BBH HIGH YIELD FIXED INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
Maturity
Principal Amount Date Interest Rate Value
---------------------- -------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
Corporate Bonds (88.6%)
Aeorspace (4.7%)
$ 1,000,000 Be Aerospace 11/01/08 9.500% $ 990,000
1,000,000 Fairchild Corp. 04/15/09 10.750 800,000
-----------------
Total Aerospace 1,790,000
-----------------
Food and Beverages (4.7%)
1,000,000 Aurora Foods, Inc. 02/15/07 9.875 750,000
1,000,000 Canandiagua Wine 08/01/06 8.625 1,002,500
1,379,000 Cott Corp. 05/01/07 8.500 1,303,155
1,000,000 Del Monte Foods Co.* 12/15/07 -- 750,000
1,000,000 Fleming Co., Inc. 12/01/04 10.500 850,000
-----------------
Total Beverages 4,655,655
-----------------
Chemical (2.0%)
1,000,000 Lyondell Chemical Co. 05/01/07 9.875 980,000
-----------------
Consumer Goods/Durables (10.5%)
1,000,000 Crown Cork & Seal Finance, Plc. 12/15/03 6.750 730,000
1,000,000 Jostens, Inc+ 05/01/10 12.750 970,000
1,000,000 Salton, Inc. 12/15/05 10.750 975,000
1,500,000 Westpoint Steven 06/15/05 7.875 1,110,000
-----------------
Total Consumer Goods/Durables 3,785,000
-----------------
Energy (4.6%)
250,000 AES Corp. 09/15/10 9.375 248,576
250,000 AES Drax Energy Limited+ 08/30/10 11.500 263,457
500,000 CMS Energy Corp. 10/15/07 9.875 505,249
250,000 Nuevo Energy Co.+ 10/01/10 9.375 249,375
1,000,000 Pride Petroleum Services, Inc. 05/01/07 9.375 1,011,250
1,000,000 RBF Finance Co. 03/15/09 11.375 1,142,500
-----------------
Total Energy 3,420,407
-----------------
Healthcare (3.7%)
1,000,000 Healthsouth Corp. 04/01/03 3.250 854,930
1,000,000 Tenet Healthcare Corp. 01/15/05 8.000 985,000
-----------------
Total Healthcare 1,839,930
-----------------
Housing (1.5%)
750,000 Standard Pacific Corp. 09/15/10 9.500 750,000
-----------------
</TABLE>
<PAGE>
BBH HIGH YIELD FIXED INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
Maturity
Principal Amount Date Interest Rate Value
---------------------- -------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
Manufacturing (5.6%)
$ 1,000,000 Actuant Corp.+ 05/01/09 13.000% $ 980,000
1,000,000 Oxford Automotive, Inc. 06/15/07 10.125 840,000
1,000,000 Lear Corp. 05/15/09 8.110 922,500
-----------------
Total Manufacturing 2,742,500
-----------------
Media (3.8%)
1,000,000 Adelphia Communications Corp. 03/01/07 9.875 902,500
1,000,000 Callahan Nord+ 07/15/10 14.000 965,000
-----------------
Total Media 1,867,500
-----------------
Paper/Forest Products (3.6%)
1,050,000 Tembec Finance Corp. 09/30/05 9.875 1,073,625
-----------------
Recreational (3.6%)
750,000 Anchor Gaming 10/15/08 9.875 757,500
1,000,000 Mandalay Resort+ 08/01/07 10.250 1,025,000
1,000,000 Park Place Entertainment 09/15/08 8.875 980,000
-----------------
Total Recreational 2,762,500
-----------------
Restaurants/Lodging (2.5%)
1,250,000 Host Marriott+ 10/01/07 9.250 1,240,625
1,500,000 Sbarro, Inc. 09/15/09 11.000 1,515,000
-----------------
Total Restaurants/Lodging 2,755,625
-----------------
Retail (6.8%)
1,000,000 Finlay Enterprises 05/01/08 9.000 900,000
1,000,000 Pantry, Inc. (The) 10/15/07 10.250 925,000
-----------------
Total Retail 1,825,000
-----------------
Services (7.9%)
1,000,000 Allied Waste 08/01/09 10.000 865,000
1,000,000 Budget Group, Inc. 04/01/06 9.125 450,000
250,000 CB Browning Ferris 09/15/35 7.400 172,500
1,250,000 SC International Services 09/01/07 9.250 1,203,125
1,000,000 United Rentals, Inc. 01/15/09 9.250 820,000
1,000,000 Weight Watchers International Co. 10/01/09 13.000 1,060,000
-----------------
Total Services 4,570,625
-----------------
Steel (2.1%)
1,000,000 Armco, Inc. 12/01/08 8.875 945,000
-----------------
Supplies (2.1%)
1,000,000 Buhrmann, Inc. 11/01/09 12.250 1,010,000
-----------------
</TABLE>
<PAGE>
BBH HIGH YIELD FIXED INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
Maturity
Principal Amount Date Interest Rate Value
----------------------- ----------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
Telecommunications (7.5%)
$ 1,000,000 Echostar Broadband Corp.+ 10/01/07 10.375% $ 1,000,000
1,000,000 Flag Telecommunication Holding Limited 03/30/10 11.625 840,000
1,000,000 Global Crossing 05/15/08 9.625 957,500
1,750,000 Pinnacle Holdings* 03/15/08 -- 1,015,000
1,000,000 Williams Communications Group, Inc.+ 08/01/10 11.875 870,000
-----------------
Total Telecommunications 4,682,500
-----------------
Transportation (3.8%)
1,000,000 Atlas Air, Inc. 11/15/06 9.375 990,000
1,070,000 Interpool, Inc. 03/01/03 6.625 856,000
250,000 Kansas City Southern 10/01/08 9.500 253,750
-----------------
Total Transportation 2,099,750
-----------------
Total Corporate Bonds 43,555,617
-----------------
</TABLE>
<TABLE>
<CAPTION>
Shares
-----------------------
<S> <C> <C> <C> <C>
Warrants and Preferred Stock (2.1%)
1,000 Jostens, Inc. Warrants* 27,372
1,000 TNP Enterprises, Inc. (Preferred Stock) 1,000,000
-----------------
Total Warrants and Preferred Stock 1,027,372
-----------------
TOTAL INVESTMENTS (identified cost $46,240,401) (a)........................ 90.7 % 44,582,989
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................. 9.3 4,589,923
-------------------------------------
NET ASSETS................................................................. 100.0 % $ 49,172,912
=====================================
</TABLE>
----------
(a) The aggregate cost for federal income tax purposes is $46,240,401, the
aggregate gross unrealized appreciation is $183,389, and the aggregate
gross unrealized depreciation is $1,840,801, resulting in net unrealized
depreciation of $1,657,412.
+ 144A Security
* Non-Income Producing Security
<PAGE>
BBH HIGH YIELD FIXED INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
ASSETS:
Investments in securities, at value
(identified cost $46,240,401) .................. $ 44,582,989
Cash ............................................... 2,277,378
Receivables for:
Investments sold ............................... 1,174,618
Interest ....................................... 1,172,044
----------------
Total Assets ............................... 49,207,029
----------------
LIABILITIES:
Payables for:
Expense payment fee ............................ 31,675
Administration fee ............................. 2,442
----------------
Total Liabilities .......................... 34,117
----------------
NET ASSETS ............................................... $ 49,172,912
================
<PAGE>
BBH HIGH YIELD FIXED INCOME PORTFOLIO
STATEMENT OF OPERATIONS
For the period from June 23, 2000
(Commencement of Operations) to October 31, 2000
NET INVESTMENT INCOME:
Income:
Interest (Net of foreign
withholding tax of $34,873) .................. $ 925,768
Other income ..................................... 70,201
-------------
Total Income ................................. 995,969
-------------
Expenses:
Expense payment fee ............................ 47,031
Administrative fee ............................... 3,597
-------------
Total Expenses ............................... 50,628
-------------
Net Investment Income ........................ 945,341
-------------
NET REALIZED AND UNREALIZED LOSS:
Net realized loss on investments ..................... (65,592)
Net change in unrealized depreciation on
investments ...................................... (1,657,412)
-------------
Net Realized and Unrealized Loss ................. (1,723,004)
-------------
Net Decrease in Net Assets Resulting from
Operations ...................................... $ (777,663)
=============
<PAGE>
BBH HIGH YIELD FIXED INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the period from
June 23, 2000
(Commencement of
Operations) to
October 31, 2000
-------------------
INCREASE IN NET ASSETS:
Operations:
Net investment income ............................. 945,341
Net realized loss on investments .................. (65,592)
Net change in unrealized depreciation on
investments ................................... (1,657,412)
------------
Net decrease in net assets resulting from
operations ................................. (777,663)
------------
Capital Transactions:
Proceeds from contributions ....................... 49,950,575
Fair value of withdrawals ......................... --
------------
Net increase in net assets resulting from
capital transactions ....................... 49,950,575
------------
Total increase in net assets ............... 49,172,912
NET ASSETS:
Beginning of period ................................... --
------------
End of period ......................................... $ 49,172,912
============
<PAGE>
BBH HIGH YIELD FIXED INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share
outstanding throughout the period
For the period from
June 23, 2000
(Commencement of
Operations) to
October 31, 2000
-------------------
Total Return(2) ............................................ (1.31)%
Ratios/Supplemental Data:
Net assets, end of period (000's omitted).............. $ 49,173
Expenses as a percentage of average net assets(2)...... 0.50%(1)
Ratio of net investment income to average net assets... 9.20%(1)
Portfolio turnover rate .............................. 25%
----------
(1) Annualized.
(2) Had the expense payment agreement not been in place, the ratio of
expenses to average net assets and total return would have been as
follows:
Ratio of expenses to average net assets ........ 0.77%(1)
Total Return ................................... (1.58)%
<PAGE>
BBH HIGH YIELD FIXED INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies. BBH High Yield Fixed
Income Portfolio (the "Portfolio") is registered under the Investment Company
Act of 1940, as amended, as an open-end management investment company which was
organized as a trust under the laws of the State of New York on August 15, 1994.
The Portfolio commenced operations on June 23, 2000. The Declaration of Trust
permits the Trustees to create an unlimited number of beneficial interests in
the Portfolio.
The Portfolio's financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America, which
require management to make certain estimates and assumptions at the date of the
financial statements and are based, in part, on the following accounting
policies. Actual results could differ from those estimates.
A. Valuation of Investments. Bonds and other fixed income securities
(other than short-term obligations but including listed issues) are valued
on the basis of valuations furnished by a pricing service, use of which
has been approved by the Board of Trustees. In making such valuations, the
pricing service utilizes both dealer-supplied valuations and electronic
data processing techniques which take into account appropriate factors
such as institutional-size trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, trading characteristics and
other market data, without exclusive reliance upon quoted prices or
exchange or over-the-counter prices, since such valuations are believed to
reflect more accurately the fair value of such securities.
Securities or other assets for which market quotations are not
readily available are valued at fair value in accordance with procedures
established by and under the general supervision and responsibility of the
Portfolio's Board of Trustees. Such procedures include the use of
independent pricing services, which use prices based upon yields or prices
of securities of comparable quality, coupon, maturity and type;
indications as to the value from dealers; and general market conditions.
Short-term investments which mature in 60 days or less are valued at
amortized cost if their original maturity was 60 days or less, or by
amortizing their value on the 61st day prior to maturity, if their
original maturity when acquired by the Portfolio was more than 60 days,
unless this is determined not to represent fair value by the Board of
Trustes.
B. Accounting for Investments. Investment transactions are accounted
for on the trade date. Realized gains and losses, if any, from investment
transactions are determined on the basis of identified cost. Interest
income is accrued daily and consists of interest accrued, discount earned
(including both original issue and market discount) and premium
amortization on the investments of the Portfolio.
C. Federal Income Taxes. The Portfolio is treated as a partnership
for Federal Income tax purposes and its operations are conducted in such a
way that it is not to be considered engaged in a U.S. trade or business
for U.S. tax purposes. It is intended that the Portfolio's assets will be
managed in such a way that an Investor in the Portfolio will be able to
comply with the provisions of the Internal Revenue Code applicable to
regulated investment companies. Accordingly, no provision for federal
income taxes is necessary.
<PAGE>
BBH HIGH YIELD FIXED INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (continued)
2. Transactions with Affiliates.
Investment Advisory Fee. The Portfolio has an investment advisory
agreement with Brown Brothers Harriman (the "Adviser") for which the Adviser
receives a fee calculated and paid monthly at an annual rate equivalent to 0.35%
of the Portfolio's average daily net assets.
Administrative Fee. The Portfolio has an administration agreement with
Brown Brothers Harriman (the "Administrator") for which the Administrator
receives a fee from the Portfolio calculated daily and paid monthly at an annual
rate equivalent to 0.035% of the Portfolio's average daily net assets. The
Administrator has a subadministration services agreement with the 59 Wall Street
Administrators, Inc. for which the 59 Wall Street Administrators, Inc. receives
such compensation as is from time to time agreed upon, but not in excess of the
amount paid to the Administrator. For the period ended October 31, 2000, the
Portfolio incurred $3,597 for administrative services.
Custody Fee. The Portfolio has a custody agreement with Brown Brothers
Harriman (the "Custodian") for which the Custodian receives a fee calculated and
paid monthly. Custody fees were reduced by $26,954 as a result of an expense off
set arrangement with the Portfolio's custodian.
Expense Payment Fee. Brown Brother Harriman Trust Company, LLC pays
certain expenses of the Portfolio and receives a fee from the Portfolio,
computed and paid monthly, such that after such fee the aggregate expenses will
not exceed 0.50% of the Portfolio's average daily net assets. For the period
ended October 31, 2000, Brown Brothers Harriman Trust Company, LLC incurred
$79,004 in expenses, including investment advisory fees of $35,978 and custody
fees of $7,656 on behalf of the Portfolio. The expense reimbursement agreement
will terminate when the aggregate amount of fees received by Brown Brothers
Harriman Trust Company, LLC thereunder equals the aggregate amount of expenses
paid by Brown Brothers Harriman Trust Company, LLC.
3. Investment Transactions. For the period ended October 31, 2000, the
cost of purchases and the proceeds of sales of investment securities other than
short-term investments were $52,699,040 and $6,519,285, respectively.
<PAGE>
[Letterhead of Deloitte & Touche]
[LOGO] Deloitte
& Touche
INDEPENDENT AUDITORS' REPORT
Board of Trustees and Investors
BBH High Yield Fixed Income Portfolio:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of BBH High Yield Fixed Income Portfolio
as of October 31, 2000, the related statement of operations, the statement of
changes in net assets, and the financial highlights for the period from June 23,
2000 (Commencement of Operations) to October 31, 2000. These financial
statements and financial highlights are the responsibility of the Portfolio's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. 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. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned at October 31, 2000 by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of BBH High Yield Fixed
Income Portfolio at October 31, 2000, and the results of its operations, the
changes in its net assets, and its financial highlights for the period then
ended in conformity with accounting principles generally accepted in the United
States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
December 22, 2000
