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:
Mark Nixon
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: 06/30/07
Date of reporting period: 07/01/06-12/31/06
ITEM 1 - Attach shareholder report
BROWN [LOGO]
BROTHERS
HARRIMAN
Semi-Annual Report
DECEMBER 31, 2006
BBH MONEY MARKET FUND
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2006 (unaudited)
ASSETS:
Investment in BBH U.S. Money Market Portfolio (the
"Portfolio"), at value ................................ $1,537,848,435
Other assets ............................................. 3,524
--------------
Total Assets ....................................... 1,537,851,959
--------------
LIABILITIES:
Payables for:
Shareholder servicing fees ............................ 924,339
Dividends declared .................................... 848,951
Administrative fees ................................... 351,249
Professional fees ..................................... 27,722
Board of Trustees' fees ............................... 12,558
Accounting fees ....................................... 8,000
--------------
Total Liabilities .................................. 2,172,819
--------------
NET ASSETS, for 1,535,679,140 fund shares outstanding ....... $1,535,679,140
==============
Net Assets Consist of:
Par value ................................................ $ 15,356,791
Paid-in capital in excess of par ......................... 1,520,322,349
--------------
Net Assets .................................................. $1,535,679,140
==============
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 six months ended December 31, 2006 (unaudited)
INVESTMENT INCOME:
Interest income allocated from Portfolio ..................... $39,704,861
Expenses allocated from Portfolio ............................ (1,193,082)
-----------
Net Investment Income allocated from Portfolio ............ 38,511,779
-----------
Expenses:
Shareholder servicing fees ................................... 1,867,766
Administrative fees .......................................... 709,751
Board of Trustees' fees ...................................... 63,524
Professional fees ............................................ 45,982
Accounting fees .............................................. 8,000
Miscellaneous expenses ....................................... 18,509
-----------
Total Expenses ............................................ 2,713,532
-----------
Net Investment Income ........................................... $35,798,247
===========
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT DECEMBER 31, 2006 3
BBH MONEY MARKET FUND
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STATEMENTS OF CHANGES IN NET ASSETS
For the six
months ended For the
December 31, 2006 year ended
(unaudited) June 30, 2006
----------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
From Operations:
Net investment income ................................................. $ 35,798,247 $ 50,921,761
Dividends declared from net investment income ......................... (35,805,959) (50,921,761)
-------------- ---------------
Net increase (decrease) in net assets resulting
from operations ....................................................... (7,712) --
-------------- ---------------
From Fund Share (Principal) Transactions at
Net Asset Value of $1.00 per share:
Fund shares sold ................................................... 937,568,777 1,839,355,983
Fund shares issued in reinvestment of dividends .................... 16,833,569 26,060,096
Fund shares repurchased ............................................ (924,277,085) (1,617,946,361)
-------------- ---------------
Net increase in net assets resulting from fund
share transactions .................................................... 30,125,261 247,469,718
-------------- ---------------
Total increase in net assets .......................................... 30,117,549 247,469,718
NET ASSETS:
Beginning of year ........................................................ 1,505,561,591 1,258,091,873
-------------- ---------------
End of period ............................................................ $1,535,679,140 $ 1,505,561,591
============== ===============
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
period
For the six
months ended
December 31, For the years ended June 30,
2006 --------------------------------------------------------------
(unaudited) 2006 2005 2004 2003 2002
----------- ---- ---- ---- ---- ----
Net asset value,
beginning of year .......................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income ...................... 0.02 0.04 0.01 0.01 0.01 0.02
Dividends to shareholders
from net investment income ................. (0.02) (0.04) (0.01) (0.01) (0.01) (0.02)
------ ------ ------ ------ ------ ------
Net asset value, end of period ................ $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ====== ====== ====== ======
Total return .................................. 2.46% 3.76% 1.72% 0.59% 1.06% 2.10%
Ratios/Supplemental data(1):
Net assets, end of period (in millions) .... $1,536 $1,506 $1,258 $1,375 $1,459 $1,382
Ratio of expenses to average net assets .... 0.52%(2) 0.53% 0.52% 0.52% 0.52% 0.51%
Ratio of net investment income to
average net assets ...................... 4.79%(2) 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.
(2) Annualized.
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT DECEMBER 31, 2006 5
BBH MONEY MARKET FUND
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NOTES TO FINANCIAL STATEMENTS
December 31, 2006 (unaudited)
1. Organization and Significant Accounting Policies. BBH Money Market Fund
(the "Fund") is a separate, diversified series of BBH Trust (the "Trust"),
which is registered under the Investment Company Act of 1940, as amended.
The Trust is an open-end management investment company organized as a
Massachusetts business trust on June 7, 1983. The Fund commenced
operations on December 12, 1983. The Declaration of Trust permits the
Trustees to create an unlimited number of series, each of which may issue
a separate class of shares. The Fund established a new class of shares
designated as "Institutional Shares". Institutional Shares commenced on
December 19, 2006. Regular Shares and Institutional Shares have different
operating expenses. 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 December 31, 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 61% at December 31, 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 to Shareholders. Dividends from net
investment income are declared daily and paid monthly to
shareholders.
6
BBH MONEY MARKET FUND
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NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006 (unaudited)
E Accounting Developments. 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 Funds' net assets and results of operations.
In September 2006, Statement of Financial Accounting Standards No.
157, Fair Value Measurements (SFAS 157), was issued and is effective
for fiscal years beginning after November 15, 2007. SFAS 157 defines
fair value, establishes a framework for measuring fair value and
expands disclosures about fair value measurements. Management is
currently evaluating the implication of SFAS 157. At this time its
impact on the Fund's financial statements has not yet been
determined.
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 six
months ended December 31, 2006, the Fund incurred $709,751 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 six months ended
December 31, 2006, the Fund incurred $1,867,766 for shareholder servicing
services.
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 six months ended December 31, 2006, the Fund incurred $8,000 for
accounting 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
six months ended December 31, 2006, the Fund incurred $63,524 for
Trustees' fees.
FINANCIAL STATEMENT DECEMBER 31, 2006 7
BBH MONEY MARKET FUND
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DISCLOSURE OF FUND EXPENSES
December 31, 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 (July 1, 2006 to December 31, 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 July 1, 2006
July 1, 2006 December 31, 2006 to December 31, 2006(1)
------------ ----------------- -----------------------
Actual ................................. $1,000 $1,024.60 $2.65
Hypothetical(2) ........................ $1,000 $1,022.58 $2.65
- ----------
(1) Expenses are equal to the Fund's annualized expense ratio of 0.52%,
multiplied by the average account value over the period, multiplied by
184/365 (to reflect the one-half year period).
(2) Assumes a return of 5% before expenses. For the purpose of the
calculation, the applicable annualized expense ratio is subtracted from
the assumed return before expenses.
8
BBH MONEY MARKET FUND
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DISCLOSURE OF ADVISOR SELECTION
December 31, 2006 (unaudited)
Approval of Continuation of Investment Advisory Agreement
At a meeting held on December 11, 2006, the Board of Trustees (the "Board") of
BBH Trust (the "Trust") unanimously approved the renewal of the Investment
Advisory Agreement (the "IA Agreement") between the Trust and Brown Brothers
Harriman ("BBH") for an additional one-year term. The following is a summary of
the factors the Board took into consideration in making its determination to
approve the renewal of the IA Agreement.
Nature, Extent and Quality of Services Provided by BBH
The Board noted that, under the IA Agreement in respect of each Fund, BBH,
subject to the supervision of the Board, is responsible for providing a
continuous investment program and, for each Fund other than the International
Fund, makes purchases and sales of portfolio securities consistent with the
Fund's investment objective and policies
The Board considered the scope and quality of services provided by BBH under the
IA Agreement and noted that the scope of services provided had expanded over
time, primarily, as a result of regulatory developments. The Board noted that,
for example, BBH is responsible for maintaining and monitoring its own and, to
varying degrees, the Funds' compliance program, and these compliance programs
have recently been refined and enhanced in light of new regulatory requirements.
The Board considered the quality of the investment research capabilities of BBH
and the other resources it has dedicated to performing services for the Funds.
The Board concluded that, overall, they were satisfied with the nature, extent
and quality of services provided (and expected to be provided) to each of the
Funds under the IA Agreement.
Costs of Services Provided and Profitability to BBH
At the request of the Board, BBH provided information concerning the
profitability of BBH's investment company, advisory fees and other fees and its
statement of condition for the recent period and as of December 31, 2005,
respectively. The Board also reviewed BBH's profitability data for each Fund,
which also included the effect of revenue generated by the shareholder
servicing, administration, custody and other fees paid by a Fund. The Board
noted that most beneficial owners of the Funds' shares are holding these shares
in the context of an overall investment management program for which BBH is the
adviser and for which BBH charges an investment management fee. Since BBH
excludes the assets in the Funds when calculating its advisory fees for its
clients, the Board agreed that it is appropriate in an analysis of Fund
profitability to reduce the advisory fees for the Funds by the advisory fees
that otherwise would have been earned by BBH on the assets involved.
The Board discussed the difficulty of making comparisons of profitability from
fund advisory contracts because comparative information is not generally
publicly available and is affected by numerous factors, including the structure
of the particular adviser, the types of funds it manages, its business mix,
numerous assumptions regarding allocations and the adviser's capital structure
and cost of capital. In considering profitability information, the Board
considered the effect of fall-out benefits on BBH's expenses, as well as the
"revenue sharing" arrangements BBH has entered into with certain entities that
distribute shares of the Funds. The Board focused on profitability of BBH's
relationships with the Funds before taxes and distribution expenses. The Board
concluded that it was satisfied that BBH's level of profitability from its
relationship with each Fund was not excessive.
FINANCIAL STATEMENT DECEMBER 31, 2006 9
BBH MONEY MARKET FUND
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DISCLOSURE OF ADVISOR SELECTION (continued)
December 31, 2006 (unaudited)
The Board also considered the advisory fees of each Fund in comparison to the
fees of comparable funds. The Board recognized that the expense ratios for the
Funds potentially reflected on BBH's provision of services, as BBH is directly
the provider of substantial services and coordinates services provided to the
Fund by others. The Board took note of situations in which BBH waived its
management fee or reimbursed a Fund's expenses.
Fall-Out Benefits
The Board considered that BBH did not allocate the Funds' portfolio transactions
for third party research, although it did benefit from proprietary research
received from brokers that execute the Funds' purchases and sales of securities.
The Board recognized that the aggregate amount of commissions generated by Fund
transactions was unlikely to result in the Funds receiving from full service
broker dealers substantial discounts on commission rates. The Board received and
reviewed information concerning BBH's policies with respect to allocating
portfolio brokerage.
The Board also considered that BBH receives shareholder servicing fees from
certain funds, and is the Funds' administrator, custodian and securities lending
agent. The Board noted that BBH retained no portion of the 12b-1 fees paid by
the Fund that operated with a plan.
The Board recognized that BBH's profitability would be somewhat lower if it did
not receive proprietary research for commissions or, if it did not receive the
other benefits described above. The Board recognized that most Fund shareholders
were also BBH clients, and that substantial assets are invested in the Funds as
a result of an overall investment management program for the shareholder. The
Board noted that the Funds also derive reputational and other benefits from
their association with BBH and their use of the BBH name, which is licensed to
the Funds by BBH. Thus, the Board did not believe that BBH revenues associated
with its clients should be fairly regarded as "fallout" benefit from the Funds.
Economies of Scale
The Board noted that the Funds' advisory fee schedules do not contain
breakpoints. As a result, if assets increase, the fee rates would not be reduced
on the incremental assets. There may be other economies of scale because many
expenses did not rise (and fall) proportionally to increases (and decreases) in
total net assets. The Board noted that BBH had priced the advisory services in
recognition of the fact that it was largely its own clients who were
shareholders and, accordingly, sought to assure that the cost of advisory
service and total expenses for each Fund were fair and reasonable. Consequently,
the advisory fees are in the range of institutional separate account fees, which
is to say substantially below, even taking into account the BBH administration
fees, typical mutual fund fees. In addition, the Board noted that BBH had
supported and continued to support certain Funds through fee waivers and expense
reimbursements. Based on information they had been provided over many years, the
Board observed that in the mutual fund industry as a whole, as well as among
funds similar to the Funds, there appeared to be no uniformity or pattern in the
fees and asset levels at which breakpoints (if any) apply. In light of the
Fund's current size and expense structure, the Board concluded that it was
unnecessary at this time to consider breakpoints.
10
BBH MONEY MARKET FUND
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DISCLOSURE OF ADVISOR SELECTION (continued)
December 31, 2006 (unaudited)
Investment Results
The Board considered the investment results of each of the Funds as compared to
investment companies with its peers and with one or more selected securities
indices. In addition to the information received by the Board for the meeting,
the Board received detailed performance information for each Fund at each
regular Board meeting during the year. At the meeting, the Board reviewed
information showing performance of each Fund compared to the peers generally
over the 1-, 3-, 5- and since inception periods ended October 31, 2005 and
compared to one or more securities indices over comparable periods.
Advisory Fee Rate
The Board considered the advisory fee rate paid by each Fund to BBH. The Board
recognized that it is difficult to make comparisons of these fees, and combined
advisory and administration fees, because there are variations in the services
that are included in the fees paid by other funds.
BBH also manages accounts for institutional clients with investment objectives
similar to those of certain Funds. The fee rates payable by the BBH's
institutional clients are generally comparable although occasionally lower, than
the rates paid by the Funds. BBH reviewed with the Board the significant
differences in the scope of services that BBH provides to institutional clients
and to the Funds through both the IA and Administration Agreements (the "Admin.
Agreements"). For example, BBH provides, among other things, officers (including
the Funds' Chief Compliance Officer and officers to provide required
certifications) and administrative services, such as shareholder communications,
and tax compliance, with the attendant costs and exposure to liability. BBH also
coordinates the provision of services to the Funds by nonaffiliated service
providers. These services normally are not provided to non investment company
clients, and fees charged to the Funds reflect the costs and risks of the
additional obligations. The Board also noted that since the Funds are constantly
issuing and redeeming their shares, they are more difficult to manage than an
institutional account, where the assets are relatively stable. Accordingly, the
Board did not place significant weight on these fee comparisons.
The following factors specific to BBH Money Market Fund also were noted and
considered by the Board in deciding to approve the continuation of the IA
Agreements:
The Trustees reviewed information showing performance of the Fund compared to
other funds in the iMoneyNet (1st Tier Retail). The comparative information
showed that the Fund had superior performance compared to the averages in these
categories over all relevant periods. The Board also viewed with favor that the
total expense ratio was substantially lower than the averages in these
categories. The Board also noted that the BBH Money Market Fund had maintained a
stable net asset value of one dollar at all times. Taking into account these
comparisons and the other factors considered, the Board concluded that the
Fund's investment results over time and expense ratios had been satisfactory.
FINANCIAL STATEMENT DECEMBER 31, 2006 11
BBH U.S. MONEY MARKET PORTFOLIO
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PORTFOLIO ALLOCATION
December 31, 2006 (unaudited)
(expressed in U.S. dollars)
BREAKDOWN BY SECURITY TYPE
Percent of
U.S. $ Value Net Assets
------------ ----------
Asset Backed Securities .......................... $ 36,711,347 1.5%
Certificates of Deposit .......................... 244,548,726 9.8
Commercial Paper ................................. 1,216,115,923 48.6
Corporate Bonds .................................. 338,118,827 13.5
Municipal Bonds .................................. 360,235,000 14.4
U.S. Government Agency Obligation ................ 15,021,357 0.6
Time Deposits .................................... 236,500,000 9.4
Repurchase Agreement ............................. 50,000,000 2.0
Other Assets in Excess of Liabilities ............ 4,250,745 0.2
-------------- -----
Net Assets ....................................... $2,501,501,925 100.0%
============== =====
All data as of December 31, 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.
12
BBH U.S. MONEY MARKET PORTFOLIO
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PORTFOLIO OF INVESTMENTS
December 31, 2006 (unaudited)
(expressed in U.S. dollars)
Principal Maturity Interest
Amount Date Rate Value
--------- -------- -------- --------------
ASSET BACKED SECURITIES (1.5%)
$ 8,429,012 AmeriCredit Automobile Receivables
Trust 2006-BG................................... 10/09/07 5.348% $ 8,429,011
9,524,049 Banc of America Securities Auto
Trust 2006-G1................................... 11/19/07 5.349 9,524,767
8,000,000 Capital Auto Receivable Asset
Trust 2006-2.................................... 12/15/07 5.340 8,000,000
7,282,271 Capital Auto Receivable Asset
Trust 2006-SN1A(1).............................. 09/20/07 5.320 7,282,271
3,476,903 CIT Equipment Collateral Series 2006-VT(1)........ 03/20/07 4.990 3,475,298
--------------
Total Asset Backed Securities..................... 36,711,347
--------------
CERTIFICATES OF DEPOSIT (9.8%)
25,000,000 Canadian Imperial Bank Commerce(1)................ 04/27/07 5.440 25,006,992
15,000,000 Canadian Imperial Bank Commerce................... 10/26/07 5.375 15,025,351
25,000,000 Charter One Bank.................................. 03/19/07 5.330 25,000,000
11,500,000 Citibank NA....................................... 02/02/07 5.315 11,499,898
10,000,000 HBOS Treasury..................................... 06/04/07 5.380 9,986,187
25,000,000 Lloyds Bank, Plc.................................. 01/26/07 5.310 25,000,118
8,000,000 M&I Marshall & Ilsley Bank(1)..................... 03/30/07 5.364 8,000,098
25,000,000 Royal Bank of Canada.............................. 10/29/07 5.368 25,024,475
25,000,000 Toronto Dominion.................................. 04/13/07 5.300 24,972,121
25,000,000 Washington Mutual Bank............................ 02/16/07 5.320 25,000,000
25,000,000 Westpac Banking Corp.............................. 10/29/07 5.350 25,033,676
25,000,000 Wilmington Trust Co............................... 02/20/07 5.350 24,999,810
--------------
Total Certificates of Deposit..................... 244,548,726
--------------
COMMERCIAL PAPER (48.6%)
15,000,000 Abbey National North America LLC.................. 01/02/07 5.315 14,997,788
20,000,000 Abbey National North America LLC.................. 01/03/07 5.326 19,994,089
10,000,000 ANZ National (Int'l) Ltd.......................... 04/04/07 5.331 9,864,375
10,000,000 ANZ National (Int'l) Ltd.......................... 06/22/07 5.309 9,752,989
25,000,000 Bank of America NA................................ 03/30/07 5.300 25,000,000
7,000,000 Bank of Ireland................................... 02/08/07 5.317 6,961,208
18,000,000 Bank of Ireland................................... 02/09/07 5.317 17,897,625
49,500,000 Barclays US Funding LLC........................... 01/16/07 5.440 49,391,719
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT DECEMBER 31, 2006 13
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
December 31, 2006 (unaudited)
(expressed in U.S. dollars)
Principal Maturity Interest
Amount Date Rate Value
--------- -------- -------- --------------
COMMERCIAL PAPER (continued)
$ 50,000,000 Bear Stearns & Co., Inc........................... 01/02/07 5.333% $ 49,992,597
50,000,000 Bear Stearns & Co., Inc........................... 01/08/07 5.309 49,948,958
8,150,000 Beta Financial Group, Inc......................... 01/12/07 5.439 8,136,926
25,000,000 Beta Financial Group, Inc......................... 01/16/07 5.344 24,945,313
25,000,000 Blue Spice LLC.................................... 01/02/07 5.301 24,996,333
20,000,000 Blue Spice LLC.................................... 01/04/07 5.320 19,991,225
25,000,000 BNP Paribas Finance, Inc.......................... 06/13/07 5.293 24,416,483
25,900,000 Brown-Forman Beverages, Europe, Ltd............... 03/23/07 5.344 25,592,891
25,000,000 Buckingham CDO II LLC............................. 01/19/07 5.327 24,934,000
11,000,000 Catholic Health Initiative........................ 03/14/07 5.360 11,000,000
25,000,000 CBA (Delaware) Finance............................ 03/15/07 5.310 24,734,361
26,000,000 CC USA, Inc....................................... 01/23/07 5.303 25,916,822
9,940,000 CC USA, Inc....................................... 01/26/07 5.313 9,903,829
15,000,000 CIT Group, Inc.................................... 05/16/07 5.309 14,708,625
14,565,000 City of Chicago, Illinois......................... 06/06/07 5.463 14,233,646
43,550,000 Columbia University............................... 01/05/07 5.396 43,524,257
12,900,000 Cornell University................................ 01/11/07 5.318 12,881,008
25,000,000 Credit Suisse FB USA, Inc......................... 02/21/07 5.311 24,814,417
11,100,000 Danske Corp....................................... 03/12/07 5.307 10,986,903
5,000,000 Dresdner US Finance, Inc.......................... 04/27/07 5.290 4,916,544
25,000,000 First Tennessee Bank.............................. 03/19/07 5.310 25,000,000
16,000,000 FPL Group Capital................................. 01/04/07 5.283 15,992,987
5,600,000 FPL Group Capital................................. 01/18/07 5.329 5,585,984
15,000,000 HBOS Treasury..................................... 03/01/07 5.305 14,871,306
15,000,000 HBOS Treasury..................................... 03/19/07 5.321 14,831,563
25,000,000 Hewlett Packard Co................................ 01/29/07 5.325 24,897,139
8,500,000 HSBC Americas, Inc................................ 01/12/07 5.304 8,486,287
25,000,000 ING US Funding LLC................................ 02/01/07 5.289 24,887,194
23,100,000 Johns Hopkins University.......................... 02/07/07 5.300 23,100,000
25,000,000 Kittyhawk Funding Corp............................ 01/16/07 5.313 24,944,896
25,000,000 Koch Resources LLC................................ 01/08/07 5.282 24,974,479
21,500,000 Koch Resources LLC................................ 02/16/07 5.340 21,354,397
25,000,000 Korea Development Bank............................ 01/18/07 5.352 24,937,726
25,000,000 Morgan Stanley.................................... 06/04/07 5.306 24,446,563
The accompanying notes are an integral part of these financial statements.
14
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
December 31, 2006 (unaudited)
(expressed in U.S. dollars)
Principal Maturity Interest
Amount Date Rate Value
--------- -------- -------- --------------
COMMERCIAL PAPER (continued)
$ 25,000,000 National Rural Utilities Cooperative
Finance Corp.................................... 01/10/07 5.283% $ 24,967,187
25,370,000 Nationwide Building............................... 01/08/07 5.345 25,344,052
10,000,000 Nationwide Building............................... 03/15/07 5.328 9,893,339
12,744,000 Power Authority of State of New York.............. 02/01/07 5.368 12,686,387
25,000,000 Rabobank Nederland NV............................. 11/21/07 5.235 25,000,093
25,000,000 Rabobank USA Financial............................ 01/02/07 5.233 24,996,368
10,000,000 Rights of University of California................ 01/16/07 5.283 9,978,167
50,000,000 San Paolo IMI US Financial Co..................... 01/05/07 5.408 49,971,000
17,087,000 Societe Generale.................................. 01/08/07 5.304 17,069,623
8,000,000 Societe Generale.................................. 06/08/07 5.282 7,819,353
30,700,000 Southern Company Funding.......................... 02/06/07 5.339 30,537,290
5,000,000 Tennessee State School Bond....................... 02/15/07 5.330 5,000,000
25,000,000 Three Rivers Funding Corp......................... 01/05/07 5.323 24,985,278
50,000,000 UBS Finance Delaware LLC.......................... 01/02/07 5.287 49,992,701
2,800,000 Variable Funding Capital Corp..................... 01/12/07 5.367 2,795,423
12,416,000 Walnut Energy Center Authority.................... 02/15/07 5.399 12,334,210
--------------
Total Commercial Paper............................ 1,216,115,923
--------------
CORPORATE BONDS (13.5%)
2,000,000 Alabama Power Co.(1).............................. 04/23/07 5.624 2,001,419
25,000,000 American Express Credit Corp.(1).................. 03/12/07 5.330 25,000,737
18,000,000 American Express Centurion Bank(1)................ 10/18/07 5.350 18,001,099
10,000,000 American General Finance Corp.(1)................. 06/27/07 5.426 10,004,594
10,780,000 CIT Group, Inc.(1)................................ 05/18/07 5.595 10,789,876
14,850,000 Citigroup Global Markets Holdings, Inc.(1)........ 03/16/07 5.431 14,852,765
25,000,000 Comerica Bank(1).................................. 07/20/07 5.349 24,996,700
23,000,000 Goldman Sachs Group, Inc.(1)...................... 03/30/07 5.464 23,018,908
25,000,000 International Business Machines, Corp.(1)......... 06/28/07 5.363 25,003,114
25,000,000 KeyBank NA(1)..................................... 08/08/07 5.395 25,010,404
15,000,000 Merrill Lynch & Co., Inc.(1)...................... 02/27/07 5.495 15,009,700
25,000,000 Merrill Lynch & Co., Inc.(1)...................... 05/14/07 5.315 25,000,000
17,500,000 Merrill Lynch & Co., Inc.......................... 11/15/07 4.000 17,333,592
25,000,000 Morgan Stanley(1)................................. 01/19/07 5.420 25,001,197
25,000,000 National City Bank of Kentucky(1)................. 02/08/07 5.365 25,000,659
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT DECEMBER 31, 2006 15
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
December 31, 2006 (unaudited)
(expressed in U.S. dollars)
Principal Maturity Interest
Amount Date Rate Value
--------- -------- -------- --------------
CORPORATE BONDS (continued)
$ 20,000,000 NGSP, Inc.(1)..................................... 06/01/46 5.400% $ 20,000,000
5,000,000 PNC Bank NA(1).................................... 01/29/07 5.320 4,999,941
25,000,000 PNC Bank NA(1).................................... 01/02/08 5.295 24,993,739
2,100,000 SouthTrust Bank(1)................................ 03/19/07 5.425 2,100,383
--------------
Total Corporate Bonds............................. 338,118,827
--------------
MUNICIPAL BONDS (14.4%)
11,890,000 Baltimore, Maryland(1)............................ 01/04/07 5.350 11,890,000
49,365,000 Baltimore, Maryland(1)............................ 01/04/07 5.350 49,365,000
6,255,000 Baltimore, Maryland(1)............................ 01/04/07 5.350 6,255,000
11,000,000 Coastal Bend Health Facilities
Development Corp.(1)............................ 01/03/07 5.360 11,000,000
10,000,000 Colorado Housing & Finance Authority(1)........... 01/03/07 5.380 10,000,000
4,000,000 Connecticut Housing Finance Authority(1).......... 01/04/07 5.350 4,000,000
8,340,000 De Kalb County, Georgia Development
Authority Revenue(1)............................ 01/03/07 5.350 8,340,000
19,300,000 Florida Housing Finance Corp.(1).................. 01/04/07 5.350 19,300,000
24,600,000 Florida Housing Finance Corp.(1).................. 01/04/07 5.320 24,600,000
5,365,000 Greensboro, North Carolina(1)..................... 01/03/07 5.400 5,365,000
4,695,000 Hamilton County, Ohio Health
Care Revenue(1)................................. 01/04/07 5.350 4,695,000
2,000,000 Jacksonville, Florida Economic
Development Commission(1)....................... 01/04/07 5.400 2,000,000
3,245,000 Massachusetts State Health &
Educational Facilities(1)....................... 01/03/07 5.400 3,245,000
23,915,000 Massachusetts State Health &
Educational Facilities(1)....................... 01/04/07 5.370 23,915,000
3,800,000 Massachusetts Port Authority(1)................... 01/03/07 5.380 3,800,000
9,995,000 Massachusetts State Housing Finance
Agency(1)....................................... 01/04/07 5.370 9,995,000
21,000,000 Mississippi Business Finance Corp.(1)............. 01/02/07 5.330 21,000,000
4,500,000 Missouri State Development Finance
Board(1)........................................ 01/04/07 5.400 4,500,000
39,700,000 New York, New York(1)............................. 01/03/07 5.350 39,700,000
The accompanying notes are an integral part of these financial statements.
16
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
December 31, 2006 (unaudited)
(expressed in U.S. dollars)
Principal Maturity Interest
Amount Date Rate Value
--------- -------- -------- --------------
MUNICIPAL BONDS (continued)
$ 25,000,000 New York City Transitional Finance
Authority(1).................................... 01/03/07 5.380% $ 25,000,000
25,000,000 North Texas Higher Education Authority(1)......... 01/03/07 5.350 25,000,000
17,350,000 Portland, Maine(1)................................ 01/03/07 5.350 17,350,000
8,220,000 Private Colleges & Universities Authority(1)...... 01/03/07 5.350 8,220,000
2,100,000 Texas State(1).................................... 01/03/07 5.370 2,100,000
19,600,000 Texas State(1).................................... 01/03/07 5.370 19,600,000
--------------
Total Municipal Bonds............................. 360,235,000
--------------
U.S. GOVERNMENT AGENCY OBLIGATION (0.6%)
15,000,000 SLM Corp.(1)...................................... 07/25/07 5.597 15,021,357
--------------
TIME DEPOSITS (9.4%)
100,000,000 Branch Bank & Trust............................... 01/02/07 4.948 100,000,000
100,000,000 Dresdner Bank..................................... 01/02/07 5.320 100,000,000
36,500,000 Royal Bank of Canada.............................. 01/02/07 5.130 36,500,000
--------------
Total Time Deposits............................... 236,500,000
--------------
REPURCHASE AGREEMENT (2.0%)
50,000,000.00 Deutche Bank (Agreement dated 12/29/06
collateralized by FMAC 4.000%-8.000%, due
11/01/16-12/01/36, value $27,729,233; FNMA
4.250%-7.220%, due 10/01/18-01/01/37; value
$22,927,997 and GNMA 5.750%, due 11/20/34;
value $342,770)................................... 01/02/07 5.300 50,000,000
--------------
TOTAL INVESTMENTS AT AMORTIZED COST............................... 99.8% $2,497,251,180
OTHER ASSETS IN EXCESS OF LIABILITIES............................. 0.2 4,250,745
----- --------------
NET ASSETS .................................................... 100.0% $2,501,501,925
===== ==============
- ----------
(1) Variable rate instrument. Interest rates change on specific dates (such as
a coupon or interest rate payment date). The yield shown represents the
December 31, 2006 coupon rate.
Abbreviations:
FMAC - Financial Markets Association of Canada
FNMA - Federal National Mortgage Association
GNMA - Government National Mortgage Association
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT DECEMBER 31, 2006 17
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2006 (unaudited)
(expressed in U.S. dollars)
ASSETS:
Investments, at amortized cost.............................. $2,497,251,180
Interest receivable......................................... 8,871,785
--------------
Total Assets............................................. 2,506,122,965
--------------
LIABILITIES:
Due to bank................................................. 3,383,968
Payables for:
Investment advisory fees................................. 613,514
Custody and accounting fees.............................. 236,083
Administrative fees...................................... 214,730
Professional fees........................................ 44,696
Board of Trustees' fees.................................. 30,247
Accrued expenses and other liabilities...................... 97,802
--------------
Total Liabilities........................................ 4,621,040
--------------
NET ASSETS..................................................... $2,501,501,925
==============
The accompanying notes are an integral part of these financial statements.
18
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the six months ended December 31, 2006 (unaudited)
(expressed in U.S. dollars)
NET INVESTMENT INCOME:
Income:
Interest................................................. $67,596,807
-----------
Expenses:
Investment advisory fees................................. 1,267,544
Administrative fees...................................... 443,641
Custody and accounting fees.............................. 226,702
Board of Trustees' fees.................................. 42,552
Miscellaneous expenses................................... 122,019
-----------
Total Expenses........................................ 2,102,458
Expense offset arrangement............................ (68,075)
-----------
Net Expenses.......................................... 2,034,383
-----------
Net Investment Income....................................... $65,562,424
===========
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT DECEMBER 31, 2006 19
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (expressed in U.S. dollars)
For the six
months ended For the
December 31, 2006 year ended
(unaudited) June 30, 2006
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS:
From Operations:
Net investment income.............................................. $ 65,562,424 $ 107,785,835
-------------- --------------
Capital Transactions:
Proceeds from contributions........................................ 1,603,988,806 4,531,857,516
Value of withdrawals............................................... (1,739,249,575) (4,572,494,305)
-------------- --------------
Net decrease in net assets resulting from
capital transactions......................................... (135,260,769) (40,636,789)
-------------- --------------
Total increase (decrease) in net assets......................... (69,698,345) 67,149,046
NET ASSETS:
Beginning of year..................................................... 2,571,200,270 2,504,051,224
-------------- --------------
End of period......................................................... $2,501,501,925 $2,571,200,270
============== ==============
The accompanying notes are an integral part of these financial statements.
20
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (expressed in U.S. dollars)
For the six
months ended
December 31, For the years ended June 30,
2006 ----------------------------------------------------------------
(unaudited) 2006 2005 2004 2003 2002
----------- ------- ------- ------- -------- --------
Total return................. 2.64% 4.13% 2.17% 0.99% 1.44% 2.47%
Ratios/Supplemental data:
Net assets, end of
period (in millions)... $2,502 $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%(1) 0.16% 0.16% 0.16% 0.15% 0.16%
Expense offset
arrangement......... 0.01%(1) 0.00%(2) 0.00%(2) 0.00%(2) 0.00%(2) 0.00%(2)
----- ----- ----- ----- ----- -----
Total expenses...... 0.17%(1) 0.16% 0.16% 0.16% 0.15% 0.16%
===== ===== ===== ===== ===== =====
Ratio of net investment
income to average
net assets............. 5.17%(1) 4.05% 2.05% 0.95% 1.40% 2.39%
- ----------
(1) Annualized.
(2) Amount is less than 0.01%.
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT DECEMBER 31, 2006 21
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
December 31, 2006 (unaudited)
(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 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 Portfolio,
accrued ratably to the date of maturity.
C. 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. Information regarding
repurchase agreements is included in the Portfolio of Investments.
D. 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 December 31, 2006, the cost of investments for federal income tax
purposes was equal to the amortized cost of the investments for
financial statement purposes.
22
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006 (unaudited)
(expressed in U.S. dollars)
E. Accounting Developments. 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 Portfolio's financial statements, management
will be evaluating the impact, if any, the adoption of FIN 48 will
have on the Portfolio's net assets and results of operations.
In September 2006, Statement of Financial Accounting Standards No.
157, Fair Value Measurements (SFAS 157), was issued and is effective
for fiscal years beginning after November 15, 2007. SFAS 157 defines
fair value, establishes a framework for measuring fair value and
expands disclosures about fair value measurements. Management is
currently evaluating the implication of SFAS 157. At this time its
impact on the Fund's financial statements has not yet been
determined.
2. Transactions with Affiliates.
Investment Advisory Fees. The Portfolio 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
0.10% 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 six months
ended December 31, 2006, the Portfolio incurred $1,267,544 for advisory
services.
Administrative Fees. The Portfolio has an administration 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 six
months ended December 31, 2006, the Portfolio incurred $443,641 for
administrative services.
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 six months ended December 31, 2006, the Portfolio
incurred $226,702 for custody and accounting services. These fees were
reduced by $68,075 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 Portfolio for the six months
ended December 31, 2006 was $13,159.
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 six months ended December 31, 2006, the Portfolio incurred $42,552
for the Trustees' fees.
FINANCIAL STATEMENT DECEMBER 31, 2006 23
BBH U.S. MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
DISCLOSURE OF FUND EXPENSES
December 31, 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 (July 1, 2006 to December 31, 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 July 1, 2006
July 1, 2006 December 31, 2006 to December 31, 2006(1)
------------ ----------------- -----------------------
Actual................................. $1,000 $1,026.40 $0.82
Hypothetical(2)........................ $1,000 $1,024.40 $0.82
- ----------
(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
184/365 (to reflect the one-half year period).
(2) Assumes a return of 5% before expenses. For the purpose of the
calculation, the applicable annualized expense ratio is subtracted from
the assumed return before expenses.
24
BBH U.S. MONEY MARKET PORTFOLIO
DISCLOSURE OF ADVISOR SELECTION
December 31, 2006 (unaudited)
Approval of Continuation of Investment Advisory Agreement
At a meeting held on December 11, 2006, the Board of Trustees (the "Board") of
BBH Portfolio (the "Portfolio") unanimously approved the renewal of the
Investment Advisory Agreement (the "IA Agreement") between the Portfolio and
Brown Brothers Harriman & Co. ("BBH") for an additional one-year term. The
following is a summary of the factors the Board took into consideration in
making its determination to approve the renewal of the IA Agreement.
Nature, Extent and Quality of Services Provided by BBH
The Board noted that, under the IA Agreement in respect of each Fund, BBH,
subject to the supervision of the Board, is responsible for providing a
continuous investment program and, for each Fund other than the International
Fund, makes purchases and sales of portfolio securities consistent with the
Fund's investment objective and policies.
The Board considered the scope and quality of services provided by BBH under the
IA Agreement and noted that the scope of services provided had expanded over
time, primarily, as a result of regulatory developments. The Board noted that,
for example, BBH is responsible for maintaining and monitoring its own and, to
varying degrees, the Funds' compliance program, and these compliance programs
have recently been refined and enhanced in light of new regulatory requirements.
The Board considered the quality of the investment research capabilities of BBH
and the other resources it has dedicated to performing services for the Funds.
The Board concluded that, overall, they were satisfied with the nature, extent
and quality of services provided (and expected to be provided) to each of the
Funds under the IA Agreement.
Costs of Services Provided and Profitability to BBH
At the request of the Board, BBH provided information concerning the
profitability of BBH's investment company, advisory fees and other fees and its
statement of condition for the recent period and as of December 31, 2005,
respectively. The Board also reviewed BBH's profitability data for each Fund,
which also included the effect of revenue generated by the shareholder
servicing, administration, custody and other fees paid by a Fund. The Board
noted that most beneficial owners of the Funds' shares are holding these shares
in the context of an overall investment management program for which BBH is the
adviser and for which BBH charges an investment management fee. Since BBH
excludes the assets in the Funds when calculating its advisory fees for its
clients, the Board agreed that it is appropriate in an analysis of Fund
profitability to reduce the advisory fees for the Funds by the advisory fees
that otherwise would have been earned by BBH on the assets involved.
The Board discussed the difficulty of making comparisons of profitability from
fund advisory contracts because comparative information is not generally
publicly available and is affected by numerous factors, including the structure
of the particular adviser, the types of funds it manages, its business mix,
numerous assumptions regarding allocations and the adviser's capital structure
and cost of capital. In considering profitability information, the Board
considered the effect of fall-out benefits on BBH's expenses, as well as the
"revenue sharing" arrangements BBH has entered into with certain entities that
distribute shares of the Funds. The Board focused on profitability of BBH's
relationships with the Funds before taxes and distribution expenses. The Board
concluded that it was satisfied that BBH's level of profitability from its
relationship with each Fund was not excessive.
FINANCIAL STATEMENT DECEMBER 31, 2006 25
BBH U.S. MONEY MARKET PORTFOLIO
DISCLOSURE OF ADVISOR SELECTION (continued)
December 31, 2006 (unaudited)
The Board also considered the advisory fees of each Fund in comparison to the
fees of comparable funds. The Board recognized that the expense ratios for the
Funds potentially reflected on BBH's provision of services, as BBH is directly
the provider of substantial services and coordinates services provided to the
Fund by others. The Board took note of situations in which BBH waived its
management fee or reimbursed a Fund's expenses.
Fall-Out Benefits
The Board considered that BBH did not allocate the Funds' portfolio transactions
for third party research, although it did benefit from proprietary research
received from brokers that execute the Funds' purchases and sales of securities.
The Board recognized that the aggregate amount of commissions generated by Fund
transactions was unlikely to result in the Funds receiving from full service
broker dealers substantial discounts on commission rates. The Board received and
reviewed information concerning BBH's policies with respect to allocating
portfolio brokerage.
The Board also considered that BBH receives shareholder servicing fees from
certain funds, and is the Funds' administrator, custodian and securities lending
agent. The Board noted that BBH retained no portion of the 12b-1 fees paid by a
Fund that operated with a plan.
The Board recognized that BBH's profitability would be somewhat lower if it did
not receive proprietary research for commissions or, if it did not receive the
other benefits described above. The Board recognized that most Fund shareholders
were also BBH clients, and that substantial assets are invested in the Funds as
a result of an overall investment management program for the shareholder. The
Board noted that the Funds also derive reputational and other benefits from
their association with BBH and their use of the BBH name, which is licensed to
the Funds by BBH. Thus, the Board did not believe that BBH revenues associated
with its clients should be fairly regarded as "fallout" benefit from the Funds.
Economies of Scale
The Board noted that the Funds' advisory fee schedules do not contain
breakpoints. As a result, if assets increase, the fee rates would not be reduced
on the incremental assets. There may be other economies of scale because many
expenses did not rise (and fall) proportionally to increases (and decreases) in
total net assets. The Board noted that BBH had priced the advisory services in
recognition of the fact that it was largely its own clients who were
shareholders and, accordingly, sought to assure that the cost of advisory
service and total expenses for each Fund were fair and reasonable. Consequently,
the advisory fees are in the range of institutional separate account fees, which
is to say substantially below, even taking into account the BBH administration
fees, typical mutual fund fees. In addition, the Board noted that BBH had
supported and continued to support certain Funds through fee waivers and expense
reimbursements. Based on information they had been provided over many years, the
Board observed that in the mutual fund industry as a whole, as well as among
funds similar to the Funds, there appeared to be no uniformity or pattern in the
fees and asset levels at which breakpoints (if any) apply. In light of the
Fund's current size and expense structure, the Board concluded that it was
unnecessary at this time to consider breakpoints.
26
BBH U.S. MONEY MARKET PORTFOLIO
DISCLOSURE OF ADVISOR SELECTION (continued)
December 31, 2006 (unaudited)
Investment Results
The Board considered the investment results of each of the Funds as compared to
investment companies with its peers and with one or more selected securities
indices. In addition to the information received by the Board for the meeting,
the Board received detailed performance information for each Fund at each
regular Board meeting during the year. At the meeting, the Board reviewed
information showing performance of each Fund compared to the peers generally
over the 1-, 3-, 5- and since inception periods ended October 31, 2005 and
compared to one or more securities indices over comparable periods.
Advisory Fee Rate
The Board considered the advisory fee rate paid by each Fund to BBH. The Board
recognized that it is difficult to make comparisons of these fees, and combined
advisory and administration fees, because there are variations in the services
that are included in the fees paid by other funds.
BBH also manages accounts for institutional clients with investment objectives
similar to those of certain Funds. The fee rates payable by the BBH's
institutional clients are generally comparable although occasionally lower, than
the rates paid by the Funds. BBH reviewed with the Board the significant
differences in the scope of services that BBH provides to institutional clients
and to the Funds through both the IA and Administration Agreements (the "Admin.
Agreements"). For example, BBH provides, among other things, officers (including
the Funds' Chief Compliance Officer and officers to provide required
certifications) and administrative services, such as shareholder communications,
and tax compliance, with the attendant costs and exposure to liability. BBH also
coordinates the provision of services to the Funds by nonaffiliated service
providers. These services normally are not provided to non investment company
clients, and fees charged to the Funds reflect the costs and risks of the
additional obligations. The Board also noted that since the Funds are constantly
issuing and redeeming their shares, they are more difficult to manage than an
institutional account, where the assets are relatively stable. Accordingly, the
Board did not place significant weight on these fee comparisons.
The following factors specific to BBH U.S. Money Market Portfolio also were
noted and considered by the Board in deciding to approve the continuation of the
IA Agreements:
The Trustees reviewed information showing performance of the Portfolio compared
to other funds in the iMoneyNet (1st Tier Institutional). The comparative
information showed that the Portfolio had superior performance compared to the
averages in these categories over all relevant periods. The Trustees also viewed
with favor that the total expense ratio was substantially lower than the
averages in these categories. The Trustees also noted that the BBH U.S. Money
Market Portfolio had maintained a stable net asset value of one dollar at all
times. Taking into account these comparisons and the other factors considered,
the Trustees concluded that the Portfolio's investment results over time and
expense ratios had been satisfactory.
FINANCIAL STATEMENT DECEMBER 31, 2006 27
- --------------------------------------------------------------------------------
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
Semi-Annual Report
DECEMBER 31, 2006
BBH U.S. TREASURY MONEY FUND
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO ALLOCATION
December 31, 2006 (unaudited)
BREAKDOWN BY SECURITY TYPE
Percent of
U.S. $ Value Net Assets
------------ ----------
U.S. Treasury Bills................................ $79,884,574 100.4%
Liabilities in Excess of Other Assets.............. (332,635) (0.4)
----------- -----
Net Assets......................................... $79,551,939 100.0%
=========== =====
All data as of December 31, 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
December 31, 2006 (unaudited)
Principal
Amount Value
--------- ------------
U.S. TREASURY BILLS(a) (100.4%)
$40,860,000 due 01/11/07, 5.01%................................. $40,803,719
25,000,000 due 03/01/07, 4.83%................................. 24,803,743
8,410,000 due 03/08/07, 4.87%................................. 8,335,719
6,000,000 due 03/15/07, 4.88%................................. 5,941,393
-----------
Total U.S. Treasury Bills........................... 79,884,574
-----------
TOTAL INVESTMENTS, AT AMORITIZED COST................... 100.4% $79,884,574
LIABILITIES IN EXCESS OF OTHER ASSETS................... (0.4) (332,635)
----- -----------
NET ASSETS.............................................. 100.0% $79,551,939
===== ===========
- ----------
(a) Rates shown are yields to maturity at time of purchase.
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT DECEMBER 31, 2006 3
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2006 (unaudited)
ASSETS:
Investments, at amortized cost................................. $79,884,574
Cash........................................................... 21,836
Other Asset.................................................... 10,093
-----------
Total Assets................................................. 79,916,503
-----------
LIABILITIES:
Payables for:
Dividends declared........................................... 185,701
Shareholder servicing fees................................... 38,823
Professional fees............................................ 32,845
Custody and accounting fees.................................. 30,846
Investment advisory fees..................................... 25,881
Administrative fees.......................................... 17,920
Board of Trustees' fees...................................... 1,000
Accrued expenses and other liabilities......................... 31,548
-----------
Total Liabilities............................................ 364,564
-----------
NET ASSETS, for 79,552,072 fund shares outstanding................ $79,551,939
===========
Net Assets Consist of:
Par value...................................................... $ 795,521
Paid-in capital in excess of par............................... 78,756,418
-----------
Net Assets........................................................ $79,551,939
===========
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 six months ended December 31, 2006 (unaudited)
NET INVESTMENT INCOME:
Income:
Interest.................................................... $2,388,684
----------
Expenses:
Shareholder servicing fees.................................. 108,376
Investment advisory fees.................................... 72,251
Administrative fees......................................... 48,167
Custody and accounting fees................................. 29,304
Professional fees........................................... 14,724
Board of Trustees' fees..................................... 5,612
Miscellaneous expenses...................................... 30,049
----------
Total Expenses............................................ 308,483
Expense offset arrangement................................ (2,584)
----------
Net Expenses.............................................. 305,899
----------
Net Investment Income......................................... $2,082,785
==========
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT DECEMBER 31, 2006 5
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
For the six
months ended For the
December 31, 2006 year ended
(unaudited) June 30, 2006
----------------- --------------
INCREASE (DECREASE) IN NET ASSETS:
From Operations:
Net investment income ............................... $ 2,082,785 $ 3,683,128
Dividends declared from net investment income ......... (2,082,785) (3,683,261)
------------- -------------
Net decrease in net assets from operations .......... -- (133)
------------- -------------
From Fund Share (Principal) Transactions at
Net Asset Value of $1.00 per share:
Fund shares sold .................................. 89,683,335 241,663,076
Fund shares issued in reinvestment of dividends ... 913,779 1,530,055
Fund shares repurchased ........................... (122,399,151) (272,459,489)
------------- -------------
Net decrease in net assets resulting
from fund share transactions .................. (31,802,037) (29,266,358)
------------- -------------
Total decrease in net assets .................... (31,802,037) (29,266,491)
NET ASSETS:
Beginning of year ..................................... 111,353,976 140,620,467
------------- -------------
End of period ......................................... $ 79,551,939 $ 111,353,976
============= =============
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
period
For the six
months ended
December 31, For the years ended June 30,
2006 --------------------------------------------------------
(unaudited) 2006 2005 2004 2003 2002
------------ ---- ---- ---- ---- ----
Net asset value,
beginning of year ............. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment
operations:
Net investment income ......... 0.02 0.03 0.01 0.00(1) 0.01 0.02
Dividends to shareholders from net
investment income ............. (0.02) (0.03) (0.01) (0.00)(1) (0.01) (0.02)
----- ----- ----- ----- ----- -----
Net asset value, end of period ... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== =====
Total return ..................... 2.20% 3.35% 1.41% 0.40% 0.91% 1.95%
Ratios/Supplemental data:
Net assets, end of period
(in millions) ............... $80 $111 $141 $117 $137 $188
Ratio of expenses to average
net assets
Net expenses paid by Fund ..... 0.63%(2) 0.59% 0.56% 0.59% 0.57% 0.56%
Expense offset arrangement .... 0.01%(2) 0.00%(3) 0.01% 0.00%(3) 0.00%(3) 0.00%(3)
----- ----- ----- ----- ----- -----
Total expenses ................... 0.64%(2) 0.59% 0.57% 0.59% 0.57% 0.56%
===== ===== ===== ===== ===== =====
Ratio of net investment income to
average net assets ............ 4.32%(2) 3.25% 1.49% 0.39% 0.92% 1.91%
- ----------
(1) Less than $0.01 per share.
(2) Annualized.
(3) Less than 0.01%.
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT DECEMBER 31, 2006 7
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
December 31, 2006 (unaudited)
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 December 31, 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 December 31, 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 to Shareholders. Dividends from net investment
income are declared daily and paid monthly to shareholders.
E. Accounting Developments. 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
8
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006 (unaudited)
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
Funds' net assets and results of operations.
In September 2006, Statement of Financial Accounting Standards No. 157,
Fair Value Measurements (SFAS 157), was issued and is effective for fiscal
years beginning after November 15, 2007. SFAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures
about fair value measurements. Management is currently evaluating the
implication of SFAS 157. At this time its impact on the Fund's financial
statements has not yet been determined.
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 six months ended December 31, 2006, the Fund
incurred $72,251 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 six months ended December 31, 2006, the
Fund incurred $48,167 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 six months ended December 31, 2006, the Fund incurred $108,376 for
shareholder servicing services.
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
six months ended December 31, 2006, the Fund incurred $29,304 for custody and
accounting services. These fees were reduced by $2,584 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
FINANCIAL STATEMENT DECEMBER 31, 2006 9
BBH U.S. TREASURY MONEY FUND
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006 (unaudited)
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 six months ended
December 31, 2006 was $8,374.
Board of Trustees' Fees. Each Trustee receives an annual fee as well as
reimbursement for reasonable out-of-pocket expenses from the Fund. For the
six months ended December 31, 2006, the Fund incurred $5,612 for Trustees'
fees.
10
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF FUND EXPENSES
December 31, 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 (July 1, 2006 to December 31, 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 July 1, 2006 to
July 1, 2006 December 31, 2006 December 31, 2006(1)
------------- ----------------- --------------------
Actual................. $1,000 $1,022.00 $3.21
Hypothetical(2)........ $1,000 $1,022.03 $3.21
- ----------
(1) Expenses are equal to the Fund's annualized expense ratio of 0.63%,
multiplied by the average account value over the period, multiplied by
184/365 (to reflect the one-half year period).
(2) Assumes a return of 5% before expenses. For the purpose of the
calculation, the applicable annualized expense ratio is subtracted from
the assumed return before expenses.
FINANCIAL STATEMENT DECEMBER 31, 2006 11
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF ADVISOR SELECTION
December 31, 2006 (unaudited)
Approval of Continuation of Investment Advisory Agreement
At a meeting held on December 11, 2006, the Board of Trustees (the "Board") of
BBH Trust, Inc. (the "Corporation") unanimously approved the renewal of the
Investment Advisory Agreement (the "IA Agreement") between the Corporation and
Brown Brothers Harriman & Co. ("BBH") for an additional one-year term. The
following is a summary of the factors the Board took into consideration in
making its determination to approve the renewal of the IA Agreement.
Nature, Extent and Quality of Services Provided by BBH
The Board noted that, under the IA Agreement in respect of each Fund, BBH,
subject to the supervision of the Board, is responsible for providing a
continuous investment program and, for each Fund other than the International
Fund, makes purchases and sales of portfolio securities consistent with the
Fund's investment objective and policies.
The Board considered the scope and quality of services provided by BBH under the
IA Agreement and noted that the scope of services provided had expanded over
time, primarily, as a result of regulatory developments. The Board noted that,
for example, BBH is responsible for maintaining and monitoring its own and, to
varying degrees, the Funds' compliance program, and these compliance programs
have recently been refined and enhanced in light of new regulatory requirements.
The Board considered the quality of the investment research capabilities of BBH
and the other resources it has dedicated to performing services for the Funds.
The Board concluded that, overall, they were satisfied with the nature, extent
and quality of services provided (and expected to be provided) to each of the
Funds under the IA Agreement.
Costs of Services Provided and Profitability to BBH
At the request of the Board, BBH provided information concerning the
profitability of BBH's investment company, advisory fees and other fees and its
statement of condition for the recent period and as of December 31, 2005,
respectively. The Board also reviewed BBH's profitability data for each Fund,
which also included the effect of revenue generated by the shareholder
servicing, administration, custody and other fees paid by a Fund. The Board
noted that most beneficial owners of the Funds' shares are holding these shares
in the context of an overall investment management program for which BBH is the
adviser and for which BBH charges an investment management fee. Since BBH
excludes the assets in the Funds when calculating its advisory fees for its
clients, the Board agreed that it is appropriate in an analysis of Fund
profitability to reduce the advisory fees for the Funds by the advisory fees
that otherwise would have been earned by BBH on the assets involved.
The Board discussed the difficulty of making comparisons of profitability from
fund advisory contracts because comparative information is not generally
publicly available and is affected by numerous factors, including the structure
of the particular adviser, the types of funds it manages, its business mix,
numerous assumptions regarding allocations and the adviser's capital structure
and cost of capital. In considering profitability information, the Board
considered the effect of fall-out benefits on BBH's expenses, as well
12
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF ADVISOR SELECTION (continued)
December 31, 2006 (unaudited)
as the "revenue sharing" arrangements BBH has entered into with certain entities
that distribute shares of the Funds. The Board focused on profitability of BBH's
relationships with the Funds before taxes and distribution expenses. The Board
concluded that it was satisfied that BBH's level of profitability from its
relationship with each Fund was not excessive.
The Board also considered the advisory fees of each Fund in comparison to the
fees of comparable funds. The Board recognized that the expense ratios for the
Funds potentially reflected on BBH's provision of services, as BBH is directly
the provider of substantial services and coordinates services provided to the
Fund by others. The Board took note of situations in which BBH waived its
management fee or reimbursed a Fund's expenses.
Fall-Out Benefits
The Board considered that BBH did not allocate the Funds' portfolio transactions
for third party research, although it did benefit from proprietary research
received from brokers that execute the Funds' purchases and sales of securities.
The Board recognized that the aggregate amount of commissions generated by Fund
transactions was unlikely to result in the Funds receiving from full service
broker dealers substantial discounts on commission rates. The Board received and
reviewed information concerning BBH's policies with respect to allocating
portfolio brokerage.
The Board also considered that BBH receives shareholder servicing fees from
certain funds, and is the Funds' administrator, custodian and securities lending
agent. The Board noted that BBH retained no portion of the 12b-1 fees paid by
the Fund that operated with a plan.
The Board recognized that BBH's profitability would be somewhat lower if it did
not receive proprietary research for commissions or, if it did not receive the
other benefits described above. The Board recognized that most Fund shareholders
were also BBH clients, and that substantial assets are invested in the Funds as
a result of an overall investment management program for the shareholder. The
Board noted that the Funds also derive reputational and other benefits from
their association with BBH and their use of the BBH name, which is licensed to
the Funds by BBH. Thus, the Board did not believe that BBH revenues associated
with its clients should be fairly regarded as "fallout" benefit from the Funds.
Economies of Scale
The Board noted that the Funds' advisory fee schedules do not contain
breakpoints. As a result, if assets increase, the fee rates would not be reduced
on the incremental assets. There may be other economies of scale because many
expenses did not rise (and fall) proportionally to increases (and decreases) in
total net assets. The Board noted that BBH had priced the advisory services in
recognition of the fact that it was largely its own clients who were
shareholders and, accordingly, sought to assure that the cost of advisory
service and total expenses for each Fund were fair and reasonable. Consequently,
the advisory fees are in the range of institutional separate account fees, which
is to say substantially below, even taking into account the BBH administration
fees, typical mutual fund fees. In addition, the Board noted
FINANCIAL STATEMENT DECEMBER 31, 2006 13
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF ADVISOR SELECTION (continued)
December 31, 2006 (unaudited)
that BBH had supported and continued to support certain Funds through fee
waivers and expense reimbursements. Based on information they had been provided
over many years, the Board observed that in the mutual fund industry as a whole,
as well as among funds similar to the Funds, there appeared to be no uniformity
or pattern in the fees and asset levels at which breakpoints (if any) apply. In
light of the Fund's current size and expense structure, the Board concluded that
it was unnecessary at this time to consider breakpoints.
Investment Results
The Board considered the investment results of each of the Funds as compared to
investment companies with its peers and with one or more selected securities
indices. In addition to the information received by the Board for the meeting,
the Board received detailed performance information for each Fund at each
regular Board meeting during the year. At the meeting, the Board reviewed
information showing performance of each Fund compared to the peers generally
over the 1-, 3-, 5- and since inception periods ended October 31, 2005 and
compared to one or more securities indices over comparable periods.
Advisory Fee Rate
The Board considered the advisory fee rate paid by each Fund to BBH. The Board
recognized that it is difficult to make comparisons of these fees, and combined
advisory and administration fees, because there are variations in the services
that are included in the fees paid by other funds.
BBH also manages accounts for institutional clients with investment objectives
similar to those of certain Funds. The fee rates payable by the BBH's
institutional clients are generally comparable although occasionally lower, than
the rates paid by the Funds. BBH reviewed with the Board the significant
differences in the scope of services that BBH provides to institutional clients
and to the Funds through both the IA and Administration Agreements (the "Admin.
Agreements"). For example, BBH provides, among other things, officers (including
the Funds' Chief Compliance Officer and officers to provide required
certifications) and administrative services, such as shareholder communications,
and tax compliance, with the attendant costs and exposure to liability. BBH also
coordinates the provision of services to the Funds by nonaffiliated service
providers. These services normally are not provided to non investment company
clients, and fees charged to the Funds reflect the costs and risks of the
additional obligations. The Board also noted that since the Funds are constantly
issuing and redeeming their shares, they are more difficult to manage than an
institutional account, where the assets are relatively stable. Accordingly, the
Board did not place significant weight on these fee comparisons.
The following factors specific to BBH U.S. Treasury Money Fund also were noted
and considered by the Board in deciding to approve the continuation of the IA
Agreements:
14
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF ADVISOR SELECTION (continued)
December 31, 2006 (unaudited)
The Trustees considered the 1-, 3- and 5-year annualized total returns versus
the iMoneyNet (Treasury Retail). The Trustees noted favorable comparisons versus
that average for the most recent periods and, in their view, immaterial
difference over longer ones. Moreover, they had been appropriately advised by
BBH about its duration and average weighted maturity decisions during the
relevant periods and were satisfied overall with the competitiveness of the
performance. The Trustees also noted with favor that the expense ratio was
substantially lower than that of the average. The Trustees also noted that the
Fund had successfully maintained a stable net asset value of one dollar at all
times. Taking into account these comparisons and the other factors considered,
the Trustees concluded that the Fund's investment results over time and its
total expense ratio had been satisfactory.
FINANCIAL STATEMENT DECEMBER 31, 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
BBH Tax Free Short / Intermediate Fixed Income Fund
Financial Statements
December 31, 2006
(unaudited)
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2006 (unaudited)
ASSETS:
Cash $ 67,780
Other Receivables 527
-----------
Total Assets 68,307
-----------
LIABILITIES:
Payables for:
Professional fees 34,678
Custody and accounting fees 5,637
Dividends and distributions declared 5,004
Investment advisory fees 8
Shareholder servicing fees 8
Administrative fees 5
Accrued expenses and other liabilities 13,452
-----------
Total Liabilities 58,792
-----------
NET ASSETS $ 9,515
===========
Net Assets Consist of:
Par value $ 9
Paid-in capital in excess of par 1,631,366
Distributions in excess of net investment income (3,277)
Accumulated net realized loss on investments (1,618,583)
-----------
Net Assets $ 9,515
===========
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($9,515 /948 shares outstanding) $ 10.04
===========
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the six months ended December 31, 2006 (unaudited)
NET INVESTMENT INCOME:
Income:
Interest income $ 465,148
-----------
Expenses:
Investment advisory fees 36,568
Shareholder servicing fees 36,568
Administrative fees 21,941
Professional fees 6,706
Custody and accounting fees 3,209
Miscellaneous expenses 3,453
-----------
Total Expenses 108,445
Expense offset arrangement (3,209)
-----------
Net Expenses 105,236
-----------
Net Investment Income 359,912
-----------
NET REALIZED AND UNREALIZED GAIN:
Net realized loss on investments (666,146)
Net change in unrealized appreciation on investments 1,142,143
-----------
Net Realized and Unrealized Gain 475,997
-----------
Net Increase in Net Assets Resulting From Operations $ 835,909
===========
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
For the six
months ended For the
December 31, 2006 year ended
(unaudited) June 30, 2006
----------------- -------------
INCREASE IN NET ASSETS:
From Operations:
Net investment income $ 359,912 $ 1,563,650
Net realized loss on investments (666,146) (884,563)
Net change in unrealized
depreciation on investments 1,142,143 (615,369)
------------- -------------
Net increase in net assets resulting
from operations 835,909 63,718
------------- -------------
Dividends and distributions declared:
From net investment income (359,912) (1,563,651)
------------- -------------
Total dividends and distributions
declared (359,912) (1,563,651)
------------- -------------
Fund shares transactions:
Net proceeds from sales of fund shares 381,749 13,031,845
Net asset value of fund shares issued
to shareholders in reinvestment
of distributions 105,922 659,458
Net cost of fund shares repurchased (57,853,334) (56,181,746)
------------- -------------
Net decrease in net assets resulting
from fund shares transactions (57,365,663) (42,490,443)
------------- -------------
Total decrease in net assets (56,889,666) (43,990,376)
NET ASSETS:
Beginning of year 56,899,181 100,889,557
------------- -------------
End of period (including distributions
in excess of net investment income
of $3,277 and $3,277, respectively) $ 9,515 $ 56,899,181
============= =============
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding throughout each
period
For the six
months ended
December 31, For the years ended June 30,
2006 ---------------------------------------------------------------------
(unaudited) 2006 2005 2004 2003 2002
------------ ---- ---- ---- ---- ----
Net asset value, beginning of year $ 10.33 $10.52 $ 10.55 $ 10.87 $ 10.73 $10.53
------- ------ ------- ------- ------- ------
Income from investment operations:
Net investment income 0.12(1) 0.21 0.23 0.18 0.25 0.31
Net realized and unrealized
gain (loss) on investments 7.86 (0.19) (0.05) (0.28) 0.18 0.22
------- ------ ------- ------- ------- ------
Total income (loss) from investment
operations 7.98 0.02 0.18 (0.10) 0.43 0.53
------- ------ ------- ------- ------- ------
Less dividends and distributions:
From net investment income (8.27) (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 (8.27) (0.21) (0.21) (0.22) (0.29) (0.33)
------- ------ ------- ------- ------- ------
Net asset value, end of period $ 10.04 $10.33 $ 10.52 $ 10.55 $ 10.87 $10.73
======= ====== ======= ======= ======= ======
Total return 0.93%(2) 0.18% 1.75% (0.75%) 4.04% 5.14%
Ratios/Supplemental data:
Net assets, end of period (in millions) $ -- $ 57 $ 101 $ 126 $ 107 $ 82
Ratio of expenses to average net assets:
Net expenses paid by Fund 0.72%(3) 0.85% 0.80% 0.80% 0.82% 0.83%
Expense offset arrangement 0.02%(3) 0.00%(4) 0.00%(4) 0.00%(4) 0.00%(4) 0.01%
------- ------ ------- ------- ------- ------
Total expenses 0.74%(3) 0.85% 0.80% 0.80% 0.82% 0.84%
======= ====== ======= ======= ======= ======
Ratio of net investment income to
average net assets 2.46%(3) 1.97% 1.68% 1.86% 2.33% 2.90%
Portfolio turnover rate 385%(3) 79% 89% 90% 82% 94%
- ----------
(1) Calculated based on average shares outstanding.
(2) Calculation perfomed by time weighted return model based on total
net assets and external cash flows.
(3) Annualized.
(4) Amount is less than 0.01%.
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
December 31, 2006 (unaudited)
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 December 31, 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 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
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006 (unaudited)
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 Carryforward. 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 Developments. 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 Funds' net assets and results of operations.
In September 2006, Statement of Financial Accounting Standards No.
157, Fair Value Measurements (SFAS 157), was issued and is effective
for fiscal years beginning after November 15, 2007. SFAS 157 defines
fair value, establishes a framework for measuring fair value and
expands disclosures about fair value measurements. Management is
currently evaluating the implication of SFAS 157. At this time its
impact on the Fund's financial statements has not yet been
determined.
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 six months ended
December 31, 2006, the Fund incurred $36,568 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 six
months ended December 31, 2006, the Fund incurred $21,941 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 six months ended December 31, 2006, the Fund
incurred $36,568 for shareholder servicing services.
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006 (unaudited)
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 six months ended December 31, 2006, the Fund incurred $3,209 for
custody and accounting services. These fees were reduced by $3,209 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 six months ended December 31, 2006 was $585.
Board of Trustees' Fees. Each Trustee receives an annual fee as well as
reimbursement for reasonable out-of-pocket expenses from the Fund. For the
six months ended December 31, 2006, the Fund incurred $0 for Trustees'
fees.
3. Investment Transactions. For the six months ended December 31, 2006, the
cost of purchases and the proceeds of sales of investment securities other
than short-term investments were $57,421,933 and $113,920,678,
respectively.
4. Share Transactions. Transactions in fund shares were as follows:
For the six
months ended For the
December 31, 2006 year ended
(unaudited) June 30, 2006
----------------- --------------
Fund shares sold 36,699 1,242,250
Fund shares issued in connection
with reinvestment of dividends 10,198 63,324
Fund shares repurchased (5,554,386) (5,385,157)
---------- ----------
Net decrease (5,507,489) (4,079,583)
========== ==========
5. Subsequent Event. At a meeting held on October 2, 2006, the Board of
Trustees of the Fund determined that it was in the best interest of the
Fund's shareholders to liquidate the Fund. Shareholders were given notice
of this determination, along with a request that shares of the Fund be
redeemed before October 31, 2006. At a subsequent meeting held on December
11, 2006, the Board authorized the involuntary redemption of the
outstanding shares of the Fund, in complete liquidation of the Fund.
Shareholders were given notice on January 23, 2007 that on or after March
26, 2007 the Fund will redeem their shares.
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF FUND EXPENSES
December 31, 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 (July 1, 2006 to December 31, 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 July 1, 2006 to
July 1, 2006 December 31, 2006 December 31, 2006(1)
------------- ----------------- --------------------
Actual $1,000 $1,009.30 $3.65
Hypothetical(2) $1,000 $1,021.58 $3.67
- ----------
(1) Expenses are equal to the Fund's annualized expense ratio of 0.72%,
multiplied by the average account value over the period, multiplied by
184/365 (to reflect the one-half year period).
(2) Assumes a return of 5% before expenses. For the purpose of the
calculation, the applicable annualized expense ratio is subtracted from
the assumed return before expenses.
- --------------------------------------------------------------------------------
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF ADVISOR SELECTION
DECEMBER 31, 2006 (UNAUDITED)
Approval of Continuation of Investment Advisory Agreement
At a meeting held on December 11, 2006, the Board of Trustees (the "Board") of
BBH Trust (the "Trust") unanimously approved the renewal of the Investment
Advisory Agreement (the "IA Agreement") between the Trust and Brown Brothers
Harriman & Co. ("BBH") for an additional one-year term. The following is a
summary of the factors the Board took into consideration in making its
determination to approve the renewal of the IA Agreement.
Nature, Extent and Quality of Services Provided by BBH
The Board noted that, under the IA Agreement in respect of each Fund, BBH,
subject to the supervision of the Board, is responsible for providing a
continuous investment program and, for each Fund other than the International
Fund, makes purchases and sales of portfolio securities consistent with the
Fund's investment objective and policies.
The Board considered the scope and quality of services provided by BBH under the
IA Agreement and noted that the scope of services provided had expanded over
time, primarily, as a result of regulatory developments. The Board noted that,
for example, BBH is responsible for maintaining and monitoring its own and, to
varying degrees, the Funds' compliance program, and these compliance programs
have recently been refined and enhanced in light of new regulatory requirements.
The Board considered the quality of the investment research capabilities of BBH
and the other resources it has dedicated to performing services for the Funds.
The Board concluded that, overall, they were satisfied with the nature, extent
and quality of services provided (and expected to be provided) to each of the
Funds under the IA Agreement.
Costs of Services Provided and Profitability to BBH
At the request of the Board, BBH provided information concerning the
profitability of BBH's investment company, advisory fees and other fees and its
statement of condition for the recent period and as of December 31, 2005,
respectively. The Board also reviewed BBH's profitability data for each Fund,
which also included the effect of revenue generated by the shareholder
servicing, administration, custody and other fees paid by a Fund. The Board
noted that most beneficial owners of the Funds' shares are holding these shares
in the context of an overall investment management program for which BBH is the
adviser and for which BBH charges an investment management fee. Since BBH
excludes the assets in the Funds when calculating its advisory fees for its
clients, the Board agreed that it is appropriate in an analysis of Fund
profitability to reduce the advisory fees for the Funds by the advisory fees
that otherwise would have been earned by BBH on the assets involved.
The Board discussed the difficulty of making comparisons of profitability from
fund advisory contracts because comparative information is not generally
publicly available and is affected by numerous factors, including the structure
of the particular adviser, the types of funds it manages, its business mix,
numerous assumptions regarding allocations and the adviser's capital structure
and cost of capital. In considering profitability information, the Board
considered the effect of fall-out benefits on BBH's expenses, as well as the
"revenue sharing" arrangements BBH has entered into with certain entities that
distribute shares of the Funds. The Board focused on profitability of BBH's
relationships with the Funds before taxes and distribution expenses. The
- --------------------------------------------------------------------------------
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF ADVISOR SELECTION (CONTINUED)
DECEMBER 31, 2006 (UNAUDITED)
Board concluded that it was satisfied that BBH's level of profitability from its
relationship with each Fund was not excessive.
The Board also considered the advisory fees of each Fund in comparison to the
fees of comparable funds. The Board recognized that the expense ratios for the
Funds potentially reflected on BBH's provision of services, as BBH is directly
the provider of substantial services and coordinates services provided to the
Fund by others. The Board took note of situations in which BBH waived its
management fee or reimbursed a Fund's expenses.
Fall-Out Benefits
The Board considered that BBH did not allocate the Funds' portfolio transactions
for third party research, although it did benefit from proprietary research
received from brokers that execute the Funds' purchases and sales of securities.
The Board recognized that the aggregate amount of commissions generated by Fund
transactions was unlikely to result in the Funds receiving from full service
broker dealers substantial discounts on commission rates. The Board received and
reviewed information concerning BBH's policies with respect to allocating
portfolio brokerage.
The Board also considered that BBH receives shareholder servicing fees from
certain funds, and is the Funds' administrator, custodian and securities lending
agent. The Board noted that BBH retained no portion of the 12b-1 fees paid by
the Fund that operated with a plan.
The Board recognized that BBH's profitability would be somewhat lower if it did
not receive proprietary research for commissions or, if it did not receive the
other benefits described above. The Board recognized that most Fund shareholders
were also BBH clients, and that substantial assets are invested in the Funds as
a result of an overall investment management program for the shareholder. The
Board noted that the Funds also derive reputational and other benefits from
their association with BBH and their use of the BBH name, which is licensed to
the Funds by BBH. Thus, the Board did not believe that BBH revenues associated
with its clients should be fairly regarded as "fallout" benefit from the Funds.
Economies of Scale
The Board noted that the Funds' advisory fee schedules do not contain
breakpoints. As a result, if assets increase, the fee rates would not be reduced
on the incremental assets. There may be other economies of scale because many
expenses did not rise (and fall) proportionally to increases (and decreases) in
total net assets. The Board noted that BBH had priced the advisory services in
recognition of the fact that it was largely its own clients who were
shareholders and, accordingly, sought to assure that the cost of advisory
service and total expenses for each Fund were fair and reasonable. Consequently,
the advisory fees are in the range of institutional separate account fees, which
is to say substantially below, even taking into account the BBH administration
fees, typical mutual fund fees. In addition, the Board noted that BBH had
supported and continued to support certain Funds through fee waivers and expense
reimbursements. Based on information they had been provided over many years, the
Board observed that in the mutual fund industry as a whole, as well as among
funds similar to the Funds, there appeared to be no uniformity or pattern in the
fees and asset levels at which breakpoints (if any) apply. In light of the
Fund's current size and expense structure, the Board concluded that it was
unnecessary at this time to consider breakpoints.
BBH TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF ADVISOR SELECTION (CONTINUED)
DECEMBER 31, 2006 (UNAUDITED)
Investment Results
The Board considered the investment results of each of the Funds as compared to
investment companies with its peers and with one or more selected securities
indices. In addition to the information received by the Board for the meeting,
the Board received detailed performance information for each Fund at each
regular Board meeting during the year. At the meeting, the Board reviewed
information showing performance of each Fund compared to the peers generally
over the 1-, 3-, 5- and since inception periods ended October 31, 2005 and
compared to one or more securities indices over comparable periods.
Advisory Fee Rate
The Board considered the advisory fee rate paid by each Fund to BBH. The Board
recognized that it is difficult to make comparisons of these fees, and combined
advisory and administration fees, because there are variations in the services
that are included in the fees paid by other funds.
BBH also manages accounts for institutional clients with investment objectives
similar to those of certain Funds. The fee rates payable by the BBH's
institutional clients are generally comparable although occasionally lower, than
the rates paid by the Funds. BBH reviewed with the Board the significant
differences in the scope of services that BBH provides to institutional clients
and to the Funds through both the IA and Administration Agreements (the "Admin.
Agreements"). For example, BBH provides, among other things, officers (including
the Funds' Chief Compliance Officer and officers to provide required
certifications) and administrative services, such as shareholder communications,
and tax compliance, with the attendant costs and exposure to liability. BBH also
coordinates the provision of services to the Funds by nonaffiliated service
providers. These services normally are not provided to non investment company
clients, and fees charged to the Funds reflect the costs and risks of the
additional obligations. The Board also noted that since the Funds are constantly
issuing and redeeming their shares, they are more difficult to manage than an
institutional account, where the assets are relatively stable. Accordingly, the
Board did not place significant weight on these fee comparisons.
The following factors specific to BBH Tax Free Short/Intermediate Fixed
Income Fund also were noted and considered by the Board in deciding to approve
the continuation of the IA Agreements:
The Trustees reviewed information showing performance of the Fund
compared to the Lehman 3-Year Municipal Bond Index. The Fund generally lagged
the Index over all relevant periods, which resulted from management's decision
to construct a defensive portfolio in recent years. The Trustees understood
management's decision and were pleased to see a portfolio with higher quality
securities and a shorter duration than the Index. The Trustees viewed with favor
this performance and noted the benchmark has no fees. The Trustees also noted
the Fund's expense ratio was in line with or lower than many Funds of similar
size and investment mandate. Taking into account these comparisons and the other
factors considered, the Trustees concluded that the Fund's investment results
over time and its total expense ratio had been satisfactory.
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
Semi-Annual Report
DECEMBER 31, 2006
BBH TAX EXEMPT MONEY FUND
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO ALLOCATION
December 31, 2006 (unaudited)
BREAKDOWN BY BOND TYPE
Percent of
U.S. $ Value Net Assets
------------ ----------
Certificate of Participation.................... $ 2,100,000 0.5%
Education....................................... 69,516,001 15.5
General Obligations............................. 103,131,351 23.1
Health Care..................................... 20,080,000 4.5
Industrial...................................... 61,380,000 13.7
Miscellaneous................................... 35,065,000 7.8
Special Tax..................................... 4,800,000 1.1
Transportation.................................. 16,565,000 3.7
Utilities....................................... 25,742,065 5.8
Water/Sewer..................................... 27,702,232 6.2
Commercial Paper................................ 79,513,000 17.8
Other Assets In Excess of Liabilities........... 1,360,060 0.3
------------ -----
Net Assets...................................... $446,954,709 100.0%
============ =====
TOP FIVE HOLDINGS BY STATE
Percent of
U.S. $ Value Net Assets
------------ ----------
New York........................................ $ 61,626,167 13.8%
Texas........................................... 51,926,900 11.6
California...................................... 32,350,000 7.2
Massachusetts................................... 30,825,000 6.9
North Carolina.................................. 22,657,589 5.1
Other States.................................... 246,208,993 55.1
Other Assets In Excess of Liabilities........... 1,360,060 0.3
------------ -----
Net Assets...................................... $446,954,709 100.0%
============ =====
All data as of December 31, 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
December 31, 2006 (unaudited)
Principal Maturity Interest
Amount Date Rate Value
--------- -------- -------- -----
MUNICIPAL BONDS (81.9%)
CERTIFICATE OF PARTICIPATION (0.5%)
$ 2,100,000 Denver, Colorado, City & Council(1) ....... 01/03/07 3.930% $ 2,100,000
------------
EDUCATION (15.5%)
1,200,000 Chicago Board of Education(1) ............. 01/02/07 4.000 1,200,000
5,600,000 Chicago Board of Education(1) ............. 01/02/07 4.000 5,600,000
2,600,000 Clark County, Nevada, School District(1) .. 01/02/07 3.990 2,600,000
3,700,000 Connecticut State Health &
Educational Facilities Authority(1) ..... 01/02/07 3.900 3,700,000
1,500,000 Connecticut State Health &
Educational Facilities Authority(1) ..... 01/02/07 3.900 1,500,000
600,000 Connecticut State Health &
Educational Facilities Authority(1) ..... 01/02/07 3.900 600,000
3,400,000 Connecticut State Health &
Educational Facilities Authority(1) ..... 01/02/07 3.900 3,400,000
4,000,000 Connecticut State Health &
Educational Facilities Authority(1) ..... 01/03/07 3.920 4,000,000
3,300,000 Connecticut State Health &
Educational Facilities Authority(1) ..... 01/03/07 3.920 3,300,000
600,000 Florida State Board of Education........... 01/01/07 5.000 600,000
2,600,000 Massachusetts State Development
Finance Agency, Boston
University Revenue(1).................... 01/02/07 3.980 2,600,000
1,850,000 Massachusetts State Health &
Educational Facilities Authority(1) ..... 01/02/07 3.880 1,850,000
3,000,000 Massachusetts State Health &
Educational Facilities Authority(1) ..... 01/02/07 3.950 3,000,000
3,000,000 Massachusetts State Health &
Educational Facilities Authority(1) ..... 01/04/07 3.920 3,000,000
3,350,000 Mesquite, Texas School District ........... 08/15/08 4.700 3,373,857
4,910,000 Michigan State University(1) .............. 01/03/07 3.970 4,910,000
2,000,000 Missouri State Health & Education
Facilities Authority(1) ................. 01/02/07 3.950 2,000,000
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT DECEMBER 31, 2006 3
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
December 31, 2006 (unaudited)
Principal Maturity Interest
Amount Date Rate Value
--------- -------- -------- -----
MUNICIPAL BONDS (continued)
EDUCATION (continued)
$ 2,800,000 New Hampshire Health & Education
Facilities Authority(1) ................. 01/03/07 3.950% $ 2,800,000
8,275,000 New Hampshire Health & Education
Facilities Authority(1) ................. 01/03/07 3.950 8,275,000
1,400,000 New Jersey State Educational
Facilities Authority(1) ................. 01/02/07 3.900 1,400,000
1,000,000 Ohio State University(1) .................. 01/04/07 3.720 1,000,000
500,000 Ohio State University(1) .................. 01/04/07 3.850 500,000
3,000,000 Ohio State University(1) .................. 01/04/07 3.850 3,000,000
2,500,000 University of Missouri(1) ................. 01/02/07 3.980 2,500,000
1,800,000 University of Pittsburgh(1) ............... 01/03/07 3.970 1,800,000
1,000,000 University of Texas ....................... 07/01/07 5.000 1,007,144
------------
Total Education............................ 69,516,001
------------
GENERAL OBLIGATIONS (23.1%)
7,700,000 California State(1) ....................... 01/02/07 3.820 7,700,000
1,000,000 Charlotte, North Carolina ................. 02/01/07 4.750 1,000,994
5,000,000 Connecticut State(1) ...................... 01/04/07 4.000 5,000,000
2,500,000 Delaware State ............................ 04/01/07 5.250 2,510,541
2,385,000 District of Columbia(1) ................... 01/03/07 4.000 2,385,000
3,165,000 Fairfax County, Virginia .................. 04/01/07 5.000 3,176,417
1,000,000 Fairfax County, Virginia .................. 06/01/07 5.000 1,006,077
1,730,000 Fairfax County, Virginia .................. 10/01/07 5.000 1,748,920
3,770,000 Georgia State ............................. 05/01/07 5.000 3,787,903
1,545,000 Harris County, Texas ...................... 10/01/07 4.000 1,550,376
1,880,000 Hawaii State .............................. 03/01/07 6.000 1,886,763
5,000,000 Hawaii State .............................. 04/01/07 5.000 5,017,792
1,430,000 Jefferson County, Alabama(1) .............. 01/02/07 3.950 1,430,000
1,700,000 Maryland State ............................ 02/01/07 5.000 1,702,126
1,850,000 Maryland State ............................ 03/01/07 5.000 1,853,816
4,000,000 Massachusetts State(1) .................... 01/02/07 3.960 4,000,000
2,625,000 Massachusetts State(1) .................... 01/04/07 3.960 2,625,000
1,275,000 Mecklenburg County, North Carolina ........ 04/01/07 5.000 1,279,607
2,000,000 Minneapolis, Minnesota(1) ................. 01/04/07 3.760 2,000,000
620,000 Minneapolis, Minnesota(1) ................. 01/04/07 3.760 620,000
The accompanying notes are an integral part of these financial statements.
4
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
December 31, 2006 (unaudited)
Principal Maturity Interest
Amount Date Rate Value
--------- -------- -------- -----
MUNICIPAL BONDS (continued)
GENERAL OBLIGATIONS (continued)
$ 9,200,000 Minneapolis, Minnesota(1) ................. 01/04/07 3.760% $ 9,200,000
750,000 New York, New York(1) ..................... 01/02/07 3.850 750,000
1,300,000 New York, New York(1) ..................... 01/02/07 3.850 1,300,000
600,000 New York, New York(1) ..................... 01/02/07 3.900 600,000
600,000 New York, New York(1) ..................... 01/02/07 3.900 600,000
900,000 New York, New York(1) ..................... 01/02/07 3.950 900,000
1,800,000 New York, New York(1) ..................... 01/02/07 3.950 1,800,000
1,600,000 New York, New York(1) ..................... 01/02/07 3.950 1,600,000
400,000 New York, New York(1) ..................... 01/02/07 3.970 400,000
6,100,000 North Carolina State ...................... 03/01/07 4.000 6,104,431
1,000,000 North Carolina State ...................... 03/01/07 5.000 1,002,096
2,550,000 North Carolina State ...................... 03/01/07 5.000 2,555,935
1,700,000 North Carolina State ...................... 05/01/07 4.000 1,702,594
2,500,000 North Carolina State ...................... 05/01/07 5.000 2,511,931
8,700,000 Texas State ............................... 08/31/07 4.500 8,752,393
1,000,000 Utah State ................................ 07/01/07 5.500 1,009,635
10,000,000 Washington Suburban Sanitation
District ................................ 06/01/07 5.000 10,061,004
------------
Total General Obligations.................. 103,131,351
------------
HEALTH CARE (4.5%)
8,000,000 New York State Dormitory
Authority Revenue(1) .................... 01/04/07 3.900 8,000,000
2,000,000 New York State Dormitory Authority(1) ..... 01/04/07 3.950 2,000,000
2,580,000 Oklahoma State Industries Authority,
Hospital Revenue(1) ..................... 01/02/07 4.000 2,580,000
2,500,000 Ross County, Ohio(1) ...................... 01/02/07 3.990 2,500,000
5,000,000 Royal Oak, Michigan, Hospital
Finance Authority(1) .................... 01/04/07 3.970 5,000,000
------------
Total Health Care.......................... 20,080,000
------------
INDUSTRIAL (13.7%)
5,700,000 Bartow County Development Authority(1) .... 01/02/07 4.050 5,700,000
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT DECEMBER 31, 2006 5
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
December 31, 2006 (unaudited)
Principal Maturity Interest
Amount Date Rate Value
--------- -------- -------- -----
MUNICIPAL BONDS (continued)
INDUSTRIAL (continued)
$ 1,000,000 California Pollution Control Financing
Authority(1)............................. 01/02/07 3.710% $ 1,000,000
1,100,000 California Statewide Communities
Development Authority, Pollution
Control Revenue(1)....................... 01/02/07 3.880 1,100,000
3,300,000 Columbia, Alabama, Pollution Control
Revenue(1)............................... 01/02/07 4.000 3,300,000
3,900,000 Columbia, Alabama, Pollution Control
Revenue(1)............................... 01/02/07 4.000 3,900,000
600,000 Delaware County, Pennsylvania, Industrial
Development Authority(1)................. 01/03/07 3.880 600,000
1,000,000 East Baton Rouge, Parish Louisiana,
Pollution Control Revenue(1)............. 01/02/07 3.940 1,000,000
13,050,000 Forsyth, Montana, Pollution Control
Revenue(1)............................... 01/02/07 4.000 13,050,000
2,200,000 Gulf Coast Waste Disposal Authority,
Texas(1)................................. 01/02/07 3.940 2,200,000
2,300,000 Harris County, Texas, Pollution Control
Revenue(1)............................... 01/02/07 3.940 2,300,000
2,400,000 Harris County, Texas, Pollution Control
Revenue(1)............................... 01/02/07 3.990 2,400,000
1,000,000 Hurley, New Mexico, Pollution Control
Revenue(1)............................... 01/02/07 3.970 1,000,000
5,000,000 Jackson County, Mississippi, Port
Facility Revenue(1)...................... 01/02/07 4.000 5,000,000
4,000,000 Kemmerer, Wyoming, Pollution Control
Revenue(1)............................... 01/02/07 3.940 4,000,000
500,000 Lincoln County, Wyoming, Pollution
Control Revenue(1)....................... 01/02/07 3.860 500,000
2,590,000 Lincoln County, Wyoming, Pollution
Control Revenue(1)....................... 01/02/07 3.940 2,590,000
2,440,000 Lincoln County, Wyoming, Pollution
Control Revenue(1)....................... 01/02/07 3.940 2,440,000
The accompanying notes are an integral part of these financial statements.
6
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
December 31, 2006 (unaudited)
Principal Maturity Interest
Amount Date Rate Value
--------- -------- -------- -----
MUNICIPAL BONDS (continued)
INDUSTRIAL (continued)
$ 800,000 Midlothian, Texas, Pollution Control
Revenue(1)............................... 01/03/07 3.930% $ 800,000
2,000,000 MT Vernon Industries Pollution Control
& Solid Waste Disposal Revenue(1)........ 01/04/07 3.880 2,000,000
1,800,000 Sweetwater County, Wyoming, Pollution
Control Revenue(1)....................... 01/02/07 4.000 1,800,000
1,300,000 Valdez, Alaska, Marine Terminal
Revenue(1)................................ 01/02/07 3.900 1,300,000
2,200,000 Valdez, Alaska, Marine Terminal
Revenue(1)................................ 01/02/07 3.900 2,200,000
1,200,000 Valdez, Alaska, Marine Terminal
Revenue(1)............................... 01/02/07 3.940 1,200,000
------------
Total Industrial........................... 61,380,000
------------
MISCELLANEOUS (7.8%)
3,125,000 Alaska State Housing Finance Corp.
Revenue(1) .............................. 01/04/07 4.030 3,125,000
600,000 California State Economic Recovery
Bond(1) ................................. 01/02/07 3.750 600,000
1,365,000 Clayton County, Georgia, Housing
Authority(1) ............................ 01/04/07 3.990 1,365,000
1,300,000 Colorado Housing & Finance Authority(1) ... 01/03/07 4.000 1,300,000
2,800,000 Illinois Finance Authority(1) ............. 01/02/07 4.000 2,800,000
200,000 New York, New York, City Transitional
Finance Authority(1) .................... 01/02/07 3.890 200,000
2,000,000 New York, New York, City Transitional
Finance Authority(1) .................... 01/02/07 3.890 2,000,000
300,000 New York, New York, City Transitional
Finance Authority(1) .................... 01/02/07 3.980 300,000
2,170,000 New York, New York, City Transitional
Finance Authority(1) .................... 01/03/07 3.950 2,170,000
1,000,000 New York, New York, City Transitional
Finance Authority(1) .................... 01/03/07 3.950 1,000,000
1,200,000 New York, New York, City Transitional
Finance Authority(1) .................... 01/03/07 3.950 1,200,000
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT DECEMBER 31, 2006 7
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
December 31, 2006 (unaudited)
Principal Maturity Interest
Amount Date Rate Value
--------- -------- -------- -----
MUNICIPAL BONDS (continued)
MISCELLANEOUS (continued)
$ 5,100,000 New York, New York, City Transitional
Finance Authority(1)..................... 01/04/07 3.350% $ 5,100,000
900,000 New York State Local Government
Assistance Corp.(1)...................... 01/03/07 3.850 900,000
3,500,000 New York State Local Government
Assistance Corp.(1)...................... 01/03/07 3.900 3,500,000
3,405,000 Oklahoma State Capital Improvement
Authority(1)............................. 01/02/07 4.000 3,405,000
5,300,000 Oklahoma State Capital Improvement
Authority(1)...................... ...... 01/02/07 4.000 5,300,000
800,000 Will County, Illinois, Exempt Facilities
Revenue(1)............................... 01/02/07 4.020 800,000
------------
Total Miscellaneous........................ 35,065,000
------------
SPECIAL TAX (1.1%)
4,800,000 Riverside County, California,
Special Tax(1)........................... 01/03/07 3.730 4,800,000
------------
TRANSPORTATION (3.7%)
5,000,000 Kansas State Department of
Transportation & Highway Revenue(1) ..... 01/02/07 3.990 5,000,000
1,100,000 Los Angeles, California, Department of
Airports Revenue(1) ..................... 01/02/07 4.000 1,100,000
3,200,000 Metropolitan Transportation Authority,
New York(1) ............................. 01/04/07 3.850 3,200,000
4,300,000 Metropolitan Transportation Authority,
New York, Revenue(1) .................... 01/02/07 4.000 4,300,000
1,965,000 Pennsylvania Turnpike Commission(1) ....... 01/02/07 4.000 1,965,000
1,000,000 Port of Port Arthur Navigation District(1) 01/02/07 4.000 1,000,000
------------
Total Transportation....................... 16,565,000
------------
UTILITIES (5.8%)
6,350,000 Long Island Power Authority New York,
Electric System(1) ...................... 01/02/07 3.880 6,350,000
4,600,000 Municipal Electric Authority of Georgia(1) 01/03/07 3.920 4,600,000
The accompanying notes are an integral part of these financial statements.
8
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
December 31, 2006 (unaudited)
Principal Maturity Interest
Amount Date Rate Value
--------- -------- -------- -----
MUNICIPAL BONDS (continued)
UTILITIES (continued)
$ 3,940,000 New York State Environmental
Facilities Corp ......................... 04/15/07 5.000% $ 3,953,935
4,100,000 New York, New York, City Municipal
Water Finance Authority(1) .............. 01/02/07 3.880 4,100,000
2,000,000 New York, New York, City Municipal
Water Finance Authority(1) .............. 01/02/07 3.970 2,000,000
900,000 Piedmont Municipal Power Agency
Electric Revenue(1) ..................... 01/03/07 4.000 900,000
2,535,000 San Antonio,Texas ......................... 02/01/07 5.000 2,538,130
1,300,000 Washington State Public Power
Supply System(1) ........................ 01/03/07 3.900 1,300,000
------------
Total Utilities............................ 25,742,065
------------
WATER/SEWER (6.2%)
1,300,000 Boston, Massachusetts, Water &
Sewer Commission(1) ..................... 01/04/07 3.840 1,300,000
500,000 California State Department of Water
Resources(1) ............................ 01/02/07 3.860 500,000
1,800,000 California State Department of Water
Resources(1) ............................ 01/03/07 3.870 1,800,000
10,250,000 California State Department of Water
Resources(1) ............................ 01/04/07 3.750 10,250,000
3,500,000 Durham, North Carolina, Water &
Sewer Revenue(1) ........................ 01/03/07 4.000 3,500,000
400,000 Irvine Ranch, California, Water District(1) 01/02/07 3.630 400,000
900,000 Massachusetts State Water Resources
Authority(1) ............................ 01/03/07 3.880 900,000
1,550,000 Massachusetts State Water Resources
Authority(1) ............................ 01/03/07 3.880 1,550,000
3,100,000 Metropolitan Water District of Southern
California(1) ........................... 01/02/07 3.850 3,100,000
2,400,000 New York, New York, City Municipal
Water Finance Authority(1) .............. 01/02/07 3.970 2,400,000
1,000,000 New York State Environmental
Facilities Corp. ........................ 06/15/07 4.000 1,002,232
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT DECEMBER 31, 2006 9
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
December 31, 2006 (unaudited)
Principal Maturity Interest
Amount Date Rate Value
--------- -------- -------- -----
MUNICIPAL BONDS (continued)
WATER/SEWER (continued)
$ 1,000,000 Ohio State Solid Waste Revenue(1).......... 01/02/07 4.020% $ 1,000,000
------------
Total Water/Sewer.......................... 27,702,232
------------
Total Municipal Bonds...................... 366,081,649
------------
COMMERCIAL PAPER (17.8%)
5,000,000 Austin, Texas Independent School District . 02/06/07 3.530 5,000,000
1,800,000 Board of Regent Texas ..................... 02/12/07 3.550 1,800,000
12,000,000 City and County of Honolulu, Hawaii ....... 02/05/07 3.500 12,000,000
3,000,000 City of Charlotte, North Carolina ......... 02/07/07 3.590 3,000,000
7,000,000 City of Houston, Texas .................... 01/11/07 3.630 7,000,000
1,000,000 City of Houston, Texas .................... 02/01/07 3.580 1,000,000
3,000,000 City of Houston, Texas .................... 02/02/07 3.520 3,000,000
5,500,000 County of Montgomery, Pennsylvania ........ 02/02/07 3.550 5,500,000
2,000,000 County of Montgomery, Pennsylvania ........ 03/07/07 3.530 2,000,000
2,200,000 Maryland Health & Education ............... 02/01/07 3.600 2,200,000
2,000,000 Massachusetts State Health &
Educational Facilities Authority ........ 01/09/07 3.580 2,000,000
3,000,000 Massachusetts State Health &
Educational Facilities Authority ........ 02/09/07 3.580 3,000,000
5,000,000 Massachusetts Water Resource
Authority ............................... 02/08/07 3.520 5,000,000
5,000,000 Omaha Public Power ........................ 02/07/07 3.500 5,000,000
4,588,000 Tennessee State School Bond ............... 02/09/07 3.560 4,588,000
9,220,000 Tennessee State School Bond ............... 02/09/07 3.570 9,220,000
3,705,000 Texas Public Finance ...................... 02/12/07 3.550 3,705,000
1,500,000 Texas Public Finance ...................... 03/08/07 3.580 1,500,000
3,000,000 University of Texas ....................... 02/12/07 3.550 3,000,000
------------
Total Commercial Paper..................... 79,513,000
------------
TOTAL INVESTMENTS, AT AMORTIZED COST............................... 99.7% $445,594,649
OTHER ASSETS IN EXCESS OF LIABILITIES.............................. 0.3 1,360,060
----- ------------
NET ASSETS......................................................... 100.0% $446,954,709
===== ============
- ----------
(1) Variable rate instrument. Interest rates change on specific dates (such as
a coupon or interest payment date). The yield shown represents the
December 31, 2006 coupon or interest rate.
The accompanying notes are an integral part of these financial statements.
10
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2006 (unaudited)
ASSETS:
Investments, at amortized cost ................................ $445,594,649
Cash .......................................................... 318,767
Interest receivable ........................................... 2,264,656
Other receivable .............................................. 16,739
------------
Total Assets ................................................ 448,194,811
------------
LIABILITIES:
Payables for:
Dividends declared .......................................... 717,536
Shareholder servicing fees .................................. 192,716
Investment advisory fees .................................... 115,630
Custody and accounting fees ................................. 94,032
Administrative fees ......................................... 77,086
Professional fees ........................................... 40,674
Board of Trustees' fees ..................................... 1,000
Accrued expenses and other liabilities ........................ 1,428
------------
Total Liabilities ......................................... 1,240,102
------------
NET ASSETS, for 446,954,709 fund shares outstanding .............. $446,954,709
============
Net Assets Consist of:
Par value ................................................... $ 4,469,547
Paid-in capital ............................................. 442,485,162
------------
Net Assets ....................................................... $446,954,709
============
NET ASSET VALUE AND OFFERING PRICE PER SHARE ..................... $1.00
=====
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT DECEMBER 31, 2006 11
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the six months ended December 31, 2006 (unaudited)
NET INVESTMENT INCOME:
Income:
Investment income ......................................... $ 8,410,922
------------
Expenses:
Shareholder servicing fees ................................ 596,876
Investment advisory fees .................................. 358,126
Administrative fees ....................................... 238,750
Custody and accounting fees ............................... 91,312
Board of Trustees' fees ................................... 28,676
Professional fees ......................................... 19,440
Miscellaneous expenses .................................... 68,091
-----------
Total Expenses .......................................... 1,401,271
Expense offset arrangement .............................. (15,874)
-----------
Net Expenses ............................................ 1,385,397
-----------
Net Investment Income ....................................... $ 7,025,525
===========
The accompanying notes are an integral part of these financial statements.
12
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
For the six
months ended For the
December 31, 2006 year ended
(unaudited) June 30, 2006
----------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
From Operations:
Net investment income ............................. $ 7,025,525 $ 11,092,429
Dividends declared from net investment income ....... (7,026,754) (11,095,940)
------------- -------------
Net decrease in net assets from operations ........ (1,229) (3,511)
------------- -------------
From Fund Share (Principal) Transactions at
Net Asset Value of $1.00 per share:
Fund shares sold ................................ 156,118,555 544,563,550
Fund shares issued in reinvestment of dividends . 3,393,364 5,793,650
Fund shares repurchased ......................... (205,715,339) (494,840,334)
------------- -------------
Net increase (decrease) in net assets resulting
from fund share transactions .................. (46,203,420) 55,516,866
------------- -------------
Total increase (decrease) in net assets ......... (46,204,649) 55,513,355
NET ASSETS:
Beginning of year ................................... 493,159,358 437,646,003
------------- -------------
End of period ....................................... $ 446,954,709 $ 493,159,358
============= =============
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT DECEMBER 31, 2006 13
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding throughout each
period
For the six
months ended
December 31, For the years ended June 30,
2006 -----------------------------------------------------
(unaudited) 2006 2005 2004 2003 2002
------------- ---- ---- ---- ---- ----
Net asset value,
beginning of year ............... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment
operations:
Net investment income ........... 0.01 0.02 0.01 0.00(1) 0.01 0.01
Dividends to shareholders
from net investment income ...... (0.01) (0.02) (0.01) (0.00)(1) (0.01) (0.01)
----- ----- ----- ----- ----- -----
Net asset value, end of period ..... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== =====
Total return ....................... 1.50% 2.31% 1.15% 0.42% 0.72% 1.40%
Ratios/Supplemental data:
Net assets, end of period
(in millions) ................. $447 $493 $438 $453 $465 $414
Net expenses paid by Fund ....... 0.58%(2) 0.56% 0.56% 0.55% 0.56% 0.53%
Expense offset arrangement ...... 0.01%(2) 0.00%(3) 0.00%(3) 0.00%(3) 0.01% 0.02%
----- ----- ----- ----- ----- -----
Total expenses ................ 0.59%(2) 0.56% 0.56% 0.55% 0.57% 0.55%
===== ===== ===== ===== ===== =====
Ratio of net investment income
to average net assets ......... 2.94%(2) 2.31% 1.15% 0.42% 0.72% 1.28%
- ----------
(1) Less than $0.01 per share.
(2) Annualized.
(3) Less than 0.01%.
The accompanying notes are an integral part of these financial statements.
14
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
December 31, 2006 (unaudited)
1. Organization and Significant Accounting Policies. BBH Tax Exempt Money Fund
(the "Fund") is a separate, diversified series of BBH Trust (the "Trust"),
which is registered under the Investment Company Act of 1940, as amended. The
Trust is an open-end management investment company organized as a
Massachusetts business trust on June 7, 1983. 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 December 31, 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 December 31, 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 to Shareholders. Dividends from net investment
income are declared daily and paid monthly to shareholders.
E. Accounting Developments. 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
FINANCIAL STATEMENT DECEMBER 31, 2006 15
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006 (unaudited)
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 Funds' net assets and results of
operations.
In September 2006, Statement of Financial Accounting Standards No. 157,
Fair Value Measurements (SFAS 157), was issued and is effective for fiscal
years beginning after November 15, 2007. SFAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures
about fair value measurements. Management is currently evaluating the
implication of SFAS 157. At this time its impact on the Fund's financial
statements has not yet been determined.
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 six months ended
December 31, 2006, the Fund incurred $358,126 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 six
months ended December 31, 2006, the Fund incurred $238,750 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 six months ended December 31, 2006, the Fund
incurred $596,876 for shareholder servicing services.
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 six months ended December 31, 2006, the Fund incurred
$91,312 for custody and accounting services. These fees were reduced by
$15,874 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
16
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006 (unaudited)
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
six months ended December 31, 2006 was $1,929.
Board of Trustees' Fees. Each Trustee receives an annual fee as well as
reimbursement for reasonable out-of-pocket expenses from the Fund. For the
six months ended December 31, 2006, the Fund incurred $28,676 for
Trustees' fees.
FINANCIAL STATEMENT DECEMBER 31, 2006 17
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF FUND EXPENSES
December 31, 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 (July 1, 2006 to December 31, 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 July 1, 2006 to
July 1, 2006 December 31, 2006 December 31, 2006(1)
------------ ----------------- --------------------
Actual.................. $1,000 $1,015.00 $2.95
Hypothetical(2)......... $1,000 $1,022.28 $2.96
- ----------
(1) Expenses are equal to the Fund's annualized expense ratio of 0.58%,
multiplied by the average account value over the period, multiplied by
184/365 (to reflect the one-half year period).
(2) Assumes a return of 5% before expenses. For the purpose of the
calculation, the applicable annualized expense ratio is subtracted from
the assumed return before expenses.
18
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF ADVISOR SELECTION
December 31, 2006 (unaudited)
Approval of Continuation of Investment Advisory Agreement
At a meeting held on December 11, 2006, the Board of Trustees (the "Board") of
BBH Trust (the "Trust") unanimously approved the renewal of the Investment
Advisory Agreement (the "IA Agreement") between the Trust and Brown Brothers
Harriman ("BBH") for an additional one-year term. The following is a summary of
the factors the Board took into consideration in making its determination to
approve the renewal of the IA Agreement.
Nature, Extent and Quality of Services Provided by BBH
The Board noted that, under the IA Agreement in respect of each Fund, BBH,
subject to the supervision of the Board, is responsible for providing a
continuous investment program and, for each Fund other than the International
Fund, makes purchases and sales of portfolio securities consistent with the
Fund's investment objective and policies
The Board considered the scope and quality of services provided by BBH under the
IA Agreement and noted that the scope of services provided had expanded over
time, primarily, as a result of regulatory developments. The Board noted that,
for example, BBH is responsible for maintaining and monitoring its own and, to
varying degrees, the Funds' compliance program, and these compliance programs
have recently been refined and enhanced in light of new regulatory requirements.
The Board considered the quality of the investment research capabilities of BBH
and the other resources it has dedicated to performing services for the Funds.
The Board concluded that, overall, they were satisfied with the nature, extent
and quality of services provided (and expected to be provided) to each of the
Funds under the IA Agreement.
Costs of Services Provided and Profitability to BBH
At the request of the Board, BBH provided information concerning the
profitability of BBH's investment company, advisory fees and other fees and its
statement of condition for the recent period and as of December 31, 2005,
respectively. The Board also reviewed BBH's profitability data for each Fund,
which also included the effect of revenue generated by the shareholder
servicing, administration, custody and other fees paid by a Fund. The Board
noted that most beneficial owners of the Funds' shares are holding these shares
in the context of an overall investment management program for which BBH is the
adviser and for which BBH charges an investment management fee. Since BBH
excludes the assets in the Funds when calculating its advisory fees for its
clients, the Board agreed that it is appropriate in an analysis of Fund
profitability to reduce the advisory fees for the Funds by the advisory fees
that otherwise would have been earned by BBH on the assets involved.
The Board discussed the difficulty of making comparisons of profitability from
fund advisory contracts because comparative information is not generally
publicly available and is affected by numerous factors, including the structure
of the particular adviser, the types of funds it manages, its business mix,
numerous assumptions regarding allocations and the adviser's capital structure
and cost of capital. In consider-
FINANCIAL STATEMENT DECEMBER 31, 2006 19
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF ADVISOR SELECTION (continued)
December 31, 2006 (unaudited)
ing profitability information, the Board considered the effect of fall-out
benefits on BBH's expenses, as well as the "revenue sharing" arrangements BBH
has entered into with certain entities that distribute shares of the Funds. The
Board focused on profitability of BBH's relationships with the Funds before
taxes and distribution expenses. The Board concluded that it was satisfied that
BBH's level of profitability from its relationship with each Fund was not
excessive.
The Board also considered the advisory fees of each Fund in comparison to the
fees of comparable funds. The Board recognized that the expense ratios for the
Funds potentially reflected on BBH's provision of services, as BBH is directly
the provider of substantial services and coordinates services provided to the
Fund by others. The Board took note of situations in which BBH waived its
management fee or reimbursed a Fund's expenses.
Fall-Out Benefits
The Board considered that BBH did not allocate the Funds' portfolio transactions
for third party research, although it did benefit from proprietary research
received from brokers that execute the Funds' purchases and sales of securities.
The Board recognized that the aggregate amount of commissions generated by Fund
transactions was unlikely to result in the Funds receiving from full service
broker dealers substantial discounts on commission rates. The Board received and
reviewed information concerning BBH's policies with respect to allocating
portfolio brokerage.
The Board also considered that BBH receives shareholder servicing fees from
certain funds, and is the Funds' administrator, custodian and securities lending
agent. The Board noted that BBH retained no portion of the 12b-1 fees paid by
the Fund that operated with a plan.
The Board recognized that BBH's profitability would be somewhat lower if it did
not receive proprietary research for commissions or, if it did not receive the
other benefits described above. The Board recognized that most Fund shareholders
were also BBH clients, and that substantial assets are invested in the Funds as
a result of an overall investment management program for the shareholder. The
Board noted that the Funds also derive reputational and other benefits from
their association with BBH and their use of the BBH name, which is licensed to
the Funds by BBH. Thus, the Board did not believe that BBH revenues associated
with its clients should be fairly regarded as "fallout" benefit from the Funds.
Economies of Scale
The Board noted that the Funds' advisory fee schedules do not contain
breakpoints. As a result, if assets increase, the fee rates would not be reduced
on the incremental assets. There may be other economies of scale because many
expenses did not rise (and fall) proportionally to increases (and decreases) in
total net assets. The Board noted that BBH had priced the advisory services in
recognition of the fact that it was largely its own clients who were
shareholders and, accordingly, sought to assure that the cost of advisory
service and total expenses for each Fund were fair and reasonable. Consequently,
the advisory
20
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF ADVISOR SELECTION (continued)
December 31, 2006 (unaudited)
fees are in the range of institutional separate account fees, which is to say
substantially below, even taking into account the BBH administration fees,
typical mutual fund fees. In addition, the Board noted that BBH had supported
and continued to support certain Funds through fee waivers and expense
reimbursements. Based on information they had been provided over many years, the
Board observed that in the mutual fund industry as a whole, as well as among
funds similar to the Funds, there appeared to be no uniformity or pattern in the
fees and asset levels at which breakpoints (if any) apply. In light of the
Fund's current size and expense structure, the Board concluded that it was
unnecessary at this time to consider breakpoints.
Investment Results
The Board considered the investment results of each of the Funds as compared to
investment companies with its peers and with one or more selected securities
indices. In addition to the information received by the Board for the meeting,
the Board received detailed performance information for each Fund at each
regular Board meeting during the year. At the meeting, the Board reviewed
information showing performance of each Fund compared to the peers generally
over the 1-, 3-, 5- and since inception periods ended October 31, 2005 and
compared to one or more securities indices over comparable periods.
Advisory Fee Rate
The Board considered the advisory fee rate paid by each Fund to BBH. The Board
recognized that it is difficult to make comparisons of these fees, and combined
advisory and administration fees, because there are variations in the services
that are included in the fees paid by other funds.
BBH also manages accounts for institutional clients with investment objectives
similar to those of certain Funds. The fee rates payable by the BBH's
institutional clients are generally comparable although occasionally lower, than
the rates paid by the Funds. BBH reviewed with the Board the significant
differences in the scope of services that BBH provides to institutional clients
and to the Funds through both the IA and Administration Agreements (the "Admin.
Agreements"). For example, BBH provides, among other things, officers (including
the Funds' Chief Compliance Officer and officers to provide required
certifications) and administrative services, such as shareholder communications,
and tax compliance, with the attendant costs and exposure to liability. BBH also
coordinates the provision of services to the Funds by nonaffiliated service
providers. These services normally are not provided to non investment company
clients, and fees charged to the Funds reflect the costs and risks of the
additional obligations. The Board also noted that since the Funds are constantly
issuing and redeeming their shares, they are more difficult to manage than an
institutional account, where the assets are relatively stable. Accordingly, the
Board did not place significant weight on these fee comparisons.
FINANCIAL STATEMENT DECEMBER 31, 2006 21
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF ADVISOR SELECTION (continued)
December 31, 2006 (unaudited)
The following factors specific to BBH Tax Exempt Money Fund also were noted and
considered by the Board in deciding to approve the continuation of the IA
Agreements:
The Trustees reviewed information showing performance of the Fund compared to
iMoneyNet (Tax Free Retail). The Fund outperformed the Average over all relevant
periods. The Trustees also viewed with favor that the Fund's portfolio of
investments had an overall high quality while the Fund's total expense ratio was
lower that the iMoneyNet Average. The Trustees also noted that the Fund had
successfully maintained a stable net asset value of one dollar at all times.
Taking into account these comparisons and the other factors considered, the
Trustees concluded that the Fund's investment results over time and its total
expense ratio had been satisfactory.
22
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.
NOT APPLICABLE SEMI-ANNUAL REPORT
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: 03-07-07
===============
/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 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: 03-07-07
==================
/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 December 31, 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: 03-07-07
==================
/s/John A. Nielsen
=====================
John A. Nielsen
Title: President, Principal Executive Officer
Dated: 03-07-07
===================
/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: 03-07-07
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: 03-07-07
Print name and title of each signing officer under his or her signature.