Co. (1999 to May 2007) Mutual 140 Broadway Funds (59 New York, NY 10005 Funds) Alan G. Lowy Trustee Since 2007 Private Investor. 5 None Birth Date: April 17, 1939 4111 Clear Valley Drive Encino, CA 91436 Arthur D. Miltenberger Trustee Since 2007 Retired; Trustee, R.K. Mellon 5 None Birth Date: November 8, 1938 Family Trust (1981 to June 503 Darlington Road 2003); Director of Ligonier, PA 15658 Aerostructures Corporation (aircraft manufacturer) (1996 to July 2003). Samuel F. Pryor, IV Trustee Since 2007 Private Investor. 5 None Birth Date: June 12, 1955 130 East 67th Street New York, NY 10021 </TABLE> FINANCIAL STATEMENT JUNE 30, 2009 27 <PAGE> TRUSTEES AND OFFICERS OF BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- (unaudited) <TABLE> <CAPTION> Number of Term of Funds in Office Fund and Complex Other Position(s) Length Overseen Directorships Name, Birth Date Held with of Time Principal Occupation(s) by Held by and Address Trust Served# During Past 5 Years Trustee^ Trustee - ---------------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> H. Whitney Wagner Trustee Since 2007 President, Clear Brook 5 None Birth Date: March 3, 1956 Advisors, a registered Clear Brook Advisors investment advisor. 75 Rockefeller Plaza, 14th Floor New York, NY 10019 Officers John A. Gehret President Since 2008 President and Principal N/A N/A Birth Date: April 11, 1959 and Executive Officer of the Trust; 140 Broadway Principal Joined Brown Brothers Harriman New York, NY 10005 Executive & Co. ("BBH & Co.") in 1981 and Officer has been a Partner of the firm since 1998. Charles H. Schreiber Treasurer Since 2007 Treasurer and Principal N/A N/A Birth Date: December 10, 1957 and Financial Officer of the Trust; 140 Broadway Principal Senior Vice President of BBH & New York, NY 10005 Financial Co. since September 2001; Officer Joined BBH & Co. in 1999. Mark B. Nixon Assistant Since 2007 Assistant Secretary and N/A N/A Birth Date: January 14, 1963 Secretary, Assistant Treasurer of the 140 Broadway Assistant Trust; Vice President of BBH & New York, NY 10005 Treasurer Co. (since October 2006); Accounting Manager, Reserve Funds (August 2005-September 2006); Assistant Controller, Reserve Funds (February 2005 - August 2005); Private Consultant (December 2001 - February 2005). Beth Haddock Chief Since 2007 Chief Compliance Officer of the N/A N/A Birth Date: December 10, 1965 Compliance Trust (September 2007-present); 140 Broadway Officer Chief Compliance Officer for New York, NY 10005 the FINRA/NYSE and SEC compliance programs and Associate Compliance Director for the global compliance program (April 2005 - present); Deputy General Counsel of AXA Advisors/ AXA Financial (November 1997-April 2005). </TABLE> 28 <PAGE> TRUSTEES AND OFFICERS OF BBH TAX EXEMPT MONEY FUND - -------------------------------------------------------------------------------- (unaudited) <TABLE> <CAPTION> Number of Term of Funds in Office Fund and Complex Other Position(s) Length Overseen Directorships Name, Birth Date Held with of Time Principal Occupation(s) by Held by and Address Trust Served# During Past 5 Years Trustee^ Trustee - ---------------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> Sue M. Rim-An Anti-Money Since 2008 Anti-Money Laundering Officer, N/A N/A Birth Date: September 10, 1970 Laundering Vice President of BBH & Co. 140 Broadway Officer (September 2007 - present); AML New York, NY 10005 Officer at UBS Investment Bank (April 2006 - August 2007); AML Officer & Vice President in Private Client Services at Bear Stearns & Co (June 1992 - April 2006). Gail C. Jones Secretary Since 2007 Secretary of the Trust; N/A N/A Birth Date: October 26, 1953 Counsel, ReedSmith, LLP (since 1001 Liberty Avenue October 2002); Corporate Pittsburgh, PA 15222-3779 Counsel (January 1997 to September 2002) and Vice President (January 1999 to September 2002) of Federated Services Company. George M. Polatas Vice Since 2008 Vice President of the Trust N/A N/A Birth Date: March 3, 1962 President (since June 2008); Assistant 1001 Liberty Avenue Vice President of Federated Pittsburgh, PA 15222-3779 Services Company; Vice President of various funds distributed by Edgewood Services, Inc (January 1997 to present). Theodore J. Boudria Assistant Since 2008 Assistant Treasurer of the N/A N/A Birth Date: June 26, 1968 Treasurer Trust; Senior Vice President 70 Franklin Street (since 2009); Joined BBH & Co. Boston, MA 02110 in 1995. </TABLE> - ---------- # Each Trustee of the Trust hold s office until he or she att ains the age of 70 (72, in the case of Trustees who were elected as such before January 1, 2000), or until he or she sooner dies, resigns or is removed from office in accordance with the provisions of the Trust's Declaration of Trust. All officers of the Trust hold office for one year and until their respective successors are chosen and qualified (subject to the ability of the Trustees to remove any officer in accordance with the Trust's By-laws). ^ The Fund Complex consists of the Trust, which has five series and each is counted as one "Fund" for purposes of this table. FINANCIAL STATEMENT JUNE 30, 2009 29 <PAGE> ADMINISTRATOR INVESTMENT ADVISER BROWN BROTHERS HARRIMAN MUTUAL FUND ADVISORY DEPARTMENT (SID) 140 BROADWAY OF BROWN BROTHERS HARRIMAN NEW YORK, NY 10005 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 Funds website at www.bbhfunds.com. 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. [LOGO] BROWN BROTHERS HARRIMAN
ITEM 2. CODE OF ETHICS.
(a) The Registrant has adopted a code of ethics that applies to the Registrant's principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions.
(b) No answer required.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f)
(1) Not applicable.
(2) Not applicable.
(3) A copy of the code of ethics referenced in Item 2(a) of this Form N-CSR
is available and can be mailed, free of charge, to anyone by calling
(800)575-1265.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The Registrant's Board of Trustees has designated two members of the
audit committee as financial experts.
(2) The following Trustees have been designated as audit committee financial
experts by the Board of Trustees who are “independent” for purposes of
this Item 3 of Form N-CSR: audit committee members Arthur D.
Miltenberger and David P. Feldman are the designated audit committee
financial experts.
(3) Not applicable.
(b) No answer required.
(c) No answer required.
(d) No answer required.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
TO BE PROVIDED BY D&T
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
(a) Not applicable.
(b) Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND
PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT
INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END
MANAGEMENT INVESTMENT COMPANY AND AFFILIATED
PURCHASERS.
Not Applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the Registrant's disclosure controls and
procedures as conducted within 90 days of the filing date of this Form
N-CSR, the Registrant's principal financial officer and principal
executive officer have concluded that those disclosure controls and
procedures provide reasonable assurance that the material information
required to be disclosed by the Registrant on this report is recorded,
processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms.
(b) There were no significant changes in the Registrant's internal controls
or in other factors that occurred during the second fiscal quarter of
the period covered by this report that has materially affected, or is
reasonably likely to materially affect, the 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: August 31, 2009
---------------------
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: August 31, 2009
----------------------
By (Signature and Title)* /s/ Charles H. Schreiber
------------------------------------------
Charles H. Schreiber, Treasurer
(Principal Financial Officer)
Date: August 31, 2009
-----------------------
- Print name and title of each signing officer under his or her signature.
EXHIBIT 12(a) (1)
A copy of the code of ethics is available and can be mailed, free of charge,
to anyone by calling (800) 575-1265.
EXHIBIT 12(a) (2)
SECTION 302 CERTIFICATION OF PRINCIPLE EXECUTIVE OFFICER.
I, John A. Gehret, certify that:
1. I have reviewed this report on Form N-CSR of BBH Trust on behalf of: BBH
Money Market Fund and BBH Tax Exempt Money Fund,("Registrant");
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations, changes in net
assets, and cash flows (if the financial statements are required to
include a statement of cash flows) of the Registrant as of, and for, the
periods presented in this report;
4. The Registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Rule 30a-3(c) under the Investment Company Act of 1940) and
internal control over financial reporting (as defined in Rule 30a-3(d)
under the Investment Company Act of 1940) for the Registrant and have:
a.) designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
b.) designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c.) evaluated the effectiveness of the Registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of a date
within 90 days prior to the filing date of this report based on such
evaluation; and
d.) disclosed in this report any change in the Registrant's internal control
over financial reporting that occurred during the second fiscal quarter of
the period covered by this report that has materially affected, or is
reasonably likely to materially affect, the Registrant's internal control
over financial reporting; and
5. The Registrant's other certifying officer and I have disclosed to the
Registrant's auditors and the audit committee of the Registrant's board of
directors (or persons performing the equivalent functions):
a.) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the Registrant's ability to record,
process, summarize, and report financial information; and
b.) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal control
over financial reporting.
Date: August 31, 2009
------------------------------
/s/ John A. Gehret
=======================
John A. Gehret
President - Principal Executive Officer
EXHIBIT 12(a) (2)
SECTION 302 CERTIFICATION OF PRINCIPLE FINANCIAL OFFICER.
I, Charles H. Schreiber, certify that:
1. I have reviewed this report on Form N-CSR of BBH Trust on behalf of: BBH
Money Market Fund and BBH Tax Exempt Money Fund,("Registrant");
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations, changes in net
assets, and cash flows (if the financial statements are required to
include a statement of cash flows)of the Registrant as of, and for, the
periods presented in this report;
4. The Registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Rule 30a-3(c) under the Investment Company Act of 1940) and
internal control over financial reporting (as defined in Rule 30a-3(d)
under the Investment Company Act of 1940) for the Registrant and have:
a.) designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
b.) designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c.) evaluated the effectiveness of the Registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of a date
within 90 days prior to the filing date of this report based on such
evaluation; and
d.) disclosed in this report any change in the Registrant's internal control
over financial reporting that occurred during the second fiscal quarter of
the period covered by this report that has materially affected, or is
reasonably likely to materially affect, the Registrant's internal control
over financial reporting; and
5. The Registrant's other certifying officer and I have disclosed to the
Registrant's auditors and the audit committee of the Registrant's board of
directors (or persons performing the equivalent functions):
a.) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the Registrant's ability to record,
process, summarize, and report financial information; and
b.) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal control
over financial reporting.
Date: August 31, 2009
---------------------------
/s/ Charles H. Schreiber
==========================
Charles H. Schreiber
Treasurer - Principal Financial Officer
SECTION 906 CERTIFICATIONS
This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. (section) 1350, and accompanies the report on Form N-CSR for the fiscal year ended June 30, 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 June 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: August 31, 2009
-------------------------
/s/ John A. Gehret
=======================
John A. Gehret
President - Principal Executive Officer
Date: August 31, 2009
---------------------------
/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.