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N-CSR
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<FILENAME>BBHTRUSTNCSR.txt
BBH TRUST 06-30-04 NCSR
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 811-03779
Name of Fund: BBH TRUST
BBH Money Market Fund
BBH U.S. Treasury Money Fund
BBH Tax Fee Short/Intermediate Fixed Income Fund
BBH Tax Exempt Money Fund
Fund Address: 40 Water Street
Boston, MA 02109-3661
Name and address of agent for service:
Michael D. Martins, Principal Financial Officer,
BBH Fund, Inc., 40 Water Street, Boston, MA, 02109
Mailing address: 140 Broadway, New York, NY, 10005
Registrant's telephone number, including area code: (800) 625-5759
Date of fiscal year end: 06/30/04
Date of reporting period: 07/01/03 - 6/30/04
Item 1 - Attach shareholder report
[LOGO] Brown Brothers Harriman
Annual Report
JUNE 30, 2004
BBH Money Market Fund
BBH MONEY MARKET FUND
- -------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2004
ASSETS:
Investment in BBH U.S. Money Market Portfolio
(the "Portfolio"), at value ........................... $1,375,342,079
--------------
Total Assets ....................................... 1,375,342,079
--------------
LIABILITIES:
Payables for:
Shareholder services fees ............................. 289,153
Administrative fees ................................... 109,878
Dividends declared .................................... 44,489
Professional fees ..................................... 40,786
Board of Trustees' fees ............................... 7,875
Accounting fees ....................................... 2,000
Accrued expenses and other liabilities ................... 46,262
--------------
Total Liabilities .................................. 540,443
--------------
NET ASSETS, for 1,374,801,636 fund shares outstanding ....... $1,374,801,636
==============
Net Assets Consist of:
Paid-in capital .......................................... $1,374,801,636
==============
NET ASSET VALUE AND OFFERING PRICE PER SHARE ................ $ 1.00
==============
The accompanying notes are an integral part of these financial statements
2
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the year ended June 30, 2004
INVESTMENT INCOME:
Interest income allocated from Portfolio ................. $ 16,037,405
Expenses allocated from Portfolio ........................ (2,307,869)
------------
Net Investment Income Allocated from Portfolio ......... 13,729,536
------------
Expenses:
Shareholder services fees ................................ 3,600,961
Administrative fees ...................................... 1,368,364
Professional fees ........................................ 64,721
Board of Trustees' fees .................................. 48,370
Accounting fees .......................................... 8,000
Miscellaneous expenses ................................... 110,535
------------
Total Expenses ......................................... 5,200,951
------------
Net Investment Income ....................................... $ 8,528,585
============
The accompanying notes are an integral part of these financial statements
FINANCIAL STATEMENT JUNE 30, 2004 3
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
For the years ended June 30,
----------------------------------
2004 2003
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS:
From Operations:
Net investment income ................. $ 8,528,585 $ 15,169,821
Dividends declared from net investment income (8,528,585) (15,169,821)
--------------- ---------------
From Fund Share (Principal) Transactions
at Net Asset Value of $1.00 per share:
Fund shares sold ...................... 5,144,651,486 4,457,583,656
Fund shares issued in reinvestment
of dividends ........................ 4,156,598 7,624,344
Fund shares repurchased ............... (5,232,593,269) (4,388,558,011)
--------------- ---------------
Net increase (decrease) in net assets
resulting from fund share transactions (83,785,185) 76,649,989
NET ASSETS:
Beginning of year ........................... 1,458,586,821 1,381,936,832
--------------- ---------------
End of year ................................. $ 1,374,801,636 $ 1,458,586,821
=============== ===============
The accompanying notes are an integral part of these financial statements
4
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding throughout each year
For the years ended June 30,
-------------------------------------------------------------------------------------
2004 2003 2002 2001 2000
------------- ------------- ------------- ------------- -------------
Net asset value, beginning of year . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income ........... 0.01 0.01 0.02 0.05 0.05
Dividends to shareholders from net
investment income ............... (0.01) (0.01) (0.02) (0.05) (0.05)
------------- ------------- ------------- ------------- -------------
Net asset value, end of year ....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------- ------------- ------------- ------------- -------------
Total return ....................... 0.59% 1.06% 2.10% 5.57% 5.36%
Ratios/Supplemental data1:
Net assets, end of year
(000's omitted) .............. $ 1,374,802 $ 1,458,587 $ 1,381,937 $ 1,449,742 $ 1,421,982
Ratio of expenses to average
net assets ................... 0.52% 0.52% 0.51% 0.52% 0.53%
Ratio of net investment income to
average net assets ............ 0.59% 1.05% 2.08% 5.43% 5.29%
The accompanying notes are an integral part of these financial statements
- ----------
1 Ratios include the Fund's share of Portfolio income, expenses paid by the
Portfolio and the expense offset arrangement, as appropriate.
FINANCIAL STATEMENT JUNE 30, 2004 5
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
June 30, 2004
1. Organization and Significant Accounting Policies. BBH Money Market Fund
(the "Fund") is a separate, diversified series of BBH Trust (the "Trust"),
which is registered under the Investment Company Act of 1940, as amended.
The Trust is an open-end management investment company organized as a
Massachusetts business trust on June 7, 1983. 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 Trustees have authorized the issuance of
an unlimited number of shares of the Fund with a par value of $0.01 per
share. At June 30, 2004, there were four series of the Trust.
The Fund invests 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. The value of
such investment reflects the Fund's proportionate interest in the net
assets of the Portfolio (approximately 48% at June 30, 2004). The
performance of the Fund is directly affected by the performance of the
Portfolio. The financial statements of the Portfolio, including the
portfolio of investments, are included elsewhere in this report and should
be read in connection with the Fund's financial statements.
The Fund's financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America, which
require management to make certain estimates and assumptions at the date
of the financial statements and are based, in part, on the following
accounting policies. Actual results could differ from those estimates.
A. Valuation of Investments. The Fund records its investments in the
Portfolio at fair value. Valuation of investments in the Portfolio
is discussed in Note 1 of the Portfolio's Notes to Financial
Statements which are included elsewhere in this report.
B. Interest Income and Expenses. The Fund records its share of the
Portfolio's income and expenses each day. In addition, the Fund
accrues its own expenses.
C. Federal Income Taxes. Each series of the Trust is treated as a
separate entity for federal income tax purposes. It is the Fund's
policy to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies and to distribute all
of its taxable income to its shareholders. Accordingly, no federal
income tax provision is required.
D. Dividends and Distributions. Dividends from net investment income
are declared daily and paid monthly to shareholders.
2. Transactions with Affiliates.
Administrative Fees. The Trust has an administration agreement with Brown
Brothers Harriman Trust Company, LLC ("BBHTC") for which BBHTC receives a
fee from the Fund calculated daily and paid monthly at an annual rate
equivalent to 0.095% of the Fund's average daily net assets. BBHTC has a
sub-administration services agreement with Federated Services Company
("FSC") for which FSC receives compensation paid by BBHTC. For the year
ended June 30, 2004, the Fund incurred $1,368,364 for administrative
services.
6
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2004
Shareholder Servicing Fees. The Trust has a shareholder servicing
agreement with Brown Brothers Harriman ("BBH") for which BBH receives a
fee from the Fund calculated daily and paid monthly at an annual rate
equivalent to 0.25% of the Fund's average daily net assets. For the year
ended June 30, 2004, the Fund incurred $3,600,961 for shareholder
servicing services.
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, 2004, the Fund incurred $48,370 for Trustees' fees.
Accounting Fees. The Fund has an accounting agreement with BBH for which
BBH receives a fee calculated and paid monthly. For the year ended June
30, 2004, the Fund incurred $8,000 for accounting services.
FINANCIAL STATEMENT JUNE 30, 2004 7
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Trustees of BBH Trust and Shareholders of
BBH Money Market Fund
We have audited the accompanying statement of assets and liabilities of BBH
Money Market Fund (a series of BBH Trust) (the "Fund") as of June 30, 2004, 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 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 are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. 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, 2004, 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 13, 2004
8
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
June 30, 2004 (expressed in U.S. dollars)
Principal Maturity Interest
Amount Date Rate Value
- ----------- -------- -------- -----------
BANK NOTES (6.6%)
$39,700,000 BNP Paribas .................................. 04/15/05 1.320% $39,515,680
45,000,000 Canadian Imperial Bank
of Commerce* .............................. 07/08/04 1.126 45,001,616
30,000,000 Royal Bank of Canada* ........................ 07/27/04 1.245 29,996,654
50,000,000 U.S. Bank NA ................................. 11/17/04 1.170 50,005,741
25,000,000 U.S. Bank NA ................................. 03/11/05 1.200 24,997,254
-----------
Total Bank Notes ............................. 189,516,945
-----------
CERTIFICATES OF DEPOSIT (11.3%)
30,000,000 ABN Amro Bank NV ............................. 08/27/04 1.380 30,008,399
25,000,000 ABN Amro Bank NV ............................. 10/29/04 1.370 24,999,173
25,000,000 BNP Paribas .................................. 09/22/04 1.230 25,000,000
25,000,000 Deutsche Bank AG ............................. 07/07/04 1.120 25,000,000
25,000,000 Deutsche Bank AG ............................. 12/03/04 1.510 25,000,000
25,000,000 Rabobank Nederland NV ........................ 10/29/04 1.360 25,000,000
30,000,000 Royal Bank of Scotland ....................... 09/07/04 1.120 30,001,112
40,000,000 Royal Bank of Scotland ....................... 02/23/05 1.330 39,969,371
20,000,000 Societe Generale ............................. 05/31/05 2.000 20,000,000
50,000,000 UBS AG (Stamford) ............................ 03/14/05 1.205 49,795,614
28,250,000 Washington Mutual, Inc. ...................... 12/14/04 1.820 28,250,000
-----------
Total Certificates of Deposit ................ 323,023,669
-----------
COMMERCIAL PAPER (47.3%)
50,000,000 Bank of America Corp. ........................ 08/04/04 1.090 49,948,528
50,000,000 Bear Stearns & Co., Inc. ..................... 07/06/04 1.060 49,992,639
50,000,000 Beta Financial Group, Inc. ................... 08/11/04 1.230 49,929,958
75,000,000 BMW U.S. Capital LLC ......................... 07/01/04 1.450 75,000,000
50,000,000 Citigroup Global Market
Holdings, Inc. ............................ 07/01/04 1.400 50,000,000
75,000,000 Citigroup Global Market
Holdings, Inc. ............................ 07/12/04 1.080 74,975,250
23,340,000 Citigroup Global Market
Holdings, Inc. ............................ 09/07/04 1.300 23,282,687
25,170,000 City of Chicago, Illinois .................... 08/02/04 1.210 25,142,928
50,000,000 Credit Suisse First
Boston Corp. .............................. 08/19/04 1.200 49,918,333
49,500,000 Danske Corp. ................................. 07/12/04 1.220 49,481,548
The accompanying notes are an integral part of these financial statements
FINANCIAL STATEMENT JUNE 30, 2004 9
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2004 (expressed in U.S. dollars)
Principal Maturity Interest
Amount Date Rate Value
- ----------- -------- -------- -----------
COMMERCIAL PAPER (continued)
$25,000,000 Danske Corp. ................................. 08/06/04 1.100% $ 24,972,500
25,000,000 General Electric Capital Corp. ............... 08/04/04 1.080 24,974,500
50,000,000 General Electric Capital Corp. ............... 08/18/04 1.200 49,920,000
50,000,000 Goldman Sachs Group, Inc. .................... 01/05/05 1.360 49,644,889
50,000,000 HBOS Treasury Services, Plc. ................. 07/15/04 1.090 49,978,806
25,000,000 HBOS Treasury Services, Plc. ................. 08/13/04 1.085 24,967,600
50,000,000 ING Funding LLC .............................. 07/15/04 1.230 49,976,083
25,000,000 ING Funding LLC .............................. 09/01/04 1.100 24,952,639
12,080,000 International Lease Finance Corp. ............ 07/08/04 1.050 12,077,533
19,006,000 International Lease Finance Corp. ............ 07/13/04 1.035 18,999,443
25,000,000 Kittyhawk Fund Corp. ......................... 07/07/04 1.060 24,995,583
50,000,000 Kittyhawk Fund Corp. ......................... 07/15/04 1.100 49,978,611
39,742,000 National Rural Utilities
Cooperative Finance Corp. ................. 07/07/04 1.060 39,734,979
30,000,000 SLM Corp. .................................... 12/01/04 1.770 29,774,325
50,000,000 Societe Generale ............................. 07/16/04 1.060 49,977,917
75,000,000 Steamboat Funding Corp. ...................... 07/07/04 1.360 74,983,000
23,335,000 Three Rivers Funding Corp. ................... 07/01/04 1.050 23,335,000
15,014,000 Three Rivers Funding Corp. ................... 07/02/04 1.050 15,013,562
67,624,000 Tulip Funding Corp. .......................... 07/14/04 1.210 67,594,452
75,000,000 UBS Finance, Ltd. ............................ 07/01/04 1.420 75,000,000
80,890,000 Wal-Mart Stores, Inc. ........................ 08/24/04 1.100 80,756,532
-------------
Total Commercial Paper ....................... 1,359,279,825
-------------
CORPORATE BOND (1.7%)
50,000,000 Abbey National Treasury
Services, Plc.* ........................... 07/19/04 1.205 49,993,705
-------------
MUNICIPAL BOND (1.2%)
35,700,000 Los Angeles, California, Water
& Power Revenue* .......................... 07/01/04 1.130% 35,700,000
--------------
U.S. GOVERNMENT AGENCY
OBLIGATIONS (14.4%)
29,000,000 Federal Farm Credit Bank* .................... 07/07/04 1.521 29,000,000
40,000,000 Federal Farm Credit Bank* .................... 10/05/04 1.326 40,000,000
25,000,000 Federal Farm Credit Bank ..................... 10/08/04 1.250 24,914,063
The accompanying notes are an integral part of these financial statements
10
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2004 (expressed in U.S. dollars)
Principal Maturity Interest
Amount Date Rate Value
- ----------- -------- -------- -----------
U.S. GOVERNMENT AGENCY
OBLIGATIONS (continued)
75,000,000 Federal Home Loan Mortgage Corp.* ............ 07/01/04 1.050% $ 74,991,141
50,000,000 Federal Home Loan Mortgage Corp. ............. 09/20/04 1.240 49,860,500
94,025,000 Federal National Mortgage Assoc.* ............ 07/07/04 1.531 94,025,000
50,000,000 Federal National Mortgage Assoc. ............. 07/07/04 1.190 49,990,084
50,000,000 Federal National Mortgage Assoc. ............. 09/17/04 1.280 49,861,334
--------------
Total U.S. Government
Agency Obligations ......................... 412,642,122
--------------
TIME DEPOSITS (18.0%)
125,000,000 Banc One Corp. ............................... 07/01/04 1.460 125,000,000
65,300,000 Deutsche Bank AG ............................. 07/01/04 1.200 65,300,000
100,000,000 Dresdner Bank ................................ 07/01/04 1.430 100,000,000
100,000,000 Rabobank Group ............................... 07/01/04 1.410 100,000,000
75,000,000 Royal Bank of Canada ......................... 07/01/04 1.250 75,000,000
50,000,000 Societe Generale ............................. 07/01/04 1.375 50,000,000
--------------
Total Time Deposits .......................... 515,300,000
--------------
TOTAL INVESTMENTS AT AMORTIZED COST ............................ 100.5% $2,885,456,266
LIABILITIES IN EXCESS OF OTHER ASSETS .......................... (0.5) (14,294,758)
----- --------------
NET ASSETS ..................................................... 100.0% $2,871,161,508
===== ==============
- ----------
* Variable rate instrument. Interest rates change on specific dates (such as
a coupon or interest payment date). The yield shown represents the June
30, 2004 coupon rate.
The accompanying notes are an integral part of these financial statements
FINANCIAL STATEMENT JUNE 30, 2004 11
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2004 (expressed in U.S. dollars)
ASSETS:
Investments, at amortized cost ......................... $2,885,456,266
Interest receivable .................................... 2,979,319
Prepaid expenses ....................................... 79,401
--------------
Total Assets ........................................ 2,888,514,986
--------------
LIABILITIES:
Due to bank ............................................ 16,857,148
Payables for:
Investment advisory fees ............................ 244,816
Custody and accounting fees ......................... 99,000
Administrative fees ................................. 85,685
Professional fees ................................... 43,423
Board of Trustees' fees ............................. 13,702
Accrued expenses and other liabilities ................. 9,704
--------------
Total Liabilities ............................... 17,353,478
--------------
NET ASSETS ................................................ $2,871,161,508
==============
The accompanying notes are an integral part of these financial statements
12
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the year ended June 30, 2004 (expressed in U.S. dollars)
NET INVESTMENT INCOME:
Income:
Interest .......................................... $ 33,971,937
------------
Expenses:
Investment advisory fees .......................... 3,051,272
Administrative fees ............................... 1,067,945
Custody and accounting fees ....................... 437,025
Board of Trustees' fees ........................... 103,795
Professional fees ................................. 53,003
Miscellaneous expenses ............................ 175,042
------------
Total Expenses ................................. 4,888,082
Fees paid indirectly ........................... (5,574)
------------
Net Expenses ................................... 4,882,508
------------
Net Investment Income .......................... $29,089,429
===========
The accompanying notes are an integral part of these financial statements
FINANCIAL STATEMENT JUNE 30, 2004 13
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (expressed in U.S. dollars)
For the years ended June 30,
------------------------------------
2004 2003
---------------- ----------------
INCREASE (DECREASE) IN NET ASSETS:
From Operations:
Net investment income .................... $ 29,089,429 $ 46,985,348
---------------- ----------------
Capital Transactions:
Proceeds from contributions .............. 9,821,500,707 11,833,968,310
Value of withdrawals ..................... (10,401,093,623) (11,332,869,201)
---------------- ----------------
Net increase (decrease) in net assets
resulting from capital transactions (579,592,916) 501,099,109
---------------- ----------------
Total increase (decrease) in net assets (550,503,487) 548,084,457
NET ASSETS:
Beginning of year ........................... 3,421,664,995 2,873,580,538
---------------- ----------------
End of year ................................. $ 2,871,161,508 $ 3,421,664,995
================ ================
The accompanying notes are an integral part of these financial statements
14
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (expressed in U.S. dollars)
For the years ended June 30,
------------------------------------------------------------------------------
2004 2003 2002 2001 2000
---------- ---------- ---------- ---------- ----------
Total return ....................... 0.99% 1.44% 2.47% 5.95% 5.70%
Ratios/Supplemental data:
Net assets, end of year
(000's omitted) .............. $2,871,162 $3,421,665 $2,873,581 $2,358,010 $1,602,484
Expenses as a percentage of
average net assets:
Net expenses paid by Portfolio 0.16% 0.15% 0.16% 0.15% 0.21%
Expense offset arrangement ... 0.00%(1) 0.00%(1) 0.00%(1) 0.01% --
---------- ---------- ---------- ---------- ----------
Total expenses ............ 0.16% 0.15% 0.16% 0.16% 0.21%
Ratio of net investment income to
average net assets ........... 0.95% 1.40% 2.39% 5.64% 5.60%
- ----------
1 Amount is less than 0.01%.
The accompanying notes are an integral part of these financial statements
FINANCIAL STATEMENT JUNE 30, 2004 15
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS
June 30, 2004 (expressed in U.S. dollars)
1. Organization and Accounting Policies. BBH U.S. Money Market Portfolio (the
"Portfolio") is registered under the Investment Company Act of 1940, as
amended, as a no load, diversified, open-end management investment
company, which was organized as a trust under the laws of the State of New
York on June 15, 1993. The Portfolio commenced operations on October 31,
1994. The Declaration of Trust permits the Trustees to create interests in
the Portfolio.
The Portfolio's financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America,
which require management to make certain estimates and assumptions at the
date of the financial statements and are based, in part, on the following
accounting policies. Actual results could differ from those estimates.
A. Valuation of Investments. The Portfolio values its investments at
amortized cost, which approximates market value. The amortized cost
method values a security at its cost at the time of purchase and
thereafter assumes a constant amortization to maturity of any
discount or premium. The Portfolio's use of amortized cost is in
compliance with Rule 2a-7 of the Investment Company Act of 1940.
B. Interest Income. Interest income consists of interest accrued and
discount earned (including both original issue and market discount)
and premium amortization on the investments of the Portfolio,
accrued ratably to date of maturity.
C. Federal Income Taxes. The Portfolio is treated as a partnership for
federal income tax purposes and its operations are conducted in such
a way that is it not to be considered engaged in a U.S. trade or
business for U.S. tax purposes. Accordingly, no provision for
federal income taxes is necessary. It is intended that the
Portfolio's assets will be managed in such way that an investor in
the Portfolio will be able to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies.
At June 30, 2004, the cost of investments for federal income tax
purposes was equal to the amortized cost of the investments for
financial statement purposes.
D. Other. Investment transactions are accounted for on a trade date
basis. Realized gains and losses, if any, from investment
transactions are determined on the basis of identified cost.
2. Transactions with Affiliates.
Investment Advisory Fees. The Portfolio has an investment advisory
agreement with Brown Brothers Harriman ("BBH") for which it pays BBH a fee
from the Fund calculated daily and paid monthly at an annual rate
equivalent to 0.10% of the Portfolio's average daily net assets. BBH has
established a separately identifiable department (SID) to provide
investment advice to mutual funds. The SID is registered with the
Securities and Exchange Commission under the Investment Advisors Act of
1940. For the year ended June 30, 2004, the Portfolio incurred $3,051,272
for advisory services.
Administrative Fees. The Portfolio has an administrative agreement with
Brown Brothers Harriman Trust Company, LLC ("BBHTC") for which it pays
BBHTC a fee calculated daily and paid monthly at an annual rate equivalent
to 0.035% of the Portfolio's average daily net assets. BBHTC has a
sub-administration services agreement with Federated Services Company
("FSC") for which FSC receives compensation paid by BBHTC. For the year
ended June 30, 2004, the Portfolio incurred $1,067,945 for administrative
services.
16
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS
June 30, 2004 (expressed in U.S. dollars)
Board of Trustees' Fees. Each Trustee receives an annual fee as well as
reimbursement for reasonable out-of-pocket expenses from the Portfolio.
For the year ended June 30, 2004, the Portfolio incurred $103,795 for the
Trustees' fees.
Custody and Accounting Fees. BBH acts as a custodian and shall be entitled
to receive a custody and accounting fee which is calculated and paid
monthly. BBH holds all cash and investments and calculates the daily net
asset value. The custody fee is a transaction based fee with an annual
minimum of $30,000, and the accounting fee is calculated at 0.05% per
annum on the first $100 million of net assets, 0.02% per annum on the next
$400 million of net assets and 0.01% per annum on all net assets over $500
million. For the year ended June 30, 2004, the Portfolio incurred $437,025
for custody and accounting services. These fees were reduced by $5,574 as
a result of an expense offset arrangement with the Portfolio's custodian.
FINANCIAL STATEMENT JUNE 30, 2004 17
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Trustees of BBH Trust and Investors of
BBH U.S. Money Market Portfolio:
We have audited the accompanying statement of assets and liabilities of BBH U.S.
Money Market Portfolio (the "Portfolio"), including the portfolio of
investments, as of June 30, 2004, 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 Portfolio'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 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 are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at June 30,
2004, by correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. 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
U.S. Money Market Portfolio as of June 30, 2004, 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 13, 2004
18
TRUSTEES AND OFFICERS OF BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
(unaudited)
Information pertaining to the Trustees of the BBH U.S. Money Market Portfolio
(the "Portfolio") and executive officers of the Portfolio is set forth below.
Part B to the Registration Statement of the Portfolio includes additional
information about the Portfolio's Trustees and is available upon request without
charge by contacting the Fund at 1-800-625-5759.
Number of Funds/
Position(s) Held Term of Office# Principal Portfolio in Fund Other Trustee/
Name, Birth Date and with Trust/ and Length of Occupation(s) During Complex Overseen by Directorships
Address Portfolio Time Served Past 5 Years Trustee Held by Trustee
- ------------------------------------------------------------------------------------------------------------------------------
Directors
Joseph V. Shields, Chairman of the Since 1990 Managing Director, 11 None
Jr. Board and Trustee Chairman and Chief
Birth Date: Executive Officer of
March 17, 1938 Shields & Company
Shields & Company (registered
140 Broadway New broker-dealer and
York, member of New York
NY 10005 Stock Exchange);
Chairman of Capital
Management
Associates, Inc.
(registered
investment adviser);
Vice Chairman and
Trustee of New York
Racing Association;
Director of Flowers
Industries, Inc.
(diversified food
company).
Eugene P. Beard Trustee Since 1993. Retired; Vice 11 Director of Old
Birth Date: Chairman-Finance/ Westbury Funds
March 17, 1935 Operations and CFO (5); Trustee of
The Interpublic Group of The Interpublic Sandhill
of Companies, Inc. 372 Group of Companies, Investment Fund
Danbury Road 2nd Inc. (until December II.
Floor Wilton, CT 1999); Special
06897 Advisor to The
Interpublic Group of
Companies, Inc.
(February 2000 to
December 2003).
Richard L. Carpenter Trustee Since 1999 Retired. 11 None
Birth Date:
March 17, 1933
10820 North La
Quinta Drive
Tucson, AZ 85737
David P. Feldman Trustee Since 1990 Director of Jeffrey 11 Director of
Birth Date: Co. (1992 to Dreyfus Mutual
November 16, 1939 present); Director of Funds (59 Funds)
3 Tall Oaks Drive QMED (1999 to
Warren, NJ 07059 present).
FINANCIAL STATEMENT JUNE 30, 2004 19
TRUSTEES AND OFFICERS OF BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
(unaudited)
Number of Funds/
Position(s) Held Term of Office# Principal Portfolio in Fund Other Trustee/
Name, Birth Date and with Trust/ and Length of Occupation(s) During Complex Overseen by Directorships
Address Portfolio Time Served Past 5 Years Trustee Held by Trustee
- ------------------------------------------------------------------------------------------------------------------------------
Directors
J. Angus Ivory Trustee Since 1999 Retired; Director of 11 None
Birth Date: Brown Brothers
July 31, 1932 Harriman Ltd.
Greenway Farm, (subsidiary of Brown
Tockenham, Swindon, Brothers Harriman &
Wiltshire, SN4 7PP Co.) (until December
England 2001); Advisor to RAF
Central Fund
(1992-June 2003).
Alan G. Lowy Trustee Since 1993 Private Investor. 11 None
Birth Date:
April 17, 1939
4111 Clear Valley
Drive
Encino, CA 91436
Arthur D. Trustee Since 1992 Retired; Trustee, 11 None
Miltenberger R.K. Mellon Family
Birth Date: Trusts (1981-June
November 8, 1938 2003); General
503 Darlington Road Partner, Mellon
Ligonier, PA 15658 Family Investment
Company IV, V and VI
(1983-2002); Director
of Aerostructures
Corporation (aircraft
manufacturer)
(1996-July 2003).
Officers
John A. Nielsen President, Since 2004 President of BBH N/A N/A
Birth Date: Principal Trust, BBH Prime
July 15, 1943 Executive Officer Institutional Money
140 Broadway Market Fund, Inc.,
New York, NY 10005 BBH Common Settlement
II Fund, Inc., BBH
Fund, Inc. and BBH
U.S. Money Market
Portfolio (since
January 2004); He
joined Brown Brothers
Harriman & Co. ("BBH
& Co.") in 1968 and
has been a Partner of
the firm since 1987.
20
TRUSTEES AND OFFICERS OF BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
(unaudited)
Number of Funds/
Position(s) Held Term of Office# Principal Portfolio in Fund Other Trustee/
Name, Birth Date and with Trust/ and Length of Occupation(s) During Complex Overseen by Directorships
Address Portfolio Time Served Past 5 Years Trustee Held by Trustee
- ------------------------------------------------------------------------------------------------------------------------------
Directors
Michael D. Martins Vice President, Since 2002 Vice President, N/A N/A
Birth Date: Treasurer, Treasurer, Principal
November 5, 1965 Principal Accounting Officer
140 Broadway Accounting and Principal
New York, NY 10005 Officer and Financial Officer of
Principal BBH Trust, BBH Prime
Financial Officer Institutional Money
Market Fund, Inc.,
BBH Common Settlement
II Fund, Inc., BBH
Fund, Inc. and BBH
U.S. Money Market
Portfolio; Vice
President (since
April 2002) and
Assistant Vice
President (December
1996-March 2002) of
BBH & Co.
Gail C. Jones Secretary Since 2002 Secretary of BBH N/A N/A
Birth Date: Trust, BBH Prime
October 26, 1953 Institutional Money
1001 Liberty Avenue Market Fund, Inc.,
Pittsburgh, PA BBH Common Settlement
15222-3779 II Fund, Inc., BBH
Fund, Inc. and BBH
U.S. Money Market
Portfolio (since
August 2002);
Counsel, ReedSmith,
LLP (since October
2002); Corporate
Counsel (January
1997-September 2002)
and Vice President
(January
1999-September 2002)
of Federated Services
Company.
Peter J. Germain Vice President Since 2002 Vice President of BBH N/A N/A
Birth Date: Trust, BBH Prime
September 3, 1959 Institutional Money
1001 Liberty Avenue Market Fund, Inc.,
Pittsburgh, PA BBH Common Settlement
15222-3779 II Fund, Inc., BBH
Fund, Inc. and BBH
U.S. Money Market
Portfolio (since
August 2002); Senior
Vice President (since
November 1997) of
Federated Services
Company.
Judith J. Mackin Vice President Since 2002 Vice President of BBH N/A N/A
Birth Date: Trust, BBH Prime
May 30, 1960 Institutional Money
1001 Liberty Avenue Market Fund, Inc.,Pittsburgh, PA
BBH Common Settlement
15222-3779 II Fund, Inc., BBH
Fund, Inc. and BBH
U.S. Money Market
Portfolio (since
August 2002); Vice
President (since
November 1997) of
Federated Services
Company.
FINANCIAL STATEMENT JUNE 30, 2004 21
TRUSTEES AND OFFICERS OF BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
(unaudited)
Number of Funds/
Position(s) Held Term of Office# Principal Portfolio in Fund Other Trustee/
Name, Birth Date and with Trust/ and Length of Occupation(s) During Complex Overseen by Directorships
Address Portfolio Time Served Past 5 Years Trustee Held by Trustee
- ------------------------------------------------------------------------------------------------------------------------------
Directors
Victor R. Siclari Assistant Since 2002 Assistant Secretary N/A N/A
Birth Date: November Secretary of BBH Trust, BBH
17, 1961 Prime Institutional
1001 Liberty Avenue Money Market Fund,
Pittsburgh, PA Inc., BBH Common
15222-3779 Settlement II Fund,
Inc., BBH Fund, Inc.
and BBH U.S. Money
Market Portfolio
(since August 2002);
Partner, ReedSmith,
LLP (since October
2002); Vice President
(March 1996-September
2002) and Senior
Corporate Counsel
(July 1998-September
2002) of Federated
Investors, Inc.
Nancy D. Osborn Assistant Since 2002 Assistant Secretary N/A N/A
Birth Date: Secretary of BBH Trust, BBH
May 4, 1966 Prime Institutional
140 Broadway Money Market Fund,
New York, NY 10005 Inc., BBH Common
Settlement II Fund,
Inc., BBH Fund, Inc.
and BBH U.S. Money
Market Portfolio
(since August 2002);
Assistant Vice
President (since
April 2003) and
Associate (April
1996-March 2003) of
BBH & Co.
John C. Smith Assistant Since 2002 Assistant Treasurer N/A N/A
Birth Date: Treasurer of BBH Trust, BBH
August 2, 1965 Prime Institutional
50 Milk Street Money Market Fund,
Boston, MA 02109 Inc., BBH Common
Settlement II Fund,
Inc., BBH Fund, Inc.
and BBH U.S. Money
Market Portfolio
(since August 2002);
Assistant Vice
President (since
September 2001),
Associate (September
2000-August 2001) and
Senior Analyst (June
1999-August 2000) of
BBH & Co.
FINANCIAL STATEMENT JUNE 30, 2004 22
TRUSTEES AND OFFICERS OF BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
(unaudited)
Number of Funds/
Position(s) Held Term of Office# Principal Portfolio in Fund Other Trustee/
Name, Birth Date and with Trust/ and Length of Occupation(s) During Complex Overseen by Directorships
Address Portfolio Time Served Past 5 Years Trustee Held by Trustee
- ------------------------------------------------------------------------------------------------------------------------------
Directors
Gregory V. Lomakin Assistant Since 2002 Assistant Treasurer N/A N/A
Birth Date: Treasurer of BBH Trust, BBH
February 23, 1965 Prime Institutional
50 Milk Street Money Market Fund,
Boston, MA 02109 Inc., BBH Common
Settlement II Fund,
Inc., BBH Fund, Inc.
and BBH U.S. Money
Market Portfolio
(since August 2002);
Vice President (since
April 2003),
Assistant Vice
President (April
2001-March 2003), and
Associate (May
1992-March 2001) of
BBH & Co.
- ----------
# Each Trustee 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 BBH Trust, BBH Prime Institutional Money
Market Fund, Inc., BBH Common Settlement II Fund, Inc., BBH Fund, Inc. and
BBH U.S. Money Market Portfolio. BBH Trust has four series, and BBH Fund,
Inc. has four series.
FINANCIAL STATEMENT JUNE 30, 2004 23
Investment Adviser and Administrator
Brown Brothers Harriman
140 Broadway
New York, NY 10005
Distributor
Edgewood Services, Inc.
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Shareholder Servicing Agent
Brown Brothers Harriman
140 Broadway
New York, NY 10005
(800) 625-5759
To obtain information or make shareholder inquiries:
By telephone: Call 1-800-575-1265
By E-mail send your request to: bbhfunds@bbh.com
On the internet: www.bbhfunds.com
This report is submitted for the general information of shareholders and is not
authorized for distribution to prospective investors unless preceded or
accompanied by an effective prospectus. Nothing herein contained is to be
considered an offer of sale or a solicitation of an offer to buy shares of the
Fund. Such offering is made only by the prospectus, which includes details as to
offering price and other material information.
A copy of the Fund's Proxy Voting Policy is available upon request by calling
the toll-free number listed above. A text-only version of the policy can be
viewed online or downloaded from the SEC at www.sec.gov.
[LOGO]Brown Brothers Harriman
[LOGO]Brown Brothers Harriman
Annual Report
JUNE 30, 2004
BBH U.S. Treasury Money Fund
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
June 30, 2004
Principal
Amount Value
--------- ------------
U.S. TREASURY BILLS (a) (70.7%)
$ 56,425,000 due 07/15/04, 1.012% ......................... $ 56,403,274
26,435,000 due 09/23/04, 1.124% ......................... 26,367,292
------------
Total U.S. Treasury Bills .................... 82,770,566
------------
U.S. TREASURY NOTES (29.3%)
14,800,000 due 08/31/04, 2.125% ......................... 14,822,551
15,500,000 due 10/31/04, 2.125% ......................... 15,555,334
4,000,000 due 04/30/05, 1.625% ......................... 3,995,391
------------
Total U.S. Treasury Notes .................... 34,373,276
------------
TOTAL INVESTMENTS, AT AMORTIZED COST .............. 100.0% $117,143,842
OTHER ASSETS IN EXCESS OF LIABILITIES ............. 0.0 27,984
----- ------------
NET ASSETS ........................................ 100.0% $117,171,826
===== ============
- ----------
(a) Rates shown are yields to maturity at time of purchase.
The accompanying notes are an integral part of these financial statements.
2
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2004
ASSETS:
Investments, at amortized cost ............................ $117,143,842
Interest receivable ....................................... 171,561
Prepaid expenses .......................................... 4,246
------------
Total Assets ..................................... 117,319,649
------------
LIABILITIES:
Due to bank ............................................... 33,624
Payables for:
Professional fees ..................................... 29,519
Shareholder servicing fees ............................ 26,449
Investment advisory fees .............................. 17,632
Administrative fees ................................... 12,421
Custody and accounting fees ........................... 10,693
Dividends declared .................................... 1,743
Board of Trustees' fees ............................... 923
Accrued expenses and other liabilities .................... 14,819
------------
Total Liabilities ................................ 147,823
------------
NET ASSETS, for 117,169,415 fund shares outstanding ............ $117,171,826
============
Net Assets Consist of:
Paid-in capital ........................................... $117,171,826
============
NET ASSET VALUE AND OFFERING PRICE PER SHARE ................... $ 1.00
============
The accompanying notes are an integral part of these financial statements.
3
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the year ended June 30, 2004
NET INVESTMENT INCOME:
Income:
Interest ................................................ $1,355,526
----------
Expenses:
Shareholder servicing fees .............................. 309,116
Investment advisory fees ................................ 206,078
Administrative fees ..................................... 137,384
Custody and accounting fees ............................. 57,956
Professional fees ....................................... 34,493
Board of Trustees' fees ................................. 7,916
Miscellaneous expenses .................................. 61,445
----------
Total Expenses ..................................... 814,388
Expense offset arrangement ......................... (1,291)
----------
Net Expenses ....................................... 813,097
----------
Net Investment Income ....................................... $ 542,429
==========
The accompanying notes are an integral part of these financial statements.
4
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30,
--------------------------------
2004 2003
------------ ------------
DECREASE IN NET ASSETS:
From Operations:
Net investment income .......................................... $ 542,429 $ 1,645,795
Dividends declared from net investment income ...................... (540,449) (1,637,907)
------------ ------------
Net increase in net assets from operations ..................... 1,980 7,888
------------ ------------
From Fund Share (Principal) Transactions at
Net Asset Value of $1.00 per share:
Fund shares sold .......................................... 666,067,396 577,290,183
Fund shares issued in reinvestment of dividends ........... 249,036 598,130
Fund shares repurchased ................................... (686,032,869) (629,020,187)
------------ ------------
Net decrease in net assets resulting from
fund share transactions ................................ (19,716,437) (51,131,874)
------------ ------------
Total decrease in net assets ............................ (19,714,457) (51,123,986)
NET ASSETS:
Beginning of year .................................................. 136,886,283 188,010,269
------------ ------------
End of year ........................................................ $117,171,826 $136,886,283
============ ============
The accompanying notes are an integral part of these financial statements.
5
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding throughout each year
For the years ended June 30,
------------------------------------------------------------------
2004 2003 2002 2001 2000
-------- -------- ------- -------- --------
Net asset value, beginning of year ............ $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income ....................... 0.001 0.01 0.02 0.05 0.05
Dividends to shareholders from net
investment income ........................... (0.00)(1) (0.01) (0.02) (0.05) (0.05)
-------- -------- -------- -------- --------
Net asset value, end of year .................. $1.00 $1.00 $1.00 $1.00 $1.00
======== ======== ======== ======== ========
Total return .................................. 0.40% 0.91% 1.95% 5.20% 4.75%
Ratios/Supplemental data:
Net assets, end of year
(000's omitted) ........................... $117,172 $136,886 $188,010 $186,039 $134,425
Ratio of expenses to average net assets ..... 0.59%(2) 0.57%(2) 0.56%(2) 0.55% 0.57%
Ratio of net investment income to
average net assets ........................ 0.39% 0.92% 1.91% 5.00% 4.68%
- ----------
1 Less than $0.01 per share.
2 The ratio of expenses to average net assets for the years ended June 30,
2004, 2003 and 2002 reflects fees reduced as a result of an expense offset
arrangement with the Fund's custodian. Had this arrangement not been in
place, this ratio would have been 0.59%, 0.57% and 0.56%, respectively.
The accompanying notes are an integral part of these financial statements.
6
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
June 30, 2004
1. Organization and Significant Accounting Policies. BBH U.S. Treasury 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. The Fund commenced
operations on March 12, 1991. 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 with a par value of $0.01 per
share. At June 30, 2004, there were four series of the Trust.
The Fund's financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America, which
require management to make certain estimates and assumptions at the date
of the financial statements and are based, in part, on the following
accounting policies. Actual results could differ from those estimates.
A. Valuation of Investments. The Fund values its investments at
amortized cost, which approximates market value. The amortized cost
method values a security at its cost at the time of purchase and
thereafter assumes a constant amortization to maturity of any
discount or premium. The Fund's use of amortized cost is in
compliance with Rule 2a-7 of the Investment Company Act of 1940.
B. Interest Income. Interest income consists of interest accrued and
discount earned (including both original issue and market discount)
and premium amortization on the investments of the Fund, accrued
ratably to the date of maturity.
C. Federal Income Taxes. Each series of the Trust is treated as a
separate entity for federal income tax purposes. It is the Fund's
policy to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies and to distribute all
of its taxable income to its shareholders. Accordingly, no federal
income tax provision is required. At June 30, 2004, the cost of
investments for federal income tax purposes was equal to the
amortized cost of investments for financial statement purposes.
D. Dividends and Distributions. Dividends from net investment income
are declared daily and paid monthly to shareholders.
E. Other. 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.
2. Transactions with Affiliates.
Investment Advisory Fees. The Trust has an investment advisory agreement
with Brown Brothers Harriman ("BBH") for which BBH receives a fee from the
Fund calculated daily and paid monthly at an annual rate equivalent to
0.15% of the Fund's average daily net assets. BBH has established a
separately identifiable department (SID) to provide investment advice to
mutual funds. The SID is registered with the Securities and Exchange
Commission under the Investment Advisors Act of 1940. For the year ended
June 30, 2004, the Fund incurred $206,078 for advisory services.
FINANCIAL STATEMENT JUNE 30, 2004 7
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2004
Administrative Fees. The Trust has an administration agreement with Brown
Brothers Harriman Trust Company, LLC ("BBHTC") for which BBHTC receives a fee
from the Fund calculated daily and paid monthly at an annual rate equivalent to
0.10% of the Fund's average daily net assets. BBHTC has a sub-administration
services agreement with Federated Services Company ("FSC") for which FSC
receives compensation paid by BBHTC. For the year ended June 30, 2004, the Fund
incurred $137,384 for 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 equivalent to 0.225% of the Fund's average daily net assets.
For the year ended June 30, 2004, the Fund incurred $309,116 for shareholder
servicing services.
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, 2004, the Fund incurred $7,916 for Trustees' fees.
Custody and Accounting Fees. BBH acts as a custodian and shall be entitled to
receive a custody and accounting fee which is calculated and paid monthly. BBH
holds all cash and investments and calculates the daily net asset value. The
custody fee is a transaction based fee with an annual minimum of $30,000, and
the accounting fee is calculated at 0.05% per annum on the first $100 million of
net assets, 0.02% per annum on the next $400 million of net assets and 0.01% per
annum on all net assets over $500 million. For the year ended June 30, 2004, the
Fund incurred $57,956 for custody and accounting services. These fees were
reduced by $1,291 as a result of an expense offset arrangement with the Fund's
custodian.
8
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Trustees of BBH Trust and Shareholders of
BBH U.S. Treasury Money Fund
We have audited the accompanying statement of assets and liabilities of BBH U.S.
Treasury Money Fund (a series of BBH Trust) (the "Fund"), including the
portfolio of investments, as of June 30, 2004, 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 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 are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at June 30,
2004, by correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. 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
U.S. Treasury Money Fund as of June 30, 2004, 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 13, 2004
FINANCIAL STATEMENT JUNE 30, 2004 9
TRUSTEES AND OFFICERS OF BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
(unaudited)
Information pertaining to the Trustees of BBH Trust (the "Trust") and executive
officers of the Trust is set forth below. Part B to the Registration Statement
of BBH U.S. Treasury 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.
Number of
Term of Funds/
Office# Portfolio Other
and in Fund Trustee/
Name, Position(s) Length Complex Directorships
Birth Date Held with of Time Principal Occupation(s) Overseen by Held by
and Address Trust/Portfolio Served During Past 5 Years Trustee^ Trustee
- ----------------------------------------------------------------------------------------------------------------------------
Directors
Joseph V. Shields, Jr. Chairman of the Since 1990 Managing Director, Chairman 11 None
Birth Date: Board and Trustee and Chief Executive Officer
March 17, 1938 of Shields & Company
Shields & Company (registered broker-dealer and
140 Broadway member of New York Stock
New York, NY 10005 Exchange); Chairman of
Capital Management
Associates, Inc. (registered
investment adviser); Vice
Chairman and Trustee of New
York Racing Association;
Director of Flowers
Industries, Inc. (diversified
food company).
Eugene P. Beard Trustee Since 1993 Retired; Vice 11 Director of Old
Birth Date: Chairman-Finance/Operations Westbury Funds
March 17, 1935 and CFO of The Interpublic (5); Trustee of
The Interpublic Group Group of Companies, Inc. Sandhill
of Companies, Inc. (until December 1999); Investment Fund
372 Danbury Road Special Advisor to The II.
2nd Floor Interpublic Group of
Wilton, CT 06897 Companies, Inc. (February
2000 to December 2003).
Richard L. Carpenter Trustee Since 1999 Retired. 11 None
Birth Date:
March 17, 1933
10820 North La
Quinta Drive
Tucson, AZ 85737
David P. Feldman Trustee Since 1990 Director of Jeffrey Co. (1992 11 Director of
Birth Date: to present); Director of QMED Dreyfus Mutual
November 16, 1939 (1999 to present). Funds (59 Funds)
3 Tall Oaks Drive
Warren, NJ 07059
10
TRUSTEES AND OFFICERS OF BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
(unaudited)
Number of
Term of Funds/
Office# Portfolio Other
and in Fund Trustee/
Name, Position(s) Length Complex Directorships
Birth Date Held with of Time Principal Occupation(s) Overseen by Held by
and Address Trust/Portfolio Served During Past 5 Years Trustee^ Trustee
- ----------------------------------------------------------------------------------------------------------------------------
J. Angus Ivory Trustee Since 1999 Retired; Director of Brown 11 None
Birth Date: Brothers Harriman Ltd.
July 31, 1932 (subsidiary of Brown Brothers
Greenway Farm, Tockenham, Harriman & Co.) (until
Swindon, Wiltshire, SN4 7PP December 2001); Advisor to
England RAF Central Fund (1992-June
2003).
Alan G. Lowy Trustee Since 1993 Private Investor. 11 None
Birth Date:
April 17, 1939
4111 Clear Valley
Drive
Encino, CA 91436
Arthur D. Miltenberger Trustee Since 1992 Retired; Trustee, R.K. Mellon 11 None
Birth Date: Family Trusts (1981-June
November 8, 1938 2003); General Partner,
503 Darlington Road Mellon Family Investment
Ligonier, PA 15658 Company IV, V and VI
(1983-2002); Director of
Aerostructures Corporation
(aircraft manufacturer)
(1996-July 2003).
Officers
John A. Nielsen President, Since 2004 President of the Trust, BBH N/A N/A
Birth Date: Principal Prime Institutional Money
July 15, 1943 Executive Officer Market Fund, Inc., BBH Common
140 Broadway Settlement II Fund, Inc., BBH
New York, NY 10005 Fund, Inc. and BBH U.S. Money
Market Portfolio (since
January 2004); He joined
Brown Brothers Harriman & Co.
("BBH & Co.") in 1968 and has
been a Partner of the firm
since 1987.
FINANCIAL STATEMENT JUNE 30, 2004 11
TRUSTEES AND OFFICERS OF BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
(unaudited)
Number of
Term of Funds/
Office# Portfolio Other
Name, and in Fund Trustee/
Position(s) Length Complex Directorships
Birth Date Held with of Time Principal Occupation(s) Overseen by Held by
and Address Trust/Portfolio Served During Past 5 Years Trustee^ Trustee
- ----------------------------------------------------------------------------------------------------------------------------
Michael D. Martins Vice President, Since 2002 Vice President, Treasurer, N/A N/A
Birth Date: Treasurer, Principal Accounting Officer
November 5, 1965 Principal and Principal Financial
140 Broadway Accounting Officer of the Trust, BBH
New York, NY 10005 Officer and Prime Institutional Money
Principal Market Fund, Inc., BBH Common
Financial Officer Settlement II Fund, Inc., BBH
Fund, Inc. and BBH U.S. Money
Market Portfolio; Vice
President (since April 2002)
and Assistant Vice President
(December 1996-March 2002) of
BBH & Co.
Gail C. Jones Secretary Since 2002 Secretary of the Trust, BBH N/A N/A
Birth Date: Prime Institutional Money
October 26, 1953 Market Fund, Inc., BBH Common
1001 Liberty Avenue Settlement II Fund, Inc., BBH
Pittsburgh, Fund, Inc. and BBH U.S. Money
PA 15222-3779 Market Portfolio (since
August 2002); Counsel,
ReedSmith, LLP (since October
2002); Corporate Counsel
(January 1997-September 2002)
and Vice President (January
1999-September 2002) of
Federated Services Company.
Peter J. Germain Vice President Since 2002 Vice President of the Trust, N/A N/A
Birth Date: BBH Prime Institutional Money
September 3, 1959 Market Fund, Inc., BBH Common
1001 Liberty Avenue Settlement II Fund, Inc., BBH
Pittsburgh, Fund, Inc. and BBH U.S. Money
PA 15222-3779 Market Portfolio (since
August 2002); Senior Vice
President (since November
1997) of Federated Services
Company.
Judith J. Mackin Vice President Since 2002 Vice President of the Trust, N/A N/A
Birth Date: BBH Prime Institutional Money
May 30, 1960 Market Fund, Inc., BBH Common
1001 Liberty Avenue Settlement II Fund, Inc., BBH
Pittsburgh, Fund, Inc. and BBH U.S. Money
PA 15222-3779 Market Portfolio (since
August 2002); Vice President
(since November 1997) of
Federated Services Company.
12
TRUSTEES AND OFFICERS OF BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
(unaudited)
Number of
Term of Funds/
Office# Portfolio Other
and in Fund Trustee/
Name, Position(s) Length Complex Directorships
Birth Date Held with of Time Principal Occupation(s) Overseen by Held by
and Address Trust/Portfolio Served During Past 5 Years Trustee^ Trustee
- ----------------------------------------------------------------------------------------------------------------------------
Victor R. Siclari Assistant Since 2002 Assistant Secretary of the N/A N/A
Birth Date: Secretary Trust, BBH Prime
November 17, 1961 Institutional Money Market
1001 Liberty Avenue Fund, Inc., BBH Common
Pittsburgh, Settlement II Fund, Inc., BBH
PA 15222-3779 Fund, Inc. and BBH U.S. Money
Market Portfolio (since
August 2002); Partner,
ReedSmith, LLP (since October
2002); Vice President (March
1996-September 2002) and
Senior Corporate Counsel
(July 1998-September 2002) of
Federated Investors, Inc.
Nancy D. Osborn Assistant Since 2002 Assistant Secretary of the N/A N/A
Birth Date: Secretary Trust, BBH Prime
May 4, 1966 Institutional Money Market
140 Broadway Fund, Inc., BBH Common
New York, NY 10005 Settlement II Fund, Inc., BBH
Fund, Inc. and BBH U.S. Money
Market Portfolio (since
August 2002); Assistant Vice
President (since April 2003)
and Associate (April
1996-March 2003) of BBH & Co.
John C. Smith Assistant Since 2002 Assistant Treasurer of the N/A N/A
Treasurer Trust, BBH Prime
Birth Date: Institutional Money Market
August 2, 1965 Fund, Inc., BBH Common
50 Milk Street Settlement II Fund, Inc., BBH
Boston, MA 02109 Fund, Inc. and BBH U.S. Money
Market Portfolio (since
August 2002); Assistant Vice
President (since September
2001), Associate (September
2000-August 2001) and Senior
Analyst (June 1999-August
2000) of BBH & Co.
FINANCIAL STATEMENT JUNE 30, 2004 13
TRUSTEES AND OFFICERS OF BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
(unaudited)
Number of
Term of Funds/
Office# Portfolio Other
and in Fund Trustee/
Name, Position(s) Length Complex Directorships
Birth Date Held with of Time Principal Occupation(s) Overseen by Held by
and Address Trust/Portfolio Served During Past 5 Years Trustee^ Trustee
- ----------------------------------------------------------------------------------------------------------------------------
Gregory V. Lomakin Assistant Since 2002 Assistant Treasurer of the N/A N/A
Birth Date: Treasurer Trust, BBH Prime
February 23, 1965 Institutional Money Market
50 Milk Street Fund, Inc., BBH Common
Boston, MA 02109 Settlement II Fund, Inc., BBH
Fund, Inc. and BBH U.S. Money
Market Portfolio (since
August 2002); Vice President
(since April 2003), Assistant
Vice President (April
2001-March 2003), and
Associate (May 1992-March
2001) of BBH & Co.
- ----------
# 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, BBH Prime Institutional Money
Market Fund, Inc., BBH Common Settlement II Fund, Inc., BBH Fund, Inc. and
BBH U.S. Money Market Portfolio. The Trust has four series, and BBH Fund,
Inc. has four series.
14
Investment Adviser and Administrator
Brown Brothers Harriman
140 Broadway
New York, NY 10005
Distributor
Edgewood Services, Inc.
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Shareholder Servicing Agent
Brown Brothers Harriman
140 Broadway
New York, NY 10005
(800) 625-5759
To obtain information or make shareholder inquiries:
By telephone: Call 1-800-575-1265
By E-mail send your request to: bbhfunds@bbh.com
On the internet: www.bbhfunds.com
This report is submitted for the general information of shareholders and is not
authorized for distribution to prospective investors unless preceded or
accompanied by an effective prospectus. Nothing herein contained is to be
considered an offer of sale or a solicitation of an offer to buy shares of the
Fund. Such offering is made only by the prospectus, which includes details as to
offering price and other material information.
A copy of the Fund's Proxy Voting Policy is available upon request by calling
the toll-free number listed above. A text-only version of the policy can be
viewed online or downloaded from the SEC at www.sec.gov.
[LOGO]Brown Brothers Harriman
[LOGO] Brown Brothers Harriman
Annual Report
JUNE 30, 2004
BBH Tax Free Short/Intermediate Fixed Income Fund
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
June 30, 2004
Principal Maturity Interest
Amount Date Rate Value
--------- -------- -------- -----------
MUNICIPAL BONDS (98.4%)
CERTIFICATE OF PARTICIPATION (0.9%)
$1,060,000 Platte County, Missouri .................... 03/01/08 4.000% $ 1,093,782
-----------
EDUCATION (8.8%)
1,935,000 Alabama State Public School &
College Authority ....................... 11/01/05 5.250 2,019,018
1,000,000 Arizona State University Revenue ........... 07/01/08 5.000 1,076,170
400,000 Connecticut State Health &
Educational Facilities Authority* ....... 07/01/04 1.100 400,000
1,100,000 Connecticut State Health & Educational
Facilities Authority* ................... 07/01/04 1.100 1,100,000
1,000,000 Greenville County, South Carolina,
School District ......................... 12/01/07 5.000 1,063,540
500,000 Massachusetts State Development
Finance Agency, Boston
University Revenue* ..................... 07/01/04 1.020 500,000
2,000,000 New York State Dormitory Authority ......... 02/15/07 4.000 2,057,380
575,000 New York State Dormitory Authority ......... 02/15/07 3.000 577,145
1,500,000 Texas A & M University Revenue ............. 05/15/07 5.000 1,595,520
750,000 University of Houston, Texas ............... 02/15/07 3.500 765,757
-----------
Total Education ............................ 11,154,530
-----------
ESCROWED TO MATURITY (a) (2.9%)
2,500,000 Houston, Texas, Water & Sewer
System Revenue .......................... 12/01/05 5.000 2,608,500
1,040,000 New Mexico Finance Authority,
Highway Revenue ......................... 09/01/06 5.000 1,102,899
-----------
Total Escrowed To Maturity ................. 3,711,399
-----------
GENERAL OBLIGATIONS (42.6%)
1,000,000 Arlington, Texas ........................... 08/15/05 5.200 1,037,800
1,475,000 Austin, Texas .............................. 09/01/06 5.250 1,563,913
2,000,000 Austin, Texas .............................. 09/01/06 5.000 2,110,140
1,000,000 Beaufort County, South Carolina,
School District ......................... 03/01/08 4.000 1,039,950
1,515,000 Birmingham, Alabama ........................ 07/01/05 5.000 1,565,192
The accompanying notes are an integral part of these financial statements.
2
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2004
Principal Maturity Interest
Amount Date Rate Value
--------- -------- -------- -----------
MUNICIPAL BONDS (continued)
GENERAL OBLIGATIONS (continued)
$1,000,000 Branson, Missouri, School District ......... 03/01/08 4.000% $ 1,031,520
200,000 California State ........................... 02/01/08 5.000 212,812
450,000 Carrollton-Farmers Branch, Texas,
Independent School District ............. 02/15/06 4.000 463,225
870,000 Chester County, Pennsylvania ............... 09/01/08 4.000 901,929
500,000 Chicago, Illinois .......................... 01/01/08 4.000 516,765
1,000,000 Chicago, Illinois, Metropolitan Water
Reclamation District .................... 12/01/07 5.000 1,067,890
1,000,000 Chicago, Illinois, Park District ........... 01/01/08 4.500 1,049,970
1,000,000 Dallas, Texas .............................. 02/15/08 4.000 1,036,360
1,000,000 Delaware County, Pennsylvania .............. 10/01/05 5.300 1,042,320
1,000,000 Delaware State ............................. 08/01/07 4.500 1,058,120
655,000 Du Page County, Illinois, Forest
Preserve District ....................... 11/01/05 6.000 689,807
500,000 El Paso, Texas ............................. 08/15/07 4.500 526,035
650,000 Florida State Board of Education ........... 06/01/06 4.000 672,535
1,400,000 Georgia State .............................. 08/01/06 4.000 1,452,136
1,000,000 Georgia State .............................. 11/01/07 3.000 1,010,710
1,175,000 Greensboro, North Carolina ................. 05/01/08 4.000 1,223,962
1,000,000 Guilford County, North Carolina* ........... 10/01/07 4.000 1,039,050
1,075,000 Hamilton County, Tennessee ................. 10/01/07 4.000 1,115,957
1,000,000 Harris County, Texas ....................... 10/01/05 5.000 1,038,040
1,750,000 Hawaii State ............................... 02/01/07 5.250 1,868,563
1,175,000 Houston, Texas, Independent
School District ......................... 07/15/06 3.500 1,205,092
1,500,000 Illinois State ............................. 08/01/07 5.000 1,601,400
1,430,000 Jordan, Utah, School District .............. 06/15/08 4.000 1,488,330
820,000 Las Vegas-Clark County, Nevada,
Library District ........................ 06/01/07 2.750 815,047
580,000 Las Vegas-Clark County, Nevada,
Library District ........................ 06/01/08 3.000 573,052
2,000,000 Massachusetts State ........................ 01/01/07 4.000 2,067,960
1,725,000 Milwaukee County, Wisconsin ................ 08/01/07 4.000 1,785,962
1,000,000 Milwaukee, Wisconsin ....................... 09/01/06 5.000 1,054,420
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2004 3
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2004
Principal Maturity Interest
Amount Date Rate Value
--------- -------- -------- -----------
MUNICIPAL BONDS (continued)
GENERAL OBLIGATIONS (continued)
$1,000,000 Minneapolis, Minnesota ..................... 12/01/05 5.000% $ 1,042,690
1,000,000 Mississippi State .......................... 12/01/05 5.000 1,042,410
505,000 Ocean Township, New Jersey,
Board of Education ...................... 03/01/08 4.250 529,169
1,090,000 Oklahoma City, Oklahoma .................... 03/01/07 4.000 1,129,981
1,000,000 Portsmouth, Virginia ....................... 07/01/07 4.000 1,039,680
1,000,000 Shelby County, Tennessee ................... 04/01/06 5.000 1,049,330
1,065,000 Southington, Connecticut ................... 09/15/08 2.500 1,040,047
2,500,000 Texas State ................................ 10/01/06 5.000 2,646,775
1,000,000 Texas State ................................ 10/01/07 5.000 1,070,770
750,000 Vermont State .............................. 02/01/07 4.000 775,733
725,000 Virginia Beach, Virginia ................... 07/15/07 5.300 782,246
1,000,000 Virginia State ............................. 06/01/06 4.000 1,036,000
1,585,000 Warren County, Tennessee ................... 06/01/08 4.250 1,657,419
2,000,000 Washington State ........................... 01/01/07 3.500 2,046,460
-----------
Total General Obligations .................. 53,814,674
-----------
HEALTH CARE (1.5%)
1,400,000 California Statewide Communities
Development Authority* .................. 05/01/07 2.300 1,357,804
500,000 Harris County, Texas, Health Facilities
Development Authority ................... 12/01/07 5.000 531,940
-----------
Total Health Care .......................... 1,889,744
-----------
INDUSTRIAL (2.1%)
1,025,000 Chemung County, New York, Industrial
Development Agency ...................... 11/01/06 4.000 1,055,668
500,000 Lincoln County, Wyoming, Pollution
Control Revenue* ........................ 07/01/04 1.000 500,000
1,020,000 Missouri State Environmental
Improvement & Energy Resources
Authority, Pollution Control Revenue .... 01/01/06 6.000 1,077,436
-----------
Total Industrial ........................... 2,633,104
-----------
The accompanying notes are an integral part of these financial statements.
4
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2004
Principal Maturity Interest
Amount Date Rate Value
--------- -------- -------- -----------
MUNICIPAL BONDS (continued)
MISCELLANEOUS (7.5%)
$1,000,000 Alaska State Housing Financial Corp. ........... 12/01/05 5.000% $ 1,040,850
1,000,000 Kentucky State Property & Buildings
Commission .................................. 02/01/06 5.250 1,048,370
2,000,000 New York, New York, City Transitional
Finance Authority ........................... 11/01/07 5.000 2,143,060
2,000,000 Ohio State Building Authority .................. 04/01/08 4.500 2,108,820
1,000,000 Puerto Rico Housing Finance Authority .......... 12/01/08 4.500 1,060,140
1,000,000 Southcentral Pennsylvania General
Authority Revenue* .......................... 12/01/08 4.500 1,043,770
1,000,000 Tobacco Settlement Financing Corp.,
New York .................................... 06/01/07 4.000 1,024,780
-----------
Total Miscellaneous ............................ 9,469,790
-----------
PRE-REFUNDED (a) (0.8%)
1,000,000 Ohio State Public Facilities Commission ........ 06/01/08 4.700 1,068,990
-----------
SALES TAX (1.7%)
1,100,000 Illinois State Sales Tax Revenue ............... 06/15/07 3.000 1,108,635
1,000,000 Jacksonville, Florida, Sales
Tax Revenue ................................. 10/01/05 5.000 1,038,790
-----------
Total Sales Tax ................................ 2,147,425
-----------
TRANSPORTATION (10.3%)
725,000 Massachusetts State Federal
Highway Grant ............................... 06/15/07 4.200 754,087
1,000,000 Michigan State Trunk Line
Highway Revenue ............................. 10/01/06 5.000 1,057,140
1,000,000 New Jersey State Transportation Trust .......... 12/15/06 5.000 1,060,310
1,500,000 New Mexico State Highway
Commission .................................. 06/15/06 5.000 1,580,850
1,000,000 New York State Thruway Authority ............... 03/15/08 5.000 1,065,750
2,000,000 Orlando & Orange County, Florida,
Expressway Authority ........................ 07/01/07 4.500 2,108,500
700,000 Phoenix, Arizona, Street & Highway
User Revenue ................................ 07/01/08 4.500 739,438
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2004 5
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2004
Principal Maturity Interest
Amount Date Rate Value
--------- -------- -------- -----------
MUNICIPAL BONDS (continued)
TRANSPORTATION (continued)
$1,500,000 Texas State Turnpike Authority ............. 06/01/07 5.000% $ 1,594,800
2,000,000 Texas State Turnpike Authority ............. 06/01/07 4.000 2,070,940
925,000 Triborough Building & Tunnel Authority,
New York ................................ 11/15/06 4.000 960,659
-----------
Total Transportation ....................... 12,992,474
-----------
UTILITIES (6.1%)
3,000,000 Austin, Texas, Electric Utilities
System Revenue .......................... 11/15/05 5.000 3,119,940
900,000 Boise-Kuna Irrigation District, Idaho,
Hydroelectricity Plant Project .......... 07/01/07 5.250 967,293
1,000,000 Colorado Springs, Colorado,
Utilities Revenue ....................... 11/15/08 5.000 1,079,430
1,000,000 Nebraska Public Power District ............. 01/01/07 4.000 1,033,250
500,000 Salt River Project, Arizona ................ 01/01/08 4.000 519,120
1,000,000 St. John's River Power Park, Florida ....... 10/01/06 5.000 1,057,360
-----------
Total Utilities ............................ 7,776,393
-----------
WATER/SEWER (13.2%)
1,345,000 Anderson, South Carolina, Water &
Sewer Revenue ........................... 07/01/08 4.000 1,397,737
2,000,000 Broward County, Florida, Water &
Sewer Revenue ........................... 10/01/07 4.000 2,083,140
2,500,000 Dallas, Texas, Waterworks & Sewer
System Revenue .......................... 10/01/06 5.000 2,643,975
1,500,000 De Kalb County, Georgia, Water &
Sewer Revenue ........................... 10/01/05 6.250 1,580,610
485,000 El Paso, Texas, Water & Sewer
Revenue ................................. 03/01/07 4.000 501,529
980,000 El Paso, Texas, Water & Sewer
Revenue ................................. 03/01/08 4.000 1,013,634
1,000,000 Irving, Texas, Waterworks & Sewer
Revenue ................................. 08/15/07 4.375 1,048,980
1,000,000 Los Angeles, California, Water &
Power Revenue ........................... 07/01/07 4.500 1,058,090
The accompanying notes are an integral part of these financial statements.
6
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2004
Principal Maturity Interest
Amount Date Rate Value
--------- -------- -------- -----------
MUNICIPAL BONDS (continued)
WATER/SEWER (continued)
$ 300,000 Massachusetts State Water
Resources Authority* .................... 07/01/04 1.110% $ 300,000
300,000 Metropolitan Water District of
Southern California* .................... 07/01/04 1.100 300,000
1,500,000 Michigan Municipal Bond Authority,
Clean Water Revenue ..................... 10/01/05 5.500 1,570,335
1,000,000 Michigan Municipal Bond Authority,
Clean Water Revenue ..................... 10/01/06 5.000 1,059,160
1,000,000 Ohio State Water Development
Authority ............................... 06/01/06 5.000 1,052,450
1,000,000 Tarrant Regional Water District, Texas ..... 03/01/06 4.500 1,037,930
------------
Total Water/Sewer .......................... 16,647,570
------------
TOTAL INVESTMENTS (Identified cost $124,887,560) (b) .............. 98.4% $124,399,875
OTHER ASSETS IN EXCESS OF LIABILITIES ............................. 1.6 2,034,201
----- ------------
NET ASSETS ........................................................ 100.0% $126,434,076
----- ------------
- ----------
* Variable rate instrument. Interest rates change on specific dates (such as
a coupon or interest payment date). The yield shown represents the June
30, 2004 coupon rate.
(a) General obligation or revenue bonds that have been fully secured or
collateralized by an escrow fund consisting of U.S. Government obligations
that can adequately meet interest and principal payments. For pre-refunded
obligations, the stated maturity date represents the date of redemption
which, pursuant to the terms of the escrow agreement, has been accelerated
from the originally stated maturity date.
(b) The aggregate cost for federal income tax purposes is $124,887,560. The
aggregate gross unrealized appreciation is $768,673, and the aggregate
gross unrealized depreciation is $1,256,358, resulting in net unrealized
depreciation of $487,685.
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2004 7
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2004
ASSETS:
Investments in securities,
at value (identified cost $124,887,560) ..................... $124,399,875
Cash ........................................................ 321,553
Receivables for:
Interest .................................................... 1,441,708
Fund shares sold ............................................ 572,000
Prepaid expenses ............................................ 4,410
------------
Total Assets ................................................ 126,739,546
------------
LIABILITIES:
Payables for:
Fund shares redeemed ........................................ 170,000
Professional fees ........................................... 26,756
Shareholder servicing fees .................................. 25,530
Investment advisory fees .................................... 25,530
Custody and accounting fees ................................. 20,675
Administrative fees ......................................... 15,319
Dividends and distributions declared ........................ 5,977
Board of Trustees' fees ..................................... 1,026
Accrued expenses and other liabilities ...................... 14,657
------------
Total Liabilities ........................................... 305,470
------------
NET ASSETS ...................................................... $126,434,076
============
Net Assets Consist of:
Paid-in capital ............................................. $126,463,051
Distributions in excess of net investment income ............ (5,977)
Accumulated net realized gain on investments ................ 464,687
Net unrealized depreciation on investments .................. (487,685)
------------
Net Assets ...................................................... $126,434,076
============
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($126,434,076 / 11,982,732 shares outstanding) .............. $ 10.55
============
The accompanying notes are an integral part of these financial statements.
8
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the year ended June 30, 2004
NET INVESTMENT INCOME:
Income:
Interest income ............................................. $3,243,931
----------
Expenses:
Investment advisory fees .................................... 304,142
Shareholder servicing fees .................................. 304,142
Administrative fees ......................................... 182,485
Custody and accounting fees ................................. 83,099
Professional fees ........................................... 33,419
Board of Trustees' fees ..................................... 6,897
Miscellaneous expenses ...................................... 62,130
----------
Total Expenses .............................................. 976,314
Expense offset arrangement .................................. (1,249)
----------
Net Expenses ................................................ 975,065
----------
Net Investment Income ....................................... 2,268,866
----------
NET REALIZED AND UNREALIZED LOSS:
Net realized gain on investments ............................ 545,787
Net change in unrealized appreciation on investments ........ (3,796,607)
----------
Net Realized and Unrealized Loss ............................ (3,250,820)
----------
Net Decrease in Net Assets Resulting From Operations ........ $ (981,954)
==========
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2004 9
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30,
------------------------------------
2004 2003
------------ ------------
INCREASE IN NET ASSETS:
Operations:
Net investment income .............................................. $ 2,268,866 $ 2,417,471
Net realized gain on investments ................................... 545,787 420,227
Net change in unrealized appreciation
on investments ................................................... (3,796,607) 1,153,402
------------ ------------
Net increase (decrease) in net assets resulting
from operations .................................................. (981,954) 3,991,100
------------ ------------
Dividends and distributions declared:
From net investment income ......................................... (2,269,577) (2,448,441)
From net realized gain ............................................. (435,991) (317,193)
------------ ------------
Total dividends and distributions declared ....................... (2,705,568) (2,765,634)
------------ ------------
Fund shares transactions:
Net proceeds from sales of fund shares ............................. 81,143,731 72,500,590
Net asset value of fund shares issued to shareholders
in reinvestment of distributions ................................. 1,022,073 917,532
Net cost of fund shares repurchased ................................ (59,305,159) (49,747,275)
------------ ------------
Net increase in net assets resulting from fund
shares transactions .............................................. 22,860,645 23,670,847
------------ ------------
Total increase in net assets ..................................... 19,173,123 24,896,313
NET ASSETS:
Beginning of year .................................................... 107,260,953 82,364,640
------------ ------------
End of year (including distributions in excess of net
investment income of $5,977 and $5,923, respectively) .............. $126,434,076 $107,260,953
------------ ------------
The accompanying notes are an integral part of these financial statements.
10
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding throughout each year
For the years ended June 30,
-------------------------------------------------------------------------
2004 2003 2002 2001 2000
-------- -------- ------- ------- -------
Net asset value, beginning of year ............... $10.87 $10.73 $10.53 $10.24 $10.30
Income from investment operations:
Net investment income .......................... 0.18 0.25 0.31 0.35 0.34
Net realized and unrealized
gain (loss) on investments ................... (0.28) 0.18 0.22 0.29 (0.06)
Less dividends and distributions:
From net investment income ..................... (0.18) (0.26) (0.31) (0.35) (0.34)
From net realized gains ........................ (0.04) (0.03) (0.02) -- --
-------- -------- ------- ------- -------
Net asset value, end of year ..................... $10.55 $10.87 $10.73 $10.53 $10.24
==== ======== ======== ======= ======= =======
Total return ..................................... (0.75%) 4.04% 5.14% 6.37% 2.88%
Ratios/Supplemental data:
Net assets, end of year (000's omitted) ........ $126,434 $107,261 $82,365 $64,592 $78,381
Ratio of expenses to average net assets:
Net expenses paid by Fund .................... 0.80% 0.82% 0.83% 0.77% 0.85%
Expense offset arrangement ................... 0.00%(1) 0.00% 10.01% 0.06% 0.03%
-------- -------- ------- ------- -------
Total expenses ............................. 0.80% 0.82% 0.84% 0.83% 0.88%
Ratio of net investment income to
average net assets ........................... 1.86% 2.33% 2.90% 3.36% 3.29%
Portfolio turnover rate ........................ 90% 82% 94% 45% 22%
- ----------
1 Amount is less than 0.01%.
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2004 11
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
June 30, 2004
1. Organization and Significant Accounting Policies. BBH Tax Free
Short/Intermediate Fixed Income 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. The Fund commenced operations on July 23, 1992. 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
with a par value of $0.01 per share. At June 30, 2004, there were four
series of the Trust.
The Fund's financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America, which
require management to make certain estimates and assumptions at the date
of the financial statements and are based, in part, on the following
accounting policies. Actual results could differ from those estimates.
A. Valuation of Investments. Bonds and other fixed income securities
(other than short-term obligations, but including listed issues) are
valued on the basis of valuations furnished by pricing services, use
of which has been approved by the Board of Trustees. In making such
valuations, the pricing services utilize both dealer-supplied
valuations and electronic data processing techniques
which take into
account appropriate factors such as institutional-size trading in
similar groups of securities, yield, quality, coupon rate, maturity,
type of issue, trading characteristics and other market data,
without exclusive reliance upon quoted prices or exchange or
over-the-counter prices, since such valuations are believed to
reflect more accurately the fair value of such securities.
Securities or other assets for which market quotations are not
readily available are valued at fair value in accordance with
procedures established by and under the general supervision and
responsibility of the Trustees. Short-term investments which mature
in 60 days or less are valued at amortized cost, which approximates
market value.
B. Accounting for Investments. Investment transactions are accounted
for on the trade date. Realized gains and losses, if any, from
investment transactions are determined on the basis of identified
cost. Interest income is accrued daily and consists of interest
accrued, discount earned (including both original issue and market
discount) and premium amortization on the investments of the Fund.
C. Federal Income Taxes. Each series of the Trust is treated as a
separate entity for federal income tax purposes. It is the Fund's
policy to comply with the provisions of the Internal Revenue Code
(the "Code") applicable to regulated investment companies and to
distribute all of its net income to its shareholders. Accordingly,
no federal income tax provision is required.
D. Dividends and Distributions to Shareholders. Dividends from net
investment income are declared daily and paid monthly. Distributions
from net capital gains, if any, are paid annually and are recorded
on the ex-dividend date. Distributions paid by the Fund from net
interest received on tax-exempt bonds are not includable by
shareholders as gross income for federal income tax purposes because
the Fund intends to meet certain requirements of the Code applicable
to regulated investment companies which will enable the Fund to pay
tax-exempt interest dividends.
12
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2004
2. Transactions with Affiliates.
Investment Advisory Fees. The Trust has an investment advisory agreement
with Brown Brothers Harriman ("BBH") for which BBH receives a fee from the
Fund calculated daily and paid monthly at an annual rate equivalent to
0.25% of the Fund's average daily net assets. BBH has established a
separately identifiable department (SID) to provide investment advice to
mutual funds. The SID is registered with the Securities and Exchange
Commission under the Investment Advisors Act of 1940. For the year ended
June 30, 2004, the Fund incurred $304,142 for advisory services.
Administrative Fees. The Trust has an administration agreement with Brown
Brothers Harriman Trust Company, LLC ("BBHTC") for which BBHTC receives a
fee from the Fund calculated daily and paid monthly at an annual rate
equivalent to 0.15% of the Fund's average daily net assets. BBHTC has a
sub-administration services agreement with Federated Services Company
("FSC") for which FSC receives compensation paid by BBHTC. For the year
ended June 30, 2004, the Fund incurred $182,485 for 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 equivalent to 0.25% of the Fund's
average daily net assets. For the year ended June 30, 2004, the Fund
incurred $304,142 for shareholder servicing services.
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, 2004, the Fund incurred $6,897 for Trustees' fees.
Custody and Accounting Fees. BBH acts as a custodian and shall be entitled
to receive a custody and accounting fee which is calculated and paid
monthly. BBH holds all cash and investments and calculates the daily net
asset value. The custody fee is a transaction based fee with an annual
minimum of $30,000, and the accounting fee is calculated at 0.05% per
annum on the first $100 million of net assets, 0.02% per annum on the next
$400 million of net assets and 0.01% per annum on all net assets over $500
million. For the year ended June 30, 2004, the Fund incurred $83,099 for
custody and accounting services. These fees were reduced by $1,249 as a
result of an expense offset arrangement with the Fund's custodian.
3. Investment Transactions. 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. The aggregate holdings
by state ranged from 0.4% to 25.1% of investments. At June 30, 2004, the
five largest holdings by state were Texas 25.1%; New York 7.1%; Florida
5.6%; Illinois 4.9% and Ohio 3.4%. For the year ended June 30, 2004, the
cost of purchases and the proceeds of sales of investment securities other
than short-term investments were $133,527,667 and $109,711,445,
respectively.
FINANCIAL STATEMENT JUNE 30, 2004 13
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2004
4. Share Transactions. Transactions in fund shares were as follows:
For the For the
year ended year ended
June 30, 2004 June 30, 2003
------------- -------------
Fund shares sold ....................... 7,539,163 6,694,603
Fund shares issued in connection
with reinvestment of dividends ....... 95,120 84,673
Fund shares repurchased ................ (5,521,766) (4,588,238)
---------- ----------
Net increase ........................... 2,112,517 2,191,038
========== ==========
14
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Trustees of BBH Trust and Shareholders of
BBH Tax Free Short/Intermediate Fixed Income Fund
We have audited the accompanying statement of assets and liabilities of BBH Tax
Free Short/Intermediate Fixed Income Fund (a series of BBH Trust) (the "Fund"),
including the portfolio of investments, as of June 30, 2004, 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 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 are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at June 30,
2004, by correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. 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 Free Short/Intermediate Fixed Income Fund as of June 30, 2004, 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 13, 2004
15
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
ADDITIONAL FEDERAL TAX INFORMATION
June 30, 2004 (unaudited)
The percentage of tax-exempt dividends paid by the BBH Tax Free
Short/Intermediate Fixed Income Fund (the "Fund") for the year ended June 30,
2004 was 97.97%.
The Fund hereby designates the approximate amount of $436,648 as capital gain
dividends for the purpose of the dividends paid deduction.
In January 2005, the Fund will report on Form 1099 the tax status of all
distributions made during the calendar year 2004. Shareholders should use the
information on Form 1099 for their income tax returns.
16
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The Fund's investment advisor maintained a highly diverse portfolio throughout
the fiscal year. Although the portfolio's holdings were geographically
diversified across all sectors, security selection within the insured and
general obligation sectors negatively impacted the Fund's performance.
In addition, the Fund maintained a higher quality bias, relative to its
benchmark, the Lehman Brothers 3-Year Municipal Index1,thus subtracting from
performance. The Fund was overweighted in AAA and AA- rated municipal securities
relative to the benchmark. As the effects of the overall improving national
economy trickled down to the state and local levels, we witnessed a correction
in general quality spreads. As the trend of upbeat economic news persisted
throughout the fiscal year, credit spread tightening was most pronounced in the
mid to lower tier credits while spreads on AAA to AA-rated securities remained
relatively stable. Quality spreads on A and BBB-rated securities compressed to
levels not seen in 2 years, outperforming high grades. Therefore, the Fund's
higher credit quality bias led to a performance shortfall relative to the
benchmark.
- ----------
1 Lehman Brothers 3-Year Municipal Index is a broad-based market index. To
be included in the index, bonds must have a minimum credit rating of Baa.
They must have an outstanding value of at least $5 million and be issued
as part of a transaction of at least $50 million. The bonds must have a
dated-date after December 31, 1990 and must be at least one year from
their maturity date. As of January 1996, the index also includes zero
coupon bonds and bonds subject to the Alternative Minimum Tax. Index
returns do not reflect taxes, sales charges, expenses or other fees that
the SEC requires to be reflected in the Fund's performance. The index is
unmanaged, and it is not possible to invest directly in an index.
FINANCIAL STATEMENT JUNE 30, 2004 17
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE (continued)
Growth of $10,000 invested in BBH Tax Free Short/Intermediate Fixed Income Fund
The graph below illustrates the hypothetical investment of $10,0001 in the Fund
from July 23, 1992 to June 30, 2004 as compared to the Lehman Brothers 3-Year
Municipal Index ("LB 3 Yr Muni").
[OMITTED GRAPH]
Past performance is no guarantee of future results. Returns shown do not reflect
the deduction of taxes that a shareholder would pay on Fund distributions or the
redemption of Fund shares. For after-tax returns, contact the Fund at
1-800-625-5759. 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 funds are not obligations of or guaranteed by any bank and are not
federally insured.
- ----------
1 The Fund's performance assumes the reinvestment of the dividends and
distributions. The LB 3 Yr Muni reflects reinvestment of interest on
securities in the index. The LB 3 Yr Muni is not adjusted to reflect
taxes, sales charges, expenses or other fees that the Securities and
Exchange Commission ("SEC") requires to be reflected in the Fund's
performance.
18
TRUSTEES AND OFFICERS OF BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
(unaudited)
Information pertaining to the Trustees of BBH Trust (the "Trust") and executive
officers of the Trust is set forth below. Part B to the Registration Statement
of BBH Tax Free Short/Intermediate Fixed Income 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.
Term of Number of
Position(s) Office# Funds/Portfolio
Held and in Fund Other
Name, with Length Complex Trustee/
Birth Date Trust/ of Time Principal Occupation(s) Overseen Directorships
and Address Portfolio Served During Past 5 Years by Trustee^ Held by Trustee
- -----------------------------------------------------------------------------------------------------------------------------------
Directors
Joseph V. Shields, Jr. Chairman of Since Managing Director, Chairman and Chief 11 None
Birth Date: the Board 1990 Executive Officer of Shields & Company
March 17, 1938 and Trustee (registered broker-dealer and member of New
Shields & Company York Stock Exchange); Chairman of Capital
140 Broadway Management Associates, Inc. (registered
New York, NY 10005 investment adviser); Vice Chairman and
Trustee of New York Racing Association;
Director of Flowers Industries, Inc.
(diversified food company).
Eugene P. Beard Trustee Since Retired; Vice Chairman-Finance/Operations 11 Director of Old
Birth Date: 1993 and CFO of The Interpublic Group of Westbury Funds
March 17, 1935 Companies, Inc. (until December 1999); (5); Trustee of
The Interpublic Group Special Advisor to The Interpublic Group of Sandhill
of Companies, Inc. Companies, Inc. (February 2000 to December Investment
372 Danbury Road 2003). Fund II.
2nd Floor
Wilton, CT 06897
Richard L. Carpenter Trustee Since Retired. 11 None
Birth Date: 1999March 17, 1933
10820 North La
Quinta Drive
Tucson, AZ 85737
David P. Feldman Trustee Since Director of Jeffrey Co. (1992 to present); 11 Director of
Birth Date: 1990 Director of QMED (1999 to present). Dreyfus Mutual
November 16, 1939 Funds (59
3 Tall Oaks Drive Funds)
Warren, NJ 07059
FINANCIAL STATEMENT JUNE 30, 2004 19
TRUSTEES AND OFFICERS OF BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
(unaudited)
Term of Number of
Position(s) Office# Funds/Portfolio
Held and in Fund Other
Name, with Length Complex Trustee/
Birth Date Trust/ of Time Principal Occupation(s) Overseen Directorships
and Address Portfolio Served During Past 5 Years by Trustee^ Held by Trustee
- -----------------------------------------------------------------------------------------------------------------------------------
J. Angus Ivory Trustee Since Retired; Director of Brown Brothers 11 None
Birth Date: 1999 Harriman Ltd. (subsidiary of Brown
July 31, 1932 Brothers Harriman & Co.) (until
Greenway Farm, December 2001); Advisor to RAF
Tockenham, Central Fund (1992-June 2003).
Swindon, Wiltshire,
SN4 7PP England
Alan G. Lowy Trustee Since Private Investor. 11 None
Birth Date: 1993
April 17, 1939
4111 Clear Valley
Drive
Encino, CA 91436
Arthur D. Trustee Since Retired; Trustee, R.K. Mellon 11 None
Miltenberger 1992 Family Trusts (1981-June 2003);
Birth Date: General Partner, Mellon Family
November 8, 1938 Investment Company IV, V and VI
503 Darlington Road (1983-2002); Director of
Ligonier, PA 15658 Aerostructures Corporation
(aircraft manufacturer) (1996-July
2003).
Officers
John A. Nielsen President, Since President of the Trust, BBH Prime N/A N/A
Birth Date: Principal 2004 Institutional Money Market Fund,
July 15, 1943 Executive Inc., BBH Common Settlement II
140 Broadway Officer Fund, Inc., BBH Fund, Inc. and BBH
New York, NY 10005 U.S. Money Market Portfolio (since
January 2004); He joined Brown
Brothers Harriman & Co. ("BBH &
Co.") in 1968 and has been a
Partner of the firm since 1987.
20
TRUSTEES AND OFFICERS OF BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
(unaudited)
Term of Number of
Position(s) Office# Funds/Portfolio
Held and in Fund Other
Name, with Length Complex Trustee/
Birth Date Trust/ of Time Principal Occupation(s) Overseen Directorships
and Address Portfolio Served During Past 5 Years by Trustee^ Held by Trustee
- -----------------------------------------------------------------------------------------------------------------------------------
Michael D. Martins Vice President, Since Vice President, Treasurer, N/A N/A
Birth Date: Treasurer, 2002 Principal Accounting Officer and
November 5, 1965 Principal Principal Financial Officer of the
140 Broadway Accounting Trust, BBH Prime Institutional
New York, NY 10005 Officer and Money Market Fund, Inc., BBH Common
Principal Settlement II Fund, Inc., BBH Fund,
Financial Inc. and BBH U.S. Money Market
Officer Portfolio; Vice President (since
April 2002) and Assistant Vice
President (December 1996-March
2002) of BBH & Co.
Gail C. Jones Secretary Since Secretary of the Trust, BBH Prime N/A N/A
Birth Date: 2002 Institutional Money Market Fund,
October 26, 1953 Inc., BBH Common Settlement II
1001 Liberty Avenue Fund, Inc., BBH Fund, Inc. and BBH
Pittsburgh, PA U.S. Money Market Portfolio (since
15222-3779 August 2002); Counsel, ReedSmith,
LLP (since October 2002); Corporate
Counsel (January 1997-September
2002) and Vice President (January
1999-September 2002) of Federated
Services Company.
Peter J. Germain Vice Since Vice President of the Trust, BBH N/A N/A
Birth Date: President 2002 Prime Institutional Money Market
september 3, 1959 Fund, Inc., BBH Common Settlement
1001 Liberty Avenue II Fund, Inc., BBH Fund, Inc. and
Pittsburgh, PA BBH U.S. Money Market Portfolio
15222-3779 (since August 2002); Senior Vice
President (since November 1997) of
Federated Services Company.
Judith J. Mackin Vice Since Vice President of the Trust, BBH N/A N/A
Birth Date: President 2002 Prime Institutional Money Market
May 30, 1960 Fund, Inc., BBH Common Settlement
1001 Liberty Avenue II Fund, Inc., BBH Fund, Inc. and
Pittsburgh, PA BBH U.S. Money Market Portfolio
15222-3779 (since August 2002); Vice President
(since November 1997) of Federated
Services Company.
FINANCIAL STATEMENT JUNE 30, 2004 21
TTRUSTEES AND OFFICERS OF BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
(unaudited)
Term of Number of
Position(s) Office# Funds/Portfolio
Held and in Fund Other
Name, with Length Complex Trustee/
Birth Date Trust/ of Time Principal Occupation(s) Overseen Directorships
and Address Portfolio Served During Past 5 Years by Trustee^ Held by Trustee
- -----------------------------------------------------------------------------------------------------------------------------------
Victor R. Siclari Assistant Since Assistant Secretary of the Trust, N/A N/A
Birth Date: secretary 2002 BBH Prime Institutional Money
November 17, 1961 Market Fund, Inc., BBH Common
1001 Liberty Avenue Settlement II Fund, Inc., BBH Fund,
Pittsburgh, PA Inc. and the BBH U.S. Money Market
15222-3779 Portfolio (since August 2002);
Partner, ReedSmith, LLP (since
October 2002); Vice President
(March 1996-September 2002) and
Senior Corporate Counsel (July
1998-September 2002) of Federated
Investors, Inc.
Nancy D. Osborn Assistant Since Assistant Secretary of the Trust, N/A N/A
Birth Date: Secretary 2002 BBH Prime Institutional Money
May 4, 1966 Market Fund, Inc., BBH Common
140 Broadway Settlement II Fund, Inc., BBH Fund,
New York, NY 10005 Inc. and BBH U.S. Money Market
Portfolio (since August 2002);
Assistant Vice President (since
April 2003) and Associate (April
1996-March 2003) of BBH & Co.
John C. Smith Assistant Since Assistant Treasurer of the Trust, N/A N/A
Birth Date: Treasurer 2002 BBH Prime Institutional Money
August 2, 1965 Market Fund, Inc., BBH Common
50 Milk Street Settlement II Fund, Inc., BBH Fund,
Boston, MA 02109 Inc. and BBH U.S. Money Market
Portfolio (since August 2002);
Assistant Vice President (since
September 2001), Associate
(September 2000-August 2001) and
Senior Analyst (June 1999-August
2000) of BBH & Co.
22
TRUSTEES AND OFFICERS OF BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
(unaudited)
Term of Number of
Position(s) Office# Funds/Portfolio
Held and in Fund Other
Name, with Length Complex Trustee/
Birth Date Trust/ of Time Principal Occupation(s) Overseen Directorships
and Address Portfolio Served During Past 5 Years by Trustee^ Held by Trustee
- -----------------------------------------------------------------------------------------------------------------------------------
Gregory V. Lomakin Assistant Since Assistant Treasurer of the Trust, N/A N/A
Birth Date: Treasurer 2002 BBH Prime Institutional Money
February 23, 1965 Market Fund, Inc., BBH Common
50 Milk Street Settlement II Fund, Inc., BBH Fund,
Boston, MA 02109 Inc. and BBH U.S. Money Market
Portfolio (since August 2002); Vice
President (since April 2003),
Assistant Vice President (April
2001-March 2003), and Associate
(May 1992-March 2001) of BBH & Co.
- ----------
# 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, BBH Prime Institutional Money
Market Fund, Inc., BBH Common Settlement II Fund, Inc., BBH Fund, Inc. and
BBH U.S. Money Market Portfolio. The Trust has four series, and BBH Fund,
Inc. has four series.
FINANCIAL STATEMENT JUNE 30, 2004 23
Investment Adviser and Administrator
Brown Brothers Harriman
140 Broadway
New York, NY 10005
Distributor
Edgewood Services, Inc.
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Shareholder Servicing Agent
Brown Brothers Harriman
140 Broadway
New York, NY 10005
(800) 625-5759
To obtain information or make shareholder inquiries:
By telephone: Call 1-800-575-1265
By E-mail send your request to: bbhfunds@bbh.com
On the internet: www.bbhfunds.com
This report is submitted for the general information of shareholders and is not
authorized for distribution to prospective investors unless preceded or
accompanied by an effective prospectus. Nothing herein contained is to be
considered an offer of sale or a solicitation of an offer to buy shares of the
Fund. Such offering is made only by the prospectus, which includes details as to
offering price and other material information.
A copy of the Fund's Proxy Voting Policy is available upon request by calling
the toll-free number listed above. A text-only version of the policy can be
viewed online or downloaded from the SEC at www.sec.gov.
[LOGO] Brown Brothers Harriman
BROWN [LOGO]
BROTHERS
HARRIMAN
Annual Report
JUNE 30, 2004
BBH Tax Exempt Money Fund
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
June 30, 2004
Principal Maturity Interest
Amount Date Rate Value
- --------- -------- -------- -----
MUNICIPAL BONDS (86.8%)
CERTIFICATES OF PARTICIPATION (0.5%)
$ 2,100,000 Denver, Colorado, City & Council* ...... 07/07/04 1.000% $ 2,100,000
-----------
EDUCATION (13.2%)
14,900,000 Connecticut State Health & Educational
Facilities Authority* ................ 07/01/04 1.100 14,900,000
2,700,000 Connecticut State Health & Educational
Facilities Authority* ................ 07/07/04 0.930 2,700,000
1,000,000 East Carolina University,
North Carolina* ...................... 07/07/04 1.090 1,000,000
625,000 Kansas City, Missouri, School District
Building Corp. ....................... 02/01/05 4.000 635,730
6,400,000 Massachusetts State Development
Finance Agency, Boston
University Revenue* .................. 07/01/04 1.020 6,400,000
3,000,000 Massachusetts State Health &
Educational Facilities Authority* .... 07/01/04 0.940 3,000,000
3,610,000 Massachusetts State Health &
Educational Facilities Authority* .... 07/02/04 1.060 3,610,000
1,000,000 Michigan State University Revenue* ..... 07/07/04 1.020 1,000,000
500,000 Muncie, Indiana, School
Building Corp. ....................... 07/15/04 6.000 500,950
5,000,000 New Hampshire Health & Education
Facilities Authority* ................ 07/07/04 1.010 5,000,000
2,000,000 New Jersey State Educational
Facilities Authority* ................ 07/01/04 1.100 2,000,000
1,500,000 New Jersey State Educational
Facilities Authority* ................ 07/01/04 0.990 1,500,000
800,000 New Jersey State Educational
Facilities Authority ................. 12/01/04 5.000 812,981
4,900,000 Ohio State University Revenue* ......... 07/01/04 1.030 4,900,000
1,000,000 Ohio State University Revenue* ......... 07/12/04 0.720 1,000,000
2,770,000 Pennsylvania State Higher Educational
Facilities Authority* ................ 07/07/04 1.060 2,770,000
2,500,000 University of Missouri Revenue* ........ 07/01/04 1.100 2,500,000
1,800,000 University of Pittsburgh Revenue* ...... 07/07/04 1.060 1,800,000
The accompanying notes are an integral part of these financial statements.
2
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2004
Principal Maturity Interest
Amount Date Rate Value
- --------- -------- -------- -----
MUNICIPAL BONDS (continued)
EDUCATION (continued)
$ 1,600,000 University of Texas Revenue ............ 08/15/04 5.000% $ 1,607,778
1,000,000 Virginia State Public School Authority . 08/01/04 5.000 1,003,280
1,000,000 Washington State Health Care
Facilities Authority* ................ 07/01/04 1.040 1,000,000
-----------
Total Education ........................ 59,640,719
-----------
ESCROWED TO MATURITY (a) (0.4%)
500,000 Ivy Technical State College, Indiana ... 07/01/04 5.000 500,000
1,100,000 Michigan Municipal Bond Authority,
Clean Water Revenue .................. 10/01/04 5.000 1,110,760
420,000 New Jersey State Turnpike Authority .... 01/01/05 5.250 428,037
-----------
Total Escrowed To Maturity ............. 2,038,797
-----------
GENERAL OBLIGATIONS (24.7%)
1,000,000 Adams County-Ohio Valley Local
School District ...................... 12/01/04 6.650 1,022,789
790,000 Akron, Ohio ............................ 12/01/04 5.000 802,596
1,635,000 Anchorage, Alaska ...................... 07/01/04 4.000 1,635,000
3,400,000 California State* ...................... 07/01/04 1.120 3,400,000
1,000,000 Charlotte, North Carolina .............. 07/01/04 3.500 1,000,000
1,000,000 Chicago, Illinois ...................... 01/01/05 5.000 1,018,879
1,500,000 Chicago, Illinois, Metropolitan
Water Reclamation District ........... 12/01/04 5.000 1,522,938
5,600,000 Clark County, Nevada, School District* . 07/01/04 1.000 5,600,000
5,000,000 Connecticut State* ..................... 07/01/04 1.110 5,000,000
500,000 Dade County, Florida, School District .. 08/01/04 5.500 501,827
2,385,000 District of Columbia* .................. 07/07/04 1.060 2,385,000
1,000,000 Du Page County, Illinois, Forest
Preserve District .................... 11/01/04 3.000 1,006,803
2,700,000 Georgia State .......................... 07/01/04 6.500 2,700,000
1,930,000 Georgia State .......................... 08/01/04 6.500 1,938,983
1,000,000 Georgia State .......................... 02/01/05 5.000 1,023,100
1,000,000 Guilford County, North Carolina ........ 10/01/04 2.500 1,003,788
1,100,000 Gwinnett County, Georgia ............... 01/01/05 2.000 1,105,048
1,000,000 Hawaii State ........................... 03/01/05 6.000 1,030,391
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2004
3
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2004
Principal Maturity Interest
Amount Date Rate Value
- --------- -------- -------- -----
MUNICIPAL BONDS (continued)
GENERAL OBLIGATIONS (continued)
$ 2,700,000 Hennepin County, Minnesota* ............ 07/01/04 0.950% $ 2,700,000
2,905,000 Houston, Texas ......................... 03/01/05 2.000 2,924,175
2,180,000 Illinois State ......................... 07/01/04 5.000 2,180,000
2,150,000 Maricopa County, Arizona, Community
College District ..................... 07/01/04 4.000 2,150,000
1,000,000 Maryland State ......................... 07/15/04 5.250 1,001,615
2,000,000 Maryland State ......................... 07/15/04 5.000 2,003,078
5,000,000 Maryland State ......................... 02/01/05 5.000 5,111,626
2,750,000 Maryland State ......................... 03/01/05 5.250 2,826,988
1,000,000 Maryland State ......................... 03/01/05 4.000 1,018,554
1,000,000 Mecklenburg County, North Carolina ..... 02/01/05 3.000 1,011,031
2,825,000 Minneapolis, Minnesota* ................ 07/01/04 0.950 2,825,000
570,000 Minneapolis-St. Paul, Minnesota,
Metropolitan Area .................... 03/01/05 3.500 579,049
850,000 Monmouth, New Jersey ................... 07/15/04 3.250 850,725
755,000 Montgomery County, Maryland ............ 02/01/05 5.000 772,106
5,000,000 Montgomery County, Maryland ............ 04/01/05 3.000 5,074,470
1,000,000 Montgomery County, Maryland ............ 05/01/05 5.375 1,034,630
3,400,000 New York, New York* .................... 07/01/04 1.120 3,400,000
12,050,000 New York, New York* .................... 07/01/04 1.080 12,050,000
600,000 New York, New York* .................... 07/01/04 1.050 600,000
3,075,000 North Carolina State ................... 03/01/05 5.000 3,146,478
1,115,000 Palm Beach County, Florida,
School District ...................... 08/01/04 4.000 1,117,769
500,000 Rapid City, South Dakota, ..............
School District ...................... 01/01/05 4.400 508,234
1,125,000 Richmond, Virginia ..................... 07/15/04 5.000 1,126,712
3,635,000 Seattle, Washington* ................... 09/03/04 1.200 3,635,000
1,150,000 Seattle, Washington .................... 01/15/05 6.000 1,180,780
2,000,000 South Carolina State ................... 08/01/04 5.750 2,007,909
2,000,000 South Carolina State ................... 01/01/05 4.000 2,029,072
700,000 South Carolina State ................... 04/01/05 5.250 720,798
1,000,000 Thornton, Colorado ..................... 12/01/04 4.000 1,012,005
1,000,000 Utah State ............................. 07/01/04 5.500 1,000,000
5,000,000 Utah State ............................. 07/01/04 4.500 5,000,000
The accompanying notes are an integral part of these financial statements.
4
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2004
Principal Maturity Interest
Amount Date Rate Value
- --------- -------- -------- -----
MUNICIPAL BONDS (continued)
GENERAL OBLIGATIONS (continued)
$ 1,000,000 Washington State ....................... 09/01/04 5.250% $ 1,007,094
1,140,000 Washington Suburban Sanitation
District, Maryland ................... 06/01/05 4.500 1,170,634
1,085,000 Washoe County, Nevada .................. 09/01/04 4.000 1,090,336
2,340,000 Westchester County, New York ........... 11/15/04 4.750 2,372,908
------------
Total General Obligations .............. 111,935,918
------------
HEALTH CARE (3.7%)
800,000 Harris County, Texas, Health Facilities
Development Corp.* ................... 07/01/04 1.100 800,000
5,500,000 Illinois Health Care Facilities
Authority* ........................... 07/07/04 1.050 5,500,000
9,000,000 Montana State Health Facilities
Authority* ........................... 07/07/04 1.210 9,000,000
1,500,000 Oklahoma State Industries Authority,
Hospital Revenue* .................... 07/01/04 1.100 1,500,000
------------
Total Health Care ...................... 16,800,000
------------
INDUSTRIAL (8.9%)
2,600,000 Berkeley County, South Carolina,
Pollution Control Revenue* ........... 07/01/04 1.100 2,600,000
1,100,000 California Statewide Communities
Development Authority,
Pollution Control Revenue* ............. 07/01/04 1.070 1,100,000
5,450,000 Columbia, Alabama, Pollution
Control Revenue* ..................... 07/01/04 1.140 5,450,000
600,000 Delaware County, Pennsylvania,
Industrial Development
Authority* ........................... 07/07/04 1.020 600,000
1,950,000 Forsyth, Montana, Pollution Control
Revenue* ............................. 07/01/04 1.140 1,950,000
2,400,000 Harris County, Texas, Pollution
Control Revenue* ..................... 07/01/04 1.000 2,400,000
1,000,000 Hurley, New Mexico, Pollution
Control Revenue* ..................... 07/01/04 1.100 1,000,000
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2004
5
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2004
Principal Maturity Interest
Amount Date Rate Value
- --------- -------- -------- -----
MUNICIPAL BONDS (continued)
INDUSTRIAL (continued)
$ 5,000,000 Jackson County, Mississippi, Port
Facility Revenue* .................... 07/01/04 1.100% $ 5,000,000
5,400,000 Joliet, Illinois, Regional Port
District* ............................ 07/01/04 1.000 5,400,000
5,000,000 Kemmerer, Wyoming, Pollution
Control Revenue* ..................... 07/01/04 1.000 5,000,000
500,000 Lincoln County, Wyoming, Pollution
Control Revenue* ..................... 07/02/04 1.010 500,000
800,000 Midlothian, Texas, Pollution Control
Revenue* ............................. 07/07/04 1.050 800,000
2,600,000 Moffat County, Colorado, Pollution
Control Revenue* ..................... 07/01/04 1.080 2,600,000
1,000,000 Port Arthur, Texas, Navigation
District* ............................ 07/01/04 1.100 1,000,000
4,700,000 Union County, New Jersey, Pollution
Control Revenue* ..................... 07/01/04 1.020 4,700,000
------------
Total Industrial ....................... 40,100,000
------------
MISCELLANEOUS (9.1%)
1,400,000 California Housing Finance Agency* ..... 07/07/04 1.070 1,400,000
2,700,000 California Housing Finance Agency* ..... 07/12/04 0.770 2,700,000
650,000 California State Public Works Board .... 12/01/04 5.250 661,087
1,365,000 Clayton County, Georgia, Housing
Authority* ........................... 07/12/04 0.850 1,365,000
1,500,000 Colorado Housing & Finance
Authority* ........................... 07/07/04 1.060 1,500,000
1,000,000 Maine Municipal Bond Bank .............. 11/01/04 4.000 1,010,036
5,500,000 Michigan State Housing Development
Authority, Rental Housing
Revenue* ............................. 07/07/04 1.030 5,500,000
1,000,000 New Hampshire Municipal
Bond Bank ............................ 08/15/04 4.500 1,004,115
900,000 New York State Local Government
Assistance Corp.* .................... 07/07/04 1.000 900,000
5,500,000 New York, New York, City Transitional
Finance Authority* ................... 07/01/04 1.120 5,500,000
The accompanying notes are an integral part of these financial statements.
6
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2004
Principal Maturity Interest
Amount Date Rate Value
- --------- -------- -------- -----
MUNICIPAL BONDS (continued)
MISCELLANEOUS (continued)
$ 500,000 New York, New York, City Transitional
Finance Authority* ................... 07/01/04 1.080% $ 500,000
6,200,000 New York, New York, City Transitional
Finance Authority* ................... 07/01/04 1.060 6,200,000
3,170,000 New York, New York, City Transitional
Finance Authority* ................... 07/07/04 1.040 3,170,000
3,565,000 New York, New York, Municipal
Assistance Corp. ..................... 07/01/04 6.000 3,565,000
1,000,000 New York, New York, Municipal
Assistance Corp. ..................... 07/01/04 5.500 1,000,000
5,400,000 Texas State ............................ 08/31/04 2.000 5,407,843
------------
Total Miscellaneous .................... 41,383,081
------------
PRE-REFUNDED (a) (9.9%)
1,540,000 Bexar, Texas, Metropolitan Water
District ............................. 05/01/05 6.000 1,628,222
2,150,000 Charlotte, North Carolina .............. 04/01/05 5.300 2,254,027
950,000 Chesapeake, Virginia ................... 05/01/05 5.500 1,000,513
750,000 Connecticut State ...................... 08/15/04 6.000 761,801
1,550,000 Dade County, Florida, School District .. 08/01/04 5.500 1,571,294
1,100,000 Hawaii State ........................... 01/01/05 5.900 1,125,270
1,425,000 Houston, Texas ......................... 04/01/05 5.250 1,469,475
6,250,000 Indiana Bond Bank ...................... 02/01/05 6.750 6,566,432
2,500,000 Lakeshore, Michigan, Public Schools .... 05/01/05 5.750 2,611,678
5,000,000 Maryland State ......................... 03/15/05 5.700 5,257,511
750,000 Massachusetts State .................... 08/01/04 6.000 768,073
1,000,000 Massachusetts State .................... 11/01/04 6.600 1,028,683
500,000 Massachusetts State Water
Resources Authority .................. 12/01/04 5.250 518,107
750,000 Michigan State Trunk Line Highway
Revenue .............................. 11/15/04 5.500 777,450
500,000 Middlesex County, New Jersey,
Improvement Authority ................ 09/15/04 6.000 514,965
1,000,000 Minnesota State ........................ 10/01/04 6.000 1,012,225
1,000,000 Nebraska Public Power District ......... 01/01/05 5.500 1,031,574
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2004
7
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2004
Principal Maturity Interest
Amount Date Rate Value
- --------- -------- -------- -----
MUNICIPAL BONDS (continued)
PRE-REFUNDED (continued)
$ 1,000,000 Nebraska Public Power District ......... 01/01/05 5.250% $ 1,031,086
800,000 Nevada State ........................... 02/01/05 6.000 828,756
520,000 New Jersey Economic Development
Authority ............................ 07/01/04 5.700 530,400
750,000 North Harris Montgomery Community
College District, Texas .............. 02/15/05 5.650 769,426
580,000 Port Arthur, Texas ..................... 02/15/05 5.500 594,490
930,000 Tempe, Arizona, Union High
School District ...................... 07/01/04 5.000 939,300
4,985,000 Texas State ............................ 10/01/04 5.750 5,044,129
500,000 Texas State ............................ 10/01/04 5.700 505,755
1,400,000 Texas State ............................ 10/01/04 5.500 1,415,395
3,000,000 Texas State ............................ 04/01/05 5.900 3,105,278
------------
Total Pre-Refunded ..................... 44,661,315
------------
SALES TAX (0.3%)
1,455,000 Orangeburg County, South Carolina,
Sales & Use Tax Revenue .............. 10/01/04 4.000 1,465,945
------------
SPECIAL TAX (1.2%)
500,000 Louisiana State Gas & Fuels
Tax Revenue .......................... 11/15/04 5.000 507,311
5,000,000 Riverside County, California,
Special Tax* ......................... 07/07/04 1.000 5,000,000
------------
Total Special Tax ...................... 5,507,311
------------
TRANSPORTATION (1.2%)
1,000,000 Central Oklahoma Transportation
& Parking Authority .................. 07/01/04 4.950 1,000,000
1,000,000 Kansas State Turnpike Authority ........ 09/01/04 5.375 1,007,383
770,000 Massachusetts Bay Transportation
Authority ............................ 03/01/05 5.000 788,067
1,000,000 New Jersey State Transportation
Trust Fund Authority ................. 12/15/04 6.000 1,022,676
1,000,000 New York State Thruway Authority ....... 04/01/05 6.000 1,033,495
The accompanying notes are an integral part of these financial statements.
8
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2004
Principal Maturity Interest
Amount Date Rate Value
- --------- -------- -------- -----
MUNICIPAL BONDS (continued)
TRANSPORTATION (continued)
$ 750,000 Pennsylvania State Turnpike
Commission ........................... 12/01/04 5.000% $ 762,477
------------
Total Transportation 5,614,098
------------
UTILITIES (0.7%)
1,000,000 Nebraska Public Power District ......... 01/01/05 5.250 1,019,598
800,000 Washington State Public Power
Supply System* ....................... 07/07/04 1.070 800,000
1,400,000 Washington State Public Power
Supply System* ....................... 07/07/04 1.020 1,400,000
------------
Total Utilities ........................ 3,219,598
------------
WATER/SEWER (13.0%)
1,000,000 Angelina & Neches River Authority,
Texas* ............................... 07/01/04 1.100 1,000,000
900,000 Arizona Water Infrastructure
Finance Authority .................... 10/01/04 4.000 906,764
750,000 Austin, Texas, Water & Wastewater
System Revenue ....................... 11/15/04 5.000 759,994
1,400,000 Boston, Massachusetts, Water &
Sewer Commission* .................... 07/01/04 1.020 1,400,000
1,800,000 California State Department of
Water Resources* ..................... 07/07/04 1.110 1,800,000
1,020,000 Connecticut State Clean Water Fund ..... 04/01/05 5.600 1,051,212
2,200,000 Detroit, Michigan, Sewage
Disposal Revenue* .................... 07/07/04 1.110 2,200,000
3,900,000 Durham, North Carolina, Water &
Sewer Revenue* ....................... 07/07/04 1.090 3,900,000
875,000 Massachusetts State Water Pollution
Abatement Trust ...................... 08/01/04 5.250 878,069
10,100,000 Massachusetts State Water
Resources Authority* ................. 07/01/04 1.110 10,100,000
1,550,000 Massachusetts State Water
Resources Authority* ................. 07/07/04 1.040 1,550,000
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2004
9
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2004
Principal Maturity Interest
Amount Date Rate Value
- --------- -------- -------- -----
MUNICIPAL BONDS (continued)
WATER/SEWER (continued)
$ 4,000,000 Massachusetts State Water
Resources Authority* ................. 07/07/04 1.010% $ 4,000,000
6,900,000 Massachusetts State Water
Resources Authority* ................. 07/07/04 1.000 6,900,000
1,000,000 Memphis, Tennessee, Water
Division Revenue ..................... 01/01/05 5.000 1,019,416
12,300,000 Metropolitan Water District of
Southern California* ................. 07/01/04 1.100 12,300,000
780,000 Michigan Municipal Bond Authority,
Clean Water Revenue .................. 10/01/04 5.000 787,695
3,000,000 New Jersey Economic Development
Authority, Water Facilities
Revenue* ............................. 07/01/04 1.120 3,000,000
1,065,000 New York, New York, City Municipal
Water Finance Authority* ............. 07/01/04 1.040 1,065,000
2,100,000 New York, New York, City Municipal
Water Finance Authority* ............. 07/02/04 1.060 2,100,000
1,000,000 New York, New York, City Municipal
Water Finance Authority* ............. 07/07/04 1.090 1,000,000
1,000,000 Ohio State Solid Waste Revenue* ........ 07/01/04 1.130 1,000,000
------------
Total Water/Sewer ...................... 58,718,150
------------
Total Municipal Bonds .................. 393,184,932
------------
COMMERCIAL PAPER (12.6%)
7,000,000 City of Houston, Texas ................. 08/19/04 1.080 7,000,000
7,000,000 City of Houston, Texas ................. 08/25/04 1.120 7,000,000
3,900,000 City of San Antonio, Texas ............. 07/13/04 1.080 3,900,000
2,500,000 City of San Antonio, Texas ............. 07/22/04 1.070 2,500,000
3,500,000 Howard County, Maryland ................ 07/19/04 1.070 3,500,000
4,000,000 King County, Washington ................ 07/13/04 1.080 4,000,000
6,700,000 Massachusetts State Health &
Educational Facilities Authority ..... 07/20/04 1.020 6,700,000
11,900,000 Montgomery County, Maryland ............ 08/20/04 1.100 11,900,000
5,277,000 Municipal Electric Authority, Georgia .. 07/09/04 1.090 5,277,000
The accompanying notes are an integral part of these financial statements.
10
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2004
Principal Maturity Interest
Amount Date Rate Value
- --------- -------- -------- -----
MUNICIPAL BONDS (continued)
WATER/SEWER (continued)
$ 1,500,000 New Jersey State Educational
Facilities Authority ................. 07/22/04 1.050% $ 1,500,000
3,705,000 Texas State Public Finance Authority ... 07/13/04 1.050 3,705,000
------------
Total Commercial Paper ................. 56,982,000
------------
TOTAL INVESTMENTS, AT AMORTIZED COST ........................ 99.4% $450,166,932
OTHER ASSETS IN EXCESS OF LIABILITIES ....................... 0.6 2,666,631
------ ------------
NET ASSETS .................................................. 100.0% $452,833,293
====== ============
- ----------
* Variable rate instrument. Interest rates change on specific dates (such as
a coupon or interest payment date). The yield shown represents the June 30,
2004 coupon rate.
(a) General obligation or revenue bonds that have been fully secured or
collateralized by an escrow fund consisting of U.S. Government obligations
that can adequately meet interest and principal payments. For pre-refunded
obligations, the stated maturity represents the date of redemption which,
pursuant to the terms of the escrow agreement, has been accelerated from
the originally stated maturity date.
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2004
11
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2004
ASSETS:
Investments, at amortized cost ............................ $450,166,932
Cash ...................................................... 51,295
Interest receivable ....................................... 2,852,840
Prepaid expenses .......................................... 13,280
------------
Total Assets ............................................ 453,084,347
------------
LIABILITIES:
Payables for:
Shareholder servicing fees .............................. 88,563
Investment advisory fees ................................ 53,138
Administrative fees ..................................... 35,425
Custody and accounting fees ............................. 27,860
Professional fees ....................................... 27,511
Dividends declared ...................................... 6,395
Board of Trustees' fees ................................. 2,066
Accrued expenses and other liabilities .................... 10,096
------------
Total Liabilities ..................................... 251,054
------------
NET ASSETS, for 452,909,471 fund shares outstanding .......... $452,833,293
============
Net Assets Consist of:
Paid-in capital ........................................... $452,833,293
============
NET ASSET VALUE AND OFFERING PRICE PER SHARE ................. $1.00
=====
The accompanying notes are an integral part of these financial statements.
12
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the year ended June 30, 2004
NET INVESTMENT INCOME:
Income:
Interest ................................................... $4,410,001
----------
Expenses:
Shareholder services fees .................................. 1,133,472
Investment advisory fees ................................... 680,083
Administrative fees ........................................ 453,388
Custody and accounting fees ................................ 115,594
Professional fees .......................................... 36,942
Board of Trustees' fees .................................... 17,128
Miscellaneous expenses ..................................... 73,251
----------
Total Expenses ........................................... 2,509,858
Expense offset arrangement ............................... (3,623)
----------
Net Expenses ............................................. 2,506,235
----------
Net Investment Income ........................................ $1,903,766
==========
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2004
13
BBH TAX EXEMPT MONEY FUND
- --------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30,
-------------------------------
2004 2003
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
From Operations:
Net investment income ............................. $ 1,903,766 $ 3,084,643
Dividends declared from net investment income ....... (1,903,482) (3,072,603)
------------- -------------
Net increase in net assets from operations ........ 284 12,040
------------- -------------
From Fund Share (Principal) Transactions at
Net Asset Value of $1.00 per share:
Fund shares sold ................................ 955,433,086 866,087,031
Fund shares issued in reinvestment of dividends . 1,026,049 2,016,449
Fund shares repurchased ......................... (969,022,796) (816,861,592)
------------- -------------
Net increase (decrease) in net assets resulting
from fund share transactions ................ (12,563,661) 51,241,888
------------- -------------
Total increase (decrease) in net assets ....... (12,563,377) 51,253,928
NET ASSETS:
Beginning of year ................................... 465,396,670 414,142,742
------------- -------------
End of year ......................................... $ 452,833,293 $ 465,396,670
============= =============
The accompanying notes are an integral part of these financial statements.
14
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding throughout each year
For the years ended June 30,
----------------------------------------------------------
2004 2003 2002 2001 2000
---- ---- ---- ---- ----
Net asset value, beginning of year ... $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income ............. 0.001 0.01 0.01 0.03 0.03
Dividends to shareholders from net
investment income ................. (0.00)(1) (0.01) (0.01) (0.03) (0.03)
----- ----- ----- ----- -----
Net asset value, end of year ......... $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total return ......................... 0.42% 0.72% 1.40% 3.20% 3.05%
Ratios/Supplemental data:
Net assets, end of year
(000's omitted) ................. $452,833 $465,397 $414,143 $199,398 $173,050
Ratio of expenses to average
net assets ...................... 0.55%(2) 0.56%(2) 0.53%(2) 0.65%(3) 0.65%(3)
Ratio of net investment income
to average net assets ........... 0.42% 0.72% 1.28% 3.17% 3.24%
- ----------
1 Less than $0.01 per share.
2 The ratio of expenses to average net assets for the years ended June 30,
2004, 2003 and 2002 reflects fees reduced as a result of an expense offset
arrangement with the Fund's custodian. Had this arrangement not been in
place, this ratio would have been 0.55%, 0.57% and 0.55%, respectively.
3 During the years ended June 30, 2001 and 2000, the Fund had an agreement
with Brown Brothers Harriman Trust Company, LLC (the "Administrator")
whereby the Administrator paid certain expenses of the Fund and received a
fee from the Fund (the "Expense Payment Fee"), computed and paid monthly,
such that after such fee the aggregate expenses of the Fund would not
exceed 0.65% of the Fund's average daily net assets. Had the expense
payment agreement not been in place, the ratio of expenses to average net
assets would have been as follows:
Expenses paid by the Fund n/a n/a n/a 0.62% 0.62%
Expense offset arrangement n/a n/a n/a 0.03% 0.03%
Gross expenses n/a n/a n/a 0.65% 0.65%
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2004
15
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
June 30, 2004
1. Organization and Significant Accounting Policies. BBH Tax Exempt Money Fund
(the "Fund") is a separate, diversified series of BBH Trust (the "Trust"),
which is registered under the Investment Company Act of 1940, as amended.
The Trust is an open-end management investment company organized as a
Massachusetts business trust on June 7, 1983. 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 with a par value of $0.01 per share. At June
30, 2004, there were four series of the Trust.
The Fund's financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America, which
require management to make certain estimates and assumptions at the date of
the financial statements and are based, in part, on the following
accounting policies. Actual results could differ from those estimates.
A. Valuation of Investments. The Fund values its investments at amortized
cost, which approximates market value. The amortized cost method
values a security at its cost at the time of purchase and thereafter
assumes a constant amortization to maturity of any discount or
premium. The Fund's use of amortized cost is in compliance with Rule
2a-7 of the Investment Company Act of 1940.
B. Interest Income. Interest income consists of interest accrued and
discount earned (including both original issue and market discount)
and premium amortization on the investments of the Fund, accrued
ratably to the date of maturity.
C. Federal Income Taxes. Each series of the Trust is treated as a
separate entity for federal income tax purposes. It is the Fund's
policy to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of
its taxable income to its shareholders. Accordingly, no federal income
tax provision is required. At June 30, 2004, the cost of investments
for federal income tax purposes was equal to the amortized cost of
investments for financial statement purposes.
D. Dividends and Distributions. Dividends from net investment income are
declared daily and paid monthly to shareholders.
E. Other. 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.
2. Transactions with Affiliates.
Investment Advisory Fees. The Trust has an investment advisory agreement
with Brown Brothers Harriman ("BBH") for which BBH receives a fee from the
Fund calculated daily and paid monthly at an annual rate equivalent to
0.15% of the Fund's average daily net assets. BBH has established a
separately identifiable department (SID) to provide investment advice to
mutual funds. The SID is registered with the Securities and Exchange
Commission under the Investment Advisors Act of 1940. For the year ended
June 30, 2004, the Fund incurred $680,083 for advisory services.
16
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2004
Administrative Fees. The Trust has an administration agreement with Brown
Brothers Harriman Trust Company, LLC ("BBHTC") for which BBHTC receives a
fee from the Fund calculated daily and paid monthly at an annual rate
equivalent to 0.10% of the Fund's average daily net assets. BBHTC has a
sub-administration services agreement with Federated Services Company
("FSC") for which FSC receives compensation paid by BBHTC. For the year
ended June 30, 2004, the Fund incurred $453,388 for 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 equivalent to 0.25% of the Fund's average
daily net assets. For the year ended June 30, 2004, the Fund incurred
$1,133,472 for shareholder servicing services.
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, 2004, the Fund incurred $17,128 for Trustees' fees.
Custody and Accounting Fees. BBH acts as a custodian and shall be entitled
to receive a custody and accounting fee which is calculated and paid
monthly. BBH holds all cash and investments and calculates the daily net
asset value. The custody fee is a transaction based fee with an annual
minimum of $30,000, and the accounting fee is calculated at 0.05% per annum
on the first $100 million of net assets, 0.02% per annum on the next $400
million of net assets and 0.01% per annum on all net assets over $500
million. For the year ended June 30, 2004, the Fund incurred $115,594 for
custody and accounting services. These fees were reduced by $3,623 as a
result of an expense offset arrangement with the Fund's custodian.
3. Investment Transactions. 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. The aggregate holdings by state ranged from
0.1% to 12.3% of investments. At June 30, 2004, the five largest holdings
by state were Texas 12.3%; Massachusetts 10.6%; New York 9.9%; Maryland
9.0% and California 6.3%.
4. Federal Income Tax Status. At June 30, 2004, the Fund had a net capital
loss carryover, which is available to offset future capital gains to the
extent provided by regulations as follows:
Expiration date Amount
--------------- ------
June 30, 2010 .................... $8,959
June 30, 2011 .................... 231
------
$9,190
======
To the extent that this net capital loss carryover is used to offset future
capital gains, it is probable the gains so offset will not be distributed
to shareholders since any such distributions may be taxable to shareholders
as ordinary income.
FINANCIAL STATEMENT JUNE 30, 2004
17
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Trustees of BBH Trust and Shareholders of
BBH Tax Exempt Money Fund
We have audited the accompanying statement of assets and liabilities of BBH Tax
Exempt Money Fund (a series of BBH Trust) (the "Fund"), including the portfolio
of investments, as of June 30, 2004, 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 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 are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at June 30,
2004, by correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. 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, 2004, 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 13, 2004
18
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
ADDITIONAL FEDERAL TAX INFORMATION
June 30, 2004 (unaudited)
The percentage of tax-exempt dividends paid by the BBH Tax Exempt Money Fund
(the "Fund") for the year ended June 30, 2004 was 99.99%.
In January 2005, the Fund will report on Form 1099 the tax status of all
distributions made during the calendar year 2004. Shareholders should use the
information on Form 1099 for their income tax returns.
FINANCIAL STATEMENT JUNE 30, 2004
19
TRUSTEES AND OFFICERS OF BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
(unaudited)
Information pertaining to the Trustees of BBH Trust (the "Trust") and executive
officers of the Trust is set forth below. Part B to the Registration Statement
of 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.
Number of
Term of Funds/
Office# Portfolio in Other
Position(s) and Fund Trustee/
Held with Length Complex Directorships
Name, Birth Date Trust/ of Time Principal Occupation(s) During Overseen by Held by
and Address Portfolio Served Past 5 Years Trustee^ Trustee
- -----------------------------------------------------------------------------------------------------------------------
Joseph V. Shields, Jr. Chairman of Since Managing Director, Chairman 11 None
Birth Date: the Board and 1990 and Chief Executive Officer of
March 17, 1938 Trustee Shields & Company (registered
Shields & Company broker-dealer and member of
140 Broadway New York Stock Exchange);
New York, NY 10005 Chairman of Capital Management
Associates, Inc. (registered
investment adviser); Vice
Chairman and Trustee of New
York Racing Association;
Director of Flowers
Industries, Inc. (diversified
food company).
Eugene P. Beard Trustee Since Retired; Vice Chairman- 11 Director of Old
Birth Date: 1993 Finance/ Operations and CFO of Westbury
March 17, 1935 The Interpublic Group of Funds (5);
The Interpublic Group Companies, Inc. (until Trustee of
of Companies, Inc. December 1999); Special Sandhill Investment
372 Danbury Road Advisor to The Interpublic Fund II.
2nd Floor Group of Companies, Inc.
Wilton, CT 06897 (February 2000 to December
2003).
Richard L. Carpenter Trustee Since Retired. 11 None
Birth Date: 1999
March 17, 1933
10820 North La
Quinta Drive
Tucson, AZ 85737
David P. Feldman Trustee Since Director of Jeffrey Co. (1992 11 Director of
Birth Date: 1990 to present); Director of QMED Dreyfus
November 16, 1939 (1999 to present). Mutual Funds
3 Tall Oaks Drive (59 Funds)
Warren, NJ 07059
20
TRUSTEES AND OFFICERS OF BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
(unaudited)
Number of
Term of Funds/
Office# Portfolio in Other
Position(s) and Fund Trustee/
Held with Length Complex Directorships
Name, Birth Date Trust/ of Time Principal Occupation(s) During Overseen by Held by
and Address Portfolio Served Past 5 Years Trustee^ Trustee
- -----------------------------------------------------------------------------------------------------------------------
J. Angus Ivory Trustee Since Retired; Director of Brown 11 None
Birth Date: 1999 Brothers Harriman Ltd.
July 31, 1932 (subsidiary of Brown Brothers
Greenway Farm, Harriman & Co.) (until
Tockenham, December 2001); Advisor to RAF
Swindon, Wiltshire, Central Fund (1992-June 2003).
SN4 7PP England
Alan G. Lowy Trustee Since Private Investor. 11 None
Birth Date: 1993
April 17, 1939
4111 Clear Valley
Drive
Encino, CA 91436
Arthur D. Miltenberger Trustee Since Retired; Trustee, R.K. Mellon 11 None
Birth Date: 1992 Family Trusts (1981-June
November 8, 1938 2003); General Partner, Mellon
503 Darlington Road Family Investment Company IV,
Ligonier, PA 15658 V and VI (1983-2002); Director
of Aerostructures Corporation
(aircraft manufacturer)
(1996-July 2003).
John A. Nielsen President, Since President of the Trust, BBH N/A N/A
Birth Date: Principal 2004 Prime Institutional Money
July 15, 1943 Executive Market Fund, Inc., BBH Common
140 Broadway Officer Settlement II Fund, Inc., BBH
New York, NY 10005 Fund, Inc. and BBH U.S. Money
Market Portfolio (since
January 2004); He joined Brown
Brothers Harriman & Co. ("BBH
& Co.") in 1968 and has been a
Partner of the firm since
1987.
FINANCIAL STATEMENT JUNE 30, 2004
21
TRUSTEES AND OFFICERS OF BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
(unaudited)
Number of
Term of Funds/
Office# Portfolio in Other
Position(s) and Fund Trustee/
Held with Length Complex Directorships
Name, Birth Date Trust/ of Time Principal Occupation(s) During Overseen by Held by
and Address Portfolio Served Past 5 Years Trustee^ Trustee
- -----------------------------------------------------------------------------------------------------------------------
Michael D. Martins Vice President, Since Vice President, Treasurer, N/A N/A
Birth Date: Treasurer, 2002 Principal Accounting Officer
November 5, 1965 Principal and Principal Financial
140 Broadway Accounting Officer of the Trust, BBH
New York, NY 10005 Officer and Prime Institutional Money
Principal Market Fund, Inc., BBH Common
Financial Settlement II Fund, Inc., BBH
Officer Fund, Inc. and BBH U.S. Money
Market Portfolio; Vice
President (since April 2002)
and Assistant Vice President
(December 1996-March 2002) of
BBH & Co.
Gail C. Jones Secretary Since Secretary of the Trust, BBH N/A N/A
Birth Date: 2002 Prime Institutional Money
October 26, 1953 Market Fund, Inc., BBH Common
1001 Liberty Avenue Settlement II Fund, Inc., BBH
Pittsburgh, PA Fund, Inc. and BBH U.S. Money
15222-3779 Market Portfolio (since August
2002); Counsel, ReedSmith, LLP
(since October 2002);
Corporate Counsel (January
1997-September 2002) and Vice
President (January
1999-September 2002) of
Federated Services Company.
Peter J. Germain Vice President Since Vice President of the Trust, N/A N/A
Birth Date: 2002 BBH Prime Institutional Money
September 3, 1959 Market Fund, Inc., BBH Common
1001 Liberty Avenue Settlement II Fund, Inc., BBH
Pittsburgh, PA Fund, Inc. and BBH U.S. Money
15222-3779 Market Portfolio (since August
2002); Senior Vice President
(since November 1997) of
Federated Services Company.
Judith J. Mackin Vice President Since Vice President of the Trust, N/A N/A
Birth Date: 2002 BBH Prime Institutional Money
May 30, 1960 Market Fund, Inc., BBH Common
1001 Liberty Avenue Settlement II Fund, Inc., BBH
Pittsburgh, PA Fund, Inc. and BBH U.S. Money
15222-3779 Market Portfolio (since August
2002); Vice President (since
November 1997) of Federated
Services Company.
22
TRUSTEES AND OFFICERS OF BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
(unaudited)
Number of
Term of Funds/
Office# Portfolio in Other
Position(s) and Fund Trustee/
Held with Length Complex Directorships
Name, Birth Date Trust/ of Time Principal Occupation(s) During Overseen by Held by
and Address Portfolio Served Past 5 Years Trustee^ Trustee
- -----------------------------------------------------------------------------------------------------------------------
Victor R. Siclari Assistant Since Assistant Secretary of the N/A N/A
Birth Date: Secretary 2002 Trust, BBH Prime Institutional
November 17, 1961 Money Market Fund, Inc., BBH
1001 Liberty Avenue Common Settlement II Fund,
Pittsburgh, PA Inc., BBH Fund, Inc. and the
15222-3779 BBH U.S. Money Market
Portfolio (since August 2002);
Partner, ReedSmith, LLP (since
October 2002); Vice President
(March 1996-September 2002)
and Senior Corporate Counsel
(July 1998-September 2002) of
Federated Investors, Inc.
Nancy D. Osborn Assistant Since Assistant Secretary of the N/A N/A
Birth Date: Secretary 2002 Trust, BBH Prime Institutional
May 4, 1966 Money Market Fund, Inc., BBH
140 Broadway Common Settlement II Fund,
New York, NY 10005 Inc., BBH Fund, Inc. and BBH
U.S. Money Market Portfolio
(since August 2002); Assistant
Vice President (since April
2003) and Associate (April
1996-March 2003) of BBH & Co.
John C. Smith Assistant Since Assistant Treasurer of the N/A N/A
Birth Date: Treasurer 2002 Trust, BBH Prime Institutional
August 2, 1965 Money Market Fund, Inc., BBH
50 Milk Street Common Settlement II Fund,
Boston, MA 02109 Inc., BBH Fund, Inc. and BBH
U.S. Money Market Portfolio
(since August 2002); Assistant
Vice President (since
September 2001), Associate
(September 2000-August 2001)
and Senior Analyst (June
1999-August 2000) of BBH & Co.
FINANCIAL STATEMENT JUNE 30, 2004
23
TRUSTEES AND OFFICERS OF BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
(unaudited)
Number of
Term of Funds/
Office# Portfolio in Other
Position(s) and Fund Trustee/
Held with Length Complex Directorships
Name, Birth Date Trust/ of Time Principal Occupation(s) During Overseen byHeld by
and Address
Portfolio Served Past 5 Years Trustee^ Trustee
- -----------------------------------------------------------------------------------------------------------------------
Gregory V. Lomakin Assistant Since Assistant Treasurer of the N/A N/A
Birth Date: Treasurer 2002 Trust, BBH Prime Institutional
February 23, 1965 Money Market Fund, Inc., BBH
50 Milk Street Common Settlement II Fund,
Boston, MA 02109 Inc., BBH Fund, Inc. and BBH
U.S. Money Market Portfolio
(since August 2002); Vice
President (since April 2003),
Assistant Vice President
(April 2001-March 2003), and
Associate (May 1992-March
2001) of BBH & Co.
- ----------
# 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, BBH Prime Institutional Money
Market Fund, Inc., BBH Common Settlement II Fund, Inc., BBH Fund, Inc. and
BBH U.S. Money Market Portfolio. The Trust has four series, and BBH Fund,
Inc. has four series.
24
Investment Adviser and Administrator
Brown Brothers Harriman
140 Broadway
New York, NY 10005
Distributor
Edgewood Services, Inc.
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Shareholder Servicing Agent
Brown Brothers Harriman
140 Broadway
New York, NY 10005
(800) 625-5759
To obtain information or make shareholder inquiries:
By telephone: Call 1-800-575-1265
By E-mail send your request to: bbhfunds@bbh.com
On the internet: www.bbhfunds.com
This report is submitted for the general information of shareholders and is not
authorized for distribution to prospective investors unless preceded or
accompanied by an effective prospectus. Nothing herein contained is to be
considered an offer of sale or a solicitation of an offer to buy shares of the
Fund. Such offering is made only by the prospectus, which includes details as to
offering price and other material information.
A copy of the Fund's Proxy Voting Policy is available upon request by calling
the toll-free number listed above. A text-only version of the policy can be
viewed online or downloaded from the SEC at www.sec.gov.
[LOGO] Brown Brothers Harriman
ITEM 2. CODE OF ETHICS.
(a) As of June 30, 2004 the registrant has adopted a code of ethics that
applies to the principle executive officer, principle financial officer,
and principle accounting officer.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
a) The Trust's board has designated two members
of the audit committee as
financial experts.
b) The independent audit committee members
Arthur Miltenberger and David Feldman
are the designated audit committee financial experts.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
a) Disclosure of the aggregate fees billed for each of the last two fiscal
years for professional services rendered for the audit of the annual
financial statements or services that are normally provided with
statutory and regulatory filings or engagements for those fiscal
years.
Audit Fee Security Count Fee Total Billed
June 30, 2004 $ 62,800 0 $ 62,800
March 31, 2004 0 $ 4,500 4,500
October 31, 2003 0 5,100 5,100
August 29, 2003 0 4,500 4,500
June 30, 2003 70,150 0 70,150
March 31, 2003 0 4,500 4,500
October 31, 2002 0 4,500 4,500
September 30, 2002 0 4,500 4,500
======================================================================
Total $ 132,950 $ 27,600$ $ 160,550
b) Disclosure of other fees assurance and related services fees billed
in the last two fiscal years that are reasonably related to the
performance of the audit and are not reported in (a).
NONE
c) Disclosure of fees billed in the last two fiscal years for tax
advice, tax compliance and tax planning.
Tax Compliance Total Billed
June 30, 2004 $ 12,000 $ 12,000
June 30, 2003 12,000 12,000
Total $ 24,000 $ 24,000
d) Disclosure of all other fees billed in the last two fiscal years.
NONE
e) 1.) AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
Audit services provided by the Funds' auditors (the "Auditors")
on behalf of the Funds shall be pre-approved of the entire audit
committee.
Non-audit services provided by the Auditors on behalf of the
Funds shall be pre-approved by the Audit Committee, except that
such services may be pre-approved solely by the chairman of the
Audit Committee if the fee for such services does not exceed
$5,000 per Fund.
Non-audit services performed by the Auditors on behalf of BBH&Co.
and that requires pre-approval shall be pre-approved by the Audit
Committee, except that such services may be pre-approved solely by
the chairman of the Audit Committee if the fees for such services
do not exceed $15,000.
f) If greater than 50 percent, disclosure of the percentage of hours expended
on principal accountant's engagement to audit the registrants financial
statements for the most recent fiscal year that were attributed to work
performed by persons other than the principle accountants'
full-time, permanent employees.
NONE
g) Disclosure of non-audit fees billed by the registrant's accountant
to the registrant and rendered to the registrant's investment adviser,
and any entity controlling, controlled by, or under common control,
with the adviser that provides ongoing services to the registrant
for each of the last two fiscal years of the registrant.
AIMR Work $ 95,000
Aetna Claims Review 59,991
Sarbanes-Oxley Review 16,000
Miscellaneous 9,700
h) Disclosure of whether the registrant's audit committee of the board
of directors has considered whether the provision of the non-audit services
that were rendered to the registrant's investment adviser and any entity
controlling, controlled by, or under common control, with the adviser that
provides ongoing services to the registrant that were not approved pursuant
to (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining
the principle accountant's independence.
The audit committee of the board of directors has considered whether the
provision of the non-audit services that were rendered to the registrant's
investment adviser and any entity controlling, controlled by, or under
common control, with the adviser that provides ongoing services to the
registrant that were not approved pursuant to (c)(7)(ii) of Rule 2-01
of Regulation S-X is compatible with maintaining the principle
accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
(a) The Trust has a separately designated audit committee. The members of
the audit committee are: Eugene P. Beard ,Richard Carpenter,
David P. Feldman, J. Angus Ivory, Alan G. Lowy and Arthur D. Miltenberger,
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable all series of the Trust are open end
management investment companies.
ITEM 8. [RESERVED]
ITEM 9. 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 could significantly affect these controls subsequent
to the date of their evaluation.
ITEM 10. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: A copy of
the code of ethics is available and can be mailed, free of charge, to
anyone by calling (800) 575-1265.
(b) 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): Attached hereto.
[If the report is filed under Section 13(a) or 15(d) of the Exchange Act,
provide the certifications required by Rule 30a-2(b) under the Act (17 CFR
270.30a-2(b)) and Section 1350 of Chapter 63 of Title 18 of the United
States Code (18 U.S.C. 1350) as an exhibit. A certification furnished
pursuant to this paragraph will not be deemed "filed" for the purposes of
Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the
liability of that section. Such certification will not be deemed to be
incorporated by reference into any filing under the Securities Act of 1933
or the Exchange Act, except to the extent that the registrant specifically
incorporates it by reference: Attached hereto.][The submission of Section
906 certifications has been proposed by the SEC, but has not yet been
finalized. The SEC has encouraged issuers to submit Section 906
certifications as an exhibit to Form N-CSR until the final rule has been
adopted. Please see Proposed Rule: Certification of Disclosure in Certain
Exchange Act Reports, Release No. 33-8212 (March 21, 2003)].
I, John A. Nielsen, certify that:
1. I have reviewed this report on Form N-CSR of BBH Trust on
behalf of: BBH Money Market Fund, BBH U.S. Treasury Money Fund,
BBH Tax Free Short/Intermediate Fixed income 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-2(c) under the Investment Company Act of 1940) for
the registrant and have:
a. designed such disclosure controls and procedures 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. evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date
of this report (the "Evaluation Date"); and
c. presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures based on our evaluation as of
the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of the registrant's board of trustees (or persons
performing the equivalent functions):
a. all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize, and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: September 7, 2004
/s/ John A. Nielsen
______________________________________
John A. Nielsen
President - Principal Executive Officer
I, Michael D. Martins, certify that:
1. I have reviewed this report on Form N-CSR of BBH Trust on
behalf of: BBH Money Market Fund, BBH U.S. Treasury Money Fund,
BBH Tax Free Short/Intermediate Fixed income 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-2(c) under the Investment Company Act of 1940) for the
registrant and have:
a. designed such disclosure controls and procedures 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. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this report (the "Evaluation Date"); and
c. presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of trustees (or persons performing
the equivalent functions):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize, and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: September 7, 2004
/s/Michael D. Martins
_______________________________________
Michael D. Martins
Treasurer - Principal Financial Officer
SECTION 906 CERTIFICATION
Pursuant to 18 U.S.C.ss. 1350, the undersigned officers of BBH Trust on
behalf of: BBH Money Market Fund, BBH U.S. Treasury Money Fund, BBH Tax
Free Short/Intermediate Fixed income Fund and BBH Tax Exempt Money Fund
("registrant"), hereby certify, to the best of our knowledge, that the
Registrant's Report on Form N-CSR for the period ended 12/31/03
(the "Report") fully
complies with the requirements of Section 13(a) or 15(d),
as applicable, of the Securities and 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.
Dated: September 7, 2004
/s/John A. Nielsen
____________________________________________
John A. Nielsen
Title: President, Principal Executive Officer
Dated: September 7, 2004
/s/Michael D. Martins
____________________________________________
Michael D. Martins
Title: 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.
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. Nielsen
-----------------------------------------------------
John A. Nielsen, President
(Principle Executive Officer)Date: September 7, 2004
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/ Michael D. Martins
------------------------------------------------------
Michael D. Martins, Treasurer
(Principal Financial Officer)
Date: September 7, 2004
* Print name and title of each signing officer under his or her signature.
BBH Trust June 30, 2004 NCSR
Trust June 30, 2004 NCSR page 108