INVESTMENT MANAGEMENT Cient Discosure Document 2015
This Investment Management Cient Discosure Document provides information about the quaifications and business practices of Brown Brothers Harriman & Co. If you have any questions about the content of this Investment Management Cient Discosure Document, pease contact us at 212-483-1818. The information in this Investment Management Cient Discosure Document has not been approved or verified by the U.S. Securities and Exchange Commission or by any state securities authority. 140 Broadway, New York, New York 10005-1101 Te: (212) 483-1818 www.bbh.com
Tabe of Contents BBH OVERVIEW AND MATERIAL UPDATES... 1 BBH INVESTMENT MANGAGEMENT BUSINESS... 2 Overview... 2 Cients... 2 BBH INVESTMENT MANAGEMENT SERVICES, PRODUCTS & FEES... 2 Equity... 2 Fixed Income... 4 Private Funds.. 7 Proprietary Mutua Funds... 8 Vauation... 8 Genera Investment Risks... 8 Fees...11 BBH INVESTMENT PROFESSIONALS...12 OTHER BBH PRODUCTS & SERVICES...15 Investor Services...15 Private Banking...16 Other Advisory Services...16 ADMINISTRATION OF CLIENT ACCOUNTS...17 Review of Accounts...17 Custody, Cient Communications & Reports...17 Investment and Brokerage Discretion...17 Proxy Voting Poicy & Cass Action Lawsuit Recovery Poicy...22 Cosing Accounts...22 OTHER IMPORTANT INFORMATION...22 Tax & Lega Matters...22 Discipinary Information...22 Misceaneous...23 Appendix A...26 Appendix B...27
BBH OVERVIEW This Investment Management Cient Discosure Document (the Cient Discosure Document ) provides an overview of Brown Brothers Harriman & Co. ( BBH or the Firm ), its affiiates, subsidiaries and services provided. BBH is a bank, organized as a New York imited partnership. Athough BBH is exempt from registration as an Investment Adviser with the U.S. Securities and Exchange Commission (the SEC ), this Cient Discosure Document is designed to provide descriptions of practices that registered investment advisers discose to their cients. The Firm provides this Cient Discosure Document to its investment management cients and may provide it to investors in certain of BBH s private investment funds for which BBH or its affiiates serve as the investment adviser, sponsor, administrator, and/or custodian in other capacities ( Proprietary Funds ). However, this Cient Discosure Document is not intended to state or impy that BBH is a registered investment adviser or that it is subject to the requirements of the Investment Advisers Act of 1940, as amended (the Advisers Act ), other than as identified beow. If you have any questions regarding BBH or its business practices, pease discuss them with your BBH reationship manager ( RM ) prior to investing. We strive to provide you with up-to-date information and invite you to visit our website (www.bbh.com) for important information, incuding updates to this document. BBH was founded in 1818 and remains one of the odest continuousy operated partnership banks in the United States. BBH is owned and managed by the partners isted in Appendix A. In addition to offering a range of investment management services for individuas, famiies and institutions, the Firm participates in businesses, incuding, but not imited to: goba custody, foreign exchange, ending, private equity investing, and persona trust & estate administration. Licensed by the New York State Department of Financia Services ( NYSDFS ) as a Private Banker, BBH is authorized to accept deposits, grant oans, and generay conduct a banking business incuding acting as a custodian of funds and securities. Assets hed at BBH are not FDIC insured and are subject to investment risks, incuding possibe oss of principe invested. As a bank, BBH is exempt from registration with the SEC as an investment adviser under the Advisers Act. BBH does, however, maintain a Separatey Identifiabe Department (the SID ) that is an SEC registered investment adviser. The SID, aso known as the Brown Brothers Harriman Mutua Fund Advisory Department, is an adviser to mutua funds that are registered under the Investment Company Act of 1940, as amended. As of December 31, 2014, BBH s Investment Management ine of business oversaw $57.1 biion as an adviser to its private and institutiona cients, incuding the SID. $56.6 biion is managed on a discretionary basis and $0.5 biion is managed on a non-discretionary basis. BBH s primary reguator is the NYSDFS and BBH is a member firm of the Financia Industry Reguatory Authority ( FINRA ). BBH is registered in certain individua states in connection with its securities and/or advisory activities. The trust services are provided by BBH s subsidiary trust companies, Brown Brothers Harriman Trust Company, N.A. and Brown Brothers Harriman Trust Company of Deaware, N.A. (coectivey, the Nationa Trust Companies ), which are subject to examination and reguatory oversight by the Office of the Comptroer of the Currency, and Brown Brothers Harriman Trust Company (Cayman), which is subject to examination and reguatory oversight by the Cayman Isand Reguatory Authority. The Nationa Trust Companies (but not BBH) are each member banks of the Federa Reserve System. MATERIAL UPDATES Whie there have been no materia changes to BBH s Investment Management business, this Cient Discosure Document has been updated to refect new strategy offerings and changes in certain key personne. BBH INVESTMENT MANAGEMENT / Cient Discosure Document 1
BBH INVESTMENT MANAGEMENT BUSINESS Overview ------------------------------------------------------------------------------------------------------------------- Through our Investment Management business, BBH offers a range of fixed income and equity investment management services for both taxabe and tax-exempt cients, incuding coverage of municipa securities, taxabe securities and infation-indexed securities, as we as arge-cap U.S. equity, mid-cap US equity and non-us equity securities. Generay, investment advice is furnished on a discretionary basis. BBH s services are provided pursuant to written agreements. In the course of managing cient portfoios BBH obtains third party information and/or assistance. The Brown Brothers Harriman Mutua Fund Advisory Department hires entities to provide sub-advisory and other investment-reated services to certain accounts. These third-party sub-advisers are themseves advisers to other investment advisers or vehices, incuding their own proprietary funds. BBH s SID reviews the sub-advised portfoio s compiance with portfoio investment guideines. Cients ---------------------------------------------------------------------------------------------------------------------- BBH is an investment manager to institutions and occasionay private cients with significant assets. Cients incude: Pubic Funds and Pensions Centra Banks and Financia Institutions Insurance Companies Endowments and Foundations Foreign Officias and Government Institutions Private Investment Funds Corporations Settement Trusts Other Advisory cients such as Taft Hartey Pans BBH INVESTMENT MANAGEMENT SERVICES, PRODUCTS & FEES Equity ----------------------------------------------------------------------------------------------------------------------- Investment Strategy & Phiosophy BBH s equity investment phiosophy centers on active management and fundamenta anaysis of individua companies. We seek to invest primariy in cash generative businesses that are eading providers of essentia products and services. We beieve that purchasing the equity securities of such companies when they are trading at a discount to our estimate of intrinsic vaue is an effective way to enjoy the benefits of equity ownership (namey, higher capita appreciation over time) whie reducing the risk of permanent capita oss over the ong term. Whie the firm typicay takes a ong-term investment approach to managing cient accounts, BBH may at times engage in short-term trading (i.e., hoding securities ess than 30 days). BBH INVESTMENT MANAGEMENT / Cient Discosure Document 2
Investment Types The types of equity securities that BBH may invest in on behaf of cients incude, without imitation, cash market securities such as exchange-isted securities, securities traded over-the-counter, foreign issuers, and exchange-traded funds ( ETFs ). BBH may aso invest, when appropriate, in portfoios of derivative instruments such as warrants, commodity interests (e.g., forwards, futures and swaps) and options. Pease refer to the section entited OTHER IMPORTANT INFORMATION: Misceaneous, Commodities/Futures Trading for more information on derivatives trading. In most cases, derivative investments wi invove greater voatiity and more imited iquidity than cash market investments. The potentia for gain or oss exists in both the cash and derivatives markets obigations. Methods of Anaysis Our equity investment team consists of portfoio managers supported by investment anaysts who foow specific industry sectors and work coaborativey with each other to identify, anayze, and monitor portfoio companies. The anaysts evauate industry structure, and they communicate with knowedgeabe industry participants and, when appropriate, company management teams, to assess whether companies meet our business, management, and vauation criteria. Where warranted, they aso use outside consutants and research materias. Generay, for each investee company, the anaysts seek to identify the key business risks and variabes outside of management s contro. Outside research materias/anaytica toos used may incude: Research Materias/Anaytica Toos Annua reports, prospectuses, fiings Company press reeases and presentations Inspections of corporate faciities and activities Financia newspapers and industry pubications/websites Expert networks Research provided by third parties Specific Service Offerings Equity investment management services provided to our institutiona cients generay incude one or more of the foowing: Core Seect: Core Seect is BBH s primary proprietary arge cap pubic equity investment management strategy. Investments in equity securities wi generay be in arge capitaized North American companies with a market vaue of at east $5 biion. For our Core Seect portfoios we empoy fundamenta anaysis and seek to anayze each company s business, management, and vauation. The criteria that we seek in each area, where appropriate, are as foows: Business Criteria (i) eadership in an attractive market niche or industry, (ii) sustainabe competitive advantages, (iii) essentia products or services, (iv) oya customers, (v) high returns on invested capita, and (vi) strong free cash fow; Management Criteria (i) high eves of integrity, (ii) exceent operators, and (iii) strong capita aocation; and BBH INVESTMENT MANAGEMENT / Cient Discosure Document 3
Vauation Criteria a meaningfu discount to a growing estimated intrinsic vaue per share. Intrinsic vaue cacuations are based on BBH s anayses of free cash fow and return-on-invested capita. We seek to own approximatey 20-30 companies in Core Seect equity portfoios in order to minimize the impact of unforeseen company-specific probems, but sti benefit from having a reativey concentrated portfoio of companies that meet our demanding business and vauation criteria. When purchasing a company, our time horizon is typicay three to five years, however, investments are usuay sod if they appreciate above our estimate of intrinsic vaue. We seek to own businesses over many years in order to compound weath and reduce taxes. Goba Core Seect: Goba Core Seect portfoios are comprised of at east 40% non-u.s. companies (based on country of incorporation) under norma circumstances. Investments in equity securities wi generay be in arge and mid-cap companies with a market capitaization of at east $3 biion. The strategy may invest in equity securities, depositary receipts, participation agreements and other derivative instruments to gain exposure to non- U.S. companies. Securities may be purchased in currencies other than the U.S. doar that may or may not be hedged. The criteria that we seek in each area, where appropriate, are as foows: Business Criteria (i) eadership in an attractive market niche or industry, (ii) sustainabe competitive advantages, (iii) essentia products or services, (iv) oya customers, (v) high returns on invested capita, and (vi) strong free cash fow; Management Criteria (i) high eves of integrity, (ii) exceent operators, and (iii) strong capita aocation; and Vauation Criteria a meaningfu discount to a growing estimated intrinsic vaue per share. Intrinsic vaue cacuations are based on BBH s anayses of free cash fow and return-on-invested capita. The strategy seeks to invest in approximatey 30-40 companies that meet its demanding investment criteria. Fixed Income ------------------------------------------------------------------------------------------------------------- Investment Strategy & Phiosophy BBH uses a fundamenta, vaue-based approach to fixed income management. Our fixed income management phiosophy is grounded in the beief that market prices move much faster and further than underying fundamentas, creating substantia misaignments of vaue and price. We beieve that successfu investing requires a strategy based on ong-term vauation discipine. We use a team approach to execute our strategy, reviewing the research and knowedge of anaysts, portfoio managers and traders in a process of transparent and open debate. Vaue opportunities drive portfoio construction, that is, we buid sector aocations and portfoios "bottom-up" based on the quantity and intensity of individua avaiabe vauation opportunities. We beieve that preservation of capita is critica to investing success. We attempt to manage this risk through independent fundamenta research and prudent diversification and by measuring and managing portfoio price exposures reative to US Treasury instruments rather than any particuar credit benchmark. There is no guarantee that a particuar account wi achieve its investment objectives. BBH INVESTMENT MANAGEMENT / Cient Discosure Document 4
Investment Types Fixed-income investments may incude cash market corporate debt, asset-backed securities, municipa securities, government securities, and non-u.s. doar denominated fixed income instruments. Certain fixed-income strategies may aso incude investments in commodity interests (e.g., treasury futures), derivative/structured products, incuding swaps, fixed or foating rate oans or simiar instruments that invove greater voatiity and more imited iquidity than cash market fixed-income securities. Cash market and derivatives fixed income instruments can create gains or osses to cient accounts depending upon security-specific, market and macroeconomic factors. We offer municipa and crossover fixed income strategies to maximize after-tax return. Methods of Anaysis The majority of our fixed income anaysis and research is performed internay. Both credit and quantitative anaysis are fundamenta parts of our investment management process. We have structured our fixed income team to aow for functiona speciaization in the foowing areas: Credit Quantitative Security Anaysis Expected Returns Monitoring Mode Deveopment Industry Trends Optimization Credit Trends Risk Quantification Return Attribution Outside research materias/anaytica toos used may incude: Research Materias/Anaytica Toos Financia Newspapers and industry pubications Inspections of corporate faciities and activities Research Prepared by Third Parties Rating Services Coatera Tracking and Data Services Annua Reports, Prospectuses, and Fiings Company Press Reeases Treasury Futures BBH may use U.S. Treasury futures contracts for a variety of purposes in connection with the management of the interest rate exposure of cient portfoios. BBH's use of such contracts for a portfoio coud incude, but is not imited to, adjusting the overa interest rate exposure, or duration, of the portfoio; changing the exposure of the portfoio to different parts of the yied curve; offsetting the impact of specia situations that affect specific securities (e.g., tender offers); and maintaining portfoio interest rate exposure as arge portfoio contributions or withdrawas occur. BBH's use of Treasury futures is subject to a cient s investment guideines and the cient s competion of the necessary documentation with a futures commission merchant. BBH is not a futures commission merchant. BBH INVESTMENT MANAGEMENT / Cient Discosure Document 5
Whie transactions in Treasury futures may reduce certain risks, these transactions themseves entai certain other risks. Unanticipated changes in interest rates or securities prices may resut in a poorer overa performance for a portfoio than if it had not entered into any Treasury futures transactions. In the event of adverse price movements, a portfoio may be required to make daiy cash payments to maintain its required margin. If the portfoio has insufficient cash, it may have to se portfoio securities to meet daiy margin requirements at a time when the portfoio manager woud not otherwise eect to do so. In addition, a portfoio may be required to deiver or take deivery of instruments underying the Treasury futures it hods. A portfoio may suffer osses if it is unabe to cose out its position because of an iiquid secondary market, and there is no assurance that a portfoio wi be abe to cose out its position when BBH considers it appropriate or desirabe to do so. In genera, derivatives, incuding Treasury futures, may invove risks different from, and potentiay greater than, those of the underying securities. To the extent a portfoio uses Treasury futures, it is exposed to additiona voatiity and potentia osses resuting from everage. Losses (or gains) invoving Treasury futures contracts can sometimes be substantia in part because a reativey sma price movement in a Treasury futures contract may resut in an immediate and substantia oss (or gain) for a portfoio. Credit Defaut Swaps BBH may use credit defaut swaps ( CDS ) to either gain exposure or to hedge an account s exposure to issuer credit risk. CDS agreements specify that one party pays a fixed periodic coupon for the ife of the agreement to another party. The other party makes no payment uness a credit event, reating to a predetermined security, occurs. If such an event occurs, the party wi make a payment to the other party and the swap wi be terminated. The size of the payment is usuay inked to the decine in the reference security s market vaue foowing the occurrence of the credit event. BBH's use of CDS is subject to a cient s investment guideines. Most CDS agreements entered into by a cient cacuate the obigations of the parties to the agreement on a net basis. Consequenty, a cient s current obigations (or rights) under a swap agreement wi generay be equa ony to the net amount to be paid or received under the agreement based on the reative vaues of the positions hed by each party to the agreement (the net amount ). A cient s current obigations under a swap agreement wi be accrued daiy (offset against any amounts owed to a cient) and any accrued but unpaid net amounts owed to a swap counterparty wi be covered by the segregation of assets determined to be iquid by BBH in accordance with its procedures. Transactions in CDS can entai counterparty risk (i.e., the counterparty s abiity to pay on its obigations) as we as other market risks. The everage used in many CDS transactions and a widespread market downturn coud ead to defauts thereby reducing the abiity of the risk buyer to meet their obigations. Loan Participations and Assignments and Other Direct Indebtedness BBH may purchase fixed and foating-rate oans, which generay wi be in the form of oan participations and assignments of portions of such oans. Loan participations and assignments invove specia types of risk, incuding credit risk, interest rate risk, iquidity risk, and the risks of being a ender. BBH may purchase oan participations in commercia oans. Such indebtedness may be secured or unsecured. Loan participations typicay represent direct participation in a oan to a corporate borrower, and generay are offered by banks or other financia institutions or ending syndicates. A cient account may participate in such syndications, or can buy part of a oan, becoming a part ender. When purchasing oan participations, the portfoio assumes the credit risk associated with the corporate borrower and may assume the credit risk associated with an interposed bank or other financia intermediary. The participation interests that a portfoio manager intends to purchase may not be rated by any nationay recognized rating organization. BBH INVESTMENT MANAGEMENT / Cient Discosure Document 6
A oan is often administered by an agent bank acting as agent for a hoders. The agent bank administers the terms of the oan, as specified in the oan agreement. In addition, the agent bank is normay responsibe for the coection of principa and interest payments from the corporate borrower and the apportionment of these payments to the credit of a institutions that are parties to the oan agreement. Uness, the account has direct recourse against the corporate borrower under the terms of the oan or other indebtedness, the account owner may have to rey on the agent bank or other financia intermediary to appy appropriate credit remedies against a corporate borrower. A financia institution s empoyment as agent bank might be terminated in the event that it fais to observe a requisite standard of care or becomes insovent. A successor agent bank woud generay be appointed to repace the terminated agent bank, and assets hed by the agent bank under the oan agreement shoud remain avaiabe to hoders of such indebtedness. However, if assets hed by the agent bank for the benefit of a portfoio were determined to be subject to the caims of the agent bank s genera creditors, a portfoio might incur certain costs and deays in reaizing payment on a oan or oan participation and coud suffer a oss of principa and/or interest. In situations invoving other interposed financia institutions (e.g., an insurance company or governmenta agency), simiar risks may arise. Specific Offerings for Fixed Income Institutiona Cients Fixed income investment management services provided to our institutiona cients generay incude one or more of the foowing: Liquidity Management: seeks to hep taxabe and tax-exempt institutions generate income whie preserving principa from their reserve portfoios with short and intermediate maturities. Core and Intermediate Fixed Income Management: seeks to maximize tota return for tax-exempt institutions that have an intermediate or onger investment horizon whie meeting cient requirements. Credit Vaue Management: seeks credit opportunities with the highest potentia excess returns through active portfoio management whie aso focusing on preserving capita. Crossover Portfoio Management: seeks to maximize tota returns for taxabe cients through tax-efficient portfoio management whie meeting cient s requirements incuding, among other things, gain/oss recognition. Municipa Bond Management: seeks to provide taxabe investors with the benefits of stabe, tax-shetered income and the incrementa returns avaiabe through active portfoio management invoving obigations of various durations. Infation-Indexed Securities Management: seeks to manage the purchasing power of assets predominanty through investments in infation-indexed securities, which provide a contractua rea or infation-adjusted return. Private Funds ------------------------------------------------------------------------------------------------------------- BBH may offer certain strategies through vehices that are privatey offered. Investing in private funds is not suitabe for a cients. These investments are intended soey for accredited investors and/or quaified purchasers who are wiing to bear any and a of the foowing risks: - Loss of a or substantiay a of an investment - Lack of iquidity - Voatiity of returns BBH INVESTMENT MANAGEMENT / Cient Discosure Document 7
- Possibe ack of diversification reative to mutua funds - Limitation on transfer or assignment of the interests in the investment vehice - Deays in tax reporting - Less reguation and higher fees than mutua funds Proprietary Mutua Funds--------------------------------------------------------------------------------------------- BBH s SID acts as investment adviser to severa registered mutua funds. The prospectus for each proprietary mutua fund contains a compete description of BBH s compensation and the risks associated with each mutua fund can be found onine at www.bbhfunds.com. Vauation-------------------------------------------------------------------------------------------------------------------- BBH typicay vaues exchange-traded securities using the most recent sae price on that exchange on the vaue date as of the vaue time. If no such saes are reported, BBH wi generay use readiy-avaiabe market quotations that it receives from independent, third-party pricing services. BBH may use broker quotes when third-party pricing services do not provide vaues, athough broker quotes are not necessariy determinative of fair vaue if an active market does not exist for the security. In regards to both exchange-traded and fixed-income securities, in the event market quotations are unavaiabe, or BBH determines in good faith that such quotations may be unreiabe, or when an active market for a security does not exist (such as the case during periods of extreme market uncertainty), BBH may price the securities using an interna methodoogy. These prices wi be estimates of fair vaue as of the vauation date, and BBH makes no representation or warranty that a security can be sod at the estimated price. There may be instances where vendor prices are unavaiabe or unreiabe and BBH may determine not to provide an interna estimate of fair vaue. In this case, no price wi appear on the monthy statement or otherwise. BBH may face a confict of interest in vauing the securities or assets in a cient s portfoio that acks a readiy ascertainabe market vaue as the vaue of the assets hed by BBH wi affect BBH s compensation. BBH wi vaue such securities and other assets in accordance with estabished vauation poicies and procedures. Genera Investment Risks--------------------------------------------------------------------------------------------- Investing in securities invoves risk of oss that cients shoud be prepared to bear. Certain types of investments may pose greater risks and in some instances, increased voatiity and ack of iquidity. Bond risk. Compared to other markets, the bond market is reativey voatie, and investments in bonds carry interest rate risk. Bonds aso carry the risk of issuer or counterparty defaut, issuer credit risk, and infation risk. Interest rate risk. Fixed income security prices may decine due to rising interest rates. Fixed income securities with onger maturities are generay subject to greater price voatiity than obigations with shorter maturities. Credit risk. A security s price may decine due to deterioration in the issuer s or guarantor s financia condition. An account coud ose money if the issuer or guarantor of a fixed income security, or the counterparty to a forward contract, repurchase agreement, or a oan of portfoio securities is unabe or unwiing to make timey principa and/or interest payments, or to otherwise honor its obigations. If an issuer defauts, or if the credit quaity of an investment deteriorates or is perceived to deteriorate, the vaue of the investment coud decine. Liquidity risk. The risk that an investment cannot be bought or sod in the market in a timey manner. The eves of iquidity may depend on the asset type, the size of a position and the iquidation horizon. Securities that are BBH INVESTMENT MANAGEMENT / Cient Discosure Document 8
subject to ega or contractua restrictions (such as private pacements and certain restricted securities) may be difficut to vaue accuratey and se at a price deemed to be representative of their vaue. Ca risk. During periods of faing interest rates, issuers of caabe bonds may repay securities with higher interest rates before maturity. This coud cause an account to ose potentia price appreciation and reinvest the proceeds at ower interest rates. Mortgage and asset-backed securities risk. Eary repayment of principa (e.g., prepayment of principa due to sae of the underying property, refinancing, or forecosure) of mortgage-reated securities (or other caabe securities) can expose an account to a potentia oss on any premium to face vaue paid and to a ower rate of return upon reinvestment of principa. In addition, changes in the rate of prepayment aso affect the price and price voatiity of a mortgage-reated security. Securities issued by certain U.S. Government sponsored enterprises (GSEs) (such as Fannie Mae, Freddie Mac, the Federa Home Loan Banks, and the Federa Farm Credit Banks) are not issued or guaranteed by the U.S. Treasury. In the event that these GSEs cannot meet their obigations, there can be no assurance that the U.S. Government wi (or wi continue to) provide support, and an account s performance coud be adversey impacted. Municipa bond risk. Like other debt securities, municipa bonds are subject to credit risk, interest rate risk and ca risk. Obigations of issuers of municipa bonds are generay subject to the provisions of bankruptcy, insovency, and other aws affecting the rights and remedies of creditors. However, the obigations of certain municipa issuers may not be enforceabe through the exercise of traditiona creditors rights. The reorganization under the federa bankruptcy aws of a municipa bond issuer or payment obigor bonds may resut in, among other things, the municipa bonds being canceed without repayment or repaid ony in part. In addition, Congress or state egisatures may seek to extend the time for payment of principa or interest, or both, or to impose other constraints upon enforcement of such obigations. Litigation and natura disasters, as we as adverse economic, business, ega, or poitica deveopments (incuding chaenges to the continued tax exempt status of various municipa bonds), may introduce uncertainties in the market for municipa bonds or materiay affect the credit risk of particuar bonds. Derivatives. Derivatives are financia contracts whose vaue depend on, or are derived from, the vaue of an underying asset or index. Derivatives risks incude iquidity risk, interest rate risk, market risk, credit risk of the reference security and counterparty, management risk, risk of mispricing or improper vauation and the risk of miscorreation. Additionay, derivative instruments may experience dramatic price changes and imperfect correations between the price of the derivative contract and the underying security or index, which may increase voatiity. Derivatives and forward-setting securities aso invove everage risk where they provide investment exposure in an amount exceeding the initia investment. Equities. The price of equity securities may rise or fa because of changes in the market, in a company s financia condition, or other macroeconomic variabes sometimes rapidy or unpredictaby. These price movements may resut from various factors affecting individua companies, sectors or industries seected for a portfoio or the securities market as a whoe, such as changes in economic or poitica conditions. Cient portfoios may decrease in vaue as a resut. Foreign Exchange. Changes in currency exchange rates and the reative vaue of non-u.s. currencies wi affect the vaue of the cient s investment and the vaue of a fund s shares. Currency exchange rates can be especiay voatie and can change quicky and unpredictaby. Changes can resut due to poitica, ega or economic conditions in the country issuing the currency of other foreign countries, or the United States. As a resut of BBH INVESTMENT MANAGEMENT / Cient Discosure Document 9
currency rate movements, the vaue of an investment may change quicky and without warning and with no change in the underying investments fundamentas. BBH may or may not hedge the foreign exchange exposure associated with a particuar investment. Emerging Markets. Investments in emerging markets pose additiona risks. These risks incude: (i) expropriation, confiscatory taxation, nationaization, and ess socia, poitica and economic stabiity than in more deveoped economics; (ii) the sma current size of the securities markets and ower trading voume; (iii) certain nationa poicies reated to nationa interests, which may restrict investment opportunities; and (iv) the absence of deveoped ega structures governing private or foreign investment and private property. Foreign Securities Generay. Investing in fixed income or equity securities of foreign-based companies or securities issued by non-u.s. banks invoves risks that incude changes in poitica, socia or economic conditions, dipomatic reations, confiscatory taxation, expropriation, nationaization, imitation on the remova of funds or assets, or imposition of (or change in) exchange contro or tax reguations. Foreign investments may be more voatie and potentiay ess iquid than U.S. investments. A cient s assets that are concentrated in a singe country or countries ocated in the same geographic region assumes additiona risks and coud utimatey cause the cient to underperform, or be more voatie than, other portfoios that invest more broady. Exchange Traded Funds. There may be a ack of iquidity in certain ETFs which can ead to a arge difference between the bid-ask prices (increasing the cost to you when you buy or se the ETF). A ack of iquidity aso may cause an ETF to trade at a arge premium or discount to its net asset vaue. Additionay, an ETF may suspend issuing new shares and this may resut in an adverse difference between the ETF s pubicy avaiabe share price and the actua vaue of its underying investment hodings. At times when underying hodings are traded ess frequenty, or not at a, an ETF s returns aso may diverge from the benchmark it is designed to track. Money Market Funds. An investment in a money market fund is neither insured nor guaranteed by the Federa Deposit Insurance Corporation ( FDIC ) or any other government agency. Athough money market funds seek to preserve the vaue of your investment at $1.00 per share, there is no assurance that wi occur, and it is possibe to ose money if the fund vaue per share fas. Moreover, in some circumstances, money market funds may be forced to cease operations when the vaue of a fund drops beow $1.00 per share. In that event, the fund s hodings are iquidated and distributed to the fund s sharehoders. This iquidation process coud take up to one month or more. During that time, these funds woud not be avaiabe to you. Lack of Diversification. Non-diversified portfoios are not imited with regard to the portion of their assets that may be invested in the securities of a singe issuer, industry sector and/or market. Such arger positions may cause performance to fuctuate to a greater extent than that of a diversified strategy. Aternative Investments. (e.g., Private Funds or Private Markets): Aternative investments have different features and risks from other types of investment products. As further described in the offering documents of any particuar aternative investment, an investment in aternative investments can be highy iiquid, is specuative and not suitabe for a investors. For exampe, aternative investment products may pace substantia imits on iquidity and the redemption rights of investors, incuding ony permitting withdrawas on a imited periodic basis and with a significant period of notice and may impose eary withdrawa fees. Investing in aternative investments is intended for experienced and sophisticated investors ony who are wiing to bear the high economic risks of the investment. Investors shoud carefuy review and consider potentia risks before investing. Certain of these risks may incude: oss of a or a substantia portion of the investment due to everaging, short seing, or other specuative practices; ack of iquidity, in that there may be no secondary market for the fund and BBH INVESTMENT MANAGEMENT / Cient Discosure Document 10
none expected to deveop; voatiity of returns; restrictions on transferring interests in the fund; potentia ack of diversification and resuting higher risk due to concentration of trading authority when a singe advisor is utiized; absence of information regarding vauations and pricing; compex tax structures and deays in tax reporting (private funds issue an annua Schedue K-1 tax document which may be deayed and require investors to seek an extension on their tax returns); ess reguation and higher fees than mutua funds; and advisor risk. Aternative investment products may aso have higher fees (incuding mutipe ayers of fees) compared to other types of investments. An investment in aternative investments carries additiona risks as described herein. Individua funds wi have specific risks reated to their investment strategies that wi vary from fund to fund. For more detais on these and other features and risks, pease carefuy read the documentation (incuding risk discosures) reating to any fund that your portfoio invests, as we as your cient agreement. Fees -------------------------------------------------------------------------------------------------------------------------- Generay, BBH charges fees on investment advisory accounts based on a percentage of assets under management. Fees and minimum account sizes may vary or be negotiabe, depending upon the types of products or services seected or the number of accounts and asset size associated with the cient reationship. The minimum annua fee for BBH cients is typicay $50,000 to $100,000 depending on the strategy, however, in certain circumstances, BBH may discount or waive fees when appropriate. Advisory fees are generay bied either monthy or quartery and either in advance or in arrears, depending upon the nature and circumstances of the cient account and services seected and are deducted accordingy from the cient s account. A refund of any pre-paid advisory fees wi be made if a cient account is terminated prior to the end of a biing cyce. Pease refer to your investment management agreement (and any subsequent notices and/or amendments) to confirm the fees and biing schedue appicabe to your account. Typicay, BBH wi notify its cients at east thirty (30) days in advance of any change in the fees and charges appicabe to a cient account, uness otherwise stated in the investment management agreement. In most cases the broker executing a trade on the account s behaf wi charge a commission (equity securities) or earn a mark up/mark down (fixed income securities) and BBH wi debit those charges from the cient account. BBH does not earn commissions or other transaction fees in connection with directing investment advisory trade orders to third party brokers for execution; however, BBH does receive credits from certain brokers toward the receipt of quaifying research or other services in accordance with appicabe aw. Pease refer to the beow section entited ADMINISTRATION OF CLIENT ACCOUNTS: Investment and Brokerage Discretion, Soft Doar or Research/Execution Arrangements for additiona information. The investment management reationship may be terminated by either the cient or BBH on the terms set forth in the investment management agreement. In the event of termination, fees sha be pro-rated based on the termination date and debited directy from the account. See aso the beow section entited ADMINISTRATION OF CLIENT ACCOUNTS: Cosing Accounts for additiona information on account termination. In some cases, and in compiance with appicabe aw, cient accounts may provide for fees to incude a sharing in the capita appreciation of the account (aso known as performance or incentive fees), which may incude sharing with BBH as Genera Partner, investment manager or in a simiar capacity. Depending upon the type of investment, incuding certain Proprietary Funds (otherwise known as aternative investments), this sharing may be based on the tota return over a benchmark of the portfoio or may be based on a percentage of the absoute profits. Structura differences in fees may motivate managers to make portfoio decisions that favor portfoios that are charged incentive fees over those that are charged asset-based fees. To address this potentia confict of interest, BBH has poicies in pace and reated interna contros intended to provide for the aocation of trades in an equitabe manner over time. BBH INVESTMENT MANAGEMENT / Cient Discosure Document 11
The compensation of BBH varies based on assets under management and the products and services appicabe to cient accounts. For instance, from time to time, BBH may earn enhanced compensation when new or existing cients increase the aggregate amount of assets under management by BBH, whether it is through investing additiona monies in a separatey managed account or in a stand-aone investment product. BBH INVESTMENT PROFESSIONALS Beow are brief biographies on BBH s key senior officers incuding those who provide investment advice. James J. Evans Born: 1958 Education: 1980 University of Deaware, B.S. 1986 New York University, M.B.A. Business Background: 1986 1994 Lazard Freres Asset Management, Fixed Income Manager 1995 1996 Shawmut Investment Advisers, Fixed Income Manager 1996 Present Fixed Income Portfoio Manager, BBH Timothy E. Hartch Born: 1969 Education: 1992 Harvard University, A.B. 1996 University of Michigan Law Schoo, J.D. 1996 University of Michigan Business Schoo, M.B.A. Business Background: 1996 Present BBH 1996 2000 M&A Advisory and Private Equity, BBH 2001 Present Co-manager of private investment funds, BBH 2005 Present Co-manager of BBH Core Seect strategy, BBH 2010 Present Partner and Head of Goba Core Seect & Core Seect Team, BBH Andrew P. Hofer Born: 1963 Education: 1986 Yae University, B.A. 1988 Coumbia University, M.I.A. Schoo of Internationa Affairs Business Background: 1988 Present BBH 1988 1997 Domestic Banking, BBH 1998 2003 Head of Institutiona Investment Management, BBH 2003 2007 Chief Operating Officer -- Investment Management, BBH 2008 Present Head of Taxabe Fixed Income, BBH Nei M. Hohmann Born: 1969 Education: BBH INVESTMENT MANAGEMENT / Cient Discosure Document 12
1991 Yae University, B.A. 2001 University of Chicago, Ph.D. Business Background: 1991 1993 Economic Research Service, U.S, Department of Agricuture 1998 2003 Swiss Reinsurance 2003 2006 Munich Reinsurance 2006 Present Credit Anayst and Co-Portfoio Manager, BBH Michae R. Keer, CFA Born: 1977 Education: 1999 Princeton University, B.S.E. Business Background: 1999 2005 KeyBanc Capita Markets, Equity Anayst 2005 Present BBH 2005 2008 Equity Anayst, BBH 2008 Present Co-Portfoio Manager and Equity Anayst, BBH 2015 Present Partner Radford W. Kotz Born: 1955 Education: 1977 University of Virginia, B.A. Business Background: 1977 Present BBH 1995 Present Partner, BBH 2008 2012 Head of Investment Process Group, Institutiona Fixed Income, BBH 2012 Present Head of Mutua Funds, BBH Pau E. Kunz, CFA Born: 1968 Education: 1990 Vianova University, B.S. 1993 St. John s University Schoo of Law, J.D. 2001 New York University Schoo of Law, LL.M Business Background: 1998 2002 SunAmerica Asset Management High Yied Credit Anayst 2002 2004 Hacyon Management Company LLC Distressed Credit Anayst 2004 2007 Oppenheimer Funds Inc. High Yied Credit Anayst 2007 2013 Deutsche Asset Management High Yied Credit Anayst 2013 Present Credit Anayst and Co-Portfoio Manager, BBH Regina K. Lombardi Born: 1959 Education 1988 - New York University, B.S. Business Background BBH INVESTMENT MANAGEMENT / Cient Discosure Document 13
1981 1991 McCowan Associates, Equity Trader (1981-1988), Research Associate (1988-1991) 1991 2000 Riverbridge Partners, Equity Anayst 2000 2002 Advantus Capita Management, Equity Anayst 2002 Present Equity Anayst, BBH 2011 Present Portfoio Manager, BBH Jean-Pierre Paquin Born: 1973 Education: 1996 Cogate University, B.A. 2002 The Wharton Schoo, University of Pennsyvania, M.B.A. Business Background 1996 2000: M&A Advisory & Private Equity, BBH 2000 2006: Principa, The 1818 Mezzanine Funds, BBH 2006 Present: Co-Manager & Principa, BBH Capita Partners, BBH 2015 Present: Partner, Investment Management, BBH Jeffrey A. Schoenfed Born: 1958 Education: 1980 University of Caifornia at Berkeey, B.A. 1984 The Wharton Schoo, University of Pennsyvania, M.B.A. Business Background: 1984 Present BBH 1990 1995 Liquidity Management Department Head, BBH 1996 Present Partner, BBH 1996 2009 Head of Institutiona Fixed Income, BBH 2003 2008 Head of Brown Brothers Harriman Mutua Fund Advisory Department 2010 Present Head of Institutiona Business Deveopment and Reationship Management, BBH Gregory S. Steier Born: 1970 Education: 1992 New York University, B.S. 1996 New York University, M.B.A. Business Background: 1992 Present BBH 2001 Present Head of Tax Exempt Fixed Income and TIPS, BBH Richard H. Witmer, Jr. Born: 1952 Education: 1974 Brown University, A.B. 1976 Harvard University Graduate Schoo of Business, M.B.A. Business Background: 1976 Present BBH 1988 Present Partner, BBH BBH INVESTMENT MANAGEMENT / Cient Discosure Document 14
1989 2001 Head of Mergers & Acquisitions, BBH 2001 Present Co-manager of Private Investment Fund, BBH 2005 2013 Co-manager of BBH Core Seect strategy, BBH 2005 2010 Co-Head of Core Seect Team, BBH 2010 Present Head of Investment Management, BBH OTHER BBH PRODUCTS & SERVICES BBH is invoved in a number of businesses other than providing investment advice, incuding, but not imited to, Private Banking and Investor Services. Investment management cients may choose to take advantage of these services at BBH as their needs require. BBH has partners and senior management who work amost excusivey in these other business ines. With the exception of certain personne of the Trust Companies and the SID, most professionas in the Investment Management business ine do not spend significant amounts of time on these other activities of BBH. A imited number may cross-over and provide due diigence/strategy seection services for BBH s Private Banking business. In addition, certain members of the impementation team provide services to Private Banking. Beow we provide a summary of our core business services. Investor Services --------------------------------------------------------------------------------------------- Our Investor Services business assists the word s most sophisticated asset managers and financia institutions to achieve their goba investment objectives through its integrated goba service mode. BBH everages its award-winning cient service and technoogy to provide goba custody services in neary 100 markets. Additiona integrated services offered incude: Fund Accounting/Administration Services: BBH provides fund accounting services as part of our suite of Goba Investment Administration products. BBH provides daiy muti-currency portfoio vauation, fund accounting, and reporting services to some of the word s eading asset gatherers. Securities Lending Services: BBH provides cients with proven expertise in structuring risk controed securities ending soutions. Our cients have the fexibiity to aocate assets across a traditiona agency or excusive arrangement, or a combination of the two, aowing cients to seect the most optima trading strategy. We focus on maximizing intrinsic vaue and in consutation with our cients deveop customized ending programs designed to optimize returns within their defined risk parameters. Foreign Exchange Services: BBH is an industry eading goba FX provider committed to offering our cients a continuum of innovative and fexibe soutions focused on execution exceence, product choice, and transparency. Our products have been designed in cose consutation with our cients resuting in soutions that hep them maximize their investment objectives. Goba Custody: BBH ensures the settement, safekeeping and accurate reporting of assets for the word s most sophisticated asset gatherers. BBH Goba Custody service incorporates operationa expertise, cient service, oca reationship management and market inteigence to deiver insightfu data over our Goba Operating Patform. BBH INVESTMENT MANAGEMENT / Cient Discosure Document 15
Mutua Fund Services: BBH, as a FINRA member, provides mutua fund soution services to a diverse institutiona cient base. BBH s cients cover a wide range of business profies, incuding private banks, mutua funds, hedge funds, independent asset managers and investment advisers, as we as other brokers. Generay, BBH does not provide mutua fund services to investment management cients; however, if it were to as an accommodation, BBH woud do so in accordance with appicabe aw. For a discussion of best execution, pease refer to the beow section entited ADMINISTRATION OF CLIENT ACCOUNTS: Investment and Brokerage Discretion, Best Execution. Private Banking ------------------------------------------------------------------------------------------------ Our Private Banking business assists business owners, and those individuas with substantia weath, achieve their financia goas. BBH serves both corporate and private cients throughout the cyce of weath creation, transition, and preservation. BBH everages our shared inteectua capita and reputation in order to become a trusted advisor to our cients. Private Banking s offered services incude: Trust Services: Through our Nationa Trust Companies, BBH offers our cients an array of individuaized services to impement estate, financia and tax panning strategies. We administer many types of persona trusts, from the simpest form of iving trust to compicated estate panning vehices. We aso act as custodian of individua retirement accounts (IRAs), and as trustee of institutiona trusts. Our services incude acting as trustee or executor to carry out fiduciary administration and assisting investment advisory and their professiona tax and ega advisors with estate panning and tax panning. Investment Advisory: The Investment Advisory and Trust Services department provides advisory services to high net worth individuas. BBH estabishes and maintains ong-term strategic asset aocation guideines for cients of various categories predicated upon ong-term investment risk and return objectives and other matters of judgment. RM s work with cients to estabish and maintain Investment Poicy Statements that document investment strategies that are designed to be consistent with the sophistication, risk toerance and investment objectives of our cients. Corporate Lending: Corporate Lending is focused on providing credit expertise to U.S. based, high quaity midde-market private firms and cosey-hed pubic companies. BBH s primary ending service is the provision of senior secured oans to corporate customers for working capita, acquisitions, and genera business expansion. Private Equity: As a proprietary private equity fund manager, BBH provides expertise in investing in ower midde market companies and works with management teams whose businesses are at critica infection points in terms of their growth and strategic deveopment. The funds have the fexibiity to act as a contro or non-contro investor and to structure investments as a combination of equity and subordinated debt securities. Other Advisory Services ---------------------------------------------------------------------------------------------- The SID provides investment advisory services to BBH s famiy of domestic mutua funds - the BBH Funds. The SID has its own investment advisory cient discosure document (i.e., the SID s Form ADV, Part I) which may be provided to SID cients upon written request. BBH aso acts as investment adviser to the majority of the cients of its affiiated Nationa Trust Companies. Where BBH acts as investment adviser to a cient for whom one of the Nationa Trust Companies is providing fiduciary services, the BBH advisory fee is incuded in the fiduciary fee charged by the trust company. BBH INVESTMENT MANAGEMENT / Cient Discosure Document 16
ADMINSTRATION OF CLIENT ACCOUNTS Review of Accounts ---------------------------------------------------------------------------------------------------- Investment management accounts for cients are reviewed and approved at east annuay. Generay, account reviews wi incude, where appicabe: Checks for portfoio compiance with cient investment objectives/guideines; The Cient s profie and economic and market conditions to verify whether the investment guideines are sti appropriate; and Checks that account performance is consistent with the strategy. RMs are aso required to review and approve accounts and to discuss any issues with the first ine reviewer. A account reviews are aso reviewed and approved by appicabe supervisors. Custody, Cient Communications & Reports ------------------------------------------------------------------ BBH serves as custodian for assets hed in certain separate accounts, funds advised by the SID, for proprietary funds, and for other assets hed in coective investment vehices managed by unaffiiated investment managers. As custodian, BBH must segregate cient assets from its proprietary assets. Assets hed by BBH are immediatey identifiabe through the designation of cient accounts. Investment management cients are typicay furnished with a written portfoio summary deivered as requested. Cients can aso view their portfoio by enroing in BBH s onine service, BBH Cient Porta. The BBH Cient Porta provides summary information of securities hed, number of units, purchase price, current market vaue and estimated annua income. As printed cient statements may differ from the summary information avaiabe on the BBH Cient Porta, incuding with respect to securities vauations, cients shoud prompty notify their RM of any potentia discrepancies. The written statement is the officia statement of your account hodings and vaues as of the statement date. Additionay, uness a cient eects to suppress confirmations, trade confirmations are provided directy to cients. Investment and Brokerage Discretion --------------------------------------------------------------------------- When BBH engages a sub adviser, the sub-adviser has fu trading and brokerage discretion over the sub-advised account. As part of that engagement, BBH considers the sub-adviser's compiance poicies and procedures, incuding those reating to trading, brokerage and the aocation of trading opportunities and requires them, among other things, to adhere to best execution standards. Written Authority to Exercise Discretion BBH typicay obtains written authority to exercise discretion over cient accounts, incuding the discretion to determine the securities to be bought or sod and their amount, the broker-deaers to be used, and the commission rates or fees to be paid for those executions. This discretionary authority may be imited by cients, incuding retention of the right to direct purchases and saes to specific brokers or the right to vote proxies. Securities hed pursuant to cient direction may not meet BBH s credit or investment criteria and, therefore, we recommend, that you discuss these positions with your RM. Shoud a cient choose to invest in a security that is not seected by BBH, the cient assumes fu responsibiity for managing such securities, and such hodings remain subject to the same fees as other managed assets in the account, uness otherwise provided by written agreement. BBH INVESTMENT MANAGEMENT / Cient Discosure Document 17
Best Execution Generay, BBH directs equity and fixed income orders for advisory cients to a ist of unaffiiated brokers and deaers for execution. BBH seeks to obtain best execution of such orders (where the reevant market recognizes concepts of best execution), which does not necessariy mean best price. In this regard, trades may be directed to brokers and deaers when deemed advisabe based on a number of factors incuding: the broker s or deaer s abiity to execute orders without disturbing the market price; the broker s or deaer s reiabiity for on-time deivery of securities; the broker s or deaer s financia condition and responsibiity; the research and other investment information provided by the broker or deaer, notwithstanding that a particuar cient account may not be the direct or excusive beneficiary of such service; and the commission or mark up/mark down charged by the broker or deaer. Accordingy, the commissions or fees charged by a broker or deaer may be greater than the amount another firm might charge provided that BBH determines, in good faith, that the amount of such commissions or fees is reasonabe in reation to the vaue of the brokerage and research information provided. BBH has estabished an oversight committee to monitor BBH s efforts to meet best execution obigations. Pease aso refer to the beow section entited Aggregation and Aocation of Transactions to Unaffiiated Brokers for additiona information on trade aocation and the section entited Soft Doar or Research/Execution Arrangements for additiona information on aocation of brokerage transactions. Principa, Agency & Cross Transactions BBH does not generay arrange agency cross transactions, however, BBH may arrange cross transactions for cients. BBH does not process principa transactions of securities for any cient where BBH has acted as investment adviser to the cient, except when the transaction is conducted in accordance with appicabe reguations. Principa Transactions with investment management cients must have prior written approva by the cient. The prior consent may not be given as a banket written consent and must incude certain required discosures (incuding the profit or mark-up on the trade). Cross Transactions invove the purchase or sae of a security between two accounts and/or funds managed by an investment adviser for which the investment adviser does not charge a fee (either a commission, spread or service fee) to either cient for the transaction. It is the poicy of BBH that cross transactions may ony be effected as a resut of one or more of the foowing events: i. Liquidation or redemption of 20% or more of assets managed in account; ii. Rebaancing of fund or cient account; iii. Reducing or eiminating position due to cient request; and iv. Cient account guideine driven event. BBH wi use an independent pricing mechanism to vaue securities incuded in Cross Transactions. Cross transactions are generay prohibited in ERISA accounts. Compiance approva is required before execution of a cross transaction. Cient-Directed Brokerage Transactions Some cients have an existing reationship with a broker-deaer and they may instruct BBH to execute a transactions through that broker-deaer. In the event that a cient directs BBH to use a particuar broker or deaer, it shoud be understood that BBH may not be abe to negotiate commissions or fees, obtain voume discounts or achieve best execution. As a resut, directed brokerage transactions may resut in higher commissions, greater spreads or ess favorabe net prices than woud be the case if BBH were abe to seect brokers and deaers to execute transactions. Additionay, BBH INVESTMENT MANAGEMENT / Cient Discosure Document 18
transactions for a cient that directs brokerage to specific brokers or deaers ( Directed Brokerage ) may not be aggregated or added to a bock trade for execution purposes with orders for the same securities for other accounts managed by BBH. In the event that a purchase or sae order is paced for mutipe accounts, orders for accounts giving BBH fu brokerage discretion wi generay be paced ahead of Directed Brokerage orders. BBH has no responsibiity for reporting or monitoring commission rates or spreads when the cient eects to direct brokerage. Cient-Directed Transactions BBH may from time-to-time accommodate a cient request to execute a cient sef-directed trade ( Directed Trade ). BBH can ony accept the Directed Trade as an investment adviser and not as a broker deaer. BBH wi seek to execute this transaction on a best efforts basis using a third-party broker deaer. In such cases, BBH cannot accept trade quaifiers, incuding but not imited to, time specific orders (e.g., at the market, good-ti-canceed ( GTC ), at the open or at the cose) and/or price specific orders (e.g., imit, stop or stop imit). BBH reserves the right not to accommodate any particuar cient trade request. Fees and commissions wi be passed through to the cient. Aggregation and Aocation of Transactions to Unaffiiated Brokers As discussed above, BBH typicay directs order instructions for its cients to a ist of unaffiiated brokers and deaers for handing and execution. When it is determined that aggregation (or batching ) of order instructions is consistent with BBH s duty to seek best execution for its cients and with operationa efficiency, BBH may, in its discretion, permit brokers or deaers to combine trades for your account with trades for BBH s other accounts, incuding accounts of BBH's partners, personne and proprietary mutua funds. In the event that trades are combined, no account (incuding those of BBH partners and personne) wi be favored over any other account with respect to aocation percentages or execution price over an extended period of time. The aocation of securities purchased in batched trades among cient accounts is intended to be accompished fairy and equitaby in accordance with BBH poicies and procedures. Batching may not be possibe when cients engage in Directed Brokerage as expained more fuy above. Cient accounts managed by BBH that are eigibe to purchase or se fixed income or equity securities that are bock traded wi generay be aocated a pro-rata portion of the executed bock trade. In the event an order is ony partiay fied, BBH wi aocate executed shares on a pro-rata basis based on the amount of assets in each order, subject to imited exceptions incuding minor adjustments for rounding and odd-ots. Equity aocations may aso be aocated using a computer generated random aocation methodoogy which randomy seects accounts if ess than 15% of the origina order is executed or if ess than 15% of the origina batch order remains to be executed. Aocations for equity and fixed income trades are generay made by the end of the day on which the trade is executed, absent extraordinary circumstances. Aocation of Trades Certain inherent conficts of interest arise from the fact that BBH provides investment management services to cients, funds and other accounts. It is possibe that the various accounts managed by BBH coud have different investment strategies which, at times, might confict with one another to the possibe detriment of the cient. Aternativey, to the extent that the same investment opportunities might be desirabe for more than one fund and/or account, possibe conficts coud arise in determining how to aocate them, incuding situations when the advisory fees for certain cient funds and/or accounts incude a sharing in the capita appreciation of the fund/account (aso known as performance or incentive fees. As a resut of aocation issues, the amount, timing, structuring, or terms of an investment by cients of BBH may differ from the investments of other cients. Funds and/or accounts that do not receive aocations that perform we may experience ower performance as a resut. BBH INVESTMENT MANAGEMENT / Cient Discosure Document 19
Investment opportunities may be appropriate, at times, for more than one strategy and/or accounts. It is the poicy of BBH to generay share investment opportunities with other funds and/or accounts, provided the opportunities meet the reevant investment criteria for the other funds and/or accounts. If it is determined that an investment opportunity wi be purchased for a fund and/or accounts, such opportunities wi generay be aocated pro rata based on avaiabe capacity for such investment in each fund and/or account. Sometimes, specific accounts in an investment strategy wi not purchase a specific security or wi be aocated a ower amount of a particuar security than the target percentage for the strategy because of the accounts particuar investment restrictions (incuding reguatory restrictions), risk toerance, time horizon, tax sensitivity, nature and size, toerance for portfoio turnover, iquidity and size imitations, and/or avaiabiity of cash or buying power. Trade aocation when both investment management accounts and firm accounts (Pension or Capita) are invoved in the same trade of a non-fungibe security sha be aocated pro-rata based on the desired share amount if a fu aocation cannot be obtained or sod. If a security is executed through more than one deaer at different prices, aocations wi be competed in such a way that both the firm accounts and investment management accounts receive the same weighted average price. Commission Rates / Spreads BBH wi not seect broker-deaers soey on the basis of commission rates nor wi it aways seek in advance competitive bidding for the most favorabe commission rate appicabe to any particuar transaction. As a resut, BBH may not necessariy pay the owest commissions possibe in connection with transactions. Transactions may invove speciaized services on the part of the broker-deaer invoved which may ca for higher commissions than woud be the case with other transactions requiring more routine services. BBH wi determine in good faith whether the amount of commission is reasonabe in reation to the vaue of research and brokerage services provided. Pease aso refer to the beow section entited Soft Doar or Research/Execution Arrangements. Cash Management Services BBH may invest cash remaining in cients accounts in one of severa cash management options. These options are seected for cients by RMs based on factors incuding but not imited to: (i) the amount of the cient s investabe assets; (ii) the type of account services provided (e.g., advisory, banking, custody trust services) and (iii) the RM s understanding of the cient s needs and objectives. Under certain circumstances, BBH may charge an administrative fee for providing cash management services. Except for Nationa Trust Company Cients, cash may aso be invested in end-of-day cash deposits in overnight time deposits (each, an OTD ) with one or more deposit institutions seected by BBH. Other cients of BBH may participate in the Cash Management Sweep and BBH uses the Cash Management Services Sweep to pace its own cash in OTDs. Where cash sweeps to a deposit institution other than BBH (an agency sweep), BBH s compensation is the BBH commission, adjusted to refect any difference between the overnight yied for each deposit and the Cash Management Sweep interest rate. On a sweep to BBH (a principa sweep), BBH earns compensation as a bank of deposit. BBH does not charge a separate investment advisory fee on assets that participate in the Cash Management Sweep. Non-excusive Management BBH or any of its nominees, agents, partners or personne may render investment management services to, and execute transactions for, its own account and for the accounts of other persons. The accounts of other persons may incude BBH partners and investment advisory accounts of BBH personne incuding discretionary accounts that are centray managed BBH INVESTMENT MANAGEMENT / Cient Discosure Document 20
as we as BBH Funds. The advice given to one cient may differ from advice given to other cient accounts or reied on for BBH s own account, and transactions may be effected for BBH s own account or the account of any cient at prices, in amounts, or reating to securities which are not purchased or sod for other accounts. In order to seek to avoid potentia conficts of interest, BBH may precude cients from making an investment or seing its existing investment in, or taking other actions with respect to, securities of a company where BBH is advising another cient or fund who is making or seing an investment in the securities of the same company. In addition, there may be certain investment opportunities, investment strategies or actions that BBH determines not to undertake on behaf of a cient in view of BBH s other cient or firm activities. BBH maintains poicies, procedures and reated contros to appropriatey maintain and guard against misuse of Confidentia and Materia Non-Pubic Information ( MNPI ). Information barrier contros incude both physica and virtua barriers incuding segregation of systems, a of which are designed to contro and contain the fow of confidentia information and MNPI. Specific information barrier contros incude, but are not imited to, contro ists (e.g., restricted ist and watch ist), persona account trading surveiance, eectronic communications surveiance and reated information barrier training. Soft Doar or Research/Execution Arrangements BBH may aocate a percentage or portion of cient commissions ( soft doars ) to specific brokers or deaers or other providers to pay for research or services which assist BBH in the management of cient portfoios. Research and services may incude information on the economy, industries, groups of securities, individua companies, statistica information, accounting and tax aw interpretations, poitica deveopments, ega deveopments affecting portfoio securities, technica market action, credit anaysis, risk measurement anaysis, performance anaysis, and anaysis of corporate responsibiity issues. In the past year, BBH has utiized soft doars to acquire research provided directy by brokers and by third party research providers that incude historica financias, corporate data and consensus estimates that anaysts use to assist in their decision-making responsibiities. Aong those ines, BBH has aso used pricing and news services, attended conferences, benefited from attendance at management meetings, modes and consutations with industry experts that were paid for through soft doars. Anaysts vote to estabish a budget and aocation mode to research providers based on the vaue and importance of the research, which budget is approved by an oversight committee. The committee aso monitors BBH s efforts to meet its best execution obigations. These arrangements may raise conficts of interest. For exampe, to the extent that BBH uses cient commissions to obtain research, it wi not have to pay for such research itsef. As such, this creates an incentive for BBH to use brokers who provide soft doar services rather than brokers who may provide more favorabe execution. The use of a broker or deaer that provides research and securities transaction services may resut in a higher commission than that offered by a broker or deaer which does not provide such services. BBH wi determine in good faith if the aggregate amount of the commissions paid is reasonabe in reation to the vaue of the brokerage and research services received. However, BBH does not attempt to track the benefits of brokerage and research services to the commissions associated with a particuar account or group of accounts and thus the benefit may not be proportionay aocated. Research services may be usefu in providing services to BBH s cients, but not a such research may be usefu for the account in which the particuar transaction was effected. In addition, certain BBH accounts may benefit from such services even though they do not produce transactions that generate soft doars. BBH s soft doar practices described above and its poicies and procedures governing this topic are intended to compy with the safe harbor rues of Section 28(e) of the Securities Exchange Act of 1934, as amended, where appicabe. BBH INVESTMENT MANAGEMENT / Cient Discosure Document 21
Proxy Voting Poicy & Cass Action Lawsuit Recovery Poicy ----------------------------------------------------- BBH has adopted a Proxy Voting & Cass Action Poicy and Procedure, avaiabe to cients upon request, which are designed to prevent conficts of interest from infuencing proxy voting decisions that BBH makes on behaf of advisory cients. Upon request, cients may aso obtain copies of a report showing how proxies were voted with respect to securities in their accounts by requesting a copy. Nevertheess, notwithstanding such Proxy Voting & Cass Action Poicy and Procedures, actua proxy voting decisions of BBH may have the effect of favoring the interests of certain cients or businesses of other divisions or units of BBH or its affiiates provided that BBH beieves such voting decisions to be in accordance with its fiduciary obigations. Uness otherwise stated in the investment management agreement, BBH maintains the right to vote proxies on behaf of cients and may utiize the services of a third-party proxy agent in making voting decisions. BBH reserves the right to vote proxies in a manner that is different than the vote recommended by thirdparty proxy agents. BBH is not responsibe for voting proxies where cients choose to opt out of BBH s proxy process. The cients custody banks must be instructed to mai proxy materia directy to cients who choose to vote their own proxies. BBH has engaged the services of a third party service provider to participate in cass action sharehoder awsuits, on a best efforts basis, in connection with securities beneficiay owned by BBH cients during reevant cass action periods. BBH is soey responsibe for any fees paid to such 3rd party. Cosing Accounts ------------------------------------------------------------------------------------------------------------------ Typicay, investment management contracts may be terminated by either the cient or BBH at any time by written notice given to the other party at east 30 days prior to the date on which such termination is to take pace, or as may otherwise be provided in the agreement. Pease refer to your investment management agreement for the terms appicabe to account termination. OTHER IMPORTANT INFORMATION Tax & Lega Matters ---------------------------------------------------------------------------------------------------- BBH does not provide ega or tax advice and, therefore, is not responsibe for deveoping, impementing or evauating any tax strategies that may be empoyed by a cient. Cients shoud deveop any such strategies or address any ega or tax-reated issues with a quaified ega or tax adviser. Discipinary Actions ---------------------------------------------------------------------------------------------------- There are no materia discipinary events invoving BBH s Investment Management Business or its personne invoved in providing investment advice. However, in September 2014, as a resut of a broad sweep investigation invoving over 30 individuas and entities, the SEC issued an administrative order citing BBH for faiure to make certain required fiings under the Securities & Exchange Act of 1934. Without admitting or denying the findings, BBH entered into a settement agreement with the SEC and agreed to pay a civi penaty. As a resut, BBH has enhanced its poicies, procedures and contros reated to the reporting of beneficia ownership. The settement has no impact on BBH s financia status or its abiity to conduct business or provide services to its cients. In 2013, FINRA conducted an examination of BBH, which incuded a Financia Operations, Saes Practice and Antimoney Laundering ( AML ) review. Any observations/recommendations with respect to the Financia Operations and Saes Practice eements of the review have either been addressed or are being addressed within expected target dates. The AML review focused on the firm s poicies and procedures reating to the surveiance and processing of U.S. ow-priced securities on behaf of certain of our bank cients ocated outside of the United States. The examination concuded in eary BBH INVESTMENT MANAGEMENT / Cient Discosure Document 22
2014. Without admitting or denying the findings, BBH entered into a settement agreement with FINRA addressing the areas of concern raised by FINRA and paying a fine to FINRA. There are no imitations on BBH s abiity to conduct business as a resut of the settement. However, as part of the settement agreement with FINRA, BBH fied a Corrective Action Statement which noted, among other things, that BBH has made changes to its processes and procedures for handing ow-priced securities for the firm s bank intermediary cients, incuding additiona poicies and procedures to enhance compiance with its obigations under Section 5 of the Securities Act of 1933, and enhanced empoyee training with respect to ow priced securities transactions and enhanced standards for fiing Suspicious Activities Reports ( SARs ). In September 2007, BBH and the NYSDFS, (formery known as the New York State Banking Department) entered into a written agreement pursuant to which BBH agreed to take certain actions to remedy deficiencies in its Bank Secrecy Act / Anti-Money Laundering compiance program. BBH was not found to be participating in any wrongdoing and there was no fine associated with the agreement. The written agreement recognized the significant steps BBH has made in remediation to date and did not impact BBH's abiity to provide products and services to its cients. Effective September 23, 2009, the NYSDFS ifted its Written Agreement with BBH. In 2006, BBH setted a matter with the New York Stock Exchange ( NYSE ) and paid a fine. The matter invoved BBH s empoyee due diigence poicies and procedures and BBH s reporting of certain events in the NYSE s eectronic database. This matter did not reate to the provision of any products or services provided to cients by BBH. The NYSE case had no materia impact on BBH s financia stabiity, did not invove any practices reating to cients or cient investments and did not impact BBH's abiity to provide products and services to its cients going forward. Misceaneous ------------------------------------------------------------------------------------------------------------ Code of Ethics and Professiona Conduct BBH has adopted a Code of Ethics and Professiona Conduct (the Code ) that requires BBH Personne to (a) conduct persona securities transactions that are in accordance with the Code and with the Firm s Persona Trading and Insider Trading Poicies, and in such a manner as to avoid any actua or potentia confict of interest; (b) compy with appicabe aws and reguations; and (c) annuay provide an acknowedgment of compiance with the Code. BBH wi provide a copy of the Code to any cient or prospective cient upon request. Trading/Portfoio Management Contros From time to time, BBH may come into possession of MNPI or other information that coud imit the abiity of its cients to buy and se investments investment fexibiity may be constrained as a consequence. BBH generay is not permitted to use MNPI in effecting purchases and saes in pubic securities transactions for cients. BBH has designed its Compiance Program, incuding contros, poicies and procedures, to prevent the misuse of MNPI, and to enabe fair aocation of batched transactions and equitabe trade routing and execution. BBH has adopted poicies and procedures, incuding trade aocation poicies and procedures, that seek to address the conficts associated with managing mutipe accounts for mutipe cients. For exampe, it is possibe that the various accounts managed by BBH coud have different investment strategies which, at times, might confict with one another to the possibe detriment of a cient. Aternativey, to the extent that the same investment opportunities might be desirabe for more than one account, possibe conficts coud arise in determining how to aocate them, incuding situations when the advisory fees for certain cient accounts/funds incude a sharing in the capita appreciation of the account (aso known as performance or incentive fees). As a resut of aocation issues, the amount, timing, structuring or terms of an investment by cients of BBH may differ from, and performance may be ower than, investments and performance of BBH INVESTMENT MANAGEMENT / Cient Discosure Document 23
other cient accounts. Cient accounts that do not receive aocations that perform we may experience ower performance as a resut. For a further discussion, pease refer to the section INVESTMENT AND BROKERAGE DISCRETION: Aocation of Trades between Strategies. Safekeeping of Assets and Compiance Contros As a goba custodian, BBH is required to segregate its cient assets from its proprietary assets and must exercise due care when custodying other peope's securities. As such, a securities that BBH hods in custody for our cients are segregated from our own assets, and can be identified through the designation of cient accounts, whether they are hed in BBH s vaut, the vaut or accounts of a sub custodian or at a cearing corporation or centra depository. They are identified by secure eectronic records as to cient ownership. BBH maintains auditing and contro procedures for both physica assets entrusted to our care and for computer records of cient accounts. We accept instructions from our cients or their authorized agents. At east once each quarter, as part of an ongoing auditing program, BBH verifies a cient securities entrusted to our custody against our records. Where the cient eects to custody their assets with a third party custodian, BBH may rey in good faith on information concerning such assets provided by such third party custodian. An audit by PriceWaterhouseCoopers (which resuts in a detaied SSAE 16 Report), an examination by NYSDFS, and a compiance review and risk-based testing of our custody poicies and procedures occurs each year. For additiona information regarding cient statements, pease refer to the above section entited ADMINSTRATION OF CLIENT ACCOUNTS: Custody, Cient Communications & Reports. Commodities/Futures Trading BBH is not a Commodity Trading Advisor (CTA) and reies on appicabe exemptions from CTA registration when conducting trading activities with respect to commodity interests, incuding futures. Consistent with such exemptions, when appropriate, BBH may aso trade futures and CDS on behaf of cients. Partner and Empoyee Activities BBH partner, empoyee and firm account(s) may at times purchase and se securities that BBH as a firm foows for our Investment Management business or which BBH purchases and ses for our investment advisory cients. These purchases may be for partners and empoyees own accounts, or accounts in which they have a financia interest or over which they have contro. Such trading may impact the pricing or proceeds reaized by cient accounts. With respect to BBH partners and personne, trading is permitted pursuant to our poicies and procedures, which incude a BBH pre-cearance process for transactions by certain defined insiders or access persons, as we as minimum hoding periods. These procedures seek to minimize conficts of interest by restricting the type and timing of empoyee s trades and are designed to prevent and detect account activity that may vioate poicy or appicabe aws. Participation in Limited Partnerships Through various entities, BBH offers eigibe investors the opportunity to invest in unregistered imited partnerships for which BBH may serve as genera partner or investment adviser. Such investments incude vehices that participate in the private equity markets, mezzanine investments, hedge funds, rea estate, oi and gas and other assets. For a further discussion, see aso the above section entited, BBH INVESTMENT MANAGEMENT SERVICES, PRODUCTS & FEES: Private Funds. Participation or Interest in Cient Transactions BBH, its personne and other financia service providers have interests in promoting saes of interests in BBH-affiiated funds. With respect to both BBH and its personne, the remuneration and profitabiity reating to services to and saes of BBH INVESTMENT MANAGEMENT / Cient Discosure Document 24
interests in BBH-affiiated funds may be greater than the remuneration and profitabiity reating to services to and saes of other products that might be provided or offered. Foreign Exchange Trading In connection with transactions in foreign securities entered into pursuant to the terms of the cient s investment management agreement and subject to cient investment guideines, BBH may (but is not required to) enter into transactions for the purchase and sae of one or more foreign currencies on a principa basis with cient accounts. BBH may combine foreign currency transactions for a particuar cient account with transactions for accounts of other BBH cients. Foreign currency transactions entered into for a cient account wi be entered into by BBH in connection with its provision of advisory services and wi not originate with BBH s Foreign Exchange Department but may be executed through that Department. BBH s deaer mark up / mark down in regard to any such transaction with a cient wi be no greater than BBH s customary deaer mark up / mark down with respect to currencies of the same types and amounts. Additiona Compensation BBH maintains a Gifts, Entertainment and Other Non-Cash Compensation Poicy designed to adhere to reguations regarding giving or receiving cash or non-cash compensation. Trading Errors BBH wi investigate trade errors and determine whether reimbursement to cient(s) is warranted. Trade errors resuting from cient instructions or faiure to instruct, an act or omission by any unaffiiated person (incuding unaffiiated persons retained by BBH to provide services reating to your account except to the extent BBH was grossy negigent in such seection) and any act or omission of any unaffiiated custodian, broker, transfer or simiar agent of an issuer of securities, are not compensabe by BBH. BBH wi not earn a net profit from trade errors in cient accounts resuting from BBH s gross negigence or wifu misconduct and wi offer to reimburse cient for security reated market vaue oss pus trading costs. Financia Information BBH does not beieve there are reasonaby ikey financia conditions that coud impair our abiity to meet our contractua commitments to our cients. BBH s Customer Identification Program It is the poicy of BBH to identify ceary each and every ega and/or natura person who seeks to do business with BBH through its Know-Your- Customer / Customer Identification Program ( CIP ). The purposes of the CIP are (a) to obtain sufficient identifying information from a cient prior to estabishing an account in order to minimize crimina exposure and monetary oss to BBH, (b) to verify the information used to identify the cient, (c) check that a cient does not appear on any reevant ists of sanctioned persons, such as those maintained by the U.S. Office of Foreign Assets Contro ( OFAC ), the European Union, and the United Nations; or on any U.S. government designated ists of known or suspected terrorists or terrorist organizations; or on any ist issued by oca reguatory bodies of the jurisdictions in which BBH conducts its business; (d) to aid aw enforcement in the prosecution of any cient who woud use BBH s resources for iicit purposes, such as money aundering or the funding of terrorism, and (e) periodicay update cient identification fies consistent with its Customer AML Risk Assessment Methodoogy. Knowing Your Customer through appropriate cient identification and verification is a critica eement in BBH s AML Program to prevent money aundering and terrorist financing and to reduce osses from fraud. BBH INVESTMENT MANAGEMENT / Cient Discosure Document 25
APPENDIX A GENERAL PARTNERS 1. Thomas E. Berk 2. Brian A. Berris 3. Tayor S. Bodman 4. John J. Borand 5. Geoffrey M. Cook 6. Jean-Marc Crépin 7. Car S. Cuter 8. Dougas A. Donahue, Jr. 9. Dario Gaindo 10. Kathryn C. George 11. Timothy E. Hartch 12. Kyosuke Hashimoto 13. Chares O. Izard 14. Michae R. Keer 15. Jared S. Keyes 16. Radford W. Kotz 17. Susan C. Livingston 18. T. Michae Long 20. Michae W. McConne 21. Jeffrey B. Meskin 22. Yukinori Nagahisa 23. John A. Niesen 24. Seán Páircéir 25. Jean-Pierre Paquin 26. Christopher C. Remondi 27. Heaton Robertston III 28. Wiiam E. Rosensweig 29. Jeffrey A. Schoenfed 30. Kevin W. Stone 31. W. Carter Suivan III 32. Andrew J. F. Tucker 33. Lawrence C. Tucker 34. Wiiam B. Tyree 35. Maroa C. Veez 36. Wiiam J. Whean, Jr. 37. Richard H. Witmer, Jr. 19. Hampton S. Lynch, Jr. BBH INVESTMENT MANAGEMENT / Cient Discosure Document 26
APPENDIX B BBH PRIVACY NOTICE BBH INVESTMENT MANAGEMENT / Cient Discosure Document 27
BBH PRIVACY NOTICE What does Brown Brothers Harriman & Co. do with your persona information? WHY? Financia companies choose how they share your persona information. Federa aw gives consumers the right to imit some but not a sharing. Federa aw aso requires us to te you how we coect, share, and protect your persona information. Pease read this notice carefuy to understand what we do. WHAT? The types of persona information we coect and share depend on the product or service you have with us. This information can incude: Socia Security number Income Account Baances Transaction history Credit history Credit scores When you are no onger our customer, we continue to share your information as described in this notice. HOW? A financia companies need to share customer s persona information to run their everyday business. In the section beow, we ist the reasons financia companies can share their customer s persona information; the reasons Brown Brothers Harriman chooses to share; and whether you can imit this sharing. Reasons we can share your persona information For our everyday business purposes such as to process your transactions, maintain your account(s), respond to court orders and ega investigations, or report to credit bureaus For our marketing purposes to offer our products and services to you Does Brown Brothers Harriman share? Yes Yes Can you imit this sharing? No No For joint marketing with other financia companies No Does Not Share For our affiiates everyday business purposes information about your transactions and experiences For our affiiates everyday business purposes information about your creditworthiness Yes No No Does Not Share For non-affiiates to market to you No Does Not Share QUESTIONS? Ca 800-285-5093 or go to www.bbh.com. Rev. 02/2012 Page 1/2
Who we are Who is providing this notice? What we do How does Brown Brothers Harriman protect my persona information? How does Brown Brothers Harriman coect my persona information? Why can t I imit a sharing? Definitions Affiiates Nonaffiiates Joint marketing Other important information Brown Brothers Harriman & Co. and affiiated entities (see bottom of page) To protect your persona information from unauthorized access and use, we use security measures that compy with federa aw. These measures incude computer safeguards and secured fi es and buidings. We coect your persona information, for exampe, when you: Open an account Make a deposit Initiate a transaction Transfer funds Make modifications to your account Federa aw gives you the right to imit ony: Sharing for affiiates everyday business purposes information about your creditworthiness Affiiates from using your information to market to you Sharing for nonaffiiates to market to you State aws and individua companies may give you additiona rights to imit sharing. Companies reated by common ownership or contro. They can be financia and nonfinancia companies. Brown Brothers Harriman Investor Services Ltd., Brown Brothers Harriman (Luxembourg) S.C.A., BBH FAS Ltd., BBH Trustee Services, and our other goba entities (see BBH.com). Companies not reated by common ownership or contro. They can be financia and nonfinancia companies. Subject to appicabe aw, you shoud expect that we wi share your information with nonaffiiated entities for various reasons, such as: invoicing, statement printing and transaction processing A forma agreement between nonaffiiated financia companies that together market financia products or services to you. Brown Brothers Harriman & Co. does not engage in joint marketing with non-affiiates. Brown Brothers Harriman & Co. Brown Brothers Harriman Trust Company, N.A. Brown Brothers Harriman Trust Company of Deaware, N.A. BBH Mutua Fund Advisory Department (the SID ) BBH Trust ( BBH Funds ) BBH Absoute Return Fund, LP BBH Absoute Return Offshore Fund, Ltd. BBH Long/Short Equity Fund, LP BBH Long/Short Equity Offshore Fund, Ltd. BBH Asian Opportunity Fund, LP BBH Asian Opportunity Fund (Cayman) BBH&Co. Private Equity Partners II, LP BBH&Co. Private Equity Partners II (Offshore), LDC BBH Private Equity Partners III, LP BBH Private Equity Partners III Trust BBH Private Equity Partners IV, LP BBH Private Equity Partners IV (Offshore), Ltd. The 1818 Mezzanine Fund, LP BBH Mezzanine Partners II, LP BBH Mezzanine Partners II (Offshore), LDC BBH Capita Partners III, LP BBH Capita Partners III (Cayman) 1818 Partners, LP 1818 Partners (Offshore), LP The 1818 SBIC Fund, LP BBH Private Equity Partners III (L/S Offshore), LDC BBH Rea Estate Income Fund, LP BBH Rea Estate Income Series Fund, LP BBH Rea Estate Income Fund II, LP BBH Rea Estate Income Series Fund II, LP BBH Capita Partners IV, LP BBH Capita Partners QP IV, LP BBH Capita Partners IV (Cayman) BBH Capita Partners QP IV (Cayman) The BBH Internationa Equity Fund (Cayman) BBH Luxembourg Funds BBH Coective Investment Series Trust 317_12 Page 2/2