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 Free 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:
Nancy D. Osborn
BBH Trust, 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: 06/30/06
Date of reporting period: 07/01/05-06/30/06
ITEM 1 - Attach shareholder report
BROWN [LOGO]
BROTHERS
HARRIMAN
Annual Report
June 30, 2006
BBH MONEY MARKET FUND
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2006
ASSETS:
Investment in BBH U.S. Money Market Portfolio
(the "Portfolio"), at value ............................ $1,507,093,673
--------------
Total Assets ......................................... 1,507,093,673
--------------
LIABILITIES:
Payables for:
Shareholder servicing fees ............................. 623,080
Dividends declared ..................................... 564,212
Administrative fees .................................... 236,771
Professional fees ...................................... 29,733
Board of Trustees' fees ................................ 19,000
Accounting fees ........................................ 5,333
Accrued expenses and other liabilities ................... 53,953
--------------
Total Liabilities .................................... 1,532,082
--------------
NET ASSETS, for 1,505,561,591 fund shares outstanding ....... $1,505,561,591
==============
Net Assets Consist of:
Par value ................................................ $ 15,055,616
Paid-in capital in excess of par ......................... 1,490,505,975
--------------
Net Assets .................................................. $1,505,561,591
==============
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
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STATEMENT OF OPERATIONS
For the year ended June 30, 2006
INVESTMENT INCOME:
Interest income allocated from Portfolio .................... $58,111,766
Expenses allocated from Portfolio ........................... (2,224,403)
-----------
Net Investment Income allocated from Portfolio ............ 55,887,363
-----------
Expenses:
Shareholder servicing fees .................................. 3,391,767
Administrative fees ......................................... 1,288,871
Board of Trustees' fees ..................................... 70,139
Professional fees ........................................... 30,322
Accounting fees ............................................. 7,999
Miscellaneous expenses ...................................... 176,504
-----------
Total Expenses ............................................ 4,965,602
-----------
Net Investment Income .......................................... $50,921,761
===========
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2006 3
BBH MONEY MARKET FUND
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STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30,
----------------------------------
2006 2005
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS:
From Operations:
Net investment income ............... $ 50,921,761 $ 23,193,048
Dividends declared from net
investment income ................... (50,921,761) (23,193,048)
--------------- ---------------
From Fund Share (Principal)
Transactions
at Net Asset Value of $1.00
per share:
Fund shares sold .................. 1,839,355,983 4,013,587,731
Fund shares issued in
reinvestment of dividends ....... 26,060,096 11,386,843
Fund shares repurchased ........... (1,617,946,361) (4,141,684,337)
--------------- ---------------
Net increase (decrease) in net assets
resulting from fund share
transactions ........................ 247,469,718 (116,709,763)
NET ASSETS:
Beginning of year ..................... 1,258,091,873 1,374,801,636
--------------- ---------------
End of year ........................... $ 1,505,561,591 $ 1,258,091,873
=============== ===============
The accompanying notes are an integral part of these financial statements.
4
BBH MONEY MARKET FUND
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FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding throughout each year
For the years ended June 30,
-----------------------------------------------
2006 2005 2004 2003 2002
---- ---- ---- ---- ----
Net asset value, beginning of year ........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income ..................................... 0.04 0.01 0.01 0.01 0.02
Dividends to shareholders from net investment income ......... (0.04) (0.01) (0.01) (0.01) (0.02)
----- ----- ----- ----- -----
Net asset value, end of year ................................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
Total return ................................................. 3.76% 1.72% 0.59% 1.06% 2.10%
Ratios/ Supplemental data1:
Net assets, end of year
(in millions) ............................................. $1,506 $1,258 $1,375 $1,459 $1,382
Ratio of expenses to average
net assets .............................................. 0.53% 0.52% 0.52% 0.52% 0.51%
Ratio of net investment income to
average net assets ...................................... 3.75% 1.70% 0.59% 1.05% 2.08%
- ----------
1 Ratios include the Fund's share of Portfolio income, expenses paid by the
Portfolio and the Portfolio's expense offset arrangement, as appropriate.
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2006 5
BBH MONEY MARKET FUND
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NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006
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, 2006, 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 59% at June 30, 2006). 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
substantially 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.
E. Accounting Development. In June 2006, Financial Accounting Standards
Board Interpretation No. 48, Accounting for Uncertainty in Income
Taxes - an interpretation of FASB Statement 109 (FIN 48) was issued
and is effective for fiscal years beginning after December 15, 2006.
FIN 48 sets forth a threshold for financial statement recognition,
measurement and disclosure of a tax position taken or expected to be
taken on a tax return. While not expected to have a material impact
on the Fund's financial statements, management will be evaluating
the impact, if any, the adoption of FIN 48 will have on the Fund's
net assets and results of operations.
6
BBH MONEY MARKET FUND
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NOTES TO FINANCIAL STATEMENTS (continued)
JUNE 30, 2006
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 of
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, 2006, the Fund incurred $1,288,871 for administrative
services.
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 of
0.25% of the Fund's average daily net assets. For the year ended June 30,
2006, the Fund incurred $3,391,767 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, 2006, the Fund incurred $70,139 for Trustees' fees.
Accounting Fees. The Fund has an accounting agreement with BBH for which
BBH receives a fee from the Fund calculated daily and paid monthly. For
the year ended June 30, 2006, the Fund incurred $7,999 for accounting
services.
FINANCIAL STATEMENT JUNE 30, 2006 7
BBH MONEY MARKET FUND
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the 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, 2006, and
the related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. 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, 2006, 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 25, 2006
8
BBH MONEY MARKET FUND
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DISCLOSURE OF FUND EXPENSES
June 30, 2006 (unaudited)
EXAMPLE
As a shareholder of BBH Money Market Fund (the "Fund"), you may incur two types
of costs: (1) transaction costs on purchase payments, reinvested dividends, or
other distributions; and exchange fees; and (2) ongoing costs, including
management fees; and other Fund expenses. This Example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (January 1, 2006 to June 30, 2006).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use information in this line, together with
the amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading entitled "Expenses Paid During the Period" to estimate
the expenses you paid on your account during the period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid
during the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees or exchange fees. Therefore, the second line of the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would have been higher.
Expenses Paid
Beginning Ending During Period
Account Value Account Value January 1, 2006
January 1, 2006 June 30, 2006 to June 30, 2006(1)
--------------- ------------- -----------------
Actual................... $1,000 $1,021.00 $2.66
Hypothetical(2).......... $1,000 $1,022.17 $2.66
- ----------
1 Expenses are equal to the Fund's annualized expense ratio of 0.53%,
multiplied by the average account value over the period, multiplied by
181/365 (to reflect the one-half year period).
2 Assumes a return of 5% before expenses. For the purpose of the
calculation, the applicable annualized expense ratio is subtracted from
the assumed return before expenses.
FINANCIAL STATEMENT JUNE 30, 2006 9
BBH U.S. MONEY MARKET PORTFOLIO
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PORTFOLIO ALLOCATION
June 30, 2006 (unaudited)
(expressed in U.S. dollars)
BREAKDOWN BY SECURITY TYPE
Percent of
U.S. $ Value Net Assets
--------------- ---------------
Asset Backed Securities .................. $ 75,909,424 3.0%
Certificates of Deposit .................. 168,868,799 6.6
Commercial Paper ......................... 1,206,815,562 46.9
Corporate Bonds .......................... 552,618,866 21.5
Municipal Bonds .......................... 192,985,000 7.5
U.S. Government Agency Obligation ........ 99,995,310 3.9
Time Deposits ............................ 266,000,000 10.3
Other Assets in Excess of Liabilities .... 8,007,309 0.3
--------------- ---------------
Net Assets ............................... $ 2,571,200,270 100.0%
=============== ===============
All data as of June 30, 2006. The fund's breakdown by security type is
expressed as a percentage of net assets and may vary over time.
The accompanying notes are an integral part of these financial statements.
10
BBH U.S. MONEY MARKET PORTFOLIO
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PORTFOLIO OF INVESTMENTS
June 30, 2006 (expressed in U.S. dollars)
Principal Maturity Interest
Amount Date Rate Value
----------- -------- --------- ------------
ASSET BACKED SECURITIES (3.0%)
$ 6,444,733 AmeriCredit Automobile Receivables Trust 2006-1 .................. 03/06/07 4.780% $ 6,444,733
4,791,325 Capital Auto Receivable Asset Trust 2003-11 ...................... 04/16/07 5.289 4,792,440
18,863,659 CIT Equipment Collateral Series 2006-VT1 ......................... 03/20/07 4.990 18,834,408
1,328,711 Ford Credit Auto Owner Trust 2006-A .............................. 11/15/06 4.725 1,328,711
25,000,000 Household Automotive Trust 2006-1 ................................ 06/18/07 5.276 24,987,376
869,117 Hyundai Auto Receivables Trust 2006-A ............................ 03/15/07 4.838 869,117
7,141,020 Nissan Auto Receivables Owner Trust 2006-A ....................... 02/15/07 4.663 7,141,020
1,348,074 Triad Auto Receivables Owners Trust 2006-A ....................... 02/12/07 4.574 1,348,074
571,873 USAA Auto Owner Trust 2005-3 ..................................... 11/09/06 4.170 571,668
9,591,877 USAA Auto Owner Trust 2006-1 ..................................... 03/15/07 4.755 9,591,877
--------------
Total Asset Backed Securities..................................... 75,909,424
--------------
CERTIFICATES OF DEPOSIT (6.6%)
9,000,000 BNP Paribas ...................................................... 10/25/06 4.760 8,983,605
25,000,000 Citizens Bank .................................................... 07/10/06 5.150 25,000,000
25,000,000 Deutsche Bank AG ................................................. 07/25/06 4.065 24,999,903
10,000,000 HBOS Treasury .................................................... 06/04/07 5.380 9,969,683
25,000,000 M&I Marshall & Ilsley Bank ....................................... 08/10/06 5.120 25,000,274
25,000,000 Toronto Dominion ................................................. 04/13/07 5.300 24,921,831
25,000,000 Washington Mutual, Inc. .......................................... 08/08/06 5.100 25,000,000
25,000,000 Washington Mutual, Inc. .......................................... 12/04/06 5.290 24,993,503
--------------
Total Certificates of Deposit..................................... 168,868,799
--------------
COMMERCIAL PAPER (46.9%)
28,500,000 ANZ National ..................................................... 08/07/06 5.290 28,345,047
50,000,000 Bank of America Corp. ............................................ 08/04/06 5.005 49,763,653
50,000,000 Barclays US Funding .............................................. 08/15/06 5.055 49,684,062
50,000,000 Bear Stearns & Co., Inc. ......................................... 07/03/06 5.300 49,985,278
50,000,000 Bear Stearns & Co., Inc. ......................................... 10/24/06 4.883 50,000,000
25,000,000 Beta Financial Group, Inc. ....................................... 07/14/06 4.930 24,955,493
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2006 11
BBH U.S. MONEY MARKET PORTFOLIO
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PORTFOLIO OF INVESTMENTS (continued)
June 30, 2006 (expressed in U.S. dollars)
Principal Maturity Interest
Amount Date Rate Value
----------- -------- --------- ------------
COMMERCIAL PAPER (continued)
$ 25,000,000 Beta Financial Group, Inc. ....................................... 08/31/06 5.110% $ 24,783,535
25,000,000 Blue Spice LLC ................................................... 08/08/06 5.040 24,867,000
25,000,000 Blue Spice LLC ................................................... 08/21/06 5.250 24,814,062
100,000,000 BMW U.S. Capital LLC ............................................. 07/05/06 5.270 99,941,445
50,000,000 CC USA, Inc. ..................................................... 08/14/06 5.090 49,688,944
3,000,000 CC USA, Inc. ..................................................... 09/29/06 5.160 2,961,300
25,000,000 Citigroup Holdings ............................................... 09/05/06 5.290 24,757,542
7,250,000 City of Chicago, Illinois ........................................ 08/01/06 5.100 7,218,160
43,550,000 Columbia University .............................................. 08/10/06 5.100 43,303,217
25,000,000 Credit Suisse .................................................... 08/16/06 5.260 24,831,972
18,100,000 FPL Group Capital ................................................ 07/06/06 5.350 18,086,551
25,000,000 General Electric Capital Corp. ................................... 08/22/06 5.080 24,816,555
25,000,000 General Electric ................................................. 08/15/06 5.240 24,836,250
40,000,000 HBOS Treasury .................................................... 07/14/06 4.935 39,928,717
50,000,000 HSBC Americas, Inc. .............................................. 08/07/06 5.270 49,729,180
25,000,000 ING US Fund ...................................................... 08/08/06 5.230 24,861,986
25,000,000 ING US Funding ................................................... 07/25/06 5.000 24,916,667
25,000,000 Istituto Bancario ................................................ 09/29/06 5.070 24,994,480
50,000,000 Kittyhawk Funding Corp. .......................................... 08/04/06 5.230 49,753,028
50,000,000 Koch Resources LLC ............................................... 07/05/06 5.050 49,971,944
42,425,000 National Rural Utilities Cooperative Finance Corp. ............... 08/08/06 5.270 42,188,999
25,000,000 Nationwide Building .............................................. 08/04/06 5.060 24,880,528
14,538,000 Power Authority of State of New York ............................. 07/06/06 5.020 14,527,864
10,000,000 Rights of University of California ............................... 09/07/06 5.140 9,902,911
4,000,000 Salvation Army ................................................... 07/28/06 5.400 4,000,000
8,800,000 Societe Generale ................................................. 08/04/06 5.280 8,756,117
16,200,000 Societe Generale ................................................. 08/15/06 5.240 16,093,890
25,100,000 Southern Company Funding ......................................... 07/14/06 5.280 25,052,143
50,000,000 Three Rivers Funding Corp. ....................................... 07/26/06 5.000 49,826,389
50,000,000 UBS Finance ...................................................... 07/27/06 5.005 49,819,264
50,000,000 Variable Funding Capital Corp. ................................... 07/05/06 5.150 49,971,389
--------------
Total Commercial Paper............................................ 1,206,815,562
--------------
The accompanying notes are an integral part of these financial statements.
12
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2006 (expressed in U.S. dollars)
Principal Maturity Interest
Amount Date Rate Value
----------- -------- --------- ------------
CORPORATE BONDS (21.5%)
$ 2,000,000 Alabama Power Co.(1) ............................................. 04/23/07 5.340% $ 2,003,750
25,000,000 American Express Bank(1) ......................................... 03/12/07 5.150 25,002,674
8,380,000 American Express Bank(1) ......................................... 11/22/06 5.324 8,381,909
4,050,000 Bank One Corp.(1) ................................................ 09/15/06 5.439 4,050,927
25,000,000 Canadian Imperial Bank of Commerce(1)............................. 04/27/07 5.170 25,018,082
15,000,000 CIT Group, Inc.(1) ............................................... 08/31/06 5.377 15,002,751
7,425,000 CIT Group, Inc.(1) ............................................... 09/22/06 5.837 7,431,817
14,850,000 Citigroup Global Markets Holdings, Inc.(1) ....................... 03/16/07 5.411 14,859,640
25,000,000 Comerica Bank .................................................... 07/20/07 5.055 24,993,665
25,000,000 Credit Suisse, New York(1) ....................................... 09/26/06 5.430 25,000,048
1,000,000 General Electric Capital Corp.(1) ................................ 09/18/06 5.526 1,000,226
2,000,000 Goldman Sachs Group, Inc.(1) ..................................... 07/28/06 5.266 2,000,242
25,000,000 Goldman Sachs Group, Inc.(1) ..................................... 10/27/06 5.280 25,016,559
23,000,000 Goldman Sachs Group, Inc.(1) ..................................... 03/30/07 5.060 23,019,481
25,000,000 International Business Machines Corp.(1) ......................... 06/28/07 5.490 25,006,333
31,831,000 JPMorgan Chase & Co. ............................................. 08/15/06 5.625 31,889,154
8,000,000 M&I Marshall & Ilsley Bank(1) .................................... 03/30/07 5.499 8,000,305
15,000,000 Merrill Lynch & Co., Inc.(1) ..................................... 02/27/07 5.345 15,013,821
7,000,000 Merrill Lynch & Co., Inc.(1) ..................................... 09/18/06 5.596 7,003,241
25,000,000 Merrill Lynch & Co., Inc.(1) ..................................... 05/14/07 5.149 25,000,000
25,000,000 Morgan Stanley(1) ................................................ 01/19/07 5.295 25,013,430
25,000,000 National City Bank of Kentucky ................................... 02/08/07 5.150 25,003,848
20,000,000 NGSP, Inc.(1) .................................................... 06/01/46 5.200 20,000,000
5,000,000 PNC Bank NA(1) ................................................... 01/29/07 5.320 4,999,553
17,000,000 PNC Funding Corp. ................................................ 08/01/06 5.750 17,005,629
25,245,000 Prudential Insurance Co. ......................................... 07/23/06 6.375 25,279,794
6,500,000 Royal Bank of Scotland, Plc.(1) .................................. 11/24/06 5.218 6,500,701
35,000,000 SLM Corp.(1) ..................................................... 09/15/06 5.529 35,013,920
2,100,000 Suntrust Bank(1) ................................................. 03/19/07 5.456 2,101,299
47,000,000 US Bank NA(1) .................................................... 09/29/06 5.470 47,000,478
10,000,000 US Trust Company, New York(1) .................................... 09/12/06 5.220 10,000,689
20,000,000 Wells Fargo Bank(1) .............................................. 09/15/06 5.419 20,004,900
--------------
Total Corporate Bonds............................................. 552,618,866
--------------
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2006 13
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2006 (expressed in U.S. dollars)
Principal Maturity Interest
Amount Date Rate Value
----------- -------- --------- ------------
MUNICIPAL BONDS (7.5%)
$ 15,000,000 Baltimore, Maryland, Project Revenue(1) .......................... 07/06/06 5.360% $ 15,000,000
4,000,000 Baltimore, Maryland(1) ........................................... 07/06/06 5.360 4,000,000
4,000,000 Connecticut Housing Finance Authority(1) ......................... 07/06/06 5.300 4,000,000
19,600,000 Florida Housing Finance Corp.(1) ................................. 07/06/06 5.360 19,600,000
25,000,000 Florida Housing Finance Corp.(1) ................................. 07/06/06 5.370 25,000,000
2,000,000 Jacksonville, Florida, Economic Development Commission(1) ........ 07/06/06 5.360 2,000,000
2,400,000 Laguna Development Corp.(1) ...................................... 07/06/06 5.380 2,400,000
35,700,000 Los Angeles Department of Water & Power Revenue(1) ............... 07/06/06 5.310 35,700,000
3,800,000 Massachusetts State Port Authority(1) ............................ 07/05/06 5.430 3,800,000
4,585,000 Massachusetts Housing Finance Agency(1) .......................... 07/06/06 5.380 4,585,000
49,700,000 New York, New York(1) ............................................ 07/05/06 5.360 49,700,000
25,000,000 North Texas Higher Education Authority ........................... 07/05/06 5.360 25,000,000
2,200,000 Texas State(1) ................................................... 07/05/06 5.350 2,200,000
--------------
Total Municipal Bonds............................................. 192,985,000
--------------
U.S. GOVERNMENT AGENCY OBLIGATION (3.9%)
100,000,000 Federal Home Loan Bank(1) ........................................ 08/02/06 5.039 99,995,310
--------------
TIME DEPOSITS (10.3%)
66,000,000 BNP Paribas ...................................................... 07/03/06 5.270 66,000,000
100,000,000 Dresdner Bank .................................................... 07/03/06 5.280 100,000,000
50,000,000 ING Bank ......................................................... 07/03/06 5.290 50,000,000
50,000,000 Societe Generale ................................................. 07/03/06 5.280 50,000,000
--------------
Total Time Deposits............................................... 266,000,000
--------------
TOTAL INVESTMENTS AT AMORTIZED COST.................................................. 99.7% $2,563,192,961
OTHER ASSETS IN EXCESS OF LIABILITIES................................................ 0.3 8,007,309
----- --------------
NET ASSETS........................................................................... 100.0% $2,571,200,270
===== ==============
- ----------
1 Variable rate instrument. Interest rates change on specific dates (such as
a coupon or interest rate payment date). The yield shown represents the
June 30, 2006 coupon or interest rate.
The accompanying notes are an integral part of these financial statements.
14
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2006 (expressed in U.S. dollars)
ASSETS:
Investments, at amortized cost ........................... $2,563,192,961
Cash ..................................................... 245,796
Interest receivable ...................................... 8,673,769
--------------
Total Assets ........................................... 2,572,112,526
--------------
LIABILITIES:
Payables for:
Investment advisory fees ............................... 440,150
Custody and accounting fees ............................ 265,344
Administrative fees .................................... 154,052
Professional fees ...................................... 31,433
Board of Trustees' fees ................................ 9,278
Accrued expenses and other liabilities ................... 11,999
--------------
Total Liabilities ...................................... 912,256
--------------
NET ASSETS .................................................. $2,571,200,270
==============
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2006 15
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the year ended June 30, 2006 (expressed in U.S. dollars)
NET INVESTMENT INCOME:
Income:
Interest .................................................... $112,121,402
------------
Expenses:
Investment advisory fees .................................... 2,662,381
Administrative fees ......................................... 931,833
Custody and accounting fees ................................. 461,693
Board of Trustees' fees ..................................... 36,705
Miscellaneous expenses ...................................... 251,326
------------
Total Expenses ............................................ 4,343,938
Expense offset arrangement ................................ (8,371)
------------
Net Expenses .............................................. 4,335,567
------------
Net Investment Income ......................................... $107,785,835
============
The accompanying notes are an integral part of these financial statements.
16
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (expressed in U.S. dollars)
For the years ended June 30,
2006 2005
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS:
From Operations:
Net investment income ........ $ 107,785,835 $ 62,265,463
--------------- ---------------
Capital Transactions:
Proceeds from contributions .. 4,531,857,516 7,990,156,859
Value of withdrawals ......... (4,572,494,305) (8,419,532,606)
--------------- ---------------
Net decrease in net assets
resulting from capital
transactions ............. (40,636,789) (429,375,747)
--------------- ---------------
Total increase (decrease) in
net assets ............... 67,149,046 (367,110,284)
NET ASSETS:
Beginning of year .............. 2,504,051,224 2,871,161,508
--------------- ---------------
End of year .................... $ 2,571,200,270 $ 2,504,051,224
=============== ===============
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2006 17
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (expressed in U.S. dollars)
For the years ended June 30,
------------------------------------------------
2006 2005 2004 2003 2002
---- ---- ---- ---- ----
Total return ................................................. 4.13% 2.17% 0.99% 1.44% 2.47%
Ratios/Supplemental data:
Net assets, end of year (in millions) ..................... $2,571 $2,504 $2,871 $3,422 $2,874
Expenses as a percentage of average net assets:
Net expenses paid by Portfolio .......................... 0.16% 0.16% 0.16% 0.15% 0.16%
Expense offset arrangement .............................. 0.00%(1) 0.00%(1) 0.00%(1) 0.00%(1) 0.00%(1)
------ ------ ------ ------ ------
Total expenses ........................................ 0.16% 0.16% 0.16% 0.15% 0.16%
====== ====== ====== ====== ======
Ratio of net investment income to average net assets ...... 4.05% 2.05% 0.95% 1.40% 2.39%
- ----------
1 Amount is less than 0.01%.
The accompanying notes are an integral part of these financial statements.
18
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
June 30, 2006 (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. Investment Transactions and Income. 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. 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, 2006, the cost of investments for federal income tax
purposes was equal to the amortized cost of the investments for
financial statement purposes.
D. Repurchase Agreements. The Portfolio may enter into repurchase
agreements with primary dealers of U.S. Government Obligations as
designated by the Federal Reserve Bank of New York. Repurchase
agreements are transactions in which the Portfolio buys a security
from a dealer or bank and agrees to sell the security back at a
mutually agreed upon time and price. The repurchase price exceeds
the sale price, reflecting the Portfolio's return on the transaction
or effectively the interest rate paid by the dealer to the
Portfolio. This return is unrelated to the interest rate on the
underlying security. The Portfolio will enter into repurchase
agreements only with banks and other recognized financial
institutions, such as securities dealers, deemed creditworthy by the
Investment Adviser. The Portfolio's custodian or sub-custodian will
take possession of the securities subject to repurchase agreements.
The Investment Adviser or sub-custodian will monitor the value of
the underlying security each day to ensure that the value of the
security always equals or exceeds the repurchase price. Repurchase
agreements are subject to credit risks. At June 30, 2006, the
Portfolio had no open repurchase agreements.
FINANCIAL STATEMENT JUNE 30, 2006 19
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2006 (expressed in U.S. dollars)
E. Accounting Development. In June 2006, Financial Accounting Standards
Board Interpretation No. 48, Accounting for Uncertainty in Income
Taxes - an interpretation of FASB Statement 109 (FIN 48) was issued
and is effective for fiscal years beginning after December 15, 2006.
FIN 48 sets forth a threshold for financial statement recognition,
measurement and disclosure of a tax position taken or expected to be
taken on a tax return. While not expected to have a material impact
on the Fund's financial statements, management will be evaluating
the impact, if any, the adoption of FIN 48 will have on the Fund's
net assets and results of operations.
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 of 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, 2006, the Portfolio incurred $2,662,381 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 from the Fund calculated daily and paid monthly at an annual
rate of 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, 2006, the Portfolio incurred $931,833 for administrative
services.
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, 2006, the Portfolio incurred $36,705 for the
Trustees' fees.
Custody and Accounting Fees. BBH acts as a custodian and receives a
custody and accounting fee from the Fund calculated daily and paid
monthly. The custody fee is a transaction based fee with an annual minimum
of $20,000, and the accounting fee is calculated at 0.01% per annum on the
first $1 billion of net assets and 0.005% per annum on all net assets over
$1 billion. For the year ended June 30, 2006, the Portfolio incurred
$461,693 for custody and accounting services. These fees were reduced by
$8,371 as a result of an expense offset arrangement with the Portfolio's
custodian. In the event that the Portfolio is overdrawn, under the custody
agreement with BBH, BBH will make overnight loans to the Portfolio to
cover overdrafts. Pursuant to their agreement the Portfolio will be
charged interest based on LIBOR on the day of the overdraft plus one
percent. The total interest paid by the Fund for the year ended June 30,
2006 was $32,002.
20
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees 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, 2006, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The
Portfolio is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audits included consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Portfolio's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of June 30, 2006, by correspondence with the custodian.
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, 2006, 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 25, 2006
FINANCIAL STATEMENT JUNE 30, 2006 21
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
DISCLOSURE OF FUND EXPENSES
June 30, 2006 (unaudited) (expressed in U.S. dollars)
EXAMPLE
As a shareholder of BBH Money Market Portfolio (the "Portfolio"), you may incur
two types of costs: (1) transaction costs on purchase payments, reinvested
dividends, or other distributions; and exchange fees; and (2) ongoing costs,
including management fees; and other Portfolio expenses. This Example is
intended to help you understand your ongoing costs (in dollars) of investing in
the Portfolio and to compare these costs with the ongoing costs of investing in
other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (January 1, 2006 to June 30, 2006).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use information in this line, together with
the amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading entitled "Expenses Paid During the Period" to estimate
the expenses you paid on your account during the period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Portfolio's actual return. The hypothetical account values and expenses may
not be used to estimate the actual ending account balance or expenses you paid
during the period. You may use this information to compare the ongoing costs of
investing in the Portfolio and other funds. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees or exchange fees. Therefore, the second line of the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would have been higher.
Expenses Paid
Beginning Ending During Period
Account Value Account Value January 1, 2006
January 1, 2006 June 30, 2006 to June 30, 2006(1)
--------------- ------------- -------------------
Actual................... $1,000 $1,022.80 $0.80
Hypothetical(2).......... $1,000 $1,024.00 $0.80
- ----------
1 Expenses are equal to the Portfolio's annualized expense ratio of 0.16%,
multiplied by the average account value over the period, multiplied by
181/365 (to reflect the one-half year period).
2 Assumes a return of 5% before expenses. For the purpose of the
calculation, the applicable annualized expense ratio is subtracted from
the assumed return before expenses.
22
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 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/
Position(s) Length Complex Directorships
Name, Birth Date Held with of Time Principal Occupation(s) During Overseen by Held by
and Address Trust/Portfolio Served Past 5 Years Trustee^ Trustee
- ---------------------------------------------------------------------------------------------------------------------------
Directors
Joseph V. Shields, Jr. Chairman of the Since 1990 Managing Director, Chairman 10 None
Birth Date: March 17, 1938 Board and Trustee and Chief Executive Officer of
Shields & Company Shields & Company (member of
140 Broadway New York Stock Exchange);
New York, NY 10005 Chairman of Capital Management
Associates, Inc. (registered
investment adviser); Director
of Flowers Foods, Inc. (New
York Stock Exchange listed
company).
David P. Feldman Trustee Since 1990 Director of Jeffrey Co. (1992 10 Director of
Birth Date: November 16, 1939 to present); Director of QMED Dreyfus Mutual
P.O. Box 864 (1999 to present). Funds (59 Funds)
Carefree, AZ 85377
Arthur D. Miltenberger Trustee Since 1992 Retired; Trustee, R.K. Mellon 10 None
Birth Date: November 8, 1938 Family Trusts (1981-June
503 Darlington Road 2003); General Partner, Mellon
Ligonier, PA 15658 Family Investment Company IV,
V and VI (1983-2002); Director
of Aerostructures Corporation
(aircraft manufacturer)
(1996-July 2003).
Eugene P. Beard Trustee Since 1993 Chairman & CEO of Westport 10 Director of Old
Birth Date: March 17, 1935 Asset Funds, Inc. Westbury Funds (7)
River Park
800 Connecticut Avenue,
3 East
Norwalk, CT 06854
Alan G. Lowy Trustee Since 1993 Private Investor. 10 None
Birth Date: April 17, 1939
4111 Clear Valley Drive
Encino, CA 91436
FINANCIAL STATEMENT JUNE 30, 2006 23
TRUSTEES AND OFFICERS OF BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
(unaudited)
Number of
Term of Funds/
Office# Portfolio Other
and in Fund Trustee/
Position(s) Length Complex Directorships
Name, Birth Date Held with of Time Principal Occupation(s) During Overseen by Held by
and Address Trust/Portfolio Served Past 5 Years Trustee^ Trustee
- ---------------------------------------------------------------------------------------------------------------------------
Samuel F. Pryor, IV Trustee Since 2005 Private Investor. 10 None
Birth Date: June 12, 1955
130 East 67th Street
New York, NY 10021
Officers
John A. Nielsen President, Since 2004 President and Principal N/A N/A
Birth Date: July 15, 1943 Principal Executive Executive Officer of BBH
140 Broadway Officer Trust, BBH Prime Institutional
New York, NY 10005 Money Market 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.
Michael F. Hogan Chief Compliance Since 2004 Chief Compliance Officer to N/A N/A
Birth Date: January 26, 1963 Officer the BBH Trust, BBH Prime
50 Milk Street Institutional Money Market
Boston, MA 02109 Fund, Inc., BBH Fund, Inc. and
the BBH U.S. Money Market
Portfolio; Senior Vice
President of BBH & Co. since
September 1994; Joined BBH &
Co. in 1985.
Charles H. Schreiber Treasurer, Since 2006 Treasurer, Principal Financial N/A N/A
Birth Date: December 10, 1957 Principal Financial Officer and Anti Money
140 Broadway Officer, Anti Laundering Officer of BBH
New York, NY 10005 Money Laundering Trust, BBH Prime Institutional
Officer Money Market Fund, Inc., BBH
Fund, Inc. and BBH U.S. Money
Market Portfolio; Senior Vice
President of BBH & Co. since
September 2001; Joined BBH &
Co. in 1999.
24
TRUSTEES AND OFFICERS OF BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
(unaudited)
Number of
Term of Funds/
Office# Portfolio Other
and in Fund Trustee/
Position(s) Length Complex Directorships
Name, Birth Date Held with of Time Principal Occupation(s) During Overseen by Held by
and Address Trust/Portfolio Served Past 5 Years Trustee^ Trustee
- ---------------------------------------------------------------------------------------------------------------------------
Gail C. Jones Secretary Since 2002 Secretary of BBH Trust, BBH N/A N/A
Birth Date: Prime Institutional Money
October 26, 1953 Market Fund, Inc., BBH Fund,
1001 Liberty Avenue Inc. and BBH U.S. Money Market
Pittsburgh, PA 15222-3779 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.
Judith J. Mackin Vice President Since 2002 Vice President of BBH Trust, N/A N/A
Birth Date: May 30, 1960 BBH Prime Institutional Money
1001 Liberty Avenue Market Fund, Inc., BBH Fund,
Pittsburgh, PA 15222-3779 Inc. and BBH U.S. Money Market
Portfolio (since August 2002);
Vice President (since November
1997) of Federated Services
Company.
Victor Siclari Assistant Secretary Since 2002 Assistant Secretary of BBH N/A N/A
Birth Date: November 17, 1961 Trust, BBH Prime Institutional
1001 Liberty Avenue Money Market Fund, Inc., BBH
Pittsburgh, PA Fund, Inc. and BBH U.S. Money
15222-3779 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 BBH N/A N/A
Birth Date: May 4, 1966 Secretary, Trust, BBH Prime Institutional
140 Broadway Assistant Treasurer Money Market Fund, Inc., BBH
New York, NY 10005 Fund, Inc. and BBH U.S. Money
Market Portfolio (since August
2002); Assistant Vice
President of BBH & Co. since
2003. Joined BBH & Co. in
1996.
FINANCIAL STATEMENT JUNE 30, 2006 25
TRUSTEES AND OFFICERS OF BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
(unaudited)
Number of
Term of Funds/
Office# Portfolio Other
and in Fund Trustee/
Position(s) Length Complex Directorships
Name, Birth Date Held with of Time Principal Occupation(s) During Overseen by Held by
and Address Trust/Portfolio Served Past 5 Years Trustee^ Trustee
- ---------------------------------------------------------------------------------------------------------------------------
John C. Smith Assistant Treasurer Since 2002 Assistant Treasurer of BBH N/A N/A
Birth Date: August 2, 1965 Trust, BBH Prime Institutional
50 Milk Street Money Market Fund, Inc., BBH
Boston, MA 02109 Fund, Inc. and BBH U.S. Money
Market Portfolio (since August
2002); Vice President (since
September 2004), Assistant
Vice President (since
September 2001), Associate
(September 2000-August 2001)
and Senior Analyst (June
1999-August 2000) 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 Fund, Inc. and BBH U.S. Money Market Portfolio. BBH
Trust has four series, and BBH Fund, Inc. has four series each are counted
as one "fund" for the purposes of this table.
26
INVESTMENT ADVISER AND ADMINISTRATOR
BROWN BROTHERS HARRIMAN
140 BROADWAY
NEW YORK, NY 10005
DISTRIBUTOR
EDGEWOOD SERVICES, INC.
5800 CORPORATE DRIVE
PITTSBURGH, PA 15237-7000
SHAREHOLDER SERVICING AGENT
BROWN BROTHERS HARRIMAN
140 BROADWAY
NEW YORK, NY 10005 (800) 625-5759
To obtain information or make shareholder inquiries:
By telephone: Call 1-800-575-1265
By E-mail send your request to: bbhfunds@bbh.com
On the internet: www.bbhfunds.com
This report is submitted for the general information of shareholders and is not
authorized for distribution to prospective investors unless preceded or
accompanied by an effective prospectus. Nothing herein contained is to be
considered an offer of sale or a solicitation of an offer to buy shares of the
Fund. Such offering is made only by the prospectus, which includes details as to
offering price and other material information.
The BBH U.S. Money Market Portfolio files with the SEC a complete schedule of
its portfolio holdings, as of the close of the first and third quarters of its
fiscal year, on "Form N-Q." Information on Form N-Q is available without charge
and upon request by calling the Funds at the toll-free number listed above. A
text only version can be viewed online or downloaded from the SEC's website at
http://www.sec.gov; and may be reviewed and copied at the SEC's Public Reference
Room in Washington, DC (call 1-800-SEC-0330 for information on the operation of
the Public Reference Room). You may also access this information from the BBH
website at BBH.com by clicking on "BBH Mutual Funds" and selecting "Online
Documents/Holdings Information."
A copy of the Fund's Proxy Voting Policy is available upon request by calling
the toll-free number listed above. A text-only version of the policy can be
viewed online or downloaded from the SEC at www.sec.gov.
BROWN [LOGO]
BROTHERS
HARRIMAN
BROWN [LOGO]
BROTHERS
HARRIMAN`
Annual Report
JUNE 30, 2006
BBH U.S. TREASURY MONEY FUND
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO ALLOCATION
June 30, 2006 (unaudited)
BREAKDOWN BY SECURITY TYPE
Percent of
U.S. $ Value Net Assets
------------ ----------
U.S. Treasury Bills ...................... $111,697,045 100.3%
Liabilities in Excess of Other Assets .... (343,069) (0.3)
------------ -----
Net Assets ............................... $111,353,976 100.0%
============ =====
All data as of June 30, 2006. The Fund's breakdown by security type is expressed
as a percentage of net assets and may vary over time.
The accompanying notes are an integral part of these financial statements.
2
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
June 30, 2006
Principal
Amount Value
- ------------ -------------
U.S. TREASURY BILLS (a) (100.3%)
$ 7,440,000 due 08/10/06, 4.75%................................. $ 7,400,733
10,635,000 due 08/17/06, 4.668%................................ 10,570,193
94,398,000 due 08/24/06, 4.745%................................ 93,726,119
------------
Total U.S. Treasury Bills........................... 111,697,045
------------
TOTAL INVESTMENTS, AT AMORTIZED COST............... 100.3% $111,697,045
LIABILITIES IN EXCESS OF OTHER ASSETS.............. (0.3) (343,069)
----- ------------
NET ASSETS......................................... 100.0% $111,353,976
===== ============
- ----------
(a) Rates shown are yields to maturity at time of purchase.
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2006 3
BBH U.S. TREASURY
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2006
ASSETS:
Investments, at amortized cost ............................ $ 111,697,045
Other asset ............................................... 14,585
--------------
Total Assets .............................................. 111,711,630
--------------
LIABILITIES:
Due to bank .............................................. 178,092
Payables for:
Shareholder servicing fees ............................. 41,547
Investment advisory fees ............................... 27,697
Custody and accounting fees ............................ 27,442
Professional fees ...................................... 22,406
Administrative fees .................................... 19,131
Dividends declared ..................................... 11,610
Board of Trustees' fees ................................ 1,000
Accrued expenses and other liabilities ................... 28,729
--------------
Total Liabilities ...................................... 357,654
--------------
NET ASSETS, for 111,354,109 fund shares outstanding ......... $ 111,353,976
Net Assets Consist of:
Par value ................................................ $ 1,113,541
Paid-in capital in excess of par ......................... 110,240,435
--------------
Net Assets .................................................. $ 111,353,976
==============
NET ASSET VALUE AND OFFERING PRICE PER SHARE ................ $1.00
=====
The accompanying notes are an integral part of these financial statements.
4
BBH U.S. TREASURY MONEY FUND
STATEMENT OF OPERATIONS
For the year ended June 30, 2006
NET INVESTMENT INCOME:
Income:
Interest .................................................... $ 4,355,767
------------
Expenses:
Shareholder servicing fees .................................. 255,080
Investment advisory fees .................................... 170,053
Administrative fees ......................................... 113,369
Custody and accounting fees ................................. 40,481
Professional fees ........................................... 21,444
Board of Trustees' fees ..................................... 8,401
Miscellaneous expenses ...................................... 65,087
------------
Total Expenses ............................................ 673,915
Expense offset arrangement ................................ (1,276)
------------
Net Expenses .............................................. 672,639
------------
Net Investment Income ....................................... $ 3,683,128
============
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2006 5
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30,
------------------------------
2006 2005
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
From Operations:
Net investment income ............... $ 3,683,128 $ 1,886,545
Dividends declared from net
investment income ................... (3,683,261) (1,888,956)
------------- -------------
Net decrease in net assets
from operations ................... (133) (2,411)
------------- -------------
From Fund Share (Principal)
Transactions at Net Asset Value
of $1.00 per share:
Fund shares sold .................. 241,663,076 425,789,851
Fund shares issued in reinvestment
of dividends .................... 1,530,055 676,711
Fund shares repurchased ........... (272,459,489) (403,015,510)
------------- -------------
Net increase (decrease) in net
assets resulting from fund
share transactions ............ (29,266,358) 23,451,052
------------- -------------
Total increase (decrease) in
net assets .................... (29,266,491) 23,448,641
NET ASSETS:
Beginning of year ..................... 140,620,467 117,171,826
------------- -------------
End of Year ........................... $ 111,353,976 $ 140,620,467
============= =============
The accompanying notes are an integral part of these financial statements.
6
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,
------------------------------------------------
2006 2005 2004 2003 2002
---- ---- ---- ---- ----
Net asset value, beginning of year ........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income ...................................... 0.03 0.01 0.001(1) 0.01 0.02
Dividends to shareholders from net
investment income .......................................... (0.03) (0.01) (0.00)(1) (0.01) (0.02)
------ ------ ------ ------ ------
Net asset value, end of year ................................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
Total return ................................................. 3.35% 1.41% 0.40% 0.91% 1.95%
Ratios/Supplemental data:
Net assets, end of year
(in millions) ............................................ $ 111 $ 141 $ 117 $ 137 $ 188
Ratio of expenses to average net assets
Net expenses paid by Fund .................................. 0.59% 0.56% 0.59% 0.57% 0.56%
Expense offset arrangement ................................. 0.00%(2) 0.01% 0.00%(2) 0.00%(2) 0.00%(2)
------ ------ ------ ------ ------
Total expenses ........................................... 0.59% 0.57% 0.59% 0.57% 0.56%
====== ====== ====== ====== ======
Ratio of net investment income to
average net assets ....................................... 3.25% 1.49% 0.39% 0.92% 1.91%
- ----------
(1) Less than $0.01 per share.
(2) Less than 0.01%.
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2006 7
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
June 30, 2006
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, 2006, 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. Investment Transactions and Income. Investment transactions are
accounted for on the trade date. Realized gains and losses, if any,
from investment transactions are determined on the basis of
identified cost. Interest income consists of interest accrued and
discount earned (including both original issue and market discount)
and premium amortization on the investments of the Fund, accrued
ratably to the date of maturity.
C. Federal Income Taxes. Each series of the Trust is treated as a
separate entity for federal income tax purposes. It is the Fund's
policy to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies and to distribute
substantially all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required. At June
30, 2006, 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. Accounting Development. In June 2006, Financial Accounting Standards
Board Interpretation No. 48, Accounting for Uncertainty in Income
Taxes - an interpretation of FASB Statement 109 (FIN 48) was issued
and is effective for fiscal years beginning after December 15, 2006.
FIN 48 sets forth a threshold for financial statement recognition,
measurement and disclosure of a tax position taken or expected to be
taken on a tax return. While not expected to have a material impact
on the Fund's financial statements, management will be evaluating
the impact, if any, the adoption of FIN 48 will have on the Fund's
net assets and results of operations.
8
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
JUNE 30, 2006
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 of 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, 2006, the Fund incurred
$170,053 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 of 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, 2006, the Fund
incurred $113,369 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 of 0.225% of the Fund's average daily net assets.
For the year ended June 30, 2006, the Fund incurred $255,080 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, 2006, the Fund incurred $8,401 for Trustees' fees.
Custody and Accounting Fees. BBH acts as a custodian and receives a custody
and accounting fee from the Fund calculated daily and paid monthly. The
custody fee is a transaction based fee with an annual minimum of $20,000, and
the accounting fee is calculated at 0.01% per annum on the first $1 billion
of net assets and 0.005% per annum on all net assets over $1 billion. For the
year ended June 30, 2006, the Fund incurred $40,481 for custody and
accounting services. These fees were reduced by $1,276 as a result of an
expense offset arrangement with the Fund's custodian. The Fund was overdrawn
$178,092 on June 30, 2006. Under the custody agreement with BBH, BBH will
make overnight loans to the Fund to cover overdrafts. Pursuant to their
agreement the Fund will be charged interest based on LIBOR on the day of
overdraft plus one percent. The total interest paid by the Fund for the year
ended June 30, 2006 was $10,668.
FINANCIAL STATEMENT JUNE 30, 2006 9
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE 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, 2006, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of June 30, 2006, by correspondence with the custodian.
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, 2006, 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 25, 2006
10
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF FUND EXPENSES
June 30, 2006 (unaudited)
EXAMPLE
As a shareholder of BBH U.S. Treasury Money Fund (the "Fund"), you may incur two
types of costs: (1) transaction costs on purchase payments, reinvested
dividends, or other distributions; and exchange fees; and (2) ongoing costs,
including management fees; and other Fund expenses. This Example is intended to
help you understand your ongoing costs (in dollars) of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (January 1, 2006 to June 30, 2006).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use information in this line, together with
the amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading entitled "Expenses Paid During the Period" to estimate
the expenses you paid on your account during the period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid
during the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such redemption
fees or exchange fees. Therefore, the second line of the table is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
Expenses Paid
Beginning Ending During Period
Account Value Account Value January 1, 2006 to
January 1, 2006 June 30, 2006 June 30, 2006(1)
--------------- ------------- ------------------
Actua..................... $1,000 $1,019.00 $2.95
Hypothetical(2)........... $1,000 $1,021.87 $2.96
(1) Expenses are equal to the Fund's annualized expense ratio of 0.59%,
multiplied by the average account value over the period, multiplied by
181/365 (to reflect the one-half year period).
(2) Assumes a return of 5% before expenses. For the purpose of the
calculation, the applicable annualized expense ratio is subtracted from
the assumed return before expenses.
FINANCIAL STATEMENT JUNE 30, 2006 11
TRUSTEES AND OFFICERS OF BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
(unaudited)
Information pertaining to the Trustees of the BBH Trust (the "Trust") and
executive officers of the Trust is set forth below. Part B to the Registration
Statement of the BBH 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/
Position(s) Length Complex Directorships
Name, 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 Since 1990 Managing Director, Chairman 10 None
Birth Date: the Board and and Chief Executive Officer of
March 17, 1938 Trustee Shields & Company (member of
Shields & Company New York Stock Exchange);
140 Broadway Chairman of Capital Management
New York, NY 10005 Associates, Inc. (registered
investment adviser); Director
of Flowers Foods, Inc.
(New York Stock Exchange
listed company).
David P. Feldman Trustee Since 1990 Director of Jeffrey Co. (1992 10 Director of
Birth Date: to present); Director of QMED Dreyfus Mutual
November 16, 1939 (1999 to present). Funds (59 Funds)
P.O. Box 864
Carefree, AZ 85377
Arthur D. Miltenberger Trustee Since 1992 Retired; Trustee, R.K. 10 None
Birth Date: Mellon Family Trusts (1981-
November 8, 1938 June 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).
Eugene P. Beard Trustee Since 1993 Chairman & CEO of Westport 10 Director of Old
Birth Date: Asset Funds, Inc. Westbury Funds (7)
March 17, 1935
River Park
800 Connecticut
Avenue, 3 East
Norwalk, CT 06854
12
Number of
Term of Funds/
Office# Portfolio Other
and in Fund Trustee/
Position(s) Length Complex Directorships
Name, Birth Date Held with of Time Principal Occupation(s) Overseen by Held by
and Address Trust/Portfolio Served During Past 5 Years Trustee^ Trustee
- ---------------------------------------------------------------------------------------------------------------------------
Alan G. Lowy Trustee Since 1993 Private Investor. 10 None
Birth Date:
April 17, 1939
4111 Clear Valley
Drive
Encino, CA 91436
Samuel F. Pryor, IV Trustee Since 2005 Private Investor. 10 None
Birth Date:
June 12, 1955
130 East 67th Street
New York, NY 10021
Officers
John A. Nielsen President, Principal Since 2004 President and Principal N/A N/A
Birth Date: Executive Officer Executive Officer of BBH Trust,
July 15, 1943 BBH Prime Institutional Money
140 Broadway Market Fund, Inc., BBH Fund,
New York, NY 10005 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.
Michael F. Hogan Chief Since 2004 Chief Compliance Officer to N/A N/A
Birth Date: Compliance the BBH Trust, BBH Prime
January 26, 1963 Officer Institutional Money Market
50 Milk Street Fund, Inc., BBH Fund, Inc. and
Boston, MA 02109 the BBH U.S. Money Market
Portfolio; Senior Vice
President of BBH & Co. since
September 1994; Joined BBH &
Co. in 1985.
Charles H. Schreiber Treasurer, Principal Since 2006 Treasurer, Principal Financial N/A N/A
Birth Date: Financial Officer, Officer and Anti Money
December 10, 1957 Anti Money Laundering Officer of BBH
140 Broadway Laundering Officer Trust, BBH Prime Institutional
New York, NY 10005 Money Market Fund, Inc., BBH
Fund, Inc. and BBH U.S. Money
Market Portfolio; Senior Vice
President of BBH & Co. since
September 2001; Joined BBH &
Co. in 1999.
FINANCIAL STATEMENT JUNE 30, 2006 13
Number of
Term of Funds/
Office# Portfolio Other
and in Fund Trustee/
Position(s) Length Complex Directorships
Name, Birth Date Held with of Time Principal Occupation(s) Overseen by Held by
and Address Trust/Portfolio Served During Past 5 Years Trustee^ Trustee
- ---------------------------------------------------------------------------------------------------------------------------
Gail C. Jones Secretary Since 2002 Secretary of BBH Trust, BBH N/A N/A
Birth Date: Prime Institutional Money
October 26, 1953 Market Fund, Inc., BBH Fund,
1001 Liberty Avenue Inc. and BBH U.S. Money
Pittsburgh, PA Market Portfolio (since August
15222-3779 2002); Counsel, ReedSmith, LLP
(since October 2002);
Corporate Counsel (January
1997-September 2002) and Vice
President (January 1999-September
2002) of Federated Services
Company.
Judith J. Mackin Vice President Since 2002 Vice President of BBH Trust, N/A N/A
Birth Date: BBH Prime Institutional Money
May 30, 1960 Market Fund, Inc., BBH Fund,
1001 Liberty Avenue Inc. and BBH U.S. Money Market
Pittsburgh, PA Portfolio (since August 2002);
15222-3779 Vice President (since November
1997) of Federated Services
Company.
Victor Siclari Assistant Secretary Since 2002 Assistant Secretary of BBH N/A N/A
Birth Date: Trust, BBH Prime Institutional
November 17, 1961 Money Market Fund, Inc., BBH
1001 Liberty Avenue Fund, Inc. and BBH U.S. Money
Pittsburgh, PA Market Portfolio (since August
15222-3779 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 Secretary, Since 2002 Assistant Secretary of BBH N/A N/A
Birth Date: Assistant Treasurer Trust, BBH Prime Institutional
May 4, 1966 Money Market Fund, Inc., BBH
140 Broadway Fund, Inc. and BBH U.S. Money
New York, NY 10005 Market Portfolio (since August
2002); Assistant Vice President
of BBH & Co. since 2003. Joined
BBH & Co. in 1996.
14
Number of
Term of Funds/
Office# Portfolio Other
and in Fund Trustee/
Position(s) Length Complex Directorships
Name, Birth Date Held with of Time Principal Occupation(s) Overseen by Held by
and Address Trust/Portfolio Served During Past 5 Years Trustee^ Trustee
- ---------------------------------------------------------------------------------------------------------------------------
John C. Smith Assistant Treasurer Since 2002 Assistant Treasurer of BBH Trust, N/A N/A
Birth Date: BBH Prime Institutional Money
August 2, 1965 Market Fund, Inc., BBH Fund, Inc.
50 Milk Street and BBH U.S. Money Market
Boston, MA 02109 Portfolio (since August 2002);
Vice President (since September
2004), Assistant Vice President
(since September 2001), Associate
(September 2000-August 2001) and
Senior Analyst (June 1999-August
2000) 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 Fund, Inc. and BBH U.S. Money Market Portfolio. BBH
Trust has four series, and BBH Fund, Inc. has four series each are counted
as one "fund" for the purposes of this table.
FINANCIAL STATEMENT JUNE 30, 2006 15
INVESTMENT ADVISER AND ADMINISTRATOR
BROWN BROTHERS HARRIMAN
140 BROADWAY
NEW YORK, NY 10005
DISTRIBUTOR
EDGEWOOD SERVICES, INC.
5800 CORPORATE DRIVE
PITTSBURGH, PA 15237-7000
SHAREHOLDER SERVICING AGENT
BROWN BROTHERS HARRIMAN
140 BROADWAY
NEW YORK, NY 10005
(800) 625-5759
To obtain information or make shareholder inquiries:
By telephone: Call 1-800-575-1265
By E-mail send your request to: bbhfunds@bbh.com
On the internet: www.bbhfunds.com
This report is submitted for the general information of shareholders and is not
authorized for distribution to prospective investors unless preceded or
accompanied by an effective prospectus. Nothing herein contained is to be
considered an offer of sale or a solicitation of an offer to buy shares of the
Fund. Such offering is made only by the prospectus, which includes details as to
offering price and other material information.
The Fund files with the SEC a complete schedule of its portfolio holdings, as of
the close of the first and third quarters of its fiscal year, on "Form N-Q."
Information on Form N-Q is available without charge and upon request by calling
the Funds at the toll-free number listed above. A text only version can be
viewed online or downloaded from the SEC's website at http://www.sec.gov; and
may be reviewed and copied at the SEC's Public Reference Room in Washington, DC
(call 1-800-SEC-0330 for information on the operation of the Public Reference
Room). You may also access this information from the BBH website at BBH.com by
clicking on "BBH Mutual Funds" and selecting "Online Documents/Holdings
Information."
A copy of the Fund's Proxy Voting Policy is available upon request by calling
the toll-free number listed above. A text-only version of the policy can be
viewed online or downloaded from the SEC at www.sec.gov.
BROWN [LOGO]
BROTHERS
HARRIMAN`
BROWN [LOGO]
BROTHERS
HARRIMAN
Annual Report
JUNE 30, 2006
BBH Tax Free Short/Intermediate Fixed Income Fund
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE (unaudited)
During the fiscal year ended June 30, 2006, U.S. economic activity continued at
a robust pace. The Fund's investment adviser ("Adviser") remained cautious
throughout the year, expecting the Federal Reserve to continue raising the
overnight Federal Funds rate beyond levels implied in the market. To protect
against the price erosion caused by higher interest rates, the Fund's Adviser
maintained the weighted average maturity of the Fund in the short to neutral
category, targeting a duration range of 2.50 to 2.85 years. The Adviser
maintained a highly diversified portfolio that was able to generate 15 bps of
excess return net of fees vs. the Lehman Brothers 3-Year Municipal Index ("LB 3
Yr Muni")(1).
Short municipal yields rose and the yield curve flattened as the Federal Reserve
raised the overnight Fund's rate 200 bps from 3.25% to 5.25%. Over the past
year, shorter-duration Municipals have outperformed longer-duration tax exempt
maturities. For example, the Lehman 1-year Municipal outperformed the Lehman
3-Year Index by 55 bps over the past year.
The Fund portfolio's holdings maintained a high credit quality average since
credit spreads have tightened considerably over the past 12 months. Furthermore,
the flat yield curve environment did not offer attractive compensation to extend
the portfolio's average maturity. The Adviser added lower rated single-A credits
over the past year in an effort to enhance the Fund's yield.
- ----------
(1) The LB 3Yr Muni 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 Securities and
Exchange Commission ("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.
The accompanying notes are an integral part of these financial statement.
2
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE (continued)(unaudited)
Growth of $10,000 invested in BBH Tax Free Short/Intermediate Fixed Income Fund
The graph below illustrates the hypothetical investment of $10,000(1) in the
Fund from July 23, 1992 to June 30, 2006 as compared to the Lehman Brothers
3-Year Municipal Index ("LB 3 Yr Muni").
[The following information was depicted as a line chart in the printed material]
Date BBTFX LB 3Yr Muni
---- ----- -----------
7/23/1992 10,000.00
7/31/1992 10,060.00 10,000.00
8/31/1992 10,043.46 9,955.00
9/30/1992 10,141.83 10,036.63
10/31/1992 10,075.12 9,997.49
11/30/1992 10,191.51 10,067.47
12/31/1992 10,243.02 10,127.88
1/31/1993 10,341.42 10,203.83
2/28/1993 10,501.10 10,364.03
3/31/1993 10,461.92 10,332.94
4/30/1993 10,523.05 10,392.87
5/31/1993 10,540.27 10,420.93
6/30/1993 10,615.36 10,487.63
7/31/1993 10,593.53 10,492.87
8/31/1993 10,696.56 10,590.46
9/30/1993 10,737.01 10,637.05
10/31/1993 10,764.28 10,659.39
11/30/1993 10,744.12 10,645.53
12/31/1993 10,848.77 10,757.42
1/31/1994 10,907.74 10,844.55
2/28/1994 10,812.76 10,743.70
3/31/1994 10,746.26 10,613.70
4/30/1994 10,743.51 10,676.32
5/31/1994 10,774.34 10,726.50
6/30/1994 10,784.10 10,729.72
7/31/1994 10,866.67 10,818.78
8/31/1994 10,910.75 10,857.72
9/30/1994 10,878.91 10,830.58
10/31/1994 10,868.41 10,804.59
11/30/1994 10,826.66 10,785.14
12/31/1994 10,881.06 10,831.51
1/31/1995 10,947.92 10,921.41
2/28/1995 11,082.11 11,037.07
3/31/1995 11,149.67 11,136.52
4/30/1995 11,182.54 11,174.38
5/31/1995 11,330.43 11,345.35
6/30/1995 11,363.24 11,372.58
7/31/1995 11,439.51 11,493.13
8/31/1995 11,484.25 11,582.77
9/30/1995 11,496.41 11,615.20
10/31/1995 11,542.66 11,670.96
11/30/1995 11,611.60 11,745.65
12/31/1995 11,656.02 11,794.98
1/31/1996 11,734.20 11,886.98
2/29/1996 11,736.12 11,889.36
3/31/1996 11,691.65 11,860.83
4/30/1996 11,717.50 11,875.06
5/31/1996 11,729.92 11,885.75
6/30/1996 11,765.92 11,957.06
7/31/1996 11,838.31 12,022.83
8/31/1996 11,849.83 12,040.86
9/30/1996 11,920.76 12,114.31
10/31/1996 11,978.21 12,199.11
11/30/1996 12,070.78 12,312.56
12/31/1996 12,073.88 12,318.72
1/31/1997 12,117.38 12,372.92
2/28/1997 12,165.53 12,433.55
3/31/1997 12,107.82 12,368.89
4/30/1997 12,132.65 12,422.08
5/31/1997 12,227.68 12,522.70
6/30/1997 12,277.40 12,596.58
7/31/1997 12,371.82 12,746.48
8/31/1997 12,370.11 12,720.99
9/30/1997 12,433.05 12,812.58
10/31/1997 12,469.19 12,868.96
11/30/1997 12,493.00 12,906.27
12/31/1997 12,554.47 12,994.04
1/31/1998 12,625.98 13,079.28
2/28/1998 12,648.95 13,106.75
3/31/1998 12,664.33 13,128.11
4/30/1998 12,641.07 13,109.86
5/31/1998 12,737.99 13,231.65
6/30/1998 12,799.28 13,276.11
7/31/1998 12,823.89 13,324.17
8/31/1998 12,934.38 13,453.15
9/30/1998 12,996.89 13,538.57
10/31/1998 13,045.26 13,604.24
11/30/1998 13,069.42 13,637.16
12/31/1998 13,118.77 13,670.30
1/31/1999 13,204.03 13,794.29
2/28/1999 13,193.06 13,809.60
3/31/1999 13,191.28 13,821.48
4/30/1999 13,230.68 13,863.63
5/31/1999 13,201.23 13,844.22
6/30/1999 13,111.33 13,761.02
7/31/1999 13,173.67 13,829.00
8/31/1999 13,171.57 13,846.15
9/30/1999 13,207.98 13,898.07
10/31/1999 13,204.53 13,899.74
11/30/1999 13,241.89 13,960.76
12/31/1999 13,227.24 13,938.70
1/31/2000 13,238.32 13,963.65
2/29/2000 13,277.86 14,007.49
3/31/2000 13,329.62 14,078.93
4/30/2000 13,323.72 14,081.04
5/31/2000 13,337.12 14,094.98
6/30/2000 13,489.42 14,273.85
7/31/2000 13,583.90 14,389.04
8/31/2000 13,662.45 14,498.83
9/30/2000 13,660.06 14,502.45
10/31/2000 13,725.30 14,584.10
11/30/2000 13,763.51 14,643.02
12/31/2000 13,909.73 14,806.88
1/31/2001 14,082.70 15,031.05
2/28/2001 14,118.43 15,089.07
3/31/2001 14,214.10 15,195.30
4/30/2001 14,187.32 15,173.11
5/31/2001 14,309.27 15,311.80
6/30/2001 14,348.82 15,380.39
7/31/2001 14,444.33 15,505.28
8/31/2001 14,566.68 15,666.38
9/30/2001 14,647.46 15,744.71
10/31/2001 14,715.56 15,846.58
11/30/2001 14,669.04 15,797.30
12/31/2001 14,677.04 15,781.82
1/31/2002 14,824.00 15,982.72
2/28/2002 14,910.56 16,102.11
3/31/2002 14,679.30 15,861.87
4/30/2002 14,894.69 16,095.67
5/31/2002 14,970.14 16,188.54
6/30/2002 15,085.41 16,328.41
07/31/02 15,187.99 16,455.77
08/31/02 15,273.04 16,561.09
09/30/02 15,360.10 16,691.92
10/31/02 15,292.52 16,600.12
11/30/02 15,309.34 16,605.10
12/31/02 15,503.77 16,844.21
01/31/03 15,519.27 16,898.11
02/28/03 15,618.59 17,006.26
03/31/03 15,563.93 16,985.85
04/30/03 15,609.06 17,031.71
05/31/03 15,710.52 17,162.86
06/30/03 15,694.81 17,135.40
07/31/03 15,562.98 16,981.18
08/31/03 15,619.00 17,067.78
09/30/03 15,775.19 17,323.80
10/31/03 15,713.67 17,242.38
11/30/03 15,723.10 17,259.62
12/31/03 15,746.68 17,295.86
01/31/04 15,770.30 17,356.40
02/29/04 15,894.89 17,503.93
03/31/04 15,845.61 17,456.67
04/30/04 15,647.54 17,280.36
05/31/04 15,567.74 17,211.23
06/30/04 15,575.52 17,242.21
07/31/04 15,672.09 17,368.08
08/31/04 15,797.47 17,552.18
09/30/04 15,803.79 17,571.49
10/31/04 15,825.91 17,620.69
11/30/04 15,757.86 17,536.11
12/31/2004 15,787.80 17,604.50
1/31/2005 15,779.91 17,579.86
2/28/2005 15,756.24 17,516.57
3/31/2005 15,718.42 17,458.77
4/30/2005 15,754.58 17,547.81
5/31/2005 15,778.21 17,581.15
6/30/2005 15,847.63 17,672.57
7/31/2005 15,811.18 17,630.15
8/31/2005 15,849.13 17,688.33
9/30/2005 15,842.79 17,697.18
10/31/2005 15,807.93 17,670.63
11/30/2005 15,803.19 17,686.54
12/31/2005 15,860.08 17,748.44
1/31/2006 15,888.63 17,787.48
2/28/2006 15,883.87 17,801.71
3/31/2006 15,852.10 17,769.67
4/30/2006 15,864.78 17,799.88
5/31/2006 15,909.20 17,862.18
6/30/2006 15,875.79 17,830.03
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 SEC requires to be
reflected in the Fund's performance. It is not possible to invest directly
in an index.
The accompanying notes are an integral part of these financial statements.
3
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO ALLOCATION
June 30, 2006 (unaudited)
BREAKDOWN BY BOND TYPE
Percent of
U.S. $ Value Net Assets
------------ ----------
Certificate of Participation .................... $ 1,064,505 1.9%
Education ....................................... 5,675,220 10.0
General Obligations ............................. 22,756,454 40.0
Health Care ..................................... 2,113,061 3.7
Housing ......................................... 1,018,940 1.8
Industrial ...................................... 3,550,710 6.2
Miscellaneous ................................... 7,256,184 12.7
Pre-Refunded .................................... 2,170,752 3.8
Sales Tax ....................................... 1,135,376 2.0
Transportation .................................. 4,494,306 7.9
Utilities ....................................... 3,627,265 6.4
Water/Sewer ..................................... 1,349,586 2.4
Other Assets in Excess of Liabilities ........... 686,822 1.2
----------- -----
Net Assets ...................................... $56,899,181 100.0%
=========== =====
TOP FIVE HOLDINGS BY STATE
Percent of
U.S. $ Value Net Assets
------------ ----------
Pennsylvania .................................... $ 4,153,990 7.3%
New Jersey ...................................... 4,117,324 7.2
New York ........................................ 3,670,070 6.5
Colorado ........................................ 3,275,974 5.8
Massachusetts ................................... 3,208,026 5.6
Other States .................................... 37,786,975 66.4
Other Assets in Excess of Liabilities ........... 686,822 1.2
----------- -----
Net Assets ...................................... $56,899,181 100.0%
=========== =====
All data as of June 30, 2006. The Fund's breakdown by bond type and top five
holdings by state are expressed as a percentage of net assets and may vary over
time.
The accompanying notes are an integral part of these financial statements.
4
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
June 30, 2006
Principal Maturity Interest
Amount Date Rate Value
--------- -------- -------- ----------
MUNICIPAL BONDS (98.8%)
CERTIFICATE OF PARTICIPATION (1.9%)
$1,060,000 Platte County, Missouri .............. 03/01/08 4.000% $1,064,505
----------
EDUCATION (10.0%)
1,000,000 Arizona State University ............. 07/01/08 5.000 1,021,970
1,500,000 Florida State Board of Education
Lottery Revenue ...................... 07/01/09 5.250 1,557,840
1,000,000 Greenville County, South Carolina,
School District ...................... 12/01/07 5.000 1,013,740
1,000,000 Pennsylvania State Higher Educational
Facilities Authority ................. 09/01/10 5.250 1,049,290
1,000,000 Virginia State Public School Authority 08/01/09 5.000 1,032,380
----------
Total Education ...................... 5,675,220
----------
GENERAL OBLIGATIONS (40.0%)
1,000,000 Branson, Missouri, School District ... 03/01/08 4.000 1,004,570
200,000 California State ..................... 02/01/08 5.000 203,496
1,000,000 California State ..................... 02/01/09 6.000 1,049,340
1,000,000 California State ..................... 03/01/09 5.000 1,027,160
570,000 Connecticut State .................... 05/01/09 5.000 586,558
1,090,000 District of Columbia ................. 06/01/09 5.500 1,136,772
1,000,000 Illinois State ....................... 04/01/10 5.500 1,054,350
500,000 Illinois State ....................... 06/01/10 5.000 518,250
820,000 Las Vegas-Clark County, Nevada,
Library District ................... 06/01/07 2.750 808,430
580,000 Las Vegas-Clark County, Nevada,
Library District ................... 06/01/08 3.000 567,014
1,000,000 Massachusetts State .................. 02/01/09 5.500 1,040,960
1,000,000 Massachusetts State .................. 09/01/09 5.000 1,031,690
1,000,000 Mississippi State .................... 07/01/08 5.500 1,030,090
1,360,000 Mississippi State .................... 11/01/08 5.000 1,392,191
1,500,000 New Jersey State ..................... 07/15/09 5.000 1,548,360
1,000,000 New York, New York ................... 08/01/08 5.250 1,025,960
1,500,000 North Carolina State ................. 04/01/09 5.000 1,546,275
505,000 Ocean Township, New Jersey,
Board of Education ................. 03/01/08 4.250 508,424
The accompanying notes are an integral part of these financial statements.
5
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2006
Principal Maturity Interest
Amount Date Rate Value
--------- -------- -------- ----------
MUNICIPAL BONDS (continued)
GENERAL OBLIGATIONS (continued)
$1,000,000 Pennsylvania State ................... 01/01/10 5.250% $ 1,044,260
1,000,000 Pennsylvania State ................... 02/01/10 5.250 1,045,230
1,000,000 San Antonio, Texas ................... 02/01/09 4.500 1,014,260
1,065,000 Southington, Connnecticut ............ 09/15/08 2.500 1,021,899
1,000,000 Tulsa, Oklahoma ...................... 06/01/09 5.000 1,029,600
500,000 Utah State ........................... 07/01/09 5.375 521,315
-----------
Total General Obligations ............ 22,756,454
-----------
HEALTH CARE (3.7%)
250,000 California Health Facilities Financing
Authority Revenue .................. 11/15/08 5.000 256,013
525,000 Chemung County, New York, Industrial
Development Agency ................. 11/01/06 4.000 524,827
500,000 Harris County, Texas, Health
Facilities Development Authority ... 12/01/07 5.000 506,465
250,000 Henderson, Nevada, Health Care
Facility Revenue ................... 07/01/08 5.000 254,678
575,000 New York State Dormitory Authority ... 02/15/07 3.000 571,078
-----------
Total Health Care .................... 2,113,061
-----------
HOUSING (1.8%)
1,000,000 Puerto Rico Housing Finance Authority 12/01/08 4.500 1,018,940
-----------
INDUSTRIAL (6.2%)
1,080,000 Kansas State Development Finance
Authority Revenue .................. 11/01/09 5.250 1,126,980
2,335,000 Rhode Island State Economic
Development Corp. Revenue .......... 06/15/09 5.250 2,423,730
-----------
Total Industrial ..................... 3,550,710
-----------
MISCELLANEOUS (12.7%)
500,000 Energy Northwest, Washington,
Electric Revenue ................... 07/01/10 5.000 518,065
1,545,000 Metropolitan Pier & Exposition
Authority .......................... 06/15/09 5.250 1,601,099
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, 2006
Principal Maturity Interest
Amount Date Rate Value
--------- -------- -------- ----------
MUNICIPAL BONDS (continued)
MISCELLANEOUS (continued)
$1,000,000 Michigan State Building Authority
Revenue ............................ 10/15/09 5.500% $1,047,430
1,000,000 New York State Urban
Development Corp. .................. 01/01/21 5.250 1,028,820
1,000,000 Ohio State ........................... 06/15/09 4.000 1,003,840
1,000,000 Ohio State Building Authority ........ 10/01/10 5.000 1,041,720
1,000,000 Southcentral Pennsylvania General
Authority Revenue(1) ............... 06/01/30 4.500 1,015,210
----------
Total Miscellaneous .................. 7,256,184
----------
PRE-REFUNDED (3.8%)2
550,000 New Hanover County, North Carolina ... 11/01/10 5.750 599,137
500,000 Oklahoma Development Finance
Authority .......................... 08/15/09 5.625 528,075
1,000,000 Washington State ..................... 07/01/09 5.500 1,043,540
----------
Total Pre-Refunded ................... 2,170,752
----------
SALES TAX (2.0%)
1,100,000 Massachusetts State School
Building Authority Dedicated
Sales Tax Revenue .................. 08/15/09 5.000 1,135,376
----------
TRANSPORTATION (7.9%)
1,150,000 Colorado Department of Transportation 06/15/10 5.250 1,205,764
500,000 Metropolitan Transportation Authority,
New York, Revenue .................. 11/15/10 5.000 519,385
1,000,000 New Jersey State Transportation
Trust .............................. 06/15/08 5.500 1,029,990
1,000,000 New Jersey State Transportaton Trust . 06/15/09 5.000 1,030,550
700,000 Phoenix, Arizona, Street & Highway
User Revenue ....................... 07/01/08 4.500 708,617
----------
Total Transportation ................. 4,494,306
----------
UTILITIES (6.4%)
1,000,000 Colorado Springs, Colorado,
Utilities Revenue .................. 11/15/08 5.000 1,026,550
The accompanying notes are an integral part of these financial statements.
7
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2006
Principal Maturity Interest
Amount Date Rate Value
--------- -------- -------- ----------
MUNICIPAL BONDS (continued)
UTILITIES (continued)
$1,000,000 Colorado Springs, Colorado,
Utilities Revenue .................. 11/15/09 5.250% $ 1,043,660
1,000,000 Salt River Project, Arizona .......... 01/01/10 5.000 1,036,190
500,000 San Antonio, Texas, Electric & Gas ... 02/01/10 5.250 520,865
-----------
Total Utilities ...................... 3,627,265
-----------
WATER/SEWER (2.4%)
1,345,000 Anderson, South Carolina, Water &
Sewer Revenue ...................... 07/01/08 4.000 1,349,586
-----------
TOTAL INVESTMENTS (Identified cost $57,354,502)(3)............. 98.8% $56,212,359
OTHER ASSETS IN EXCESS OF LIABILITIES.......................... 1.2 686,822
----- -----------
NET ASSETS..................................................... 100.0% $56,899,181
===== ===========
- ----------
(1) Variable rate instrument. Interest rates change on specific dates (such as
a coupon or interest payment date). The yield shown represents the June
30, 2006 coupon rate.
(2) 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 original stated maturity date.
(3) The aggregate cost for federal income tax purposes is $57,354,502. The
aggregate gross unrealized appreciation is $0, and the aggregate gross
unrealized depreciation is $1,142,143, resulting in net unrealized
depreciation of $1,142,143.
The accompanying notes are an integral part of these financial statements.
8
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2006
ASSETS:
Investments in securities, at value (identified cost
$57,354,502) ............................................... $56,212,359
Cash .......................................................... 121,804
Interest receivable ........................................... 727,426
-----------
Total Assets ............................................... 57,061,589
-----------
LIABILITIES:
Payables for:
Custody and accounting fees ................................ 46,318
Professional fees .......................................... 31,133
Shareholder servicing fees ................................. 25,132
Investment advisory fees ................................... 25,132
Administrative fees ........................................ 15,079
Dividends and distributions declared ....................... 3,277
Board of Trustees' fees .................................... 2,642
Accrued expenses and other liabilities ........................ 13,695
-----------
Total Liabilities .......................................... 162,408
-----------
NET ASSETS ....................................................... $56,899,181
===========
Net Assets Consist of:
Par value .................................................. $ 55,084
Paid-in capital in excess of par ........................... 58,941,954
Distributions in excess of net investment income ........... (3,277)
Accumulated net realized loss on investments ............... (952,437)
Net unrealized depreciation on investments ................. (1,142,143)
-----------
Net Assets .................................................... $56,899,181
===========
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($56,899,181 / 5,508,437 shares outstanding) .................. $10.33
======
The accompanying notes are an integral part of these financial statements.
9
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the year ended June 30, 2006
NET INVESTMENT INCOME:
Income:
Interest income ......................................... $ 2,235,576
-----------
Expenses:
Investment advisory fees ................................ 198,593
Shareholder servicing fees .............................. 198,593
Administrative fees .................................. 119,156
Custody and accounting fees ............................. 69,431
Professional fees ....................................... 32,258
Board of Trustees' fees ................................. 4,718
Miscellaneous expenses .................................. 50,950
-----------
Total Expenses ....................................... 673,699
Expense offset arrangement ........................... (1,773)
-----------
Net Expenses ......................................... 671,926
-----------
Net Investment Income ...................................... 1,563,650
-----------
NET REALIZED AND UNREALIZED LOSS:
Net realized loss on investments ........................... (884,563)
Net change in unrealized depreciation on investments ....... (615,369)
-----------
Net Realized and Unrealized Loss ........................ (1,499,932)
-----------
Net Increase in Net Assets Resulting From Operations ....... $ 63,718
===========
The accompanying notes are an integral part of these financial statements.
10
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30,
------------------------------
2006 2005
------------- -------------
INCREASE IN NET ASSETS:
From Operations:
Net investment income ............................... $ 1,563,650 $ 2,189,878
Net realized loss on investments .................... (884,563) (67,874)
Net change in unrealized depreciation
on investments ................................... (615,369) (39,089)
------------ ------------
Net increase in net assets resulting
from operations .................................. 63,718 2,082,915
------------ ------------
Dividends and distributions declared:
From net investment income ............................. (1,563,651) (2,191,473)
From net realized gains ................................ -- (467,291)
------------ ------------
Total dividends and distributions declared .......... (1,563,651) (2,658,764)
------------ ------------
Fund shares transactions:
Net proceeds from sales of fund shares ................. 13,031,845 61,049,548
Net asset value of fund shares issued to shareholders
in reinvestment of distributions .................... 659,458 855,771
Net cost of fund shares repurchased .................... (56,181,746) (86,873,989)
------------ ------------
Net decrease in net assets resulting from fund
shares transactions ................................. (42,490,443) (24,968,670)
------------ ------------
Total decrease in net assets ........................ (43,990,376) (25,544,519)
NET ASSETS:
Beginning of year ...................................... 100,889,557 126,434,076
------------ ------------
End of year (including distributions in excess of net
investment income of $3,277 and $10,176, respectively).. $ 56,899,181 $100,889,557
============ ============
The accompanying notes are an integral part of these financial statements.
11
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,
-------------------------------------------------------------
2006 2005 2004 2003 2002
------ ------ ------ ------ ------
Net asset value, beginning of year ........ $10.52 $10.55 $10.87 $10.73 $10.53
------ ------ ------ ------ ------
Income from investment operations:
Net investment income .................. 0.21 0.23 0.18 0.25 0.31
Net realized and unrealized
gain (loss) on investments .......... (0.19) (0.05) (0.28) 0.18 0.22
------ ------ ------ ------ ------
Total income (loss) from investment
operations ....................... 0.02 0.18 (0.10) 0.43 0.53
------ ------ ------ ------ ------
Less dividends and distributions:
From net investment income ............. (0.21) (0.18) (0.18) (0.26) (0.31)
From net realized gains ................ -- (0.03) (0.04) (0.03) (0.02)
------ ------ ------ ------ ------
Total dividends and distributions ... (0.21) (0.21) (0.22) (0.29) (0.33)
------ ------ ------ ------ ------
Net asset value, end of year .............. $10.33 $10.52 $10.55 $10.87 $10.73
====== ====== ====== ====== ======
Total return .............................. 0.18% 1.75% (0.75%) 4.04% 5.14%
Ratios/Supplemental data:
Net assets, end of year (in millions) .. $ 57 $ 101 $ 126 $ 107 $ 82
Ratio of expenses to average net assets:
Net expenses paid by Fund ........... 0.85% 0.80% 0.80% 0.82% 0.83%
Expense offset arrangement ............. 0.00%(1) 0.00%(1) 0.00%(1) 0.00%(1) 0.01%
------ ------ ------ ------ ------
Total expenses ...................... 0.85% 0.80% 0.80% 0.82% 0.84%
====== ====== ====== ====== ======
Ratio of net investment income to
average net assets ..................... 1.97% 1.68% 1.86% 2.33% 2.90%
Portfolio turnover rate ................... 79% 89% 90% 82% 94%
- ----------
(1) Amount is less than 0.01%.
The accompanying notes are an integral part of these financial statements.
12
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
June 30, 2006
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, 2006, 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 and Income. Investment transactions are
accounted for on the trade date. Realized gains and losses, if any,
from investment transactions are determined on the basis of
identified cost. Interest income is accrued daily and consists of
interest accrued, discount earned (including both original issue and
market discount) and premium amortization on the investments of the
Fund. 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. Debt obligations may be placed on
non-accrual status and related interest income may be reduced by
ceasing current accruals and writing off interest receivable when
the collection of all or a portion of interest has become doubtful
based on constantly applied procedures. A debt obligation is removed
from non-accrual status when the issuer resumes interest payments or
when collectibility of interest is reasonable assured.
C. Federal Income Taxes. It is the Corporation's policy to comply with
the requirements of the Internal Revenue Code (the "Code")
applicable to regulated investment companies and to distribute all
of its taxable income to its shareholders. Accordingly, no federal
income tax provision is required. The Fund files a tax return
annually using tax accounting methods required under provisions of
the Code which may differ from accounting principles generally
accepted in the United States of America, the
13
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2006
basis on which these financial statements are prepared. Accordingly,
the amount of net investment income and net realized gain reported
on these financial statements may differ from that reported on the
Fund's tax return due to certain book-to-tax timing differences such
as losses deferred due to "wash sale" transactions and utilization
of capital loss carryforwards. These differences result in temporary
over-distributions for financial statement purposes and are
classified as distributions in excess of accumulated net realized
gains or net investment income. These distributions do not
constitute a return of capital. Permanent differences are
reclassified on the Statement of Assets & Liabilities based upon
their tax classification. As such, the character of distributions to
shareholders reported in the Financial Highlights table may differ
from that reported to shareholders on Form 1099-DIV.
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 at least 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.
Capital Loss Carry Forward. At June 30, 2006 the fund had a net
capital loss carryforward of approximately $305,022 which expires as
follows:
June 30, 2014 $305,019
June 30, 2013 $ 3
E. Accounting Development. In June 2006, Financial Accounting Standards
Board Interpretation No. 48, Accounting for Uncertainty in Income
Taxes - an interpretation of FASB Statement 109 (FIN 48) was issued
and is effective for fiscal years beginning after December 15, 2006.
FIN 48 sets forth a threshold for financial statement recognition,
measurement and disclosure of a tax position taken or expected to be
taken on a tax return. While not expected to have a material impact
on the Fund's financial statements, management will be evaluating
the impact, if any, the adoption of FIN 48 will have on the Fund's
net assets and results of operations.
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 of 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,
2006, the Fund incurred $198,593 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 of
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, 2006, the Fund incurred $119,156 for administrative
services.
14
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2006
Shareholder Servicing Fees. The Trust has a shareholder servicing
agreement with BBH for which BBH receives a fee from the Fund calculated
daily and paid monthly at an annual rate of 0.25% of the Fund's average
daily net assets. For the year ended June 30, 2006, the Fund incurred
$198,593 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, 2006, the Fund incurred $4,718 for Trustees' fees.
Custody and Accounting Fees. BBH acts as a custodian and receives a
custody and accounting fee from the Fund calculated daily and paid
monthly. The custody fee is a transaction based fee with an annual minimum
of $20,000, and the accounting fee is calculated at 0.04% per annum on the
first $100 million of net assets, 0.02% per annum on the next $400 million
of net assets and 0.01% per annum on all net assets over $500 million. For
the year ended June 30, 2006, the Fund incurred $69,431 for custody and
accounting services. These fees were reduced by $1,773 as a result of an
expense offset arrangement with the Fund's custodian. In the event that
the Fund is overdrawn, under the custody agreement with BBH, BBH will make
overnight loans to the Fund to cover overdrafts. Pursuant to their
agreement the Fund will be charged interest based on LIBOR on the day of
overdraft plus one percent. The total interest paid by the Fund for the
year ended June 30, 2006 was $588.
15
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2006
3. Investment Transactions. For the year ended June 30, 2006, the cost of
purchases and the proceeds of sales of investment securities other than
short-term investments were $62,143,663 and $99,500,549, respectively.
4. Share Transactions. Transactions in fund shares were as follows:
For the For the
year ended year ended
June 30, 2006 June 30, 2005
------------- -------------
Fund shares sold ........................... 1,242,250 5,762,117
Fund shares issued in connection
with reinvestment of dividends ........... 63,324 80,950
Fund shares repurchased .................... (5,385,157) (8,237,779)
---------- ----------
Net decrease ............................... (4,079,583) (2,394,712)
========== ==========
16
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the 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, 2006, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of June 30, 2006, by correspondence with the custodian.
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, 2006, 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 25, 2006
17
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF FUND EXPENSES
June 30, 2006 (unaudited)
EXAMPLE
As a shareholder of BBH Tax Free Short/Intermediate Fixed Income Fund (the
"Fund"), you may incur two types of costs: (1) transaction costs on purchase
payments, reinvested dividends, or other distributions; and exchange fees; and
(2) ongoing costs, including management fees; and other Fund expenses. This
Example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with the ongoing costs of
investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (January 1, 2006 to June 30, 2006).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use information in this line, together with
the amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading entitled "Expenses Paid During the Period" to estimate
the expenses you paid on your account during the period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid
during the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees or exchange fees. Therefore, the second line of the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would have been higher.
Expenses Paid
Beginning Ending During Period
Account Value Account Value January 1, 2006
January 1, 2006 June 30, 2006 to June 30, 2006(1)
---------------- --------------- -------------------
Actual.................. $1,000 $1,001.00 $4.22
Hypothetical(2)......... $1,000 $1,020.58 $4.26
- ----------
(1) Expenses are equal to the Fund's annualized expense ratio of 0.85%,
multiplied by the average account value over the period, multiplied by
181/365 (to reflect the one-half year period).
(2) Assumes a return of 5% before expenses. For the purpose of the
calculation, the applicable annualized expense ratio is subtracted from
the assumed return before expenses.
18
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
ADDITIONAL FEDERAL TAX INFORMATION
June 30, 2006 (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,
2006 was 100%.
In January 2007, the Fund will report on Form 1099 the tax status of all
distributions made during the calendar year 2006. Shareholders should use the
information on Form 1099 for their income tax returns.
19
TRUSTEES AND OFFICERS OF BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
(unaudited)
Information pertaining to the Trustees of the BBH Trust (the "Trust") and
executive officers of the Trust is set forth below. Part B to the Registration
Statement of the BBH Tax 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.
Number of
Term of Funds/
Office# Portfolio Other
and in Fund Trustee/
Position(s) Length Complex Directorships
Name, 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 Since 1990 Managing Director, Chairman and 10 None
Birth Date: the Board and Chief Executive Officer of
March 17, 1938 Trustee Shields & Company (member of
Shields & Company New York Stock Exchange);
140 Broadway Chairman of Capital Management
New York, NY 10005 Associates, Inc. (registered
investment adviser); Director of
Flowers Foods, Inc. (New York
Stock Exchange listed company).
David P. Feldman Trustee Since 1990 Director of Jeffrey Co. (1992 to 10 Director of Dreyfus
Birth Date: present); Director of QMED (1999 Mutual Funds (59
November 16, 1939 to present). Funds)
P.O. Box 864
Carefree, AZ 85377
Arthur D. Miltenberger Trustee Since 1992 Retired; Trustee, R.K. Mellon 10 None
Birth Date: Family Trusts (1981-June 2003);
November 8, 1938 General Partner, Mellon Family
503 Darlington Road Investment Company IV, V and VI
Ligonier, PA 15658 (1983-2002); Director of
Aerostructures Corporation
(aircraft manufacturer)
(1996-July 2003).
Eugene P. Beard Trustee Since 1993 Chairman & CEO of Westport Asset 10 Director of Old
Birth Date: Funds, Inc. Westbury Funds (7)
March 17, 1935
River Park
800 Connecticut
Avenue, 3 East
Norwalk, CT 06854
20
TRUSTEES AND OFFICERS OF BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
(unaudited)
Number of
Term of Funds/
Office# Portfolio Other
and in Fund Trustee/
Position(s) Length Complex Directorships
Name, Birth Date Held with of Time Principal Occupation(s) Overseen by Held by
and Address Trust/Portfolio Served During Past 5 Years Trustee^ Trustee
- ---------------------------------------------------------------------------------------------------------------------------
Alan G. Lowy Trustee Since 1993 Private Investor. 10 None
Birth Date:
April 17, 1939
4111 Clear Valley
Drive
Encino, CA 91436
Samuel F. Pryor, IV Trustee Since 2005 Private Investor. 10 None
Birth Date:
June 12, 1955
130 East 67th Street
New York, NY 10021
Officers
John A. Nielsen President, Since 2004 President and Principal Executive N/A N/A
Birth Date: Principal Officer of BBH Trust, BBH Prime
July 15, 1943 Executive Institutional Money Market Fund,
140 Broadway Officer Inc., BBH Fund, Inc. and BBH U.S.
New York, NY 10005 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.
Michael F. Hogan Chief Since 2004 Chief Compliance Officer to the N/A N/A
Birth Date: Compliance BBH Trust, BBH Prime Institutional
January 26, 1963 Officer Money Market Fund, Inc., BBH
50 Milk Street Fund, Inc. and the BBH U.S. Money
Boston, MA 02109 Market Portfolio; Senior Vice
President of BBH & Co. since
September 1994; Joined BBH & Co.
in 1985.
Charles H. Schreiber Treasurer, Since 2006 Treasurer, Principal Financial N/A N/A
Birth Date: Principal Officer and Anti Money Laundering
December 10, 1957 Financial Officer of BBH Trust, BBH Prime
140 Broadway Officer, Anti Institutional Money Market Fund,
New York, NY 10005 Money Inc., BBH Fund, Inc. and BBH U.S.
Laundering Money Market Portfolio; Senior
Officer Vice President of BBH & Co. since
September 2001; Joined BBH & Co.
in 1999.
FINANCIAL STATEMENT JUNE 30, 2006 21
TRUSTEES AND OFFICERS OF BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
(unaudited)
Number of
Term of Funds/
Office# Portfolio Other
and in Fund Trustee/
Position(s) Length Complex Directorships
Name, Birth Date Held with of Time Principal Occupation(s) Overseen by Held by
and Address Trust/Portfolio Served During Past 5 Years Trustee^ Trustee
- ---------------------------------------------------------------------------------------------------------------------------
Gail C. Jones Secretary Since 2002 Secretary of BBH Trust, BBH Prime N/A N/A
Birth Date: Institutional Money Market Fund,
October 26, 1953 Inc., BBH Fund, Inc. and BBH U.S.
1001 Liberty Avenue Money Market Portfolio (since
Pittsburgh, PA 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.
Judith J. Mackin Vice President Since 2002 Vice President of BBH Trust, BBH N/A N/A
Birth Date: Prime Institutional Money Market
May 30, 1960 Fund, Inc., BBH Fund, Inc. and
1001 Liberty Avenue BBH U.S. Money Market Portfolio
Pittsburgh, PA 15222-3779 (since August 2002); Vice
President (since November 1997)
of Federated Services Company.
Victor Siclari Assistant Secretary Since 2002 Assistant Secretary of BBH Trust, N/A N/A
Birth Date: BBH Prime Institutional Money
November 17, 1961 Market Fund, Inc., BBH Fund, Inc.
1001 Liberty Avenue and BBH U.S. Money Market
Pittsburgh, PA Portfolio (since August 2002);
15222-3779 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 BBH Trust, N/A N/A
Birth Date: Secretary, BBH Prime Institutional Money
May 4, 1966 Assistant Market Fund, Inc., BBH Fund, Inc.
140 Broadway Treasurer and BBH U.S. Money Market
New York, NY 10005 Portfolio (since August 2002);
Assistant Vice President of BBH &
Co. since 2003. Joined BBH & Co.
in 1996.
22
TRUSTEES AND OFFICERS OF BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
(unaudited)
Number of
Term of Funds/
Office# Portfolio Other
and in Fund Trustee/
Position(s) Length Complex Directorships
Name, Birth Date Held with of Time Principal Occupation(s) Overseen by Held by
and Address Trust/Portfolio Served During Past 5 Years Trustee^ Trustee
- ---------------------------------------------------------------------------------------------------------------------------
John C. Smith Assistant Treasurer Since 2002 Assistant Treasurer of BBH Trust, N/A N/A
Birth Date: BBH Prime Institutional Money
August 2, 1965 Market Fund, Inc., BBH Fund, Inc.
50 Milk Street and BBH U.S. Money Market
Boston, MA 02109 Portfolio (since August 2002);
Vice President (since September
2004), Assistant Vice President
(since September 2001), Associate
(September 2000-August 2001) and
Senior Analyst (June 1999-August
2000) 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 Fund, Inc. and BBH U.S. Money Market Portfolio. BBH
Trust has four series, and BBH Fund, Inc. has four series each are counted
as one "fund" for the purposes of this table.
FINANCIAL STATEMENT JUNE 30, 2006 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.
The Fund files with the SEC a complete schedule of its portfolio holdings, as of
the close of the first and third quarters of its fiscal year, on "Form N-Q."
Information on Form N-Q is available without charge and upon request by calling
the Funds at the toll-free number listed above. A text only version can be
viewed online or downloaded from the SEC's website at http://www.sec.gov; and
may be reviewed and copied at the SEC's Public Reference Room in Washington, DC
(call 1-800-SEC-0330 for information on the operation of the Public Reference
Room). You may also access this information from the BBH website at BBH.com by
clicking on "BBH Mutual Funds" and selecting "Online Documents/Holdings
Information."
A copy of the Fund's Proxy Voting Policy is available upon request by calling
the toll-free number listed above. A text-only version of the policy can be
viewed online or downloaded from the SEC at www.sec.gov.
BROWN [LOGO]
BROTHERS
HARRIMAN
BROWN [LOGO]
BROTHERS
HARRIMAN
Annual Report
JUNE 30, 2006
BBH TAX EXEMPT MONEY FUND
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO ALLOCATION
June 30, 2006 (unaudited)
BREAKDOWN BY BOND TYPE
Percent of
U.S. $ Value Net Assets
------------ ----------
Certificate of Participation..................... $ 2,100,000 0.4%
Education........................................ 66,561,285 13.5
General Obligations.............................. 129,621,538 26.3
Health Care...................................... 20,800,000 4.2
Industrial....................................... 63,900,000 13.0
Miscellaneous.................................... 34,762,112 7.0
Pre-Refunded..................................... 1,821,588 0.4
Special Tax...................................... 5,903,505 1.2
Transportation................................... 17,001,040 3.4
Utilities........................................ 22,436,490 4.5
Water/Sewer...................................... 62,930,000 12.8
Commercial Paper................................. 67,023,000 13.6
Liabilities in Excess of Other Assets............ (1,701,200) (0.3)
------------ -----
Net Assets....................................... $493,159,358 100.0%
============ =====
TOP FIVE HOLDINGS BY STATE
Percent of
U.S. $ Value Net Assets
------------ ----------
New York......................................... $ 82,927,832 16.8%
Massachusetts.................................... 59,427,005 12.0
California....................................... 31,050,000 6.3
Texas............................................ 57,466,346 11.7
Minnesota........................................ 20,962,327 4.2
Other States..................................... 243,027,048 49.3
Liabilities in Excess of Other Assets............ (1,701,200) (0.3)
------------ -----
Net Assets....................................... $493,159,358 100.0%
============ =====
All data as of June 30, 2006. The Fund's breakdown by bond type and top five
holdings by state are expressed as a percentage of net assets and may vary over
time.
The accompanying notes are an integral part of these financial statements.
2
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
June 30, 2006
Principal Maturity Interest
Amount Date Rate Value
- ----------- -------- --------- -----------
MUNICIPAL BONDS (86.7%)
CERTIFICATE OF PARTICIPATION (0.4%)
$ 2,100,000 Denver, Colorado, City & Council(1).... 07/05/06 3.980% $ 2,100,000
------------
EDUCATION (13.5%)
600,000 Connecticut State Health & Educational
Facilities Authority(1).............. 07/03/06 3.850 600,000
700,000 Connecticut State Health & Educational
Facilities Authority(1).............. 07/03/06 3.850 700,000
4,000,000 Connecticut State Health & Educational
Facilities Authority(1).............. 07/05/06 3.850 4,000,000
3,300,000 Connecticut State Health & Educational
Facilities Authority(1).............. 07/05/06 3.850 3,300,000
1,700,000 Connecticut State Health & Educational
Facilities Authority(1).............. 07/03/06 3.850 1,700,000
1,000,000 Indiana University..................... 08/01/06 5.250 1,001,790
3,000,000 Massachusetts State Health &
Educational Facilities Authority(1).. 07/06/06 3.850 3,000,000
5,000,000 Massachusetts State Health &
Educational Facilities Authority(1).. 07/03/06 3.900 5,000,000
1,910,000 Massachusetts State Health &
Educational Facilities Authority(1).. 07/03/06 3.930 1,910,000
5,000,000 Michigan State University(1)........... 07/05/06 3.950 5,000,000
2,800,000 New Hampshire Health & Education
Facilities Authority(1).............. 07/05/06 3.930 2,800,000
8,275,000 New Hampshire Health & Education
Facilities Authority(1).............. 07/05/06 3.930 8,275,000
2,360,000 New Jersey State Educational
Facilities Authority(1).............. 07/03/06 3.520 2,360,000
3,400,000 New Jersey State Educational
Facilities Authority(1).............. 07/03/06 3.850 3,400,000
2,000,000 New York State Dormitory Authority(1).. 07/03/06 3.950 2,000,000
900,000 North Carolina State University........ 10/01/06 5.000 903,331
1,500,000 Oakland University, Michigan(1)........ 07/05/06 3.980 1,500,000
1,000,000 Ohio State University(1)............... 07/06/06 3.850 1,000,000
3,000,000 Ohio State University(1)............... 07/06/06 3.850 3,000,000
1,000,000 Ohio State University(1)............... 07/06/06 3.850 1,000,000
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2006 3
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2006
Principal Maturity Interest
Amount Date Rate Value
- ----------- -------- --------- -----------
MUNICIPAL BONDS (continued)
EDUCATION (continued)
$ 2,000,000 Palm Beach County School District...... 09/28/06 4.000% $ 2,002,074
2,500,000 University of Missouri(1).............. 07/03/06 3.980 2,500,000
1,800,000 University of Pittsburgh(1)............ 07/05/06 3.950 1,800,000
3,000,000 University of Texas.................... 07/01/06 5.000 3,000,000
3,000,000 University of Texas.................... 08/15/06 6.000 3,009,090
1,800,000 Washington State Health Care
Facilities Authority(1).............. 07/03/06 3.920 1,800,000
------------
Total Education........................ 66,561,285
------------
GENERAL OBLIGATIONS (26.3%)
3,200,000 Chicago Board of Education(1).......... 07/03/06 3.970 3,200,000
2,100,000 Chicago Board of Education(1).......... 07/03/06 3.970 2,100,000
1,300,000 Chicago Metropolitan Water
Reclamation District................. 12/01/06 5.900 1,311,774
1,800,000 City & County of Honolulu, Hawaii...... 11/01/06 5.500 1,812,006
4,100,000 Clark County, Nevada,
School District(1)................... 07/03/06 3.920 4,100,000
2,610,000 Columbus, Ohio......................... 07/01/06 5.000 2,610,000
5,000,000 Connecticut State(1)................... 07/06/06 3.980 5,000,000
1,000,000 Delaware State......................... 07/01/06 5.000 1,000,000
2,385,000 District of Columbia(1)................ 07/05/06 3.980 2,385,000
600,000 Florida State Board of Education....... 01/01/07 5.000 603,819
3,000,000 Georgia State.......................... 07/01/06 5.750 3,000,000
1,200,000 Hawaii State........................... 08/01/06 5.000 1,201,624
500,000 Hennepin County, Minnesota............. 12/01/06 4.700 502,134
5,075,000 Loudoun County, Virginia............... 12/01/06 4.250 5,089,343
1,500,000 Maryland State......................... 08/01/06 5.000 1,502,683
7,700,000 Massachusetts State(1)................. 07/03/06 3.930 7,700,000
11,000,000 Massachusetts State(1)................. 07/03/06 3.930 11,000,000
2,625,000 Massachusetts State(1)................. 07/06/06 3.930 2,625,000
2,000,000 Massachusetts State.................... 12/01/06 5.000 2,012,005
1,000,000 Miami-Dade County School
District, Florida.................... 08/01/06 5.100 1,001,243
2,000,000 Minneapolis, Minnesota(1).............. 07/06/06 3.820 2,000,000
620,000 Minneapolis, Minnesota(1).............. 07/06/06 3.820 620,000
The accompanying notes are an integral part of these financial statements.
4
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2006
Principal Maturity Interest
Amount Date Rate Value
- ----------- -------- --------- -----------
MUNICIPAL BONDS (continued)
GENERAL OBLIGATIONS (continued)
$ 9,300,000 Minneapolis, Minnesota(1).............. 07/06/06 3.820% $ 9,300,000
1,000,000 Minnesota State........................ 08/01/06 5.000 1,001,746
1,000,000 Minnesota State........................ 10/01/06 5.000 1,005,175
5,000,000 Minnesota State........................ 10/01/06 5.000 5,021,934
1,500,000 Minnesota State........................ 11/01/06 5.500 1,511,337
600,000 New York, New York(1).................. 07/03/06 3.920 600,000
4,000,000 New York, New York(1).................. 07/03/06 3.930 4,000,000
1,800,000 New York, New York(1).................. 07/03/06 3.940 1,800,000
750,000 New York, New York(1).................. 07/03/06 3.940 750,000
3,300,000 New York, New York(1).................. 07/03/06 3.940 3,300,000
5,275,000 New York, New York(1).................. 07/03/06 3.940 5,275,000
600,000 New York, New York(1).................. 07/03/06 3.940 600,000
1,000,000 New York, New York(1).................. 07/03/06 3.940 1,000,000
900,000 New York, New York(1).................. 07/03/06 3.940 900,000
1,300,000 New York, New York(1).................. 07/03/06 3.940 1,300,000
1,900,000 New York, New York(1).................. 07/03/06 3.950 1,900,000
1,175,000 Pennsylvania State..................... 09/15/06 5.125 1,178,924
2,000,000 Port Saint Lucie, Florida.............. 07/01/06 4.000 2,000,000
5,500,000 South Carolina State................... 08/01/06 4.000 5,505,482
2,000,000 South Carolina State................... 11/01/06 4.000 2,002,646
1,590,000 South Carolina State................... 08/01/06 5.000 1,592,038
2,500,000 Stamford, Connecticut.................. 07/15/06 5.000 2,502,069
12,175,000 Texas State............................ 08/31/06 4.500 12,198,556
1,000,000 Utah State............................. 07/01/06 5.500 1,000,000
------------
Total General Obligations.............. 129,621,538
------------
HEALTH CARE (4.2%)
2,400,000 Harris County, Texas, Health Facilities
Development Corp.(1)................. 07/03/06 3.950 2,400,000
8,000,000 New York State Dormitory Authority
Revenue(1)........................... 07/06/06 3.950 8,000,000
1,500,000 Oklahoma State Industries Authority,
Hospital Revenue(1).................. 07/03/06 4.000 1,500,000
3,900,000 Reno, Nevada, Hospital Revenue(1)...... 07/03/06 3.920 3,900,000
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2006 5
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2006
Principal Maturity Interest
Amount Date Rate Value
- ----------- -------- --------- -----------
MUNICIPAL BONDS (continued)
HEALTH CARE (continued)
$ 5,000,000 Royal Oak, Michigan, Hospital
Finance Authority(1)................. 07/03/06 3.990% $ 5,000,000
------------
Total Health Care...................... 20,800,000
------------
INDUSTRIAL (13.0%)
2,600,000 Berkeley County, South Carolina,
Pollution Control Revenue(1)......... 07/03/06 3.960 2,600,000
1,000,000 California Pollution Control
Financing Authority(1)............... 07/03/06 3.850 1,000,000
1,100,000 California Statewide Communities
Development Authority, Pollution
Control Revenue(1)................... 07/03/06 3.930 1,100,000
8,700,000 Columbia, Alabama, Pollution
Control Revenue(1)................... 07/03/06 3.970 8,700,000
5,800,000 Columbia, Alabama, Pollution
Control Revenue(1)................... 07/03/06 3.970 5,800,000
600,000 Delaware County, Pennsylvania,
Industrial Development Authority(1) 07/05/06 3.950 600,000
1,000,000 East Baton Rouge, Parish Louisiana,
Pollution Control Revenue(1)......... 07/03/06 3.900 1,000,000
7,750,000 Forsyth, Montana, Pollution Control
Revenue(1)........................... 07/03/06 3.970 7,750,000
3,400,000 Gulf Coast Waste Disposal
Authority, Texas(1).................. 07/03/06 3.910 3,400,000
1,800,000 Harris County, Texas, Pollution
Control Revenue(1)................... 07/03/06 3.970 1,800,000
1,000,000 Hurley, New Mexico, Pollution
Control Revenue(1)................... 07/03/06 3.970 1,000,000
5,000,000 Jackson County, Mississippi, Port
Facility Revenue(1).................. 07/03/06 3.990 5,000,000
5,850,000 Joliet, Illinois, Regional Port
District(1) ......................... 07/03/06 3.910 5,850,000
5,500,000 Kemmerer, Wyoming, Pollution
Control Revenue(1)................... 07/03/06 3.970 5,500,000
500,000 Lincoln County, Wyoming, Pollution
Control Revenue(1)................... 07/03/06 3.880 500,000
The accompanying notes are an integral part of these financial statements.
6
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2006
Principal Maturity Interest
Amount Date Rate Value
- ----------- -------- --------- -----------
MUNICIPAL BONDS (continued)
INDUSTRIAL (continued)
$ 5,000,000 Lincoln County, Wyoming, Pollution
Control Revenue(1)................... 07/03/06 3.910% $ 5,000,000
800,000 Midlothian, Texas, Pollution
Control Revenue(1)................... 07/05/06 3.980 800,000
1,000,000 Port Arthur, Texas, Navigation
District(1) ......................... 07/03/06 3.990 1,000,000
1,800,000 Sweetwater County, Wyoming,
Pollution Control Revenue(1)......... 07/03/06 3.970 1,800,000
1,300,000 Valdez, Alaska, Marine Terminal
Revenue(1)........................... 07/03/06 3.880 1,300,000
2,200,000 Valdez, Alaska, Marine Terminal
Revenue(1).......................... 07/03/06 3.880 2,200,000
200,000 Valdez, Alaska, Marine Terminal
Revenue(1)........................... 07/03/06 3.910 200,000
------------
Total Industrial....................... 63,900,000
------------
MISCELLANEOUS (7.0%)
3,125,000 Alaska State Housing Finance
Corp. Revenue(1)..................... 07/06/06 4.030 3,125,000
1,200,000 California Housing Finance Agency(1)... 07/05/06 3.950 1,200,000
600,000 California State Economic
Recovery Bond(1)..................... 07/03/06 3.880 600,000
2,400,000 California State Economic
Recovery Bond(1)..................... 07/03/06 3.930 2,400,000
1,000,000 City of Dallas, Texas.................. 08/15/06 5.250 1,002,112
1,365,000 Clayton County, Georgia, Housing
Authority(1)......................... 07/05/06 3.930 1,365,000
1,300,000 Colorado Housing & Finance
Authority(1)......................... 07/05/06 3.980 1,300,000
3,400,000 Missouri Development Finance
Board Cultural Facilities
Revenue(1) .......................... 07/03/06 3.980 3,400,000
2,800,000 New York, New York, City Transitional..
Finance Authority(1)................. 07/03/06 3.930 2,800,000
5,400,000 New York, New York, City
Transitional Finance Authority(1).... 07/05/06 3.930 5,400,000
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2006 7
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2006
Principal Maturity Interest
Amount Date Rate Value
- ----------- -------- --------- -----------
MUNICIPAL BONDS (continued)
MISCELLANEOUS (continued)
$ 2,000,000 New York, New York, City Transitional
Finance Authority(1)................. 07/03/06 3.950% $ 2,000,000
200,000 New York, New York, City Transitional
Finance Authority(1)................. 07/03/06 3.950 200,000
2,170,000 New York, New York, City Transitional
Finance Authority(1)................. 07/05/06 3.950 2,170,000
1,000,000 New York, New York, City Transitional
Finance Authority(1)................. 07/05/06 3.950 1,000,000
1,200,000 New York, New York, City Transitional
Finance Authority(1)................. 07/05/06 3.950 1,200,000
400,000 New York, New York, City Transitional
Finance Authority(1)................. 07/03/06 3.990 400,000
3,500,000 New York State Local Government
Assistance Corp.(1).................. 07/05/06 3.900 3,500,000
900,000 New York State Local Government
Assistance Corp.(1).................. 07/05/06 3.950 900,000
800,000 Will County, Illinois Exempt Facilities
Revenue(1)........................... 07/03/06 4.040 800,000
------------
Total Miscellaneous.................... 34,762,112
------------
PRE-REFUNDED (0.4%)2
1,815,000 Harris County, Texas................... 10/01/06 5.000 1,821,588
SPECIAL TAX (1.2%)
1,000,000 Connecticut State...................... 10/01/06 5.000 1,003,505
4,900,000 Riverside County, California,
Special Tax(1)....................... 07/05/06 3.940 4,900,000
------------
Total Special Tax...................... 5,903,505
------------
TRANSPORTATION (3.4%)
1,000,000 Arizona State Transportation Board
Highway Revenue...................... 07/01/06 5.000 1,000,000
1,100,000 Georgia State Road & Tollway
Authority............................ 10/01/06 4.000 1,101,040
The accompanying notes are an integral part of these financial statements.
8
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2006
Principal Maturity Interest
Amount Date Rate Value
- ----------- -------- --------- -----------
MUNICIPAL BONDS (continued)
TRANSPORTATION (continued)
$11,700,000 Kansas State Department of
Transportation & Highway
Revenue(1)........................... 07/03/06 3.920% $11,700,000
3,200,000 Metropolitan Transportation
Authority, New York(1)............... 07/05/06 3.900 3,200,000
------------
Total Transportation................... 17,001,040
------------
UTILITIES (4.5%)
2,600,000 California State Department of Water
Resources(1)......................... 07/03/06 4.000 2,600,000
3,590,000 Long Island Power Authority............ 12/01/06 5.000 3,607,726
4,350,000 Long Island Power Authority
New York, Electric System(1)......... 07/03/06 3.930 4,350,000
1,000,000 Michigan Municipal Bond Authority...... 10/01/06 5.000 1,003,659
4,600,000 Municipal Electric Authority
of Georgia(1)........................ 07/05/06 3.750 4,600,000
3,940,000 New York State Environmental
Facilities Corp...................... 04/15/07 5.000 3,975,105
900,000 Piedmont Municipal Power Agency
Electric Revenue(1).................. 07/05/06 3.980 900,000
1,400,000 Washington State Public Power
Supply System(1)..................... 07/05/06 3.960 1,400,000
------------
Total Utilities........................ 22,436,490
------------
WATER/SEWER (12.8%)
1,300,000 Boston, Massachusetts, Water &
Sewer Commission(1).................. 07/06/06 3.900 1,300,000
2,000,000 California State Department of
Water Resources & Power
Supply Revenue(1).................... 07/03/06 3.930 2,000,000
1,800,000 California State Department of
Water Resources(1)................... 07/05/06 3.950 1,800,000
10,250,000 California State Department of
Water Resources(1)................... 07/06/06 3.950 10,250,000
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2006 9
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2006
Principal Maturity Interest
Amount Date Rate Value
- ----------- -------- --------- -----------
MUNICIPAL BONDS (continued)
WATER/SEWER (continued)
$ 3,700,000 Durham, North Carolina, Water &
Sewer Revenue(1)..................... 07/05/06 3.980% $ 3,700,000
400,000 Irvine Ranch, California, Water
District(1).......................... 07/03/06 3.780 400,000
5,800,000 Massachusetts State Water
Resources Authority(1)............... 07/05/06 3.910 5,800,000
14,530,000 Massachusetts State Water
Resources Authority(1)............... 07/03/06 3.930 14,530,000
1,000,000 Massachusetts State Water
Resources Authority(1)............... 07/05/06 3.950 1,000,000
1,550,000 Massachusetts State Water
Resources Authority(1)............... 07/05/06 3.980 1,550,000
2,800,000 Metropolitan Water District of
Southern California(1)............... 07/03/06 3.850 2,800,000
4,100,000 New York, New York, City Municipal
Water Finance Authority(1)........... 07/03/06 3.930 4,100,000
12,700,000 New York, New York, City Municipal
Water Finance Authority(1)........... 07/03/06 3.950 12,700,000
1,000,000 Ohio State Solid Waste Revenue(1)...... 07/03/06 3.850 1,000,000
------------
Total Water/Sewer...................... 62,930,000
------------
Total Municipal Bonds.................. 427,837,558
------------
COMMERCIAL PAPER (13.6%)
1,800,000 Board of Regent Texas.................. 08/16/06 3.530 1,800,000
10,000,000 City and County of Honolulu, Hawaii.... 08/03/06 3.350 10,000,000
7,000,000 City of Houston , Texas................ 08/15/06 3.530 7,000,000
5,000,000 City of San Antonio, Texas............. 08/02/06 3.350 5,000,000
4,200,000 City of San Antonio, Texas............. 09/12/06 3.500 4,200,000
4,000,000 King County, Washington................ 09/11/06 3.470 4,000,000
2,200,000 Maryland Health & Education............ 08/17/06 3.530 2,200,000
1,000,000 Maryland State......................... 07/21/06 3.530 1,000,000
2,000,000 Massachusetts State Health &
Educational Facilities Authority..... 07/25/06 3.500 2,000,000
5,000,000 Omaha Public Power..................... 07/12/06 3.320 5,000,000
1,500,000 Tennessee State School Bond............ 07/05/06 3.510 1,500,000
The accompanying notes are an integral part of these financial statements.
10
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2006
Principal Maturity Interest
Amount Date Rate Value
- ----------- -------- --------- -----------
COMMERCIAL PAPER (continued)
$ 9,700,000 Tennessee State School Bond............ 07/25/06 3.500% $ 9,700,000
4,588,000 Tennessee State School Bond............ 07/26/06 3.750 4,588,000
3,705,000 Texas Public Finance................... 08/14/06 3.530 3,705,000
1,000,000 Texas Public Finance................... 09/12/06 3.500 1,000,000
3,000,000 University of Texas.................... 08/09/06 3.450 3,000,000
1,330,000 University of Texas.................... 09/12/06 3.500 1,330,000
------------
Total Commercial Paper................. 67,023,000
------------
TOTAL INVESTMENTS, AT AMORTIZED COST....................... 100.3% $494,860,558
LIABILITIES IN EXCESS OF OTHER ASSETS...................... (0.3) (1,701,200)
----- ------------
NET ASSETS................................................. 100.0% $493,159,358
===== ============
- ----------
(1) Variable rate instrument. Interest rates change on specific dates (such as
a coupon or interest payment date). The yield shown represents the June
30, 2006 coupon or interest rate.
(2) 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, 2006 11
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2006
ASSETS:
Investments, at amortized cost................................ $494,860,558
Cash.......................................................... 102,287
Interest receivable........................................... 2,747,182
Other receivable.............................................. 24,188
------------
Total Assets................................................ 497,734,215
------------
LIABILITIES:
Payables for:
Investments purchased....................................... 3,975,105
Shareholder servicing fees.................................. 218,029
Investment advisory fees.................................... 130,818
Administrative fees......................................... 87,212
Custody and accounting fees................................. 68,066
Professional fees........................................... 38,205
Dividends declared.......................................... 36,783
Board of Trustees' fees..................................... 1,000
Accrued expenses and other liabilities........................ 19,639
------------
Total Liabilities......................................... 4,574,857
------------
NET ASSETS, for 493,158,129 fund shares outstanding.............. $493,159,358
============
Net Assets Consist of:
Par value................................................... $ 4,931,581
Paid-in capital............................................. 488,227,777
------------
Net Assets....................................................... $493,159,358
============
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, 2006
NET INVESTMENT INCOME:
Income:
Investment income........................................... $13,809,806
-----------
Expenses:
Shareholder servicing fees.................................. 1,202,850
Investment advisory fees.................................... 721,710
Administrative fees......................................... 481,140
Custody and accounting fees................................. 103,861
Professional fees........................................... 42,556
Board of Trustees' fees..................................... 28,089
Miscellaneous expenses...................................... 142,528
-----------
Total Expenses............................................ 2,722,734
Expense offset arrangement................................ (5,357)
-----------
Net Expenses.............................................. 2,717,377
-----------
Net Investment Income............................................ $11,092,429
===========
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2006 13
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30,
--------------------------------
2006 2005
------------- ---------------
INCREASE (DECREASE) IN NET ASSETS:
From Operations:
Net investment income ............................. $ 11,092,429 $ 5,447,040
Dividends declared from net investment income ....... (11,095,940) (5,366,122)
------------- ---------------
Net increase (decrease) in net
assets from operations ........................ (3,511) 80,918
------------- ---------------
From Fund Share (Principal) Transactions at
Net Asset Value of $1.00 per share:
Fund shares sold ................................ 544,563,550 1,199,999,083
Fund shares issued in reinvestment of dividends . 5,793,650 2,748,333
Fund shares repurchased ......................... (494,840,334) (1,218,015,624)
------------- ---------------
Net increase (decrease) in net assets resulting
from fund share transactions ................ 55,516,866 (15,268,208)
------------- ---------------
Total increase (decrease) in net assets ....... 55,513,355 (15,187,290)
NET ASSETS:
Beginning of year ................................... 437,646,003 452,833,293
------------- ---------------
End of year ......................................... $ 493,159,358 $ 437,646,003
============= ===============
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,
-------------------------------------------
2006 2005 2004 2003 2002
----- ----- ----- ----- -----
Net asset value, beginning of year . $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income ........... 0.02 0.01 0.00(1) 0.01 0.01
Dividends to shareholders from net
investment income ............... (0.02) (0.01) (0.00)(1) (0.01) (0.01)
----- ----- ----- ----- -----
Net asset value, end of year ....... $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total return ....................... 2.31% 1.15% 0.42% 0.72% 1.40%
Ratios/Supplemental data:
Net assets, end of year
(in millions) ................. $493 $438 $453 $465 $414
Net expenses paid by Fund ....... 0.56% 0.56% 0.55% 0.56% 0.53%
Expense offset arrangement ...... 0.00%(2) 0.00%(2) 0.00%(2) 0.01% 0.02%
----- ----- ----- ----- -----
Total expenses ................ 0.56% 0.56% 0.55% 0.57% 0.55%
===== ===== ===== ===== =====
Ratio of net investment income to
average net assets ............ 2.31% 1.15% 0.42% 0.72% 1.28%
- ----------
(1) Less than $0.01 per share.
(2) Less than 0.01%.
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2006 15
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006
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, 2006, 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. Investment Transactions and Income. Investment transactions are
accounted for on the trade date. Realized gains and losses, if any,
from investment transactions are determined on the basis of
identified cost. The Fund invests primarily in debt securities
issued by municipalities. The ability of the issuers of the debt
securities to meet their obligation may be affected by economic
developments in a specific state or municipality. Interest income
consists of interest accrued and discount earned (including both
original issue and market discount) and premium amortization on the
investments of the Fund, accrued ratably to the date of maturity.
C. Federal Income Taxes. Each series of the Trust is treated as a
separate entity for federal income tax purposes. It is the Fund's
policy to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies and to distribute
substantially all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required. At June
30, 2006, 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. Accounting Development. In June 2006, Financial Accounting Standards
Board Interpretation No. 48, Accounting for Uncertainty in Income
Taxes - an interpretation of FASB Statement 109 (FIN 48) was issued
and is effective for fiscal years beginning after December 15, 2006.
FIN 48 sets forth a threshold for financial statement recognition,
measurement and disclosure of a tax position taken or expected to be
taken on a tax return. While not expected to have a material impact
on the Fund's financial statements, management will be evaluating
the impact, if any, the adoption of FIN 48 will have on the Fund's
net assets and results of operations.
16
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
JUNE 30, 2006
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 of 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,
2006, the Fund incurred $721,710 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 of
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, 2006, the Fund incurred $481,140 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 of 0.25% of the Fund's average
daily net assets. For the year ended June 30, 2006, the Fund incurred
$1,202,850 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, 2006, the Fund incurred $28,089 for Trustees' fees.
Custody and Accounting Fees. BBH acts as a custodian and receives a
custody and accounting fee from the Fund calculated daily and paid
monthly. The custody fee is a transaction based fee with an annual minimum
of $20,000, and the accounting fee is calculated at 0.01% per annum on the
first $1 billion of net assets and 0.005% per annum on all net assets over
$1 billion. For the year ended June 30, 2006, the Fund incurred $103,861
for custody and accounting services. These fees were reduced by $5,357 as
a result of an expense offset arrangement with the Fund's custodian. In
the event that the Fund is overdrawn, under the custody agreement with
BBH, BBH will make overnight loans to the Fund to cover overdrafts.
Pursuant to their agreement the Fund will be charged interest based on
LIBOR on the day of overdraft plus one percent. The total interest paid by
the Fund for the year ended June 30, 2006 was $5,789.
FINANCIAL STATEMENT JUNE 30, 2006 17
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the 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, 2006, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of June 30, 2006, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of BBH
Tax Exempt Money Fund as of June 30, 2006, 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 25, 2006
18
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF FUND EXPENSES
June 30, 2006 (unaudited)
EXAMPLE
As a shareholder of BBH Tax Exempt Money Fund (the "Fund"), you may incur two
types of costs: (1) transaction costs on purchase payments, reinvested
dividends, or other distributions; and exchange fees; and (2) ongoing costs,
including management fees; and other Fund expenses. This Example is intended to
help you understand your ongoing costs (in dollars) of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (January 1, 2006 to June 30, 2006).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use information in this line, together with
the amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading entitled "Expenses Paid During the Period" to estimate
the expenses you paid on your account during the period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid
during the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees or exchange fees. Therefore, the second line of the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would have been higher.
Expenses Paid
Beginning Ending During Period
Account Value Account Value January 1, 2006
January 1, 2006 June 30, 2006 to June 30, 2006(1)
--------------- ------------- -------------------
Actual.................. $1,000 $1,012.90 $2.79
Hypothetical(2)......... $1,000 $1,022.02 $2.81
- ----------
(1) Expenses are equal to the Fund's annualized expense ratio of 0.56%,
multiplied by the average account value over the period, multiplied by
181/365 (to reflect the one-half year period).
(2) Assumes a return of 5% before expenses. For the purpose of the
calculation, the applicable annualized expense ratio is subtracted from
the assumed return before expenses.
FINANCIAL STATEMENT JUNE 30, 2006 19
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
ADDITIONAL FEDERAL TAX INFORMATION
June 30, 2006 (unaudited)
The percentage of tax-exempt dividends paid by the BBH Tax Exempt Money Fund
(the "Fund") for the year ended June 30, 2006 was 100%.
In January 2007, the Fund will report on Form 1099 the tax status of all
distributions made during the calendar year 2006. Shareholders should use the
information on Form 1099 for their income tax returns.
20
TRUSTEES AND OFFICERS OF BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
(unaudited)
Information pertaining to the Trustees of the BBH Trust (the "Trust") and
executive officers of the Trust is set forth below. Part B to the Registration
Statement of the BBH Tax Exempt Money Fund includes additional information about
the Fund's Trustees and is available upon request without charge by contacting
the Fund at 1-800-625-5759.
Number of
Term of Funds/
Office# Portfolio Other
and in Fund Trustee/
Position(s) Length Complex Directorships
Name, 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 and 10 None
Birth Date: Board and Trustee Chief Executive Officer of Shields
March 17, 1938 & Company (member of New York
Shields & Company Stock Exchange); Chairman of
140 Broadway Capital Management Associates,
New York, NY 10005 Inc. (registered investment
adviser); Director of Flowers
Foods, Inc. (New York Stock
Exchange listed company).
David P. Feldman Trustee Since 1990 Director of Jeffrey Co. (1992 to 10 Director of Dreyfus
Birth Date: present); Director of QMED (1999 Mutual Funds (59
November 16, 1939 to present). Funds)
P.O. Box 864
Carefree, AZ 85377
Arthur D. Miltenberger Trustee Since 1992 Retired; Trustee, R.K. Mellon 10 None
Birth Date: Family Trusts (1981-June 2003);
November 8, 1938 General Partner, Mellon Family
503 Darlington Road Investment Company IV, V and VI
Ligonier, PA 15658 (1983-2002); Director of
Aerostructures Corporation
(aircraft manufacturer)
(1996-July 2003).
Eugene P. Beard Trustee Since 1993 Chairman & CEO of Westport Asset 10 Director of Old
Birth Date: Funds, Inc. Westbury Funds (7)
March 17, 1935
River Park
800 Connecticut
Avenue, 3 East
Norwalk, CT 06854
Alan G. Lowy Trustee Since 1993 Private Investor. 10 None
Birth Date:
April 17, 1939
4111 Clear Valley Drive
Encino, CA 91436
FINANCIAL STATEMENT JUNE 30, 2006 21
TRUSTEES AND OFFICERS OF BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
(unaudited)
Number of
Term of Funds/
Office# Portfolio Other
and in Fund Trustee/
Position(s) Length Complex Directorships
Name, Birth Date Held with of Time Principal Occupation(s) Overseen by Held by
and Address Trust/Portfolio Served During Past 5 Years Trustee^ Trustee
- ---------------------------------------------------------------------------------------------------------------------------
Samuel F. Pryor, IV Trustee Since 2005 Private Investor. 10 None
Birth Date:
June 12, 1955
130 East 67th Street
New York, NY 10021
Officers
John A. Nielsen President, Since 2004 President and Principal Executive N/A N/A
Birth Date: Principal Officer of BBH Trust, BBH Prime
July 15, 1943 Executive Officer Institutional Money Market Fund,
140 Broadway Inc., BBH Fund, Inc. and BBH U.S.
New York, NY 10005 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.
Michael F. Hogan Chief Since 2004 Chief Compliance Officer to the N/A N/A
Birth Date: Compliance BBH Trust, BBH Prime Institutional
January 26, 1963 Officer Money Market Fund, Inc., BBH Fund,
50 Milk Street Inc. and the BBH U.S. Money Market
Boston, MA 02109 Portfolio; Senior Vice President
of BBH & Co. since September 1994;
Joined BBH & Co. in 1985.
Charles H. Schreiber Treasurer, Since 2006 Treasurer, Principal Financial N/A N/A
Birth Date: Principal Officer and Anti Money Laundering
December 10, 1957 Financial Officer of BBH Trust, BBH Prime
140 Broadway Officer, Anti Institutional Money Market Fund,
New York, NY 10005 Money Inc., BBH Fund, Inc. and BBH U.S.
Laundering Money Market Portfolio; Senior
Officer Vice President of BBH & Co.
since September 2001; Joined BBH
& Co. in 1999.
Gail C. Jones Secretary Since 2002 Secretary of BBH Trust, BBH Prime N/A N/A
Birth Date: Institutional Money Market Fund,
October 26, 1953 Inc., BBH Fund, Inc. and BBH U.S.
1001 Liberty Avenue Money Market Portfolio (since
Pittsburgh, PA 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.
22
TRUSTEES AND OFFICERS OF BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
(unaudited)
Number of
Term of Funds/
Office# Portfolio Other
and in Fund Trustee/
Position(s) Length Complex Directorships
Name, Birth Date Held with of Time Principal Occupation(s) Overseen by Held by
and Address Trust/Portfolio Served During Past 5 Years Trustee^ Trustee
- ---------------------------------------------------------------------------------------------------------------------------
Judith J. Mackin Vice President Since 2002 Vice President of BBH Trust, BBH N/A N/A
Birth Date: Prime Institutional Money Market
May 30, 1960 Fund, Inc., BBH Fund, Inc. and
1001 Liberty Avenue BBH U.S. Money Market Portfolio
Pittsburgh, PA 15222-3779 (since August 2002); Vice
President (since November 1997)
of Federated Services Company.
Victor Siclari Assistant Since 2002 Assistant Secretary of BBH Trust, N/A N/A
Birth Date: Secretary BBH Prime Institutional Money
November 17, 1961 Market Fund, Inc., BBH Fund, Inc.
1001 Liberty Avenue and BBH U.S. Money Market
Pittsburgh, PA Portfolio (since August 2002);
15222-3779 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 BBH Trust, N/A N/A
Birth Date: Secretary, BBH Prime Institutional Money
May 4, 1966 Assistant Market Fund, Inc., BBH Fund, Inc.
140 Broadway Treasurer and BBH U.S. Money Market
New York, NY 10005 Portfolio (since August 2002);
Assistant Vice President of BBH &
Co. since 2003. Joined BBH & Co.
in 1996.
John C. Smith Assistant Since 2002 Assistant Treasurer of BBH Trust, N/A N/A
Birth Date: Treasurer BBH Prime Institutional Money
August 2, 1965 Market Fund, Inc., BBH Fund, Inc.
50 Milk Street and BBH U.S. Money Market
Boston, MA 02109 Portfolio (since August 2002);
Vice President (since September
2004), Assistant Vice President
(since September 2001), Associate
(September 2000-August 2001) and
Senior Analyst (June 1999-August
2000) 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 Fund, Inc. and BBH U.S. Money Market Portfolio. BBH
Trust has four series, and BBH Fund, Inc. has four series each are counted
as one "fund" for the purposes of this table.
FINANCIAL STATEMENT JUNE 30, 2006 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.
The Fund files with the SEC a complete schedule of its portfolio holdings, as of
the close of the first and third quarters of its fiscal year, on "Form N-Q."
Information on Form N-Q is available without charge and upon request by calling
the Funds at the toll-free number listed above. A text only version can be
viewed online or downloaded from the SEC's website at http://www.sec.gov; and
may be reviewed and copied at the SEC's Public Reference Room in Washington, DC
(call 1-800-SEC-0330 for information on the operation of the Public Reference
Room). You may also access this information from the BBH website at BBH.com by
clicking on "BBH Mutual Funds" and selecting "Online Documents/Holdings
Information."
A copy of the Fund's Proxy Voting Policy is available upon request by calling
the toll-free number listed above. A text-only version of the policy can be
viewed online or downloaded from the SEC at www.sec.gov.
BROWN [LOGO]
BROTHERS
HARRIMAN
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a code of ethics that
applies to the registrant's principal executive officer,
principal financial officer,
principal accounting officer or controller or persons
performing similar functions.
(b) No answer required.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f)
(1) A copy of the code of ethics referenced in Item 2(a)
of this Form N-CSR is available and can be mailed,
free of charge, to anyone by calling (800) 575-1265.
(2) Not applicable.
(3) Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The registrant's Board of Trustees board has designated
two members of the audit committee as financial experts.
(2) The following Trustees have been designated as
audit committee financial experts by the
Board of Trustees: independent audit committee
members Arthur Miltenberger and David Feldman
are the designated audit committee financial experts.
3) Not applicable.
(b) No answer required.
(c) No answer required.
(d) No answer required.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
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
June 30, 2006 $ 66,000
April 30, 2006
October 31, 2005
August 31, 2005
June 30, 2005 62,800
May 31, 2005
October 31, 2004
August 31, 2004
Total $128,800
Security Count Fee
April 30, 2006 $ 4,800
October 31, 2005 4,500
August 31, 2005 4,500
June 30, 2005
May 31, 2005 4,500
October 31, 2004 4,500
August 31, 2004 4,500
Total $ 27,300
Total Billed
June 30, 2006 $ 66,000
April 30, 2006 4,800
October 31, 2005 4,500
August 31, 2005 4,500
June 30, 2005 62,800
May 31, 2005 4,500
October 31, 2004 4,500
August 31, 2004 4,500
Total $ 156,100
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, 2006$ 12,000 $ 12,000
June 30, 200512,000 12,000
Total $ 24,000 $ 24,000
d) Disclosure of all other fees billed in the last two fiscal years.
NONE
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.
NOTE: For the purposes of item g, we are considering
the following entities as controlling, controlled
by, or under common control, with the adviser
that provides ongoing services to the registrant:
BBH Trust Company (Cayman) Limited
BBH International Equity Fund Cayman
BBH US Equity Fund Cayman
New World Investment Trust
World Investment Trust
Global Investment Trust
American Investment Trust
Brown Brothers Harriman and Co.
Brown Brothers Harriman Trust Company, LLC
Brown Brothers Harriman Infomediary, LLC
Activity Based Costing Review $ 1,008,825
AIMR Work 30,412
Miscellaneous 8,740
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.
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, Alan G. Lowy and
Arthur D. Miltenberger.
(b) Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES
AND PROCEDURES FOR OPEN-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF
OPEN-END MANAGEMENT INVESTMENT
COMPANY.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES
BY OPEN-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS.
Not applicable.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the registrant's disclosure controls and
procedures as conducted within 90 days of the filing date of this Form
N-CSR, the registrant's principal financial officer and principal executive
officer have concluded that those disclosure controls and procedures
provide reasonable assurance that the material information required to be
disclosed by the registrant on this report is recorded, processed,
summarized and reported within the time periods specified in the Securities
and Exchange Commission's rules and forms.
(b) There were no significant changes in the registrant's internal controls or
in other factors that could significantly affect these controls subsequent
to the date of their evaluation.
ITEM 12. 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-3(c) under the
Investment Company Act
of 1940) for the registrant and
have:
a.) designed such disclosure controls
and procedures, or caused such disclosure
controls and procedures to be designed
under our supervision, to ensure that
material information relating
to the registrant, including
its consolidated subsidiaries,
is made known to us by others
within those entities, particularly
during the period in which this
report is being prepared;
b.) designed such disclosure
controls and procedures, or
caused such disclosure controls
and procedures to be designed
under our supervision, to
provide reasonable assurance
regarding the reliability of
financial reporting and the
preparation of financial statements
for external
purposes in accordance with
generally accepted accounting principles;
c.)evaluated the effectiveness of
the registrant's disclosure controls
and procedures and presented
in this report our conclusions
about the effectiveness of the
disclosure controls and procedures,
as of a date within 90
days prior to the filing date
of this report based on such
evaluation; and
d.) disclosed in this report
any change in the registrant's
internal control over financial reporting
that occurred during the registrant's
most recent fiscal half-year (the
registrant's second fiscal
half year in the case of an annual
report) that has materially affected,
or is reasonably likely to
materially affect, the registrant's
internal control over financial reporting; and
5. The registrant's other certifying
officer and I have disclosed to the
registrant's auditors and the audit
committee of the registrant's
board of directors (or persons performing
the equivalent functions):
a.) all significant deficiencies
and material weaknesses in the design
or operation of internal
control over financial
reporting which are reasonably
likely to adversely affect the
registrant's ability to record,
process, summarize, and report
financial information; and
b.) any fraud, whether or not material,
that involves management or other
employees who
have a significant role in the
registrant's internal control over
financial reporting.
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: 09-07-06
/s/John A. Nielsen
==============
John A. Nielsen
President - Principal Executive Officer
I, Charles Schreiber, 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
a nd I are responsible for establishing and
maintaining disclosure controls and
procedures (as defined in rule 30a-3(c)
under the Investment Company Act
of 1940) for the registrant and have:
a.) designed such disclosure controls
and procedures, or caused such
disclosure controls and
procedures to be designed under
our supervision, to ensure that material
information relating
to the registrant, including
its consolidated subsidiaries, is made
known to us by others within
those entities, particularly during
the period in which this report
is being prepared;
b.) designed such disclosure controls and
procedures, or caused such disclosure controls and
procedures to be designed under our supervision,
to provide reasonable assurance regarding
the reliability of financial reporting
and the preparation of financial statements
for external
purposes in accordance with generally
accepted accounting principles;
c.)evaluated the effectiveness of the
registrant's disclosure controls and
procedures and presented
in this report our conclusions
about the effectiveness of the disclosure
controls and procedures,
as of a date within 90 days prior
to the filing date of this report based
on such evaluation; and
d.) disclosed in this report any
change in the registrant's internal
control over financial reporting
that occurred during the registrant's
most recent fiscal half-year (the
registrant's second fiscal
half year in the case of an
annual report) that has materially
affected, or is reasonably likely to
materially affect, the registrant's
internal control over financial reporting; and
5. The registrant's other certifying
officer and I have disclosed
to the registrant's auditors
and the audit
committee of the registrant's
board of directors (or persons
performing the equivalent functions):
a.) all significant deficiencies and
material weaknesses in the design or
operation of internal
control over financial reporting
which are reasonably likely to adversely
affect the registrant's
ability to record, process, summarize,
and report financial information; and
b.) any fraud, whether or not material,
that involves management or other employees
who have a significant role in the registrant's
internal control over financial reporting.
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: 09-07-06
/s/Charles Schreiber
==========================
Charles Schreiber
Treasurer - Principal Financial Officer
SECTION 906 CERTIFICATION
Pursuant to 18 U.S.C.ss. 1350, the undersigned
officers of BBH Trust ("registrant"), hereby
certify, to the best of our knowledge, that the
Registrant's Report on Form N-CSR for the period
ended June 30, 2006 (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: 09-07-06
/s/John A. Nielsen
==============
John A. Nielsen
Title: President, Principal Executive Officer
Dated: 09-07-06
/s/Charles Schreiber
===============
Charles Schreiber
Treasurer - Principal Financial Officer
This certification is being furnished
solely pursuant to 18 U.S.C.ss. 1350 and
is not being filed as part of the Report
or as a separate
disclosure document.
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
(Principal Executive Officer)
Date:09-07-06
Pursuant to the requirements of the
Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this
report has been signed below by the
following persons on behalf of the registrant
and in the capacities and on the
dates indicated.
By (Signature and Title) /s/Charles Schreiber
-------------------
Charles Schreiber, Treasurer
(Principal Financial Officer)
Date: 09-07-06
Print name and title of each signing
officer under his or her signature.