UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES
Investment Company Act file number 811-21829
Name of Fund: BBH TRUST
BBH U.S. Treasury Money Fund
BBH Money Market Fund
BBH Tax Exempt Money Fund
Fund Address: 140 Broadway
New York, NY 10005
Name and address of agent for service:
Mark Nixon
BBH Trust, 140 Broadway, New York, NY, 10005
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: 07/01/06-06/30/07
ITEM 1 - Attach shareholder report
BROWN [LOGO]
BROTHERS
HARRIMAN
Annual Report
JUNE 30, 2007
BBH U.S. TREASURY MONEY FUND
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE TRUSTEES OF THE BBH TRUST AND SHAREHOLDERS OF
BBH U.S. TREASURY MONEY FUND
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of BBH U.S. Treasury Money Fund (a series of BBH
Trust) (the "Fund") as of June 30, 2007, and the related statement of operations
for the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of June 30, 2007, by correspondence with the custodian.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of BBH
U.S. Treasury Money Fund as of June 30, 2007, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended, and the financial highlights for each of the five years
in the period then ended, in conformity with accounting principles generally
accepted in the United States of America.
Deloitte & Touche LLP
Boston, Massachusetts
August 20, 2007
2
BBH U.S. TREASURY MONEY FUND
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PORTFOLIO ALLOCATION
June 30, 2007
BREAKDOWN BY SECURITY TYPE
PERCENT OF
U.S. $ VALUE NET ASSETS
------------ ----------
U.S. Treasury Bills ............................ $74,446,215 98.9%
U.S. Treasury Note ............................. 1,102,057 1.5
Liabilities in Excess of Other Assets .......... (308,508) (0.4)
----------- -----
Net Assets ..................................... $75,239,764 100.0%
=========== =====
All data as of June 30, 2007. 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
FINANCIAL STATEMENT JUNE 30, 2007 3
BBH U.S. TREASURY MONEY FUND
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PORTFOLIO OF INVESTMENTS
June 30, 2007
Principal
Amount Value
- ----------- -----------
U.S. TREASURY BILLS (a) (98.9%)
$ 40,000 due 07/05/07, 4.693%......................... $ 39,979
13,565,000 due 07/19/07, 4.846%......................... 13,532,499
48,755,000 due 08/02/07, 4.808%......................... 48,549,146
5,000,000 due 08/09/07, 4.582%......................... 4,975,354
7,425,000 due 09/20/07, 4.588%......................... 7,349,237
-----------
Total U.S. Treasury Bills.................... 74,446,215
-----------
U.S. TREASURY NOTE (1.5%)
1,125,000 due 05/15/08, 2.625%......................... 1,102,057
-----------
TOTAL INVESTMENTS, AT AMORTIZED COST............. 100.4% $75,548,272
LIABILITIES IN EXCESS OF OTHER ASSETS............ (0.4) (308,508)
----- -----------
NET ASSETS....................................... 100.0% $75,239,764
===== ===========
- ----------
(a) Rates shown are yields to maturity at time of purchase.
The accompanying notes are an integral part of these financial statements
4
BBH U.S. TREASURY MONEY FUND
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STATEMENT OF ASSETS AND LIABILITIES
June 30, 2007
ASSETS:
Investments, at amortized cost....................... $75,548,272
Interest receivable and other assets................. 5,030
-----------
Total Assets....................................... 75,553,302
-----------
LIABILITIES:
Due to bank.......................................... 204,899
Payables for:
Professional fees.................................. 28,414
Shareholder servicing fees......................... 18,073
Dividends declared................................. 16,152
Investment advisory fees........................... 12,049
Administrative fees................................ 8,699
Custody and accounting fees........................ 8,254
Board of Trustees' fees............................ 480
Accrued expenses and other liabilities............... 16,518
-----------
Total Liabilities.................................. 313,538
-----------
NET ASSETS, for 75,239,897 fund shares outstanding...... $75,239,764
===========
Net Assets Consist of:
Paid-in capital...................................... $75,239,764
-----------
Net Assets.............................................. $75,239,764
===========
NET ASSET VALUE AND OFFERING PRICE PER SHARE............ $1.00
=====
The accompanying notes are an integral part of these financial statements
FINANCIAL STATEMENT JUNE 30, 2007 5
BBH U.S. TREASURY MONEY FUND
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STATEMENT OF OPERATIONS
For the year ended June 30, 2007
NET INVESTMENT INCOME:
Income:
Interest ................................................... $4,385,775
----------
Expenses:
Shareholder servicing fees ................................. 198,314
Investment advisory fees ................................... 132,209
Administrative fees ........................................ 88,140
Custody and accounting fees ................................ 34,907
Professional fees .......................................... 31,580
State registration fees .................................... 28,191
Board of Trustees' fees .................................... 8,987
Miscellaneous expenses ..................................... 26,991
----------
Total Expenses ........................................... 549,319
Expense offset arrangement ............................... (6,246)
----------
Net Expenses ............................................. 543,073
----------
Net Investment Income ........................................ $3,842,702
==========
The accompanying notes are an integral part of these financial statements
6
BBH U.S. TREASURY MONEY FUND
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STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30,
----------------------------
2007 2006
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
From Operations:
Net investment income ..................... $ 3,842,702 $3,683,128
Dividends declared from net
investment income ......................... (3,842,702) (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 ........................ 169,360,686 241,663,076
Fund shares issued in reinvestment
of dividends .......................... 1,684,859 1,530,055
Fund shares repurchased ................. (207,159,757) (272,459,489)
------------ ------------
Net decrease in net assets
resulting from fund share
transactions ........................ (36,114,212) (29,266,358)
------------ ------------
Total decrease in net assets .......... (36,114,212) (29,266,491)
NET ASSETS:
Beginning of year ........................... 111,353,976 140,620,467
------------ ------------
End of Year ................................. $ 75,239,764 $111,353,976
============ ============
The accompanying notes are an integral part of these financial statements
FINANCIAL STATEMENT JUNE 30, 2007 7
BBH U.S. TREASURY MONEY FUND
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FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding throughout each year
For the years ended June 30,
------------------------------------------------------------------------
2007 2006 2005 2004 2003
------ ------ ------ ------ ------
Net asset value, beginning of year ............. $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income ........................ 0.04 0.03 0.01 0.00(1) 0.01
Dividends to shareholders from net
investment income ............................ (0.04) (0.03) (0.01) (0.00)(1) (0.01)
----- ----- ----- ----- -----
Net asset value, end of year ................... $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total return ................................... 4.45% 3.35% 1.41% 0.40% 0.91%
Ratios/Supplemental data:
Net assets, end of year (in millions) ........ $ 75 $ 111 $ 141 $ 117 $ 137
Ratio of expenses to average net assets
Net expenses paid by Fund .................... 0.62% 0.59% 0.56% 0.59% 0.57%
Expense offset arrangement ................... 0.01% 0.00%(2) 0.01% 0.00%(2) 0.00%(2)
----- ----- ----- ----- -----
Total expenses ............................. 0.63% 0.59% 0.57% 0.59% 0.57%
===== ===== ===== ===== =====
Ratio of net investment income to
average net assets ......................... 4.36% 3.25% 1.49% 0.39% 0.92%
- ----------
(1) Less than $0.01 per share.
(2) Less than 0.01%.
The accompanying notes are an integral part of these financial statements
8
BBH U.S. TREASURY MONEY FUND
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NOTES TO FINANCIAL STATEMENTS
June 30, 2007
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 and re-organized as a
Delaware statutory trust on June 12, 2007. 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 without a par value. At June 30, 2007, there were
seven series of the Trust.
The Fund's financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America, which
require management to make certain estimates and assumptions at the date
of the financial statements and are based, in part, on the following
accounting policies. Actual results could differ from those estimates.
A. Valuation of Investments. The Fund values its investments at
amortized cost, which approximates market value. The amortized cost
method values a security at its cost at the time of purchase and
thereafter assumes a constant amortization to maturity of any
discount or premium. The Fund's use of amortized cost is in
compliance with Rule 2a-7 of the Investment Company Act of 1940.
B. Investment Transactions and Income. Investment transactions are
accounted for on the trade date. Realized gains and losses, if any,
from investment transactions are determined on the basis of
identified cost. Interest income consists of interest accrued and
discount earned (including both original issue and market discount)
and premium amortization on the investments of the Fund, accrued
ratably to the date of maturity.
C. Federal Income Taxes. Each series of the Trust is treated as a
separate entity for federal income tax purposes. It is the Fund's
policy to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies and to distribute
substantially all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required. At June
30, 2007, 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. The Fund declared dividends in the amounts of
$3,842,702 and $3,683,261 for the years ended June 30, 2007 and June
30, 2006, respectively. The tax character of the dividends declared
in both years was 100% ordinary income.
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.
The accompanying notes are an integral part of these financial statements
FINANCIAL STATEMENT JUNE 30, 2007 9
BBH U.S. TREASURY MONEY FUND
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NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2007
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.
Advisory and Administrative Fees. Effective June 12, 2007, under a
combined Investment Advisory and Administrative Services Agreement
("Agreement") with the Trust, Brown Brothers Harriman & Co. ("BBH")
provides investment advice, portfolio management and administrative
services to the Fund. BBH receives a combined fee from the Fund for
advisory and administrative services calculated daily and paid monthly at
an annual rate equivalent to 0.25% of the fund's daily net assets. Prior
to June 12, 2007, under a separate agreement that covered only advisory
fees, BBH received a fee from the Fund calculated daily and paid monthly
at an annual rate of 0.15% of the Fund's average daily assets and Brown
Brothers Harriman Trust Company, LLC ("BBHTC") the Fund's administrator,
under a separate agreement that covered only administrative services,
received a fee from the Fund calculated daily and paid monthly at an
annual rate equivalent to 0.10% of the Fund's average daily nets assets.
BBH has a sub-administration services agreement with Federated Services
Company ("FSC") for which FSC receives compensation paid by BBH. For the
year ended June 30, 2007, the Fund incurred $220,349 for advisory and
administration services.
Shareholder Servicing Fees. The Trust has a shareholder servicing
agreement with BBH for which BBH receives a fee from the Fund calculated
daily and paid monthly at an annual rate of 0.225% of the Fund's average
daily net assets. For the year ended June 30, 2007, the Fund incurred
$198,314 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 year ended June 30, 2007, the Fund incurred $34,907
for custody and accounting services. These fees were reduced by $6,246 as
a result of an expense offset arrangement with the Fund's custodian. In
the event that the Fund is overdrawn, under the custody agreement with
BBH, BBH will make overnight loans to the Fund to cover overdrafts.
Pursuant to their agreement the Fund will be charged interest based on
LIBOR on the day of overdraft plus one percent. The total interest paid by
the Fund for the year ended June 30, 2007 was $12,234.
Board of Trustees' Fees. Each Trustee receives an annual fee as well as
reimbursement for reasonable out-of-pocket expenses from the Fund. For the
year ended June 30, 2007, the Fund incurred $8,987 for Trustees' fees.
10
BBH U.S. TREASURY MONEY FUND
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NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2007
3. Federal Income Tax Status. At June 30, 2007, the Fund had a net capital
loss carryover, which is available to offset future capital gains to the
extent provided by regulations as follows:
Expiration date Amount
--------------- ------
June 30, 2015 $12,199
-------
$12,199
=======
To the extent that this net capital loss carryover is used to offset
future capital gains, it is probable the gains so offset will not be
distributed to shareholders since any such distributions may be taxable to
shareholders as ordinary income.
FINANCIAL STATEMENT JUNE 30, 2007 11
BBH U.S. TREASURY MONEY FUND
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SUPPLEMENTAL PROXY INFORMATION
June 30, 2007 (unaudited)
Supplemental Proxy Information. A Special Meeting of Trust shareholders was held
on May 23, 2007. On April 5, 2007, the record date for shareholders voting at
the meeting, there were 2,556,036,213 total outstanding shares.
The following items were considered by Fund shareholders and the results of
their voting are listed below. Unless otherwise noted, each matter was approved.
Proposals:
(1) To elect two Trustees of the Funds;
Samuel F. Pryor IV
Shares voted affirmatively........ 2,553,191,186
Shares voted negatively........... 1,105,147
Shares abstaining................. 705,862
H. Whitney Wagner
Shares voted affirmatively........ 2,553,191,186
Shares voted negatively........... 1,105,147
Shares abstaining................. 705,862
(2) To approve a new combined investment advisory and administrative services
agreement the Funds with the current investment adviser of the Fund;
Shares voted affirmatively........ 79,991,618
Shares voted negatively........... 2,648,273
Shares abstaining................. 0
(3) To approve changes to the Fund's fundamental investment policies in order
to modernize their investment restrictions and increase their investment
flexibility:
(a) To amend the Fund's fundamental investment policy regarding
diversification;
Shares voted affirmatively...... 78,971,526
Shares voted negatively......... 3,668,365
Shares abstaining............... 0
(b) To amend the Fund's fundamental investment policy regarding
concentration;
Shares voted affirmatively...... 79,991,618
Shares voted negatively......... 2,648,273
Shares abstaining............... 0
(c) To amend the Fund's fundamental investment policy regarding
underwriting;
Shares voted affirmatively...... 79,991,618
Shares voted negatively......... 2,648,273
Shares abstaining............... 0
12
BBH U.S. TREASURY MONEY FUND
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SUPPLEMENTAL PROXY INFORMATION (continued)
June 30, 2007 (unaudited)
(d) To amend the Fund's fundamental investment policy regarding
investing in commodities;
Shares voted affirmatively...... 79,991,618
Shares voted negatively......... 2,648,273
Shares abstaining............... 0
(e) To amend the Fund's fundamental investment policy regarding
investing in real estate;
Shares voted affirmatively...... 78,971,526
Shares voted negatively......... 3,668,365
Shares abstaining............... 0
(f) To amend the Fund's fundamental investment policy regarding
borrowing money and issuing senior securities;
Shares voted affirmatively...... 78,884,930
Shares voted negatively......... 3,754,961
Shares abstaining............... 0
(g) To amend the Fund's fundamental investment policy regarding lending;
Shares voted affirmatively...... 78,884,930
Shares voted negatively......... 3,754,961
Shares abstaining............... 0
(h) To amend, and to make non-fundamental, the Fund's fundamental
investment policy regarding selling short;
Shares voted affirmatively...... 78,884,930
Shares voted negatively......... 3,754,961
Shares abstaining............... 0
(i) To amend, and to make non-fundamental, the Fund's fundamental
investment policy regarding illiquid securities;
Shares voted affirmatively...... 78,971,526
Shares voted negatively......... 3,668,365
Shares abstaining............... 0
FINANCIAL STATEMENT JUNE 30, 2007 13
BBH U.S. TREASURY MONEY FUND
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SUPPLEMENTAL PROXY INFORMATION (continued)
June 30, 2007 (unaudited)
(j) To amend, and to make non-fundamental, the Fund's fundamental
investment policy regarding investing in securities of other
investment companies;
Shares voted affirmatively...... 78,971,526
Shares voted negatively......... 3,668,365
Shares abstaining............... 0
(k) To amend, and to make non-fundamental, the Fund's fundamental
investment policy regarding purchases on margin;
Shares voted affirmatively...... 78,884,930
Shares voted negatively......... 3,754,961
(4) To approve the proposed Reorganization Agreement, pursuant to which each
series of BBH Trust would be reorganized as separate series of BBH Trust,
(the "New BBH Trust"), a newly formed Delaware statutory trust.
Shares voted affirmatively........ 79,991,618
Shares voted negatively........... 2,648,273
Shares abstaining................. 0
14
BBH U.S. TREASURY MONEY FUND
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DISCLOSURE OF FUND EXPENSES
June 30, 2007 (unaudited)
EXAMPLE
As a shareholder of BBH U.S. Treasury Money Fund (the "Fund"), you may incur two
types of costs: (1) transaction costs on purchase payments, reinvested
dividends, or other distributions; and exchange fees; and (2) ongoing costs,
including management fees; and other Fund expenses. This Example is intended to
help you understand your ongoing costs (in dollars) of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (January 1, 2007 to June 30, 2007).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use information in this line, together with
the amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading entitled "Expenses Paid During the Period" to estimate
the expenses you paid on your account during the period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid
during the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such redemption
fees or exchange fees. Therefore, the second line of the table is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
Expenses Paid
Beginning Ending During Period
Account Value Account Value January 1, 2007
January 1, 2007 June 30, 2007 to June 30, 2007(1)
--------------- ------------- -------------------
Actual.................. $1,000 $1,022.00 $3.11
Hypothetical(2)......... $1,000 $1,021.72 $3.11
- ----------
(1) Expenses are equal to the Fund's annualized expense ratio of 0.62%,
multiplied by the average account value over the period, multiplied by
181/365 (to reflect the one-half year period).
(2) Assumes a return of 5% before expenses. For the purpose of the
calculation, the applicable annualized expense ratio is subtracted from
the assumed return before expenses.
FINANCIAL STATEMENT JUNE 30, 2007 15
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF ADVISOR SELECTION
June 30, 2007 (unaudited)
Approval of Investment Advisory/Administrative Services Agreement
At a meeting held on October 2, 2006, the Board of Trustees (the "Board") of the
Trust unanimously approved a new Combined Investment Advisory/Administrative
Services Agreement ("Combined Agreement"). The Board determined that the terms
of the Combined Agreement will be substantially identical to those of the
current advisory and administration agreements of the Funds, noting that the
most significant difference in the Combined Agreement is a single fee for both
advisory and administrative services. The following is a summary of the factors
the Board took into consideration in making its determination to approve the new
Combined Agreement.
Nature, Extent and Quality of Services Provided by BBH & Co.
The Board noted that, under the Combined Agreement in respect of each Fund, BBH
& Co., subject to the supervision of the Board, will be responsible for
providing a continuous investment program and making purchases and sales of
portfolio securities consistent with the Funds' investment objective and
policies. Under the Combined Agreement, BBH & Co. also provides administrative
services to each Fund.
The Board considered the scope and quality of services to be provided by BBH &
Co. under the Combined 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 & Co. 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 and administrative capabilities of BBH & Co. 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
expected to be provided to each of the Funds under the Combined Agreement.
Costs of Services Provided and Profitability to BBH & Co.
At the request of the Board, BBH & Co. provided information concerning the
profitability of BBH & Co.'s current investment company advisory and other fees.
The Board also reviewed BBH & Co.'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 the Fund. The Board discussed the
difficulty of making comparisons of profitability because comparative
information is not generally publicly available and is affected by numerous
factors, including the structure of the service provider, the types of funds it
manages and administers, its business mix, numerous assumptions regarding
allocations and the entity's capital structure and cost of capital. In
considering profitability information, the Board considered the effect of
fall-out benefits on BBH & Co.'s expenses, as well as the "revenue sharing"
arrangements BBH & Co. has entered into with certain entities that distribute
shares of the Funds. The Board focused on profitability of BBH & Co.'s
relationships with the Funds before taxes and distribution expenses. The Board
concluded that it was satisfied that BBH & Co.'s level of profitability from its
relationship with each Fund was not excessive.
16
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF ADVISOR SELECTION (continued)
June 30, 2007 (unaudited)
Fall-Out Benefits
The Board considered that BBH & Co. does not allocate the Funds' portfolio
transactions for third party research, although it did benefit from proprietary
research received from brokers that execute the Funds' purchases and sales of
securities. The Board recognized that the aggregate amount of commissions
generated by Fund transactions was unlikely to result in the Funds receiving
from full service broker dealers substantial discounts on commission rates. The
Board received and reviewed information concerning BBH & Co.'s policies with
respect to allocating portfolio brokerage.
The Board also considered that BBH & Co. receives shareholder servicing fees
from certain funds, and is the Funds' administrator, custodian and securities
lending agent. The Board noted that BBH & Co. retained no portion of the 12b-1
fees paid by any Fund that operated with a Rule 12b-1 plan. The Board recognized
that BBH & Co.'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 & Co. 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 & Co. and their use of the BBH & Co. name, which is licensed to the Funds by
BBH & Co. Thus, the Board did not believe that BBH & Co. revenues associated
with its clients should be fairly regarded as "fallout" benefit from the Funds.
Economies of Scale
The Board noted that the Funds' combined fee schedules, other than the fee
schedule for BBH Money Market Fund, do not contain breakpoints. As a result, if
assets increase, the fee rates would not be reduced for these Funds on the
incremental assets. With respect to the BBH Money Market Fund, the breakpoint
will be reviewed every three (3) years by the Board, and may be adjusted upwards
to take into account the effects of inflation or such other basis as may be
appropriate, subject to the approval of shareholders to the extent required by
the 1940 Act.
There may be other economies of scale because many expenses did not rise (and
fall) proportionally to increases (and decreases) in total net assets. The Board
noted that BBH & Co. had priced its services in recognition of the fact that it
was largely its own clients who were shareholders and, accordingly, sought to
assure that the cost of these services and total expenses for each Fund were
fair and reasonable. In addition, the Board noted that over the years BBH & Co.
had supported certain Funds through fee waivers and expense reimbursements.
Based on information they had been provided over many years, the Board observed
that in the mutual fund industry as a whole, as well as among funds similar to
the Funds, there appeared to be no uniformity or pattern in the fees and asset
levels at which breakpoints (if any) apply. In light of the Funds' current size
and expense structure, the Board concluded that it was unnecessary at this time
to consider breakpoints with respect to the Funds, other than for the BBH Money
Market Fund.
FINANCIAL STATEMENT JUNE 30, 2007 17
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF ADVISOR SELECTION (continued)
June 30, 2007 (unaudited)
Investment Results
The Board considered the investment results of each of the Funds as compared to
investment companies with its peers and with one or more selected securities
indices. In addition to the information received by the Board for the meeting
held on October 2, 2006, the Board received detailed performance information for
each Fund at each regular Board meeting during the year. At the meeting held on
October 2, 2006, the Board reviewed information showing performance of each Fund
compared to its peers over the prior 1-, 3-, and 5- year periods and compared
the performance information to one or more securities indices over comparable
periods.
Combined Fee Rate
The Board considered the fee rate to be paid by each Fund to BBH & Co. The Board
recognized that it is difficult to make comparisons of these fee rates, and the
combined advisory and administration fees, because there are variations in the
services that are included in the fees paid by other funds.
The Board considered the depth and range of services provided under the Combined
Agreement. For example, in addition to a continuous investment program, BBH &
Co. 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 & Co. also coordinates
the provision of services to the Funds by nonaffiliated service providers.
The following factors specific to BBH U.S. Treasury Money Fund also were noted
and considered by the Board in deciding to approve the Combined Agreement:
The Board considered the 1-, 3- and 5-year annualized total returns of the BBH
U.S. Treasury Money Fund versus the iMoneyNet (Treasury Retail). The Board noted
that the Fund outperformed or performed in line with that average over all
relevant periods. Moreover, the Board noted that it believes to have been
appropriately advised by BBH & Co. about its duration and average weighted
maturity decisions during the relevant periods and were satisfied overall with
the competitiveness of the performance. The Board also noted with favor that the
expense ratio was substantially lower than that of the average. The Board also
noted that the BBH U.S. Treasury Money 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
BBH U.S. Treasury Money Fund's investment results over time and its total
expense ratio had been satisfactory.
18
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF ADVISOR SELECTION (continued)
June 30, 2007 (unaudited)
Conflicts of Interest
As a general matter, certain conflicts of interest may arise in connection with
a portfolio manager's management of a fund's investments, on the one hand, and
the investments of other accounts for which the portfolio manager is
responsible, on the other. For example, it is possible that the various accounts
managed could have different investment strategies that, at times, might
conflict with one another to the possible detriment of the Fund. Alternatively,
to the extent that the same investment opportunities might be desirable for more
than one account, possible conflicts could arise in determining how to allocate
them. Other potential conflicts might include conflicts created by specific
portfolio manager compensation arrangements, and conflicts relating to selection
of brokers or dealers to execute fund portfolio trades and/or specific uses of
commissions from Fund portfolio trades (for example, research, or "soft
dollars").
BBH & Co. has adopted and implemented policies and procedures, including
brokerage and trade allocation policies and procedures, which it believes
address the conflicts associated with managing multiple accounts for multiple
clients. In addition, BBH & Co. monitors a variety of areas, including
compliance with account investment guidelines, the inclusion only of securities
approved for purchase by the BBH & Co.'s Fixed Income Credit Committee, and
compliance with the BBH & Co.'s Code of Ethics. Finally, BBH & Co. has
structured the portfolio managers' compensation in a manner, and the Funds have
adopted policies and procedures, reasonably designed to safeguard a Fund from
being negatively affected as a result of any such potential conflicts.
FINANCIAL STATEMENT JUNE 30, 2007 19
BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
ADDITIONAL FEDERAL TAX INFORMATION
June 30, 2007 (unaudited)
The amount of qualified interest income (QII) dividends paid by the BBH U.S.
Treasury Money Fund (the "Fund") for the year ended June 30, 2007 was
$3,842,702.
The accompanying notes are an integral part of these financial statements
20
TRUSTEES AND OFFICERS OF BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
(unaudited)
Information pertaining to the Trustees of the BBH Trust (the "Trust") and
executive officers of the Trust is set forth below. Part B to the Registration
Statement of the BBH U.S. Treasury Money Fund includes additional information
about the Fund's Trustees and is available upon request without charge by
contacting the Fund at 1-800-625-5759.
Term of Number of
Office Funds in
and Fund Other
Position(s) Length Complex Directorships
Name, Birth Date Held with of Time Principal Occupation(s) Overseen by Held by
and Address Trust Served# During Past 5 Years Trustee^ Trustee
- -----------------------------------------------------------------------------------------------------------------------------------
Joseph V. Shields, Jr. Chairman of the Since 2007 Managing Director, Chairman and 7 None
Birth Date: Board and Chief Executive Officer of Shields
March 17, 1938 Trustee & Company (member of New York Stock
Shields & Company Exchange); Chairman of Capital
140 Broadway Management Associates, Inc.
New York, NY 10005 (registered investment adviser);
Director of Flower Foods, Inc. (New
York Stock Exchange listed
company).
Eugene P. Beard Trustee Since 2007 Chairman & CEO of Westport Asset 7 Director of
Birth Date: Fund, Inc. Old Westbury
March 17, 1935 Funds
800 Connecticut Ave. (7 Funds)
3 East
Norwalk, CT 06854
David P. Feldman Trustee Since 2007 Director of Jeffrey Co. (1992 to 7 Director of
Birth Date: present). Dreyfus Mutual
c/o BBH & Co. Funds
November 16, 1939 (59 Funds)
140 Broadway,
16th Floor
New York, NY 10005
Alan G. Lowy Trustee Since 2007 Private Investor. 7 None
Birth Date:
April 17, 1939
4111 Clear
Valley Drive
Encino, CA 91436
Arthur D. Miltenberger Trustee Since 2007 Retired; Trustee, R.K. Mellon 7 None
Birth Date: Family Trust (1981 to June 2003);
November 8, 1938 General Partner, Mellon Family
503 Darlington Road Investment Company IV, V and VI
Ligonier, PA 15658 (1983 to 2002); Director of
Aerostructures Corporation
(aircraft manufacturer) (1996 to
July 2003).
FINANCIAL STATEMENT JUNE 30, 2007 21
TRUSTEES AND OFFICERS OF BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
(unaudited)
Term of Number of
Office Funds in
and Fund Other
Position(s) Length Complex Directorships
Name, Birth Date Held with of Time Principal Occupation(s) Overseen by Held by
and Address Trust Served# During Past 5 Years Trustee^ Trustee
- -----------------------------------------------------------------------------------------------------------------------------------
Samuel F. Pryor, IV Trustee Since 2007 Private Investor. 7 None
Birth Date:
June 12, 1955
130 East 67th Street
New York, NY 10021
H. Whitney Wagner Trustee Since 2007 President, Clear Brook Advisors, a 7 None
Birth Date: registered investment advisor.
March 3, 1956
Clear Brook Advisors
75 Rockefeller Plaza,
14th Floor
New York, NY 10019
Officers
John A. Nielsen President and Since 2007 President and Principal Executive N/A N/A
Birth Date: Principal Officer of the Trust; He joined
July 15, 1943 Executive Brown Brothers Harriman & Co. ("BBH
140 Broadway Officer & Co.") in 1968 and has been a
New York, NY 10005 Partner of the firm since 1987.
Charles H. Schreiber Treasurer, Since 2007 Treasurer, Principal Financial N/A N/A
Birth Date: Principal Officer and Anti-Money Laundering
December 10, 1957 Financial Officer of the Trust; Senior Vice
140 Broadway Officer, President of BBH & Co. since
New York, NY 10005 Anti-Money September 2001; Joined BBH & Co. in
Laundering 1999.
Officer
Mark Nixon Assistant Since 2007 Assistant Secretary and Assistant N/A N/A
Birth Date: Secretary and Treasurer of the Trust, Vice
January 14, 1963 Assistant President of BBH & Co. (since
140 Broadway Treasurer October 2006), Accounting Manager,
New York, NY 10005 Reserve Funds (August
2005-September 2006) Assistant
Controller, Reserve Funds (February
2005-August 2005), Private
Consultant (December 2001-February
2005).
22
TRUSTEES AND OFFICERS OF BBH U.S. TREASURY MONEY FUND
- --------------------------------------------------------------------------------
(unaudited)
Term of Number of
Office Funds in
and Fund Other
Position(s) Length Complex Directorships
Name, Birth Date Held with of Time Principal Occupation(s) Overseen by Held by
and Address Trust Served# During Past 5 Years Trustee^ Trustee
- -----------------------------------------------------------------------------------------------------------------------------------
Michael F. Hogan Chief Since 2007 Chief Compliance Officer of the N/A N/A
Birth Date: Compliance Trust; Senior Vice President of BBH
January 26, 1963 Officer & Co. since September 1994; Joined
50 Milk Street BBH & Co. in 1985.
Boston, MA 02109
Gail C. Jones Secretary Since 2007 Secretary of the Trust; Counsel, N/A N/A
Birth Date: ReedSmith, LLP (since October
October 26, 1953 2002); Corporate Counsel (January
1001 Liberty Avenue 1997 to September 2002) and Vice
Pittsburgh, PA President (January 1999 to
15222-3779 September 2002) of Federated
Services Company.
Judith J. Mackin Vice President Since 2007 Vice President of the Trust; Vice N/A N/A
Birth Date: President (since November 1997) of
May 30, 1960 Federated Services Company.
1001 Liberty Avenue,
Pittsburgh, PA
15222-3779
John C. Smith Assistant Since 2007 Assistant Treasurer of the Trust; N/A N/A
Birth Date: Treasurer Vice President (Since September
August 2, 1965 2004); Assistant Vice President
50 Milk Street (since September 2001); Associate
Boston, MA 02109 (September 2000 to August 2001);
and Senior Analyst (June 1999 to
August 2000) of BBH & Co.
- ----------
# Each Trustee of the Trust holds office until he or she attains the age of
70 (72, in the case of Trustees who were elected as such before January 1,
2000), or until he or she sooner dies, resigns or is removed from office
in accordance with the provisions of the Trust's Declaration of Trust. All
officers of the Trust hold office for one year and until their respective
successors are chosen and qualified (subject to the ability of the
Trustees to remove any officer in accordance with the Trust's By-laws).
Each Trustee previously served on the Board of Trustees of the Predecessor
BBH U.S. Treasury Money Fund.
^ The Fund Complex consists of the Trust, which has seven series and are
each counted as one "fund" for purposes of this table.
FINANCIAL STATEMENT JUNE 30, 2007 23
INVESTMENT ADVISER AND ADMINISTRATOR
BROWN BROTHERS HARRIMAN
140 BROADWAY
NEW YORK, NY 10005
DISTRIBUTOR
EDGEWOOD SERVICES, INC.
5800 CORPORATE DRIVE
PITTSBURGH, PA 15237-7000
SHAREHOLDER SERVICING AGENT
BROWN BROTHERS HARRIMAN
140 BROADWAY
NEW YORK, NY 10005
(800) 625-5759
To obtain information or make shareholder inquiries:
By telephone: Call 1-800-575-1265
By E-mail send your request to: bbhfunds@bbh.com
On the internet: www.bbhfunds.com
This report is submitted for the general information of shareholders and is not
authorized for distribution to prospective investors unless preceded or
accompanied by an effective prospectus. Nothing herein contained is to be
considered an offer of sale or a solicitation of an offer to buy shares of the
Fund. Such offering is made only by the prospectus, which includes details as to
offering price and other material information.
The Fund files with the SEC a complete schedule of its portfolio holdings, as of
the close of the first and third quarters of its fiscal year, on "Form N-Q."
Information on Form N-Q is available without charge and upon request by calling
the Funds at the toll-free number listed above. A text only version can be
viewed online or downloaded from the SEC's website at http://www.sec.gov; and
may be reviewed and copied at the SEC's Public Reference Room in Washington, DC
(call 1-800-SEC-0330 for information on the operation of the Public Reference
Room). You may also access this information from the BBH website at BBH.com by
clicking on "BBH Mutual Funds" and selecting "Online Documents/Holdings
Information."
A copy of the Fund's Proxy Voting Policy is available upon request by calling
the toll-free number listed above. A text-only version of the policy can be
viewed online or downloaded from the SEC at www.sec.gov.
Brown [LOGO]
Brothers
Harriman
BROWN [LOGO]
BROTHERS
HARRIMAN
- --------------------------------------------------------------------------------
Annual Report
JUNE 30, 2007
- --------------------------------------------------------------------------------
BBH MONEY MARKET FUND
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees of the BBH Trust and Shareholders of
BBH Money Market Fund
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of BBH Money Market Fund (a series of BBH Trust)
(the "Fund") as of June 30, 2007, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of June 30, 2007, by correspondence with the custodian.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of BBH
Money Market Fund as of June 30, 2007, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended, in conformity with accounting principles generally
accepted in the United States of America.
Deloitte & Touche LLP
Boston, Massachusetts
August 20, 2007
2
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO ALLOCATION
June 30, 2007
BREAKDOWN BY SECURITY TYPE
Percent of
U.S. $ Value Net Assets
-------------- ----------
Asset Backed Security ...................................................... $ 1,313,151 0.1%
Certificates of Deposit .................................................... 339,017,003 14.7
Commercial Paper ........................................................... 1,212,004,949 52.4
Corporate Bonds ............................................................ 229,995,420 9.9
Municipal Bonds ............................................................ 341,229,160 14.8
Mutual Fund ................................................................ 104,600,000 4.5
Other Assets in Excess of Liabilities ...................................... 83,654,351 3.6
-------------- -----
Net Assets ................................................................. $2,311,814,034 100.0%
============== =====
All data as of June 30, 2007. 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.
FINANCIAL STATEMENT JUNE 30, 2007 3
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
JUNE 30, 2007
Principal Maturity Interest
Amount Date Rate Value
- ------------ -------- -------- --------------
ASSET BACKED SECURITY (0.1%)
$ 1,313,108 Banc of America Securities Auto
Trust 2006-G1................................. 11/19/07 5.349% $ 1,313,151
--------------
CERTIFICATES OF DEPOSIT (14.7%)
17,750,000 Abbey National Treasury Services................. 12/05/07 5.330 17,750,000
15,000,000 Banco Bilbao Vizcaya Argentaria.................. 08/07/07 5.305 15,000,076
25,000,000 Bank of Tokyo-Mitsubishi UFJ..................... 06/04/08 5.340 25,001,117
25,000,000 Barclays Bank, Plc............................... 07/16/07 5.300 25,000,000
25,000,000 Canadian Imperial Bank of Commerce............... 07/30/07 5.295 25,000,000
15,000,000 Canadian Imperial Bank of Commerce............... 10/26/07 5.375 15,009,953
25,000,000 Charter One Bank NA.............................. 09/18/07 5.320 25,000,000
25,000,000 Comerica Bank.................................... 07/20/07 5.333 24,999,687
10,000,000 Credit Suisse New York........................... 05/21/08 5.300 10,000,857
25,000,000 First Tennessee Bank NA.......................... 07/23/07 5.300 25,000,000
16,750,000 HBOS Treasury Services........................... 05/29/08 5.335 16,731,177
25,000,000 Royal Bank of Canada............................. 10/29/07 5.368 25,009,757
19,765,000 Unicredito Italiano, New York.................... 11/21/07 5.300 19,755,059
20,000,000 Washington Mutual Bank........................... 08/27/07 5.260 19,996,104
25,000,000 Westpac Banking Corp............................. 10/29/07 5.350 25,013,426
19,750,000 Wilmington Trust Co.............................. 09/20/07 5.305 19,750,182
5,000,000 Wilmington Trust Co.............................. 10/05/07 5.290 4,999,608
--------------
Total Certificates of Deposit.................... 339,017,003
--------------
COMMERCIAL PAPER (52.4%)
16,950,000 ABN-AMRO NA...................................... 08/16/07 5.274 16,836,835
25,000,000 Air Products & Chemicals, Inc.................... 07/03/07 5.383 24,992,528
25,000,000 Bank of America Corp............................. 09/21/07 5.266 24,704,458
25,000,000 Bank of Nova Scotia.............................. 07/02/07 5.265 24,996,354
50,000,000 Bear Stearns & Co., Inc.......................... 07/02/07 5.402 49,992,500
50,000,000 BMW US Capital LLC............................... 07/02/07 5.342 49,992,583
75,000,000 BNP Paribas Finance, Inc......................... 07/02/07 5.342 74,988,875
16,300,000 Brown University................................. 07/02/07 5.328 16,297,628
20,560,000 Brown-Forman Beverages, Europe, Ltd.............. 07/09/07 5.240 20,536,150
18,000,000 Buckingham CDO LLC............................... 08/24/07 5.347 17,856,900
14,718,000 Buckingham CDO II LLC............................ 08/07/07 5.343 14,637,828
25,000,000 Calyon North America, Inc........................ 07/23/07 5.261 24,920,097
The accompanying notes are an integral part of these financial statements.
4
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
JUNE 30, 2007
Principal Maturity Interest
Amount Date Rate Value
- ------------ -------- -------- --------------
COMMERCIAL PAPER (continued)
$ 11,800,000 Catholic Health Initiative....................... 08/07/07 5.300% $ 11,800,000
3,000,000 Catholic Health Initiative....................... 08/07/07 5.340 3,000,000
12,250,000 CBA (Delaware) Finance........................... 08/30/07 5.259 12,143,833
13,500,000 CC USA, Inc...................................... 07/10/07 5.281 13,482,248
10,000,000 CC USA, Inc...................................... 08/03/07 5.259 9,952,150
10,000,000 CIT Group, Inc................................... 07/18/07 5.292 9,975,114
14,970,000 City of Chicago, Illinois........................ 12/04/07 5.547 14,624,243
43,550,000 Columbia University.............................. 07/09/07 5.270 43,499,193
25,000,000 Commerzbank US Finance........................... 10/03/07 5.270 24,661,535
14,000,000 Cornell University............................... 09/06/07 5.314 13,863,208
15,000,000 Danske Corp...................................... 10/31/07 5.255 14,738,208
25,000,000 Dresdner US Finance, Inc......................... 07/03/07 5.300 24,992,646
10,000,000 HBOS Treasury Services........................... 08/28/07 5.294 9,915,658
35,000,000 HVB US Finance, Inc.............................. 07/20/07 5.268 34,903,206
25,000,000 ING US Funding LLC............................... 10/09/07 5.301 24,638,194
23,100,000 Johns Hopkins University......................... 08/02/07 5.300 23,100,000
19,280,000 Kittyhawk Funding Corp........................... 07/16/07 5.283 19,237,755
50,000,000 Koch Resources LLC............................... 07/02/07 5.352 49,992,569
8,000,000 Koch Resources LLC............................... 07/10/07 5.285 7,989,460
20,000,000 Kredietbank NA Finance Corp...................... 07/27/07 5.264 19,924,456
15,200,000 Leland Stanford Junior University................ 09/13/07 5.321 15,035,967
5,000,000 Merrill Lynch & Co., Inc......................... 08/29/07 5.279 4,957,225
23,384,000 National Rural Utilities Cooperative
Finance Corp.................................. 07/31/07 5.327 23,280,721
28,005,000 NYSE Euronext.................................... 08/13/07 5.307 27,829,051
12,744,000 Power Authority of State of New York............. 08/01/07 5.351 12,686,496
25,000,000 Rabobank Nederland NV............................ 11/21/07 5.235 25,000,041
10,405,000 Rio Tinto........................................ 07/23/07 5.320 10,371,299
7,000,000 Rutgers University............................... 07/24/07 5.330 7,000,000
15,000,000 San Paolo IMI US Financial Co.................... 07/02/07 5.332 14,997,779
10,000,000 San Paolo IMI US Financial Co.................... 07/31/07 5.267 9,956,417
6,200,000 San Paolo IMI US Financial Co.................... 08/01/07 5.307 6,171,811
25,000,000 Siemens Capital Co. LLC.......................... 07/20/07 5.248 24,931,125
50,000,000 Societe Generale................................. 07/03/07 5.325 49,985,222
29,750,000 Southern Company Funding......................... 07/10/07 5.291 29,710,730
4,200,000 Tennessee State School Bond...................... 07/18/07 5.320 4,200,000
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2007 5
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
JUNE 30, 2007
Principal Maturity Interest
Amount Date Rate Value
- ------------ -------- -------- --------------
COMMERCIAL PAPER (continued)
$ 25,000,000 Three Rivers Funding Corp........................ 07/02/07 5.382% $ 24,996,264
16,984,000 Three Rivers Funding Corp........................ 07/17/07 5.302 16,944,144
100,000,000 UBS Finance Delaware LLC......................... 07/02/07 5.352 99,985,139
10,000,000 Unicredito Italiano Bank......................... 06/02/08 5.447 9,516,031
10,000,000 Rights of University of California............... 08/02/07 5.341 9,953,511
25,000,000 Variable Funding Capital Co. LLC................. 07/12/07 5.287 24,959,743
12,415,000 Walnut Energy Center Authority................... 08/06/07 5.365 12,349,821
--------------
Total Commercial Paper........................... 1,212,004,949
--------------
CORPORATE BONDS (9.9%)
35,035,000 American Express Centurion Bank(1)............... 10/18/07 5.320 35,036,685
12,000,000 BNP Paribas(1)................................... 07/03/08 5.260 11,995,202
14,915,000 HBOS Treasury Services........................... 11/30/07 3.500 14,801,444
4,000,000 Hewlett Packard Co............................... 07/01/07 5.500 4,000,000
4,900,000 Hewlett Packard Co............................... 03/15/08 3.625 4,842,473
10,000,000 HSBC Finance Corp................................ 03/11/08 4.125 9,917,218
15,850,000 International Lease Finance Corp................. 06/02/08 4.625 15,748,454
7,500,000 John Deere Capital Corp.......................... 01/15/08 3.900 7,442,491
25,000,000 KeyBank NA(1).................................... 08/08/07 5.376 25,001,805
17,500,000 Merrill Lynch & Co., Inc......................... 11/15/07 4.000 17,428,308
4,062,000 Morgan Stanley................................... 04/01/08 3.625 4,012,747
20,000,000 NGSP, Inc.(1).................................... 06/01/46 5.350 20,000,000
25,000,000 PNC Bank NA(1)................................... 01/02/08 5.265 24,996,836
19,920,000 PNC Funding Corp................................. 03/10/08 4.200 19,769,257
15,000,000 SLM Corp.(1)..................................... 07/25/07 5.575 15,002,500
--------------
Total Corporate Bonds............................ 229,995,420
--------------
MUNICIPAL BONDS (14.8%)
5,470,000 Cleveland, Ohio Airport System Revenue........... 01/01/17 7.000 5,564,160
13,230,000 Colorado Housing & Finance Authority(1).......... 07/04/07 5.350 13,230,000
11,340,000 De Kalb County, Georgia Development
Authority Revenue(1).......................... 07/04/07 5.320 11,340,000
7,485,000 De Kalb County, Georgia Development
Authority Revenue(1).......................... 09/05/07 5.330 7,485,000
8,285,000 Greensboro, North Carolina(1).................... 07/04/07 5.350 8,285,000
The accompanying notes are an integral part of these financial statements.
6
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
JUNE 30, 2007
Principal Maturity Interest
Amount Date Rate Value
- ------------ -------- -------- --------------
MUNICIPAL BONDS (continued)
$ 4,695,000 Hamilton County, Ohio Health Care Revenue(1)..... 07/05/07 5.320% $ 4,695,000
2,000,000 Jacksonville, Florida Economic
Development Commission(1)..................... 07/05/07 5.350 2,000,000
3,800,000 Massachusetts Port Authority(1).................. 07/04/07 5.350 3,800,000
3,245,000 Massachusetts State Health &
Educational Facilities(1)..................... 07/04/07 5.350 3,245,000
23,915,000 Massachusetts State Health &
Educational Facilities(1)..................... 07/05/07 5.370 23,915,000
26,790,000 Massachusetts State Housing
Finance Agency(1)............................. 07/05/07 5.370 26,790,000
3,850,000 Miami, Florida Parking System Revenue(1)......... 07/05/07 5.320 3,850,000
21,000,000 Mississippi Business Finance Corp.(1)............ 07/01/07 5.300 21,000,000
23,700,000 Mississippi State(1)............................. 07/04/07 5.360 23,700,000
43,900,000 New York, New York(1)............................ 07/04/07 5.320 43,900,000
33,695,000 New York City Transitional Finance
Authority(1).................................. 07/04/07 5.350 33,695,000
35,000,000 North Texas Higher Education
Authority(1).................................. 07/04/07 5.320 35,000,000
18,955,000 Portland, Maine(1)............................... 07/04/07 5.320 18,955,000
8,220,000 Private Colleges & Universities Authority(1)..... 07/04/07 5.320 8,220,000
4,200,000 San Diego, California Metropolitan
Transportation Development Board(1)........... 07/04/07 5.320 4,200,000
11,275,000 Tempe, Arizona Industrial Development
Authority(1).................................. 07/05/07 5.350 11,275,000
21,385,000 Texas State(1)................................... 07/04/07 5.380 21,385,000
5,700,000 Utah State Board of Regents(1)................... 07/04/07 5.320 5,700,000
--------------
Total Municipal Bonds............................ 341,229,160
--------------
MUTUAL FUND (4.5%)
104,600,000 Reserve Primary Fund 12.......................... 12/01/49 5.277 104,600,000
--------------
TOTAL INVESTMENTS AT AMORTIZED COST........................................... 96.4% $2,228,159,683
OTHER ASSETS IN EXCESS OF LIABILITIES......................................... 3.6 83,654,351
----- --------------
NET ASSETS.................................................................... 100.0% $2,311,814,034
===== ==============
- ----------
(1) Variable rate instrument. Interest rates change on specific dates (such as
coupon or interest payment date). The yield shown represents the June 30,
2007 coupon or interest rate.
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2007 7
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2007
ASSETS:
Investments, at amortized cost ............................. $2,228,159,683
Cash ....................................................... 34,277
Receivables for:
Investments sold ........................................ 75,034,062
Interest and other receivables .......................... 10,147,189
--------------
Total Assets ......................................... 2,313,375,211
--------------
LIABILITIES:
Payables for:
Dividends declared ...................................... 817,292
Administrative fees ..................................... 406,917
Shareholder servicing fees .............................. 219,278
Professional fees ....................................... 33,244
Custody and accounting fees ............................. 27,667
Board of Trustees' fees ................................. 2,001
Accrued expenses and other liabilities ..................... 54,778
--------------
Total Liabilities .................................... 1,561,177
--------------
NET ASSETS .................................................... $2,311,814,034
==============
Net Assets Consist of:
Paid-in capital ............................................ $2,311,814,034
--------------
Net Assets .................................................... $2,311,814,034
==============
NET ASSET VALUE AND OFFERING PRICE PER SHARE
REGULAR SHARES NET ASSET VALUE
($1,172,126,377 / 1,172,126,377 shares outstanding) ........ $1.00
=====
INSTITUTIONAL SHARES NET ASSET VALUE
($1,139,687,657 / 1,139,687,657 shares outstanding) ........ $1.00
=====
The accompanying notes are an integral part of these financial statements.
8
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the year ended June 30, 2007
NET INVESTMENT INCOME:
Income:
Interest income allocated from Portfolio ................ $ 88,547,344
Expenses allocated from Portfolio ....................... (2,373,135)
------------
Net Investment Income allocated from Portfolio ....... 86,174,209
Interest Income ......................................... 5,890,079
------------
Total Investment Income .............................. 92,064,288
------------
Expenses:
Shareholder servicing fees .............................. 3,510,557
Investment advisory and administrative fees ............. 1,953,367
Board of Trustees' fees ................................. 132,559
Professional fees ....................................... 103,807
Custody and accounting fees ............................. 33,000
Miscellaneous expenses .................................. 144,604
------------
Total Expenses ....................................... 5,877,894
------------
Net Investment Income ......................................... $ 86,186,394
============
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2007 9
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30,
------------------------------------------
2007 2006
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS:
From Operations:
Net investment income .................................................. $ 86,186,394 $ 50,921,761
--------------- ---------------
Dividends and distributions declared:
From net investment income:
Regular Shares ......................................................... (67,612,111) (50,921,761)
Institutional Shares ................................................... (18,574,283) --
--------------- ---------------
Total dividends and distributions declared .......................... (86,186,394) (50,921,761)
--------------- ---------------
From Fund Share (Principal) Transactions at
Net Asset Value of $1.00 per share:
Fund shares sold .................................................... 3,932,442,373 1,839,355,983
Fund shares issued in reinvestment of dividends ..................... 39,649,577 26,060,096
Fund shares repurchased ............................................. (3,165,839,507) (1,617,946,361)
--------------- ---------------
Net increase in net assets resulting from fund
share transactions ..................................................... 806,252,443 247,469,718
--------------- ---------------
NET ASSETS:
Beginning of year ......................................................... 1,505,561,591 1,258,091,873
--------------- ---------------
End of year ............................................................... $ 2,311,814,034 $ 1,505,561,591
=============== ===============
The accompanying notes are an integral part of these financial statements.
10
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a Regular share outstanding throughout
each year
For the years ended June 30,
---------------------------------------------------------
2007 2006 2005 2004 2003
----- ----- ----- ----- -----
Net asset value, beginning of year.. ............... $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income ............................ 0.05 0.04 0.01 0.01 0.01
Dividends to shareholders from net
investment income ................................ (0.05) (0.04) (0.01) (0.01) (0.01)
----- ----- ----- ----- -----
Net asset value, end of year ....................... $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total return ....................................... 4.97% 3.76% 1.72% 0.59% 1.06%
Ratios/Supplemental data(1):
Net assets, end of year (in millions) ............ $1,172 $1,506 $1,258 $1,375 $1,459
Ratio of expenses to average net assets .......... 0.51% 0.53% 0.52% 0.52% 0.52%
Ratio of net investment income to
average net assets ............................. 4.79% 3.75% 1.70% 0.59% 1.05%
- ----------
(1) Ratios include the Fund's share of income, expenses paid by, and the
expense offset arrangement of, the BBH US Money Market Portfolio, which
the Fund invested in through June 12, 2007, as appropriate.
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2007 11
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for an Institutional share outstanding
throughout the period
For the period from
January 26, 2007
(commencement of
operations) through
June 30, 2007
-------------------
Net asset value, beginning of period......................... $1.00
Income from investment operations:
Net investment income .................................... 0.02
Dividends to shareholders from net investment income......... (0.02)
-----
Net asset value, end of period............................... $1.00
=====
Total return(1) ............................................ 2.21%
Ratios/ Supplemental data:(2)
Net assets, end of period (in millions) ..................... $1,140
Ratio of expenses to average net assets...................... 0.26%(3)
Ratio of net investment income to average net assets ........ 5.07%(3)
- ----------
(1) Inception to date return.
(2) Ratios include the Fund's share of income, expenses paid by, and the
expense offset arrangement of, the BBH US Money Market Portfolio, which
the Fund invested in through June 12, 2007, as appropriate.
(3) Annualized.
The accompanying notes are an integral part of these financial statements.
12
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2007
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 and re-organized as a
Delaware statutory trust on June 12, 2007. The Fund commenced operations
on December 12, 1983. The Declaration of Trust permits the Trustees to
create an unlimited number of series, each of which may issue a separate
class of shares. The Fund established a new class of shares designated as
"Institutional Shares". Institutional Shares opened on December 19, 2006
and commenced operations on January 26, 2007. Regular Shares and
Institutional Shares have different operating expenses. At June 30, 2007,
there were seven series of the Trust.
Prior to June 12, 2007 the Fund invested all of its investable assets in
the BBH U.S. Money Market Portfolio (the "Portfolio"), a diversified,
open-end management investment company having the same investment
objectives as the Fund. Effective June 12, 2007, the Fund redeemed its
shares of the Portfolio and began investing its assets directly. There
were no changes to the Fund's investment policies and restrictions. The
Fund recorded its share of the Portfolios' income and expenses daily until
the date of the redemption.
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. Repurchase Agreements. The Fund may enter into repurchase agreements
with primary dealers of U.S. Government Obligations as designated by
the Federal Reserve Bank of New York. Repurchase agreements are
transactions in which the Fund buys a security from a dealer or bank
and agrees to sell the security back at a mutually agreed upon time
and price. The repurchase price exceeds the sale price, reflecting
the Fund's return on the transaction or effectively the interest
rate paid by the dealer to the Fund. This return is unrelated to the
interest rate on the underlying security. The Fund will enter into
repurchase agreements only with banks and other recognized financial
institutions, such as securities dealers, deemed creditworthy by the
Investment Adviser. The Fund's custodian or sub-custodian will take
possession of the securities subject to repurchase agreements. The
Investment Adviser or sub-custodian will monitor the value of the
underlying security each day to ensure that the value of the
security always equals or exceeds the repurchase price. Repurchase
agreements are subject to credit risks. At June 30, 2007, the Fund
had no open repurchase agreements.
FINANCIAL STATEMENT JUNE 30, 2007 13
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2007
D. Federal Income Taxes. Each series of the Trust is treated as a
separate entity for federal income tax purposes. It is the Fund's
policy to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies and to distribute
substantially all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required. At June
30, 2007, the cost of investments for federal income tax purposes
was equal to the amortized cost of investments for financial
statement purposes.
E. Dividends and Distributions to Shareholders. Dividends from net
investment income are declared daily and paid monthly to
shareholders. The Fund declared dividends in the amounts of
$67,612,111 and $18,574,283 to Regular and Institutional
shareholders, respectively, during the year ended June 30, 2007. The
Fund declared dividends in the amount of $50,921,761 to Regular
shareholders during the year ended June 30, 2006. The tax character
of the dividends declared in both years was 100% ordinary income.
F. 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 impact of SFAS 157. At this time its impact
on the Fund's financial statements has not yet been determined.
2. Transactions with Affiliates.
Advisory and Administrative Fees. Effective June 12, 2007, under a
combined Investment Advisory and Administrative Services Agreement
("Agreement") with the Trust, Brown Brothers Harriman & Co. ("BBH")
provides investment advice, portfolio management and administrative
services to the Fund. BBH receives a combined fee from the Fund for
advisory and administrative services calculated daily and paid monthly at
an annual rate equivalent to 0.25% on the first $1,000,000,000 of the
Fund's average daily net assets and 0.20% of the Fund's average daily net
assets in excess of $1,000,000,000. Prior to June 12, 2007, under a
separate agreement that covered only advisory fees, BBH received a fee
from the Fund calculated daily and paid monthly. This fee was allocated to
the Fund from the Portfolio in which the Fund invested and was calculated
at an annual rate of 0.15% of the Portfolio's average daily assets. Brown
Brothers Harriman Trust Company, LLC ("BBHTC") the Fund's administrator,
under a separate agreement that covered only administrative services,
received a fee from the Fund calculated daily and paid monthly at an
annual rate equivalent to 0.10% of the Fund's average daily net assets.
BBH has a sub-administration services agreement with Federated Services
Company ("FSC") for which FSC receives compensation paid by BBH. For the
year ended June 30, 2007, the Fund incurred $1,953,367 for advisory and
administrative services.
14
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2007
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 Regular Shares' average daily net assets. For the year ended
June 30, 2007, the Fund incurred $3,510,557 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 $1billion of net assets and 0.005% per annum on all net assets over
$1 billion. For the year ended June 30, 2007, the Fund incurred $33,000
for custody and accounting services. 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 the overdraft
plus one percent. The total interest paid by the Fund for the year ended
June 30, 2007 was $4,222.
Board of Trustees' Fees. Each Trustee receives an annual fee as well as
reimbursement for reasonable out-of-pocket expenses from the Fund. For the
year ended June 30, 2007, the Fund incurred $132,559 for Trustees' fees.
3. In-Kind Contributions. For the year ended June 30, 2007 the Fund had
in-kind contributions of $2,262,291,367.
4. Capital Stock. The Trust is permitted to issue an unlimited number of
Regular Shares and Institutional Shares of capital stock, at no par value.
Transactions in shares of capital stock were as follows:
Shares
-----------------------------------
For the For the
year ended year ended
June 30, 2007 June 30, 2006
-------------- --------------
Regular Shares
Capital stock sold ..................................................... 2,210,338,409 1,839,355,983
Capital stock issued in connection with
reinvestment of dividends ............................................ 31,844,261 26,060,096
Capital stock redeemed ................................................. (2,575,617,884) (1,617,946,361)
-------------- --------------
Net increase (decrease) ................................................ (333,435,214) 247,469,718
============== ==============
FINANCIAL STATEMENT JUNE 30, 2007 15
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
JUNE 30, 2007
Shares
-------------------
For the period from
January 26, 2007
(commencement of
operations) to
June 30, 2007
-------------------
Institutional Shares
Capital stock sold .......................................... 1,722,103,964
Capital stock issued in connection with reinvestment
of dividends ............................................. 7,805,316
Capital stock redeemed ...................................... (590,221,623)
--------------
Net increase ................................................ 1,139,687,657
==============
16
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
SUPPLEMENTAL PROXY INFORMATION
June 30, 2007 (unaudited)
Supplemental Proxy Information. A Special Meeting of Trust shareholders was held
on May 23, 2007. On April 5, 2007, the record date for shareholders voting at
the meeting, there were 2,556,036,213 total outstanding shares.
The following items were considered by Fund shareholders and the results of
their voting are listed below. Unless otherwise noted, each matter was approved.
Proposals:
(1) To elect two Trustees of the Funds;
Samuel F. Pryor IV
Shares voted affirmatively..................... 2,553,191,186
Shares voted negatively........................ 1,105,147
Shares abstaining.............................. 705,862
H. Whitney Wagner
Shares voted affirmatively..................... 2,553,191,186
Shares voted negatively........................ 1,105,147
Shares abstaining.............................. 705,862
(2) To approve a new combined investment advisory and administrative services
agreement for the Funds with the current investment adviser of the Fund;
Shares voted affirmatively..................... 2,090,748,352
Shares voted negatively........................ 1,071,623
Shares abstaining.............................. 1,071,431
(3) To approve changes to the Fund's fundamental investment policies in order
to modernize their investment restrictions and increase their investment
flexibility:
(a) To amend the Fund's fundamental investment policy regarding
diversification;
Shares voted affirmatively.................. 2,090,488,255
Shares voted negatively..................... 1,331,721
Shares abstaining........................... 1,071,431
(b) To amend the Fund's fundamental investment policy regarding
concentration;
Shares voted affirmatively.................. 2,090,488,255
Shares voted negatively..................... 1,331,721
Shares abstaining........................... 1,071,431
(c) To amend the Fund's fundamental investment policy regarding
underwriting;
Shares voted affirmatively.................. 2,090,488,255
Shares voted negatively..................... 1,331,721
Shares abstaining........................... 1,071,431
(d) To amend the Fund's fundamental investment policy regarding
investing in commodities;
Shares voted affirmatively.................. 2,090,488,255
Shares voted negatively..................... 1,331,721
Shares abstaining........................... 1,071,431
FINANCIAL STATEMENT JUNE 30, 2007 17
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
SUPPLEMENTAL PROXY INFORMATION (continued)
June 30, 2007 (unaudited)
(e) To amend the Fund's fundamental investment policy regarding
investing in real estate;
Shares voted affirmatively.................. 2,090,488,255
Shares voted negatively..................... 1,331,721
Shares abstaining........................... 1,071,431
(f) To amend the Fund's fundamental investment policy regarding
borrowing money and issuing senior securities;
Shares voted affirmatively.................. 2,090,488,255
Shares voted negatively..................... 1,331,721
Shares abstaining........................... 1,071,431
(g) To amend the Fund's fundamental investment policy regarding lending;
Shares voted affirmatively.................. 2,090,488,255
Shares voted negatively..................... 1,331,721
Shares abstaining........................... 1,071,431
(h) To amend, and to make non-fundamental, the Fund's fundamental
investment policy regarding selling short;
Shares voted affirmatively.................. 2,088,727,585
Shares voted negatively..................... 3,092,391
Shares abstaining........................... 1,071,431
(i) To amend, and to make non-fundamental, the Fund's fundamental
investment policy regarding illiquid securities;
Shares voted affirmatively.................. 2,090,488,255
Shares voted negatively..................... 1,331,721
Shares abstaining........................... 1,071,431
(j) To amend, and to make non-fundamental, the Fund's fundamental
investment policy regarding investing in securities of other
investment companies;
Shares voted affirmatively.................. 2,090,190,054
Shares voted negatively..................... 1,629,922
Shares abstaining........................... 1,071,431
(k) To amend, and to make non-fundamental, the Fund's fundamental
investment policy regarding purchases on margin;
Shares voted affirmatively.................. 2,090,190,054
Shares voted negatively..................... 1,629,922
Shares abstaining........................... 1,071,431
18
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
SUPPLEMENTAL PROXY INFORMATION (continued)
June 30, 2007 (unaudited)
(4) To approve the proposed Reorganization Agreement, pursuant to which each
series of BBH Trust would be reorganized as separate series of BBH Trust,
(the "New BBH Trust"), a newly formed Delaware statutory trust.
Shares voted affirmatively..................... 2,090,116,618
Shares voted negatively........................ 1,616,912
Shares abstaining.............................. 1,157,877
FINANCIAL STATEMENT JUNE 30, 2007 19
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF FUND EXPENSES
June 30, 2007 (unaudited)
EXAMPLE
As a shareholder of BBH Money Market Fund (the "Fund"), you may incur two types
of costs:
(1) transaction costs on purchase payments, reinvested dividends, or other
distributions; and exchange fees; and (2) ongoing costs, including management
fees; and other Fund expenses. This Example is intended to help you understand
your ongoing costs (in dollars) of investing in the Fund and to compare these
costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (January 1, 2007 to June 30, 2007).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use information in this line, together with
the amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading entitled "Expenses Paid During the Period" to estimate
the expenses you paid on your account during the period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid
during the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of other funds.
20
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF FUND EXPENSES (continued)
June 30, 2007 (unaudited)
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees or exchange fees. Therefore, the second line of the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would have been higher.
Expenses Paid
Beginning Ending During Period
Account Value Account Value January 1, 2007
January 1, 2007 June 30, 2007 to June 30, 2007(1)
--------------- ------------- -------------------
Regular Shares
Actual.......................... $1,000 $1,024.60 $2.56
Hypothetical(2)................. $1,000 $1,022.27 $2.56
Expenses Paid
Beginning Ending During Period
Account Value Account Value January 26, 2007
January 26, 2007 (3) June 30, 2007 to June 30, 2007(1)
-------------------- ------------- -------------------
Institutional Shares
Actual.......................... $1,000 $1,022.10 $1.12
Hypothetical(2)................. $1,000 $1,020.26 $1.12
- ----------
(1) Expenses are equal to the Fund's annualized expense ratio of 0.51% and
0.26% for Regular and Institutional shares, respectively, multiplied by
the average account value over the period, multiplied by 181/365 for
Regular shares and 156/365 for Institutional shares to reflect the actual
number of days in the half-year period.
(2) Assumes a return of 5% before expenses. For the purpose of the
calculation, the applicable annualized expense ratio for each class of
shares is subtracted from the assumed return before expenses.
(3) Inception date.
FINANCIAL STATEMENT JUNE 30, 2007 21
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF ADVISOR SELECTION
June 30, 2007 (unaudited)
Approval of Investment Advisory/Administrative Services Agreement
At a meeting held on October 2, 2006, the Board of Trustees (the "Board") of the
Trust unanimously approved a new Combined Investment Advisory/Administrative
Services Agreement ("Combined Agreement"). The Board determined that the terms
of the Combined Agreement will be substantially identical to those of the
current advisory and administration agreements of the Funds, noting that the
most significant difference in the Combined Agreement is a single fee for both
advisory and administrative services. The following is a summary of the factors
the Board took into consideration in making its determination to approve the new
Combined Agreement.
Nature, Extent and Quality of Services Provided by BBH & Co.
The Board noted that, under the Combined Agreement in respect of each Fund, BBH
& Co., subject to the supervision of the Board, will be responsible for
providing a continuous investment program and making purchases and sales of
portfolio securities consistent with the Funds' investment objective and
policies. Under the Combined Agreement, BBH & Co. also provides administrative
services to each Fund.
The Board considered the scope and quality of services to be provided by BBH &
Co. under the Combined 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 & Co. 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 and administrative capabilities of BBH & Co. 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
expected to be provided to each of the Funds under the Combined Agreement.
Costs of Services Provided and Profitability to BBH & Co.
At the request of the Board, BBH & Co. provided information concerning the
profitability of BBH & Co.'s current investment company advisory and other fees.
The Board also reviewed BBH & Co.'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 the Fund. The Board discussed the
difficulty of making comparisons of profitability because comparative
information is not generally publicly available and is affected by numerous
factors, including the structure of the service provider, the types of funds it
manages and administers, its business mix, numerous assumptions regarding
allocations and the entity's capital structure and cost of capital. In
considering profitability information, the Board considered the effect of
fall-out benefits on BBH & Co.'s expenses, as well as the "revenue sharing"
arrangements BBH & Co. has entered into with certain entities that distribute
shares of the Funds. The Board focused on profitability of BBH & Co.'s
relationships with the Funds before taxes and distribution expenses. The Board
concluded that it was satisfied that BBH & Co.'s level of profitability from its
relationship with each Fund was not excessive.
22
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF ADVISOR SELECTION (continued)
June 30, 2007 (unaudited)
Fall-Out Benefits
The Board considered that BBH & Co. does not allocate the Funds' portfolio
transactions for third party research, although it did benefit from proprietary
research received from brokers that execute the Funds' purchases and sales of
securities. The Board recognized that the aggregate amount of commissions
generated by Fund transactions was unlikely to result in the Funds receiving
from full service broker dealers substantial discounts on commission rates. The
Board received and reviewed information concerning BBH & Co.'s policies with
respect to allocating portfolio brokerage.
The Board also considered that BBH & Co. receives shareholder servicing fees
from certain funds, and is the Funds' administrator, custodian and securities
lending agent. The Board noted that BBH & Co. retained no portion of the 12b-1
fees paid by any Fund that operated with a Rule 12b-1 plan. The Board recognized
that BBH & Co.'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 & Co. 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 & Co. and their use of the BBH & Co. name, which is licensed to the Funds by
BBH & Co. Thus, the Board did not believe that BBH & Co. revenues associated
with its clients should be fairly regarded as "fallout" benefit from the Funds.
Economies of Scale
The Board noted that the Funds' combined fee schedules, other than the fee
schedule for BBH Money Market Fund, do not contain breakpoints. As a result, if
assets increase, the fee rates would not be reduced for these Funds on the
incremental assets. With respect to the BBH Money Market Fund, the breakpoint
will be reviewed every three (3) years by the Board, and may be adjusted upwards
to take into account the effects of inflation or such other basis as may be
appropriate, subject to the approval of shareholders to the extent required by
the 1940 Act.
There may be other economies of scale because many expenses did not rise (and
fall) proportionally to increases (and decreases) in total net assets. The Board
noted that BBH & Co. had priced its services in recognition of the fact that it
was largely its own clients who were shareholders and, accordingly, sought to
assure that the cost of these services and total expenses for each Fund were
fair and reasonable. In addition, the Board noted that over the years BBH & Co.
had supported certain Funds through fee waivers and expense reimbursements.
Based on information they had been provided over many years, the Board observed
that in the mutual fund industry as a whole, as well as among funds similar to
the Funds, there appeared to be no uniformity or pattern in the fees and asset
levels at which breakpoints (if any) apply. In light of the Funds' current size
and expense structure, the Board concluded that it was unnecessary at this time
to consider breakpoints with respect to the Funds, other than for the BBH Money
Market Fund.
FINANCIAL STATEMENT JUNE 30, 2007 23
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF ADVISOR SELECTION (continued)
June 30, 2007 (unaudited)
Investment Results
The Board considered the investment results of each of the Funds as compared to
investment companies with its peers and with one or more selected securities
indices. In addition to the information received by the Board for the meeting
held on October 2, 2006, the Board received detailed performance information for
each Fund at each regular Board meeting during the year. At the meeting held on
October 2, 2006, the Board reviewed information showing performance of each Fund
compared to its peers over the prior 1-, 3-, and 5- year periods and compared
the performance information to one or more securities indices over comparable
periods.
Combined Fee Rate
The Board considered the fee rate to be paid by each Fund to BBH & Co. The Board
recognized that it is difficult to make comparisons of these fee rates, and the
combined advisory and administration fees, because there are variations in the
services that are included in the fees paid by other funds.
The Board considered the depth and range of services provided under the Combined
Agreement. For example, in addition to a continuous investment program, BBH &
Co. 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 & Co. also coordinates
the provision of services to the Funds by nonaffiliated service providers.
The following factors specific to BBH Money Market Fund also were noted and
considered by the Board in deciding to approve the Combined Agreement:
The Board reviewed information showing performance of the BBH Money Market Fund
compared to other funds in the iMoneyNet (1st Tier Retail) and (1st Tier
Institutional). The comparative information showed that the BBH Money Market
Fund had outperformed or performed in line with the averages over all relevant
periods. The Board also viewed with favor that the total expense ratio was
substantially lower than the averages in these categories. The Board also noted
that the BBH Money Market Fund had maintained a stable net asset value of one
dollar at all times. Taking into account these comparisons and the other factors
considered, the Board concluded that the BBH Money Market Fund's investment
results over time and expense ratios had been satisfactory.
Conflicts of Interest
As a general matter, certain conflicts of interest may arise in connection with
a portfolio manager's management of a fund's investments, on the one hand, and
the investments of other accounts for which the portfolio manager is
responsible, on the other. For example, it is possible that the various accounts
managed could have different investment strategies that, at times, might
conflict with one another to the possible detriment of the Fund. Alternatively,
to the extent that the same investment opportunities might be desirable for more
than one account, possible conflicts could arise in determining how to allocate
24
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF ADVISOR SELECTION (continued)
June 30, 2007 (unaudited)
them. Other potential conflicts might include conflicts created by specific
portfolio manager compensation arrangements, and conflicts relating to selection
of brokers or dealers to execute fund portfolio trades and/or specific uses of
commissions from Fund portfolio trades (for example, research, or "soft
dollars").
BBH & Co. has adopted and implemented policies and procedures, including
brokerage and trade allocation policies and procedures, which it believes
address the conflicts associated with managing multiple accounts for multiple
clients. In addition, BBH & Co. monitors a variety of areas, including
compliance with account investment guidelines, the inclusion only of securities
approved for purchase by the BBH & Co.'s Fixed Income Credit Committee, and
compliance with the BBH & Co.'s Code of Ethics. Finally, BBH & Co. has
structured the portfolio managers' compensation in a manner, and the Funds have
adopted policies and procedures, reasonably designed to safeguard a Fund from
being negatively affected as a result of any such potential conflicts.
FINANCIAL STATEMENT JUNE 30, 2007 25
BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
ADDITIONAL FEDERAL TAX INFORMATION
June 30, 2007 (unaudited)
The amount of qualified interest income (QII) dividends paid by the BBH Money
Market Fund (the "Fund") for the year ended June 30, 2007 was $79,407,539.
26
TRUSTEES AND OFFICERS OF BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
(unaudited)
Information pertaining to the Trustees of the BBH Trust (the "Trust") and
executive officers of the Trust is set forth below. Part B to the Registration
Statement of the BBH Money Market Fund includes additional information about the
Fund's Trustees and is available upon request without charge by contacting the
Fund at 1-800-625-5759.
Term of Number of
Office Funds in
and Fund Other
Position(s) Length Complex Directorships
Name, Birth Date Held with of Time Principal Occupation(s) Overseen by Held by
and Address Trust Served# During Past 5 Years Trustee^ Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Directors
Joseph V. Shields, Jr. Chairman of Since 2007 Managing Director, Chairman and Chief Executive 7 None
Birth Date: the Board and Officer of Shields & Company (member of New York
March 17, 1938 Trustee Stock Exchange); Chairman of Capital Management
Shields & Company Associates, Inc. (registered investment
140 Broadway adviser); Director of Flower Foods, Inc. (New
New York, NY 10005 York Stock Exchange listed company).
Eugene P. Beard Trustee Since 2007 Chairman & CEO of Westport Asset Fund, Inc. 7 Director of
Birth Date: Old Westbury
March 17, 1935 Funds (7
800 Connecticut Ave. Funds)
3 East
Norwalk, CT 06854
David P. Feldman Trustee Since 2007 Director of Jeffrey Co. (1992 to present). 7 Director of
Birth Date: Dreyfus Mutual
November 16, 1939 Funds (59
c/o BBH & Co. Funds)
140 Broadway,
16th Floor
New York, NY 10005
Alan G. Lowy Trustee Since 2007 Private Investor. 7 None
Birth Date:
April 17, 1939
4111 Clear Valley Drive
Encino, CA 91436
Arthur D. Miltenberger Trustee Since 2007 Retired; Trustee, R.K. Mellon Family Trust (1981 7 None
Birth Date: to June 2003); General Partner, Mellon Family
November 8, 1938 Investment Company IV, V and VI (1983 to 2002);
503 Darlington Road Director of Aerostructures Corporation (aircraft
Ligonier, PA 15658 manufacturer) (1996 to July 2003).
FINANCIAL STATEMENT JUNE 30, 2007 27
TRUSTEES AND OFFICERS OF BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
(unaudited)
Term of Number of
Office Funds in
and Fund Other
Position(s) Length Complex Directorships
Namee, Birth Date Held with of Time Principal Occupation(s) Overseen by Held by
and Address Trust Served# During Past 5 Years Trustee^ Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Samuel F. Pryor, IV Trustee Since 2007 Private Investor. 7 None
Birth Date:
June 12, 1955
130 East 67th Street
New York, NY 10021
H. Whitney Wagner Trustee Since 2007 President, Clear Brook Advisors, a registered 7 None
Birth Date: investment advisor.
March 3, 1956
Clear Brook Advisors
75 Rockefeller Plaza,
14th Floor
New York, NY 10019
Officers
John A. Nielsen President and Since 2007 President and Principal Executive Officer of the N/A N/A
Birth Date: Principal Trust; He joined Brown Brothers Harriman & Co.
July 15, 1943 Executive ("BBH & Co.") in 1968 and has been a Partner of
140 Broadway Officer the firm since 1987.
New York, NY 10005
Charles H. Schreiber Treasurer, Since 2007 Treasurer, Principal Financial Officer and N/A N/A
Birth Date: Principal Anti-Money Laundering Officer of the Trust;
December 10, 1957 Financial Senior Vice President of BBH & Co. since
140 Broadway Officer, September 2001; Joined BBH & Co. in 1999.
New York, NY 10005 Anti-Money
Laundering
Officer
Mark Nixon Assistant Since 2007 Assistant Secretary and Assistant Treasurer of N/A N/A
Birth Date: Secretary and the Trust, Vice President of BBH & Co. (since
January 14, 1963 Assistant October 2006), Accounting Manager, Reserve Funds
140 Broadway Treasurer (August 2005-September 2006) Assistant
New York, NY 10005 Controller, Reserve Funds (February 2005-August
2005), Private Consultant (December
2001-February 2005).
28
TRUSTEES AND OFFICERS OF BBH MONEY MARKET FUND
- --------------------------------------------------------------------------------
(unaudited)
Term of Number of
Office Funds in
and Fund Other
Position(s) Length Complex Directorships
Namee, Birth Date Held with of Time Principal Occupation(s) Overseen by Held by
and Address Trust Served# During Past 5 Years Trustee^ Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Michael F. Hogan Chief Since 2007 Chief Compliance Officer of the Trust; Senior N/A N/A
Birth Date: Compliance Vice President of BBH & Co. since September
January 26, 1963 Officer 1994; Joined BBH & Co. in 1985.
50 Milk Street
Boston, MA 02109
Gail C. Jones Secretary Since 2007 Secretary of the Trust; Counsel, ReedSmith, LLP N/A N/A
Birth Date: (since October 2002); Corporate Counsel (January
October 26, 1953 1997 to September 2002) and Vice President
1001 Liberty Avenue (January 1999 to September 2002) of Federated
Pittsburgh, PA Services Company.
15222-3779
Judith J. Mackin Vice President Since 2007 Vice President of the Trust; Vice President N/A N/A
Birth Date: (since November 1997) of Federated Services
May 30, 1960 Company.
1001 Liberty Avenue,
Pittsburgh, PA
15222-3779
John C. Smith Assistant Since 2007 Assistant Treasurer of the Trust; Vice President N/A N/A
Birth Date: Treasurer (since September 2004); Assistant Vice President
August 2, 1965 (since September 2001); Associate (September
50 Milk Street 2000 to August 2001); and Senior Analyst (June
Boston, MA 02109 1999 to August 2000) of BBH & Co.
- ----------
# Each Trustee of the Trust holds office until he or she attains the age of
70 (72, in the case of Trustees who were elected as such before January 1,
2000), or until he or she sooner dies, resigns or is removed from office
in accordance with the provisions of the Trust's Declaration of Trust. All
officers of the Trust hold office for one year and until their respective
successors are chosen and qualified (subject to the ability of the
Trustees to remove any officer in accordance with the Trust's By-laws).
Each Trustee previously served on the Board of Trustees of the Predecessor
BBH Money Market Fund.
^ The Fund Complex consists of the Trust, which has seven series and are
each counted as one "fund" for purposes of this table.
FINANCIAL STATEMENT JUNE 30, 2007 29
INVESTMENT ADVISER AND ADMINISTRATOR
BROWN BROTHERS HARRIMAN
140 BROADWAY
NEW YORK, NY 10005
DISTRIBUTOR
EDGEWOOD SERVICES, INC.
5800 CORPORATE DRIVE
PITTSBURGH, PA 15237-7000
SHAREHOLDER SERVICING AGENT
BROWN BROTHERS HARRIMAN
140 BROADWAY
NEW YORK, NY 10005
(800) 625-5759
To obtain information or make shareholder inquiries:
By telephone: Call 1-800-575-1265
By E-mail send your request to: bbhfunds@bbh.com
On the internet: www.bbhfunds.com
This report is submitted for the general information of shareholders and is not
authorized for distribution to prospective investors unless preceded or
accompanied by an effective prospectus. Nothing herein contained is to be
considered an offer of sale or a solicitation of an offer to buy shares of the
Fund. Such offering is made only by the prospectus, which includes details as to
offering price and other material information.
The BBH U.S. Money Market Portfolio files with the SEC a complete schedule of
its portfolio holdings, as of the close of the first and third quarters of its
fiscal year, on "Form N-Q." Information on Form N-Q is available without charge
and upon request by calling the Funds at the toll-free number listed above. A
text only version can be viewed online or downloaded from the SEC's website at
http://www.sec.gov; and may be reviewed and copied at the SEC's Public Reference
Room in Washington, DC (call 1-800-SEC-0330 for information on the operation of
the Public Reference Room). You may also access this information from the BBH
website at BBH.com by clicking on "BBH Mutual Funds" and selecting "Online
Documents/Holdings Information."
A copy of the Fund's Proxy Voting Policy is available upon request by calling
the toll-free number listed above. A text-only version of the policy can be
viewed online or downloaded from the SEC at www.sec.gov.
BROWN [LOGO]
BROTHERS
HARRIMAN
BROWN [LOGO]
BROTHERS
HARRIMAN
- --------------------------------------------------------------------------------
Annual Report
JUNE 30, 2007
- --------------------------------------------------------------------------------
BBH TAX EXEMPT MONEY FUND
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees of the BBH Trust and Shareholders of
BBH Tax Exempt Money Fund
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of BBH Tax Exempt Money Fund (a series of BBH
Trust) (the "Fund") as of June 30, 2007, and the related statement of operations
for the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of June 30, 2007, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of BBH
Tax Exempt Money Fund as of June 30, 2007, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended, in conformity with accounting principles generally
accepted in the United States of America.
Deloitte & Touche LLP
Boston, Massachusetts
August 20, 2007
2
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO ALLOCATION
June 30, 2007
BREAKDOWN BY BOND TYPE
Percent of
U.S. $ Value Net Assets
------------ ----------
Certificate of Participation .................. $ 2,100,000 0.6%
Education ..................................... 38,141,750 11.6
General Obligations ........................... 90,102,883 27.5
Health Care ................................... 23,880,000 7.3
Industrial .................................... 35,805,000 10.9
Miscellaneous ................................. 22,960,000 7.0
Transportation ................................ 33,494,247 10.2
Utilities ..................................... 19,809,197 6.0
Water/Sewer ................................... 21,592,458 6.6
Commercial Paper .............................. 45,200,000 13.8
Liabilities In Excess of Other Assets ......... (4,849,197) (1.5)
------------ -----
Net Assets .................................... $328,236,338 100.0%
============ =====
TOP FIVE HOLDINGS BY STATE
Percent of
U.S. $ Value Net Assets
------------ ----------
New York ...................................... $ 51,520,000 15.7%
Texas ......................................... 45,264,768 13.8
Massachusetts ................................. 32,545,000 9.9
Minnesota ..................................... 16,798,168 5.1
Pennsylvania .................................. 13,771,652 4.2
Other States .................................. 173,185,947 52.8
Liabilities In Excess of Other Assets ......... (4,849,197) (1.5)
------------ -----
Net Assets .................................... $328,236,338 100.0%
============ =====
All data as of June 30, 2007. 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.
FINANCIAL STATEMENT JUNE 30, 2007 3
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
June 30, 2007
Principal Maturity Interest
Amount Date Rate Value
- ----------- -------- -------- ------------
MUNICIPAL BONDS (87.7%)
CERTIFICATE OF PARTICIPATION (0.6%)
$ 2,100,000 Denver, Colorado, City & County(1)............... 07/04/07 3.770% $ 2,100,000
------------
EDUCATION (11.6%)
1,017,000 Chicago Board of Education(1).................... 07/02/07 3.900 1,017,000
2,000,000 Clark County, Nevada, School District(1)......... 07/02/07 3.930 2,000,000
5,100,000 Massachusetts State Development
Finance Agency, Boston University
Revenue(1).................................... 07/02/07 3.900 5,100,000
3,000,000 Massachusetts State Health &
Educational Facilities Authority(1)........... 07/02/07 3.780 3,000,000
1,770,000 Massachusetts State Health &
Educational Facilities Authority(1)........... 07/02/07 3.840 1,770,000
3,350,000 Mesquite, Texas School District.................. 08/15/08 4.700 3,354,750
2,000,000 Missouri State Health & Educational
Facilities Authority(1)....................... 07/02/07 3.740 2,000,000
2,800,000 New Hampshire Health & Education
Facilities Authority(1)....................... 07/04/07 3.680 2,800,000
2,300,000 New Jersey State Educational
Facilities Authority(1)....................... 07/02/07 3.800 2,300,000
1,000,000 Ohio State University(1)......................... 07/05/07 3.550 1,000,000
500,000 Ohio State University(1)......................... 07/05/07 3.730 500,000
3,000,000 Ohio State University(1)......................... 07/05/07 3.730 3,000,000
5,000,000 Rutgers State University(1)...................... 07/02/07 3.700 5,000,000
2,500,000 University of Missouri(1)........................ 07/02/07 3.860 2,500,000
1,800,000 University of Pittsburgh(1)...................... 07/04/07 3.700 1,800,000
1,000,000 University of Texas.............................. 07/01/07 5.000 1,000,000
------------
Total Education.................................. 38,141,750
------------
GENERAL OBLIGATIONS (27.5%)
1,925,000 Alaska State..................................... 07/15/07 5.000 1,926,019
1,600,000 Baltimore County, Maryland....................... 09/01/07 5.000 1,603,477
2,000,000 California State(1).............................. 07/02/07 3.800 2,000,000
1,000,000 Delaware State................................... 07/01/07 5.250 1,000,000
5,000,000 Denver, Colorado, City & County.................. 08/01/07 5.625 5,008,370
The accompanying notes are an integral part of these financial statements.
4
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2007
Principal Maturity Interest
Amount Date Rate Value
- ----------- -------- -------- ------------
MUNICIPAL BONDS (continued)
GENERAL OBLIGATIONS (continued)
$ 2,385,000 District of Columbia(1).......................... 07/04/07 3.730% $ 2,385,000
1,730,000 Fairfax County, Virginia......................... 10/01/07 5.000 1,736,376
1,000,000 Fairfax County, Virginia......................... 06/01/08 4.250 1,004,434
1,800,000 Georgia State.................................... 11/01/07 4.000 1,801,845
1,545,000 Harris County, Texas............................. 10/01/07 4.000 1,546,812
2,000,000 Illinois State................................... 07/01/07 5.000 2,000,000
1,430,000 Jefferson County, Alabama(1)..................... 07/02/07 3.880 1,430,000
5,000,000 Maryland State................................... 07/15/07 5.000 5,002,587
3,100,000 Massachusetts State(1)........................... 07/02/07 3.900 3,100,000
4,900,000 Massachusetts State(1)........................... 07/02/07 3.900 4,900,000
2,625,000 Massachusetts State(1)........................... 07/05/07 3.710 2,625,000
1,000,000 Metropolitan Council, Minneapolis................ 03/01/08 5.000 1,008,998
2,000,000 Minneapolis, Minnesota(1)........................ 07/05/07 3.580 2,000,000
620,000 Minneapolis, Minnesota(1)........................ 07/05/07 3.580 620,000
9,200,000 Minneapolis, Minnesota(1)........................ 07/05/07 3.580 9,200,000
1,615,000 Minneapolis, Minnesota........................... 12/01/07 4.000 1,616,550
2,350,000 Minnesota State.................................. 08/01/07 5.000 2,352,621
1,475,000 Montgomery County, Maryland...................... 05/01/08 5.000 1,489,916
1,000,000 New York, New York(1)............................ 07/02/07 3.740 1,000,000
1,300,000 New York, New York(1)............................ 07/02/07 3.740 1,300,000
300,000 New York, New York(1)............................ 07/02/07 3.740 300,000
1,200,000 New York, New York(1)............................ 07/02/07 3.740 1,200,000
1,600,000 New York, New York(1)............................ 07/02/07 3.870 1,600,000
2,700,000 New York, New York(1)............................ 07/02/07 3.870 2,700,000
600,000 New York, New York(1)............................ 07/02/07 3.880 600,000
900,000 New York, New York(1)............................ 07/02/07 3.900 900,000
1,555,000 Seattle, Washington.............................. 10/01/07 4.000 1,556,101
1,830,000 South Carolina State............................. 07/01/07 4.000 1,830,000
8,700,000 Texas State...................................... 08/31/07 4.500 8,713,207
1,000,000 Utah State....................................... 07/01/07 5.500 1,000,000
5,000,000 Utah State....................................... 07/01/08 4.000 5,012,050
950,000 Vermont State.................................... 03/01/08 5.000 958,628
4,030,000 Washington Suburban Sanitation
District...................................... 06/01/08 5.000 4,074,892
------------
Total General Obligations........................ 90,102,883
------------
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2007 5
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2007
Principal Maturity Interest
Amount Date Rate Value
- ----------- -------- -------- ------------
MUNICIPAL BONDS (continued)
HEALTH CARE (7.3%)
$ 2,000,000 New York State Dormitory Authority
Revenue(1).................................... 07/05/07 3.680% $ 2,000,000
8,000,000 New York State Dormitory Authority
Revenue(1).................................... 07/05/07 3.700 8,000,000
2,580,000 Oklahoma State Industries Authority,
Hospital Revenue(1)........................... 07/02/07 3.860 2,580,000
2,500,000 Ross County, Ohio(1)............................. 07/02/07 3.900 2,500,000
4,900,000 Royal Oak, Michigan, Hospital Finance
Authority(1).................................. 07/02/07 3.920 4,900,000
3,900,000 Washington State Health Care Facilities
Authority(1).................................. 07/02/07 3.950 3,900,000
------------
Total Health Care................................ 23,880,000
------------
INDUSTRIAL (10.9%)
1,000,000 California Pollution Control Financing
Authority(1).................................. 07/02/07 3.900 1,000,000
1,100,000 California Statewide Communities
Development Authority, Pollution
Control Revenue(1)............................ 07/02/07 3.800 1,100,000
1,200,000 Columbia, Alabama, Pollution Control
Revenue(1).................................... 07/02/07 3.900 1,200,000
600,000 Delaware County, Pennsylvania,
Industrial Development Authority(1)........... 07/04/07 3.700 600,000
1,000,000 East Baton Rouge, Parish Louisiana,
Pollution Control Revenue(1).................. 07/02/07 3.910 1,000,000
7,600,000 Gulf Coast Waste Disposal Authority,
Texas(1)...................................... 07/02/07 3.910 7,600,000
2,400,000 Harris County, Texas, Pollution Control
Revenue(1).................................... 07/02/07 3.900 2,400,000
2,300,000 Harris County, Texas, Pollution Control
Revenue(1).................................... 07/02/07 3.910 2,300,000
1,000,000 Hurley, New Mexico, Pollution Control
Revenue(1).................................... 07/02/07 3.920 1,000,000
5,000,000 Jackson County, Mississippi, Port
Facility Revenue(1)........................... 07/02/07 3.900 5,000,000
The accompanying notes are an integral part of these financial statements.
6
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2007
Principal Maturity Interest
Amount Date Rate Value
- ----------- -------- -------- ------------
MUNICIPAL BONDS (continued)
INDUSTRIAL (continued)
$ 3,805,000 Kemmerer, Wyoming, Pollution Control
Revenue(1).................................... 07/02/07 3.910% $ 3,805,000
500,000 Lincoln County, Wyoming, Pollution
Control Revenue(1)............................ 07/02/07 3.820 500,000
2,400,000 Lincoln County, Wyoming, Pollution
Control Revenue(1)............................ 07/02/07 3.910 2,400,000
800,000 Midlothian, Texas, Pollution Control
Revenue(1).................................... 07/04/07 3.720 800,000
2,000,000 MT Vernon Industries Pollution Control &
Solid Waste Disposal Revenue(1)............... 07/02/07 3.840 2,000,000
1,800,000 Sweetwater County, Wyoming,
Pollution Control Revenue(1).................. 07/02/07 3.900 1,800,000
1,300,000 Valdez, Alaska, Marine Terminal
Revenue(1).................................... 07/02/07 3.850 1,300,000
------------
Total Industrial................................. 35,805,000
------------
MISCELLANEOUS (7.0%)
3,125,000 Alaska State Housing Finance Corp.
Revenue(1).................................... 07/05/07 3.700 3,125,000
1,365,000 Clayton County, Georgia, Housing
Authority(1).................................. 07/04/07 3.770 1,365,000
1,300,000 Colorado Housing & Finance Authority(1).......... 07/04/07 3.730 1,300,000
2,800,000 Illinois Finance Authority(1).................... 07/02/07 3.860 2,800,000
300,000 New York, New York, City Transitional
Finance Authority(1).......................... 07/02/07 3.840 300,000
200,000 New York, New York, City Transitional
Finance Authority(1).......................... 07/02/07 3.850 200,000
2,000,000 New York, New York, City Transitional
Finance Authority(1).......................... 07/02/07 3.850 2,000,000
2,170,000 New York, New York, City Transitional
Finance Authority(1).......................... 07/04/07 3.680 2,170,000
1,000,000 New York, New York, City Transitional
Finance Authority(1).......................... 07/04/07 3.680 1,000,000
1,200,000 New York, New York, City Transitional
Finance Authority(1).......................... 07/04/07 3.680 1,200,000
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2007 7
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2007
Principal Maturity Interest
Amount Date Rate Value
- ----------- -------- -------- ------------
MUNICIPAL BONDS (continued)
MISCELLANEOUS (continued)
$ 900,000 New York State Local Government
Assistance Corp.(1)........................... 07/04/07 3.700% $ 900,000
3,500,000 New York State Local Government
Assistance Corp.(1)........................... 07/04/07 3.760 3,500,000
2,300,000 Oklahoma State Capital Improvement
Authority(1).................................. 07/02/07 3.900 2,300,000
800,000 Will County, Illinois, Exempt Facilities
Revenue(1).................................... 07/02/07 3.960 800,000
------------
Total Miscellaneous.............................. 22,960,000
------------
TRANSPORTATION (10.2%)
5,000,000 Alabama State Federal Highway Finance
Authority..................................... 03/01/08 5.000 5,045,716
800,000 Joliet, Illinois, Regional Port District(1)...... 07/02/07 3.910 800,000
200,000 Kansas State Department of
Transportation & Highway Revenue(1)........... 07/02/07 3.940 200,000
3,200,000 Kansas State Department of
Transportation & Highway Revenue(1)........... 07/02/07 3.940 3,200,000
1,100,000 Los Angeles, California, Department of
Airports Revenue(1)........................... 07/02/07 3.850 1,100,000
3,200,000 Metropolitan Transportation Authority,
New York, Revenue(1).......................... 07/05/07 3.620 3,200,000
3,000,000 Metropolitan Transportation Authority,
New York, Revenue(1).......................... 07/02/07 3.850 3,000,000
2,000,000 Metropolitan Transportation Authority,
New York, Revenue(1).......................... 07/02/07 3.920 2,000,000
4,955,000 Nevada State..................................... 12/01/07 5.000 4,983,531
1,965,000 Pennsylvania Turnpike Commission(1).............. 07/02/07 3.780 1,965,000
7,000,000 Pennsylvania Turnpike Commission(1).............. 07/05/07 3.710 7,000,000
1,000,000 Port of Port Arthur Navigation District(1)....... 07/02/07 3.900 1,000,000
------------
Total Transportation............................. 33,494,247
------------
UTILITIES (6.0%)
1,095,000 City of Tacoma, Washington....................... 01/01/08 4.000 1,097,035
2,250,000 Houston, Texas, Utility System Revenue(1)........ 07/04/07 3.770 2,250,000
The accompanying notes are an integral part of these financial statements.
8
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2007
Principal Maturity Interest
Amount Date Rate Value
- ----------- -------- -------- ------------
MUNICIPAL BONDS (continued)
UTILITIES (continued)
$ 6,350,000 Long Island Power Authority New York,
Electric System(1)............................ 07/02/07 3.810% $ 6,350,000
2,300,000 Memphis, Tennessee, Electric System
Revenue....................................... 12/01/07 5.000 2,312,162
3,600,000 Municipal Electric Authority of Georgia(1)....... 07/04/07 3.660 3,600,000
2,000,000 New York State Energy Research &
Development Authority(1)...................... 07/04/07 3.690 2,000,000
900,000 Piedmont Municipal Power Agency
Electric Revenue(1)........................... 07/04/07 3.730 900,000
1,300,000 Washington State Public Power Supply
System(1)..................................... 07/04/07 3.700 1,300,000
------------
Total Utilities.................................. 19,809,197
------------
WATER/SEWER (6.6%)
2,440,000 Arizona Water Infrastructure Finance
Authority Revenue............................. 10/01/07 5.000 2,447,701
1,300,000 Boston, Massachusetts, Water & Sewer
Commission(1)................................. 07/05/07 3.680 1,300,000
1,800,000 California State Department of Water
Resources(1).................................. 07/04/07 3.710 1,800,000
1,100,000 Denver, Colorado, City & County, Board
of Water Commission........................... 09/01/07 5.000 1,102,542
3,500,000 Durham, North Carolina, Water & Sewer
Revenue(1).................................... 07/04/07 3.730 3,500,000
200,000 Irvine Ranch, California, Water District(1)...... 07/02/07 3.830 200,000
1,285,000 Jackson County Water & Sewer
Authority..................................... 09/01/07 4.000 1,285,563
900,000 Massachusetts State Water Resources
Authority(1).................................. 07/04/07 3.680 900,000
1,550,000 Massachusetts State Water Resources
Authority(1).................................. 07/04/07 3.750 1,550,000
4,100,000 New York, New York, City Municipal
Water Finance Authority(1).................... 07/02/07 3.810 4,100,000
1,000,000 Ohio State Solid Waste Revenue(1)................ 07/02/07 3.950 1,000,000
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2007 9
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
June 30, 2007
Principal Maturity Interest
Amount Date Rate Value
- ----------- -------- -------- ------------
MUNICIPAL BONDS (continued)
WATER/SEWER (continued)
$ 2,405,000 Pittsburgh, Pennsylvania, Water &
Sewer Authority............................... 09/01/07 4.000% $ 2,406,652
------------
Total Water/Sewer................................ 21,592,458
------------
Total Municipal Bonds............................ 287,885,535
------------
COMMERCIAL PAPER (13.8%)
1,500,000 Board of Government, University of
North Carolina................................ 08/09/07 3.680 1,500,000
1,800,000 Board of Regent Texas............................ 08/09/07 3.740 1,800,000
12,000,000 City & County of Honolulu, Hawaii................ 08/09/07 3.700 12,000,000
1,100,000 Johns Hopkins University......................... 08/07/07 3.760 1,100,000
2,000,000 Massachusetts State Health &
Educational Facilities Authority.............. 07/05/07 3.740 2,000,000
3,000,000 Massachusetts State Health &
Educational Facilities Authority.............. 09/04/07 3.730 3,000,000
3,300,000 Massachusetts Water Resources
Authority..................................... 08/08/07 3.760 3,300,000
6,000,000 Palm Beach County School District................ 07/19/07 3.750 6,000,000
2,000,000 Private College & University Authority........... 08/08/07 3.700 2,000,000
2,500,000 Texas Public Finance............................. 08/09/07 3.740 2,500,000
7,000,000 University of Texas.............................. 08/08/07 3.750 7,000,000
3,000,000 University of Texas.............................. 08/09/07 3.750 3,000,000
------------
Total Commercial Paper........................... 45,200,000
------------
TOTAL INVESTMENTS, AT AMORTIZED COST......................................... 101.5% $333,085,535
LIABILITIES IN EXCESS OF OTHER ASSETS........................................ (1.5) (4,849,197)
----- ------------
NET ASSETS................................................................... 100.0% $328,236,338
===== ============
- ----------
(1) Variable rate instrument. Interest rates change on specific dates (such as
coupon or interest payment date). The yield shown represents the June 30,
2007 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
June 30, 2007
ASSETS:
Investments, at amortized cost............................... $333,085,535
Cash......................................................... 820,233
Interest receivable.......................................... 2,224,639
------------
Total Assets.............................................. 336,130,407
------------
LIABILITIES:
Payables for:
Investments purchased..................................... 7,636,366
Shareholder servicing fees................................ 67,843
Dividends declared........................................ 53,627
Investment advisory fees.................................. 42,187
Professional fees......................................... 38,281
Administrative fees....................................... 28,125
Custody and accounting fees............................... 8,968
Board of Trustees' fees................................... 527
Accrued expenses and other liabilities....................... 18,145
------------
Total Liabilities......................................... 7,894,069
------------
NET ASSETS, for 328,233,210 fund shares outstanding............. $328,236,338
============
Net Assets Consist of:
Paid-in capital........................................... $328,236,338
------------
Net Assets...................................................... $328,236,338
============
NET ASSET VALUE AND OFFERING PRICE PER SHARE.................... $1.00
=====
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2007 11
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the year ended June 30, 2007
NET INVESTMENT INCOME:
Income:
Investment income........................................ $15,028,269
-----------
Expenses:
Shareholder servicing fees............................... 1,055,033
Investment advisory fees................................. 633,020
Administrative fees...................................... 422,013
Registration fees........................................ 208,157
Custody and accounting fees.............................. 61,179
Professional fees........................................ 53,367
Board of Trustees' fees.................................. 47,507
Miscellaneous expenses................................... 25,036
-----------
Total Expenses......................................... 2,505,312
Expense offset arrangement............................. (41,729)
-----------
Net Expenses........................................... 2,463,583
-----------
Net Investment Income....................................... $12,564,686
===========
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 years ended June 30,
------------------------------
2007 2006
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
From Operations:
Net investment income.................................... $ 12,564,686 $ 11,092,429
Dividends declared from net investment income............... (12,562,787) (11,095,940)
------------- -------------
Net increase (decrease) in net
assets from operations................................. 1,899 (3,511)
------------- -------------
From Fund Share (Principal) Transactions at Net Asset
Value of $1.00 per share:
Fund shares sold....................................... 353,300,401 544,563,550
Fund shares issued in reinvestment of dividends........ 6,378,787 5,793,650
Fund shares repurchased................................ (524,604,107) (494,840,334)
------------- -------------
Net increase (decrease) in net assets resulting
from fund share transactions........................ (164,924,919) 55,516,866
------------- -------------
Total increase (decrease) in net assets............. (164,923,020) 55,513,355
NET ASSETS:
Beginning of year........................................... 493,159,358 437,646,003
------------- -------------
End of year ................................................ $ 328,236,338 $ 493,159,358
============= =============
The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENT JUNE 30, 2007 13
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding throughout each year
For the years ended June 30,
-----------------------------------------------------------------------
2007 2006 2005 2004 2003
------ ------ ------ ------ ------
Net asset value, beginning of year ............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income ....................... 0.03 0.02 0.01 0.00(1) 0.01
Dividends to shareholders from net
investment income ........................... (0.03) (0.02) (0.01) (0.00)(1) (0.01)
------ ------ ------ ------ ------
Net asset value, end of year ................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
Total return ................................... 3.03% 2.31% 1.15% 0.42% 0.72%
Ratios/Supplemental data:
Net assets, end of year
(in millions) ............................ $328 $493 $438 $453 $465
Net expenses paid by Fund ................... 0.58% 0.56% 0.56% 0.55% 0.56%
Expense offset arrangement.. ................ 0.01% 0.00%(2) 0.00%(2) 0.00%(2) 0.01%
------ ------ ------ ------ ------
Total expenses ........................... 0.59% 0.56% 0.56% 0.55% 0.57%
====== ====== ====== ====== ======
Ratio of net investment income to
average net assets ....................... 2.98% 2.31% 1.15% 0.42% 0.72%
- ----------
(1) Less than $0.01 per share.
(2) 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
June 30, 2007
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 and re-organized as a
Delaware statutory trust on June 12, 2007. The Fund commenced operations
on February 22, 1999. The Declaration of Trust permits the Trustees to
create an unlimited number of series, each of which may issue a separate
class of shares. The Trustees have authorized the issuance of an unlimited
number of shares of the Fund without a par value. At June 30, 2007, there
were seven series of the Trust.
The Fund's financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America, which
require management to make certain estimates and assumptions at the date
of the financial statements and are based, in part, on the following
accounting policies. Actual results could differ from those estimates.
A. Valuation of Investments. The Fund values its investments at
amortized cost, which approximates market value. The amortized cost
method values a security at its cost at the time of purchase and
thereafter assumes a constant amortization to maturity of any
discount or premium. The Fund's use of amortized cost is in
compliance with Rule 2a-7 of the Investment Company Act of 1940.
B. Investment Transactions and Income. Investment transactions are
accounted for on the trade date. Realized gains and losses, if any,
from investment transactions are determined on the basis of
identified cost. The Fund invests primarily in debt securities
issued by municipalities. The ability of the issuers of the debt
securities to meet their obligation may be affected by economic
developments in a specific state or municipality. Interest income
consists of interest accrued and discount earned (including both
original issue and market discount) and premium amortization on the
investments of the Fund, accrued ratably to the date of maturity.
C. Federal Income Taxes. Each series of the Trust is treated as a
separate entity for federal income tax purposes. It is the Fund's
policy to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies and to distribute
substantially all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required. At June
30, 2007, 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. The Fund declared dividends in the amounts of
$12,562,787 and $11,095,940 for the years ended June 30, 2007 and
June 30, 2006, respectively. The tax character of the dividends
declared in both years was 100% tax exempt income.
FINANCIAL STATEMENT JUNE 30, 2007 15
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2007
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.
Advisory and Administrative Fees. Effective June 12, 2007, under a
combined Investment Advisory and Administrative Services Agreement
("Agreement") with the Trust, Brown Brothers Harriman & Co. ("BBH")
provides investment advice, portfolio management and administrative
services to the Fund. BBH receives a combined fee from the Fund for
advisory and administrative services calculated daily and paid monthly at
an annual rate equivalent to 0.25% of the fund's daily net assets. Prior
to June 12, 2007, under a separate agreement that covered only advisory
fees, BBH received a fee from the Fund calculated daily and paid monthly
at an annual rate of 0.15% of the Fund's average daily assets and Brown
Brothers Harriman Trust Company, LLC ("BBHTC") the Fund's administrator,
under a separate agreement that covered only administrative services,
received a fee from the Fund calculated daily and paid monthly at an
annual rate equivalent to 0.10% of the Fund's average daily net assets.
BBH has a sub-administration services agreement with Federated Services
Company ("FSC") for which FSC receives compensation paid by BBH. For the
year ended June 30, 2007, the Fund incurred $1,055,033 for advisory and
administrative services.
Shareholder Servicing Fees. The Trust has a shareholder servicing
agreement with BBH for which BBH receives a fee from the Fund calculated
daily and paid monthly at an annual rate of 0.25% of the Fund's average
daily net assets. For the year ended June 30, 2007, the Fund incurred
$1,055,033 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 year ended
16
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2007
June 30, 2007, the Fund incurred $61,179 for custody and accounting
services. These fees were reduced by $41,729 as a result of an expense
offset arrangement with the Fund's custodian. In the event that the Fund
is overdrawn, under the custody agreement with BBH, BBH will make
overnight loans to the Fund to cover overdrafts. Pursuant to their
agreement the Fund will be charged interest based on LIBOR on the day of
overdraft plus one percent. The total interest paid by the Fund for the
year ended June 30, 2007 was $3,185.
Board of Trustees' Fees. Each Trustee receives an annual fee as well as
reimbursement for reasonable out-of-pocket expenses from the Fund. For the
year ended June 30, 2007, the Fund incurred $47,507 for Trustees' fees.
FINANCIAL STATEMENT JUNE 30, 2007 17
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
SUPPLEMENTAL PROXY INFORMATION
June 30, 2007 (unaudited)
Supplemental Proxy Information. A Special Meeting of Trust shareholders was held
on May 23, 2007. On April 5, 2007, the record date for shareholders voting at
the meeting, there were 2,556,036,213 total outstanding shares.
The following items were considered by Fund shareholders and the results of
their voting are listed below. Unless otherwise noted, each matter was approved.
Proposals:
(1) To elect two Trustees of the Funds;
Samuel F. Pryor IV
Shares voted affirmatively.............. 2,553,191,186
Shares voted negatively................. 1,105,147
Shares abstaining....................... 705,862
H. Whitney Wagner
Shares voted affirmatively.............. 2,553,191,186
Shares voted negatively................. 1,105,147
Shares abstaining....................... 705,862
(2) To approve a new combined investment advisory and administrative services
agreement for the Funds with the current investment adviser of the Fund;
Shares voted affirmatively.............. 366,174,599
Shares voted negatively................. 867,569
Shares abstaining....................... 47,289
(3) To approve changes to the Fund's fundamental investment policies in order
to modernize their investment restrictions and increase their investment
flexibility:
(a) To amend the Fund's fundamental investment policy regarding
diversification;
Shares voted affirmatively........... 366,174,599
Shares voted negatively.............. 867,569
Shares abstaining.................... 47,289
(b) To amend the Fund's fundamental investment policy regarding
concentration;
Shares voted affirmatively........... 366,174,599
Shares voted negatively.............. 867,569
Shares abstaining.................... 47,289
(c) To amend the Fund's fundamental investment policy regarding
underwriting;
Shares voted affirmatively........... 366,080,525
Shares voted negatively.............. 867,569
Shares abstaining.................... 141,363
18
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
SUPPLEMENTAL PROXY INFORMATION (continued)
June 30, 2007 (unaudited)
(d) To amend the Fund's fundamental investment policy regarding
investing in commodities;
Shares voted affirmatively........... 366,080,525
Shares voted negatively.............. 867,569
Shares abstaining.................... 141,363
(e) To amend the Fund's fundamental investment policy regarding
investing in real estate;
Shares voted affirmatively........... 366,174,599
Shares voted negatively.............. 867,569
Shares abstaining.................... 47,289
(f) To amend the Fund's fundamental investment policy regarding
borrowing money and issuing senior securities;
Shares voted affirmatively........... 366,174,599
Shares voted negatively.............. 867,569
Shares abstaining.................... 47,289
(g) To amend the Fund's fundamental investment policy regarding lending;
Shares voted affirmatively........... 366,174,599
Shares voted negatively.............. 867,569
Shares abstaining.................... 47,289
(h) To amend, and to make non-fundamental, the Fund's fundamental
investment policy regarding selling short;
Shares voted affirmatively........... 366,174,599
Shares voted negatively.............. 867,569
Shares abstaining.................... 47,289
(i) To amend, and to make non-fundamental, the Fund's fundamental
investment policy regarding illiquid securities;
Shares voted affirmatively........... 366,080,525
Shares voted negatively.............. 867,569
Shares abstaining.................... 141,363
(j) To amend, and to make non-fundamental, the Fund's fundamental
investment policy regarding investing in securities of other
investment companies;
Shares voted affirmatively........... 366,080,525
Shares voted negatively.............. 867,569
Shares abstaining.................... 141,363
FINANCIAL STATEMENT JUNE 30, 2007 19
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
SUPPLEMENTAL PROXY INFORMATION (continued)
June 30, 2007 (unaudited)
(k) To amend, and to make non-fundamental, the Fund's fundamental
investment policy regarding purchases on margin;
Shares voted affirmatively........... 366,174,599
Shares voted negatively.............. 867,569
Shares abstaining.................... 47,289
(4) To approve the proposed Reorganization Agreement, pursuant to which each
series of BBH Trust would be reorganized as separate series of BBH Trust,
(the "New BBH Trust"), a newly formed Delaware statutory trust.
Shares voted affirmatively.............. 366,174,599
Shares voted negatively................. 867,569
Shares abstaining....................... 47,289
20
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF FUND EXPENSES
June 30, 2007 (unaudited)
EXAMPLE
As a shareholder of BBH Tax Exempt Money Fund (the "Fund"), you may incur two
types of costs:
(1) transaction costs on purchase payments, reinvested dividends, or other
distributions; and exchange fees; and (2) ongoing costs, including management
fees; and other Fund expenses. This Example is intended to help you understand
your ongoing costs (in dollars) of investing in the Fund and to compare these
costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (January 1, 2007 to June 30, 2007).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use information in this line, together with
the amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading entitled "Expenses Paid During the Period" to estimate
the expenses you paid on your account during the period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid
during the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees or exchange fees. Therefore, the second line of the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would have been higher.
Expenses Paid
Beginning Ending During Period
Account Value Account Value January 1, 2007
January 1, 2007 June 30, 2007 to June 30, 2007(1)
-------------- ------------- -------------------
Actual...................... $1,000 $1,015.10 $2.90
Hypothetical(2)............. $1,000 $1,021.92 $2.91
- ----------
(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
181/365 (to reflect the one-half year period).
(2) Assumes a return of 5% before expenses. For the purpose of the
calculation, the applicable annualized expense ratio is subtracted from
the assumed return before expenses.
FINANCIAL STATEMENT JUNE 30, 2007 21
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF ADVISOR SELECTION
June 30, 2007 (unaudited)
Approval of Investment Advisory/Administrative Services Agreement
At a meeting held on October 2, 2006, the Board of Trustees (the "Board") of the
Trust unanimously approved a new Combined Investment Advisory/Administrative
Services Agreement ("Combined Agreement"). The Board determined that the terms
of the Combined Agreement will be substantially identical to those of the
current advisory and administration agreements of the Funds, noting that the
most significant difference in the Combined Agreement is a single fee for both
advisory and administrative services. The following is a summary of the factors
the Board took into consideration in making its determination to approve the new
Combined Agreement.
Nature, Extent and Quality of Services Provided by BBH & Co.
The Board noted that, under the Combined Agreement in respect of each Fund, BBH
& Co., subject to the supervision of the Board, will be responsible for
providing a continuous investment program and making purchases and sales of
portfolio securities consistent with the Funds' investment objective and
policies. Under the Combined Agreement, BBH & Co. also provides administrative
services to each Fund.
The Board considered the scope and quality of services to be provided by BBH &
Co. under the Combined 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 & Co. 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 and administrative capabilities of BBH & Co. 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
expected to be provided to each of the Funds under the Combined Agreement.
Costs of Services Provided and Profitability to BBH & Co.
At the request of the Board, BBH & Co. provided information concerning the
profitability of BBH & Co.'s current investment company advisory and other fees.
The Board also reviewed BBH & Co.'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 the Fund. The Board discussed the
difficulty of making comparisons of profitability because comparative
information is not generally publicly available and is affected by numerous
factors, including the structure of the service provider, the types of funds it
manages and administers, its business mix, numerous assumptions regarding
allocations and the entity's capital structure and cost of capital. In
considering profitability information, the Board considered the effect of
fall-out benefits on BBH & Co.'s expenses, as well as the "revenue sharing"
arrangements BBH & Co. has entered into with certain entities that distribute
shares of the Funds. The Board focused on profitability of BBH & Co.'s
relationships with the Funds before taxes and distribution expenses. The Board
concluded that it was satisfied that BBH & Co.'s level of profitability from its
relationship with each Fund was not excessive.
22
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF ADVISOR SELECTION (continued)
June 30, 2007 (unaudited)
Fall-Out Benefits
The Board considered that BBH & Co. does not allocate the Funds' portfolio
transactions for third party research, although it did benefit from proprietary
research received from brokers that execute the Funds' purchases and sales of
securities. The Board recognized that the aggregate amount of commissions
generated by Fund transactions was unlikely to result in the Funds receiving
from full service broker dealers substantial discounts on commission rates. The
Board received and reviewed information concerning BBH & Co.'s policies with
respect to allocating portfolio brokerage.
The Board also considered that BBH & Co. receives shareholder servicing fees
from certain funds, and is the Funds' administrator, custodian and securities
lending agent. The Board noted that BBH & Co. retained no portion of the 12b-1
fees paid by any Fund that operated with a Rule 12b-1 plan. The Board recognized
that BBH & Co.'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 & Co. 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 & Co. and their use of the BBH & Co. name, which is licensed to the Funds by
BBH & Co. Thus, the Board did not believe that BBH & Co. revenues associated
with its clients should be fairly regarded as "fallout" benefit from the Funds.
Economies of Scale
The Board noted that the Funds' combined fee schedules, other than the fee
schedule for BBH Money Market Fund, do not contain breakpoints. As a result, if
assets increase, the fee rates would not be reduced for these Funds on the
incremental assets. With respect to the BBH Money Market Fund, the breakpoint
will be reviewed every three (3) years by the Board, and may be adjusted upwards
to take into account the effects of inflation or such other basis as may be
appropriate, subject to the approval of shareholders to the extent required by
the 1940 Act.
There may be other economies of scale because many expenses did not rise (and
fall) proportionally to increases (and decreases) in total net assets. The Board
noted that BBH & Co. had priced its services in recognition of the fact that it
was largely its own clients who were shareholders and, accordingly, sought to
assure that the cost of these services and total expenses for each Fund were
fair and reasonable. In addition, the Board noted that over the years BBH & Co.
had supported certain Funds through fee waivers and expense reimbursements.
Based on information they had been provided over many years, the Board observed
that in the mutual fund industry as a whole, as well as among funds similar to
the Funds, there appeared to be no uniformity or pattern in the fees and asset
levels at which breakpoints (if any) apply. In light of the Funds' current size
and expense structure, the Board concluded that it was unnecessary at this time
to consider breakpoints with respect to the Funds, other than for the BBH Money
Market Fund.
FINANCIAL STATEMENT JUNE 30, 2007 23
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF ADVISOR SELECTION (continued)
June 30, 2007 (unaudited)
Investment Results
The Board considered the investment results of each of the Funds as compared to
investment companies with its peers and with one or more selected securities
indices. In addition to the information received by the Board for the meeting
held on October 2, 2006, the Board received detailed performance information for
each Fund at each regular Board meeting during the year. At the meeting held on
October 2, 2006, the Board reviewed information showing performance of each Fund
compared to its peers over the prior 1-, 3-, and 5- year periods and compared
the performance information to one or more securities indices over comparable
periods.
Combined Fee Rate
The Board considered the fee rate to be paid by each Fund to BBH & Co. The Board
recognized that it is difficult to make comparisons of these fee rates, and the
combined advisory and administration fees, because there are variations in the
services that are included in the fees paid by other funds.
The Board considered the depth and range of services provided under the Combined
Agreement. For example, in addition to a continuous investment program, BBH &
Co. 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 & Co. also coordinates
the provision of services to the Funds by nonaffiliated service providers.
The following factors specific to BBH Tax Exempt Money Fund also were noted and
considered by the Board in deciding to approve the Combined Agreement:
The Board reviewed information showing performance of the Tax-Exempt Money Fund
compared to iMoneyNet (Tax Free Retail). The Fund outperformed or performed in
line with the average over all relevant periods. The Board also viewed with
favor that the BBH Tax-Exempt Money Fund's portfolio of investments had an
overall high quality while the BBH Tax-Exempt Money Fund's total expense ratio
was lower that the iMoneyNet Average. The Board also noted that the BBH
Tax-Exempt Money Fund had successfully maintained a stable net asset value of
one dollar at all times. Taking into account these comparisons and the other
factors considered, the Board concluded that the BBH Tax-Exempt Money Fund's
investment results over time and its total expense ratio had been satisfactory.
24
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
DISCLOSURE OF ADVISOR SELECTION (continued)
June 30, 2007 (unaudited)
Conflicts of Interest
As a general matter, certain conflicts of interest may arise in connection with
a portfolio manager's management of a fund's investments, on the one hand, and
the investments of other accounts for which the portfolio manager is
responsible, on the other. For example, it is possible that the various accounts
managed could have different investment strategies that, at times, might
conflict with one another to the possible detriment of the Fund. Alternatively,
to the extent that the same investment opportunities might be desirable for more
than one account, possible conflicts could arise in determining how to allocate
them. Other potential conflicts might include conflicts created by specific
portfolio manager compensation arrangements, and conflicts relating to selection
of brokers or dealers to execute fund portfolio trades and/or specific uses of
commissions from Fund portfolio trades (for example, research, or "soft
dollars").
BBH & Co. has adopted and implemented policies and procedures, including
brokerage and trade allocation policies and procedures, which it believes
address the conflicts associated with managing multiple accounts for multiple
clients. In addition, BBH & Co. monitors a variety of areas, including
compliance with account investment guidelines, the inclusion only of securities
approved for purchase by the BBH & Co.'s Fixed Income Credit Committee, and
compliance with the BBH & Co.'s Code of Ethics. Finally, BBH & Co. has
structured the portfolio managers' compensation in a manner, and the Funds have
adopted policies and procedures, reasonably designed to safeguard a Fund from
being negatively affected as a result of any such potential conflicts.
FINANCIAL STATEMENT JUNE 30, 2007 25
BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
ADDITIONAL FEDERAL TAX INFORMATION
June 30, 2007 (unaudited)
The percentage of tax-exempt dividends paid by the BBH Tax Exempt Money Fund
(the "Fund") for the year ended June 30, 2007 was 100%.
In January 2008, the Fund will report on Form 1099 the tax status of all
distributions made during the calendar year 2007. Shareholders should use the
information on Form 1099 for their income tax returns.
26
TRUSTEES AND OFFICERS OF BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
(unaudited)
Information pertaining to the Trustees of the BBH Trust (the "Trust") and
executive officers of the Trust is set forth below. Part B to the Registration
Statement of the BBH Tax Exempt Money Fund includes additional information about
the Fund's Trustees and is available upon request without charge by contacting
the Fund at 1-800-625-5759.
Term of Number of
Office Funds in
and Fund Other
Position(s) Length Complex Directorships
Name, Birth Date Held with of Time Principal Occupation(s) Overseen by Held by
and Address Trust Served# During Past 5 Years Trustee^ Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Directors
Joseph V. Shields, Jr. Chairman of Since 2007 Managing Director, Chairman and 7 None
Birth Date: the Board Chief Executive Officer of Shields &
March 17, 1938 and Trustee Company (member of New York Stock
Shields & Company Exchange); Chairman of Capital
140 Broadway Management Associates, Inc.
New York, NY 10005 (registered investment adviser);
Director of Flower Foods, Inc. (New
York Stock Exchange listed company).
Eugene P. Beard Trustee Since 2007 Chairman & CEO of Westport Asset 7 Director of Old
Birth Date: Fund, Inc. Westbury
March 17, 1935 Funds (7 Funds)
800 Connecticut Ave.
3 East
Norwalk, CT 06854
David P. Feldman Trustee Since 2007 Director of Jeffrey Co. (1992 to 7 Director of
Birth Date: present). Dreyfus
November 16, 1939 Mutual Funds
c/o BBH & Co. (59 Funds)
140 Broadway,
16th Floor
New York, NY 10005
Alan G. Lowy Trustee Since 2007 Private Investor. 7 None
Birth Date:
April 17, 1939
4111 Clear Valley Drive
Encino, CA 91436
Arthur D. Miltenberger Trustee Since 2007 Retired; Trustee, R.K. Mellon Family 7 None
Birth Date: Trust (1981 to June 2003); General
November 8, 1938 Partner, Mellon Family Investment
503 Darlington Road Company IV, V and VI (1983 to 2002);
Ligonier, PA 15658 Director of Aerostructures Corporation
(aircraft manufacturer) (1996 to July
2003).
FINANCIAL STATEMENT JUNE 30, 2007 27
TRUSTEES AND OFFICERS OF BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
(unaudited)
Term of Number of
Office Funds in
and Fund Other
Position(s) Length Complex Directorships
Name, Birth Date Held with of Time Principal Occupation(s) Overseen by Held by
and Address Trust Served# During Past 5 Years Trustee^ Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Samuel F. Pryor, IV Trustee Since 2007 Private Investor. 7 None
Birth Date:
June 12, 1955
130 East 67th Street
New York, NY 10021
H. Whitney Wagner Trustee Since 2007 President, Clear Brook Advisors, a 7 None
Birth Date: registered investment advisor.
March 3, 1956
Clear Brook Advisors
75 Rockefeller Plaza,
14th Floor
New York, NY 10019
Officers
John A. Nielsen President and Since 2007 President and Principal Executive N/A N/A
Birth Date: Principal Officer of the Trust; He joined
July 15, 1943 Executive Brown Brothers Harriman & Co. ("BBH
140 Broadway Officer & Co.") in 1968 and has been a
New York, NY 10005 Partner of the firm since 1987.
Charles H. Schreiber Treasurer, Since 2007 Treasurer, Principal Financial N/A N/A
Birth Date: Principal Officer and Anti-Money Laundering
December 10, 1957 Financial Officer of the Trust; Senior Vice
140 Broadway Officer, President of BBH & Co. since
New York, NY 10005 Anti-Money September 2001; Joined BBH & Co. in
Laundering 1999.
Officer
Mark Nixon Assistant Since 2007 Assistant Secretary and Assistant N/A N/A
Birth Date: Secretary and Treasurer of the Trust, Vice
January 14, 1963 Assistant President of BBH & Co. (since
140 Broadway Treasurer October 2006), Accounting Manager,
New York, NY 10005 Reserve Funds (August 2005-September
2006) Assistant Controller,
Reserve Funds (February 2005-August
2005), Private Consultant (December
2001-February 2005).
28
TRUSTEES AND OFFICERS OF BBH TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
(unaudited)
Term of Number of
Office Funds in
and Fund Other
Position(s) Length Complex Directorships
Name, Birth Date Held with of Time Principal Occupation(s) Overseen by Held by
and Address Trust Served# During Past 5 Years Trustee^ Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Michael F. Hogan Chief Since 2007 Chief Compliance Officer of the N/A N/A
Birth Date: Compliance Trust; Senior Vice President of BBH
January 26, 1963 Officer & Co. since September 1994; Joined
50 Milk Street BBH & Co. in 1985.
Boston, MA 02109
Gail C. Jones Secretary Since 2007 Secretary of the Trust; Counsel, N/A N/A
Birth Date: ReedSmith, LLP (since October 2002);
October 26, 1953 Corporate Counsel (January 1997 to
1001 Liberty Avenue September 2002) and Vice President
Pittsburgh, PA (January 1999 to September 2002) of
15222-3779 Federated Services Company.
Judith J. Mackin Vice President Since 2007 Vice President of the Trust; Vice N/A N/A
Birth Date: President (since November 1997) of
May 30, 1960 Federated Services Company.
1001 Liberty Avenue,
Pittsburgh, PA
15222-3779
John C. Smith Assistant Since 2007 Assistant Treasurer of the Trust; N/A N/A
Birth Date: Treasurer Vice President (since September
August 2, 1965 2004); Assistant Vice President
50 Milk Street (since September 2001); Associate
Boston, MA 02109 (September 2000 to August 2001); and
Senior Analyst (June 1999 to August
2000) of BBH & Co.
- ----------
# Each Trustee of the Trust holds office until he or she attains the age of
70 (72, in the case of Trustees who were elected as such before January 1,
2000), or until he or she sooner dies, resigns or is removed from office
in accordance with the provisions of the Trust's Declaration of Trust. All
officers of the Trust hold office for one year and until their respective
successors are chosen and qualified (subject to the ability of the
Trustees to remove any officer in accordance with the Trust's By-laws).
Each Trustee previously served on the Board of Trustees of the Predecessor
BBH Tax Exempt Money Fund.
^ The Fund Complex consists of the Trust, which has seven series and are
each counted as one "fund" for purposes of this table.
FINANCIAL STATEMENT JUNE 30, 2007 29
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 D. Miltenberger and David P. Feldman
are the designated audit committee financial experts.
3) Not applicable.
(b) No answer required.
(c) No answer required.
(d) No answer required.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Non Audit Fees
BBH Fund, Inc. as of 6/30/2007 (from 7/1/2005 to 6/30/2007)
10/31/2006 5,000 Marco Bertolozzi
11/8/2006 5,000 Marco Bertolozzi
10,000 Total Other
2/2/2007 42,000 Brian Carroll
42,000 Total AIMR
6/1/2007 81,980
6/25/2007 33,538
6/29/2007 38,270
153,788 Tax System Review
FYE 6/30/2006 775,948 Total Activity Based Costing Review
*(no services for FYE 6/30/2007)
Audit Fee Security Count Fee Total Billed
June 30, 2007 $66,000 $66,000
April 30, 2007 $5,100 $5,100
October 31, 2006 $5,100 $5,100
August 31, 2006 $5,100 $5,100
June 30, 2006 $66,000 $66,000
April 30, 2006 $4,800 $4,800
October 31, 2005 $4,500 $4,500
August 31, 2005 $4,500 $4,500
Total $132,000 $29,100 $161,100
Tax Compliance June 30, 2007 $8,700
Tax Compliance June 30, 2006 $12,000
20,700
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,
David P. Feldman, Alan G. Lowy, Arthur D. Miltenberger,
Samuel F. Pryor and H. Whitney Wagner.
(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 U.S. Treasury Money Fund,
BBH Money Market Fund and BBH Tax Exempt Money
Fund ("Registrant");
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material
fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not
misleading with respect to the period covered by
this report;
3. Based on my knowledge, the financial statements and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations, changes
in net assets, and cash flows (if the financial statements are required
to include a statement of cash flows)of the Registrant as of, and
for, the periods presented in this report;
4. The Registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures
as defined in rule 30a-3(c) under the Investment Company Act
of 1940) and internal control over financial reporting (as defined
in Rule 30a-3(d) under the Investment Company Act of 1940) for the
Registrant and have:
a.) designed such disclosure controls and procedures,
or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that
material information relating to the Registrant, including
its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this
report is being prepared;
b.) designed such internal control over financial reporting, or
caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c.) evaluated the effectiveness of the Registrant's disclosure controls
and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures,
as of a date within 90 days prior to the filing date
of this report based on such evaluation; and
d.) disclosed in this report any change in the Registrant's
internal control over financial reporting that occurred during
the 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: September 4, 2007
===============
/s/John A. Nielsen
=====================
John A. Nielsen
President - Principal Executive Officer
I, Charles H. Schreiber, certify that:
1. I have reviewed this report on Form N-CSR of BBH Trust on
behalf of: BBH U.S. Treasury Money Fund, BBH Money Market Fund
and BBH Tax Exempt Money Fund ("Registrant");
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which
such statements were made, not misleading with respect
to the period covered by this report;
3. Based on my knowledge, the financial statements and other financial
information included in this report, fairly present in all
material respects the financial condition, results
of operations, changes in net assets, and cash flows (if the financial
statements are required to include a statement of cash flows)
of the Registrant as of, and for, the periods presented
in this report;
4. The Registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and
procedures (as defined in rule 30a-3(c) under the Investment Company Act
of 1940) and internal control over financial reporting (as defined in
Rule 30a-3(d) under the Investment Company Act of 1940) and for the
Registrant and have:
a.) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating
to the Registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during
the period in which this report is being prepared;
b.) designed such internal control over financial reporting, or
caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles;
c.) evaluated the effectiveness of the Registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure
controls and procedures, as of a date within 90 days prior
to the filing date of this report based on such evaluation; and
d.) disclosed in this report any change in the Registrant's internal
control over financial reporting that occurred during the
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: September 4, 2007
==================
/s/Charles H. Schreiber
==========================
Charles H. 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 year ended June 30, 2007
(the "Report") fully complies with the
requirements of Section 13(a) or 15(d),
as applicable, of the Securities and
Exchange Act of 1934 and that the
information contained in the Report
fairly presents, in all material
respects, the financial condition
and results of operations of the
Registrant.
Dated: September 4, 2007
==================
/s/John A. Nielsen
=====================
John A. Nielsen
Title: President, Principal Executive Officer
Dated: September 4, 2007
===================
/s/Charles H. Schreiber
=========================
Charles H. Schreiber
Treasurer - Principal Financial Officer
This certification is being furnished solely pursuant to 18 U.S.C.ss. 1350 and
is not being filed as part of the Report or as a separate disclosure document.
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: September 4, 2007
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 H. Schreiber
-------------------
Charles H. Schreiber, Treasurer
(Principal Financial Officer)
Date: September 4, 2007
Print name and title of each signing officer under his or her signature.