SEMI-ANNUAL REPORT
December 31, 2023
Brown Advisory Growth Equity Fund
Brown Advisory Flexible Equity Fund
Brown Advisory Equity Income Fund
Brown Advisory Sustainable Growth Fund
Brown Advisory Mid-Cap Growth Fund
Brown Advisory Small-Cap Growth Fund
Brown Advisory Small-Cap Fundamental Value Fund
Brown Advisory Sustainable Small-Cap Core Fund
Brown Advisory Sustainable Value Fund
Brown Advisory Global Leaders Fund
Brown Advisory Sustainable International Leaders Fund
Brown Advisory Intermediate Income Fund
Brown Advisory Sustainable Bond Fund
Brown Advisory Maryland Bond Fund
Brown Advisory Tax-Exempt Bond Fund
Brown Advisory Tax-Exempt Sustainable Bond Fund
Brown Advisory Mortgage Securities Fund
Brown Advisory – WMC Strategic European Equity Fund
Brown Advisory Emerging Markets Select Fund
Brown Advisory – Beutel Goodman Large-Cap Value Fund
TABLE OF CONTENTS
| Brown Advisory Growth Equity Fund | | 1 |
| Brown Advisory Flexible Equity Fund | | 4 |
| Brown Advisory Equity Income Fund | | 7 |
| Brown Advisory Sustainable Growth Fund | | 9 |
| Brown Advisory Mid-Cap Growth Fund | | 12 |
| Brown Advisory Small-Cap Growth Fund | | 16 |
| Brown Advisory Small-Cap Fundamental Value Fund | | 20 |
| Brown Advisory Sustainable Small-Cap Core Fund | | 23 |
| Brown Advisory Sustainable Value Fund | | 27 |
| Brown Advisory Global Leaders Fund | | 29 |
| Brown Advisory Sustainable International Leaders Fund | | 32 |
| Brown Advisory Intermediate Income Fund | | 35 |
| Brown Advisory Sustainable Bond Fund | | 39 |
| Brown Advisory Maryland Bond Fund | | 46 |
| Brown Advisory Tax-Exempt Bond Fund | | 51 |
| Brown Advisory Tax-Exempt Sustainable Bond Fund | | 57 |
| Brown Advisory Mortgage Securities Fund | | 62 |
| Brown Advisory – WMC Strategic European Equity Fund | | 71 |
| Brown Advisory Emerging Markets Select Fund | | 74 |
| Brown Advisory – Beutel Goodman Large-Cap Value Fund | | 77 |
| Statements of Assets and Liabilities | | 80 |
| Statements of Operations | | 85 |
| Statements of Changes in Net Assets | | 90 |
| Financial Highlights | | 100 |
| Notes to Financial Statements | | 108 |
| Additional Information | | 123 |
The views in the report contained herein were those of the Funds’ investment adviser, Brown Advisory LLC, or, for the sub-advised funds, of the respective sub-adviser, as of December 31, 2023 and may not reflect their views on the date this report is first published or anytime thereafter. This report may contain discussions about certain investments both held and not held in the portfolio as of December 31, 2023. All current and future holdings are subject to risk and are subject to change. While these views are intended to assist shareholders in understanding their investment in each Fund, they do not constitute investment advice, are not a guarantee of future performance and are not intended as an offer or solicitation with respect to the purchase or sale of any security. Performance figures include the reinvestment of dividend and capital gain distributions.
The Global Industry Classification Standard (GICS®) was developed by and is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS® is a service mark of MSCI, Inc. and S&P and has been licensed for use by the Administrator, U.S. Bancorp Fund Services, LLC.
GLOSSARY OF TERMS
Absolute basis is to express as a fixed amount rather than referring to variable factors.
Absolute performance refers to the percentage rise or fall in the share price of a security over a stated period.
Absolute return refers to the percent amount that an asset rises or declines in value in a given period.
Alpha refers to the abnormal rate of return on a security or portfolio in excess of what would be predicted by an equilibrium model like the capital asset pricing model (CAPM).
American Rescue Plan (ARP) is a $1.9 trillion economic stimulus bill passed by the 117th United States Congress and signed into law by President Joe Biden on March 11, 2021, to speed up the United States’ recovery from the economic and health effects of the COVID-19 pandemic and the ongoing recession.
Bloomberg 1-10 Year Blended Municipal Bond Index is a market index of high quality, domestic fixed income securities with maturities of less than 10 years.
Bloomberg Intermediate US Aggregate Bond Index represents domestic taxable investment-grade bonds with index components for government and corporate securities, mortgage pass-through securities and asset-backed securities with average maturities and durations in the intermediate range. This index represents a sector of the Bloomberg US Aggregate Bond Index.
Bloomberg Mortgage Backed Securities Index is a market value-weighted index which covers the mortgage-backed securities component of the Bloomberg US Aggregate Bond Index. The index is composed of agency mortgage-backed passthrough securities of the Government National Mortgage Association (Ginnie Mae), the Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (Freddie Mac) with a minimum $150 million par amount outstanding and a weighted-average maturity of at least 1 year. The index includes reinvestment of income.
Bloomberg US Aggregate Bond Index is a broad-based benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS, ABS and CMBS.
Bloomberg US Corporate High Yield Index measures the US Dollar denominated, high-yield, fixed-rate corporate bond market.
Basis point(s) (bps) is a unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly used for calculating changes in interest rates, equity indexes and the yield of a fixed-income security. 1% is equal to 100 basis points.
Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole.
Book value is the net asset value of a company, calculated by total assets minus intangible assets (patents, goodwill) and liabilities.
CAPEX, or capital expenditures, are funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment. It is often used to undertake new projects or investments by the firm. This type of outlay is also made by companies to maintain or increase the scope of their operations.
Cash flow measures the cash generating capability of a company by adding non-cash charges (e.g. depreciation) and interest expense to pretax income.
Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.
Coronavirus Aid, Relief, and Economic Security Act (CARES Act), also known as the CARES Act, is a $2.2 trillion economic stimulus bill passed by the 116th U.S. Congress and signed into law by President Donald Trump on March 27, 2020, in response to the economic fallout of the COVID-19 pandemic in the United States.
Correlation is a statistical measurement of how two securities move in relation to each other.
Credit spread is the difference in yield between a U.S. Treasury bond and another debt security of the same maturity but different credit quality. Credit spreads between U.S. Treasuries and other bond issuances are measured in basis points, with a 1% difference in yield equal to a spread of 100 basis points.
Dividend Yield is a financial ratio that shows how much a company pays out in dividends each year relative to its share price. In the absence of any capital gains, the dividend yield is the return on investment for a stock.
Downside Capture is a statistical measure of a fund’s performance in down markets. For example, a fund with downside capture of 90% would only have declined 90% as much as the related index during the same down market period.
Duration is a measure of the sensitivity of the price of a fixed-income investment to a change in interest rates. Duration is expressed as a number of years.
GLOSSARY OF TERMS
Duration contribution equals the spread duration, or the measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates, of a security or market segment multiplied by the size of the allocation to it.
Earnings growth is a measure of growth in a company’s net income over a specific period, often one year. The term can apply to actual data from previous periods or estimated data for future periods.
Earnings per share (EPS) is calculated by taking the total earnings divided by the number of shares outstanding.
Earnings Yield is the earnings per share for the most recent 12-month period divided by the current market price per share. The earnings yield shows the percentage of each dollar invested in the stock that was earned by the company.
EBITDA is the Earnings Before Interest, Taxes, Depreciation and Amortization. An approximate measure of a company’s operating cash flow based on data from the company’s income statement.
Enterprise Value (EV) is a measure of a company’s value, often used as an alternative to straightforward market capitalization. Enterprise Value is calculated as market capitalization plus debt, minority interest and preferred shares, minus total cash and cash equivalents.
Environmental, Social and Governance (ESG) is an evaluation of a firm’s collective conscientiousness for social and environmental factors. The criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. Environmental criteria consider how a company performs as a steward of nature. Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights.
FTSE All-World Index is a market capitalization weighted index representing the performance of large and mid-capitalization stocks from the FTSE Global Equity Index Series.
FTSE Emerging Index is a market capitalization weighted index representing the performance of over 790 large and mid-capitalization companies in 22 emerging markets.
Forward price to earnings ratio uses forecasted earnings, rather than current earnings, to calculate the price to earnings ratio.
Free Cash Flow is the operating cash flows (net income plus amortization and depreciation) minus capital expenditures and dividends. Free cash flow is the amount of cash that a company has left over after it has paid all of its expenses, including investments.
Free Cash Flow (FCF) Conversion represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. Unlike earnings or net income, free cash flow is a measure of profitability that excludes the non-cash expenses of the income statement and includes spending on equipment and assets as well as changes in working capital from the balance sheet.
Free Cash Flow (FCF) Yield is a financial ratio that compares the free cash flow per share a company is expected to earn against its market value per share. The ratio is calculated by taking the free cash flow per share divided by the current share price.
Global Financial Crisis refers to the financial crisis of 2007-2008, which was a severe worldwide economic crisis. Prior to the COVID-19 recession in 2020, it was considered by many economists to have been the most serious financial crisis since the Great Depression.
Government agency residential mortgage-backed security is an instrument whose principal and interest payments are guaranteed by a government agency such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).
Gross Domestic Product (GDP) is the monetary value of all the goods and services produced by an economy over a specified period. It includes consumption, government purchases, investments, and exports minus imports.
ICE BofAML 0-3 Month US Treasury Bill Index is a subset of the ICE BofAML US Treasury Bill Index and includes all securities with a remaining term to final maturity less than 3 months.
Inflation rate refers to the rate of increase in prices over a given period of time. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country.
Internal rate of return (IRR) is a metric used in financial analysis to estimate the profitability of potential investments. IRR is a discount rate that makes the net present value (NPV) of all cash flows equal to zero in a discounted cash flow analysis.
Mandatory convertible is a bond issued by a company which must be converted into shares to common stock on or before a specific date.
Meme stocks are stocks that see dramatic price increases, mostly fueled by people on social media (primarily Reddit, Twitter and Tik Tok). These stocks rarely have company fundamentals that back the rise in price and are often highly volatile.
Mortgage-backed security (MBS) is an investment similar to a bond that is made up of a bundle of home loans bought from the banks that issued them. Investors in MBS receive periodic payments similar to bond coupon payments.
GLOSSARY OF TERMS
MSCI ACWI ex USA Index is an index that captures large and mid cap representation across Developed Markets countries (excluding the US) and Emerging Markets countries. The index covers the majority of the global equity opportunity set outside the US.
MSCI All Country World Index (ACWI) is a free float-adjusted market capitalization index that is designed to measure equity market performance in the large- and mid-cap segments of certain developed markets and global emerging markets countries.
MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets.
MSCI Emerging Markets Small Cap Index is a free float-adjusted market capitalization index that is designed to measure small cap equity market performance in the global emerging markets.
MSCI Europe Index is an index that captures large and mid cap representation across 15 developed market countries in Europe.
Net present value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. NPV is used in capital budgeting and investment planning to analyze the profitability of a projected investment or project.
90% active share is an active share that was developed to quantify the degree of active management and measures the fraction of portfolio (based on position weights) that differs from the benchmark index. A portfolio with an active share of more than 60% is considered actively managed. Therefore, a 90% active share portfolio significantly differs from its index.
Positive Convexity is a measure describing the sensitivity of a bond’s duration to changes in yield where a fall in yields leads to a greater increase in price than price declines due to an increase in yields providing downside protection for investors.
Price to Book Value Ratio (P/B) is ratio used to compare a stock’s market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter’s book value per share.
Price to earnings ratio (P/E) is a common tool for comparing the prices of different common stocks and is calculated by dividing the current market price of a stock by the earnings per share.
Quantitative Easing is an expansionary monetary policy implemented by a central bank aiming to increase the money supply and decrease interest rates by buying bonds in order to inject liquidity into the economy.
Relative performance measures how a stock is performing relative to a specific market or index.
Return of Capital (ROC) is a return from an investment that is not considered income. The return of capital is when some or all of the money an investor has in an investment is paid back to him or her, thus decreasing the value of the investment.
Return on Capital Employed (ROCE) is a financial ratio that measures a company’s profitability and the efficiency with which its capital is employed. Return on Capital Employed (ROCE) is calculated as: ROCE = Earnings Before Interest and Tax (EBIT) / Capital Employed.
Return on Equity (ROE) is the amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested.
Return on Invested Capital (ROIC) is a calculation used to assess a company’s efficiency at allocating the capital under its control to profitable investments. ROIC is typically calculated by taking a company’s net income, subtracting dividends the company paid out and dividing that amount by the company’s total capital.
Risk-adjusted return refers to a calculation of the profit or potential profit from an investment that takes into account the degree of risk that must be accepted in order to achieve it. The risk is usually measured in comparison to U.S. Treasuries.
Russell Midcap Growth Index measures the performance of the mid-capitalization growth sector of the U.S. equity market.
Russell 1000® Growth Index measures the performance of the large-cap growth segment of the of the U.S. equity universe. It includes those Russell 1000® companies with higher price to book value ratios and higher forecasted growth values.
Russell 1000® Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000® companies with lower price to book value ratios and lower expected growth values.
Russell 2000® Growth Index measures the performance of the small-cap growth segment of the U.S. equity universe. It includes those Russell 2000® companies with higher price to book value ratios and higher forecasted growth values.
Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index.
Russell 2000® Value Index measures the performance of the small-cap value segment of the U.S. equity universe. It includes those Russell 2000® companies with lower price to book value ratios and lower forecasted growth values.
Russell 3000® Index measures the performance of the 3,000 largest U.S. companies representing approximately 98% of the investable U.S. equity market.
GLOSSARY OF TERMS
S&P 500 Index (“S&P 500”) is a market-value weighted index representing the performance of 500 widely held, publicly traded large capitalization stocks.
Securitized credit refers to the transformation of illiquid, nonmarketed assets into liquid, marketable assets, or in other words, securities.
Sell-side research is investment research issued by an investment bank or brokerage firm that is circulated to the firm’s clients. The ultimate outcome of the research is to provide a report including a set of financial estimates, a price target, and a recommendation of a stock’s expected performance.
Standard deviation is a statistical measure of the extent to which returns of an asset vary from its average.
Sustainable Business Advantage Drivers (SBA Drivers) refers to characteristic determined to help drive material value for customers and meaningful differentiation versus peers, as well as strong ESG risk management.
Tangible Book Value (“TBV”) is a valuation ratio expressing the price of a security compared to its hard, or tangible, book value as reported in the company’s balance sheet. The tangible book value number is equal to the company’s total book value less the value of any intangible assets.
Tier 1 Capital Ratio is a comparison between a banking firm’s core equity capital and total risk-weighted assets. A firm’s core equity capital is known as its Tier 1 capital and is the measure of a bank’s financial strength based on the sum of its equity capital and disclosed reserves, and sometimes non-redeemable, non-cumulative preferred stock. A firm’s risk-weighted assets include all assets that the firm holds that are systematically weighted for credit risk. Central banks typically develop the weighting scale for different asset classes, such as cash and coins, which have zero risk, versus a letter or credit, which carries more risk.
Turnover refers to a fund buying or selling securities. (The fund “turns over” its portfolio.) A fund pays transaction costs, such as commissions, when it buys and sells securities. Additionally, a higher turnover rate may result in higher taxes when the fund shares are held in a taxable account.
Yield concessions is when an investor gives up some yield by buying a lower yielding bond that if one were to invest in a higher yielding bond.
Yield Curve is a line that plots the yields of securities having equal credit quality but different maturity dates.
Yield Spread is the difference between yields on differing securities, calculated by deducting the yield of one security from another.
The broad based market indexes referenced in the following management commentaries are considered representative of their indicated market, the indexes are unmanaged and do not reflect the deduction of fees, such as, investment management and fund accounting fees, or taxes associated with a mutual fund. Investors cannot invest directly in an index.
Brown Advisory Growth Equity FundA Message to Our Shareholders
December 31, 2023
Dear Shareholder:
During the six-month period ended December 31, 2023, the Brown Advisory Growth Equity Fund Investor Shares (the “Fund”) increased 8.47% in value. During the same period, the Russell 1000 Growth (the “Index”), the Fund’s benchmark, increased 10.59%.
U.S. Large-Cap Growth stocks continued their impressive run during the period, and the Index ended the calendar year up 43%; the strongest calendar year return in the Index’s 45-year history. Returns, however, were not broad-based for much of the period but instead were concentrated in a handful of the largest companies by market capitalization. Through the first four and a half months of the period, the “Magnificent Seven” accounted for more than 75% of the Index’s return.
While this concentration of returns has challenged relative performance for active large-cap growth managers, we were encouraged by two things: fundamental results from companies in the Fund, and a favorable market environment to close out the period. Market breadth significantly increased in the final month and a half of the period, following inflation data that came in below market expectations in mid-November. These data points meaningfully increased market breadth- something we hope continues into 2024. The Fund outperformed by nearly 550 basis points (bp) over that month and a half period, with nearly every name in the portfolio outperforming our Index.
From a sector perspective, health care was the largest detractor to relative performance during the period. The rollout of the new generation of Glucagon-Like Peptide 1 (GLP-1) weight loss drugs negatively affected many medical technology companies’ stock prices, as investors abruptly reacted to uncertainty. Fund company, Edwards Lifesciences (EW), saw their stock decline following the rollout of the drugs, even though there is no known correlation between the drug and preventing heart disease.
Information technology was the largest positive contributing sector to relative performance during the period. Intuit, a provider of financial management software, was a top performer and continues to execute in its small- and medium-sized business group, delivering 18% year-over-year growth, most recently. TurboTax results were also better than we expected and offered some optimism for the product line-up heading into next year’s tax season.
During the period, the Fund initiated a position in Uber (UBER), and most recently, in Veralto Corporation (VLTO). Veralto is a multi-industrial company that was recently spun out by Danaher. The company operates in two segments: Water Quality, and Product Quality & Innovation. Both business segments provide mission-critical equipment/instrumentation, which we believe brings with them a steady stream of profitable financials. We also exited three positions during the period: Shopify (SHOP), Estee Lauder (EL), and DexCom (DXCM).
While we believe the market’s focus on interest rates and the mega-cap companies has created a challenging environment for stock pickers, we remain focused on implementing the philosophy and process that have been the hallmarks of this Fund for years. Outperformance to close out the period, which was particularly pronounced in the stock picker’s market following a better-than-expected inflation number in mid-November, was encouraging and we hope it is indicative of what is to come in 2024.
Sincerely,
Kenneth M. Stuzin, CFA
Portfolio Manager
Brown Advisory Growth Equity FundA Message to Our Shareholders
December 31, 2023
Past performance is not a guarantee of future results.
Mutual fund investing involves risk. Principal loss is possible.
Investments in smaller and medium capitalization companies generally carry greater risk than is customarily associated with larger companies for various reasons such as narrower markets, limited financial resources and less liquid stock.
The value of the Fund’s investments in REITs may change in response to changes in the real estate market such as declines in the value of real estate, lack of available capital or financing opportunities, and increases in property taxes or operating costs.
Investments in foreign securities entail certain risks not associated with investments in domestic securities, such as volatility of currency exchange rates, and in some cases, political and economic instability and relatively illiquid markets. These risks are greater for investments in emerging markets.
The Fund may invest in ETFs, which may trade at a discount to the aggregate value of the underlying securities and although expense ratios for ETFs are generally low, frequent trading of ETFs by the Fund can generate brokerage expenses.
Diversification does not assure a profit, nor does it protect against a loss in a declining market.
Fund holdings and sector allocations are subject to change and should not be considered a recommendation to buy or sell any security. For a complete list of Fund holdings, please refer to the Schedule of Investments provided in this report.
Definitions for terms and indices are provided in the Glossary of Terms.
Brown Advisory Growth Equity FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Shares | | | Value | |
| COMMON STOCKS — 94.1% | | | | | | |
| | | | | | | |
| Communication Services — 5.8% | | | | | | |
| Alphabet, Inc. — Class C(a) | | | 709,924 | | | $ | 100,049,589 | |
| Match Group, Inc.(a) | | | 997,530 | | | | 36,409,845 | |
| | | | | | | | 136,459,434 | |
| Consumer Discretionary — 9.1% | | | | | | | | |
| Amazon.com, Inc.(a) | | | 652,977 | | | | 99,213,326 | |
| Chewy, Inc. — Class A(a) | | | 1,168,611 | | | | 27,614,278 | |
| Lululemon Athletica, Inc.(a) | | | 172,277 | | | | 88,083,507 | |
| | | | | | | | 214,911,111 | |
| Consumer Staples — 4.4% | | | | | | | | |
| Costco Wholesale Corp. | | | 157,442 | | | | 103,924,315 | |
| | | | | | | | | |
| Financials — 10.7% | | | | | | | | |
| Mastercard, Inc. — Class A | | | 210,560 | | | | 89,805,946 | |
| Progressive Corp. | | | 473,282 | | | | 75,384,357 | |
| S&P Global, Inc. | | | 199,554 | | | | 87,907,528 | |
| | | | | | | | 253,097,831 | |
| Health Care — 17.6% | | | | | | | | |
| Align Technology, Inc.(a) | | | 231,856 | | | | 63,528,544 | |
| Edwards Lifesciences Corp.(a) | | | 901,342 | | | | 68,727,328 | |
| Intuitive Surgical, Inc.(a) | | | 291,196 | | | | 98,237,882 | |
| Thermo Fisher Scientific, Inc. | | | 136,864 | | | | 72,646,042 | |
| Veeva Systems, Inc. — Class A(a) | | | 230,181 | | | | 44,314,446 | |
| Zoetis, Inc. — Class A | | | 351,253 | | | | 69,326,805 | |
| | | | | | | | 416,781,047 | |
| Industrials — 12.6% | | | | | | | | |
| Cintas Corp. | | | 132,797 | | | | 80,031,440 | |
| Generac Holdings, Inc.(a) | | | 419,446 | | | | 54,209,201 | |
| IDEX Corp. | | | 148,110 | | | | 32,156,162 | |
| Uber Technologies, Inc.(a) | | | 1,362,422 | | | | 83,884,323 | |
| Veralto Corp. | | | 580,955 | | | | 47,789,358 | |
| | | | | | | | 298,070,484 | |
| Information Technology — 30.9% | | | | | | | | |
| Adobe, Inc.(a) | | | 150,024 | | | | 89,504,318 | |
| Atlassian Corp. — Class A(a) | | | 312,969 | | | | 74,442,806 | |
| Autodesk, Inc.(a) | | | 317,276 | | | | 77,250,360 | |
| Intuit, Inc. | | | 184,719 | | | | 115,454,918 | |
| Microsoft Corp. | | | 282,103 | | | | 106,082,012 | |
| NVIDIA Corp. | | | 214,867 | | | | 106,406,436 | |
| NXP Semiconductors NV | | | 213,910 | | | | 49,130,849 | |
| ServiceNow, Inc.(a) | | | 156,245 | | | | 110,385,530 | |
| | | | | | | | 728,657,229 | |
| Real Estate — 3.0% | | | | | | | | |
| CoStar Group, Inc.(a) | | | 822,621 | | | | 71,888,849 | |
| TOTAL COMMON STOCKS | | | | | | | | |
(Cost $1,230,801,852) | | | | | | | 2,223,790,300 | |
| | | | | | | | | |
| REAL ESTATE INVESTMENT TRUSTS — 3.7% | | | | | | | | |
| | | | | | | | | |
| Real Estate — 3.7% | | | | | | | | |
| SBA Communications Corp. — Class A | | | 339,529 | | | | 86,135,112 | |
| TOTAL REAL ESTATE | | | | | | | | |
| INVESTMENT TRUSTS | | | | | | | | |
(Cost $48,236,279) | | | | | | | 86,135,112 | |
| | | | | | | | | |
| SHORT-TERM INVESTMENTS — 2.6% | | | | | | | | |
| | | | | | | | | |
| Money Market Funds — 2.6% | | | | | | | | |
| First American Government Obligations | | | | | | | | |
| Fund — Class Z, 5.25%(b) | | | 61,228,305 | | | | 61,228,305 | |
| TOTAL SHORT-TERM INVESTMENTS | | | | | | | | |
| (Cost $61,228,305) | | | | | | | 61,228,305 | |
| TOTAL INVESTMENTS — 100.4% | | | | | | | | |
| (Cost $1,340,266,436) | | | | | | | 2,371,153,717 | |
| Liabilities in Excess of Other Assets — (0.4)% | | | | | | | (9,057,072 | ) |
| TOTAL NET ASSETS — 100.0% | | | | | | $ | 2,362,096,645 | |
Percentages are stated as a percent of net assets.
| (a) | Non-income producing security. |
| (b) | The rate shown represents the 7-day effective yield as of December 31, 2023. |
PORTFOLIO HOLDINGS
% of Net Assets
| Information Technology | 30.9% |
| Health Care | 17.6% |
| Industrials | 12.6% |
| Financials | 10.7% |
| Consumer Discretionary | 9.1% |
| Communication Services | 5.8% |
| Consumer Staples | 4.4% |
| Real Estate Investment Trusts | 3.7% |
| Real Estate | 3.0% |
| Money Market Funds | 2.6% |
| Other Assets and Liabilities | (0.4)% |
| | 100.0% |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Flexible Equity FundA Message to Our Shareholders
December 31, 2023
Dear Shareholder:
During the six-month period ended December 31, 2023, the Brown Advisory Flexible Equity Fund Investor Shares (the “Fund”) increased 12.00% in value exceeding the S&P 500 Index (the “Index”), the Fund’s benchmark, return of 8.04%.
For the calendar year, the S&P 500 Index gained 26.29%. It is interesting to note that no economists had anticipated such robust gains at the beginning of the year. The primary debate among economists at the beginning of the year was centered on the timing of an impending recession, rather than its likelihood. This was in the context of the Federal Reserve aggressively combating inflation by increasing interest rates at an unprecedented pace. We believe for many economists, it seemed almost inevitable that debt-laden businesses would need to cut costs, leading to rising unemployment, a decline in consumer confidence and spending, a subsequent recession, and a likely downturn in the markets. Contrary to these expectations the U.S. economy remained resilient, and consumer spending did not falter. In hindsight, it became clear that many businesses and consumers had secured long-term debt at lower interest rates, which mitigated the impact of the rising rates more than the headline figures suggested.
However, not all businesses were unaffected by the increasing interest rates. Notably, a few large regional banks collapsed due to mismatches in their assets and liabilities and liquidity concerns, which became evident when these institutions recorded paper losses on their securities due to the higher rates. Timely intervention by regulators prevented further bank runs, thereby stopping the spread of a financial contagion. Once investors were reassured that a crisis had been averted, the markets generally performed well and ended the year on a strong note.
The two major highlights of 2023 were the “narrowness” of the market and the burgeoning excitement around Artificial Intelligence (AI). A group of large technology companies, often referred to as the “Magnificent Seven” (Apple, Alphabet, Amazon, Meta, Microsoft, Nvidia, Tesla), had an exceptional year, with an average total return exceeding 100%. These seven stocks alone contributed to over 60% of the S&P 500 Index’s overall returns for the year. The Fund has meaningful investments in five of these companies – Microsoft, Alphabet, Meta, Amazon, and Apple.
The investor enthusiasm for the “Magnificent Seven” was also fueled by the groundbreaking advancements in Artificial Intelligence (AI) in 2023. This year, AI captured global attention due to its remarkable progress in natural language processing and machine learning. For the first time, AI demonstrated the capability to understand and generate human-like text, revolutionizing the way people interact with devices. The technology’s proficiency in rapidly and accurately analyzing vast datasets has opened the door to unprecedented insights and innovations.
Although it’s still early, we believe the gradual adoption of AI promises to significantly boost efficiency and foster creativity across a wide array of sectors, ranging from health care to education. Within the portfolio, companies such as Alphabet, Microsoft, Amazon, Adobe, and Meta are leading the charge in AI innovation.
The advantages of AI will likely extend beyond those companies that have been at the forefront of releasing AI models, such as Large Language Models. Firms with unique and proprietary datasets should also benefit. Over time, portfolio companies such as Apple, UnitedHealth, Intuit, Uber, and Progressive are expected to leverage their rich data resources to introduce new services or substantially enhance existing ones. This evolving landscape underscores the potential of AI to reshape various industries and create new opportunities for growth and innovation.
On the macroeconomic front, the discussion has shifted towards the possibility of a soft landing, and market pricing appears to reflect this sentiment. Inflation has significantly decreased, mainly due to the normalization of supply chains and a reduction in the money supply, a result of the Federal Reserve’s actions. Current trends suggest that the U.S. labor market is moving towards normalcy, with a decrease in job openings but without a meaningful rise in job losses.
Federal Reserve Chairman Jerome Powell has indicated that short-term interest rates may have reached their peak, signaling a potential shift in monetary policy. The Fed is prepared to consider lowering rates if economic data supports such a move. In anticipation of this potential policy change, the bond market has already begun pricing in rate cuts for the middle of the new year. This scenario reflects a cautiously optimistic outlook, with key economic indicators pointing towards stabilization and a potential easing of monetary policy in response to the evolving economic landscape.
In the six-month period, the communication services, financials and industrials sectors contributed the most to the portfolio’s return relative to the Index. All three had higher returns than the sectors in the Index. As compared to the Index, health care and information technology detracted from the results. Health care had a similar weighting but a lower return and information technology had a lower weighting but a similar return as compared to the Index.
The largest contributors to returns in the six-month period were KKR & Co., Inc., Microsoft Corp., Meta Platforms Inc. CL A (formerly known as Facebook), Intuit Inc. and Booking Holdings Inc. In their Strategic Update in the fourth quarter, KKR & Co
Brown Advisory Flexible Equity FundA Message to Our Shareholders
December 31, 2023
announced the acquisition of the remaining stake in Global Atlantic, the creation of a new Strategic Holdings segment and a modification of compensation ratios to be more performance-based. These initiatives were well received by investors. Overall, our estimates increased ~15% in the quarter from the combination of strong earnings and the Strategic Update. Microsoft established themselves as the leader in AI-related cloud infrastructure through their partnership with Open AI and rapid innovation. Monetization remains early, but Gen AI-services appear to be an opportunity for incremental revenue growth and share gains for Microsoft.
The biggest detractors were Edwards Lifesciences Corp., Align Technology, Merck & Co., CarMax, Inc., and Otis Worldwide Corp. Edwards Lifesciences’ results fell short of analysts’ expectations. Align’s stock declined sharply as the company’s earnings report missed revenues and earnings per share, and its updated guidance was below consensus. Longer term, we continue to like Align as the clear aligner penetration opportunity remains strong and we expect its dominant competitive positioning to continue.
We added three new investments and eliminated two since our June 30, 2023 annual report.
We eliminated Charles Schwab Corp. in favor of investing in Progressive, a well-managed property and casualty insurance company. Progressive’s stock declined as the company reported a higher loss ratio due to higher severity in the current inflationary environment. We view this as a temporary situation and assume that they will price risk appropriately going forward. There is more uncertainty today about Schwab’s earnings power given the shock their balance sheet experienced on the securities book due to the rapid rise in interest rates.
We sold Otis Worldwide Corp. and reinvested the proceeds in General Electric. Otis was an undermanaged business prior to its spin-off from United Technologies and while we like the progress Otis has made as an independent company, we believe GE is a better risk/reward opportunity. GE is well on its path of transforming itself and eliminating the complexity of its prior business model. GE will largely be a pureplay aerospace engine business after the anticipated spin-off of Vernova, its power and renewable energy business. We like GE’s aerospace business for its economics, moats and the recurring nature of its services business.
New holding Ferguson is one of the largest wholesale distributors of plumbing, HVAC (heating, ventilation, air conditioning) and MRO (maintenance, repair and operations) products in North America. We believe it has attractive economics and an opportunity to grow faster than the end markets, strong free cash flows, as well as a high return on invested capital.
As a reminder of our approach, the Flexible Equity team searches for investment bargains among long-term attractive businesses with shareholder-oriented managers – those with productive assets and productive managers. These businesses should have or develop competitive advantages that result in good business economics, managers who allocate capital well, capacity to adjust to changes in the world and the ability to grow business value over time. Bargains in these types of stocks can arise for various reasons, but are often due to short-term investor perceptions, temporary business challenges that will improve, company or industry changes for the better or as-yet-unrecognized potential for long-term growth and development. Despite the occasional investment that will go awry, and stretches when the general stock market, or our investment selection, is unrewarding, we are optimistic about the long-term outlook for equities of good businesses purchased at reasonable prices and our ability to find them.
Sincerely,
Maneesh Bajaj
Portfolio Manager
Past performance is not a guarantee of future results.
Mutual fund investing involves risk. Principal loss is possible.
Investments in smaller and medium-sized capitalization companies generally carry greater risk than is customarily associated with larger companies for various reasons such as narrower markets, limited financial resources and less liquid stock.
Investments in foreign securities entail certain risks not associated with investments in domestic securities, such as volatility of currency exchange rates, and in some cases, political and economic instability and relatively illiquid markets. These risks are greater for investments in emerging markets.
The value of the Fund’s investments in REITS may change in response to changes in the real estate market such as declines in the value of real estate, lack of available capital or financing opportunities, and increases in property taxes or operating costs.
Diversification does not assure a profit, nor does it protect against a loss in a declining market.
Fund holdings and sector allocations are subject to change and should not be considered a recommendation to buy or sell any security. For a complete list of Fund holdings, please refer to the Schedule of Investments provided in this report.
Definitions for terms and indices are provided in the Glossary of Terms.
Brown Advisory Flexible Equity FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Shares | | | Value | |
| COMMON STOCKS — 94.8% | | | | | | |
| | | | | | | |
| Communication Services — 13.1% | | | | | | |
| Alphabet, Inc. — Class A(a) | | | 133,678 | | | $ | 18,673,480 | |
| Alphabet, Inc. — Class C(a) | | | 203,937 | | | | 28,740,841 | |
| Meta Platforms, Inc. — Class A(a) | | | 84,510 | | | | 29,913,160 | |
| Netflix, Inc.(a) | | | 16,740 | | | | 8,150,371 | |
| Pinterest, Inc. — Class A(a) | | | 188,977 | | | | 6,999,708 | |
| T-Mobile US, Inc. | | | 66,450 | | | | 10,653,929 | |
| | | | | | | | 103,131,489 | |
| Consumer Discretionary — 10.4% | | | | | | | | |
| Amazon.com, Inc.(a) | | | 176,986 | | | | 26,891,252 | |
| Booking Holdings, Inc.(a) | | | 4,898 | | | | 17,374,284 | |
| Bright Horizons Family Solutions, Inc.(a) | | | 74,680 | | | | 7,037,843 | |
| CarMax, Inc.(a) | | | 123,928 | | | | 9,510,235 | |
| Lowe’s Cos., Inc. | | | 41,216 | | | | 9,172,621 | |
| TJX Cos., Inc. | | | 126,617 | | | | 11,877,941 | |
| | | | | | | | 81,864,176 | |
| Consumer Staples — 1.2% | | | | | | | | |
| Nomad Foods Ltd.(a) | | | 551,955 | | | | 9,355,637 | |
| | | | | | | | | |
| Energy — 2.9% | | | | | | | | |
| Baker Hughes Co. – Class A | | | 270,073 | | | | 9,231,095 | |
| Suncor Energy, Inc. | | | 434,178 | | | | 13,911,063 | |
| | | | | | | | 23,142,158 | |
| Financials — 25.8% | | | | | | | | |
| Ameriprise Financial, Inc. | | | 25,845 | | | | 9,816,706 | |
| Bank of America Corp. | | | 467,346 | | | | 15,735,540 | |
| Berkshire Hathaway, Inc. — Class B(a) | | | 85,483 | | | | 30,488,367 | |
| Blackstone, Inc. | | | 62,541 | | | | 8,187,868 | |
| First Citizens BancShares, Inc. — Class A | | | 10,556 | | | | 14,978,647 | |
| Fiserv, Inc.(a) | | | 89,376 | | | | 11,872,708 | |
| KKR & Co., Inc. | | | 327,502 | | | | 27,133,541 | |
| Mastercard, Inc. — Class A | | | 86,489 | | | | 36,888,423 | |
| Progressive Corp. | | | 66,203 | | | | 10,544,814 | |
| Visa, Inc. — Class A | | | 146,029 | | | | 38,018,650 | |
| | | | | | | | 203,665,264 | |
| Health Care — 12.6% | | | | | | | | |
| Agilent Technologies, Inc. | | | 86,357 | | | | 12,006,214 | |
| Align Technology, Inc.(a) | | | 40,226 | | | | 11,021,924 | |
| Avantor, Inc.(a) | | | 475,625 | | | | 10,858,519 | |
| Edwards Lifesciences Corp.(a) | | | 213,634 | | | | 16,289,593 | |
| Elevance Health, Inc. | | | 33,349 | | | | 15,726,054 | |
| Merck & Co., Inc. | | | 64,768 | | | | 7,061,007 | |
| UnitedHealth Group, Inc. | | | 50,518 | | | | 26,596,211 | |
| | | | | | | | 99,559,522 | |
| Industrials — 8.5% | | | | | | | | |
| Canadian National Railway Co. | | | 72,685 | | | | 9,131,417 | |
| Carrier Global Corp. | | | 139,020 | | | | 7,986,699 | |
| Ferguson PLC | | | 74,021 | | | | 14,291,234 | |
| General Electric Co. | | | 79,447 | | | | 10,139,821 | |
| Uber Technologies, Inc.(a) | | | 142,582 | | | | 8,778,774 | |
| United Rentals, Inc. | | | 29,193 | | | | 16,739,849 | |
| | | | | | | | 67,067,794 | |
| Information Technology — 20.3% | | | | | | | | |
| Accenture PLC — Class A | | | 31,667 | | | | 11,112,267 | |
| Adobe, Inc.(a) | | | 21,787 | | | | 12,998,124 | |
| Analog Devices, Inc. | | | 59,804 | | | | 11,874,682 | |
| Apple, Inc. | | | 157,789 | | | | 30,379,116 | |
| Intuit, Inc. | | | 30,908 | | | | 19,318,427 | |
| Microsoft Corp. | | | 151,752 | | | | 57,064,823 | |
| Taiwan Semiconductor | | | | | | | | |
| Manufacturing Co., Ltd. ADR | | | 169,795 | | | | 17,658,680 | |
| | | | | | | | 160,406,119 | |
| TOTAL COMMON STOCKS | | | | | | | | |
| (Cost $311,062,007) | | | | | | | 748,192,159 | |
| | | | | | | | | |
| REAL ESTATE INVESTMENT TRUSTS — 1.2% | | | | | | | | |
| | | | | | | | | |
| Real Estate — 1.2% | | | | | | | | |
| SBA Communications Corp. | | | 36,779 | | | | 9,330,465 | |
| TOTAL REAL ESTATE | | | | | | | | |
| INVESTMENT TRUSTS | | | | | | | | |
| (Cost $6,538,449) | | | | | | | 9,330,465 | |
| | | | | | | | | |
| SHORT-TERM INVESTMENTS — 4.0% | | | | | | | | |
| | | | | | | | | |
| Money Market Funds — 4.0% | | | | | | | | |
| First American Government Obligations | | | | | | | | |
| Fund — Class Z, 5.25%(b) | | | 31,861,170 | | | | 31,861,170 | |
| TOTAL SHORT-TERM INVESTMENTS | | | | | | | | |
| (Cost $31,861,170) | | | | | | | 31,861,170 | |
| TOTAL INVESTMENTS — 100.0% | | | | | | | | |
| (Cost $349,461,626) | | | | | | | 789,383,794 | |
| Other Assets in Excess of Liabilities — 0.0% | | | | | | | 2,511 | |
| TOTAL NET ASSETS — 100.0% | | | | | | $ | 789,386,305 | |
Percentages are stated as a percent of net assets.
ADR — American Depositary Receipt
PLC — Public Limited Company
| (a) | Non-income producing security. |
| (b) | The rate shown represents the 7-day effective yield as of December 31, 2023. |
PORTFOLIO HOLDINGS
% of Net Assets
| Financials | 25.8% |
| Information Technology | 20.3% |
| Communication Services | 13.1% |
| Health Care | 12.6% |
| Consumer Discretionary | 10.4% |
| Industrials | 8.5% |
| Money Market Funds | 4.0% |
| Energy | 2.9% |
| Consumer Staples | 1.2% |
| Real Estate Investment Trusts | 1.2% |
| Other Assets and Liabilities | 0.0% |
| | 100.0% |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Equity Income FundA Message to Our Shareholders
December 31, 2023
Dear Shareholder:
On October 25, 2023, shareholders were notified that the Brown Advisory Equity Income Fund (the “Fund”) would close via the Liquidation Sticker. This decision was taken after careful consideration and with the best interests of our shareholders in mind.
At current asset levels and with little prospect of growth in the medium term, the Fund was no longer viable, and we believed an orderly closure was the best solution for the Fund’s investors.
The closure of the Fund took place on January 12, 2024. This closure did not require shareholder approval. Brown Advisory LLC did not earn management fees while the Fund was in cash prior to being closed.
Brown Advisory LLC
Brown Advisory Equity Income FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Shares | | | Value | |
| COMMON STOCKS — 95.3% | | | | | | |
| | | | | | | |
| Consumer Discretionary — 14.6% | | | | | | |
| Best Buy Co., Inc. | | | 6,081 | | | $ | 476,021 | |
| Lowe’s Cos., Inc. | | | 3,057 | | | | 680,335 | |
| McDonald’s Corp. | | | 6,000 | | | | 1,779,060 | |
| | | | | | | | 2,935,416 | |
| Financials — 16.0% | | | | | | | | |
| Ameriprise Financial, Inc. | | | 3,000 | | | | 1,139,490 | |
| JPMorgan Chase & Co. | | | 12,136 | | | | 2,064,334 | |
| | | | | | | | 3,203,824 | |
| Health Care — 27.5% | | | | | | | | |
| AbbVie, Inc. | | | 10,418 | | | | 1,614,477 | |
| Merck & Co., Inc. | | | 20,000 | | | | 2,180,400 | |
| UnitedHealth Group, Inc. | | | 3,299 | | | | 1,736,825 | |
| | | | | | | | 5,531,702 | |
| Industrials — 9.3% | | | | | | | | |
| Automatic Data Processing, Inc. | | | 8,000 | | | | 1,863,760 | |
| | | | | | | | | |
| Information Technology — 27.9% | | | | | | | | |
| Accenture PLC — Class A | | | 3,501 | | | | 1,228,536 | |
| Apple, Inc. | | | 11,000 | | | | 2,117,830 | |
| Microsoft Corp. | | | 6,000 | | | | 2,256,240 | |
| | | | | | | | 5,602,606 | |
| TOTAL COMMON STOCKS | | | | | | | | |
| (Cost $4,167,116) | | | | | | | 19,137,308 | |
| | | | | | | | | |
| SHORT-TERM INVESTMENTS — 4.5% | | | | | | | | |
| | | | | | | | | |
| Money Market Funds — 4.5% | | | | | | | | |
| First American Government Obligations | | | | | | | | |
| Fund — Class Z, 5.25%(a) | | | 896,947 | | | | 896,947 | |
| TOTAL SHORT-TERM INVESTMENTS | | | | | | | | |
| (Cost $896,947) | | | | | | | 896,947 | |
| TOTAL INVESTMENTS — 99.8% | | | | | | | | |
| (Cost $5,064,063) | | | | | | | 20,034,255 | |
| Other Assets in Excess of Liabilities — 0.2% | | | | | | | 44,632 | |
| TOTAL NET ASSETS — 100.0% | | | | | | $ | 20,078,887 | |
Percentages are stated as a percent of net assets.
PLC — Public Limited Company
| (a) | The rate shown represents the 7-day effective yield as of December 31, 2023. |
PORTFOLIO HOLDINGS
% of Net Assets
| Information Technology | 27.9% |
| Health Care | 27.5% |
| Financials | 16.0% |
| Consumer Discretionary | 14.6% |
| Industrials | 9.3% |
| Money Market Funds | 4.5% |
| Other Assets and Liabilities | 0.2% |
| | 100.0% |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Sustainable Growth FundA Message to Our Shareholders
December 31, 2023
Dear Shareholder:
During the six-month period that ended December 31, 2023, the Brown Advisory Sustainable Growth Fund Institutional Shares (the “Fund”) increased 11.66% in value. During the same period, the Russell 1000 Growth Index (the “Index”), the Fund’s benchmark, increased 10.59%.
During the final two quarters of 2023, the US equity market was characterized by short-term volatility – three out of the six months were up and three were down – reflecting persistent uncertainty about the macroeconomic and geopolitical environment. Despite the periodic downdrafts, the market inflected higher to close out the year, as a refreshingly broad set of growth stocks finally usurped the dominance of the “Magnificent 7.”
During the third and fourth quarters of 2023, strong stock selection in the portfolio outweighed the negative effect of sector positioning on relative returns against the Index. From a sector positioning standpoint, our lack of exposure to consumer staples had a positive effect, while our underweight to communication services was detractive. Inclusive of stock selection and interaction, weakness from our health care names was overshadowed by strong performance from our information technology and industrials holdings.
Within information technology, our software and semi-conductor holdings were among the top contributors to both absolute and relative returns during the period. A leader in tax preparation, accounting, and financial management software, Intuit delivered robust earnings results in both reporting periods and raised forward guidance to reflect management’s optimism about the forward outlook. Despite macro headwinds for its Credit Karma business and relatively modest results from its TurboTax segment after a weaker-than-expected tax season, the company’s aggregate top- and bottom-line beats during the period were driven by significant outperformance in the Small and Medium Business segment, which we consider a continued catalyst for growth in the years to come.
The financial technology company, Block, was a top detractor to returns during the period. Although the company demonstrated impressive year-over-year revenue growth and continued to show progress on management’s commitment to improve their cost discipline, the stock traded down during our holding period on continued concerns about market share loss to competitors in its merchant-acquiring business and the continued macro-overhang in the CashApp segment. We exited our position in the third quarter and used the proceeds to fund a build out of our position in Veralto, the former Environmental and Applied Solutions segment of Danaher that spun out as a standalone entity at the end of September.
In addition to welcoming Veralto to the portfolio via a corporate action, we also added three other new names during the period that we believe represent upgrades to the portfolio. Consistent with our “one-in, one-out” philosophy, each new name that we added corresponded with the exit of an existing holding. In the beginning of the third quarter, we exited Autodesk to make room for Uber, and in the fourth quarter, we initiated new positions in Arthur J Gallagher and Agilent, which we funded with the proceeds from the liquidation of our positions in Home Depot and Bio-Rad. We also made a number of strategic trims/adds to optimize the position sizes of existing holdings. The trading actively associated with position re-sizing largely focused on taking advantage of short-term price movements and/or portfolio re-balancing. More specifically, we trimmed back a number of our top performing names like NVIDIA Corporation (NVDA), Verisk Analytics Inc (VRSK), and Cadence Design Systems, Inc. (CDNS) in order to fund incremental additions to names like Analog Devices, Inc. (ADI), Edwards Lifesciences Corporation (EW), and Fortive Corp. (FTV) that we believed to be trading down on short-term weakness. We believe these actions – upgrading the portfolio via swaps and our opportunistic trims/adds of existing holdings – will better position the portfolio for growth on a forward 4-6 year investment horizon, which is consistent with our philosophy of investing in a portfolio of our highest conviction ideas across a full market cycle.
Sincerely,
David Powell & Karina Funk
Co-Portfolio Managers
Brown Advisory Sustainable Growth FundA Message to Our Shareholders
December 31, 2023
Past performance is not a guarantee of future results.
Mutual fund investing involves risk. Principal loss is possible.
Sustainable investment considerations are one of multiple informational inputs into the investment process, alongside data on traditional financial factors, and so are not the sole driver of decision-making. Sustainable investment analysis may not be performed for every holding in the strategy. Sustainable investment considerations that are material will vary by investment style, sector/industry, market trends and client objectives. The Fund seeks to identify companies that it believes may be desirable based on our analysis of sustainable investment related risks and opportunities, but investors may differ in their views. As a result, the Fund may invest in companies that do not reflect the beliefs and values of any particular investor. The Fund may also invest in companies that would otherwise be excluded from other funds that focus on sustainable investment risks. Security selection will be impacted by the combined focus on sustainable investment research assessments and fundamental research assessments including the return forecasts. The Fund incorporates data from third parties in its research process but does not make investment decisions based on third-party data alone.
Investments in smaller and medium-sized capitalization companies generally carry greater risk than is customarily associated with larger companies for various reasons such as narrower markets, limited financial resources and less liquid stock.
The value of the Fund’s investments in REITS may change in response to changes in the real estate market such as declines in the value of real estate, lack of available capital or financing opportunities, and increases in property taxes or operating costs.
Diversification does not assure a profit, nor does it protect against a loss in a declining market.
Fund holdings and sector allocations are subject to change and should not be considered a recommendation to buy or sell any security. For a complete list of Fund holdings, please refer to the Schedule of Investments provided in this report.
Definitions for terms and indices are provided in the Glossary of Terms.
Brown Advisory Sustainable Growth FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Shares | | | Value | |
| COMMON STOCKS — 94.6% | | | | | | |
| | | | | | | |
| Communication Services — 3.9% | | | | | | |
| Alphabet, Inc. — Class A(a) | | | 2,469,142 | | | $ | 344,914,446 | |
| | | | | | | | | |
| Consumer Discretionary — 9.8% | | | | | | | | |
| Amazon.com, Inc.(a) | | | 2,973,207 | | | | 451,749,072 | |
| Chipotle Mexican Grill, Inc.(a) | | | 94,567 | | | | 216,270,946 | |
| NIKE, Inc. — Class B | | | 1,785,486 | | | | 193,850,215 | |
| | | | | | | | 861,870,233 | |
| Financials — 11.2% | | | | | | | | |
| Arthur J Gallagher & Co. | | | 506,374 | | | | 113,873,385 | |
| Blackstone, Inc. | | | 1,813,673 | | | | 237,446,069 | |
| MSCI, Inc. — Class A | | | 416,326 | | | | 235,494,802 | |
| Visa, Inc. — Class A | | | 1,508,727 | | | | 392,797,075 | |
| | | | | | | | 979,611,331 | |
| Health Care — 18.6% | | | | | | | | |
| Agilent Technologies, Inc. | | | 633,593 | | | | 88,088,435 | |
| Danaher Corp. | | | 1,309,851 | | | | 303,020,930 | |
| Edwards Lifesciences Corp.(a) | | | 2,895,153 | | | | 220,755,416 | |
| IDEXX Laboratories, Inc.(a) | | | 414,677 | | | | 230,166,469 | |
| Thermo Fisher Scientific, Inc. | | | 455,110 | | | | 241,567,837 | |
| UnitedHealth Group, Inc. | | | 657,511 | | | | 346,159,816 | |
| West Pharmaceutical Services, Inc. | | | 561,588 | | | | 197,746,367 | |
| | | | | | | | 1,627,505,270 | |
| Industrials — 8.9% | | | | | | | | |
| Fortive Corp. | | | 2,928,908 | | | | 215,655,496 | |
| Uber Technologies, Inc.(a) | | | 3,874,074 | | | | 238,526,737 | |
| Veralto Corp. | | | 1,365,332 | | | | 112,312,210 | |
| Verisk Analytics, Inc. | | | 898,406 | | | | 214,593,257 | |
| | | | | | | | 781,087,700 | |
| Information Technology — 40.3% | | | | | | | | |
| Adobe, Inc.(a) | | | 390,763 | | | | 233,129,206 | |
| Analog Devices, Inc. | | | 969,379 | | | | 192,479,894 | |
| Atlassian Corp. — Class A(a) | | | 778,876 | | | | 185,263,445 | |
| Cadence Design Systems, Inc.(a) | | | 814,783 | | | | 221,922,446 | |
| Dynatrace, Inc.(a) | | | 3,580,516 | | | | 195,818,420 | |
| Gartner, Inc.(a) | | | 469,295 | | | | 211,703,667 | |
| Intuit, Inc. | | | 673,646 | | | | 421,048,959 | |
| Marvell Technology, Inc. | | | 3,586,190 | | | | 216,283,119 | |
| Microsoft Corp. | | | 1,427,838 | | | | 536,924,203 | |
| Monolithic Power Systems, Inc. | | | 408,632 | | | | 257,756,893 | |
| NVIDIA Corp. | | | 1,026,947 | | | | 508,564,693 | |
| ServiceNow, Inc.(a) | | | 485,752 | | | | 343,178,930 | |
| | | | | | | | 3,524,073,875 | |
| Materials — 1.9% | | | | | | | | |
| Ecolab, Inc. | | | 854,569 | | | | 169,503,761 | |
| TOTAL COMMON STOCKS | | | | | | | | |
| (Cost $5,130,636,079) | | | | | | | 8,288,566,616 | |
| | | | | | | | | |
| REAL ESTATE INVESTMENT TRUSTS — 3.4% | | | | | | | | |
| | | | | | | | | |
| Real Estate — 3.4% | | | | | | | | |
| American Tower Corp. | | | 1,382,230 | | | | 298,395,812 | |
| TOTAL REAL ESTATE | | | | | | | | |
| INVESTMENT TRUSTS | | | | | | | | |
| (Cost $288,516,336) | | | | | | | 298,395,812 | |
| | | | | | | | | |
| SHORT-TERM INVESTMENTS — 1.9% | | | | | | | | |
| | | | | | | | | |
| Money Market Funds — 1.9% | | | | | | | | |
| First American Government Obligations | | | | | | | | |
| Fund — Class Z, 5.25%(b) | | | 163,095,422 | | | | 163,095,422 | |
| TOTAL SHORT-TERM INVESTMENTS | | | | | | | | |
| (Cost $163,095,422) | | | | | | | 163,095,422 | |
| TOTAL INVESTMENTS — 99.9% | | | | | | | | |
| (Cost $5,582,247,837) | | | | | | | 8,750,057,850 | |
| Other Assets in Excess of Liabilities — 0.1% | | | | | | | 6,615,699 | |
| TOTAL NET ASSETS — 100.0% | | | | | | $ | 8,756,673,549 | |
Percentages are stated as a percent of net assets.
| (a) | Non-income producing security. |
| (b) | The rate shown represents the 7-day effective yield as of December 31, 2023. |
PORTFOLIO HOLDINGS
% of Net Assets
| Information Technology | 40.3% |
| Health Care | 18.6% |
| Financials | 11.2% |
| Consumer Discretionary | 9.8% |
| Industrials | 8.9% |
| Communication Services | 3.9% |
| Real Estate Investment Trusts | 3.4% |
| Materials | 1.9% |
| Money Market Funds | 1.9% |
| Other Assets and Liabilities | 0.1% |
| | 100.0% |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Mid-Cap Growth FundA Message to Our Shareholders
December 31, 2023
Dear Shareholder:
During the six-month period ended December 31, 2023, the Brown Advisory Mid-Cap Growth Fund Investor Shares (the “Fund”) increased 8.12% in value. During the same period, the Russell Midcap® Growth Index, the Fund’s benchmark, increased 8.56%.
The Fund seeks to produce attractive, risk-adjusted returns over a full market cycle by owning companies that we believe are well-positioned to grow their enterprise value meaningfully (or compound) over time. We define a firm’s potential to compound with a set of traits we call the three Gs—durable growth, sound governance and scalable go-to market strategies. This philosophy typically leads us to own higher-quality, less-cyclical businesses. Finally, we strive to mitigate risk through deep due diligence, a valuation sensitivity, and by employing a structured sell discipline.
During the second half of 2023, signs of economic stability and growth emerged, the pace of inflation eased, and the U.S. 10-year Treasury yield—despite a 76 basis-point run in the first three months—ended the six-month period just slightly above where it started as 2024 rate-cut hopes blossomed sending rates lower in November and December. With that backdrop, U.S. equities generally performed well, with large-cap growth and small-cap value indices generally posting low double-digit percentage gains while small-cap growth mostly lagged with a mid-single-digit-percentage gain. In the midcap range, Technology, Financial, and Consumer Discretionary stocks drove returns. Defensive sectors like Health care and Staples lagged. The Fund slightly underperformed during this period due to its cash position in a rising market; stock selection positively contributed during the period.
From an individual stock perspective, CrowdStrike (CRWD) was the Fund’s top contributor during the period. The cybersecurity vendor posted 30%+ revenue growth throughout the year despite an uncertain IT budget environment. The company’s net new business growth accelerated in the most recent quarter. Fair Isaac Corp (FICO) was the second largest contributor during the period. Despite significant declines in mortgage volume across the market due to higher interest rates in general, the company demonstrated strong pricing power in its Scores business. Meanwhile, FICO’s software business continues to show strong recurring revenue growth and expanding profitability. Paycom (PAYC) was the largest detractor. It’s share-price took a hit on a weaker revenue outlook for the back half of 2023 and 2024. We think the issues are self-inflicted but fixable. Despite no correlation between transcatheter aortic valve replacement (TAVR) and obesity, Edwards (EW) share-price was hurt by GLP-1-related fears, as companies with cardiovascular exposure saw shares broadly decline. Additionally, growth in Edwards’ TAVR revenue has yet to accelerate above 10% following depressed sales during the pandemic, disappointing some investors that expected a faster recovery.
The Fund added nine new investments during the period, including four in technology, two in financials, one in health care, one in the consumer staples, and one in the industrials vertical. The Fund exited eight investments during the period to fund those opportunities.
As always, we remain committed to seeking attractive, risk-adjusted returns over a full market cycle by owning a diversified portfolio of companies, each of which we believe could one day grow much larger. We thank you for your support and interest and look forward to updating you in more detail in our next letter.
Sincerely,
George Sakellaris, CFA
Portfolio Manager
Brown Advisory Mid-Cap Growth FundA Message to Our Shareholders
December 31, 2023
Past performance is not a guarantee of future results.
Mutual fund investing involves risk. Principal loss is possible.
Investments in smaller and medium-sized capitalization companies generally carry greater risk than is customarily associated with larger companies for various reasons such as narrower markets, limited financial resources and less liquid stock.
The value of the Fund’s investments in REITS may change in response to changes in the real estate market such as declines in the value of real estate, lack of available capital or financing opportunities, and increases in property taxes or operating costs.
Investments in foreign securities entail certain risks not associated with investments in domestic securities, such as volatility of currency exchange rates, and in some cases, political and economic instability and relatively illiquid markets.
Diversification does not assure a profit, nor does it protect against a loss in a declining market.
Fund holdings and sector allocations are subject to change and should not be considered a recommendation to buy or sell any security. For a complete list of Fund holdings, please refer to the Schedule of Investments provided in this report.
Definitions for terms and indices are provided in the Glossary of Terms.
Brown Advisory Mid-Cap Growth FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Shares | | | Value | |
| COMMON STOCKS — 93.3% | | | | | | |
| | | | | | | |
| Communication Services — 3.9% | | | | | | |
| Match Group, Inc.(a) | | | 27,536 | | | $ | 1,005,064 | |
| Pinterest, Inc. — Class A(a) | | | 59,792 | | | | 2,214,696 | |
| Trade Desk, Inc. — Class A(a) | | | 8,101 | | | | 582,948 | |
| | | | | | | | 3,802,708 | |
| Consumer Discretionary — 9.3% | | | | | | | | |
| Bright Horizons Family Solutions, Inc.(a) | | | 12,276 | | | | 1,156,890 | |
| Chipotle Mexican Grill, Inc.(a) | | | 624 | | | | 1,427,063 | |
| Five Below, Inc.(a) | | | 5,930 | | | | 1,264,039 | |
| Lululemon Athletica, Inc.(a) | | | 1,812 | | | | 926,457 | |
| Pool Corp. | | | 3,834 | | | | 1,528,654 | |
| Ross Stores, Inc. | | | 19,680 | | | | 2,723,516 | |
| | | | | | | | 9,026,619 | |
| Consumer Staples — 3.1% | | | | | | | | |
| Casey’s General Stores, Inc. | | | 3,097 | | | | 850,870 | |
| Church & Dwight Co., Inc. | | | 9,349 | | | | 884,041 | |
| Kenvue, Inc. | | | 57,017 | | | | 1,227,576 | |
| | | | | | | | 2,962,487 | |
| Financials — 8.0% | | | | | | | | |
| Ares Management Corp. | | | 10,898 | | | | 1,295,990 | |
| Arthur J Gallagher & Co. | | | 5,729 | | | | 1,288,338 | |
| KKR & Co., Inc. | | | 20,793 | | | | 1,722,701 | |
| Tradeweb Markets, Inc. — Class A | | | 18,338 | | | | 1,666,557 | |
| WEX, Inc.(a) | | | 8,839 | | | | 1,719,627 | |
| | | | | | | | 7,693,213 | |
| Health Care — 21.5% | | | | | | | | |
| agilon health, Inc.(a) | | | 46,723 | | | | 586,374 | |
| Align Technology, Inc.(a) | | | 5,505 | | | | 1,508,370 | |
| Alnylam Pharmaceuticals, Inc.(a) | | | 6,894 | | | | 1,319,581 | |
| argenx SE — ADR(a) | | | 1,965 | | | | 747,545 | |
| Ascendis Pharma A/S — ADR(a) | | | 7,384 | | | | 930,015 | |
| Bio-Techne Corp. | | | 18,622 | | | | 1,436,874 | |
| Dexcom, Inc.(a) | | | 30,048 | | | | 3,728,655 | |
| Edwards Lifesciences Corp.(a) | | | 26,686 | | | | 2,034,808 | |
| HealthEquity, Inc.(a) | | | 18,055 | | | | 1,197,047 | |
| IDEXX Laboratories, Inc.(a) | | | 2,493 | | | | 1,383,740 | |
| Inari Medical, Inc.(a) | | | 20,246 | | | | 1,314,370 | |
| Insulet Corp.(a) | | | 5,816 | | | | 1,261,956 | |
| Veeva Systems, Inc. — Class A(a) | | | 12,243 | | | | 2,357,022 | |
| West Pharmaceutical Services, Inc. | | | 3,003 | | | | 1,057,416 | |
| | | | | | | | 20,863,773 | |
| Industrials — 22.0% | | | | | | | | |
| Booz Allen Hamilton Holding Corp. — Class A | | | 13,277 | | | | 1,698,261 | |
| Carlisle Cos., Inc. | | | 4,627 | | | | 1,445,614 | |
| Cintas Corp. | | | 4,552 | | | | 2,743,307 | |
| Copart, Inc.(a) | | | 43,532 | | | | 2,133,068 | |
| Equifax, Inc. | | | 7,063 | | | | 1,746,609 | |
| HEICO Corp. — Class A | | | 12,329 | | | | 1,756,143 | |
| IDEX Corp. | | | 3,041 | | | | 660,232 | |
| Paycom Software, Inc. | | | 5,514 | | | | 1,139,854 | |
| Rentokil Initial PLC — ADR | | | 34,938 | | | | 999,576 | |
| SiteOne Landscape Supply, Inc.(a) | | | 7,555 | | | | 1,227,688 | |
| Verisk Analytics, Inc. | | | 8,820 | | | | 2,106,745 | |
| Waste Connections, Inc. | | | 24,664 | | | | 3,681,595 | |
| | | | | | | | 21,338,692 | |
| Information Technology — 21.3% | | | | | | | | |
| Atlassian Corp. — Class A(a) | | | 4,042 | | | | 961,430 | |
| Autodesk, Inc.(a) | | | 2,077 | | | | 505,708 | |
| CCC Intelligent Solutions Holdings, Inc.(a) | | | 76,299 | | | | 869,046 | |
| Crowdstrike Holdings, Inc. — Class A(a) | | | 6,336 | | | | 1,617,708 | |
| Dynatrace, Inc.(a) | | | 30,237 | | | | 1,653,662 | |
| Elastic NV(a) | | | 6,403 | | | | 721,618 | |
| Fair Isaac Corp.(a) | | | 2,059 | | | | 2,396,696 | |
| Gartner, Inc.(a) | | | 5,741 | | | | 2,589,822 | |
| Guidewire Software, Inc.(a) | | | 9,065 | | | | 988,448 | |
| HubSpot, Inc.(a) | | | 924 | | | | 536,419 | |
| Keysight Technologies, Inc.(a) | | | 8,405 | | | | 1,337,151 | |
| KLA Corp. | | | 1,604 | | | | 932,405 | |
| Marvell Technology, Inc. | | | 34,474 | | | | 2,079,126 | |
| Monolithic Power Systems, Inc. | | | 1,284 | | | | 809,922 | |
| NXP Semiconductors NV | | | 5,288 | | | | 1,214,548 | |
| Workday, Inc. — Class A(a) | | | 5,043 | | | | 1,392,171 | |
| | | | | | | | 20,605,880 | |
| Materials — 2.1% | | | | | | | | |
| Vulcan Materials Co. | | | 9,047 | | | | 2,053,759 | |
| | | | | | | | | |
| Real Estate — 2.1% | | | | | | | | |
| CoStar Group, Inc.(a) | | | 23,720 | | | | 2,072,891 | |
| TOTAL COMMON STOCKS | | | | | | | | |
| (Cost $65,898,091) | | | | | | | 90,420,022 | |
| | | | | | | | | |
| REAL ESTATE INVESTMENT TRUSTS — 1.4% | | | | | | | | |
| | | | | | | | | |
| Real Estate — 1.4% | | | | | | | | |
| SBA Communications Corp. — Class A | | | 5,269 | | | | 1,336,693 | |
| TOTAL REAL ESTATE | | | | | | | | |
| INVESTMENT TRUSTS | | | | | | | | |
| (Cost $920,637) | | | | | | | 1,336,693 | |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Mid-Cap Growth FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Shares | | | Value | |
| SHORT-TERM INVESTMENTS — 5.2% | | | | | | |
| | | | | | | |
| Money Market Funds — 5.2% | | | | | | |
| First American Government Obligations | | | | | | |
| Fund — Class Z, 5.25%(b) | | | 5,033,511 | | | $ | 5,033,511 | |
| TOTAL SHORT-TERM INVESTMENTS | | | | | | | | |
| (Cost $5,033,511) | | | | | | | 5,033,511 | |
| TOTAL INVESTMENTS — 99.9% | | | | | | | | |
| (Cost $71,852,239) | | | | | | | 96,790,226 | |
| Other Assets in Excess of Liabilities — 0.1% | | | | | | | 63,710 | |
| TOTAL NET ASSETS — 100.0% | | | | | | $ | 96,853,936 | |
Percentages are stated as a percent of net assets.
ADR — American Depositary Receipt
PLC — Public Limited Company
| (a) | Non-income producing security. |
| (b) | The rate shown represents the 7-day effective yield as of December 31, 2023. |
PORTFOLIO HOLDINGS
% of Net Assets
| Industrials | 22.0% |
| Health Care | 21.5% |
| Information Technology | 21.3% |
| Consumer Discretionary | 9.3% |
| Financials | 8.0% |
| Money Market Funds | 5.2% |
| Communication Services | 3.9% |
| Consumer Staples | 3.1% |
| Real Estate | 2.1% |
| Materials | 2.1% |
| Real Estate Investment Trusts | 1.4% |
| Other Assets and Liabilities | 0.1% |
| | 100.0% |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Small-Cap Growth FundA Message to Our Shareholders
December 31, 2023
Dear Shareholder:
During the six-month period ended December 31, 2023, the Brown Advisory Small-Cap Growth Fund Investor Shares (the “Fund”) returned 2.26%. During the same period, the Russell 2000® Growth Index, the Fund’s benchmark, returned 4.50%. The strategy failed to keep up with the low-quality rally during the final weeks of the year spurred by the Federal Reserve’s abrupt dovish turn.
For the six-month period, the largest contributors to the Fund’s overall performance were the Communication Services, Health Care and Materials sectors. The largest detractors were Industrials and Information Technology due to their relative lack of intense cyclicality.
At the individual stock level, Pinterest Inc., Neurocrine Biosciences and Prosperity Bancshares were the top contributors to the strategy. Pinterest is a social media platform that continued to demonstrate revenue growth and margin expansion, bolstering confidence in the new management team’s strategic plan amidst an improving advertising market back drop. Neurocrine is a commercial stage biopharmaceutical company whose lead drug, Ingrezza, continues to show robust growth as the firm is entering a key period for its pipeline assets. Prosperity Bancshares reported solid results for most of 2023. However, it took solid economic growth, a benign credit environment, and a more dovish Federal Reserve to finally push the stock off the lows incurred post the collapse of Silicon Valley Bank earlier in the year. In addition, Karuna Therapeutics was up considerably on the announced acquisition by Bristol-Myers Squibb.
The largest detractors for the period were concentrated in the Health Care sector, which lagged the broader benchmark meaningfully in 2023. Establishment Labs, a women’s health company, was the largest detractor due to weaker demand and a delay in product approvals in two key geographies. (Fortunately, a couple positive developments have enabled the stock to rebound strongly in early 2024.) Rentokil, a global pest management company, witnessed U.S. growth come in slightly below plan – a symptom of its continued integration of the acquired Terminex assets. Finally, agilon health, a value-based care organization, did not improve its profitability at the anticipated rate due to an industry-wide issue of strong healthcare utilization trends. Although painful in the short-term, the company’s core model of partnering with primary care physician practices to enable better coordinated care of principally Medicare Advantage lives appears intact.
There were 7 new investments over the course of the six-month period. The additions were diversified, with 3 in Information Technology, 2 in Industrials, and one in Health Care. There were an equal number of businesses that were sold from the portfolio. Due to the dramatic move higher in smaller capitalization equities in the final few weeks of the year, we slowed our purchases of several names, leaving us with ample room to add capital to these ideas as price and information flow dictate.
As we enter 2024, we remain comfortable with our sector positioning and remain laser focused on continuing to drive enough idea generation to prepare for whatever the economy and markets might have in store for the coming year. Our philosophy and process have served us well over time, but it requires a dedicated team and a constant focus on execution to drive superior risk-adjusted returns over a full market cycle.
Sincerely,
Christopher Berrier
Portfolio Manager
Brown Advisory Small-Cap Growth FundA Message to Our Shareholders
December 31, 2023
Past performance is not a guarantee of future results.
Mutual fund investing involves risk. Principal loss is possible.
Investments in smaller companies generally carry greater risk than is customarily associated with larger companies for various reasons such as narrower markets, limited financial resources and less liquid stock.
The value of the Fund’s investments in REITs may change in response to changes in the real estate market such as declines in the value of real estate, lack of available capital or financing opportunities, and increases in property taxes or operating costs.
The Fund may invest in ETFs, which may trade at a discount to the aggregate value of the underlying securities and although expense ratios for ETFs are generally low, frequent trading of ETFs by the Fund can generate brokerage expenses.
Earnings growth is not representative of the Fund’s future performance. Diversification does not assure a profit, nor does it protect against a loss in a declining market.
Private Placement issued securities are restricted securities that are not publicly traded. Delay or difficulty in selling such securities may result in a loss to the Fund.
Fund holdings and sector allocations are subject to change and should not be considered a recommendation to buy or sell any security. For a complete list of Fund holdings, please refer to the Schedule of Investments provided in this report.
Definitions for terms and indices are provided in the Glossary of Terms.
Brown Advisory Small-Cap Growth FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Shares | | | Value | |
| COMMON STOCKS — 89.2% | | | | | | |
| | | | | | | |
| Communication Services — 4.8% | | | | | | |
| Cogent Communications Holdings, Inc. | | | 402,562 | | | $ | 30,618,866 | |
| Pinterest, Inc. — Class A(a) | | | 376,974 | | | | 51,003,117 | |
| Take-Two Interactive Software, Inc.(a) | | | 150,473 | | | | 24,218,629 | |
| | | | | | | | 105,840,612 | |
| Consumer Discretionary — 8.7% | | | | | | | | |
| Bright Horizons Family Solutions, Inc.(a) | | | 715,565 | | | | 67,434,845 | |
| Choice Hotels International, Inc. | | | 52,656 | | | | 5,965,925 | |
| Churchill Downs, Inc. | | | 139,972 | | | | 18,886,422 | |
| Clarus Corp. | | | 1,529,261 | | | | 10,544,255 | |
| First Watch Restaurant Group, Inc.(a) | | | 531,515 | | | | 10,683,452 | |
| Mister Car Wash, Inc.(a) | | | 4,310,526 | | | | 37,242,944 | |
| TopBuild Corp.(a) | | | 73,651 | | | | 27,564,623 | |
| Vizio Holding Corp. — Class A(a) | | | 1,231,517 | | | | 9,482,681 | |
| XPEL, Inc.(a) | | | 94,276 | | | | 5,076,763 | |
| | | | | | | | 192,881,910 | |
| Consumer Staples — 3.4% | | | | | | | | |
| Casey’s General Stores, Inc. | | | 189,666 | | | | 52,108,837 | |
| Simply Good Foods Co.(a) | | | 602,153 | | | | 23,845,259 | |
| | | | | | | | 75,954,096 | |
| Energy — 3.1% | | | | | | | | |
| Cactus, Inc. — Class A | | | 490,520 | | | | 22,269,608 | |
| ChampionX Corp. | | | 1,600,735 | | | | 46,757,469 | |
| | | | | | | | 69,027,077 | |
| Financials — 4.7% | | | | | | | | |
| Houlihan Lokey, Inc. — Class A | | | 137,138 | | | | 16,444,218 | |
| Prosperity Bancshares, Inc. | | | 811,549 | | | | 54,966,214 | |
| WEX, Inc.(a) | | | 174,324 | | | | 33,914,734 | |
| | | | | | | | 105,325,166 | |
| Health Care — 22.8% | | | | | | | | |
| Accolade, Inc.(a) | | | 1,988,733 | | | | 23,884,683 | |
| agilon health, Inc.(a) | | | 1,241,740 | | | | 15,583,837 | |
| Alignment Healthcare, Inc.(a) | | | 1,171,633 | | | | 10,087,760 | |
| Arvinas, Inc.(a) | | | 87,927 | | | | 3,619,075 | |
| Ascendis Pharma A/S — ADR(a) | | | 154,661 | | | | 19,479,553 | |
| Bio-Techne Corp. | | | 238,661 | | | | 18,415,083 | |
| Blueprint Medicines Corp.(a) | | | 203,727 | | | | 18,791,778 | |
| Bruker Corp. | | | 530,596 | | | | 38,988,194 | |
| Definitive Healthcare Corp. — Class A(a) | | | 1,357,913 | | | | 13,497,655 | |
| Encompass Health Corp. | | | 582,199 | | | | 38,844,317 | |
| Establishment Labs Holdings, Inc.(a) | | | 792,772 | | | | 20,524,867 | |
| HealthEquity, Inc.(a) | | | 544,982 | | | | 36,132,307 | |
| Inari Medical, Inc.(a) | | | 504,712 | | | | 32,765,903 | |
| Karuna Therapeutics, Inc.(a) | | | 105,395 | | | | 33,358,571 | |
| LifeStance Health Group, Inc.(a) | | | 1,536,413 | | | | 12,030,114 | |
| NeoGenomics, Inc.(a) | | | 3,048,087 | | | | 49,318,049 | |
| Neurocrine Biosciences, Inc.(a) | | | 357,842 | | | | 47,149,262 | |
| OrthoPediatrics Corp.(a) | | | 491,021 | | | | 15,963,093 | |
| Phreesia, Inc.(a) | | | 1,296,049 | | | | 30,003,534 | |
| SI-BONE, Inc.(a) | | | 1,285,006 | | | | 26,972,276 | |
| | | | | | | | 505,409,911 | |
| Industrials — 18.2% | | | | | | | | |
| AZEK Co., Inc — Class A.(a) | | | 511,630 | | | | 19,569,848 | |
| Casella Waste Systems, Inc. — Class A(a) | | | 432,841 | | | | 36,990,592 | |
| Curtiss-Wright Corp. | | | 111,794 | | | | 24,906,585 | |
| EnPro Industries, Inc. | | | 58,377 | | | | 9,150,011 | |
| FTI Consulting, Inc.(a) | | | 144,929 | | | | 28,862,610 | |
| Genpact Ltd. | | | 309,759 | | | | 10,751,735 | |
| IDEX Corp. | | | 50,118 | | | | 10,881,119 | |
| John Bean Technologies Corp. | | | 210,105 | | | | 20,894,942 | |
| Knight-Swift Transportation | | | | | | | | |
| Holdings, Inc. — Class A | | | 176,884 | | | | 10,197,363 | |
| MSA Safety, Inc. | | | 225,333 | | | | 38,042,970 | |
| Mueller Water Products, Inc. — Class A | | | 1,130,090 | | | | 16,273,296 | |
| Rentokil Initial PLC — ADR | | | 1,066,795 | | | | 30,521,005 | |
| SiteOne Landscape Supply, Inc.(a) | | | 97,004 | | | | 15,763,150 | |
| SPX Technologies, Inc.(a) | | | 114,952 | | | | 11,611,302 | |
| Valmont Industries, Inc. | | | 112,272 | | | | 26,216,635 | |
| Waste Connections, Inc. | | | 271,932 | | | | 40,591,290 | |
| Woodward, Inc. | | | 194,249 | | | | 26,443,116 | |
| Zurn Elkay Water Solutions Corp. | | | 867,220 | | | | 25,504,940 | |
| | | | | | | | 403,172,509 | |
| Information Technology — 19.1% | | | | | | | | |
| Bentley Systems, Inc. — Class B | | | 351,790 | | | | 18,356,402 | |
| BlackLine, Inc.(a) | | | 612,759 | | | | 38,260,672 | |
| CCC Intelligent Solutions Holdings, Inc.(a) | | | 3,306,428 | | | | 37,660,215 | |
| Clear Secure, Inc. — Class A | | | 1,053,524 | | | | 21,755,271 | |
| Clearwater Analytics | | | | | | | | |
| Holdings, Inc. — Class A(a) | | | 389,549 | | | | 7,802,666 | |
| Dynatrace, Inc.(a) | | | 764,072 | | | | 41,787,097 | |
| Entegris, Inc. | | | 326,749 | | | | 39,151,064 | |
| Envestnet, Inc.(a) | | | 352,957 | | | | 17,478,431 | |
| Guidewire Software, Inc.(a) | | | 188,214 | | | | 20,522,855 | |
| Infinera Corp.(a) | | | 4,980,334 | | | | 23,656,587 | |
| Lattice Semiconductor Corp.(a) | | | 250,679 | | | | 17,294,344 | |
| Littelfuse, Inc. | | | 96,014 | | | | 25,689,506 | |
| Onto Innovation, Inc.(a) | | | 60,914 | | | | 9,313,751 | |
| Power Integrations, Inc. | | | 353,140 | | | | 28,996,325 | |
| PROS Holdings, Inc.(a) | | | 913,669 | | | | 35,441,221 | |
| SiTime Corp.(a) | | | 49,576 | | | | 6,052,238 | |
| Workiva, Inc. — Class A(a) | | | 345,236 | | | | 35,051,811 | |
| | | | | | | | 424,270,456 | |
| Materials — 3.8% | | | | | | | | |
| HB Fuller Co. | | | 523,375 | | | | 42,607,959 | |
| Quaker Chemical Corp. | | | 192,008 | | | | 40,978,347 | |
| | | | | | | | 83,586,306 | |
| Real Estate — 0.6% | | | | | | | | |
| DigitalBridge Group, Inc. — Class A | | | 764,721 | | | | 13,413,206 | |
| TOTAL COMMON STOCKS | | | | | | | | |
| (Cost $1,589,601,007) | | | | | | | 1,978,881,249 | |
| | | | | | | | | |
| EXCHANGE TRADED FUNDS — 2.1% | | | | | | | | |
| SPDR S&P Biotech Exchange Traded Fund | | | 532,861 | | | | 47,579,159 | |
| TOTAL EXCHANGE TRADED FUNDS | | | | | | | | |
| (Cost $42,833,507) | | | | | | | 47,579,159 | |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Small-Cap Growth FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Shares | | | Value | |
| REAL ESTATE INVESTMENT TRUSTS — 1.7% | | | | | | |
| | | | | | | |
| Real Estate — 1.7% | | | | | | |
| EastGroup Properties, Inc. | | | 211,345 | | | $ | 38,790,261 | |
| TOTAL REAL ESTATE | | | | | | | | |
| INVESTMENT TRUSTS | | | | | | | | |
| (Cost $23,195,542) | | | | | | | 38,790,261 | |
| | | | | | | | | |
| PRIVATE PLACEMENTS — 0.1% | | | | | | | | |
| StepStone VC Global | | | | | | | | |
| Partners IV-B, L.P.(a)(b)(e) | | | 19,200 | | | | 1,047,133 | |
| StepStone VC Global | | | | | | | | |
| Partners V-B, L.P.(a)(c)(e) | | | 91,769 | | | | 100,412 | |
| TOTAL PRIVATE PLACEMENTS | | | | | | | | |
| (Cost $—) | | | | | | | 1,147,545 | |
| | | | | | | | | |
| SHORT-TERM INVESTMENTS — 8.3% | | | | | | | | |
| | | | | | | | | |
| Money Market Funds — 8.3% | | | | | | | | |
| First American Government Obligations | | | | | | | | |
| Fund — Class Z, 5.25%(d) | | | 183,725,024 | | | | 183,725,024 | |
| TOTAL SHORT-TERM INVESTMENTS | | | | | | | | |
| (Cost $183,725,024) | | | | | | | 183,725,024 | |
| TOTAL INVESTMENTS — 101.4% | | | | | | | | |
| (Cost $1,839,355,080) | | | | | | | 2,250,123,238 | |
| Liabilities in Excess of Other Assets — (1.4)% | | | | | | | (29,974,126 | ) |
| TOTAL NET ASSETS — 100.0% | | | | | | $ | 2,220,149,112 | |
Percentages are stated as a percent of net assets.
ADR — American Depositary Receipt
PLC — Public Limited Company
| (a) | Non-income producing security. |
| (b) | Security is exempt from registration under Regulation D of the Securities Act of 1933. Security was acquired from February 2008 to April 2018 as part of a $2,000,000 capital commitment. As of the date of this report, $1,920,000 of the capital commitment has been fulfilled by the Fund. |
| (c) | Security is exempt from registration under Regulation D of the Securities Act of 1933. Security was acquired from October 2012 to August 2018 as part of a $100,000 capital commitment. As of the date of this report, $91,000 of the capital commitment has been fulfilled by the Fund |
| (d) | The rate shown represents the 7-day effective yield as of December 31, 2023. |
| (e) | These securities are being fair valued, using significant unobservable inputs (Level 3), in accordance with the policies and procedures adopted by the Fund. Further, they may not be sold by the Fund. Total unfunded capital commitments related to these holdings are immaterial and total $89,000, or 0.0% of the Fund’s net assets as of the date of this report. |
PORTFOLIO HOLDINGS
% of Net Assets
| Health Care | 22.8% |
| Information Technology | 19.1% |
| Industrials | 18.2% |
| Consumer Discretionary | 8.7% |
| Money Market Funds | 8.3% |
| Communication Services | 4.8% |
| Financials | 4.7% |
| Materials | 3.8% |
| Consumer Staples | 3.4% |
| Energy | 3.1% |
| Exchange Traded Funds | 2.1% |
| Real Estate Investment Trusts | 1.7% |
| Real Estate | 0.6% |
| Private Placements | 0.1% |
| Other Assets and Liabilities | (1.4)% |
| | 100.0% |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Small-Cap Fundamental Value FundA Message to Our Shareholders
December 31, 2023
Dear Shareholder:
During the six-month period ended December 31, 2023, the Brown Advisory Small-Cap Fundamental Value Fund Investor Shares (the “Fund”) increased 12.98% in value. During the same period, the Russell 2000® Value Index, the Fund’s benchmark, increased 11.85%.
For the six-month period, the largest positive contributors to the Fund were consumer discretionary and information technology. The largest negative contributors to overall performance were communication services and financials.
From an individual stock perspective, Modine Manufacturing Company was the top contributor during the period. Modine manufactures and sells heat-transfer systems and components and thermal management products. Management’s 80/20 efforts are paying off, as margins in both the Climate Solutions and Performance Technologies segments are now materially higher than just a few years ago. Additionally, we believe an improved ability to commercialize the company’s highly engineered product portfolio is allowing the company to show the consistent revenue growth that was elusive before this management team was installed. In our view, earnings growth and multiple expansion have worked in tandem in Modine’s favor.
WideOpenWest, Inc. continues to be a bottom contributor. Management cited competition from Fixed Wireless being more difficult than they expected. These challenges were exacerbated by poor execution in the later part of the period.
The Fund made seven new investments and sold five investments during the six-month period. One notable addition was within the energy sector. We made an investment in Sitio Royalties (STR) which is an oil and gas mineral owner with concentrated, high productivity positions in the Permian, Delaware and Eagleford basins. The company has been a consolidator of Permian acreage interests, and after recently merging with Brigham Minerals, we believe it has strong scale, limited leverage, and an advantaged position from which to continue to consolidate the basin to drive earnings growth.
January 1st, 2024 is the Fund’s 15th year anniversary. While there have been significant macro challenges to contend with (great financial crisis, quantitative easing/ zero interest rates, a global pandemic, and renewed inflation flames), we have never veered from our core philosophy which we laid out over 15 years ago. Our philosophy is firmly rooted in the concept that current and consistent cash flow always retain value. We believe capital allocation can be incredibly impactful, but if poorly executed can destroy meaningful value. We strive to make these investments at an attractive valuation. Each year the team talks to approximately 250-300 companies in order to find ones that meet our criteria. This is a labor-intensive process, but we believe it enables us to find opportunities that do not present themselves nice and neatly in a screen. Finally, we believe risk management and sell discipline helps to ensure that we protect investors capital. As we start 2024, we continue to be confident about the sound foundation of our cash flow oriented investing philosophy, the strength of our investment process, and the team’s ability to find attractive investments for our investors.
Sincerely,
J. David Schuster
Portfolio Manager
Past performance is not a guarantee of future results.
Mutual fund investing involves risk. Principal loss is possible.
Investments in smaller companies generally carry greater risk than is customarily associated with larger companies for various reasons such as narrower markets, limited financial resources and less liquid stock.
The value of the Fund’s investments in REITs may change in response to changes in the real estate market such as declines in the value of real estate, lack of available capital or financing opportunities, and increases in property taxes or operating costs.
The Fund may invest in ETFs, which may trade at a discount to the aggregate value of the underlying securities and although expense ratios for ETFs are generally low, frequent trading of ETFs by the Fund can generate brokerage expenses.
Diversification does not assure a profit, nor does it protect against a loss in a declining market.
Fund holdings and sector allocations are subject to change and should not be considered a recommendation to buy or sell any security. For a complete list of Fund holdings, please refer to the Schedule of Investments provided in this report.
Definitions for terms and indices are provided in the Glossary of Terms.
Brown Advisory Small-Cap Fundamental Value FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Shares | | | Value | |
| COMMON STOCKS — 88.4% | | | | | | |
| | | | | | | |
| Communication Services — 5.4% | | | | | | |
| Cable One, Inc. | | | 49,916 | | | $ | 27,782,746 | |
| Nexstar Media Group, Inc. | | | 167,930 | | | | 26,323,028 | |
| Shutterstock, Inc. | | | 279,663 | | | | 13,502,130 | |
| WideOpenWest, Inc.(a) | | | 621,705 | | | | 2,517,905 | |
| | | | | | | | 70,125,809 | |
| Consumer Discretionary — 14.8% | | | | | | | | |
| La-Z-Boy, Inc. | | | 589,738 | | | | 21,773,127 | |
| Modine Manufacturing Co.(a) | | | 883,285 | | | | 52,732,114 | |
| Monarch Casino & Resort, Inc. | | | 231,399 | | | | 16,001,241 | |
| Monro, Inc. | | | 214,210 | | | | 6,284,921 | |
| Murphy USA, Inc. | | | 64,898 | | | | 23,140,031 | |
| Oxford Industries, Inc. | | | 57,850 | | | | 5,785,000 | |
| Signet Jewelers Ltd. | | | 426,767 | | | | 45,775,029 | |
| Vista Outdoor, Inc.(a) | | | 764,610 | | | | 22,609,518 | |
| | | | | | | | 194,100,981 | |
| Consumer Staples — 1.9% | | | | | | | | |
| TreeHouse Foods, Inc.(a) | | | 614,861 | | | | 25,485,988 | |
| | | | | | | | | |
| Energy — 6.6% | | | | | | | | |
| Bristow Group, Inc.(a) | | | 431,395 | | | | 12,195,537 | |
| ChampionX Corp. | | | 833,699 | | | | 24,352,348 | |
| Oceaneering International, Inc.(a) | | | 1,146,419 | | | | 24,395,795 | |
| REX American Resources Corp.(a) | | | 399,990 | | | | 18,919,527 | |
| Sitio Royalties Corp. — Class A | | | 291,372 | | | | 6,850,156 | |
| | | | | | | | 86,713,363 | |
| Financials — 25.6% | | | | | | | | |
| Alerus Financial Corp. | | | 158,013 | | | | 3,537,911 | |
| Amalgamated Financial Corp. | | | 504,120 | | | | 13,580,993 | |
| Assurant, Inc. | | | 163,632 | | | | 27,570,356 | |
| Assured Guaranty Ltd. | | | 332,554 | | | | 24,885,015 | |
| Bancorp, Inc.(a) | | | 814,856 | | | | 31,420,847 | |
| Dime Community Bancshares, Inc. | | | 419,825 | | | | 11,305,887 | |
| Eastern Bankshares, Inc. | | | 1,718,636 | | | | 24,404,631 | |
| First Bancorp | | | 269,084 | | | | 9,958,799 | |
| Hanover Insurance Group, Inc. | | | 149,087 | | | | 18,102,144 | |
| International Money Express, Inc.(a) | | | 642,960 | | | | 14,202,986 | |
| MGIC Investment Corp. | | | 1,109,064 | | | | 21,393,845 | |
| NCR Atleos Corp.(a) | | | 866,425 | | | | 21,045,463 | |
| Pacific Premier Bancorp, Inc. | | | 906,755 | | | | 26,395,638 | |
| Peapack-Gladstone Financial Corp. | | | 306,769 | | | | 9,147,852 | |
| Peoples Bancorp, Inc. | | | 334,868 | | | | 11,305,144 | |
| Seacoast Banking Corp. of Florida | | | 214,210 | | | | 6,096,417 | |
| UMB Financial Corp. | | | 185,450 | | | | 15,494,348 | |
| Virtus Investment Partners, Inc. | | | 51,238 | | | | 12,387,299 | |
| White Mountains Insurance Group Ltd. | | | 8,264 | | | | 12,437,403 | |
| WSFS Financial Corp. | | | 440,981 | | | | 20,254,257 | |
| | | | | | | | 334,927,235 | |
| Health Care — 2.1% | | | | | | | | |
| Patterson Cos., Inc. | | | 944,110 | | | | 26,859,930 | |
| | | | | | | | | |
| Industrials — 15.2% | | | | | | | | |
| Albany International Corp. — Class A | | | 254,209 | | | | 24,968,408 | |
| Civeo Corp. | | | 219,499 | | | | 5,015,552 | |
| Curtiss-Wright Corp. | | | 113,386 | | | | 25,261,267 | |
| EnPro, Inc. | | | 171,236 | | | | 26,839,531 | |
| Federal Signal Corp. | | | 431,395 | | | | 33,105,253 | |
| Kadant, Inc. | | | 79,337 | | | | 22,238,954 | |
| Leonardo DRS, Inc.(a) | | | 906,755 | | | | 18,171,370 | |
| Mueller Water Products, Inc. — Class A | | | 1,742,107 | | | | 25,086,341 | |
| Thermon Group Holdings, Inc.(a) | | | 575,854 | | | | 18,755,565 | |
| | | | | | | | 199,442,241 | |
| Information Technology — 8.4% | | | | | | | | |
| Bel Fuse, Inc. — Class A | | | 24,970 | | | | 1,601,076 | |
| Crane NXT Co. | | | 343,132 | | | | 19,513,917 | |
| CTS Corp. | | | 670,397 | | | | 29,323,165 | |
| NCR Voyix Corp.(a) | | | 1,192,699 | | | | 20,168,540 | |
| Onto Innovation, Inc.(a) | | | 191,069 | | | | 29,214,450 | |
| PC Connection, Inc. | | | 151,438 | | | | 10,178,148 | |
| | | | | | | | 109,999,296 | |
| Materials — 6.6% | | | | | | | | |
| Eagle Materials, Inc. | | | 200,656 | | | | 40,701,063 | |
| Ingevity Corp.(a) | | | 457,510 | | | | 21,603,622 | |
| Orion S.A. | | | 854,855 | | | | 23,705,129 | |
| | | | | | | | 86,009,814 | |
| Utilities — 1.8% | | | | | | | | |
| Portland General Electric Co. | | | 403,957 | | | | 17,507,496 | |
| Star Group L.P. | | | 490,897 | | | | 5,660,042 | |
| | | | | | | | 23,167,538 | |
| TOTAL COMMON STOCKS | | | | | | | | |
| (Cost $811,876,591) | | | | | | | 1,156,832,195 | |
| | | | | | | | | |
| REAL ESTATE INVESTMENT TRUSTS — 7.9% | | | | | | | | |
| | | | | | | | | |
| Financials — 1.9% | | | | | | | | |
| Ladder Capital Corp. | | | 2,143,420 | | | | 24,670,764 | |
| | | | | | | | | |
| Real Estate — 6.0% | | | | | | | | |
| CTO Realty Growth, Inc. | | | 198,342 | | | | 3,437,267 | |
| EastGroup Properties, Inc. | | | 52,561 | | | | 9,647,046 | |
| Equity Commonwealth | | | 1,089,230 | | | | 20,913,216 | |
| Essential Properties Realty Trust, Inc. | | | 855,186 | | | | 21,858,553 | |
| Getty Realty Corp. | | | 484,616 | | | | 14,160,480 | |
| Global Medical REIT, Inc. | | | 833,038 | | | | 9,246,722 | |
| | | | | | | | 79,263,284 | |
| TOTAL REAL ESTATE | | | | | | | | |
| INVESTMENT TRUSTS | | | | | | | | |
| (Cost $85,645,338) | | | | | | | 103,934,048 | |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Small-Cap Fundamental Value FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Shares | | | Value | |
| SHORT-TERM INVESTMENTS — 3.9% | | | | | | |
| | | | | | | |
| Money Market Funds — 3.9% | | | | | | |
| First American Government Obligations | | | | | | |
| Fund — Class Z, 5.25%(b) | | | 50,449,129 | | | $ | 50,449,129 | |
| TOTAL SHORT-TERM INVESTMENTS | | | | | | | | |
| (Cost $50,449,129) | | | | | | | 50,449,129 | |
| TOTAL INVESTMENTS — 100.2% | | | | | | | | |
| (Cost $947,971,058) | | | | | | $ | 1,311,215,372 | |
| Liabilities in Excess of Other Assets — (0.2)% | | | | | | | (2,481,670 | ) |
| TOTAL NET ASSETS — 100.0% | | | | | | $ | 1,308,733,702 | |
Percentages are stated as a percent of net assets.
| (a) | Non-income producing security. |
| (b) | The rate shown represents the 7-day effective yield as of December 31, 2023. |
PORTFOLIO HOLDINGS
% of Net Assets
| Financials | 25.6% |
| Industrials | 15.2% |
| Consumer Discretionary | 14.8% |
| Information Technology | 8.4% |
| Real Estate Investment Trusts | 7.9% |
| Energy | 6.6% |
| Materials | 6.6% |
| Communication Services | 5.4% |
| Money Market Funds | 3.9% |
| Health Care | 2.1% |
| Consumer Staples | 1.9% |
| Utilities | 1.8% |
| Other Assets and Liabilities | (0.2)% |
| | 100.0% |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Sustainable Small-Cap Core FundA Message to Our Shareholders
December 31, 2023
Dear Shareholder:
During the six-month period ended December 31, 2023, the Brown Advisory Sustainable Small-Cap Core Fund (the “Fund”) Institutional Shares increased 9.26% in value. During the same period, the Russell 2000® Index, the Fund’s benchmark, increased 8.18%.
The beginning of the six-month period was met with broad market declines driven by weakening economic data points, which was further compounded by the rising 10-year Treasury yield that hit its highest point since 2007, leading to a particularly challenging environment for smaller, higher multiple, unprofitable companies. As we approached the end of the period, the Fed’s willingness to hold rates steady and expectations for possible rate cuts in 2024 catalyzed a risk-on market environment, particularly within the small-cap asset class, which experienced strong performance relative to the broad market.
The Fund’s outperformance during the six-month period was largely driven by strong stock selection within the health care and industrials sectors, which more than offset weak stock selection within the communication services and consumer staples sectors.
The largest contributors to returns included Onto Innovation, TopBuild, Assured Guaranty, Kadant, and Federal Signal. The Fund’s largest individual contributor, Onto Innovation, benefitted from the company’s strong position in advanced packaging, specifically within Taiwan Semiconductor’s Chip-on-Wafer-on-Substrate (CoWoS) package, which has the potential to be a key enabler of GenAI. We trimmed our large position during the six-month period on this strength.
The largest detractors included Ingevity, Cable One, Phreesia, TreeHouse Foods, and OrthoPediatrics. The Fund’s largest individual detractor, Ingevity, has posted disappointing results primarily within its Pine Chemicals division due to reduced pricing in resins as economic activity has slowed. Offsetting some of this weakness has been strong results in the company’s Performance Chemicals segment, driven by better-than-expected pavement demand; Ingevity believes that its more sustainable products in this segment have contributed to pricing power.
We took advantage of the volatile markets to initiate six new positions in the Fund, including Equity Commonwealth, Kadant, LifeStance Health Group, NCR Atleos, NCR Voyix, and Vista Outdoor. Many of these investments, except for Kadant and LifeStance, were made in part due to planned corporate actions taking place (M&A, spin-offs, and divestures, for example) that we believe have the potential to unlock shareholder value over time. Many of these additions to the portfolio replaced eight positions that were eliminated during the period, including Abcam, Angi Inc, Arvinas, Azenta, EchoStar, Genpact, Hannon Armstrong Sustainable Infrastructure, and W. P. Carey.
In periods of fluctuating strength between the growth and value asset classes, we believe the Sustainable Small-Cap Core Fund’s focus on maintaining balanced exposure to these two corners of the market has served our shareholders well over a long-term investment horizon. Small-caps have yet to fully recover from their prior peak, last seen in the fourth quarter of 2021, and small-cap valuations continue to look compelling relative to large cap equities. Looking ahead, we believe investments with many of the fundamental characteristics that we seek out—such as effective capital allocation, low leverage, durable free cash flows, and strong revenue visibility—are well-positioned to navigate these turbulent markets.
Sincerely,
| Timothy Hathaway, CFA | Christopher Berrier |
| Portfolio Manager | Portfolio Manager |
| | |
| Emily Dwyer | J. David Schuster |
| Portfolio Manager | Portfolio Manager |
Brown Advisory Sustainable Small-Cap Core FundA Message to Our Shareholders
December 31, 2023
Past performance is not a guarantee of future results.
Mutual fund investing involves risk. Principal loss is possible.
Investments in smaller companies generally carry greater risk than is customarily associated with larger companies for various reasons such as narrower markets, limited financial resources and less liquid stock. The value of the Fund’s investments in REITS may change in response to changes in the real estate market such as declines in the value of real estate, lack of available capital or financing opportunities, and increases in property taxes or operating costs.
The Fund may invest in ETFs, which may trade at a discount to the aggregate value of the underlying securities and although expense ratios for ETFs are generally low, frequent trading of ETFs by the Fund can generate brokerage expenses.
Earnings growth is not representative of the Fund’s future performance. Diversification does not assure a profit, nor does it protect against a loss in a declining market.
Sustainable investment considerations are one of multiple informational inputs into the investment process, alongside data on traditional financial factors, and so are not the sole driver of decision-making. Sustainable investment analysis may not be performed for every holding in the strategy. Sustainable investment considerations that are material will vary by investment style, sector/industry, market trends and client objectives. The Fund seeks to identify companies that it believes may be desirable based on our analysis of sustainable investment related risks and opportunities, but investors may differ in their views. As a result, the Fund may invest in companies that do not reflect the beliefs and values of any particular investor. The Fund may also invest in companies that would otherwise be excluded from other funds that focus on sustainable investment risks. Security selection will be impacted by the combined focus on sustainable investment research assessments and fundamental research assessments including the return forecasts. The Fund incorporates data from third parties in its research process but does not make investment decisions based on third-party data alone.
Fund holdings and sector allocations are subject to change and should not be considered a recommendation to buy or sell any security. For a complete list of Fund holdings, please refer to the Schedule of Investments provided in this report.
Definitions for terms and indices are provided in the Glossary of Terms.
Brown Advisory Sustainable Small-Cap Core FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Shares | | | Value | |
| COMMON STOCKS — 90.5% | | | | | | |
| | | | | | | |
| Communication Services — 3.5% | | | | | | |
| Cable One, Inc. | | | 2,230 | | | $ | 1,241,195 | |
| Nexstar Media Group, Inc. — Class A | | | 6,957 | | | | 1,090,510 | |
| | | | | | | | 2,331,705 | |
| Consumer Discretionary — 8.0% | | | | | | | | |
| Bright Horizons Family Solutions, Inc.(a) | | | 16,949 | | | | 1,597,273 | |
| Choice Hotels International, Inc. | | | 1,135 | | | | 128,596 | |
| First Watch Restaurant Group, Inc.(a) | | | 30,141 | | | | 605,834 | |
| TopBuild Corp.(a) | | | 4,149 | | | | 1,552,805 | |
| Vista Outdoor, Inc.(a) | | | 22,193 | | | | 656,247 | |
| Wyndham Hotels & Resorts, Inc. | | | 8,877 | | | | 713,800 | |
| | | | | | | | 5,254,555 | |
| Consumer Staples — 2.7% | | | | | | | | |
| Sprouts Farmers Market, Inc.(a) | | | 11,354 | | | | 546,241 | |
| TreeHouse Foods, Inc.(a) | | | 28,861 | | | | 1,196,288 | |
| | | | | | | | 1,742,529 | |
| Financials — 20.0% | | | | | | | | |
| Assurant, Inc. | | | 6,503 | | | | 1,095,690 | |
| Assured Guaranty Ltd. | | | 18,766 | | | | 1,404,260 | |
| AvidXchange Holdings, Inc.(a) | | | 78,138 | | | | 968,130 | |
| Bancorp, Inc.(a) | | | 39,224 | | | | 1,512,478 | |
| Eastern Bankshares, Inc. | | | 82,040 | | | | 1,164,968 | |
| MGIC Investment Corp. | | | 75,847 | | | | 1,463,089 | |
| NCR Atleos Corp.(a) | | | 42,300 | | | | 1,027,467 | |
| Pacific Premier Bancorp, Inc. | | | 28,324 | | | | 824,512 | |
| Primerica, Inc. | | | 2,828 | | | | 581,889 | |
| Prosperity Bancshares, Inc. | | | 8,918 | | | | 604,016 | |
| UMB Financial Corp. | | | 6,090 | | | | 508,820 | |
| WEX, Inc.(a) | | | 5,946 | | | | 1,156,794 | |
| WSFS Financial Corp. | | | 16,908 | | | | 776,584 | |
| | | | | | | | 13,088,697 | |
| Health Care — 16.9% | | | | | | | | |
| Accolade, Inc.(a) | | | 46,057 | | | | 553,145 | |
| Alignment Healthcare, Inc.(a) | | | 47,915 | | | | 412,548 | |
| Ascendis Pharma A/S — ADR(a) | | | 6,296 | | | | 792,981 | |
| Blueprint Medicines Corp.(a) | | | 7,742 | | | | 714,122 | |
| Charles River Laboratories | | | | | | | | |
| International, Inc.(a) | | | 2,333 | | | | 551,521 | |
| Encompass Health Corp. | | | 15,483 | | | | 1,033,026 | |
| HealthEquity, Inc.(a) | | | 15,380 | | | | 1,019,694 | |
| Inari Medical, Inc.(a) | | | 14,575 | | | | 946,209 | |
| Karuna Therapeutics, Inc.(a) | | | 3,055 | | | | 966,938 | |
| LifeStance Health Group, Inc.(a) | | | 52,333 | | | | 409,767 | |
| NeoGenomics, Inc.(a) | | | 71,697 | | | | 1,160,058 | |
| Neurocrine Biosciences, Inc.(a) | | | 5,884 | | | | 775,276 | |
| OrthoPediatrics Corp.(a) | | | 15,979 | | | | 519,477 | |
| Phreesia, Inc.(a) | | | 26,879 | | | | 622,249 | |
| SI-BONE, Inc.(a) | | | 28,014 | | | | 588,014 | |
| | | | | | | | 11,065,025 | |
| Industrials — 19.6% | | | | | | | | |
| AZEK Co., Inc.(a) | | | 34,001 | | | | 1,300,538 | |
| Comfort Systems USA, Inc. | | | 4,108 | | | | 844,892 | |
| EnPro Industries, Inc. | | | 8,154 | | | | 1,278,058 | |
| Federal Signal Corp. | | | 23,390 | | | | 1,794,949 | |
| John Bean Technologies Corp. | | | 1,466 | | | | 145,794 | |
| Kadant, Inc. | | | 4,562 | | | | 1,278,774 | |
| Mueller Water Products, Inc. — Class A | | | 99,010 | | | | 1,425,744 | |
| SiteOne Landscape Supply, Inc.(a) | | | 2,870 | | | | 466,375 | |
| SPX Technologies, Inc.(a) | | | 19,406 | | | | 1,960,200 | |
| Valmont Industries, Inc. | | | 3,179 | | | | 742,328 | |
| Woodward, Inc. | | | 5,698 | | | | 775,669 | |
| Zurn Elkay Water Solutions Corp. | | | 27,849 | | | | 819,039 | |
| | | | | | | | 12,832,360 | |
| Information Technology — 14.9% | | | | | | | | |
| Aspen Technology, Inc.(a) | | | 1,817 | | | | 400,013 | |
| BlackLine, Inc.(a) | | | 12,304 | | | | 768,262 | |
| CTS Corp. | | | 25,186 | | | | 1,101,636 | |
| Dynatrace, Inc.(a) | | | 12,683 | | | | 693,633 | |
| Entegris, Inc. | | | 3,303 | | | | 395,765 | |
| Envestnet, Inc.(a) | | | 7,102 | | | | 351,691 | |
| Infinera Corp.(a) | | | 136,706 | | | | 649,354 | |
| Littelfuse, Inc. | | | 2,787 | | | | 745,690 | |
| NCR Voyix Corp.(a) | | | 55,017 | | | | 930,337 | |
| Onto Innovation, Inc.(a) | | | 12,861 | | | | 1,966,446 | |
| Power Integrations, Inc. | | | 7,989 | | | | 655,977 | |
| Workiva, Inc.(a) | | | 11,045 | | | | 1,121,399 | |
| | | | | | | | 9,780,203 | |
| Materials — 3.6% | | | | | | | | |
| HB Fuller Co. | | | 17,093 | | | | 1,391,541 | |
| Ingevity Corp.(a) | | | 20,314 | | | | 959,227 | |
| | | | | | | | 2,350,768 | |
| Real Estate — 1.3% | | | | | | | | |
| DigitalBridge Group, Inc. | | | 50,496 | | | | 885,700 | |
| TOTAL COMMON STOCKS | | | | | | | | |
| (Cost $49,920,715) | | | | | | | 59,331,542 | |
| | | | | | | | | |
| REAL ESTATE INVESTMENT TRUSTS — 3.9% | | | | | | | | |
| | | | | | | | | |
| Real Estate — 3.9% | | | | | | | | |
| EastGroup Properties, Inc. | | | 5,863 | | | | 1,076,096 | |
| Equity Commonwealth | | | 34,166 | | | | 655,987 | |
| Essential Properties Realty Trust, Inc. | | | 33,340 | | | | 852,170 | |
| TOTAL REAL ESTATE | | | | | | | | |
| INVESTMENT TRUSTS | | | | | | | | |
| (Cost $2,373,942) | | | | | | | 2,584,253 | |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Sustainable Small-Cap Core FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Shares | | | Value | |
| SHORT-TERM INVESTMENTS — 5.5% | | | | | | |
| | | | | | | |
| Money Market Funds — 5.5% | | | | | | |
| First American Government Obligations | | | | | | |
| Fund — Class Z, 5.25%(b) | | | 3,639,491 | | | $ | 3,639,491 | |
| TOTAL SHORT-TERM INVESTMENTS | | | | | | | | |
| (Cost $3,639,491) | | | | | | | 3,639,491 | |
| TOTAL INVESTMENTS — 99.9% | | | | | | | | |
| (Cost $55,934,148) | | | | | | | 65,555,286 | |
| Other Assets in Excess of Liabilities — 0.1% | | | | | | | 35,495 | |
| TOTAL NET ASSETS — 100.0% | | | | | | $ | 65,590,781 | |
Percentages are stated as a percent of net assets.
ADR — American Depositary Receipt
| (a) | Non-income producing security. |
| (b) | The rate shown represents the 7-day effective yield as of December 31, 2023. |
PORTFOLIO HOLDINGS
% of Net Assets
| Financials | 20.0% |
| Industrials | 19.6% |
| Health Care | 16.9% |
| Information Technology | 14.9% |
| Consumer Discretionary | 8.0% |
| Money Market Funds | 5.5% |
| Real Estate Investment Trusts | 3.9% |
| Materials | 3.6% |
| Communication Services | 3.5% |
| Consumer Staples | 2.7% |
| Real Estate | 1.3% |
| Other Assets and Liabilities | 0.1% |
| | 100.0% |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Sustainable Value FundA Message to Our Shareholders
December 31, 2023
Dear Shareholder:
During the six-month period ended December 31, 2023, the Brown Advisory Sustainable Value (the “Fund”) Investor Shares increased 11.38% in value. During the same period, the Russell 1000® Value Index, the Fund’s benchmark, increased 6.03%.
For the six-month period ended December 31, 2023, the Fund outperformed its benchmark despite the fair share of volatility throughout the period. Industrials, utilities, and consumer discretionary were all sources of positive performance during the period. The negative contributor was energy.
From an individual stock perspective, Constellation Energy Corporation was the top positive contributor. We believe that the company had a strong period because of the improved performance of their commercial business driven by market volatility as well as favorable operating results and pricing in their core Nuclear & Gas fleets. We believe the company demonstrated strong capital allocation through an attractive acquisition of a nuclear power plant in Texas. The bottom contributor was Bio-Rad Laboratories, Inc (BIO). The company underperformed as results throughout the year demonstrated that the life science tools industry downturn has yet to bottom. We believe both BIO and the industry are facing continued headwinds from tighter spending and inventory destocking by company’s customers. The surprise departure of the company’s CFO later in the year also weighed on sentiment.
Activity was strong during the six-month period, and we remain pleased with continued buildout of our pipeline of potential new investments. The Fund made five new investments and exited from two. The exits were both in financials. The new investments were diversified with one in financials, one in materials, one in information technology, one in consumer staples, and one in health care.
One notable investment is our investment in Dell Technologies. The company has gone under a multi-year simplification process and is currently hitting a capital inflection point that we think is underappreciated by the market. Dell has been a consistent market share gainer and free cash flow generator over the last decade and we find the current valuation of >9% free cash flow (FCF) yield very attractive.
We continue to believe that a portfolio of companies that generate consistent high levels of free cash flow, possess a Sustainable Cash Flow Advantage (SCFA), exhibit capital discipline, and trade at attractive valuations will lead to compelling risk adjusted returns over the long term while providing a margin of safety for our investors.
Sincerely,
Michael Poggi
Portfolio Manager
Past performance is not a guarantee of future results.
Mutual fund investing involves risk. Principal loss is possible.
Sustainable investment considerations are one of multiple informational inputs into the investment process, alongside data on traditional financial factors, and so are not the sole driver of decision-making. Sustainable investment analysis may not be performed for every holding in the strategy. Sustainable investment considerations that are material will vary by investment style, sector/industry, market trends and client objectives. The Fund seeks to identify companies that it believes may be desirable based on our analysis of sustainable investment related risks and opportunities, but investors may differ in their views. As a result, the Fund may invest in companies that do not reflect the beliefs and values of any particular investor. The Fund may also invest in companies that would otherwise be excluded from other funds that focus on sustainable investment risks. Security selection will be impacted by the combined focus on sustainable investment research assessments and fundamental research assessments including the return forecasts. The Fund incorporates data from third parties in its research process but does not make investment decisions based on third-party data alone.
Large Capitalization Company Risk. Large capitalization companies may be unable to respond quickly to new competitive challenges like changes in consumer tastes or innovative smaller competitors. In addition, large capitalization companies are sometimes unable to attain the high growth rates of successful, smaller companies, especially during extended periods of economic expansion.
Fund holdings and sector allocations are subject to change and should not be considered a recommendation to buy or sell any security. For a complete list of Fund holdings, please refer to the Schedule of Investments provided in this report.
Definitions for terms and indices are provided in the Glossary of Terms.
Brown Advisory Sustainable Value FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Shares | | | Value | �� |
| COMMON STOCKS — 95.6% | | | | | | |
| | | | | | | |
| Communication Services — 11.0% | | | | | | |
| Alphabet, Inc. — Class C(a) | | | 8,045 | | | $ | 1,133,782 | |
| Comcast Corp. — Class A | | | 58,819 | | | | 2,579,213 | |
| Nexstar Media Group, Inc. | | | 6,229 | | | | 976,396 | |
| T-Mobile US, Inc. | | | 16,682 | | | | 2,674,625 | |
| | | | | | | | 7,364,016 | |
| Consumer Discretionary — 6.7% | | | | | | | | |
| Best Buy Co., Inc. | | | 13,030 | | | | 1,019,988 | |
| Expedia Group, Inc.(a) | | | 8,715 | | | | 1,322,850 | |
| Wyndham Hotels & Resorts, Inc. | | | 26,638 | | | | 2,141,962 | |
| | | | | | | | 4,484,800 | |
| Consumer Staples — 5.2% | | | | | | | | |
| Kenvue, Inc. | | | 54,485 | | | | 1,173,062 | |
| Unilever PLC — ADR | | | 47,883 | | | | 2,321,368 | |
| | | | | | | | 3,494,430 | |
| Energy — 5.8% | | | | | | | | |
| ChampionX Corp. | | | 62,234 | | | | 1,817,855 | |
| Schlumberger NV | | | 40,100 | | | | 2,086,804 | |
| | | | | | | | 3,904,659 | |
| Financials — 16.5% | | | | | | | | |
| American International Group, Inc. | | | 23,439 | | | | 1,587,992 | |
| Ameriprise Financial, Inc. | | | 2,306 | | | | 875,888 | |
| Assurant, Inc. | | | 7,499 | | | | 1,263,507 | |
| Bank of America Corp. | | | 69,713 | | | | 2,347,236 | |
| Fidelity National Information Services, Inc. | | | 40,836 | | | | 2,453,018 | |
| KKR & Co., Inc. | | | 17,470 | | | | 1,447,390 | |
| Morgan Stanley | | | 11,531 | | | | 1,075,266 | |
| | | | | | | | 11,050,297 | |
| Health Care — 15.4% | | | | | | | | |
| AbbVie, Inc. | | | 6,463 | | | | 1,001,571 | |
| Bio-Rad Laboratories, Inc. — Class A(a) | | | 3,040 | | | | 981,586 | |
| Centene Corp.(a) | | | 14,088 | | | | 1,045,470 | |
| Elevance Health, Inc. | | | 3,219 | | | | 1,517,952 | |
| Gilead Sciences, Inc. | | | 12,520 | | | | 1,014,245 | |
| Laboratory Corp. of America Holdings | | | 6,810 | | | | 1,547,845 | |
| Medtronic PLC | | | 20,743 | | | | 1,708,808 | |
| Merck & Co., Inc. | | | 13,665 | | | | 1,489,758 | |
| | | | | | | | 10,307,235 | |
| Industrials — 13.6% | | | | | | | | |
| Ferguson PLC | | | 16,502 | | | | 3,186,041 | |
| Lincoln Electric Holdings, Inc. | | | 4,499 | | | | 978,353 | |
| Masco Corp. | | | 23,005 | | | | 1,540,874 | |
| Trane Technologies PLC | | | 8,301 | | | | 2,024,614 | |
| Waste Connections, Inc. | | | 8,944 | | | | 1,335,071 | |
| | | | | | | | 9,064,953 | |
| Information Technology — 12.1% | | | | | | | | |
| Applied Materials, Inc. | | | 5,340 | | | | 865,454 | |
| Cisco Systems, Inc. | | | 29,828 | | | | 1,506,910 | |
| Cognizant Technology | | | | | | | | |
| Solutions Corp. — Class A | | | 8,928 | | | | 674,332 | |
| Dell Technologies, Inc. — Class C | | | 14,935 | | | | 1,142,528 | |
| Micron Technology, Inc. | | | 12,917 | | | | 1,102,337 | |
| NXP Semiconductors NV | | | 6,102 | | | | 1,401,507 | |
| TD SYNNEX Corp. | | | 12,768 | | | | 1,373,964 | |
| | | | | | | | 8,067,032 | |
| Materials — 3.9% | | | | | | | | |
| CRH PLC | | | 37,368 | | | | 2,584,371 | |
| | | | | | | | | |
| Real Estate — 1.7% | | | | | | | | |
| CBRE Group, Inc. — Class A(a) | | | 12,164 | | | | 1,132,347 | |
| | | | | | | | | |
| Utilities — 3.7% | | | | | | | | |
| Constellation Energy Corp. | | | 21,449 | | | | 2,507,174 | |
| TOTAL COMMON STOCKS | | | | | | | | |
| (Cost $56,182,533) | | | | | | | 63,961,314 | |
| | | | | | | | | |
| SHORT-TERM INVESTMENTS — 4.7% | | | | | | | | |
| | | | | | | | | |
| Money Market Funds — 4.7% | | | | | | | | |
| First American Government Obligations | | | | | | | | |
| Fund — Class Z, 5.25%(b) | | | 3,128,266 | | | | 3,128,266 | |
| TOTAL SHORT-TERM INVESTMENTS | | | | | | | | |
| (Cost $3,128,266) | | | | | | | 3,128,266 | |
| TOTAL INVESTMENTS — 100.3% | | | | | | | | |
| (Cost $59,310,799) | | | | | | | 67,089,580 | |
| Liabilities in Excess of Other Assets — (0.3)% | | | | | | | (209,391 | ) |
| TOTAL NET ASSETS — 100.0% | | | | | | $ | 66,880,189 | |
Percentages are stated as a percent of net assets.
ADR — American Depositary Receipt
PLC — Public Limited Company
| (a) | Non-income producing security. |
| (b) | The rate shown represents the 7-day effective yield as of December 31, 2023. |
PORTFOLIO HOLDINGS
% of Net Assets
| Financials | 16.5% |
| Health Care | 15.4% |
| Industrials | 13.6% |
| Information Technology | 12.1% |
| Communication Services | 11.0% |
| Consumer Discretionary | 6.7% |
| Energy | 5.8% |
| Consumer Staples | 5.2% |
| Money Market Funds | 4.7% |
| Materials | 3.9% |
| Utilities | 3.7% |
| Real Estate | 1.7% |
| Other Assets and Liabilities | (0.3)% |
| | 100.0% |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Global Leaders FundA Message to Our Shareholders
December 31, 2023
Dear Shareholder:
During the six-month period ended December 31, 2023, the Brown Advisory Global Leaders Fund Investor Shares (the “Fund”) increased 7.44% in value. During the same period, the MSCI All Country World Index (ACWI), the Fund’s benchmark, increased 7.26%.
For the 6 months ended December 31, 2023, the volatile market environment continued and culminated in a strong, macro driven year-end rally. The biggest drivers of outperformance during the period were investment selection in industrials, consumer discretionary and information technology with financials and health care contributing negatively to performance. The year-end rally in technology investments highlighted the transformative potential of Generative AI. The shift from technology enabling efficiency tools to emulating human thought and creative skills is transformative. We believe we are invested in some of the best companies positioned to benefit from new technology solutions and the acceleration of processing power to the cloud. We currently see most opportunity within technical infrastructure and semiconductor companies as well as cloud data center operators and are invested in beneficiaries such as Taiwan Semiconductor, Marvell Technology, Alphabet and Microsoft. We also believe that companies with large proprietary data sets have a relative competitive advantage and are invested in companies such as Adobe, Intuit, Wolters Kluwer and London Stock Exchange Group. Health care, despite underperforming, holds in our view one of the highest potentials for new opportunities for the strategy. We do believe some of the pressures on our investments in Roche, Edwards Lifesciences and Coloplast to be short-term, company specific issues. Health care valuations for the first time in almost 5 years have become quite compelling on the Global Leaders valuation framework.
We exited our position in Otis. We had switched from Schindler into Otis last year as we considered it a higher quality company that had reached our double-digit 5-year IRR valuation target for entry. Whilst our fundamental base case had barely moved since the start of our investment, the sharp rise in Otis’s share price saw us exit purely based on valuation. We would be happy to own it again at a more favourable price. Within our process we believe there is significant value in our Drawdown Reviews. Our focus in a Drawdown Review is on the reason driving share price performance, whether it is temporary (demand side) or permanent (supply side or regulation). Four of our five bottom contributors during the period went through the drawdown process and we added to all of them. We increased our investment in General Electric (GE) to a top ten weight. GE Aerospace is the dominant maker of narrow- and wide-body aerospace engines with an attractive business model protected by substantial barriers of entry, multiple economic moats and strong pricing power. It is a capital light business model where close to 70% of revenues are generated through after-market servicing of engines. GE has significantly simplified their business over the past 5 years, culminating in the spinoff of its power business (GE Vernova) which appears to be on track for 1Q24.
The Global Leaders strategy is focused on delivering attractive long-term performance by investing in a concentrated portfolio of companies that can uniquely solve a problem for their customer and generate attractive economics for shareholders. The Global Leaders team remains dedicated to executing on our investment process that we believe will deliver value for our investors over the long run.
Sincerely,
Mick Dillon, Bertie Thomson
Portfolio Managers
Brown Advisory Global Leaders FundA Message to Our Shareholders
December 31, 2023
Past performance is not a guarantee of future results.
Mutual fund investing involves risk. Principal loss is possible.
The Fund invests in small and medium capitalization companies which carry greater risk than is associated with larger companies for various reasons, such as narrower markets, limited financial resources and less liquid stock.
The Fund may invest in ETFs, which may trade at a discount to the aggregate value of the underlying securities and although expense ratios for ETFs are generally low, frequent trading of ETFs by the Fund can generate brokerage expenses.
Investments in foreign securities entail certain risks not associated with investments in domestic securities, such as volatility of currency exchange rates, and in some cases, political and economic instability and relatively illiquid markets. These risks are greater for investments in emerging markets.
Sustainable investment considerations are one of multiple informational inputs into the investment process, alongside data on traditional financial factors, and so are not the sole driver of decision-making. Sustainable investment analysis may not be performed for every holding in the strategy. Sustainable investment considerations that are material will vary by investment style, sector/industry, market trends and client objectives. The Fund seeks to identify companies that it believes may be desirable based on our analysis of sustainable investment related risks and opportunities, but investors may differ in their views. As a result, the Fund may invest in companies that do not reflect the beliefs and values of any particular investor. The Fund may also invest in companies that would otherwise be excluded from other funds that focus on sustainable investment risks. Security selection will be impacted by the combined focus on sustainable investment research assessments and fundamental research assessments including the return forecasts. The Fund incorporates data from third parties in its research process but does not make investment decisions based on third-party data alone.
Diversification does not assure a profit, nor does it protect against a loss in a declining market.
Fund holdings and sector allocations are subject to change and should not be considered a recommendation to buy or sell any security. For a complete list of Fund holdings, please refer to the Schedule of Investments provided in this report.
Definitions for terms and indices are provided in the Glossary of Terms.
Brown Advisory Global Leaders FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Shares | | | Value | |
| COMMON STOCKS — 97.0% | | | | | | |
| | | | | | | |
| Brazil — 1.9% | | | | | | |
| B3 S.A. — Brasil Bolsa Balcao | | | 10,563,604 | | | $ | 31,605,992 | |
| | | | | | | | | |
| China — 2.6% | | | | | | | | |
| AIA Group, Ltd. | | | 5,073,144 | | | | 44,150,976 | |
| | | | | | | | | |
| Denmark — 2.2% | | | | | | | | |
| Coloplast A/S — Class B | | | 329,307 | | | | 37,628,640 | |
| | | | | | | | | |
| France — 3.3% | | | | | | | | |
| Safran S.A. | | | 316,646 | | | | 55,827,872 | |
| | | | | | | | | |
| Germany — 6.3% | | | | | | | | |
| CTS Eventim AG & Co. KGaA | | | 511,524 | | | | 35,379,623 | |
| Deutsche Boerse AG | | | 343,118 | | | | 70,659,795 | |
| | | | | | | | 106,039,418 | |
| India — 3.6% | | | | | | | | |
| HDFC Bank, Ltd. | | | 2,994,825 | | | | 61,322,101 | |
| | | | | | | | | |
| Indonesia — 2.3% | | | | | | | | |
| Bank Rakyat Indonesia Persero Tbk PT | | | 102,801,464 | | | | 38,208,002 | |
| | | | | | | | | |
| Netherlands — 4.6% | | | | | | | | |
| ASML Holding NV | | | 49,650 | | | | 37,581,078 | |
| Wolters Kluwer NV | | | 274,546 | | | | 39,059,442 | |
| | | | | | | | 76,640,520 | |
| Sweden — 2.0% | | | | | | | | |
| Atlas Copco AB — Class B | | | 2,218,261 | | | | 32,910,422 | |
| | | | | | | | | |
| Switzerland — 3.1% | | | | | | | | |
| Roche Holding AG | | | 178,825 | | | | 51,983,277 | |
| | | | | | | | | |
| Taiwan — 3.2% | | | | | | | | |
| Taiwan Semiconductor | | | | | | | | |
| Manufacturing Co., Ltd. — ADR | | | 509,418 | | | | 52,979,472 | |
| | | | | | | | | |
| United Kingdom — 6.7% | | | | | | | | |
| London Stock Exchange Group PLC | | | 524,490 | | | | 62,000,703 | |
| Unilever PLC | | | 1,029,475 | | | | 49,837,880 | |
| | | | | | | | 111,838,583 | |
| United States — 55.2% | | | | | | | | |
| | | | | | | | | |
| Communication Services — 4.4% | | | | | | | | |
| Alphabet, Inc. — Class C(a) | | | 528,589 | | | | 74,494,048 | |
| | | | | | | | | |
| Consumer Discretionary — 4.3% | | | | | | | | |
| Booking Holdings, Inc.(a) | | | 10,616 | | | | 37,657,288 | |
| TJX Cos., Inc. | | | 379,894 | | | | 35,637,856 | |
| | | | | | | | 73,295,144 | |
| Consumer Staples — 2.5% | | | | | | | | |
| Estee Lauder Cos., Inc. — Class A | | | 283,740 | | | | 41,496,975 | |
| | | | | | | | | |
| Financials — 12.3% | | | | | | | | |
| Charles Schwab Corp. | | | 624,181 | | | | 42,943,653 | |
| Mastercard, Inc. — Class A | | | 163,464 | | | | 69,719,031 | |
| Moody’s Corp. | | | 111,295 | | | | 43,467,375 | |
| Visa, Inc. — Class A | | | 192,641 | | | | 50,154,084 | |
| | | | | | | | 206,284,143 | |
| Health Care — 2.4% | | | | | | | | |
| Edwards Lifesciences Corp.(a) | | | 520,658 | | | | 39,700,173 | |
| | | | | | | | | |
| Industrials — 8.7% | | | | | | | | |
| Allegion PLC | | | 301,938 | | | | 38,252,525 | |
| Ferguson PLC | | | 224,697 | | | | 43,382,250 | |
| General Electric Co. | | | 502,580 | | | | 64,144,285 | |
| | | | | | | | 145,779,060 | |
| Information Technology — 18.5% | | | | | | | | |
| Adobe, Inc.(a) | | | 64,176 | | | | 38,287,402 | |
| Autodesk, Inc.(a) | | | 149,752 | | | | 36,461,617 | |
| Intuit, Inc. | | | 78,017 | | | | 48,762,966 | |
| Marvell Technology, Inc. | | | 715,339 | | | | 43,142,095 | |
| Microsoft Corp. | | | 385,560 | | | | 144,985,981 | |
| | | | | | | | 311,640,061 | |
| Materials — 2.1% | | | | | | | | |
| Sherwin-Williams Co. | | | 114,029 | | | | 35,565,645 | |
| Total United States | | | | | | | 928,255,249 | |
| TOTAL COMMON STOCKS | | | | | | | | |
| (Cost $1,124,526,779) | | | | | | | 1,629,390,524 | |
| | | | | | | | | |
| SHORT-TERM INVESTMENTS — 2.8% | | | | | | | | |
| | | | | | | | | |
| Money Market Funds — 2.8% | | | | | | | | |
| First American Government Obligations | | | | | | | | |
| Fund — Class Z, 5.25%(b) | | | 47,607,562 | | | | 47,607,562 | |
| TOTAL SHORT-TERM INVESTMENTS | | | | | | | | |
| (Cost $47,607,562) | | | | | | | 47,607,562 | |
| TOTAL INVESTMENTS — 99.8% | | | | | | | | |
| (Cost $1,172,134,341) | | | | | | | 1,676,998,086 | |
| Other Assets in Excess of Liabilities — 0.2% | | | | | | | 4,039,114 | |
| TOTAL NET ASSETS — 100.0% | | | | | | $ | 1,681,037,200 | |
Percentages are stated as a percent of net assets.
ADR — American Depositary Receipt
PLC — Public Limited Company
| (a) | Non-income producing security. |
| (b) | The rate shown represents the 7-day effective yield as of December 31, 2023. |
PORTFOLIO HOLDINGS
% of Net Assets
| Financials | 30.6% |
| Information Technology | 23.9% |
| Industrials | 16.3% |
| Health Care | 7.7% |
| Communication Services | 6.5% |
| Consumer Staples | 5.5% |
| Consumer Discretionary | 4.4% |
| Money Market Funds | 2.8% |
| Materials | 2.1% |
| Other Assets and Liabilities | 0.2% |
| | 100.0% |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Sustainable International Leaders FundA Message to Our Shareholders
December 31, 2023
Dear Shareholder:
During the six-month period ended December 31, 2023, the Brown Advisory Sustainable International Leaders Fund (the “Fund”) Investor Shares returned -0.02% in value. During the same period, the MSCI ACWI ex US Index, the Fund’s benchmark, increased 5.61%. Despite the persistent macroeconomic challenges, inflation appears to be gradually moderating in several major economies. The prevailing economic outlook, however, remains cautious in many key markets, with geopolitical risks continuing to be top of mind for investors. As fundamental investors, we remain steadfastly focused on bottom-up opportunities and aim to own businesses that should perform well in multiple different futures.
The main drivers of underperformance were Financials and Industrials. Within Financials specifically Adyen and AIA Group contributed negatively. AIA is a high-quality, structurally growing insurance company and very well positioned, in our view, to capitalize on transformative trends in its end markets. We added to our position on weakness. The largest negative contributor, payment provider Adyen, saw growth and margin headwinds from the expansion of its business in the U.S., where it has started to increasingly come up against strong incumbents delivering what seem to be comparable outcomes at lower fees. We exited the position in August. Despite Industrials ending the year as one of the largest drivers of full year outperformance we saw idiosyncratic issues at Rentokil and Grupo Aeroporto del Pacifico (GAP) impact performance towards year-end. The global leader in pest control, Rentokil contributed negatively as it is going through the integration with U.S. pest control company Terminix. We believe this transition to be temporary with strong long-term growth opportunities for the combined entity. GAP experienced a change in their tariff regime which diminished our confidence in our thesis, and we exited our position.
We added two new investments to the portfolio, dominant maker of bike components globally, Japanese company Shimano and global beverage company Diageo. Shimano benefits from the strong brand loyalty and its scale in manufacturing while its commitment to innovation is a key driver for sustained revenue growth and a continuous improvement in average selling prices. Diageo holds a best-in-class portfolio of brands. We believe its scale in advertising and promotion, distribution power and brand management positions it well to drive share gains in its categories and we saw an opportunity to build a position when near-term macro headwinds and continuing post-Covid supply chain challenges weighted on share prices.
With these new additions we believe we had the ability to enhance the quality of the portfolio in 2023 by adding high quality businesses that are valued at attractive 5-year IRRs. Looking at the portfolio today, as of December 31, 2023, we see what we believe to be attractive portfolio characteristics in key areas such as return on invested capital (18.3% ROIC), sales growth (7.1% 3-year sales growth CAGR) and free cash flow “FCF” yield (3.7%) as of December 31, 2023.
Sincerely,
Priyanka Agnihotri
Portfolio Manager
Brown Advisory Sustainable International Leaders FundA Message to Our Shareholders
December 31, 2023
Past performance is not a guarantee of future results.
Mutual fund investing involves risk. Principal loss is possible. The Fund invests in small and medium capitalization companies which carry greater risk than is associated with larger companies for various reasons, such as narrower markets, limited financial resources and less liquid stock.
The Fund may invest in ETFs, which may trade at a discount to the aggregate value of the underlying securities and although expense ratios for ETFs are generally low, frequent trading of ETFs by the Fund can generate brokerage expenses.
Investments in foreign securities entail certain risks not associated with investments in domestic securities, such as volatility of currency exchange rates, and in some cases, political and economic instability and relatively illiquid markets. These risks are greater for investments in emerging markets.
Sustainable investment considerations are one of multiple informational inputs into the investment process, alongside data on traditional financial factors, and so are not the sole driver of decision-making. Sustainable investment analysis may not be performed for every holding in the strategy. Sustainable investment considerations that are material will vary by investment style, sector/industry, market trends and client objectives. The Fund seeks to identify companies that it believes may be desirable based on our analysis of sustainable investment related risks and opportunities, but investors may differ in their views. As a result, the Fund may invest in companies that do not reflect the beliefs and values of any particular investor. The Fund may also invest in companies that would otherwise be excluded from other funds that focus on sustainable investment risks. Security selection will be impacted by the combined focus on sustainable investment research assessments and fundamental research assessments including the return forecasts. The Fund incorporates data from third parties in its research process but does not make investment decisions based on third-party data alone.
Diversification does not assure a profit, nor does it protect against a loss in a declining market.
Fund holdings and sector allocations are subject to change and should not be considered a recommendation to buy or sell any security. For a complete list of Fund holdings, please refer to the Schedule of Investments provided in this report.
Definitions for terms and indices are provided in the Glossary of Terms.
Brown Advisory Sustainable International Leaders FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Shares | | | Value | |
| COMMON STOCKS — 98.0% | | | | | | |
| | | | | | | |
| Brazil — 3.8% | | | | | | |
| B3 S.A. — Brasil Bolsa Balcao | | | 416,558 | | | $ | 1,246,329 | |
| | | | | | | | | |
| Canada — 4.5% | | | | | | | | |
| Waste Connections, Inc. | | | 9,856 | | | | 1,471,725 | |
| | | | | | | | | |
| China — 3.5% | | | | | | | | |
| AIA Group, Ltd. | | | 131,472 | | | | 1,144,185 | |
| | | | | | | | | |
| Denmark — 1.8% | | | | | | | | |
| Coloplast A/S — Class B | | | 5,165 | | | | 590,185 | |
| | | | | | | | | |
| Finland — 3.3% | | | | | | | | |
| Kone Oyj — Class B | | | 21,494 | | | | 1,075,152 | |
| | | | | | | | | |
| France — 7.9% | | | | | | | | |
| LVMH Moet Hennessy Louis Vuitton SE | | | 1,343 | | | | 1,091,235 | |
| Safran S.A. | | | 8,300 | | | | 1,463,373 | |
| | | | | | | | 2,554,608 | |
| Germany — 8.9% | | | | | | | | |
| CTS Eventim AG & Co. KGaA | | | 19,690 | | | | 1,361,861 | |
| Deutsche Boerse AG | | | 7,397 | | | | 1,523,298 | |
| | | | | | | | 2,885,159 | |
| India — 7.0% | | | | | | | | |
| HDFC Bank, Ltd. — ADR | | | 21,093 | | | | 1,415,551 | |
| Tata Consultancy Services Ltd. | | | 18,676 | | | | 850,578 | |
| | | | | | | | 2,266,129 | |
| Indonesia — 3.3% | | | | | | | | |
| Bank Rakyat Indonesia Persero Tbk PT | | | 2,855,563 | | | | 1,061,321 | |
| | | | | | | | | |
| Japan — 5.0% | | | | | | | | |
| Keyence Corp. | | | 2,288 | | | | 1,005,247 | |
| Shimano, Inc. | | | 4,016 | | | | 618,641 | |
| | | | | | | | 1,623,888 | |
| Netherlands — 6.0% | | | | | | | | |
| ASML Holding NV | | | 1,009 | | | | 761,680 | |
| Wolters Kluwer NV | | | 8,407 | | | | 1,196,057 | |
| | | | | | | | 1,957,737 | |
| Sweden — 3.3% | | | | | | | | |
| Atlas Copco AB — Class B | | | 71,866 | | | | 1,066,214 | |
| | | | | | | | | |
| Switzerland — 7.0% | | | | | | | | |
| Roche Holding AG | | | 3,592 | | | | 1,044,171 | |
| Sika AG | | | 3,717 | | | | 1,212,025 | |
| | | | | | | | 2,256,196 | |
| United Kingdom — 25.4% | | | | | | | | |
| Compass Group PLC | | | 48,454 | | | | 1,325,862 | |
| Diageo PLC | | | 25,885 | | | | 939,500 | |
| Experian PLC | | | 31,861 | | | | 1,299,779 | |
| Howden Joinery Group PLC | | | 115,295 | | | | 1,193,621 | |
| London Stock Exchange Group PLC | | | 12,518 | | | | 1,479,770 | |
| Rentokil Initial PLC | | | 248,023 | | | | 1,397,922 | |
| Unilever PLC | | | 12,209 | | | | 591,049 | |
| | | | | | | | 8,227,503 | |
| United States — 7.3% | | | | | | | | |
| Booking Holdings, Inc.(a) | | | 300 | | | | 1,064,166 | |
| NXP Semiconductors NV | | | 5,609 | | | | 1,288,275 | |
| | | | | | | | 2,352,441 | |
| TOTAL COMMON STOCKS | | | | | | | | |
| (Cost $27,128,935) | | | | | | | 31,778,772 | |
| | | | | | | | | |
| SHORT-TERM INVESTMENTS — 2.2% | | | | | | | | |
| | | | | | | | | |
| Money Market Funds — 2.2% | | | | | | | | |
| First American Government Obligations | | | | | | | | |
| Fund — Class Z, 5.25%(b) | | | 703,574 | | | | 703,574 | |
| TOTAL SHORT-TERM INVESTMENTS | | | | | | | | |
| (Cost $703,574) | | | | | | | 703,574 | |
| TOTAL INVESTMENTS — 100.2% | | | | | | | | |
| (Cost $27,832,509) | | | | | | | 32,482,346 | |
| Liabilities in Excess of Other Assets — (0.2)% | | | | | | | (49,964 | ) |
| TOTAL NET ASSETS — 100.0% | | | | | | $ | 32,432,382 | |
Percentages are stated as a percent of net assets.
ADR — American Depositary Receipt
PLC — Public Limited Company
| (a) | Non-income producing security. |
| (b) | The rate shown represents the 7-day effective yield as of December 31, 2023. |
PORTFOLIO HOLDINGS
% of Net Assets
| United Kingdom | 25.4% |
| Germany | 8.9% |
| France | 7.9% |
| United States | 7.3% |
| India | 7.0% |
| Switzerland | 7.0% |
| Netherlands | 6.0% |
| Japan | 5.0% |
| Canada | 4.5% |
| Brazil | 3.8% |
| China | 3.5% |
| Finland | 3.3% |
| Sweden | 3.3% |
| Indonesia | 3.3% |
| Money Market Funds | 2.2% |
| Denmark | 1.8% |
| Liabilities in Excess of Other Assets | (0.2%) |
| | 100.0% |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Intermediate Income FundA Message to Our Shareholders
December 31, 2023
Dear Shareholder:
During the 6-month period ended December 31, 2023, the Brown Advisory Intermediate Income Fund (the “Fund”) Investor Shares returned 2.98%, behind the 3.51% return for its benchmark, the Bloomberg Intermediate U.S. Aggregate Bond Index.
The Fund aims to generate performance primarily through individual security analysis, supported by a detailed and disciplined research process focused on downside protection. Duration and sector weightings are determined by an analysis of the intermediate-term risk/reward as opposed to any particular macro forecast.
During the period, the Federal Reserve’s monetary policy shifted from further elevating interest rates to how long rates would stay elevated. Moreover, commentary centered around what the impact of an increasing term premium, the additional yield compensation investors require to hold longer bonds, could have on economic conditions. For the entirety of the period, long-term interest rates were marginally higher while short-term interest rates were markedly lower. However, when scoring the change from the September FOMC meeting forward, long-term rates moved significantly lower, erasing the previous move higher which was supported by Federal Reserve officials’ aggressive ‘higher-for-longer’ mantra. Home and auto sales, notoriously sensitive portions of the economy, should have slowed due to elevated interest rates, yet the seasonally adjusted annual rate of auto sales exceeded fifteen million units and housing prices reached new highs in many major metropolitan markets for 2023.
Throughout the period, we were neutrally positioned with respect to interest rates, though we mildly extended duration as the period was ending. In retrospect, it would have been impactful to increase duration more meaningfully, but going forward we should have the opportunity to do so as the Federal Reserve’s pursues its elusive target inflation rate of 2%.
Given the continued resilience of corporate balance sheets and the broader economy, we moved to an overweight position in corporate credit. We invested in companies that we believed would exhibit less cyclicality if a recession does occur and focused, in part, on shorter maturity bonds that are higher yielding due to technical market conditions. This proved a good decision as credit spreads meaningfully tightened once investors became increasingly convinced of an economic soft landing. Within securitized bonds, we continue to focus on government-backed mortgage bonds since spreads remain elevated and these securities have limited extension risk. Broadly, we experienced mixed performance with lower coupon mortgages underperforming and higher coupon bonds rallying as the interest rate environment evolved. Lastly, although we primarily utilize Treasuries for liquidity and duration management, we ended the period with a lower weighting in favor of corporate and mortgage bonds.
Looking forward, we believe income will return to being the primary driver of return, rather than capital appreciation resulting from a secular period of ever lower interest rates. We expect our research focused investment process will continue to identify attractive individual security opportunities, enhancing the yield and income profile of the Fund.
Sincerely,
Jason T. Vlosich
Portfolio Manager
Past performance is not a guarantee of future results.
Mutual fund investing involves risk. Principal loss is possible. The Fund is subject to interest rate risk which is the risk that debt securities in the Fund’s portfolio will decline in value because of increases in market interest rates. Investments in Asset Backed and Mortgage Backed Securities include additional risks that investors should be aware of such as credit risk, prepayment risk, possible illiquidity and default, as well as increased susceptibility to adverse economic developments. Investments in debt securities typically decrease in value when interest rates rise.
The risk is usually greater for longer-term debt securities. Inflation-indexed bonds see the principal value of the security increased as the Consumer Price Index increases. Should the Consumer Price Index decline, those securities should be adversely impacted.
Diversification does not assure a profit, nor does it protect against a loss in a declining market.
Fund holdings and sector allocations are subject to change and should not be considered a recommendation to buy or sell any security. For a complete list of Fund holdings, please refer to the Schedule of Investments provided in this report.
Definitions for terms and indices are provided in the Glossary of Terms.
Brown Advisory Intermediate Income FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Par | | | Value | |
| U.S. TREASURY SECURITIES — 31.0% | | | | | | |
| | | | | | | |
| United States Treasury Note | | | | | | |
| 0.88%, 11/15/2030 | | $ | 2,735,000 | | | $ | 2,247,401 | �� |
| 1.88%, 02/15/2032 | | | 12,935,000 | | | | 11,124,605 | |
| 2.25%, 03/31/2026 | | | 6,775,000 | | | | 6,500,295 | |
| 2.75%, 05/15/2025 | | | 3,320,000 | | | | 3,241,928 | |
| 2.88%, 05/15/2028 | | | 5,395,000 | | | | 5,174,669 | |
| 3.00%, 06/30/2024 | | | 3,000,000 | | | | 2,968,665 | |
| 3.25%, 06/30/2029 | | | 6,200,000 | | | | 6,001,648 | |
TOTAL U.S. TREASURY SECURITIES (Cost $39,547,194) | | | | | | | 37,259,211 | |
| | | | | | | | | |
| CORPORATE BONDS — 25.0% | | | | | | | | |
| AerCap Ireland Capital DAC / AerCap Global Aviation Trust, 1.65%, 10/29/2024 | | | 1,345,000 | | | | 1,298,824 | |
| American Tower Corp., 3.60%, 01/15/2028 | | | 686,000 | | | | 654,160 | |
| Analog Devices, Inc., 1.70%, 10/01/2028 | | | 1,400,000 | | | | 1,242,528 | |
| Aptiv PLC, 3.25%, 03/01/2032 | | | 754,000 | | | | 666,437 | |
| Bio-Rad Laboratories, Inc., 3.70%, 03/15/2032 | | | 1,405,000 | | | | 1,269,361 | |
| Carrier Global Corp., 2.24%, 02/15/2025 | | | 1,215,000 | | | | 1,178,260 | |
| Citigroup, Inc., 3.20%, 10/21/2026 | | | 1,259,000 | | | | 1,200,961 | |
| Clorox Co., 4.40%, 05/01/2029 | | | 1,221,000 | | | | 1,209,624 | |
| Comcast Corp., 3.40%, 04/01/2030 | | | 694,000 | | | | 649,845 | |
| Consolidated Edison Co. of New York, Inc., 3.35%, 04/01/2030 | | | 1,211,000 | | | | 1,129,809 | |
| Crown Castle, Inc., 3.30%, 07/01/2030 | | | 719,000 | | | | 645,145 | |
| Dollar General Corp., 3.88%, 04/15/2027 | | | 1,235,000 | | | | 1,197,712 | |
| Dollar Tree, Inc., 4.20%, 05/15/2028 | | | 1,251,000 | | | | 1,224,842 | |
| Ferguson Finance PLC, 4.65%, 04/20/2032 (a) | | | 1,335,000 | | | | 1,290,851 | |
| Fortis, Inc., 3.06%, 10/04/2026 | | | 680,000 | | | | 645,947 | |
| Hasbro, Inc., 3.55%, 11/19/2026 | | | 1,250,000 | | | | 1,186,032 | |
| JB Hunt Transport Services, Inc., 3.88%, 03/01/2026 | | | 644,000 | | | | 631,472 | |
| Keysight Technologies, Inc., 4.60%, 04/06/2027 | | | 1,196,000 | | | | 1,192,748 | |
| Marvell Technology, Inc., 5.75%, 02/15/2029 | | | 1,195,000 | | | | 1,235,501 | |
| Morgan Stanley, 3.13%, 07/27/2026 | | | 1,260,000 | | | | 1,206,898 | |
| PNC Financial Services Group, Inc., 6.88% (Fixed until 10/20/2033, then SOFR + 2.28%), 10/20/2034 | | | 1,062,000 | | | | 1,179,414 | |
| Revvity, Inc., 1.90%, 09/15/2028 | | | 764,000 | | | | 661,694 | |
| Sysco Corp., 5.95%, 04/01/2030 | | | 604,000 | | | | 642,493 | |
| Trimble, Inc., 6.10%, 03/15/2033 | | | 1,205,000 | | | | 1,290,262 | |
| Veralto Corp., 5.45%, 09/18/2033 (a) | | | 1,240,000 | | | | 1,285,234 | |
| Verizon Communications, Inc., 2.10%, 03/22/2028 | | | 1,376,000 | | | | 1,245,332 | |
| Wells Fargo & Co., 3.00%, 10/23/2026 | | | 1,269,000 | | | | 1,205,339 | |
| West Fraser Timber Co., Ltd., 4.35%, 10/15/2024 (a) | | | 1,000,000 | | | | 984,343 | |
| Xylem, Inc., 1.95%, 01/30/2028 | | | 730,000 | | | | 660,242 | |
TOTAL CORPORATE BONDS (Cost $31,376,281) | | | | | | | 30,111,310 | |
| | | | | | | | | |
| MORTGAGE-BACKED SECURITIES — 22.4% | | | | | | | | |
| Federal Home Loan Mortgage Corp. | | | | | | | | |
| Pool QE0622, 2.00%, 04/01/2052 | | | 801,669 | | | | 665,878 | |
| Pool QF0492, 5.50%, 09/01/2052 | | | 899,471 | | | | 912,060 | |
| Pool RA7927, 4.50%, 09/01/2052 | | | 1,312,290 | | | | 1,272,984 | |
| Pool SD0913, 2.50%, 02/01/2052 | | | 1,466,878 | | | | 1,254,381 | |
| Pool SD3234, 2.50%, 12/01/2051 | | | 1,663,152 | | | | 1,418,749 | |
| Pool SD3475, 5.50%, 08/01/2053 | | | 1,250,677 | | | | 1,257,186 | |
| Pool SD3477, 6.50%, 08/01/2053 | | | 565,793 | | | | 586,413 | |
| Pool WA3311, 2.21%, 04/01/2038 | | | 1,651,876 | | | | 1,235,708 | |
| Series 4634, Class MA, 4.50%, 11/15/2054 | | | 818,102 | | | | 808,679 | |
| Series 5145, Class AB, 1.50%, 09/25/2049 | | | 435,957 | | | | 333,433 | |
| Series Q006, Class APT2, 2.76%, 09/25/2026 (b) | | | 95,981 | | | | 91,792 | |
| Series Q007, Class APT1, 6.00%, 10/25/2047 (b) | | | 77,062 | | | | 76,834 | |
| Series Q010, Class APT1, 4.74%, 04/25/2046 (b) | | | 42,823 | | | | 43,016 | |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Intermediate Income FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Par | | | Value | |
| MORTGAGE-BACKED SECURITIES — 22.4% (Continued) | | | | | | |
| Federal National Mortgage Association | | | | | | |
| Pool 628837, 6.50%, 03/01/2032 | | $ | 7,882 | | | $ | 8,214 | |
| Pool 663238, 5.50%, 09/01/2032 | | | 11,055 | | | | 11,348 | |
| Pool 741373, 6.41% (1 Year CMT Rate + 2.28%), 12/01/2033 | | | 6,068 | | | | 6,043 | |
| Pool 744805, 5.27% (Refinitiv USD IBOR Consumer Cash Fallbacks Term 6 Month + 1.52%), 11/01/2033 | | | 15,677 | | | | 15,488 | |
| Pool 764342, 4.90% (Refinitiv USD IBOR Consumer Cash Fallbacks Term 6 Month + 1.52%), 02/01/2034 | | | 19,634 | | | | 19,499 | |
| Pool BL1160, 3.64%, 01/01/2026 | | | 750,000 | | | | 732,351 | |
| Pool BQ3248, 2.00%, 11/01/2050 | | | 1,464,191 | | | | 1,204,292 | |
| Pool BQ6307, 2.00%, 11/01/2050 | | | 1,341,927 | | | | 1,103,724 | |
| Pool BR5634, 2.00%, 03/01/2051 | | | 797,432 | | | | 659,073 | |
| Pool BW0025, 4.00%, 07/01/2052 | | | 674,123 | | | | 640,539 | |
| Pool CB2548, 2.50%, 01/01/2052 | | | 1,318,638 | | | | 1,127,715 | |
| Pool FM6555, 2.00%, 04/01/2051 | | | 1,033,187 | | | | 848,830 | |
| Pool FM9973, 3.00%, 08/01/2051 | | | 1,359,472 | | | | 1,215,370 | |
| Pool FS0031, 2.50%, 10/01/2051 | | | 1,321,129 | | | | 1,124,305 | |
| Pool FS0348, 2.00%, 01/01/2052 | | | 1,489,114 | | | | 1,233,517 | |
| Pool FS3607, 2.50%, 02/01/2037 | | | 1,039,766 | | | | 959,632 | |
| Pool FS4862, 2.50%, 10/01/2051 | | | 1,508,244 | | | | 1,286,110 | |
| Pool MA2998, 3.50%, 04/01/2032 | | | 321,860 | | | | 313,179 | |
| Pool MA4208, 2.00%, 12/01/2050 | | | 740,998 | | | | 610,135 | |
| Pool MA4492, 2.00%, 12/01/2051 | | | 1,141,047 | | | | 934,512 | |
| Series 2016-M10, Class AV1, 2.35%, 11/25/2045 | | | 244,231 | | | | 236,447 | |
| FREMF Mortgage Trust, Series 2020-KF74, Class B, 7.60% (30 day avg SOFR US + 2.26%), 01/25/2027 (a) | | | 148,475 | | | | 141,903 | |
| Ginnie Mae I Pool, Pool 781186, 9.00%, 06/15/2030 | | | 8,089 | | | | 8,081 | |
| Government National Mortgage Association, Series 2021-84, Class ED, 1.00%, 07/16/2060 | | | 2,414,034 | | | | 1,773,442 | |
| JP Morgan Mortgage Trust, Series 2020-LTV2, Class A15, 3.00%, 11/25/2050 (a)(b) | | | 891,779 | | | | 802,010 | |
TOTAL MORTGAGE-BACKED SECURITIES (Cost $28,427,163) | | | | | | | 26,972,872 | |
| | | | | | | | | |
| | | Shares | | | | | |
| AFFILIATED MUTUAL FUNDS (Note 3) — 12.6% | | | | | | | | |
| Brown Advisory Mortgage Securities Fund — Institutional Shares | | | 1,654,617 | | | | 15,156,294 | |
TOTAL AFFILIATED MUTUAL FUNDS (Cost $16,952,513) | | | | | | | 15,156,294 | |
| | | | | | | | | |
| | | Par | | | | | |
| ASSET-BACKED SECURITIES — 3.8% | | | | | | | | |
| American Homes 4 Rent Trust, Series 2015-SFR2, Class C, 4.69%, 10/17/2052 (a) | | $ | 510,000 | | | | 500,512 | |
| CarMax Auto Owner Trust, Series 2021-2, Class C, 1.34%, 02/16/2027 | | | 900,000 | | | | 843,903 | |
| CNH Equipment Trust, Series 2023-B, Class A2, 5.90%, 02/16/2027 | | | 1,230,000 | | | | 1,238,118 | |
| Dext ABS LLC, Series 2021-1, Class A, 1.12%, 02/15/2028 (a) | | | 195,230 | | | | 190,098 | |
| FHF Trust | | | | | | | | |
| Series 2021-1A, Class A, 1.27%, 03/15/2027 (a) | | | 50,473 | | | | 48,822 | |
| Series 2021-2A, Class A, 0.83%, 12/15/2026 (a) | | | 219,801 | | | | 212,385 | |
| John Deere Owner Trust, Series 2023-C, Class A2, 5.76%, 08/17/2026 | | | 1,135,000 | | | | 1,139,931 | |
| JPMorgan Chase Bank NA, Series 2021-3, Class B, 0.76%, 02/26/2029 (a) | | | 280,785 | | | | 270,985 | |
| Tesla Auto Lease Trust, Series 2021-A, Class C, 1.18%, 03/20/2025 (a) | | | 115,287 | | | | 114,923 | |
TOTAL ASSET-BACKED SECURITIES (Cost $4,659,221) | | | | | | | 4,559,677 | |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Intermediate Income FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Shares | | | Value | |
| SHORT-TERM INVESTMENTS — 4.4% | | | | | | |
| Money Market Funds — 4.4% | | | | | | |
| First American Government Obligations Fund — Class Z, 5.25%(c) | | | 5,292,664 | | | $ | 5,292,664 | |
TOTAL SHORT-TERM INVESTMENTS (Cost $5,292,664) | | | | | | | 5,292,664 | |
TOTAL INVESTMENTS — 99.2% (Cost $126,255,036) | | | | | | | 119,352,028 | |
| Other Assets in Excess of Liabilities — 0.8% | | | | | | | 938,000 | |
| TOTAL NET ASSETS — 100.0% | | | | | | $ | 120,290,028 | |
Percentages are stated as a percent of net assets.
PLC — Public Limited Company
SOFR — Secured Overnight Financing Rate
| (a) | Security is exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may only be resold in transactions exempt from registration to qualified institutional investors. |
| (b) | Coupon rate is variable based on the weighted average coupon of the underlying collateral. To the extent the weighted average coupon of the underlying assets which comprise the collateral increases or decreases, the coupon rate of this security will increase or decrease correspondingly. The rate disclosed is as of December 31, 2023. |
| (c) | The rate shown represents the 7-day effective yield as of December 31, 2023. |
PORTFOLIO HOLDINGS
% of Net Assets
| U.S. Treasury Securities | 31.0% |
| Corporate Bonds | 25.0% |
| Mortgage-Backed Securities | 22.4% |
| Affiliated Mutual Funds | 12.6% |
| Money Market Funds | 4.4% |
| Asset-Backed Securities | 3.8% |
| Other Assets and Liabilities | 0.8% |
| | 100.0% |
Schedule of Open Futures Contracts
| | | Contracts | | | | Notional | | | Notional | | | Unrealized Appreciation | |
Description | | Purchased | | Expiration Date | | Amount | | | Value | | | (Depreciation) | |
| U.S. Treasury 2 Year Notes | | 81 | | 03/28/2024 | | $ | 16,511,511 | | | $ | 16,679,039 | | | $ | 167,528 | |
| U.S. Treasury 5 Year Notes | | 76 | | 03/28/2024 | | | 8,081,723 | | | | 8,266,781 | | | | 185,058 | |
| U.S. Treasury Long Bonds | | 4 | | 03/19/2024 | | | 463,706 | | | | 499,750 | | | | 36,044 | |
| | | | | | | $ | 25,056,940 | | | $ | 25,445,570 | | | $ | 388,630 | |
| | | | | | | | | | | | | | | | | |
| | | Contracts | | | | Notional | | | Notional | | | Unrealized Appreciation | |
Description | | Sold | | Expiration Date | | Amount | | | Value | | | (Depreciation) | |
| 10 Year U.S. Ultra Treasury Notes | | (37) |
| 03/19/2024 | | $ | (4,177,056 | ) | | $ | (4,366,578 | ) | | $ | (189,522 | ) |
| U.S. Treasury 10 Year Notes | | (25) |
| 03/19/2024 | | | (2,735,898 | ) | | | (2,822,265 | ) | | | (86,367 | ) |
| U.S. Treasury Ultra Bonds | | (8) |
| 03/19/2024 | | | (974,088 | ) | | | (1,068,750 | ) | | | (94,662 | ) |
| | | | | | | $ | (7,887,042 | ) | | $ | (8,257,593 | ) | | $ | (370,551 | ) |
| Total Unrealized Appreciation (Depreciation) | | | | | | | | | | | | $ | 18,079 | |
There is no variation margin due to or from the Fund as of the date of this report.
The accompanying notes are an integral part of these financial statements.
Brown Advisory Sustainable Bond FundA Message to Our Shareholders
December 31, 2023
Dear Shareholder:
During the 6-month period ended December 31, 2023, the Brown Advisory Sustainable Bond Fund Institutional Shares (the “Fund”) returned 2.74%, underperforming the 3.37% return of the benchmark, the Bloomberg US Aggregate Bond Index. Relative underperformance for the period was primarily driven by positioning for a steeper yield curve, a defensive underweight position in corporate credit, and positioning within the securitized bond sectors.
The Fund seeks to take a sustainable and dynamic approach to fixed income. We believe that dynamic asset allocation underpinned by rigorous bottom-up security analysis and informed by top-down macro analysis, combined with our differentiated sustainable investment approach, can deliver an attractive stream of income and risk-adjusted returns through the economic cycle while addressing global sustainability challenges.
Heading into the 4th quarter, the bond market was looking at its third consecutive year of negative returns as the momentum of a strong economy continued. In November, we experienced one of the more powerful rallies in the bond market that we have seen in recent years, and the sharp decline in bond yields was enough to erase the absolute YTD losses in our fixed income portfolios. After causing much pain for the first 10 months of the year, the yield on the 10-year Treasury ended roughly where it started at about 3.9%.
Economic unpredictability has proven how difficult it is to forecast and time markets. We don’t put a lot of emphasis on trying to forecast, rather focus on what we can control. Our strength is staying nimble and flexible within our asset allocation and focusing on strong bottom-up security selection. Given the continued resilience of the economy and the ability of corporate balance sheets to weather higher interest rates, we’ve moved to a mildly overweight position in corporate bonds. We’ve invested in companies that we believe will exhibit less cyclicality if a recession does occur and focused, in part, on shorter maturity bonds that are higher yielding due to technical market conditions. We continue to decrease our exposure to structured credit in favor of traditional mortgage pass-through bonds that have elevated yields and spreads with minimal extension risk.
In our view, the tightening cycle ended in 2023 and it was a tall feat to moderate inflation while averting a recession. The discussion has now shifted to the timing and degree of policy easing and whether a “soft landing” will come to fruition in the U.S. While we do see a realistic path towards a “soft landing”, we are not blinded to increasing geopolitical risks and policy/economic challenges that could create significant hurdles to achieving that successfully.
Looking forward, we believe income will return to being the primary driver of return, rather than capital appreciation resulting from a secular period of ever lower interest rates. We expect our research focused and differentiated sustainable investment approach will continue to identify attractive individual security opportunities, enhancing the yield and income profile of the Fund.
Sincerely,
Amy Hauter, CFA
Portfolio Manager
Jason Vlosich
Portfolio Manager
Brown Advisory Sustainable Bond FundA Message to Our Shareholders
December 31, 2023
Past performance is not a guarantee of future results.
Mutual fund investing involves risk. Principal loss is possible. The Fund is non-diversified which means it may invest a large percentage of its assets in the securities of fewer issuers. Concentration in a limited number of issuers exposes the Fund to greater market risk than if its assets were diversified among a greater number of issuers. The Fund is also subject to interest rate risk which is the risk that debt securities in the Fund’s portfolio will decline in value because of an increase in market interest rates. This risk is usually greater for longer- term debt securities. Income from tax-exempt funds may be subject to state and local taxes and a portion of income may be subject to the Federal Alternative minimum tax for certain investors.
Sustainable investment considerations are one of multiple informational inputs into the investment process, alongside data on traditional financial factors, and so are not the sole driver of decision-making. Sustainable investment analysis may not be performed for every holding in the strategy. Sustainable investment considerations that are material will vary by investment style, sector/industry, market trends and client objectives. The Fund seeks to identify companies that it believes may be desirable based on our analysis of sustainable investment related risks and opportunities, but investors may differ in their views. As a result, the Fund may invest in companies that do not reflect the beliefs and values of any particular investor. The Fund may also invest in companies that would otherwise be excluded from other funds that focus on sustainable investment risks. Security selection will be impacted by the combined focus on sustainable investment research assessments and fundamental research assessments including the return forecasts. The Fund incorporates data from third parties in its research process but does not make investment decisions based on third-party data alone.
Diversification does not assure a profit, nor does it protect against a loss in a declining market.
Fund holdings and sector allocations are subject to change and should not be considered a recommendation to buy or sell any security. For a complete list of Fund holdings, please refer to the Schedule of Investments provided in this report.
Credit Quality weights by rating are derived from the highest bond rating as determined by Standard & Poor’s (“S&P”), Moody’s or Fitch. Bond ratings are grades given to bonds that indicate their credit quality as determined by private independent rating services such as S&P, Moody’s and Fitch. These firms evaluate a bond issuer’s financial strength, or its ability to pay a bond’s principal and interest in a timely fashion. Ratings are expressed as letters ranging from ‘AAA’, which is the highest grade, to ‘D’, which is the lowest grade. In limited situations when none of the three rating agencies have issued a formal rating, the Advisor will classify the security as nonrated.
Definitions for terms and indices are provided in the Glossary of Terms.
Brown Advisory Sustainable Bond FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Par | | | Value | |
| MORTGAGE-BACKED SECURITIES — 35.3% | | | | | | |
| Federal Home Loan Mortgage Corp. | | | | | | |
| Pool G31063, 3.50%, 11/01/2037 | | $ | 581,893 | | | $ | 555,641 | |
| Pool QC5510, 3.50%, 07/01/2051 | | | 1,083,779 | | | | 995,482 | |
| Pool QD5888, 3.50%, 02/01/2052 | | | 1,831,739 | | | | 1,689,626 | |
| Pool QD7054, 3.00%, 02/01/2052 | | | 1,730,841 | | | | 1,532,250 | |
| Pool QD7450, 3.00%, 03/01/2052 | | | 1,742,186 | | | | 1,545,160 | |
| Pool QE0380, 2.50%, 04/01/2052 | | | 156,919 | | | | 134,729 | |
| Pool RA6064, 2.50%, 09/01/2051 | | | 5,039,407 | | | | 4,370,028 | |
| Pool RA6699, 3.50%, 02/01/2052 | | | 1,790,374 | | | | 1,651,455 | |
| Pool SD2875, 5.00%, 05/01/2053 | | | 3,292,097 | | | | 3,277,736 | |
| Pool SD3100, 3.50%, 09/01/2052 | | | 6,938,964 | | | | 6,390,248 | |
| Pool SD3234, 2.50%, 12/01/2051 | | | 7,704,435 | | | | 6,572,263 | |
| Pool SD3477, 6.50%, 08/01/2053 | | | 2,934,451 | | | | 3,041,396 | |
| Series 2015-HQ2, Class M3, 8.70% (30 day avg SOFR US + 3.36%), 05/25/2025 (a) | | | 52,918 | | | | 53,613 | |
| Series 4094, Class NI, 2.50%, 03/15/2027 (b) | | | 140,220 | | | | 1,249 | |
| Series 4107, Class LI, 3.00%, 08/15/2027 (b) | | | 1,608,247 | | | | 92,874 | |
| Series 4143, Class IA, 3.50%, 09/15/2042 (b) | | | 1,024,956 | | | | 79,708 | |
| Series KW03, Class A2, 3.02%, 06/25/2027 | | | 300,000 | | | | 287,285 | |
| Series Q007, Class APT1, 6.00%, 10/25/2047 (a) | | | 142,269 | | | | 141,847 | |
| Series Q010, Class APT1, 4.74%, 04/25/2046 (a) | | | 85,646 | | | | 86,032 | |
| Federal National Mortgage Association | | | | | | | | |
| Pool 467095, 5.90%, 01/01/2041 | | | 243,452 | | | | 264,598 | |
| Pool BH7686, 4.50%, 12/01/2047 | | | 67,510 | | | | 66,370 | |
| Pool BK5105, 5.50%, 05/01/2048 | | | 141,295 | | | | 144,336 | |
| Pool BK8032, 5.50%, 06/01/2048 | | | 211,113 | | | | 215,659 | |
| Pool BN4921, 5.50%, 01/01/2049 | | | 144,960 | | | | 147,757 | |
| Pool BN4936, 5.50%, 12/01/2048 | | | 144,663 | | | | 147,454 | |
| Pool BT7699, 4.00%, 09/01/2051 | | | 1,818,462 | | | | 1,772,219 | |
| Pool BV4532, 3.50%, 03/01/2052 | | | 1,818,734 | | | | 1,674,133 | |
| Pool CB2909, 3.50%, 02/01/2052 | | | 1,704,926 | | | | 1,572,132 | |
| Pool DA0025, 6.00%, 09/01/2053 | | | 5,178,343 | | | | 5,307,524 | |
| Pool FM8754, 3.00%, 09/01/2051 | | | 5,468,042 | | | | 4,873,248 | |
| Pool FS0031, 2.50%, 10/01/2051 | | | 1,150,661 | | | | 979,233 | |
| Pool FS0195, 2.50%, 01/01/2052 | | | 4,015,807 | | | | 3,434,550 | |
| Pool FS0491, 3.50%, 01/01/2052 | | | 2,711,046 | | | | 2,489,057 | |
| Pool FS0731, 2.00%, 02/01/2052 | | | 1,051,192 | | | | 871,773 | |
| Pool FS1480, 2.50%, 11/01/2051 | | | 602,445 | | | | 516,013 | |
| Pool FS4862, 2.50%, 10/01/2051 | | | 7,589,251 | | | | 6,471,511 | |
| Pool FS5314, 2.00%, 05/01/2052 | | | 7,683,251 | | | | 6,291,298 | |
| Pool FS5458, 5.50%, 08/01/2053 | | | 6,907,653 | | | | 6,937,200 | |
| Pool MA2897, 3.00%, 02/01/2037 | | | 414,600 | | | | 386,285 | |
| Pool MA4565, 3.50%, 03/01/2052 | | | 2,384,515 | | | | 2,199,651 | |
| Series 2012-65, Class HJ, 5.00%, 07/25/2040 | | | 188,807 | | | | 189,280 | |
| Series 2021-95, Class WI, 0.00%, 02/25/2035 (a)(b) | | | 4,557,653 | | | | 178,954 | |
| Federal National Mortgage Association, TBA | | | | | | | | |
| 2.00%, 01/15/2054 | | | 17,960,000 | | | | 14,682,300 | |
| 3.00%, 01/15/2054 | | | 9,100,000 | | | | 8,051,012 | |
| 4.50%, 01/15/2054 | | | 7,200,000 | | | | 6,980,063 | |
| 5.00%, 01/15/2054 | | | 2,800,000 | | | | 2,770,469 | |
| 5.50%, 01/15/2054 | | | 4,820,000 | | | | 4,841,088 | |
| 6.00%, 01/15/2054 | | | 11,000,000 | | | | 11,170,156 | |
| Ginnie Mae I Pool | | | | | | | | |
| Pool 723334, 5.00%, 09/15/2039 | | | 224,973 | | | | 227,038 | |
| Pool 781950, 4.50%, 07/15/2035 | | | 509,109 | | | | 503,880 | |
| Pool 783467, 4.00%, 10/15/2041 | | | 2,643,264 | | | | 2,580,828 | |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Sustainable Bond FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Par | | | Value | |
| MORTGAGE-BACKED SECURITIES — 35.3% (Continued) | | | | | | |
| Ginnie Mae II Pool | | | | | | |
| Pool 784507, 4.00%, 12/20/2047 | | $ | 3,077,747 | | | $ | 2,970,902 | |
| Pool MA2754, 3.50%, 04/20/2045 | | | 1,015,541 | | | | 960,448 | |
| Pool MA6994, 2.00%, 11/20/2050 | | | 3,497,433 | | | | 2,963,386 | |
| Pool MA7106, 2.00%, 01/20/2036 | | | 605,549 | | | | 549,498 | |
| Pool MA7164, 2.00%, 02/20/2036 | | | 594,989 | | | | 539,900 | |
| Pool MA7471, 2.00%, 07/20/2051 | | | 7,379,070 | | | | 6,252,707 | |
| Pool MA7774, 6.00%, 11/20/2051 | | | 262,533 | | | | 272,022 | |
| Government National Mortgage Association | | | | | | | | |
| Series 2014-135, Class IO, 0.42%, 01/16/2056 (a)(b) | | | 228,627 | | | | 4,121 | |
| Series 2014-45, Class BI, 0.54%, 07/16/2054 (a)(b) | | | 366,383 | | | | 3,867 | |
| Series 2015-172, Class IO, 0.62%, 03/16/2057 (a)(b) | | | 213,139 | | | | 4,447 | |
| Series 2016-40, Class IO, 0.61%, 07/16/2057 (a)(b) | | | 426,164 | | | | 8,796 | |
| Series 2016-56, Class IO, 1.01%, 11/16/2057 (a)(b) | | | 285,431 | | | | 12,287 | |
| Series 2016-98, Class IO, 0.85%, 05/16/2058 (a)(b) | | | 418,898 | | | | 15,786 | |
| Series 2017-167, Class SE, 0.73% (-1 x 1 mo. Term SOFR + 6.09%), 11/20/2047 (a)(b)(c) | | | 1,855,263 | | | | 234,818 | |
| Series 2021-125, Class UL, 1.50%, 07/20/2051 | | | 920,148 | | | | 691,426 | |
| Series 2021-158, Class JD, 1.50%, 09/20/2051 | | | 1,343,418 | | | | 988,050 | |
| Series 2021-160, Class DK, 2.00%, 09/20/2051 | | | 2,104,659 | | | | 1,438,309 | |
| Series 2021-177, Class KD, 2.00%, 10/20/2051 | | | 1,383,690 | | | | 1,075,160 | |
| Series 2021-84, Class ED, 1.00%, 07/16/2060 | | | 8,292,072 | | | | 6,091,676 | |
| Series 2022-9, Class CD, 2.00%, 01/20/2052 | | | 2,468,351 | | | | 1,972,104 | |
| Government National Mortgage Association, TBA | | | | | | | | |
| 2.00%, 01/15/2054 | | | 18,085,000 | | | | 15,316,441 | |
| 2.50%, 01/15/2054 | | | 16,300,000 | | | | 14,261,267 | |
| 3.00%, 01/15/2054 | | | 8,800,000 | | | | 7,968,790 | |
| 4.00%, 01/15/2054 | | | 6,634,000 | | | | 6,334,450 | |
| 4.50%, 01/15/2054 | | | 4,915,000 | | | | 4,797,513 | |
| 5.00%, 01/15/2054 | | | 2,360,000 | | | | 2,343,778 | |
| Seasoned Credit Risk Transfer Trust, Series 2017-1, Class M1, 4.00%, 01/25/2056 (a)(d) | | | 45,312 | | | | 44,890 | |
TOTAL MORTGAGE-BACKED SECURITIES (Cost $213,105,494) | | | | | | | 209,552,530 | |
| | | | | | | | | |
| CORPORATE BONDS — 29.7% | | | | | | | | |
| AbbVie, Inc., 2.60%, 11/21/2024 | | | 6,010,000 | | | | 5,874,170 | |
| AerCap Ireland Capital DAC / AerCap Global Aviation Trust | | | | | | | | |
| 1.65%, 10/29/2024 | | | 3,050,000 | | | | 2,945,289 | |
| 3.00%, 10/29/2028 | | | 6,495,000 | | | | 5,933,043 | |
| AIB Group PLC | | | | | | | | |
| 7.58% to 10/14/2025 then SOFR + 3.46%, 10/14/2026 (d) | | | 2,840,000 | | | | 2,931,875 | |
| 6.61% to 09/13/2028 then SOFR + 2.33%, 09/13/2029 (d) | | | 2,795,000 | | | | 2,947,612 | |
| Aptiv PLC, 3.25%, 03/01/2032 | | | 6,675,000 | | | | 5,899,822 | |
| AT&T, Inc., 4.35%, 03/01/2029 | | | 5,955,000 | | | | 5,880,088 | |
| Bio-Rad Laboratories, Inc., 3.70%, 03/15/2032 | | | 6,575,000 | | | | 5,940,247 | |
| CaixaBank S.A., 6.84% to 09/13/2033 then SOFR + 2.77%, 09/13/2034 (d) | | | 5,550,000 | | | | 5,866,227 | |
| Carrier Global Corp., 2.24%, 02/15/2025 | | | 6,060,000 | | | | 5,876,755 | |
| Consolidated Edison Co. of New York, Inc., 3.35%, 04/01/2030 | | | 4,730,000 | | | | 4,412,879 | |
| Crown Castle, Inc., 3.30%, 07/01/2030 | | | 6,570,000 | | | | 5,895,137 | |
| Equinix, Inc., 3.20%, 11/18/2029 | | | 9,630,000 | | | | 8,853,774 | |
| Ferguson Finance PLC, 4.65%, 04/20/2032 (d) | | | 6,095,000 | | | | 5,893,436 | |
| Ford Motor Credit Co. LLC, 4.06%, 11/01/2024 | | | 5,980,000 | | | | 5,878,247 | |
| Fortis, Inc., 3.06%, 10/04/2026 | | | 6,210,000 | | | | 5,899,014 | |
| Kreditanstalt fuer Wiederaufbau, 0.63%, 01/22/2026 | | | 19,025,000 | | | | 17,669,487 | |
| Marvell Technology, Inc., 5.95%, 09/15/2033 | | | 8,390,000 | | | | 8,903,249 | |
| Micron Technology, Inc., 6.75%, 11/01/2029 | | | 2,735,000 | | | | 2,957,432 | |
| Nationwide Building Society, 4.30% to 03/08/2028 then 3 mo. LIBOR US + 1.45%, 03/08/2029 (d) | | | 3,070,000 | | | | 2,943,886 | |
| NatWest Group PLC, 5.08% to 01/27/2029 then 3 mo. LIBOR US + 1.91%, 01/27/2030 | | | 2,990,000 | | | | 2,946,728 | |
| PNC Financial Services Group, Inc., 6.88% to 10/20/2033 then SOFR + 2.28%, 10/20/2034 | | | 5,445,000 | | | | 6,046,998 | |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Sustainable Bond FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Par | | | Value | |
| CORPORATE BONDS — 29.7% (Continued) | | | | | | |
| Revvity, Inc., 2.25%, 09/15/2031 | | $ | 9,120,000 | | | $ | 7,482,537 | |
| Roper Technologies, Inc., 1.75%, 02/15/2031 | | | 5,375,000 | | | | 4,429,969 | |
| Societe Generale S.A., 2.80% to 01/19/2027 then 1 Year CMT Rate + 1.30%, 01/19/2028 (d) | | | 6,390,000 | | | | 5,890,059 | |
| Sprint Capital Corp., 8.75%, 03/15/2032 | | | 7,180,000 | | | | 8,870,445 | |
| Toronto-Dominion Bank/The, 5.26%, 12/11/2026 | | | 5,780,000 | | | | 5,896,397 | |
| Trimble, Inc., 6.10%, 03/15/2033 | | | 8,365,000 | | | | 8,956,883 | |
| Veralto Corp., 5.45%, 09/18/2033 (d) | | | 5,695,000 | | | | 5,902,749 | |
TOTAL CORPORATE BONDS (Cost $174,552,362) | | | | | | | 175,824,434 | |
| | | | | | | | | |
| FOREIGN GOVERNMENT BONDS — 24.0% | | | | | | | | |
| Asian Development Bank | | | | | | | | |
| 2.88%, 05/06/2025 | | | 18,050,000 | | | | 17,641,062 | |
| 1.88%, 03/15/2029 | | | 10,200,000 | | | | 9,187,173 | |
| Council of Europe Development Bank, 3.00%, 06/16/2025 | | | 14,100,000 | | | | 13,775,681 | |
| European Investment Bank | | | | | | | | |
| 2.75%, 08/15/2025 | | | 23,915,000 | | | | 23,278,453 | |
| 1.38%, 03/15/2027 | | | 24,655,000 | | | | 22,679,363 | |
| Inter-American Development Bank | | | | | | | | |
| 0.88%, 04/20/2026 | | | 22,670,000 | | | | 21,024,695 | |
| 5.29% (SOFR + 0.28%), 04/12/2027 (e) | | | 10,625,000 | | | | 10,607,614 | |
| International Bank for Reconstruction & Development, 0.63%, 04/22/2025 | | | 25,400,000 | | | | 24,131,099 | |
TOTAL FOREIGN GOVERNMENT BOND (Cost $142,990,734) | | | | | | | 142,325,140 | |
| | | | | | | | | |
| U.S. TREASURY SECURITIES — 16.9% | | | | | | | | |
| United States Treasury Bond | | | | | | | | |
| 3.88%, 02/15/2043 | | | 2,650,000 | | | | 2,527,645 | |
| 4.13%, 08/15/2053 | | | 33,000,000 | | | | 33,366,094 | |
| United States Treasury Note | | | | | | | | |
| 3.25%, 06/30/2027 | | | 6,270,000 | | | | 6,128,068 | |
| 3.88%, 12/31/2027 | | | 2,445,000 | | | | 2,441,466 | |
| 3.50%, 04/30/2028 | | | 2,980,000 | | | | 2,933,030 | |
| 2.88%, 05/15/2028 | | | 12,560,000 | | | | 12,047,052 | |
| 0.88%, 11/15/2030 | | | 9,565,000 | | | | 7,859,740 | |
| 1.88%, 02/15/2032 | | | 20,490,000 | | | | 17,622,199 | |
| United States Treasury STRIP, 4.30%, 05/15/2043 (f) | | | 36,020,000 | | | | 15,343,483 | |
TOTAL U.S. TREASURY SECURITIES (Cost $98,628,992) | | | | | | | 100,268,777 | |
| | | | | | | | | |
| ASSET-BACKED SECURITIES — 6.5% | | | | | | | | |
| American Homes 4 Rent Trust | | | | | | | | |
| Series 2014-SFR2, Class D, 5.15%, 10/17/2036 (d) | | | 540,000 | | | | 534,585 | |
| Series 2015-SFR1, Class D, 4.41%, 04/17/2052 (d) | | | 520,000 | | | | 509,575 | |
| AmeriCredit Automobile Receivables Trust, Series 2020-2, Class C, 1.48%, 02/18/2026 | | | 855,568 | | | | 840,745 | |
| CarMax Auto Owner Trust | | | | | | | | |
| Series 2021-2, Class C, 1.34%, 02/16/2027 | | | 2,255,000 | | | | 2,114,447 | |
| Series 5.72000, Class A2A, 5.72%, 11/16/2026 | | | 2,870,000 | | | | 2,878,923 | |
| CNH Equipment Trust | | | | | | | | |
| Series 2020-A, Class A4, 1.51%, 04/15/2027 | | | 939,797 | | | | 933,371 | |
| Series 2021-C, Class B, 1.41%, 04/16/2029 | | | 2,650,000 | | | | 2,457,208 | |
| Series 2023-B, Class A2, 5.90%, 02/16/2027 | | | 5,150,000 | | | | 5,183,987 | |
| Dext ABS LLC | | | | | | | | |
| Series 2021-1, Class A, 1.12%, 02/15/2028 (d) | | | 860,284 | | | | 837,670 | |
| Series 2021-1, Class B, 1.76%, 02/15/2028 (d) | | | 870,000 | | | | 818,599 | |
| Drive Auto Receivables Trust, Series 2020-1, Class D, 2.70%, 05/17/2027 | | | 646,242 | | | | 641,193 | |
| FHF Trust | | | | | | | | |
| Series 2021-1A, Class A, 1.27%, 03/15/2027 (d) | | | 477,109 | | | | 461,501 | |
| Series 2021-2A, Class A, 0.83%, 12/15/2026 (d) | | | 318,513 | | | | 307,767 | |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Sustainable Bond FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Par | | | Value | |
| ASSET-BACKED SECURITIES — 6.5% (Continued) | | | | | | |
| HPEFS Equipment Trust, Series 2021-1A, Class D, 1.03%, 03/20/2031 (d) | | $ | 1,831,923 | | | $ | 1,810,143 | |
| John Deere Owner Trust | | | | | | | | |
| Series 2023-B, Class A2, 5.59%, 06/15/2026 | | | 3,775,000 | | | | 3,778,279 | |
| Series 2023-C, Class A2, 5.76%, 08/17/2026 | | | 5,850,000 | | | | 5,875,413 | |
| JPMorgan Chase Bank NA, Series 2021-3, Class B, 0.76%, 02/26/2029 (d) | | | 769,425 | | | | 742,570 | |
| Newtek Small Business Loan Trust, Series 2018-1, Class A, 7.95% (Prime Rate + (0.55%)), 02/25/2044 (a)(d) | | | 463,849 | | | | 460,053 | |
| PFS Financing Corp, Series 2021-A, Class A, 0.71%, 04/15/2026 (d) | | | 1,075,000 | | | | 1,058,608 | |
| Tesla Auto Lease Trust, Series 2021-A, Class C, 1.18%, 03/20/2025 (d) | | | 700,792 | | | | 698,578 | |
| Verizon Master Trust, Series 2021-1, Class A, 0.50%, 05/20/2027 | | | 5,850,000 | | | | 5,735,176 | |
TOTAL ASSET-BACKED SECURITIES (Cost $39,143,595) | | | | | | | 38,678,391 | |
| | | | | | | | | |
| MUNICIPAL BONDS — 1.4% | | | | | | | | |
| California Health Facilities Financing Authority, 3.03%, 06/01/2034 | | | 2,650,000 | | | | 2,267,219 | |
| Colorado Health Facilities Authority, 3.36%, 12/01/2030 | | | 1,325,000 | | | | 1,172,953 | |
| Honolulu Hawaii, 3.00%, 09/01/2027 | | | 100,000 | | | | 95,530 | |
| Los Angeles California Community College District/CA, 6.60%, 08/01/2042 | | | 30,000 | | | | 35,954 | |
| Los Angeles California Wastewater System Revenue, 3.49%, 06/01/2029 | | | 430,000 | | | | 410,639 | |
| Maryland Community Development Administration, 3.24%, 09/01/2048 | | | 15,000 | | | | 14,563 | |
| Metropolitan Pier & Exposition Authority, 3.96%, 12/15/2026 | | | 3,300,000 | | | | 3,175,484 | |
| New York City New York Housing Development Corp., 2.71%, 08/01/2031 | | | 1,000,000 | | | | 853,169 | |
| University of California, 2.99%, 05/15/2026 | | | 355,000 | | | | 342,161 | |
| University of North Texas System, 3.69%, 04/15/2030 | | | 25,000 | | | | 23,974 | |
TOTAL MUNICIPAL BONDS (Cost $9,256,555) | | | | | | | 8,391,646 | |
| | | | | | | | | |
| | | Shares | | | | | |
| SHORT-TERM INVESTMENTS — 1.9% | | | | | | | | |
| | | | | | | | | |
| Money Market Funds — 1.5% | | | | | | | | |
| First American Government Obligations Fund — Class Z, 5.25%(g) | | | 9,015,318 | | | | 9,015,318 | |
| | | | | | | | | |
| | | Par | | | | | |
| U.S. Treasury Bills — 0.4% | | | | | | | | |
| 4.98%, 01/11/2024(h) | | $ | 2,050,000 | | | | 2,047,324 | |
TOTAL SHORT-TERM INVESTMENTS (Cost $11,062,276) | | | | | | | 11,062,642 | |
TOTAL INVESTMENTS — 115.7% (Cost $688,740,008) | | | | | | | 686,103,560 | |
| Liabilities in Excess of Other Assets — (15.7)% | | | | | | | (93,263,018 | ) |
| TOTAL NET ASSETS — 100.0% | | | | | | $ | 592,840,542 | |
Percentages are stated as a percent of net assets.
LIBOR — London Interbank Offered Rate
PLC — Public Limited Company
SOFR — Secured Overnight Financing Rate
STRIP — Separate Trading of Registered Interest and Principal
TBA — To be Announced
| (a) | Coupon rate is variable based on the weighted average coupon of the underlying collateral. To the extent the weighted average coupon of the underlying assets which comprise the collateral increases or decreases, the coupon rate of this security will increase or decrease correspondingly. The rate disclosed is as of December 31, 2023. |
| (b) | Interest only security. |
| (c) | Inverse floating rate security whose interest rate moves in the opposite direction of reference interest rates. Reference interest rates are typically based on a negative multiplier or slope. Interest rate may also be subject to a cap or floor. |
| (d) | Security is exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may only be resold in transactions exempt from registration to qualified institutional investors. |
| (e) | Coupon rate is variable or floats based on components including but not limited to reference rate and spread. These securities may not indicate a reference rate and/or spread in their description. The rate disclosed is as of December 31, 2023. |
| (f) | Zero-coupon bond. The rate shown is the effective yield as of December 31, 2023. |
| (g) | The rate shown represents the 7-day effective yield as of December 31, 2023. |
| (h) | This security is pledged as collateral in connection with open futures contracts. Rate disclosed is yield to maturity as of the date of this report. |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Sustainable Bond FundSchedule of Investments
December 31, 2023 (Unaudited)
PORTFOLIO HOLDINGS
% of Net Assets
| Mortgage-Backed Securities | 35.3% |
| Corporate Bonds | 29.7% |
| Foreign Government Bonds | 24.0% |
| U.S. Treasury Securities | 16.9% |
| Asset-Backed Securities | 6.5% |
| Short-Term Investments | 1.9% |
| Municipal Bonds | 1.4% |
| Liabilities in Excess of Other Assets | (15.7%) |
| | 100.0% |
Schedule of Open Futures Contracts
| | | Contracts | | | | Notional | | | Notional | | | Unrealized Appreciation | |
Description | | Purchased | | Expiration Date | | Amount | | | Value | | | (Depreciation) | |
| U.S. Treasury 5 Year Note | | 139 | | 03/28/2024 | | $ | 14,781,045 | | | $ | 15,119,507 | | | $ | 338,462 | |
| U.S. Treasury Ultra Bonds | | 280 | | 03/19/2024 | | | 34,072,671 | | | | 37,406,250 | | | | 3,333,579 | |
| | | | | | | $ | 48,853,716 | | | $ | 52,525,757 | | | $ | 3,672,041 | |
| | | | | | | | | | | | | | | | | |
| | | Contracts | | | | Notional | | | Notional | | | Unrealized Appreciation | |
Description | | Sold | | Expiration Date | | Amount | | | Value | | | (Depreciation) | |
| 10 Year U.S. Ultra Treasury Notes | | (153) |
| 03/19/2024 | | $ | (17,523,027 | ) | | $ | (18,056,391 | ) | | $ | (533,364 | ) |
| U.S. Treasury 10 Year Notes | | (124) |
| 03/19/2024 | | | (13,544,787 | ) | | | (13,998,437 | ) | | | (453,650 | ) |
| U.S. Treasury 2 Year Notes | | (165) |
| 03/28/2024 | | | (33,630,010 | ) | | | (33,975,820 | ) | | | (345,810 | ) |
| U.S. Treasury Long Bonds | | (201) |
| 03/19/2024 | | | (23,296,696 | ) | | | (25,112,438 | ) | | | (1,815,742 | ) |
| | | | | | | $ | (87,994,520 | ) | | $ | (91,143,086 | ) | | $ | (3,148,566 | ) |
| Total Unrealized Appreciation (Depreciation) | | | | | | | | | | | | $ | 523,475 | |
There is no variation margin due to or from the Fund as of the date of this report.
The accompanying notes are an integral part of these financial statements.
Brown Advisory Maryland Bond FundA Message to Our Shareholders
December 31, 2023
Dear Shareholder:
During the six-month period ended December 31, 2023, the Brown Advisory Maryland Bond Fund (the “Fund”) increased 3.57% in value. During the same period, the Bloomberg 1-10 Year Blended Municipal Bond Index, the Fund’s benchmark, increased 3.11%.
The fourth quarter represented a dramatic turnaround in municipal market performance as intermediate maturity bond yields staged a sharp reversal after touching multi-decade highs in late-October. The whipsaw in rates was largely driven by a period of policy uncertainty as many market participants viewed the Federal Open Market Committee (FOMC) as quickly pivoting from a tightening bias to an easing bias over the course of their last three meetings of the year.
Within the Fund, yield curve positioning and individual security selection drove much of the relative outperformance during the period. From a yield curve perspective, our most active positioning has been an intentional underweight to bonds around the 5-year duration range. Given the unconventional “U-shape” of the municipal yield curve, this short-intermediate duration range has both the lowest absolute yields, as well as the least favorable relative value across the curve. We have kept overall portfolio duration slightly elevated relative to our benchmark while maintaining a barbell, with overweight positions in both floating-rate and 10-year and slightly longer duration bonds, which have recently been higher yielding.
Within credit, we have been very focused on late-cycle dynamics, taking advantage of relatively tight credit spreads and reducing credit risk in spread sectors that could underperform if/when economic growth deteriorates. The typical forms of revenue (sales, income, and property taxes) for government issuers have been robust, including providing some cushion for inflation concerns, and there has been an incredible amount of federal fiscal stimulus to municipal borrowers. However, we are cognizant of the fact that further credit improvement will be difficult in any potential slowdown given a backdrop of lower economic activity, wage pressures abating, and stressed property valuations, all with a limited appetite for any further stimulus as a backstop. Therefore, we are being more selective at this point in the cycle, preferring issuers that have a more robust financial footing.
We are also looking at some secular trends in fundamental credit and adjusting accordingly. While many issuers are navigating the current complexities well, we have been actively reducing exposure to the not-for-profit hospital and senior living sectors, and some smaller higher education issuers. Beyond short term stress, we expect medium and long-term expenses, inflation (and in the case of higher education even some demographic) pressures to continue to be a headwind for broad credit improvement.
Staying true to our long-term, bottom-up approach to sector and credit selection, we are very focused on which sectors may be the most affected by this unique period of elevated inflationary pressure and late-cycle credit dynamics, and how individual issuers are likely to manage the current environment. We are working to actively stay in front of these risks, while also maintaining a high level of portfolio liquidity, and we have been particularly proactive about pairing our credit thoughts with our positioning thoughts. Fortunately, we have had success finding ideas which both align with the sectors and issuers we like as well as have desirable interest rate risk characteristics.
Sincerely,
Stephen M. Shutz, CFA
Portfolio Manager
Joshua R. Perry, CFA, CAIA, FRM
Portfolio Manager
Brown Advisory Maryland Bond FundA Message to Our Shareholders
December 31, 2023
Past performance is not a guarantee of future results.
Mutual fund investing involves risk. Principal loss is possible. The Fund is non-diversified which means it may invest a large percentage of its assets in the securities of fewer issuers. Investment in a limited number of issuers exposes the Fund to greater market risk than if its assets were diversified among a greater number of issuers. The Fund is also subject to interest rate risk which is the risk that debt securities in the Fund’s portfolio will decline in value because of an increase in market interest rates. Municipal securities are subject to adverse political or economic factors, including changes in the tax law. Income from tax-exempt funds may be subject to state and local taxes and a portion of income may be subject to the federal alternative minimum tax for certain investors.
Fund holdings and sector allocations are subject to change and should not be considered a recommendation to buy or sell any security. For a complete list of Fund holdings, please refer to the Schedule of Investments provided in this report.
Credit Quality weights by rating are derived from the highest bond rating as determined by Standard & Poor’s (“S&P”), Moody’s or Fitch. Bond ratings are grades given to bonds that indicate their credit quality as determined by private independent rating services such as S&P, Moody’s and Fitch. These firms evaluate a bond issuer’s financial strength, or its ability to pay a bond’s principal and interest in a timely fashion. Ratings are expressed as letters ranging from ‘AAA’, which is the highest grade, to ‘D’, which is the lowest grade. In limited situations when none of the three rating agencies have issued a formal rating, the Advisor will classify the security as nonrated.
Definitions for terms and indices are provided in the Glossary of Terms.
Brown Advisory Maryland Bond FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Par | | | Value | |
| MUNICIPAL BONDS — 98.7% | | | | | | |
| | | | | | | |
| General Obligation Bonds — 18.7% | | | | | | |
| Baltimore County Maryland | | | | | | |
| 5.00%, 08/01/2028 | | $ | 1,650,000 | | | $ | 1,671,484 | |
| 4.00%, 02/01/2033 | | | 1,520,000 | | | | 1,520,291 | |
| 3.00%, 02/01/2035 | | | 5,000,000 | | | | 4,918,774 | |
| Frederick County Maryland, 1.88%, 10/01/2038 | | | 8,755,000 | | | | 6,670,318 | |
| Howard County Maryland, 1.75%, 08/15/2036 | | | 7,875,000 | | | | 6,285,136 | |
| Maryland State, 5.00%, 08/01/2025 | | | 1,000,000 | | | | 1,037,733 | |
| Montgomery County Maryland, 3.00%, 10/01/2034 | | | 3,370,000 | | | | 3,376,255 | |
| Prince George’s County Maryland | | | | | | | | |
| 5.00%, 10/01/2024 | | | 1,350,000 | | | | 1,370,849 | |
| 5.00%, 10/01/2025 | | | 1,500,000 | | | | 1,557,006 | |
| 5.00%, 10/01/2026 | | | 1,550,000 | | | | 1,648,219 | |
| St Mary’s County Maryland, 5.00%, 05/01/2028 | | | 1,290,000 | | | | 1,434,213 | |
| | | | | | | | 31,490,278 | |
| Revenue Bonds — 80.0% | | | | | | | | |
| Austin Texas, 7.88%, 09/01/2026 | | | 750,000 | | | | 752,640 | |
| Baltimore Maryland | | | | | | | | |
| 5.00%, 06/15/2030 | | | 520,000 | | | | 524,463 | |
| 3.25%, 06/01/2031 (a) | | | 225,000 | | | | 207,139 | |
| 4.50%, 06/01/2033 | | | 1,550,000 | | | | 1,549,001 | |
| 5.00%, 06/15/2033 | | | 670,000 | | | | 675,639 | |
| 3.50%, 06/01/2039 (a) | | | 1,260,000 | | | | 1,087,544 | |
| California Municipal Finance Authority, 5.00%, 11/01/2039 (a) | | | 1,750,000 | | | | 1,771,249 | |
| Cedar Rapids Iowa, 3.20%, 08/15/2029 (b) | | | 875,000 | | | | 875,000 | |
| Franklin Ohio, 5.00%, 11/15/2034 | | | 1,550,000 | | | | 1,553,686 | |
| Frederick County Maryland | | | | | | | | |
| 5.00%, 07/01/2029 | | | 1,990,000 | | | | 2,191,154 | |
| 5.00%, 07/01/2030 | | | 1,390,000 | | | | 1,548,657 | |
| 3.75%, 07/01/2039 | | | 1,410,000 | | | | 1,262,442 | |
| Gaithersburg Maryland | | | | | | | | |
| 5.00%, 01/01/2028 | | | 1,000,000 | | | | 1,016,307 | |
| 5.00%, 01/01/2033 | | | 2,000,000 | | | | 2,032,530 | |
| Lehigh Pennsylvania, 5.07% (SIFMA Municipal Swap Index + 1.10%), 08/15/2038 | | | 2,600,000 | | | | 2,570,157 | |
| Main Street Natural Gas, Inc., 5.31% (SOFR + 1.70%), 12/01/2053 | | | 5,500,000 | | | | 5,558,231 | |
| Maryland Community Development Administration | | | | | | | | |
| 5.00%, 09/01/2030 | | | 1,245,000 | | | | 1,356,679 | |
| 5.00%, 09/01/2031 | | | 1,030,000 | | | | 1,126,129 | |
| 4.60%, 03/01/2042 | | | 3,930,000 | | | | 4,045,180 | |
| 2.41%, 07/01/2043 | | | 2,660,000 | | | | 1,925,273 | |
| Maryland Community Development Administration Local Government Infrastructure, 4.00%, 06/01/2035 | | | 1,140,000 | | | | 1,220,891 | |
| Maryland Economic Development Corp. | | | | | | | | |
| 5.00%, 07/01/2028 | | | 1,000,000 | | | | 1,060,861 | |
| 5.00%, 07/01/2029 | | | 750,000 | | | | 803,805 | |
| 4.10%, 10/01/2036 (b) | | | 2,600,000 | | | | 2,657,898 | |
| 4.00%, 07/01/2040 | | | 1,500,000 | | | | 1,418,708 | |
| 4.50%, 07/01/2044 | | | 4,500,000 | | | | 4,285,629 | |
| Maryland Health & Higher Educational Facilities Authority | | | | | | | | |
| 5.00%, 07/01/2026 | | | 420,000 | | | | 433,272 | |
| 5.00%, 08/15/2027 | | | 4,000,000 | | | | 4,085,568 | |
| 5.00%, 07/01/2029 | | | 2,000,000 | | | | 2,128,927 | |
| 4.00%, 10/01/2030 | | | 100,000 | | | | 100,797 | |
| 4.00%, 10/01/2031 | | | 300,000 | | | | 302,238 | |
| 5.00%, 08/15/2033 | | | 1,250,000 | | | | 1,274,347 | |
| 5.00%, 07/01/2034 | | | 1,955,000 | | | | 2,013,007 | |
| 5.00%, 05/15/2037 | | | 5,000,000 | | | | 5,119,714 | |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Maryland Bond FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Par | | | Value | |
| MUNICIPAL BONDS — 98.7% (Continued) | | | | | | |
| | | | | | | |
| Revenue Bonds — (Continued) | | | | | | |
| Maryland Health & Higher Educational Facilities Authority (Continued) | | | | | | |
| 5.00%, 07/01/2037 | | $ | 1,200,000 | | | $ | 1,235,215 | |
| 5.00%, 07/01/2038 | | | 1,500,000 | | | | 1,524,717 | |
| 3.05%, 07/01/2041 (b) | | | 900,000 | | | | 900,000 | |
| 4.15% (SIFMA Municipal Swap Index + 0.28%), 07/01/2042 | | | 2,450,000 | | | | 2,444,961 | |
| 5.00%, 07/01/2043 | | | 1,310,000 | | | | 1,319,949 | |
| 5.00%, 07/01/2045 (b) | | | 4,000,000 | | | | 4,233,561 | |
| Series A, 3.93%, 04/01/2035 (b) | | | 3,000,000 | | | | 3,000,000 | |
| Maryland Stadium Authority | | | | | | | | |
| 1.42%, 05/01/2025 | | | 1,100,000 | | | | 1,051,098 | |
| 5.00%, 05/01/2030 | | | 3,000,000 | | | | 3,151,951 | |
| 4.00%, 06/01/2037 | | | 1,000,000 | | | | 1,065,504 | |
| 5.00%, 09/01/2037 | | | 1,000,000 | | | | 1,168,452 | |
| 5.00%, 05/01/2038 | | | 5,000,000 | | | | 5,327,389 | |
| Maryland Stadium Authority Built to Learn Revenue | | | | | | | | |
| 4.00%, 06/01/2035 | | | 1,340,000 | | | | 1,427,279 | |
| 3.00%, 06/01/2041 | | | 4,460,000 | | | | 3,954,029 | |
| Maryland State Department of Transportation | | | | | | | | |
| 0.91%, 08/01/2026 | | | 1,500,000 | | | | 1,362,533 | |
| 5.00%, 10/01/2027 | | | 1,715,000 | | | | 1,831,793 | |
| 4.00%, 12/01/2029 | | | 1,260,000 | | | | 1,303,990 | |
| 5.00%, 08/01/2033 | | | 1,000,000 | | | | 1,116,848 | |
| 4.00%, 08/01/2038 | | | 1,150,000 | | | | 1,167,226 | |
| Maryland State Transportation Authority | | | | | | | | |
| 5.00%, 07/01/2025 | | | 3,000,000 | | | | 3,103,083 | |
| 5.00%, 07/01/2025 | | | 1,510,000 | | | | 1,561,885 | |
| 5.00%, 07/01/2028 | | | 4,420,000 | | | | 4,800,850 | |
| Maryland State Transportation Authority Passenger Facility Charge Revenue, 4.00%, 06/01/2035 | | | 4,330,000 | | | | 4,341,688 | |
| Metropolitan Washington DC Airports Authority Aviation Revenue, 5.00%, 10/01/2040 | | | 1,500,000 | | | | 1,590,606 | |
| Miami-Dade County Florida Expressway Authority, 6.51% (1 mo. Term SOFR + 1.05%), 07/01/2032 | | | 5,000,000 | | | | 5,030,423 | |
| New Hope Texas Cultural Education Facilities Finance Corp. | | | | | | | | |
| 5.50%, 07/01/2046 (c) | | | 365,000 | | | | 127,750 | |
| 5.75%, 07/01/2051 (c) | | | 820,000 | | | | 287,000 | |
| New Jersey Transportation Trust Fund Authority, 4.59%, 12/15/2038 (d) | | | 6,760,000 | | | | 3,844,752 | |
| New York Transportation Development Corp., 6.00%, 04/01/2035 | | | 3,000,000 | | | | 3,347,947 | |
| Newport News Virginia Economic Development Authority, 5.00%, 12/01/2031 | | | 2,000,000 | | | | 2,030,484 | |
| St Mary’s College of Maryland, 4.00%, 09/01/2024 | | | 1,000,000 | | | | 1,004,858 | |
| | | | | | | | 134,662,279 | |
TOTAL MUNICIPAL BONDS (Cost $168,646,428) | | | | | | | 166,152,557 | |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Maryland Bond FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Shares | | | Value | |
| SHORT-TERM INVESTMENTS — 0.5% | | | | | | |
| | | | | | | |
| Money Market Funds — 0.5% | | | | | | |
| First American Government Obligations Fund — Class Z, 5.25% (e) | | | 768,345 | | | $ | 768,345 | |
TOTAL SHORT-TERM INVESTMENTS (Cost $768,345) | | | | | | | 768,345 | |
TOTAL INVESTMENTS — 99.2% (Cost $169,414,773) | | | | | | | 166,920,902 | |
| Other Assets in Excess of Liabilities — 0.8% | | | | | | | 1,408,425 | |
| TOTAL NET ASSETS — 100.0% | | | | | | $ | 168,329,327 | |
Percentages are stated as a percent of net assets.
SOFR — Secured Overnight Financing Rate
| (a) | Security is exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may only be resold in transactions exempt from registration to qualified institutional investors. |
| (b) | Coupon rate is variable or floats based on components including but not limited to reference rate and spread. These securities may not indicate a reference rate and/or spread in their description. The rate disclosed is as of December 31, 2023. |
| (c) | Security is in default and missed all or a portion of its last payment of interest as of the date of this report. |
| (d) | Zero-coupon bond. The rate shown is the effective yield as of December 31, 2023. |
| (e) | The rate shown represents the 7-day effective yield as of December 31, 2023. |
PORTFOLIO HOLDINGS
% of Net Assets
| Revenue Bonds | 80.0% |
| General Obligations Bonds | 18.7% |
| Money Market Funds | 0.5% |
| Other Assets and Liabilities | 0.8% |
| | 100.0% |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Tax-Exempt Bond FundA Message to Our Shareholders
December 31, 2023
Dear Shareholder:
During the six-month period ended December 31, 2023, the Brown Advisory Tax-Exempt Bond Fund Investor Shares (the “Fund”) increased 3.80% in value. During the same period, the Bloomberg 1-10 Year Blended Municipal Bond Index, the Fund’s benchmark, increased 3.11%.
The fourth quarter represented a dramatic turnaround in municipal market performance as intermediate maturity bond yields staged a sharp reversal after touching multi-decade highs in late-October. The whipsaw in rates was largely driven by a period of policy uncertainty as many market participants viewed the Federal Open Market Committee (FOMC) as quickly pivoting from a tightening bias to an easing bias over the course of their last three meetings of the year.
Within the Fund, yield curve positioning and individual security selection drove much of the relative outperformance during the period. From a yield curve perspective, our most active positioning has been an intentional underweight to bonds around the 5-year duration range. Given the unconventional “U-shape” of the municipal yield curve, this short-intermediate duration range has both the lowest absolute yields, as well as the least favorable relative value across the curve. We have kept overall portfolio duration slightly elevated relative to our benchmark while maintaining a barbell, with overweight positions in both floating-rate and 10-year and slightly longer duration bonds, which have recently been higher yielding.
Within credit, we have been very focused on late-cycle dynamics, taking advantage of relatively tight credit spreads and reducing credit risk in spread sectors that could underperform if/when economic growth deteriorates. The typical forms of revenue (sales, income, and property taxes) for government issuers have been robust, including providing some cushion for inflation concerns, and there has been an incredible amount of federal fiscal stimulus to municipal borrowers. However, we are cognizant of the fact that further credit improvement will be difficult in any potential slowdown given a backdrop of lower economic activity, wage pressures abating, and stressed property valuations, all with a limited appetite for any further stimulus as a backstop. Therefore, we are being more selective at this point in the cycle, preferring issuers that have a more robust financial footing.
We are also looking at some secular trends in fundamental credit and adjusting accordingly. While many issuers are navigating the current complexities well, we have been actively reducing exposure to the not-for-profit hospital and senior living sectors, and some smaller higher education issuers. Beyond short term stress, we expect medium and long-term expenses, inflation (and in the case of higher education even some demographic) pressures to continue to be a headwind for broad credit improvement.
Staying true to our long-term, bottom-up approach to sector and credit selection, we are very focused on which sectors may be the most affected by this unique period of elevated inflationary pressure and late-cycle credit dynamics, and how individual issuers are likely to manage the current environment. We are working to actively stay in front of these risks, while also maintaining a high level of portfolio liquidity, and we have been particularly proactive about pairing our credit thoughts with our positioning thoughts. Fortunately, we have had success finding ideas which both align with the sectors and issuers we like as well as have desirable interest rate risk characteristics.
Sincerely,
Stephen M. Shutz, CFA
Portfolio Manager
Joshua R. Perry, CFA, CAIA, FRM
Portfolio Manager
Brown Advisory Tax-Exempt Bond FundA Message to Our Shareholders
December 31, 2023
Past performance is not a guarantee of future results.
Mutual fund investing involves risk. Principal loss is possible.
The Fund is also subject to interest rate risk which is the risk that debt securities in the Fund’s portfolio will decline in value because of an increase in market interest rates. This risk is usually greater for longer- term debt securities. Income from tax-exempt funds may be subject to state and local taxes and a portion of income may be subject to the Federal Alternative minimum tax for certain investors.
Diversification does not assure a profit nor protect against loss in a declining market.
Fund holdings and sector allocations are subject to change and should not be considered a recommendation to buy or sell any security. For a complete list of Fund holdings, please refer to the Schedule of Investments provided in this report.
Credit Quality weights by rating are derived from the highest bond rating as determined by Standard & Poor’s (“S&P”), Moody’s or Fitch. Bond ratings are grades given to bonds that indicate their credit quality as determined by private independent rating services such as S&P, Moody’s and Fitch. These firms evaluate a bond issuer’s financial strength, or its ability to pay a bond’s principal and interest in a timely fashion. Ratings are expressed as letters ranging from ‘AAA’, which is the highest grade, to ‘D’, which is the lowest grade. In limited situations when none of the three rating agencies have issued a formal rating, the Advisor will classify the security as nonrated.
Definitions for terms and indices are provided in the Glossary of Terms.
Brown Advisory Tax-Exempt Bond FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Par | | | Value | |
| MUNICIPAL BONDS — 97.2% | | | | | | |
| | | | | | | |
| General Obligation Bonds — 15.3% | | | | | | |
| Bentonville South Dakota School District No. 6 | | | | | | |
| 2.13%, 06/01/2041 | | $ | 2,680,000 | | | $ | 1,931,007 | |
| 2.13%, 06/01/2042 | | | 2,750,000 | | | | 1,937,089 | |
| 2.13%, 06/01/2043 | | | 2,825,000 | | | | 1,956,002 | |
| Cary North Carolina | | | | | | | | |
| 1.75%, 09/01/2037 | | | 6,250,000 | | | | 4,809,392 | |
| 1.75%, 09/01/2038 | | | 6,250,000 | | | | 4,648,978 | |
| Cass County Missouri Reorganized School District No. R-2/MO, 2.00%, 03/01/2039 | | | 3,375,000 | | | | 2,568,602 | |
| Chicago Illinois Park District, 5.00%, 01/01/2044 | | | 9,000,000 | | | | 9,533,635 | |
| Commonwealth of Massachusetts | | | | | | | | |
| 2.00%, 03/01/2037 | | | 2,250,000 | | | | 1,820,728 | |
| 4.00%, 10/01/2038 | | | 6,000,000 | | | | 6,461,137 | |
| Del Valle Independent School District TX | | | | | | | | |
| 2.00%, 06/15/2038 | | | 10,135,000 | | | | 7,674,070 | |
| 2.00%, 06/15/2039 | | | 3,085,000 | | | | 2,270,158 | |
| Des Moines Iowa | | | | | | | | |
| 2.00%, 06/01/2039 | | | 4,635,000 | | | | 3,407,545 | |
| 1.88%, 06/01/2040 | | | 3,575,000 | | | | 2,507,260 | |
| Fort Worth Texas, 2.00%, 03/01/2039 | | | 6,475,000 | | | | 4,951,146 | |
| Frisco Texas | | | | | | | | |
| 2.00%, 02/15/2039 | | | 1,710,000 | | | | 1,326,906 | |
| 2.00%, 02/15/2040 | | | 1,745,000 | | | | 1,321,543 | |
| Henderson Nevada | | | | | | | | |
| 2.00%, 06/01/2038 | | | 2,830,000 | | | | 2,186,989 | |
| 2.00%, 06/01/2039 | | | 1,585,000 | | | | 1,195,644 | |
| Illinois State | | | | | | | | |
| 5.00%, 11/01/2024 | | | 3,470,000 | | | | 3,520,426 | |
| 5.00%, 12/01/2025 | | | 4,050,000 | | | | 4,191,690 | |
| 5.25%, 02/01/2033 | | | 4,325,000 | | | | 4,328,476 | |
| 4.00%, 10/01/2033 | | | 1,700,000 | | | | 1,764,668 | |
| 6.73%, 04/01/2035 | | | 6,461,538 | | | | 6,812,809 | |
| Joshua Texas Independent School District, 3.00%, 08/15/2035 | | | 3,105,000 | | | | 2,905,883 | |
| Knox Tennessee, 3.05%, 06/01/2035 | | | 4,905,000 | | | | 4,714,668 | |
| Lewiston Maine | | | | | | | | |
| 1.75%, 02/15/2038 | | | 1,270,000 | | | | 928,508 | |
| 1.75%, 02/15/2039 | | | 1,270,000 | | | | 903,313 | |
| Madison Alabama, 3.00%, 02/01/2036 | | | 2,730,000 | | | | 2,573,502 | |
| Milford Massachusetts, 2.00%, 12/01/2037 | | | 3,000,000 | | �� | | 2,351,849 | |
| New York City New York, 5.00%, 08/01/2038 | | | 5,500,000 | | | | 5,713,566 | |
| Omaha Nebraska School District, 2.00%, 12/15/2039 | | | 8,010,000 | | | | 6,036,604 | |
| San Marcos Texas, 2.00%, 08/15/2039 | | | 4,265,000 | | | | 3,201,829 | |
| Sarpy Nebraska, 1.75%, 06/01/2036 | | | 2,710,000 | | | | 2,114,346 | |
| Seaside School District No. 10, 5.46%, 06/15/2040 (a) | | | 6,825,000 | | | | 3,339,107 | |
| Suffolk Virginia | | | | | | | | |
| 1.88%, 02/01/2038 | | | 1,645,000 | | | | 1,250,587 | |
| 1.88%, 02/01/2040 | | | 1,385,000 | | | | 1,001,600 | |
| Temecula Valley California Unified School District, 3.00%, 08/01/2047 | | | 2,000,000 | | | | 1,712,284 | |
| Waltham Massachusetts | | | | | | | | |
| 2.13%, 10/15/2038 | | | 3,455,000 | | | | 2,753,013 | |
| 2.13%, 10/15/2039 | | | 4,455,000 | | | | 3,473,612 | |
| West Des Moines Iowa, 2.00%, 06/01/2040 | | | 1,280,000 | | | | 952,032 | |
| Willis Texas Independent School District | | | | | | | | |
| 2.00%, 02/15/2038 | | | 1,525,000 | | | | 1,177,147 | |
| 2.00%, 02/15/2039 | | | 1,500,000 | | | | 1,125,930 | |
| | | | | | | | 131,355,280 | |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Tax-Exempt Bond FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Par | | | Value | |
| MUNICIPAL BONDS — 97.2% (Continued) | | | | | | |
| | | | | | | |
| Revenue Bonds — 81.9% | | | | | | |
| American Municipal Power, Inc. | | | | | | |
| 4.00%, 02/15/2037 | | $ | 5,310,000 | | | $ | 5,505,803 | |
| 4.00%, 02/15/2038 | | | 5,940,000 | | | | 6,079,082 | |
| Atlanta Georgia Department of Aviation, 5.00%, 01/01/2031 | | | 1,000,000 | | | | 1,000,000 | |
| Austin Texas, 7.88%, 09/01/2026 | | | 3,225,000 | | | | 3,236,352 | |
| Bartow County Georgia Development Authority, 3.95%, 12/01/2032 (b) | | | 6,295,000 | | | | 6,406,559 | |
| Black Belt Energy Gas District, 4.22% (SIFMA Municipal Swap Index + 0.35%), 10/01/2052 (b) | | | 24,000,000 | | | | 23,419,413 | |
| Board of Governors of Colorado State University System, 4.00%, 03/01/2036 | | | 3,255,000 | | | | 3,374,853 | |
| Buckeye Ohio Tobacco Settlement Financing Authority, 4.00%, 06/01/2037 | | | 10,325,000 | | | | 10,489,701 | |
| California Community Choice Financing Authority | | | | | | | | |
| 5.00%, 03/01/2029 | | | 4,280,000 | | | | 4,576,455 | |
| 4.32% (SIFMA Municipal Swap Index + 0.45%), 02/01/2052 (b) | | | 5,000,000 | | | | 4,581,645 | |
| California Earthquake Authority, 5.60%, 07/01/2027 | | | 10,000,000 | | | | 10,122,294 | |
| California Infrastructure & Economic Development Bank | | | | | | | | |
| 4.22% (SIFMA Municipal Swap Index + 0.35%), 08/01/2047 (b) | | | 1,050,000 | | | | 1,043,156 | |
| 3.65%, 01/01/2050 (b)(c) | | | 10,400,000 | | | | 10,388,683 | |
| Central Plains Energy Project | | | | | | | | |
| 5.79% (SOFR + 2.18%), 05/01/2053 (b) | | | 10,000,000 | | | | 10,171,303 | |
| 5.00%, 05/01/2053 (b) | | | 7,670,000 | | | | 8,087,764 | |
| Chandler Industrial Development Authority, 5.00%, 06/01/2049 (b) | | | 23,500,000 | | | | 23,546,625 | |
| Chicago Illinois Board of Education Dedicated Capital Improvement Tax | | | | | | | | |
| 5.25%, 04/01/2036 | | | 3,200,000 | | | | 3,550,237 | |
| 5.25%, 04/01/2037 | | | 3,700,000 | | | | 4,062,001 | |
| 5.25%, 04/01/2040 | | | 3,250,000 | | | | 3,514,171 | |
| Chicago Illinois Waterworks Revenue, 5.00%, 11/01/2044 | | | 4,095,000 | | | | 4,120,366 | |
| Clark County Nevada, 2.10%, 06/01/2031 | | | 4,960,000 | | | | 4,278,985 | |
| Colorado Health Facilities Authority, 5.00%, 12/01/2035 | | | 7,715,000 | | | | 7,781,945 | |
| Delaware River Port Authority, 5.00%, 01/01/2027 | | | 4,000,000 | | | | 4,000,000 | |
| Delaware Valley Regional Finance Authority | | | | | | | | |
| 4.54% (1 mo. LIBOR US + 0.88%), 09/01/2048 (b) | | | 5,000,000 | | | | 4,957,389 | |
| 4.27% (SIFMA Municipal Swap Index + 0.40%), 03/01/2057 (b) | | | 3,000,000 | | | | 2,933,711 | |
| Du Page Illinois, 3.00%, 05/15/2047 | | | 7,680,000 | | | | 5,672,122 | |
| Farmington New Mexico, 1.80%, 04/01/2029 | | | 15,000,000 | | | | 13,439,114 | |
| Grand Forks North Dakota | | | | | | | | |
| 6.63%, 12/15/2031 (c)(d) | | | 5,000,000 | | | | 1,000,000 | |
| 9.00%, 06/15/2044 (c)(d) | | | 2,500,000 | | | | 500,000 | |
| Henrico County Virginia Economic Development Authority, 3.85%, 08/23/2027 (b) | | | 750,000 | | | | 750,000 | |
| Illinois State Toll Highway Authority | | | | | | | | |
| 5.00%, 01/01/2031 | | | 3,000,000 | | | | 3,014,385 | |
| 5.00%, 01/01/2038 | | | 14,150,000 | | | | 14,217,849 | |
| Industrial Development Authority of St Louis Missouri, 2.22%, 12/01/2038 | | | 4,845,317 | | | | 3,664,971 | |
| Industrial Development Board of Mobile Alabama, 3.78%, 06/01/2034 (b) | | | 2,500,000 | | | | 2,524,955 | |
| JEA Electric System Revenue, 5.58%, 10/01/2027 | | | 5,690,000 | | | | 5,789,533 | |
| Kentucky Public Energy Authority | | | | | | | | |
| 4.99% (V1 Month LIBOR USD + 1.30%), 12/01/2049 (b) | | | 4,100,000 | | | | 4,103,276 | |
| 4.00%, 12/01/2049 (b) | | | 1,585,000 | | | | 1,588,043 | |
| Lancaster Ohio Port Authority, 5.00%, 08/01/2049 (b) | | | 13,565,000 | | | | 13,739,648 | |
| Las Vegas Nevada Redevelopment Agency | | | | | | | | |
| 5.00%, 06/15/2026 | | | 1,000,000 | | | | 1,034,370 | |
| 5.00%, 06/15/2028 | | | 2,280,000 | | | | 2,365,238 | |
| Lehigh Pennsylvania, 5.07% (SIFMA Municipal Swap Index + 1.10%), 08/15/2038 (b) | | | 9,615,000 | | | | 9,504,640 | |
| Los Angeles California Department of Airports | | | | | | | | |
| 4.00%, 05/15/2041 | | | 3,660,000 | | | | 3,690,042 | |
| 4.00%, 05/15/2042 | | | 7,950,000 | | | | 7,990,096 | |
| Love Field Texas Airport Modernization Corp., 4.00%, 11/01/2036 | | | 17,720,000 | | | | 18,051,655 | |
| Main Street Natural Gas, Inc., 5.31% (SOFR + 1.70%), 12/01/2053 (b) | | | 28,500,000 | | | | 28,801,740 | |
| Maricopa County Arizona Industrial Development Authority, | | | | | | | | |
| 4.44% (SIFMA Municipal Swap Index + 0.57%), 01/01/2035 (b) | | | 5,290,000 | | | | 5,280,611 | |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Tax-Exempt Bond FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Par | | | Value | |
| MUNICIPAL BONDS — 97.2% (Continued) | | | | | | |
| | | | | | | |
| Revenue Bonds — 81.9% (Continued) | | | | | | |
| Maryland Community Development Administration, 2.41%, 07/01/2043 | | $ | 5,000,000 | | | $ | 3,618,935 | |
| Maryland Economic Development Corp., 4.38%, 07/01/2036 | | | 3,000,000 | | | | 2,928,028 | |
| Massachusetts Bay Transportation Authority Sales Tax Revenue, 4.00%, 07/01/2038 | | | 3,205,000 | �� | | | 3,394,266 | |
| Massachusetts Health & Educational Facilities Authority, 4.15%, 07/01/2027 (b) | | | 15,000,000 | | | | 15,000,000 | |
| Massachusetts Housing Finance Agency, 4.00%, 12/01/2033 | | | 3,055,000 | | | | 3,055,426 | |
| Mesa Arizona Utility System Revenue, 4.00%, 07/01/2035 | | | 3,590,000 | | | | 3,891,850 | |
| Metropolitan Pier & Exposition Authority | | | | | | | | |
| 5.75%, 06/15/2036 (a) | | | 5,000,000 | | | | 3,219,396 | |
| 2.98%, 06/15/2037 (a) | | | 10,165,000 | | | | 6,212,642 | |
| 5.13%, 12/15/2037 (a) | | | 20,365,000 | | | | 12,106,652 | |
| Metropolitan Transportation Authority | | | | | | | | |
| 5.00%, 11/15/2032 | | | 5,050,000 | | | | 5,093,255 | |
| 5.00%, 11/15/2038 | | | 17,590,000 | | | | 17,594,158 | |
| 5.25%, 11/15/2044 | | | 5,000,000 | | | | 5,014,416 | |
| Metropolitan Washington Airports Authority Aviation Revenue, 5.00%, 10/01/2032 | | | 2,660,000 | | | | 2,757,936 | |
| Miami-Dade County Florida Expressway Authority | | | | | | | | |
| 6.51% (1 mo. Term SOFR + 1.05%), 07/01/2026 (b) | | | 4,385,000 | | | | 4,413,282 | |
| 6.51% (1 mo. Term SOFR + 1.05%), 07/01/2029 (b) | | | 5,260,000 | | | | 5,290,881 | |
| 6.51% (1 mo. Term SOFR + 1.05%), 07/01/2032 (b) | | | 8,260,000 | | | | 8,310,258 | |
| 5.00%, 07/01/2040 | | | 4,000,000 | | | | 4,001,639 | |
| Miami-Dade Florida Aviation Revenue | | | | | | | | |
| 5.00%, 10/01/2024 | | | 10,000,000 | | | | 10,013,051 | |
| 5.00%, 10/01/2036 | | | 3,595,000 | | | | 3,605,628 | |
| New Hope Texas Cultural Education Facilities Finance Corp. | | | | | | | | |
| 5.00%, 07/01/2031 (d) | | | 1,080,000 | | | | 378,000 | |
| 5.25%, 07/01/2036 (d) | | | 1,750,000 | | | | 612,500 | |
| 5.00%, 07/01/2046 | | | 4,000,000 | | | | 1,800,000 | |
| 5.50%, 07/01/2046 (d) | | | 250,000 | | | | 87,500 | |
| 5.75%, 07/01/2051 (d) | | | 2,000,000 | | | | 700,000 | |
| New Jersey Transportation Trust Fund Authority | | | | | | | | |
| 5.75%, 12/15/2028 | | | 11,000,000 | | | | 11,242,801 | |
| 2.23%, 12/15/2035 (a) | | | 1,000,000 | | | | 679,482 | |
| 4.25%, 12/15/2037 (a) | | | 10,050,000 | | | | 6,182,742 | |
| 5.17%, 12/15/2038 (a) | | | 5,000,000 | | | | 2,928,468 | |
| 4.65%, 12/15/2039 (a) | | | 21,355,000 | | | | 11,848,448 | |
| New York City Transitional Finance Authority, 4.10%, 11/01/2042 (b) | | | 7,000,000 | | | | 7,000,000 | |
| New York City Water & Sewer System, 3.15%, 06/15/2043 (b) | | | 4,075,000 | | | | 4,075,000 | |
| New York Convention Center Development Corp. | | | | | | | | |
| 4.28%, 11/15/2035 (a) | | | 8,730,000 | | | | 5,781,671 | |
| 3.84%, 11/15/2037 (a) | | | 5,750,000 | | | | 3,420,142 | |
| New York Liberty Development Corp., 3.13%, 09/15/2050 | | | 6,700,000 | | | | 5,409,638 | |
| New York Mortgage Agency Homeowner Mortgage Revenue, 4.65%, 10/01/2043 | | | 6,380,000 | | | | 6,561,843 | |
| New York State Dormitory Authority, 4.00%, 03/15/2038 | | | 1,715,000 | | | | 1,815,200 | |
| New York State Mortgage Agency Homeowner Mortgage Revenue, 4.70%, 04/01/2036 | | | 1,745,000 | | | | 1,838,327 | |
| New York State Transportation Development Corp., 5.00%, 07/01/2041 | | | 5,500,000 | | | | 5,505,879 | |
| New York State Urban Development Corp., 4.00%, 03/15/2037 | | | 13,800,000 | | | | 14,436,435 | |
| Newport News Virginia Economic Development Authority, 5.00%, 12/01/2031 | | | 3,375,000 | | | | 3,426,442 | |
| Niagara County New York Tobacco Asset Securitization Corp., 5.00%, 05/15/2024 | | | 1,760,000 | | | | 1,765,484 | |
| North Carolina Turnpike Authority, 4.00%, 01/01/2036 | | | 4,720,000 | | | | 4,867,014 | |
| North Texas Tollway Authority, 5.00%, 01/01/2035 | | | 1,350,000 | | | | 1,370,441 | |
| Park Creek Metropolitan District, 5.00%, 12/01/2034 | | | 1,000,000 | | | | 1,027,946 | |
| Patriots Energy Group Financing Agency, 4.52% (1 mo. LIBOR US + 0.86%), 10/01/2048 (b) | | | 10,000,000 | | | | 10,000,866 | |
| Philadelphia Pennsylvania Authority for Industrial Development, 5.00%, 04/01/2032 | | | 3,000,000 | | | | 3,063,520 | |
| Port Authority of New York & New Jersey, 4.00%, 09/01/2043 | | | 2,970,000 | | | | 2,932,175 | |
| Puerto Rico Sales Tax Financing Corp. Sales Tax Revenue, 5.79%, 07/01/2031 (a) | | | 16,249,000 | | | | 11,912,548 | |
| San Diego California Tobacco Settlement Revenue Funding Corp., 4.00%, 06/01/2032 | | | 3,550,000 | | | | 3,564,160 | |
| Tampa Florida | | | | | | | | |
| 4.64%, 09/01/2039 (a) | | | 1,100,000 | | | | 571,273 | |
| 4.73%, 09/01/2041 (a) | | | 1,280,000 | | | | 597,836 | |
| 3.75%, 09/01/2045 (a) | | | 1,850,000 | | | | 695,350 | |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Tax-Exempt Bond FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Par | | | Value | |
| MUNICIPAL BONDS — 97.2% (Continued) | | | | | | |
| Revenue Bonds — 81.9% (Continued) | | | | | | |
| TerrebonneParish Louisiana, 3.17%, 04/01/2036 (a) | | $ | 3,045,000 | | | $ | 1,997,489 | |
| Texas Municipal Gas Acquisition and Supply Corp. II | | | | | | | | |
| 3.90% (3 mo. Term SOFR + 0.86%), 09/15/2027 (b) | | | 12,970,000 | | | | 12,774,158 | |
| 4.13% (3 mo. Term SOFR + 1.05%), 09/15/2027 (b) | | | 12,670,000 | | | | 12,532,107 | |
| 4.90% (SIFMA Municipal Swap Index + 0.55%), 09/15/2027 (b) | | | 6,655,000 | | | | 6,568,057 | |
| Texas Municipal Power Agency, 3.00%, 09/01/2035 | | | 1,630,000 | | | | 1,552,586 | |
| Tobacco Settlement Authority, 5.25%, 06/01/2032 | | | 460,000 | | | | 459,987 | |
| Tobacco Settlement Finance Authority, 2.55%, 06/01/2029 | | | 4,505,000 | | | | 3,919,723 | |
| Tobacco Settlement Financing Corp. | | | | | | | | |
| 5.00%, 06/01/2035 | | | 23,310,000 | | | | 23,680,882 | |
| 5.25%, 06/01/2046 | | | 5,000,000 | | | | 5,156,385 | |
| Triborough Bridge & Tunnel Authority, 5.00%, 11/15/2038 | | | 5,000,000 | | | | 5,890,251 | |
| TSASC, Inc. | | | | | | | | |
| 5.00%, 06/01/2030 | | | 7,960,000 | | | | 8,297,750 | |
| 5.00%, 06/01/2031 | | | 1,070,000 | | | | 1,114,158 | |
| Utah Housing Corp. | | | | | | | | |
| 3.00%, 01/21/2052 | | | 5,555,051 | | | | 4,928,855 | |
| 4.50%, 06/21/2052 | | | 9,157,227 | | | | 9,131,854 | |
| 5.00%, 10/21/2052 | | | 4,869,626 | | | | 5,004,947 | |
| Utility Debt Securitization Authority, 5.00%, 12/15/2030 | | | 10,000,000 | | | | 10,038,173 | |
| Vermont Student Assistance Corp., 5.85% (30 day avg SOFR US + 1.00%), 06/02/2042 (b) | | | 10,599,308 | | | | 10,584,700 | |
| Virginia Small Business Financing Authority, 4.00%, 12/01/2036 | | | 1,230,000 | | | | 1,161,002 | |
| Washington Health Care Facilities Authority, 5.00%, 10/01/2033 | | | 2,540,000 | | | | 2,540,838 | |
| Wisconsin Health & Educational Facilities Authority, 5.00%, 05/01/2027 | | | 1,610,000 | | | | 1,617,976 | |
| | | | | | | | 704,523,489 | |
TOTAL MUNICIPAL BONDS (Cost $822,245,530) | | | | | | | 835,878,769 | |
| | | | | | | | | |
| | | Shares | | | | | |
| SHORT-TERM INVESTMENTS — 2.1% | | | | | | | | |
| | | | | | | | | |
| Money Market Funds — 2.1% | | | | | | | | |
| First American Government Obligations Fund — Class Z, 5.25% (e) | | | 18,430,120 | | | | 18,430,120 | |
TOTAL SHORT-TERM INVESTMENTS (Cost $18,430,120) | | | | | | | 18,430,120 | |
TOTAL INVESTMENTS — 99.3% (Cost $840,675,650) | | | | | | | 854,308,889 | |
| Other Assets in Excess of Liabilities — 0.7% | | | | | | | 6,204,398 | |
| TOTAL NET ASSETS — 100.0% | | | | | | $ | 860,513,287 | |
Percentages are stated as a percent of net assets.
LIBOR — London Interbank Offered Rate
SOFR — Secured Overnight Financing Rate
| (a) | Zero-coupon bond. The rate shown is the effective yield as of December 31, 2023. |
| (b) | Coupon rate is variable or floats based on components including but not limited to reference rate and spread. These securities may not indicate a reference rate and/or spread in their description. The rate disclosed is as of December 31, 2023. |
| (c) | Security is exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may only be resold in transactions exempt from registration to qualified institutional investors. |
| (d) | Security is in default and missed all or a portion of its last payment of interest. |
| (e) | The rate shown represents the 7-day effective yield as of December 31, 2023. |
PORTFOLIO HOLDINGS
% of Net Assets
| Revenue Bonds | 81.9% |
| General Obligation Bonds | 15.3% |
| Money Market Funds | 2.1% |
| Other Assets and Liabilities | 0.7% |
| | 100.0% |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Tax-Exempt Sustainable Bond FundA Message to Our Shareholders
December 31, 2023
Dear Shareholder:
During the six-month period ended December 31, 2023, the Brown Advisory Tax-Exempt Sustainable Bond Fund (the “Fund”) Investor Shares reported 2.95% in value. During the same period, the Bloomberg 1-10 Year Blended Municipal Bond Index, the Fund’s benchmark, increased 3.11%.
The fourth quarter represented a dramatic turnaround in municipal market performance as intermediate maturity bond yields staged a sharp reversal after touching multi-decade highs in late-October. The whipsaw in rates was largely driven by a period of policy uncertainty as many market participants viewed the Federal Open Market Committee (FOMC) as quickly pivoting from a tightening bias to an easing bias over the course of their last three meetings of the year.
Within the Fund, yield curve positioning and individual security selection drove much of the relative performance during the period. From a yield curve perspective, our most active positioning has been an intentional underweight to bonds around the 5-year duration range. Given the unconventional “U-shape” of the municipal yield curve, this short-intermediate duration range has both the lowest absolute yields, as well as the least favorable relative value across the curve. We have kept overall portfolio duration slightly elevated relative to our benchmark while maintaining a barbell, with overweight positions in both floating-rate and 10-year and slightly longer duration bonds, which have recently been higher yielding.
Within credit, we have been very focused on late-cycle dynamics, taking advantage of relatively tight credit spreads and reducing credit risk in spread sectors that could underperform if/when economic growth deteriorates. The typical forms of revenue (sales, income, and property taxes) for government issuers have been robust, including providing some cushion for inflation concerns, and there has been an incredible amount of federal fiscal stimulus to municipal borrowers. However, we are cognizant of the fact that further credit improvement will be difficult in any potential slowdown given a backdrop of lower economic activity, wage pressures abating, and stressed property valuations, all with a limited appetite for any further stimulus as a backstop. Therefore, we are being more selective at this point in the cycle, preferring issuers that have a more robust financial footing.
We are also looking at some secular trends in fundamental credit and adjusting accordingly. While many issuers are navigating the current complexities well, we have been actively reducing exposure to the not-for-profit hospital and senior living sectors, and some smaller higher education issuers. Beyond short term stress, we expect medium and long-term expenses, inflation (and in the case of higher education even some demographic) pressures to continue to be a headwind for broad credit improvement.
Staying true to our long-term, bottom-up approach to sector and credit selection, we are very focused on which sectors may be the most affected by this unique period of elevated inflationary pressure and late-cycle credit dynamics, and how individual issuers are likely to manage the current environment. We are working to actively stay in front of these risks, while also maintaining a high level of portfolio liquidity, and we have been particularly proactive about pairing our credit thoughts with our positioning thoughts. Fortunately, we have had success finding ideas which both align with the sectors and issuers we like as well as have desirable interest rate risk characteristics.
Sincerely,
Stephen M. Shutz, CFA
Portfolio Manager
Amy N. Hauter, CFA
Portfolio Manager
Brown Advisory Tax-Exempt Sustainable Bond FundA Message to Our Shareholders
December 31, 2023
Past performance is not a guarantee of future results.
Mutual fund investing involves risk. Principal loss is possible.
The Fund is also subject to interest rate risk which is the risk that debt securities in the Fund’s portfolio will decline in value because of an increase in market interest rates. This risk is usually greater for longer- term debt securities. Income from tax-exempt funds may be subject to state and local taxes and a portion of income may be subject to the Federal Alternative minimum tax for certain investors.
Sustainable investment considerations are one of multiple informational inputs into the investment process, alongside data on traditional financial factors, and so are not the sole driver of decision-making. Sustainable investment analysis may not be performed for every holding in the strategy. Sustainable investment considerations that are material will vary by investment style, sector/industry, market trends and client objectives. The Fund seeks to identify companies that it believes may be desirable based on our analysis of sustainable investment related risks and opportunities, but investors may differ in their views. As a result, the Fund may invest in companies that do not reflect the beliefs and values of any particular investor. The Fund may also invest in companies that would otherwise be excluded from other funds that focus on sustainable investment risks. Security selection will be impacted by the combined focus on sustainable investment research assessments and fundamental research assessments including the return forecasts. The Fund incorporates data from third parties in its research process but does not make investment decisions based on third-party data alone.
Diversification does not assure a profit, nor does it protect against a loss in a declining market.
Fund holdings and sector allocations are subject to change and should not be considered a recommendation to buy or sell any security. For a complete list of Fund holdings, please refer to the Schedule of Investments provided in this report.
Credit Quality weights by rating are derived from the highest bond rating as determined by Standard & Poor’s (“S&P”), Moody’s or Fitch. Bond ratings are grades given to bonds that indicate their credit quality as determined by private independent rating services such as S&P, Moody’s and Fitch. These firms evaluate a bond issuer’s financial strength, or its ability to pay a bond’s principal and interest in a timely fashion. Ratings are expressed as letters ranging from ‘AAA’, which is the highest grade, to ‘D’, which is the lowest grade. In limited situations when none of the three rating agencies have issued a formal rating, the Advisor will classify the security as nonrated.
Definitions for terms and indices are provided in the Glossary of Terms.
Brown Advisory Tax-Exempt Sustainable Bond FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Par | | | Value | |
| MUNICIPAL BONDS — 98.5% | | | | | | |
| | | | | | | |
| General Obligation Bonds — 18.3% | | | | | | |
| Adams & Arapahoe Colorado Joint School District 28J Aurora, 5.00%, 12/01/2031 | | $ | 6,000,000 | | | $ | 6,343,863 | |
| Bondurant-Farrar Iowa Community School District | | | | | | | | |
| 2.00%, 06/01/2039 | | | 2,555,000 | | | | 1,881,648 | |
| 2.00%, 06/01/2038 | | | 1,805,000 | | | | 1,359,546 | |
| Calumet County Wisconsin | | | | | | | | |
| 1.75%, 12/01/2037 | | | 1,035,000 | | | | 745,313 | |
| 1.88%, 12/01/2038 | | | 1,320,000 | | | | 939,342 | |
| 1.88%, 12/01/2039 | | | 2,650,000 | | | | 1,834,553 | |
| Cartersville Georgia, 2.00%, 10/01/2039 | | | 3,195,000 | | | | 2,356,731 | |
| Chicago Illinois Park District | | | | | | | | |
| 4.00%, 01/01/2036 | | | 2,930,000 | | | | 3,025,614 | |
| 4.00%, 01/01/2034 | | | 1,425,000 | | | | 1,474,656 | |
| 4.00%, 01/01/2036 | | | 1,000,000 | | | | 1,030,989 | |
| Fairfield California, 4.31%, 04/01/2038 (a) | | | 3,845,000 | | | | 2,249,948 | |
| Greenfield-Central Community School Corp., 5.00%, 01/15/2025 | | | 1,535,000 | | | | 1,555,041 | |
| Illinois State, 5.00%, 02/01/2039 | | | 5,150,000 | | | | 5,152,582 | |
| New Glarus School District, 2.00%, 04/01/2039 | | | 1,510,000 | | | | 1,146,192 | |
| Peoria Arizona, 2.00%, 07/15/2038 | | | 3,375,000 | | | | 2,564,824 | |
| Pima County Unified School District No 20 Vail, 5.00%, 07/01/2036 | | | 3,280,000 | | | | 3,417,629 | |
| Westosha Wisconsin Central High School District | | | | | | | | |
| 2.00%, 03/01/2039 | | | 1,500,000 | | | | 1,132,707 | |
| 2.00%, 03/01/2038 | | | 1,000,000 | | | | 775,274 | |
| Wisconsin State, 4.29% (SIFMA Municipal Swap Index + 0.42%), 05/01/2025 | | | 10,000,000 | | | | 9,940,755 | |
| York County South Carolina Fort Mill School District No. 4 | | | | | | | | |
| 1.88%, 03/01/2037 | | | 4,585,000 | | | | 3,589,961 | |
| 1.88%, 03/01/2038 | | | 4,675,000 | | | | 3,502,871 | |
| | | | | | | | 56,020,039 | |
| Revenue Bonds — 80.2% | | | | | | | | |
| Alabama Housing Finance Authority, 5.00%, 09/01/2024 (b) | | | 5,410,000 | | | | 5,419,154 | |
| Alaska Housing Finance Corp., 4.60%, 12/01/2042 | | | 890,000 | | | | 919,596 | |
| Allegheny County Pennsylvania Hospital Development Authority, | | | | | | | | |
| 4.45% (SIFMA Municipal Swap Index + 0.58%), 11/15/2026 | | | 1,750,000 | | | | 1,726,592 | |
| American Municipal Power, Inc., 5.00%, 02/15/2036 | | | 1,000,000 | | | | 1,088,180 | |
| Arizona Industrial Development Authority, 4.00%, 07/01/2041 | | | 1,200,000 | | | | 1,159,292 | |
| Austin Texas, 7.88%, 09/01/2026 | | | 1,750,000 | | | | 1,756,160 | |
| Baltimore County Maryland | | | | | | | | |
| 4.00%, 01/01/2040 | | | 1,525,000 | | | | 1,505,853 | |
| 4.00%, 01/01/2039 | | | 1,000,000 | | | | 995,793 | |
| Buffalo New York Sewer Authority, 4.00%, 06/15/2051 | | | 750,000 | | | | 748,096 | |
| California Community Choice Financing Authority | | | | | | | | |
| 4.32% (SIFMA Municipal Swap Index + 0.45%), 02/01/2052 | | | 5,900,000 | | | | 5,406,341 | |
| 5.00%, 09/01/2029 | | | 3,805,000 | | | | 4,091,177 | |
| 5.50%, 05/01/2054 (b) | | | 5,000,000 | | | | 5,389,214 | |
| California Earthquake Authority, 5.60%, 07/01/2027 | | | 8,095,000 | | | | 8,193,996 | |
| California Infrastructure & Economic Development Bank | | | | | | | | |
| 3.65%, 01/01/2050 (b)(c) | | | 6,800,000 | | | | 6,792,600 | |
| 4.00%, 05/01/2046 | | | 2,000,000 | | | | 2,009,648 | |
| 4.22% (SIFMA Municipal Swap Index + 0.35%), 08/01/2047 | | | 4,360,000 | | | | 4,331,583 | |
| California Municipal Finance Authority | | | | | | | | |
| 5.00%, 11/01/2049 (c) | | | 1,575,000 | | | | 1,490,431 | |
| 5.00%, 11/01/2029 (c) | | | 1,170,000 | | | | 1,210,941 | |
| California School Finance Authority, 5.00%, 07/01/2037 (c) | | | 1,180,000 | | | | 1,221,233 | |
| Clifton Texas Higher Education Finance Corp., 4.00%, 04/01/2040 | | | 2,450,000 | | | | 2,474,756 | |
| Colorado Health Facilities Authority, 4.00%, 12/01/2040 | | | 1,500,000 | | | | 1,422,408 | |
| Colorado Housing and Finance Authority, 5.75%, 11/01/2053 | | | 6,000,000 | | | | 6,484,042 | |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Tax-Exempt Sustainable Bond FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Par | | | Value | |
| MUNICIPAL BONDS — 98.5% (Continued) | | | | | | |
| | | | | | | |
| Revenue Bonds — 80.2% (Continued) | | | | | | |
| District of Columbia Housing Finance Agency, 5.00%, 12/01/2026 (b) | | $ | 2,500,000 | | | $ | 2,565,917 | |
| Douglas County Nebraska, 4.40% (SIFMA Municipal Swap Index + 0.53%), 07/01/2035 | | | 7,855,000 | | | | 7,727,032 | |
| Du Page Illinois, 3.00%, 05/15/2047 | | | 7,495,000 | | | | 5,535,488 | |
| Fairfax County Virginia Redevelopment & Housing Authority, 5.00%, 01/01/2025 (b) | | | 2,722,000 | | | | 2,722,000 | |
| Florida Development Finance Corp., 4.00%, 11/15/2035 | | | 2,000,000 | | | | 2,110,542 | |
| Grand Forks North Dakota | | | | | | | | |
| 7.00%, 12/15/2043 (c)(d) | | | 2,500,000 | | | | 500,000 | |
| 9.00%, 06/15/2044 (c)(d) | | | 2,500,000 | | | | 500,000 | |
| Health Educational and Housing Facility Board of Memphis Tennessee, 5.00%, 07/01/2027 (b) | | | 6,000,000 | | | | 6,195,019 | |
| Houston Texas Airport System Revenue, 5.00%, 07/01/2036 | | | 2,000,000 | | | | 2,173,816 | |
| Illinois Housing Development Authority, 4.85%, 10/01/2042 | | | 2,700,000 | | | | 2,823,375 | |
| Indiana Housing & Community Development Authority, 5.00%, 10/01/2026 (b) | | | 4,452,000 | | | | 4,538,733 | |
| Industrial Development Authority of St Louis Missouri, 2.22%, 12/01/2038 | | | 2,916,987 | | | | 2,206,393 | |
| Lancaster County Pennsylvania Hospital Authority, 5.00%, 08/15/2042 | | | 2,380,000 | | | | 2,465,673 | |
| Los Angeles California Department of Airports, 5.00%, 05/15/2038 | | | 2,000,000 | | | | 2,234,272 | |
| Maryland Community Development Administration, 2.41%, 07/01/2043 | | | 2,500,000 | | | | 1,809,468 | |
| Maryland Economic Development Corp., 4.00%, 07/01/2040 | | | 1,275,000 | | | | 1,205,901 | |
| Maryland Health & Higher Educational Facilities Authority, 5.00%, 08/15/2038 | | | 10,000,000 | | | | 10,004,583 | |
| Metropolitan Pier & Exposition Authority | | | | | | | | |
| 2.36%, 12/15/2031 (a) | | | 135,000 | | | | 103,747 | |
| 2.93%, 06/15/2034 (a) | | | 270,000 | | | | 190,235 | |
| 2.98%, 06/15/2037 (a) | | | 175,000 | | | | 106,956 | |
| 3.46%, 12/15/2051 (a) | | | 375,000 | | | | 105,320 | |
| 3.62%, 12/15/2052 (a) | | | 590,000 | | | | 157,008 | |
| 3.64%, 12/15/2038 (a) | | | 1,175,000 | | | | 660,486 | |
| 5.11%, 06/15/2046 (a) | | | 3,300,000 | | | | 1,244,070 | |
| Metropolitan Transportation Authority | | | | | | | | |
| 4.30% (SIFMA Municipal Swap Index + 0.43%), 11/01/2031 | | | 12,500,000 | | | | 12,366,143 | |
| 5.00%, 11/15/2033 | | | 5,000,000 | | | | 5,001,253 | |
| 5.00%, 11/15/2038 | | | 5,000,000 | | | | 5,001,076 | |
| 5.00%, 11/15/2042 | | | 1,870,000 | | | | 1,870,442 | |
| 5.00%, 11/15/2038 | | | 1,250,000 | | | | 1,349,190 | |
| Miami Beach Florida Health Facilities Authority, 5.00%, 11/15/2039 | | | 4,455,000 | | | | 4,489,424 | |
| Montana Board of Housing, 4.90%, 12/01/2042 | | | 1,000,000 | | | | 1,068,313 | |
| Nebraska Investment Finance Authority, 4.35%, 09/01/2043 | | | 2,500,000 | | | | 2,533,964 | |
| Nevada Housing Division, 5.00%, 12/01/2025 (b) | | | 2,775,000 | | | | 2,807,367 | |
| New Hampshire Housing Finance Authority, 4.65%, 07/01/2047 | | | 1,800,000 | | | | 1,836,353 | |
| New Hope Texas Cultural Education Facilities Finance Corp., 5.50%, 07/01/2046 (d) | | | 2,075,000 | | | | 726,250 | |
| New Jersey Economic Development Authority | | | | | | | | |
| 3.47%, 06/15/2027 | | | 1,000,000 | | | | 968,051 | |
| 5.12% (SIFMA Municipal Swap Index + 1.25%), 09/01/2025 | | | 6,910,000 | | | | 6,924,067 | |
| New Jersey Housing & Mortgage Finance Agency, 1.60%, 10/01/2026 | | | 1,765,000 | | | | 1,636,703 | |
| New York City New York Housing Development Corp., 2.60%, 11/01/2034 | | | 1,975,000 | | | | 1,771,651 | |
| New York Liberty Development Corp., 3.13%, 09/15/2050 | | | 11,000,000 | | | | 8,881,495 | |
| New York Mortgage Agency Homeowner Mortgage Revenue, 4.65%, 10/01/2043 | | | 3,000,000 | | | | 3,085,506 | |
| New York State Housing Finance Agency | | | | | | | | |
| 1.60%, 11/01/2024 | | | 910,000 | | | | 894,669 | |
| 1.65%, 05/15/2039 | | | 1,289,637 | | | | 963,927 | |
| North Dakota Housing Finance Agency, 4.60%, 07/01/2043 | | | 2,285,000 | | | | 2,334,626 | |
| Portland Maine General Airport Revenue, 4.00%, 01/01/2038 | | | 1,500,000 | | | | 1,531,235 | |
| San Francisco California Airport Commission-San Francisco International Airport, 5.00%, 05/01/2038 | | | 6,220,000 | | | | 6,898,992 | |
| San Francisco California Public Utilities Commission Wastewater Revenue, 5.00%, 10/01/2034 | | | 7,775,000 | | | | 8,077,539 | |
| Tampa Florida, 5.25%, 05/01/2043 | | | 5,000,000 | | | | 5,371,276 | |
| Triborough Bridge & Tunnel Authority, 5.00%, 11/15/2038 | | | 11,700,000 | | | | 13,783,186 | |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Tax-Exempt Sustainable Bond FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Par | | | Value | |
| MUNICIPAL BONDS — 98.5% (Continued) | | | | | | |
| | | | | | | |
| Revenue Bonds — 80.2% (Continued) | | | | | | |
| Utah Housing Corp. | | | | | | |
| 3.00%, 01/21/2052 | | $ | 1,851,684 | | | $ | 1,642,952 | |
| 4.50%, 06/21/2052 | | | 4,578,878 | | | | 4,566,191 | |
| 5.00%, 10/21/2052 | | | 2,434,813 | | | | 2,502,474 | |
| 5.00%, 08/01/2025 (b) | | | 1,957,000 | | | | 1,971,823 | |
| Virginia Small Business Financing Authority, 4.00%, 01/01/2036 | | | 2,250,000 | | | | 2,255,905 | |
| Wisconsin Health & Educational Facilities Authority, 3.25%, 02/15/2050 (b) | | | 5,300,000 | | | | 5,300,000 | |
| | | | | | | | 246,135,163 | |
TOTAL MUNICIPAL BONDS (Cost $307,390,147) | | | | | | | 302,155,202 | |
| | | | | | | | | |
| | | Shares | | | | | |
| SHORT-TERM INVESTMENTS — 0.7% | | | | | | | | |
| | | | | | | | | |
| Money Market Funds — 0.7% | | | | | | | | |
| First American Government Obligations Fund — Class Z, 5.25% (e) | | | 2,229,271 | | | | 2,229,271 | |
TOTAL SHORT-TERM INVESTMENTS (Cost $2,229,271) | | | | | | | 2,229,271 | |
TOTAL INVESTMENTS — 99.2% (Cost $309,619,418) | | | | | | | 304,384,473 | |
| Other Assets in Excess of Liabilities — 0.8% | | | | | | | 2,405,493 | |
| TOTAL NET ASSETS — 100.0% | | | | | | $ | 306,789,966 | |
Percentages are stated as a percent of net assets.
| (a) | Zero-coupon bond. The rate shown is the effective yield as of December 31, 2023. |
| (b) | Coupon rate is variable or floats based on components including but not limited to reference rate and spread. These securities may not indicate a reference rate and/or spread in their description. The rate disclosed is as of December 31, 2023. |
| (c) | Security is exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may only be resold in transactions exempt from registration to qualified institutional investors. |
| (d) | Security is in default and missed all or a portion of its last payment of interest. |
| (e) | The rate shown represents the 7-day effective yield as of December 31, 2023. |
PORTFOLIO HOLDINGS
% of Net Assets
| Revenue Bonds | 80.2% |
| General Obligation Bonds | 18.3% |
| Money Market Funds | 0.7% |
| Other Assets and Liabilities | 0.8% |
| | 100.0% |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Mortgage Securities FundA Message to Our Shareholders
December 31, 2023
Dear Shareholder:
During the six-month period ended December 31, 2023, the Brown Advisory Mortgage Securities Fund (the “Fund”) Investor Shares increased 2.73% in value. During the same period, the Bloomberg Mortgage Backed Securities Index (the “Index”), the Fund’s benchmark, increased 3.12%.
The Fund aims to generate performance primarily through strong current income generation from high quality mortgage-related securities selected to have favorable relative valuations and principal repayment characteristics. This is supplemented by select securitized credit positions in mortgage and asset backed securities. We believe this combination can deliver attractive income generation with relatively low correlation to equity and corporate credit.
By mid-year 2023, inflation had cooled from its peak of over 9% to only 3%, GDP growth held remarkably resilient, and the labor market continued its post-pandemic streak of historically low unemployment. The much-anticipated recession of 2023 had yet to occur, and the market braced for tight financial conditions to persist as 10-year bond yields continued their ascent from 3.31% in April to 4.99% in October. Mortgage rates rose in line with overall bond yields, reaching over 8% in October. Higher mortgage rates put pressure on already challenging housing affordability, with home prices, as measured by the S&P CoreLogic Case-Shiller U.S. National Home Price Index, more than 47% higher than the end of 2019. This kept housing activity depressed as homeowners stayed put and prepayments dwindled, pressuring returns on mortgage-backed securities as they extended duration into a widening bond market.
This all changed late in the year after the Fed, encouraged by stabilizing inflation, forecasted more cuts than expected and all-but announced an end to its tightening monetary cycle. Bond markets wiped out losses from earlier in the year as yields fell sharply, the yield curve steepened, and interest rate volatility declined. Under the improved outlook, demand returned and mortgages posted one of their strongest quarters in history, outperforming the broader Bloomberg Aggregate Bond Index and returning 7.5% in the fourth quarter alone. November in particular saw the highest excess return month in the history of the Bloomberg Mortgage Backed Securities Index.
Despite a challenging third quarter, MBS managed to deliver strong overall performance in the second half of the year with 47 basis points in excess return. Securitized credit also performed well, with CMBS and ABS generating 101 and 66 basis points over the same period, respectively. While the Fund outperformed in the weakening third quarter as bond yields rose, it lagged the Index in November and December as our conservative positioning did not keep up with the sharp market rally. Our holdings in to-be-announced mortgage securities, which we maintain for their superior liquidity, also failed to keep up with the market rebound. We did add slightly to mortgage and asset-backed securities at wider valuations in the second half of the year, and will continue to focus on bottom-up opportunities for security selection in the coming months.
Sentiment in fixed income markets has changed quite drastically in recent months, with the consensus market view transitioning from recession worries and continued tight monetary conditions to a likely ‘soft landing’ supported by easing central bank policy. With that said, there is no shortage of uncertainties with ongoing geopolitical conflicts, rising debt balances, and a potentially contentious U.S. election cycle, to name a few. The impact of rampant inflation in the past few years continues to pressure consumer balance sheets, and moderating recent prints are cold comfort as the new reality of higher prices is locked in. Within housing, affordability remains at its lowest levels in history as high prices, expensive borrowing costs, and a tight and immobile housing market constrain activity. Labor markets have been a bright spot with persistently low unemployment, but any weakness could put undue pressure on consumer finances as they struggle under the pressure of today’s high prices. We continue to believe today’s environment warrants a focus on liquidity and quality, and will work to remain nimble as we navigate the next year.
Sincerely,
| Garritt Conover, CFA, CAIA | Chris Roof |
| Portfolio Manager | Associate Portfolio Manager |
Brown Advisory Mortgage Securities FundA Message to Our Shareholders
December 31, 2023
Past performance is not a guarantee of future results.
Mutual fund investing involves risk. Principal loss is possible. The Fund is subject to interest rate risk which is the risk that debt securities in the Fund’s portfolio will decline in value because of increases in market interest rates. Investments in Asset Backed and Mortgage Backed Securities include additional risks that investors should be aware of such as credit risk, prepayment risk, possible illiquidity and default, as well as increased susceptibility to adverse economic developments. Investments in debt securities typically decrease in value when interest rates rise. The risk is usually greater for longer-term debt securities. Inflation-indexed bonds see the principal value of the security increased as the Consumer Price Index increases. Should the Consumer Price Index decline, those securities should be adversely impacted. Diversification does not assure a profit, nor does it protect against a loss in a declining market.
Fund holdings and sector allocations are subject to change and should not be considered a recommendation to buy or sell any security. For a complete list of Fund holdings, please refer to the Schedule of Investments provided in this report.
Definitions for terms and indices are provided in the Glossary of Terms.
Brown Advisory Mortgage Securities FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Par | | | Value | |
| MORTGAGE-BACKED SECURITIES — 88.2% | | | | | | |
| Angel Oak Mortgage Trust, Series 2022-1, Class A1, 2.88%, 12/25/2066 (a)(b) | | $ | 2,228,736 | | | $ | 1,999,391 | |
| Fannie Mae Grantor Trust, Series 2017-T1, Class A, 2.90%, 06/25/2027 | | | 1,989,549 | | | | 1,883,571 | |
| Fannie Mae Whole Loan | | | | | | | | |
| Series 2003-W10, Class 3A5, 4.30%, 06/25/2043 | | | 5,883 | | | | 5,458 | |
| Series 2003-W12, Class 1A8, 4.55%, 06/25/2043 | | | 9,659 | | | | 9,358 | |
| Series 2003-W12, Class 1A9, 4.48%, 06/25/2043 | | | 1,610 | | | | 1,566 | |
| Series 2003-W12, Class 2A6, 5.00%, 06/25/2043 | | | 6,472 | | | | 6,392 | |
| Series 2003-W12, Class 2A7, 4.68%, 06/25/2043 | | | 5,548 | | | | 5,357 | |
| Federal Home Loan Mortgage Corp. | | | | | | | | |
| Pool 1G2249, 6.03% (Refinitiv USD IBOR Consumer Cash Fallbacks Term 1 Year + 1.78%), 10/01/2037 (c) | | | 42,486 | | | | 42,384 | |
| Pool 1H1348, 6.07% (1 Year CMT Rate + 2.14%), 10/01/2036 (c) | | | 13,473 | | | | 13,789 | |
| Pool 1J0204, 5.12% (Refinitiv USD IBOR Consumer Cash Fallbacks Term 1 Year + 1.75%), 05/01/2035 (c) | | | 18,207 | | | | 18,011 | |
| Pool 1J1681, 5.73% (Refinitiv USD IBOR Consumer Cash Fallbacks Term 1 Year + 1.98%), 06/01/2037 (c) | | | 20,908 | | | | 21,054 | |
| Pool 1L1263, 4.61% (1 Year CMT Rate + 2.25%), 03/01/2036 (c) | | | 13,351 | | | | 13,665 | |
| Pool 847727, 5.49% (Refinitiv USD IBOR Consumer Cash Fallbacks Term 1 Year + 1.74%), 02/01/2037 (c) | | | 3,513 | | | | 3,488 | |
| Pool A14256, 5.50%, 10/01/2033 | | | 33,122 | | | | 34,170 | |
| Pool A46629, 5.00%, 08/01/2035 | | | 34,691 | | | | 35,316 | |
| Pool B31891, 5.38%, 01/01/2037 | | | 63,850 | | | | 65,654 | |
| Pool B31900, 5.38%, 02/01/2037 | | | 81,201 | | | | 83,514 | |
| Pool B31934, 5.38%, 04/01/2037 | | | 40,231 | | | | 41,377 | |
| Pool B31976, 5.10%, 05/01/2037 | | | 81,633 | | | | 83,329 | |
| Pool C03427, 5.50%, 10/01/2039 | | | 261,571 | | | | 269,870 | |
| Pool C53878, 5.50%, 12/01/2030 | | | 42,732 | | | | 43,655 | |
| Pool C66421, 6.50%, 02/01/2032 | | | 46,767 | | | | 49,130 | |
| Pool C91366, 4.50%, 04/01/2031 | | | 93,023 | | | | 92,664 | |
| Pool C91826, 3.00%, 05/01/2035 | | | 352,285 | | | | 330,943 | |
| Pool G04540, 6.00%, 08/01/2038 | | | 111,378 | | | | 116,622 | |
| Pool G04655, 6.00%, 08/01/2038 | | | 98,089 | | | | 102,708 | |
| Pool G08348, 5.00%, 06/01/2039 | | | 57,495 | | | | 58,533 | |
| Pool G08828, 5.50%, 04/01/2048 | | | 74,170 | | | | 76,374 | |
| Pool G20028, 7.50%, 12/01/2036 | | | 93,882 | | | | 96,350 | |
| Pool G30932, 4.50%, 03/01/2034 | | | 107,236 | | | | 106,926 | |
| Pool G31063, 3.50%, 11/01/2037 | | | 581,893 | | | | 555,641 | |
| Pool K93349, 4.00%, 11/01/2035 | | | 220,657 | | | | 215,690 | |
| Pool K93365, 3.50%, 11/01/2035 | | | 224,164 | | | | 214,432 | |
| Pool N30530, 5.50%, 01/01/2029 | | | 32,116 | | | | 32,574 | |
| Pool N70071, 6.00%, 06/01/2035 | | | 101,439 | | | | 101,437 | |
| Pool N70078, 5.50%, 01/01/2033 | | | 149,393 | | | | 148,317 | |
| Pool N70082, 6.00%, 07/01/2038 | | | 278,359 | | | | 280,011 | |
| Pool QC5310, 3.00%, 08/01/2051 | | | 1,381,257 | | | | 1,231,956 | |
| Pool QD5779, 3.00%, 01/01/2052 | | | 3,673,740 | | | | 3,250,314 | |
| Pool QD7450, 3.00%, 03/01/2052 | | | 1,742,186 | | | | 1,545,160 | |
| Pool QD7999, 4.00%, 03/01/2052 | | | 4,148,482 | | | | 3,925,253 | |
| Pool QD9382, 4.00%, 04/01/2052 | | | 3,071,062 | | | | 2,907,014 | |
| Pool QD9775, 4.00%, 04/01/2052 | | | 2,568,118 | | | | 2,431,406 | |
| Pool QE0380, 2.50%, 04/01/2052 | | | 919,099 | | | | 789,128 | |
| Pool QE0622, 2.00%, 04/01/2052 | | | 543,353 | | | | 451,317 | |
| Pool QE0898, 4.50%, 04/01/2052 | | | 2,826,356 | | | | 2,741,702 | |
| Pool QE2358, 3.50%, 05/01/2052 | | | 3,085,339 | | | | 2,832,108 | |
| Pool QE3174, 3.50%, 06/01/2052 | | | 3,179,498 | | | | 2,918,186 | |
| Pool QF0493, 5.50%, 09/01/2052 | | | 2,517,698 | | | | 2,555,579 | |
| Pool QF0773, 5.50%, 09/01/2052 | | | 3,058,271 | | | | 3,080,402 | |
| Pool RA6966, 2.00%, 03/01/2052 | | | 3,741,084 | | | | 3,087,943 | |
| Pool RA7374, 3.00%, 05/01/2052 | | | 3,711,751 | | | | 3,285,663 | |
| Pool SD0846, 2.50%, 02/01/2052 | | | 3,069,891 | | | | 2,626,014 | |
| Pool SD1846, 4.50%, 10/01/2052 | | | 3,388,226 | | | | 3,287,793 | |
| Pool SD3234, 2.50%, 12/01/2051 | | | 3,611,454 | | | | 3,080,748 | |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Mortgage Securities FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Par | | | Value | |
| MORTGAGE-BACKED SECURITIES — 88.2% (Continued) | | | | | | |
| Federal Home Loan Mortgage Corp. (Continued) | | | | | | |
| Pool SD3475, 5.50%, 08/01/2053 | | $ | 2,886,179 | | | $ | 2,901,198 | |
| Pool SD3477, 6.50%, 08/01/2053 | | | 1,448,046 | | | | 1,500,820 | |
| Pool SD8196, 3.50%, 02/01/2052 | | | 4,919,660 | | | | 4,537,968 | |
| Pool T30346, 5.38%, 10/01/2037 | | | 69,539 | | | | 71,507 | |
| Pool U30606, 5.10%, 09/01/2037 | | | 59,002 | | | | 60,227 | |
| Pool U30653, 5.13%, 07/01/2037 | | | 47,332 | | | | 48,700 | |
| Pool U30681, 5.10%, 09/01/2037 | | | 194,511 | | | | 198,553 | |
| Pool U30800, 5.10%, 11/01/2037 | | | 71,361 | | | | 72,844 | |
| Pool U31874, 5.38%, 04/01/2038 | | | 127,068 | | | | 130,659 | |
| Pool U32470, 5.10%, 11/01/2038 | | | 83,584 | | | | 85,319 | |
| Pool WA3311, 2.21%, 04/01/2038 | | | 3,168,981 | | | | 2,370,598 | |
| Series 1843, Class Z, 7.00%, 04/15/2026 | | | 284 | | | | 284 | |
| Series 2517, Class Z, 5.50%, 10/15/2032 | | | 38,164 | | | | 37,090 | |
| Series 2890, Class ZA, 5.00%, 11/15/2034 | | | 156,444 | | | | 157,084 | |
| Series 2907, Class VZ, 4.50%, 05/15/2034 | | | 540,695 | | | | 533,439 | |
| Series 3150, Class DZ, 5.50%, 05/15/2036 | | | 286,419 | | | | 290,163 | |
| Series 3294, Class CB, 5.50%, 03/15/2037 | | | 162,527 | | | | 166,885 | |
| Series 366, Class IO, Pool -, 4.00%, 08/15/2049 (d) | | | 737,121 | | | | 124,781 | |
| Series 4121, Class DH, 2.00%, 10/15/2042 | | | 762,174 | | | | 565,780 | |
| Series 4888, Class AC, 3.50%, 01/15/2049 | | | 655,038 | | | | 608,671 | |
| Series 4891, Class PA, 3.50%, 07/15/2048 | | | 112,143 | | | | 107,767 | |
| Series 5080, Class PB, 1.25%, 03/25/2050 | | | 1,948,113 | | | | 1,459,677 | |
| Series 5083, Class UB, 1.25%, 03/25/2051 | | | 2,626,386 | | | | 1,985,111 | |
| Series Q004, Class A2H, 5.17%, 01/25/2046 (c) | | | 355,801 | | | | 353,497 | |
| Series Q004, Class A4H, 5.54%, 08/25/2046 (c) | | | 738,766 | | | | 734,040 | |
| Series Q006, Class APT2, 2.76%, 09/25/2026 (c) | | | 447,911 | | | | 428,364 | |
| Series Q007, Class APT1, 6.00%, 10/25/2047 (c) | | | 675,794 | | | | 673,792 | |
| Series Q010, Class APT1, 4.74%, 04/25/2046 (c) | | | 71,372 | | | | 71,693 | |
| Federal National Mortgage Association | | | | | | | | |
| Pool 257203, 5.00%, 05/01/2028 | | | 290,490 | | | | 289,853 | |
| Pool 336422, 3.43% (3 Year CMT Rate + 2.30%), 10/01/2025 (c) | | | 6,566 | | | | 6,507 | |
| Pool 344903, 5.50%, 10/01/2025 | | | 3,059 | | | | 3,128 | |
| Pool 356232, 6.50%, 01/01/2026 | | | 22,643 | | | | 23,335 | |
| Pool 356329, 6.78% (1 Year CMT Rate + 2.65%), 01/01/2027 (c) | | | 26,286 | | | | 26,089 | |
| Pool 363850, 4.90% (1 Year CMT Rate + 2.13%), 04/01/2027 (c) | | | 9,895 | | | | 9,840 | |
| Pool 406380, 5.43% (1 Year CMT Rate + 2.17%), 11/01/2027 (c) | | | 16,700 | | | | 16,618 | |
| Pool 406521, 4.90% (1 Year CMT Rate + 2.52%), 05/01/2026 (c) | | | 9,394 | | | | 9,236 | |
| Pool 467095, 5.90%, 01/01/2041 | | | 568,055 | | | | 617,396 | |
| Pool 470828, 3.53%, 03/01/2032 | | | 775,615 | | | | 721,545 | |
| Pool 520478, 6.23% (1 Year CMT Rate + 2.10%), 11/01/2029 (c) | | | 24,264 | | | | 24,111 | |
| Pool 555819, 5.28% (Refinitiv USD IBOR Consumer Cash Fallbacks Term 6 Month + 1.03%), 07/01/2033 (c) | | | 5,097 | | | | 5,051 | |
| Pool 628837, 6.50%, 03/01/2032 | | | 7,390 | | | | 7,701 | |
| Pool 640225, 4.40% (1 Year CMT Rate + 2.27%), 04/01/2032 (c) | | | 12,063 | | | | 11,755 | |
| Pool 642122, 4.40% (1 Year CMT Rate + 2.27%), 03/01/2032 (c) | | | 7,697 | | | | 7,458 | |
| Pool 656181, 5.25% (1 Year CMT Rate + 2.16%), 08/01/2031 (c) | | | 26,023 | | | | 25,746 | |
| Pool 662138, 6.30% (1 Year CMT Rate + 2.30%), 09/01/2032 (c) | | | 30,559 | | | | 30,529 | |
| Pool 668309, 6.02% (1 Year CMT Rate + 2.02%), 11/01/2032 (c) | | | 22,083 | | | | 21,968 | |
| Pool 723313, 6.54% (1 Year CMT Rate + 2.54%), 09/01/2031 (c) | | | 27,706 | | | | 27,676 | |
| Pool 741373, 6.41% (1 Year CMT Rate + 2.28%), 12/01/2033 (c) | | | 15,448 | | | | 15,384 | |
| Pool 744805, 5.27% (Refinitiv USD IBOR Consumer Cash Fallbacks Term 6 Month + 1.52%), 11/01/2033 (c) | | | 23,353 | | | | 23,071 | |
| Pool 745626, 5.53% (1 Year CMT Rate + 2.14%), 05/01/2036 (c) | | | 16,449 | | | | 16,378 | |
| Pool 745818, 6.50%, 09/01/2036 | | | 62,740 | | | | 64,903 | |
| Pool 751498, 6.34% (1 Year CMT Rate + 2.22%), 11/01/2033 (c) | | | 7,212 | | | | 7,160 | |
| Pool 764342, 4.90% (Refinitiv USD IBOR Consumer Cash Fallbacks Term 6 Month + 1.52%), 02/01/2034 (c) | | | 23,488 | | | | 23,328 | |
| Pool 774969, 5.28% (1 Year CMT Rate + 2.28%), 04/01/2034 (c) | | | 24,153 | | | | 24,132 | |
| Pool 783554, 6.21% (1 Year CMT Rate + 2.21%), 07/01/2034 (c) | | | 97,040 | | | | 96,953 | |
| Pool 819649, 4.12% (Refinitiv USD IBOR Consumer Cash Fallbacks Term 1 Year + 1.52%), 03/01/2035 (c) | | | 2,717 | | | | 2,699 | |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Mortgage Securities FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Par | | | Value | |
| MORTGAGE-BACKED SECURITIES — 88.2% (Continued) | | | | | | |
| Federal National Mortgage Association (Continued) | | | | | | |
| Pool 830970, 6.08% (Refinitiv USD IBOR Consumer Cash Fallbacks Term 1 Year + 1.83%), 08/01/2035 (c) | | $ | 2,991 | | | $ | 2,954 | |
| Pool 836715, 6.02% (Refinitiv USD IBOR Consumer Cash Fallbacks Term 1 Year + 1.77%), 10/01/2035 (c) | | | 45,592 | | | | 45,555 | |
| Pool 837329, 6.04% (1 Year CMT Rate + 2.04%), 09/01/2035 (c) | | | 19,535 | | | | 19,520 | |
| Pool 842006, 4.25%, 10/01/2035 | | | 103,738 | | | | 103,030 | |
| Pool 850232, 4.25%, 12/01/2035 | | | 220,613 | | | | 218,236 | |
| Pool 865849, 3.94% (Refinitiv USD IBOR Consumer Cash Fallbacks Term 1 Year + 1.54%), 03/01/2036 (c) | | | 10,788 | | | | 10,737 | |
| Pool 868568, 4.62% (Refinitiv USD IBOR Consumer Cash Fallbacks Term 1 Year + 1.72%), 04/01/2036 (c) | | | 13,527 | | | | 13,502 | |
| Pool 872895, 6.13% (Refinitiv USD IBOR Consumer Cash Fallbacks Term 1 Year + 1.88%), 06/01/2036 (c) | | | 4,010 | | | | 3,986 | |
| Pool 877009, 6.31% (Refinitiv USD IBOR Consumer Cash Fallbacks Term 1 Year + 2.38%), 03/01/2036 (c) | | | 8,118 | | | | 8,212 | |
| Pool 882017, 5.31% (Refinitiv USD IBOR Consumer Cash Fallbacks Term 6 Month + 1.56%), 05/01/2036 (c) | | | 33,008 | | | | 32,600 | |
| Pool 886163, 6.08% (Refinitiv USD IBOR Consumer Cash Fallbacks Term 1 Year + 1.83%), 07/01/2036 (c) | | | 15,046 | | | | 14,956 | |
| Pool 889829, 5.00%, 07/01/2035 | | | 32,357 | | | | 32,892 | |
| Pool 896838, 5.45%, 07/01/2036 | | | 207,791 | | | | 206,993 | |
| Pool 922680, 5.74% (Refinitiv USD IBOR Consumer Cash Fallbacks Term 1 Year + 1.91%), 11/01/2035 (c) | | | 16,045 | | | | 16,513 | |
| Pool 930507, 6.50%, 02/01/2039 | | | 81,655 | | | | 84,248 | |
| Pool 941050, 5.95% (Refinitiv USD IBOR Consumer Cash Fallbacks Term 1 Year + 1.70%), 08/01/2037 (c) | | | 25,076 | | | | 24,843 | |
| Pool 950382, 6.86% (Refinitiv USD IBOR Consumer Cash Fallbacks Term 6 Month + 1.12%), 08/01/2037 (c) | | | 33,350 | | | | 33,626 | |
| Pool 952835, 6.15% (1 Year CMT Rate + 2.32%), 09/01/2037 (c) | | | 28,790 | | | | 29,415 | |
| Pool 955233, 6.50%, 12/01/2037 | | | 66,053 | | | | 69,460 | |
| Pool 957502, 3.98%, 07/01/2029 | | | 285,670 | | | | 284,571 | |
| Pool 958720, 5.65%, 10/01/2028 | | | 754,577 | | | | 788,403 | |
| Pool 995521, 5.32% (Refinitiv USD IBOR Consumer Cash Fallbacks Term 1 Year + 1.82%), 05/01/2037 (c) | | | 26,067 | | | | 25,775 | |
| Pool AB0577, 4.00%, 03/01/2036 | | | 187,252 | | | | 178,272 | |
| Pool AD0100, 7.00%, 12/01/2038 | | | 194,422 | | | | 204,541 | |
| Pool AD0427, 5.50%, 10/01/2039 | | | 141,881 | | | | 146,176 | |
| Pool AD0941, 5.50%, 04/01/2040 | | | 200,892 | | | | 206,973 | |
| Pool AH8447, 5.50%, 04/01/2041 | | | 267,749 | | | | 275,926 | |
| Pool AI4717, 4.50%, 07/01/2031 | | | 1,020,293 | | | | 1,015,878 | |
| Pool AL0407, 6.50%, 04/01/2039 | | | 181,019 | | | | 186,441 | |
| Pool AL0898, 5.00%, 02/01/2031 | | | 50,916 | | | | 51,198 | |
| Pool AL7654, 3.00%, 09/01/2035 | | | 395,118 | | | | 370,492 | |
| Pool AN8842, 3.32%, 04/01/2028 | | | 150,000 | | | | 143,232 | |
| Pool AN9202, 3.32%, 05/01/2025 | | | 1,000,000 | | | | 974,598 | |
| Pool AN9931, 4.24%, 08/01/2048 | | | 995,339 | | | | 902,517 | |
| Pool AS1429, 4.00%, 12/01/2043 | | | 186,771 | | | | 182,216 | |
| Pool AS2249, 4.00%, 04/01/2039 | | | 1,271,425 | | | | 1,240,416 | |
| Pool AV7739, 4.00%, 01/01/2044 | | | 231,130 | | | | 224,247 | |
| Pool AW6485, 4.00%, 06/01/2044 | | | 132,475 | | | | 129,188 | |
| Pool AW9534, 4.00%, 03/01/2045 | | | 331,856 | | | | 320,998 | |
| Pool AY0382, 4.00%, 11/01/2044 | | | 183,623 | | | | 177,726 | |
| Pool AZ4154, 4.00%, 06/01/2045 | | | 115,615 | | | | 112,239 | |
| Pool AZ7828, 4.00%, 08/01/2045 | | | 841,926 | | | | 811,990 | |
| Pool BA3674, 4.50%, 10/01/2045 | | | 501,047 | | | | 497,601 | |
| Pool BC1738, 4.50%, 09/01/2043 | | | 220,408 | | | | 219,938 | |
| Pool BC6366, 4.50%, 02/01/2046 | | | 312,941 | | | | 310,534 | |
| Pool BD1241, 4.50%, 05/01/2046 | | | 189,786 | | | | 188,131 | |
| Pool BD5189, 4.50%, 07/01/2046 | | | 557,380 | | | | 553,438 | |
| Pool BD8599, 4.50%, 11/01/2046 | | | 165,824 | | | | 164,214 | |
| Pool BH7686, 4.50%, 12/01/2047 | | | 201,665 | | | | 198,261 | |
| Pool BJ8287, 4.50%, 01/01/2048 | | | 325,070 | | | | 321,628 | |
| Pool BK5105, 5.50%, 05/01/2048 | | | 346,453 | | | | 353,910 | |
| Pool BK8032, 5.50%, 06/01/2048 | | | 373,849 | | | | 381,900 | |
| Pool BL0387, 4.28%, 05/01/2028 | | | 2,679,017 | | | | 2,651,226 | |
| Pool BN4921, 5.50%, 01/01/2049 | | | 104,332 | | | | 106,345 | |
| Pool BN4936, 5.50%, 12/01/2048 | | | 180,782 | | | | 184,270 | |
| Pool BP5419, 3.00%, 05/01/2050 | | | 2,503,999 | | | | 2,268,931 | |
| Pool BQ3248, 2.00%, 11/01/2050 | | | 2,795,149 | | | | 2,299,000 | |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Mortgage Securities FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Par | | | Value | |
| MORTGAGE-BACKED SECURITIES — 88.2% (Continued) | | | | | | |
| Federal National Mortgage Association (Continued) | | | | | | |
| Pool BQ6307, 2.00%, 11/01/2050 | | $ | 1,341,927 | | | $ | 1,103,724 | |
| Pool BR5634, 2.00%, 03/01/2051 | | | 797,432 | | | | 659,073 | |
| Pool BV4128, 2.00%, 03/01/2052 | | | 3,772,149 | | | | 3,087,933 | |
| Pool BV4532, 3.50%, 03/01/2052 | | | 2,662,020 | | | | 2,450,373 | |
| Pool BW0025, 4.00%, 07/01/2052 | | | 730,300 | | | | 693,917 | |
| Pool CB2539, 2.50%, 01/01/2052 | | | 3,003,919 | | | | 2,581,776 | |
| Pool CB2548, 2.50%, 01/01/2052 | | | 2,982,759 | | | | 2,550,890 | |
| Pool CB2909, 3.50%, 02/01/2052 | | | 2,557,388 | | | | 2,358,198 | |
| Pool CB3103, 2.50%, 03/01/2052 | | | 3,911,296 | | | | 3,372,062 | |
| Pool DA0025, 6.00%, 09/01/2053 | | | 2,523,862 | | | | 2,586,823 | |
| Pool FM8754, 3.00%, 09/01/2051 | | | 3,645,361 | | | | 3,248,832 | |
| Pool FM9760, 3.50%, 11/01/2051 | | | 4,532,022 | | | | 4,180,961 | |
| Pool FM9973, 3.00%, 08/01/2051 | | | 2,643,781 | | | | 2,363,544 | |
| Pool FS0031, 2.50%, 10/01/2051 | | | 3,128,950 | | | | 2,662,792 | |
| Pool FS0348, 2.00%, 01/01/2052 | | | 3,245,393 | | | | 2,688,341 | |
| Pool FS0731, 2.00%, 02/01/2052 | | | 1,051,192 | | | | 871,773 | |
| Pool FS0832, 3.50%, 03/01/2052 | | | 2,692,793 | | | | 2,484,032 | |
| Pool FS0922, 3.50%, 03/01/2052 | | | 1,416,850 | | | | 1,301,748 | |
| Pool FS0945, 4.00%, 03/01/2052 | | | 3,914,299 | | | | 3,704,336 | |
| Pool FS1480, 2.50%, 11/01/2051 | | | 442,004 | | | | 378,590 | |
| Pool FS1521, 3.00%, 04/01/2052 | | | 3,554,265 | | | | 3,180,839 | |
| Pool FS3607, 2.50%, 02/01/2037 | | | 3,119,298 | | | | 2,878,897 | |
| Pool FS4862, 2.50%, 10/01/2051 | | | 3,554,459 | | | | 3,030,961 | |
| Pool FS5314, 2.00%, 05/01/2052 | | | 3,768,219 | | | | 3,085,541 | |
| Pool FS5458, 5.50%, 08/01/2053 | | | 3,059,104 | | | | 3,072,188 | |
| Pool MA3208, 4.50%, 10/01/2037 | | | 1,379,956 | | | | 1,378,659 | |
| Pool MA4208, 2.00%, 12/01/2050 | | | 963,297 | | | | 793,175 | |
| Pool MA4492, 2.00%, 12/01/2051 | | | 1,140,100 | | | | 933,736 | |
| Pool MA4565, 3.50%, 03/01/2052 | | | 1,873,548 | | | | 1,728,297 | |
| Series 1996-23, Class G, 6.50%, 07/25/2026 | | | 2,409 | | | | 2,400 | |
| Series 2001-80, Class Z, 6.00%, 01/25/2032 | | | 84,124 | | | | 83,988 | |
| Series 2003-71, Class MB, 5.50%, 08/25/2033 | | | 239,486 | | | | 242,727 | |
| Series 2005-110, Class GL, 5.50%, 12/25/2035 | | | 552,504 | | | | 562,479 | |
| Series 2005-73, Class EZ, 5.50%, 08/25/2035 | | | 1,465,772 | | | | 1,469,758 | |
| Series 2006-112, Class QC, 5.50%, 11/25/2036 | | | 761,708 | | | | 774,435 | |
| Series 2006-21, Class Z, 5.50%, 04/25/2036 | | | 248,114 | | | | 250,658 | |
| Series 2006-M2, Class A2A, 5.27%, 10/25/2032 (c) | | | 124,191 | | | | 123,893 | |
| Series 2007-22, Class A, 5.50%, 03/25/2037 | | | 347,667 | | | | 355,509 | |
| Series 2008-2, Class PH, 5.50%, 02/25/2038 | | | 418,000 | | | | 424,606 | |
| Series 2009-20, Class DS, 1.95% (-1 x 30 day avg SOFR US + 7.29%), 04/25/2039 (c)(d)(e) | | | 541,836 | | | | 71,856 | |
| Series 2012-10, Class UF, 6.00% (30 day avg SOFR US + 0.66%), 02/25/2042 (c) | | | 46,407 | | | | 45,935 | |
| Series 2012-139, Class HI, 2.50%, 12/25/2027 (d) | | | 471,113 | | | | 14,734 | |
| Series 2012-27, Class PI, 4.50%, 02/25/2042 (d) | | | 606,461 | | | | 48,603 | |
| Series 2012-65, Class HJ, 5.00%, 07/25/2040 | | | 944,037 | | | | 946,401 | |
| Series 2013-15, Class QI, 3.00%, 03/25/2028 (d) | | | 36,445 | | | | 1,443 | |
| Series 2013-34, Class IG, 3.00%, 05/25/2042 (d) | | | 269,553 | | | | 26,442 | |
| Series 2014-8, Class IQ, 4.00%, 03/25/2034 (d) | | | 1,085,538 | | | | 121,758 | |
| Series 2015-40, Class LI, 4.50%, 03/25/2045 (d) | | | 324,262 | | | | 58,868 | |
| Series 2018-86, Class JA, 4.00%, 05/25/2047 | | | 166,666 | | | | 161,192 | |
| Series 2019-37, Class IM, 5.00%, 07/25/2049 (d) | | | 829,401 | | | | 113,065 | |
| Series 2021-95, Class WI, 0.00%, 02/25/2035 (c)(d) | | | 5,859,839 | | | | 230,083 | |
| Federal National Mortgage Association, TBA | | | | | | | | |
| 2.00%, 01/15/2054 | | | 20,900,000 | | | | 17,085,750 | |
| 2.50%, 01/15/2054 | | | 4,300,000 | | | | 3,658,695 | |
| 5.00%, 01/15/2054 | | | 7,710,000 | | | | 7,628,684 | |
| 6.00%, 01/15/2054 | | | 3,000,000 | | | | 3,046,406 | |
| 6.50%, 01/15/2054 | | | 1,400,000 | | | | 1,434,836 | |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Mortgage Securities FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Par | | | Value | |
| MORTGAGE-BACKED SECURITIES — 88.2% (Continued) | | | | | | |
| FREMF Mortgage Trust | | | | | | |
| Series 2019-KF73 B, Class B, 7.90% (30 day avg SOFR US + 2.56%), 11/25/2029 (a)(c) | | $ | 653,999 | | | $ | 608,319 | |
| Series 2020-KF74 B, Class B, 7.60% (30 day avg SOFR US + 2.26%), 01/25/2027 (a)(c) | | | 490,858 | | | | 469,130 | |
| Ginnie Mae I Pool | | | | | | | | |
| Pool 589694, 4.50%, 08/15/2029 | | | 638,869 | | | | 623,669 | |
| Pool 623145, 5.50%, 10/15/2028 | | | 133,323 | | | | 134,797 | |
| Pool 728157, 3.75%, 11/15/2029 | | | 22,026 | | | | 21,334 | |
| Pool 728160, 5.25%, 11/15/2024 | | | 11,530 | | | | 11,455 | |
| Pool 783374, 5.50%, 04/15/2024 | | | 137 | | | | 136 | |
| Pool 784315, 6.00%, 06/15/2036 | | | 29,383 | | | | 30,027 | |
| Ginnie Mae II Pool | | | | | | | | |
| Pool MA6994, 2.00%, 11/20/2050 | | | 1,710,080 | | | | 1,448,956 | |
| Pool MA7471, 2.00%, 07/20/2051 | | | 3,618,125 | | | | 3,065,843 | |
| Pool 770225, 4.25%, 08/20/2031 | | | 200,518 | | | | 198,032 | |
| Pool 770226, 4.75%, 09/20/2036 | | | 186,076 | | | | 185,993 | |
| Pool 782173, 5.50%, 05/20/2035 | | | 168,263 | | | | 175,268 | |
| Pool AC0521, 5.50%, 05/20/2042 | | | 596,760 | | | | 615,872 | |
| Pool BM9287, 4.00%, 08/20/2049 | | | 861,713 | | | | 826,822 | |
| Pool BT1891, 2.50%, 12/20/2050 | | | 1,115,832 | | | | 942,985 | |
| Pool CJ2171, 4.00%, 05/20/2052 | | | 1,776,035 | | | | 1,746,716 | |
| Poll MA6994, 2.00%, 11/20/2050 | | | 1,710,080 | | | | 1,448,956 | |
| Pool MA7106, 2.00%, 01/20/2036 | | | 605,549 | | | | 549,498 | |
| Pool MA7164, 2.00%, 02/20/2036 | | | 594,989 | | | | 539,900 | |
| Pool MA7471, 2.00%, 07/20/2051 | | | 3,618,125 | | | | 3,065,843 | |
| Pool MA7834, 6.00%, 01/20/2052 | | | 364,599 | | | | 383,307 | |
| Government National Mortgage Association, TBA | | | | | | | | |
| 2.00%, 01/15/2054 | | | 7,900,000 | | | | 6,690,621 | |
| 2.50%, 01/15/2054 | | | 14,870,000 | | | | 13,010,126 | |
| 3.00%, 01/15/2054 | | | 10,305,000 | | | | 9,331,634 | |
| 3.50%, 01/15/2054 | | | 3,300,000 | | | | 3,073,641 | |
| 5.00%, 01/15/2054 | | | 4,605,000 | | | | 4,573,346 | |
| 5.50%, 01/15/2054 | | | 5,490,000 | | | | 5,358,769 | |
| Government National Mortgage Association | | | | | | | | |
| Series 2004-93 PD, Class PD, 5.00%, 11/16/2034 | | | 327,959 | | | | 325,991 | |
| Series 2006-40 B, Class B, 6.00%, 08/20/2036 | | | 57,410 | | | | 58,081 | |
| Series 2010-105 IB, Class IB, 4.50%, 01/16/2040 (d) | | | 574,716 | | | | 52,528 | |
| Series 2011-127 C, Class C, 3.50%, 03/16/2047 (c) | | | 47,921 | | | | 47,439 | |
| Series 2011-156 PM, Class PM, 2.00%, 04/20/2040 | | | 682,000 | | | | 541,776 | |
| Series 2011-2 DP, Class DP, 5.46%, 03/20/2039 (c) | | | 425,275 | | | | 431,807 | |
| Series 2012-143 IC, Class IC, 5.00%, 10/16/2041 (d) | | | 931,121 | | | | 145,494 | |
| Series 2012-52 WA, Class WA, 6.19%, 04/20/2038 (c) | | | 340,508 | | | | 351,746 | |
| Series 2012-97 GB, Class GB, 2.00%, 08/16/2042 | | | 831,612 | | | | 673,122 | |
| Series 2013-168 IA, Class IA, 2.50%, 11/16/2028 (d) | | | 192,456 | | | | 6,009 | |
| Series 2013-86 JA, Class IA, 5.00%, 06/20/2043 (d) | | | 510,409 | | | | 57,174 | |
| Series 2014-135 IO, Class IO, 0.42%, 01/16/2056 (c)(d) | | | 1,085,978 | | | | 19,573 | |
| Series 2014-6 IG, Class IG, 4.50%, 01/16/2044 (d) | | | 333,407 | | | | 41,945 | |
| Series 2015-172 IO, Class IO, 0.62%, 03/16/2057 (c)(d) | | | 1,012,408 | | | | 21,125 | |
| Series 2016-112 AW, Class AW, 6.98%, 12/20/2040 (c) | | | 196,916 | | | | 207,460 | |
| Series 2016-12 KI, Class KI, 5.00%, 09/20/2038 (d) | | | 607,202 | | | | 79,965 | |
| Series 2016-40 IO, Class IO, 0.61%, 07/16/2057 (c)(d) | | | 2,075,176 | | | | 42,833 | |
| Series 2016-56 IO, Class IO, 1.01%, 11/16/2057 (c)(d) | | | 1,391,903 | | | | 59,918 | |
| Series 2016-68 IO, Class IC, 6.00%, 01/20/2040 (c)(d) | | | 431,912 | | | | 59,474 | |
| Series 2016-98 IO, Class IO, 0.85%, 05/16/2058 (c)(d) | | | 1,989,765 | | | | 74,984 | |
| Series 2017-103 IM, Class IM, 5.00%, 06/20/2043 (d) | | | 730,581 | | | | 94,227 | |
| Series 2017-167 SE, Class SE, 0.73% (-1 x 1 mo. Term SOFR + 6.09%), 11/20/2047 (c)(d)(e) | | | 1,855,263 | | | | 234,818 | |
| Series 2017-83 ID, Class ID, 7.00%, 01/20/2039 (d) | | | 331,643 | | | | 39,535 | |
| Series 2017-83 IK, Class IK, 6.00%, 05/20/2040 (d) | | | 749,488 | | | | 134,527 | |
| Series 2018-127 PB, Class PB, 3.00%, 09/20/2047 | | | 274,997 | | | | 257,396 | |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Mortgage Securities FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Par | | | Value | |
| MORTGAGE-BACKED SECURITIES — 88.2% (Continued) | | | | | | |
| Government National Mortgage Association (Continued) | | | | | | |
| Series 2018-153 QA, Class QA, 3.50%, 11/20/2048 | | $ | 458,851 | | | $ | 436,545 | |
| Series 2018-166 AB, Class AB, 4.00%, 10/20/2047 | | | 1,237 | | | | 1,231 | |
| Series 2018-36 LI, Class LI, 5.00%, 03/20/2048 (d) | | | 1,884,349 | | | | 264,142 | |
| Series 2019-162 KB, Class KB, 2.00%, 12/20/2049 | | | 579,422 | | | | 374,299 | |
| Series 2021-125 UL, Class UL, 1.50%, 07/20/2051 | | | 1,840,296 | | | | 1,382,852 | |
| Series 2021-160 DK, Class DK, 2.00%, 09/20/2051 | | | 1,049,804 | | | | 717,429 | |
| Series 2021-177 KD, Class KD, 2.00%, 10/20/2051 | | | 1,791,418 | | | | 1,391,974 | |
| Series 2021-50 PL, Class PL, 1.25%, 03/20/2051 | | | 552,000 | | | | 246,457 | |
| Series 2022-9 CD, Class CD, 2.00%, 01/20/2052 | | | 2,515,250 | | | | 2,009,574 | |
| Seasoned Credit Risk Transfer Trust, Series 2017-1 M1, Class M1, 4.00%, 01/25/2056 (a)(c) | | | 151,041 | | | | 149,635 | |
| United States Small Business Administration, Pool 522053, 9.11% (Prime Rate + 0.61%), 05/25/2026 (c) | | | 154,074 | | | | 153,408 | |
TOTAL MORTGAGE-BACKED SECURITIES (Cost $277,238,884) | | | | | | | 267,228,050 | |
| | | | | | | | | |
| ASSET-BACKED SECURITIES — 11.8% | | | | | | | | |
| American Express Travel Related Services Co., Inc., Series 2022-2 A, Class A, 3.39%, 05/15/2027 | | | 3,500,000 | | | | 3,429,863 | |
| American Homes 4 Rent Trust | | | | | | | | |
| Series 2014-SFR2 A, Class A, 3.79%, 10/17/2036 (a) | | | 1,841,607 | | | | 1,812,058 | |
| Series 2014-SFR2 B, Class B, 4.29%, 10/17/2036 (a) | | | 2,130,000 | | | | 2,101,539 | |
| Series 2014-SFR3 A, Class A, 3.68%, 12/17/2036 (a) | | | 2,262,942 | | | | 2,219,612 | |
| Series 2015-SFR1 A, Class A, 3.47%, 04/17/2052 (a) | | | 305,117 | | | | 296,695 | |
| Series 2015-SFR2 A, Class A, 3.73%, 10/17/2052 (a) | | | 210,254 | | | | 203,948 | |
| Series 2015-SFR2 C, Class C, 4.69%, 10/17/2052 (a) | | | 250,000 | | | | 245,349 | |
| AmeriCredit Automobile Receivables Trust, Series 2021-1 D, Class D, 1.21%, 12/18/2026 | | | 1,404,000 | | | | 1,312,505 | |
| CarMax Auto Owner Trust | | | | | | | | |
| Series 2021-2 C, Class C, 1.34%, 02/16/2027 | | | 1,505,000 | | | | 1,411,194 | |
| Series 5.72000, Class A2A, 5.72%, 11/16/2026 | | | 3,130,000 | | | | 3,139,731 | |
| CNH Equipment Trust, Series 2023-B, Class A2, 5.90%, 02/16/2027 | | | 4,400,000 | | | | 4,429,037 | |
| Dext ABS LLC | | | | | | | | |
| Series 2021-1 A, Class A, 1.12%, 02/15/2028 (a) | | | 373,001 | | | | 363,196 | |
| Series 2021-1 B, Class B, 1.76%, 02/15/2028 (a) | | | 380,000 | | | | 357,549 | |
| FHF Trust | | | | | | | | |
| Series 2021-1A A, Class A, 1.27%, 03/15/2027 (a) | | | 215,223 | | | | 208,182 | |
| Series 2021-2A A, Class A, 0.83%, 12/15/2026 (a) | | | 383,006 | | | | 370,084 | |
| Ford Credit Auto Owner Trust, Series 2023-C A2A, Class A2A, 5.68%, 09/15/2026 | | | 1,875,000 | | | | 1,883,541 | |
| John Deere Owner Trust | | | | | | | | |
| Series 2023-B A2, Class A2, 5.59%, 06/15/2026 | | | 2,985,000 | | | | 2,987,593 | |
| Series 2023-C A2, Class A2, 5.76%, 08/17/2026 | | | 2,740,000 | | | | 2,751,903 | |
| JPMorgan Chase Bank NA, Series 2021-3 B, Class B, 0.76%, 02/26/2029 (a) | | | 529,967 | | | | 511,470 | |
| PFS Financing Corp, Series 2021-A A, Class A, 0.71%, 04/15/2026 (a) | | | 1,505,000 | | | | 1,482,052 | |
| Toyota Auto Receivables Owner Trust, Series 2023-B A2A, Class A2A, 5.28%, 05/15/2026 | | | 1,416,984 | | | | 1,415,090 | |
| Verizon Master Trust | | | | | | | | |
| Series 2021-1 A, Class A, 0.50%, 05/20/2027 | | | 1,500,000 | | | | 1,470,558 | |
| Series 2022-4 A, Class A, 3.40%, 11/20/2028 | | | 1,500,000 | | | | 1,467,579 | |
TOTAL ASSET-BACKED SECURITIES (Cost $36,317,315) | | | | | | | 35,870,328 | |
| | | | | | | | | |
| MUNICIPAL BONDS — 0.1% | | | | | | | | |
| Colorado Health Facilities Authority, 2.80%, 12/01/2026 | | | 435,000 | | | | 408,753 | |
TOTAL MUNICIPAL BONDS (Cost $435,000) | | | | | | | 408,753 | |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Mortgage Securities FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Shares | | | Value | |
| SHORT-TERM INVESTMENTS – 23.0% | | | | | | |
| | | | | | | |
| Money Market Funds — 2.9% | | | | | | |
| First American Government Obligations Fund — Class Z, 5.26% (f) | | | 8,594,541 | | | $ | 8,594,541 | |
| | | | | | | | | |
| | | Par | | | | | |
| U.S. Treasury Bills — 20.1% | | | | | | | | |
| 2.67%, 01/02/2024 (g) | | $ | 61,000,000 | | | | 61,000,000 | |
TOTAL SHORT-TERM INVESTMENTS (Cost $69,585,611) | | | | | | | 69,594,541 | |
TOTAL INVESTMENTS — 123.1% (Cost $383,576,810) | | | | | | | 373,101,672 | |
| Liabilities in Excess of Other Assets — (23.1)% | | | | | | | (70,115,084 | ) |
TOTAL NET ASSETS — 100.0% | | | | | | $ | 302,986,588 | |
Percentages are stated as a percent of net assets.
SOFR — Secured Overnight Financing Rate
TBA — To be Announced
| (a) | Security is exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may only be resold in transactions exempt from registration to qualified institutional investors. |
| (b) | Step coupon bond. The rate disclosed is as of December 31, 2023. |
| (c) | Coupon rate is variable based on the weighted average coupon of the underlying collateral. To the extent the weighted average coupon of the underlying assets which comprise the collateral increases or decreases, the coupon rate of this security will increase or decrease correspondingly. The rate disclosed is as of December 31, 2023. |
| (d) | Interest only security. |
| (e) | Inverse floating rate security whose interest rate moves in the opposite direction of reference interest rates. Reference interest rates are typically based on a negative multiplier or slope. Interest rate may also be subject to a cap or floor. |
| (f) | The rate shown represents the 7-day effective yield as of December 31, 2023. |
| (g) | The rate shown is the effective yield. |
PORTFOLIO HOLDINGS
% of Net Assets
| Mortgage Backed Securities | 88.2% |
| Short Term Investments | 23.0% |
| Asset Backed Securities | 11.8% |
| Municipal Bonds | 0.1% |
| Liabilities in Excess of Other Assets | (23.1)% |
| | 100.0% |
Schedule of Open Futures Contracts
| | | Contracts | | | | Notional | | | Notional | | | Unrealized Appreciation | |
Description | | Purchased | | Expiration Date | | Amount | | | Value | | | (Depreciation) | |
| 10 Year U.S. Ultra Treasury Notes | | 63 | | 03/19/24 | | $ | 7,110,327 | | | $ | 7,434,984 | | | $ | 324,657 | |
| U.S. Treasury 10 Year Notes | | 56 | | 03/19/24 | | | 6,118,562 | | | | 6,321,875 | | | | 203,313 | |
| U.S. Treasury 5 Year Notes | | 56 | | 03/28/24 | | | 5,970,551 | | | | 6,091,313 | | | | 120,762 | |
| 10 Year U.S. Long Bonds | | 19 | | 03/19/24 | | | 2,202,606 | | | | 2,373,813 | | | | 171,207 | |
| | | | | | | $ | 21,402,046 | | | $ | 22,221,985 | | | $ | 819,939 | |
| | | | | | | | | | | | | | | | | |
| | | Contracts | | | | Notional | | | Notional | | | Unrealized Appreciation | |
Description | | Sold | | Expiration Date | | Amount | | | Value | | | (Depreciation) | |
| U.S. Treasury 2 Year Notes | | (22) |
| 03/28/24 | | $ | (4,509,271 | ) | | $ | (4,530,109 | ) | | $ | (20,838 | ) |
| U.S. Treasury Ultra Bonds | | (26) |
| 03/19/24 | | | (3,165,785 | ) | | | (3,473,438 | ) | | | (307,653 | ) |
| | | | | | | $ | (7,675,056 | ) | | $ | (8,003,547 | ) | | $ | (328,491 | ) |
| Total Unrealized Appreciation (Depreciation) | | | | | | | | | | | | $ | 491,448 | |
The accompanying notes are an integral part of these financial statements.
Brown Advisory – WMC Strategic European Equity FundA Message to Our Shareholders
December 31, 2023
Dear Shareholder:
During the 6-month period ended December 31, 2023, the Brown Advisory – WMC Strategic European Equity Fund (the “Fund”) Investor Shares increased 6.38% in value. During the same period, the MSCI Europe Index, the Fund’s benchmark, increased 5.55%.
For the 6 months ended December 31, 2023, the portfolio outperformed the benchmark. Sector allocation, a result of our bottom-up stock selection process, was the primary driver of relative outperformance, driven by the Fund’s overweight to industrials and underweights to consumer discretionary and health care. This was partially offset by underweights to materials and energy, which detracted. Security selection detracted from relative performance. Selection in financials, health care, and energy detracted most, while selection within communication services, consumer discretionary, and industrials contributed.
From an individual stock perspective, our top relative contributors were United Internet (communication services), Trelleborg (industrials), and BAE Systems (industrials). Our top relative detractors were not owning Novo Nordisk (health care), and positions in Prudential (financials), and Bayer (health care). During the period, we purchased new positions in Holcim and Industria de Diseno (Inditex). We sold our positions in Bayer, Smith & Nephew, and CRH.
Holcim is a Switzerland-based, global company that specialises in building materials and solutions. They are leaders in cement, aggregates, and ready-mix concrete production. They continue to sell their emerging markets cement business, focusing on the light side of the building materials sector. We think their US cement business (around 40% of the company) is well positioned, benefitting from the US Inflation Reduction Act, while the EU’s carbon credit policy means that Holcim are keen to decarbonise so that they do not have to purchase additional carbon credits, reducing their cost base over the medium to long term. Their decarbonisation efforts have led to them winning multiple decarbonisation grants by the EU. The team recently met with the CEO, and like the acquisitions they’ve done and the growth outlook, initiating a position over the period.
Bayer engages in the development of products within health care, nutrition, and crop science. They operate in 5 segments: Pharmaceuticals, Consumer Health, Crop Science, Animal Health, and Covestro. Our original thesis was based on their assets being good quality, with solid underlying free cash flow generation, but trading at depressed multiples due to ongoing litigation concerns stemming mostly from its acquisition of Monsanto. We underestimated their litigation risk and did not expect the risk from their recent drug failure, as such we eliminated our position over the period.
Sincerely,
Carl Dirk Enderlein, CFA,
Senior Managing Director, and Equity Portfolio Manager
Past performance is not a guarantee of future results.
Mutual fund investing involves risk. Principal loss is possible.
Investments focused in a single geographic region may be exposed to greater risk than investments diversified among various geographies. Investments in foreign securities entail certain risks not associated with investments in domestic securities, such as volatility of currency exchange rates, and in some cases, political and economic instability and relatively illiquid markets. These risks are greater in emerging markets.
Investments in smaller and medium capitalization companies generally carry greater risk than is customarily associated with larger companies for various reasons such as narrower markets, limited financial resources and less liquid stock.
The Fund may invest in ETFs, which may trade at a discount to the aggregate value of the underlying securities and although expense ratios for ETFs are generally low, frequent trading of ETFs by the Fund can generate brokerage expenses. The value of investments in REITs may change in response to changes in the real estate market such as declines in the value of real estate, lack of available capital or financing opportunities, and increases in property taxes or operating costs. Derivatives involve risks different from, and in certain cases, greater than the risks presented by more traditional investments. Investors will indirectly bear the principal risks and its share of the fees and expenses of the Fund’s investment in other Investment Companies.
Diversification does not assure a profit, nor does it protect against a loss in a declining market.
Fund holdings and sector allocations are subject to change and should not be considered a recommendation to buy or sell any security. For a complete list of Fund holdings, please refer to the Schedule of Investments provided in this report.
Definitions for terms and indices are provided in the Glossary of Terms.
Brown Advisory – WMC Strategic European Equity FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Shares | | | Value | |
| COMMON STOCKS — 95.0% | | | | | | |
| | | | | | | |
| Austria — 4.0% | | | | | | |
| Erste Group Bank AG | | | 223,746 | | | $ | 9,062,798 | |
| Vienna Insurance Group AG Wiener | | | | | | | | |
| Versicherung Gruppe | | | 79,887 | | | | 2,335,365 | |
| | | | | | | | 11,398,163 | |
| Belgium — 6.1% | | | | | | | | |
| Azelis Group NV | | | 93,124 | | | | 2,286,345 | |
| KBC Group NV | | | 105,722 | | | | 6,861,273 | |
| UCB S.A. | | | 92,646 | | | | 8,076,087 | |
| | | | | | | | 17,223,705 | |
| Czech Republic — 0.9% | | | | | | | | |
| Komercni Banka AS | | | 75,280 | | | | 2,437,709 | |
| | | | | | | | | |
| Denmark — 0.7% | | | | | | | | |
| Royal Unibrew AS | | | 27,376 | | | | 1,828,881 | |
| | | | | | | | | |
| France — 11.9% | | | | | | | | |
| Bureau Veritas S.A. | | | 85,251 | | | | 2,156,824 | |
| Dassault Aviation S.A. | | | 10,479 | | | | 2,076,202 | |
| Elis S.A. | | | 350,426 | | | | 7,324,414 | |
| Legrand S.A. | | | 12,765 | | | | 1,329,297 | |
| Publicis Groupe S.A. | | | 77,850 | | | | 7,233,173 | |
| SPIE S.A. | | | 84,563 | | | | 2,646,968 | |
| Technip Energies NV | | | 260,824 | | | | 6,088,206 | |
| Thales S.A. | | | 33,790 | | | | 5,003,369 | |
| | | | | | | | 33,858,453 | |
| Germany — 13.9% | | | | | | | | |
| Beiersdorf AG | | | 17,754 | | | | 2,658,741 | |
| Brenntag SE | | | 77,462 | | | | 7,119,324 | |
| Hannover Rueck SE | | | 9,063 | | | | 2,166,994 | |
| Hensoldt AG | | | 170,266 | | | | 4,585,678 | |
| Jenoptik AG | | | 49,316 | | | | 1,546,696 | |
| Rheinmetall AG | | | 39,057 | | | | 12,386,364 | |
| Siemens Healthineers AG | | | 22,972 | | | | 1,333,720 | |
| United Internet AG | | | 298,670 | | | | 7,595,875 | |
| Washtec AG | | | 1,300 | | | | 45,924 | |
| | | | | | | | 39,439,316 | |
| Ireland — 2.3% | | | | | | | | |
| AIB Group PLC | | | 1,491,549 | | | | 6,387,934 | |
| | | | | | | | | |
| Netherlands — 5.3% | | | | | | | | |
| Heineken NV | | | 60,803 | | | | 6,177,540 | |
| QIAGEN NV(a) | | | 149,127 | | | | 6,483,479 | |
| Wolters Kluwer NV | | | 16,971 | | | | 2,414,451 | |
| | | | | | | | 15,075,470 | |
| Portugal — 2.1% | | | | | | | | |
| Jeronimo Martins SGPS S.A. | | | 236,097 | | | | 6,008,781 | |
| | | | | | | | | |
| Spain — 5.6% | | | | | | | | |
| Almirall S.A. | | | 78,125 | | | | 727,369 | |
| Bankinter S.A. | | | 900,854 | | | | 5,777,742 | |
| Fluidra S.A. | | | 131,683 | | | | 2,745,310 | |
| Industria de Diseno Textil S.A. | | | 103,448 | | | | 4,513,846 | |
| Laboratorios Farmaceuticos Rovi S.A. | | | 32,160 | | | | 2,140,754 | |
| | | | | | | | 15,905,021 | |
| Sweden — 5.2% | | | | | | | | |
| Alfa Laval AB | | | 76,430 | | | | 3,059,804 | |
| Assa Abloy AB — Class B | | | 72,873 | | | | 2,100,141 | |
| Hexpol AB | | | 129,431 | | | | 1,568,146 | |
| Sandvik AB | | | 79,810 | | | | 1,733,900 | |
| Trelleborg AB — Class B | | | 185,344 | | | | 6,220,900 | |
| | | | | | | | 14,682,891 | |
| Switzerland — 7.1% | | | | | | | | |
| ABB, Ltd. | | | 184,446 | | | | 8,189,064 | |
| Holcim, Ltd. | | | 88,997 | | | | 6,989,951 | |
| Novartis AG | | | 30,451 | | | | 3,075,870 | |
| UBS Group AG | | | 62,546 | | | | 1,942,778 | |
| | | | | | | | 20,197,663 | |
| United Kingdom — 29.9% | | | | | | | | |
| BAE Systems PLC | | | 661,775 | | | | 9,366,882 | |
| Beazley PLC | | | 586,151 | | | | 3,895,329 | |
| British American Tobacco PLC | | | 364,868 | | | | 10,675,729 | |
| Bunzl PLC | | | 161,982 | | | | 6,582,216 | |
| Compass Group PLC | | | 87,792 | | | | 2,402,279 | |
| Haleon PLC | | | 2,162,232 | | | | 8,852,757 | |
| Hikma Pharmaceuticals PLC | | | 103,570 | | | | 2,360,056 | |
| IMI PLC | | | 207,774 | | | | 4,452,065 | |
| Next PLC | | | 25,706 | | | | 2,657,351 | |
| Prudential PLC | | | 516,011 | | | | 5,821,987 | |
| Rotork PLC | | | 710,670 | | | | 2,924,766 | |
| RS GROUP PLC | | | 725,251 | | | | 7,570,348 | |
| Savills PLC | | | 170,636 | | | | 2,107,584 | |
| Serco Group PLC | | | 1,465,147 | | | | 3,018,836 | |
| Smiths Group PLC | | | 313,335 | | | | 7,032,930 | |
| Softcat PLC | | | 37,894 | | | | 656,901 | |
| Spectris PLC | | | 93,925 | | | | 4,517,859 | |
| | | | | | | | 84,895,875 | |
| TOTAL COMMON STOCKS | | | | | | | | |
| (Cost $214,806,079) | | | | | | | 269,339,862 | |
| | | | | | | | | |
| PREFERRED STOCKS — 1.0% | | | | | | | | |
| | | | | | | | | |
| Germany — 1.0% | | | | | | | | |
| FUCHS SE | | | 65,942 | | | | 2,933,751 | |
| TOTAL PREFERRED STOCKS | | | | | | | | |
| (Cost $2,267,356) | | | | | | | 2,933,751 | |
The accompanying notes are an integral part of these financial statements.
Brown Advisory – WMC Strategic European Equity FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Shares | | | Value | |
| SHORT-TERM INVESTMENTS — 3.5% | | | | | | |
| | | | | | | |
| Money Market Funds — 3.5% | | | | | | |
| First American Government Obligations | | | | | | |
| Fund — Class Z, 5.25% (b) | | | 9,936,236 | | | $ | 9,936,236 | |
| TOTAL SHORT-TERM INVESTMENTS | | | | | | | | |
| (Cost $9,936,236) | | | | | | | 9,936,236 | |
| TOTAL INVESTMENTS — 99.5% | | | | | | | | |
| (Cost $227,009,671) | | | | | | | 282,209,849 | |
| Other Assets in Excess of Liabilities — 0.5% | | | | | | | 1,384,111 | |
| TOTAL NET ASSETS — 100.0% | | | | | | $ | 283,593,960 | |
Percentages are stated as a percent of net assets.
PLC — Public Limited Company
| (a) | Non-income producing security. |
| (b) | The rate shown represents the 7-day effective yield as of December 31, 2023. |
PORTFOLIO HOLDINGS
% of Net Assets
| United Kingdom | 29.9% |
| Germany | 14.9% |
| France | 11.9% |
| Switzerland | 7.1% |
| Belgium | 6.1% |
| Spain | 5.6% |
| Netherlands | 5.3% |
| Sweden | 5.2% |
| Austria | 4.0% |
| Money Market Funds | 3.5% |
| Ireland | 2.3% |
| Portugal | 2.1% |
| Czech Republic | 0.9% |
| Denmark | 0.7% |
| Other Assets and Liabilities | 0.5% |
| | 100.0% |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Emerging Markets Select FundA Message to Our Shareholders
December 31, 2023
Dear Shareholder:
During the six-month period ended December 31, 2023, the Brown Advisory Emerging Markets Select Fund (the “Fund”) Institutional Shares increased 3.30% in value. During the same period, the MSCI Emerging Markets Index (the “Index”), the Fund’s benchmark, increased 4.71% in value.
After strong performance in July fueled by a rebound in Chinese equities, emerging markets declined for three straight months, as new concerns emerged in the Chinese property market impacting the Chinese and commodity-driven economies. However, emerging markets rallied during the last two months of the year on optimism around peaking inflation, declining crude oil prices, and possible interest rate cuts in 2024. The notable exception was China, where macroeconomic concerns and problems in specific industries such as property, financial services, and gaming continued to weigh on investor sentiment.
The Fund advanced in absolute terms but underperformed the Index as positive stock selection was more than offset by unfavorable sector and country allocation. On a sector basis, positive stock selection in information technology and real estate were partially offset by negative selection in communication services, consumer staples, consumer discretionary, and financials. The Fund’s underweight to energy was a notable detractor from relative performance. On a country basis, the Fund’s overweight allocation to Hong Kong and underweight allocation to Taiwan were the biggest detractors. This was partially offset by overweight allocations to India and Singapore.
A specific area of strength in the portfolio was the Fund’s Indian real estate developers, DLF Ltd. and Macrotech Developers Ltd. India is one of Asia’s largest and fastest growing economies and demand for high quality real estate continued to drive a healthy pipeline of development for these companies. Excitement around artificial intelligence and resilient demand pushed the shares of electronics and PC suppliers higher during the period. The Fund’s holdings in Elite Material, Lite-On Technology, Compal Electronics, and Lenovo were key contributors to relative performance. By far, the biggest headwind to the Fund’s relative performance was exposure to Chinese consumer and financial companies given the negative effect that high unemployment and the struggling real estate market had on businesses held by the Fund such as Li Ning, Tsingtao Brewery, China Mengniu Dairy, Meituan, and China Pacific Insurance.
Portfolio sales during the period focused mainly on trimming or eliminating positions that performed well or opportunistically upgrading the quality of businesses held. Sales included strong performers such as POSCO, Elite Material, and Lite-On Technology. The Fund initiated a variety of new positions in India in the consumer, materials, and financial sectors. The Fund’s weighting in China and Hong Kong decreased by roughly 4% to 30.4%, and its combined overweight versus the benchmark decreased from 7.9% to 6.2%. However, the Fund has prudently added new positions in China as it seeks to take advantage of cheap valuations for businesses that are, in many cases, industry leaders.
Looking ahead to 2024, we are cautiously optimistic on the outlook for emerging markets as valuations appear reasonable, growth is generally stable, and inflation has been declining.
Sincerely,
Jordan Wruble
Portfolio Manager
Past performance is not a guarantee of future results.
Mutual fund investing involves risk. Principal loss is possible.
The Fund may invest in ETFs, which may trade at a discount to the aggregate value of the underlying securities and although expense ratios for ETFs are generally low, frequent trading of ETFs by the Fund can generate brokerage expenses. The Fund may invest in foreign securities which involve greater volatility and political, economic and currency risks and differences in accounting methods. These risks are greater in emerging markets. Derivatives may involve certain costs and risks such as liquidity, interest rate, market, credit, management, and the risk that a position could not be closed when most advantageous. Investing in derivatives could lose more than the amount invested. The Fund invests in smaller and medium-sized companies which carry greater risk than is associated with larger companies for various reasons, such as narrower markets, limited financial resources and less liquid stock.
Diversification does not assure a profit, nor does it protect against a loss in a declining market.
Fund holdings and sector allocations are subject to change and should not be considered a recommendation to buy or sell any security. For a complete list of Fund holdings, please refer to the Schedule of Investments provided in this report.
Definitions for terms and indices are provided in the Glossary of Terms.
Brown Advisory Emerging Markets Select FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Shares | | | Value | |
| COMMON STOCKS — 95.4% | | | | | | |
| | | | | | | |
| Australia — 1.4% | | | | | | |
| BHP Billiton Ltd. | | | 123,253 | | | $ | 4,210,888 | |
| Rio Tinto, Ltd. | | | 39,039 | | | | 3,614,924 | |
| | | | | | | | 7,825,812 | |
| Brazil — 3.7% | | | | | | | | |
| Ambev S.A. | | | 2,429,500 | | | | 6,827,896 | |
| Banco do Brasil S.A. | | | 317,800 | | | | 3,622,741 | |
| Natura & Co. Holding S.A.(a) | | | 714,100 | | | | 2,448,523 | |
| Neoenergia S.A. | | | 865,900 | | | | 3,802,910 | |
| Vale S.A. | | | 296,000 | | | | 4,688,250 | |
| | | | | | | | 21,390,320 | |
| China — 29.7% | | | | | | | | |
| AIA Group, Ltd. | | | 1,114,473 | | | | 9,699,128 | |
| Alibaba Group Holding, Ltd. | | | 1,898,433 | | | | 18,286,736 | |
| ANTA Sports Products, Ltd. | | | 468,916 | | | | 4,557,540 | |
| Baidu, Inc. — Class A(a) | | | 520,164 | | | | 7,743,118 | |
| Baidu, Inc. — ADR(a) | | | 11,693 | | | | 1,392,519 | |
| Beijing Oriental Yuhong Waterproof | | | | | | | | |
| Technology Co., Ltd. — Class A | | | 802,500 | | | | 2,172,539 | |
| Brilliance China Automotive | | | | | | | | |
| Holdings, Ltd. | | | 2,678,000 | | | | 1,491,627 | |
| China Mengniu Dairy Co., Ltd. | | | 1,151,388 | | | | 3,101,738 | |
| China Merchants | | | | | | | | |
| Bank Co., Ltd. — Class H | | | 1,087,500 | | | | 3,782,900 | |
| China Overseas Land & Investment, Ltd. | | | 3,455,246 | | | | 6,096,027 | |
| China Pacific Insurance | | | | | | | | |
| Group Co., Ltd. — Class H | | | 1,764,435 | | | | 3,569,284 | |
| Contemporary Amperex | | | | | | | | |
| Technology Co., Ltd. — Class A | | | 124,060 | | | | 2,855,932 | |
| Fuyao Glass Industry | | | | | | | | |
| Group Co., Ltd. — Class A | | | 657,600 | | | | 3,466,053 | |
| Galaxy Entertainment Group, Ltd. | | | 740,000 | | | | 4,144,642 | |
| GF Securities Co., Ltd. — Class H | | | 3,270,400 | | | | 3,916,274 | |
| Haier Smart Home Co., Ltd. — Class H | | | 2,093,200 | | | | 5,912,523 | |
| Hangzhou Tigermed | | | | | | | | |
| Consulting Co., Ltd. — Class A | | | 237,200 | | | | 1,836,837 | |
| Hong Kong Exchanges & Clearing, Ltd. | | | 170,477 | | | | 5,847,405 | |
| KE Holdings, Inc. — ADR | | | 19,264 | | | | 312,269 | |
| KE Holdings, Inc. — Class A | | | 949,747 | | | | 5,189,039 | |
| Kweichow Moutai Co., Ltd. — Class A | | | 16,283 | | | | 3,963,643 | |
| Lenovo Group, Ltd. | | | 2,400,000 | | | | 3,358,657 | |
| Pacific Basin Shipping, Ltd. | | | 15,261,568 | | | | 5,022,300 | |
| Ping An Insurance | | | | | | | | |
| Group Co. of China, Ltd. — Class H | | | 422,000 | | | | 1,910,520 | |
| Ping An Insurance | | | | | | | | |
| Group Co. of China, Ltd. — Class A | | | 133,500 | | | | 759,485 | |
| Shenzhen Inovance | | | | | | | | |
| Technology Co., Ltd. — Class A | | | 512,928 | | | | 4,568,789 | |
| Shenzhou International | | | | | | | | |
| Group Holdings, Ltd. | | | 334,214 | | | | 3,428,654 | |
| SITC International Holdings Co., Ltd. | | | 2,020,000 | | | | 3,486,580 | |
| Tencent Holdings, Ltd. | | | 540,548 | | | | 20,408,321 | |
| Trip.com Group, Ltd.(a) | | | 149,922 | | | | 5,381,926 | |
| Trip.com Group, Ltd. — ADR(a) | | | 45,935 | | | | 1,654,119 | |
| Tsingtao Brewery Co., Ltd. — Class H | | | 386,987 | | | | 2,600,287 | |
| Weichai Power Co., Ltd. — Class H | | | 3,520,000 | | | | 5,880,676 | |
| WH Group, Ltd. | | | 6,992,000 | | | | 4,515,430 | |
| Yue Yuen Industrial Holdings, Ltd. | | | 1,802,000 | | | | 1,997,178 | |
| Zhejiang Longsheng | | | | | | | | |
| Group Co., Ltd. — Class A | | | 2,834,500 | | | | 3,356,279 | |
| ZTO Express Cayman, Inc. — ADR | | | 191,441 | | | | 4,073,865 | |
| | | | | | | | 171,740,839 | |
| Hungary — 0.8% | | | | | | | | |
| OTP Bank Nyrt | | | 106,680 | | | | 4,859,526 | |
| | | | | | | | | |
| India — 19.3% | | | | | | | | |
| Amber Enterprises India, Ltd.(a) | | | 85,471 | | | | 3,217,616 | |
| Apollo Hospitals Enterprise, Ltd. | | | 60,587 | | | | 4,150,469 | |
| AU Small Finance Bank, Ltd. | | | 409,613 | | | | 3,872,466 | |
| Aurobindo Pharma, Ltd. | | | 179,445 | | | | 2,336,578 | |
| Axis Bank, Ltd. | | | 647,585 | | | | 8,570,382 | |
| Bajaj Auto, Ltd. | | | 48,770 | | | | 3,982,541 | |
| DLF, Ltd. | | | 720,845 | | | | 6,286,360 | |
| Five-Star Business Finance Ltd.(a) | | | 386,237 | | | | 3,409,784 | |
| Godrej Consumer Products, Ltd. | | | 289,284 | | | | 3,931,044 | |
| HDFC Bank, Ltd. | | | 537,841 | | | | 11,012,844 | |
| ICICI Bank, Ltd. | | | 789,733 | | | | 9,437,150 | |
| Jubilant Foodworks, Ltd. | | | 668,078 | | | | 4,533,988 | |
| Larsen & Toubro, Ltd. | | | 230,561 | | | | 9,763,768 | |
| Macrotech Developers, Ltd. | | | 598,041 | | | | 7,346,938 | |
| Mahindra & Mahindra, Ltd. | | | 378,615 | | | | 7,863,299 | |
| Reliance Industries, Ltd. | | | 268,267 | | | | 8,326,458 | |
| SBI Life Insurance Co., Ltd. | | | 200,991 | | | | 3,459,009 | |
| Shriram Finance, Ltd. | | | 228,933 | | | | 5,647,260 | |
| UltraTech Cement, Ltd. | | | 36,183 | | | | 4,564,530 | |
| | | | | | | | 111,712,484 | |
| Indonesia — 3.9% | | | | | | | | |
| Bank Central Asia Tbk PT | | | 11,542,255 | | | | 7,048,851 | |
| Bank Negara Indonesia Persero Tbk PT | | | 17,517,268 | | | | 6,112,474 | |
| Bank Rakyat Indonesia Persero Tbk PT | | | 25,609,213 | | | | 9,518,122 | |
| | | | | | | | 22,679,447 | |
| Russia — 0.0% | | | | | | | | |
| Sberbank of Russia PJSC — ADR(a)(b)(c) | | | 184,769 | | | | 1,848 | |
| | | | | | | | | |
| Singapore — 3.5% | | | | | | | | |
| DBS Group Holdings, Ltd. | | | 223,827 | | | | 5,660,323 | |
| Seatrium, Ltd.(a) | | | 50,115,300 | | | | 4,474,891 | |
| United Overseas Bank, Ltd. | | | 209,838 | | | | 4,528,977 | |
| Wilmar International, Ltd. | | | 1,973,908 | | | | 5,332,269 | |
| | | | | | | | 19,996,460 | |
| South Africa — 0.7% | | | | | | | | |
| Sasol, Ltd. | | | 373,359 | | | | 3,762,597 | |
| | | | | | | | | |
| South Korea — 15.0% | | | | | | | | |
| DB Insurance Co., Ltd. | | | 83,582 | | | | 5,413,035 | |
| Hankook Tire & Technology Co., Ltd. | | | 187,223 | | | | 6,580,300 | |
| HD Hyundai Heavy Industries Co., Ltd.(a) | | | 50,949 | | | | 5,082,456 | |
| Hyundai Mipo Dockyard Co., Ltd.(a) | | | 73,999 | | | | 4,855,786 | |
| KB Financial Group, Inc. | | | 55,320 | | | | 2,308,050 | |
| Samsung Electronics Co., Ltd. | | | 771,192 | | | | 46,808,918 | |
| Samsung Engineering Co., Ltd.(a) | | | 332,465 | | | | 7,447,641 | |
The accompanying notes are an integral part of these financial statements.
Brown Advisory Emerging Markets Select FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Shares | | | Value | |
| COMMON STOCKS — 95.4% (Continued) | | | | | | |
| | | | | | | |
| South Korea — 15.0% (Continued) | | | | | | |
| Samsung Heavy Industries Co., Ltd.(a) | | | 609,224 | | | $ | 3,651,897 | |
| Shinhan Financial Group Co., Ltd. | | | 147,290 | | | | 4,566,520 | |
| | | | | | | | 86,714,603 | |
| Taiwan — 11.6% | | | | | | | | |
| Advantech Co., Ltd. | | | 197,908 | | | | 2,394,965 | |
| Compal Electronics, Inc. | | | 1,798,000 | | | | 2,328,965 | |
| Hon Hai Precision Industry Co., Ltd. | | | 2,644,000 | | | | 8,995,513 | |
| Realtek Semiconductor Corp. | | | 384,743 | | | | 5,900,006 | |
| Taiwan Semiconductor | | | | | | | | |
| Manufacturing Co., Ltd. | | | 2,471,543 | | | | 47,383,315 | |
| | | | | | | | 67,002,764 | |
| Thailand — 1.7% | | | | | | | | |
| Bangkok Bank PCL | | | 436,800 | | | | 2,002,484 | |
| Bangkok Bank PCL — NVDR | | | 217,700 | | | | 997,277 | |
| Indorama Ventures PCL — NVDR | | | 3,160,300 | | | | 2,519,627 | |
| SCB X PCL | | | 1,315,200 | | | | 4,022,912 | |
| | | | | | | | 9,542,300 | |
| Turkey — 0.5% | | | | | | | | |
| Akbank T.A.S. | | | 2,149,157 | | | | 2,657,986 | |
| | | | | | | | | |
| United Arab Emirates — 0.8% | | | | | | | | |
| Abu Dhabi Commercial Bank PJSC | | | 1,927,001 | | | | 4,816,520 | |
| | | | | | | | | |
| United Kingdom — 0.6% | | | | | | | | |
| Standard Chartered PLC | | | 409,360 | | | | 3,473,883 | |
| | | | | | | | | |
| United States — 2.2% | | | | | | | | |
| Cognizant Technology | | | | | | | | |
| Solutions Corp. — Class A | | | 103,061 | | | | 7,784,197 | |
| Credicorp, Ltd. | | | 31,153 | | | | 4,670,770 | |
| | | | | | | | 12,454,967 | |
| TOTAL COMMON STOCKS | | | | | | | | |
| (Cost $489,816,529) | | | | | | | 550,632,356 | |
| | | | | | | | | |
| PREFERRED STOCKS — 2.2% | | | | | | | | |
| | | | | | | | | |
| Brazil — 2.2% | | | | | | | | |
| Cia Energetica de Minas Gerais | | | 2,272,495 | | | | 5,389,492 | |
| Itau Unibanco Holding S.A. | | | 431,800 | | | | 3,004,248 | |
| Petroleo Brasileiro S.A. | | | 570,600 | | | | 4,353,570 | |
| TOTAL PREFERRED STOCKS | | | | | | | | |
| (Cost $8,803,251) | | | | | | | 12,747,310 | |
| | | | | | | | | |
| SHORT-TERM INVESTMENTS — 1.5% | | | | | | | | |
| | | | | | | | | |
| Money Market Funds — 1.5% | | | | | | | | |
| First American Government Obligations | | | | | | | | |
| Fund — Class Z, 5.25%(d) | | | 8,604,036 | | |
| 8,604,036 | |
| TOTAL SHORT-TERM INVESTMENTS | | | | | | | | |
| (Cost $8,604,036) | | | | | | | 8,604,036 | |
| TOTAL INVESTMENTS — 99.1% | | | | | | | | |
| (Cost $507,223,816) | | | | | | | 571,983,702 | |
| Other Assets in Excess of Liabilities — 0.9% | | | | | | | 5,450,919 | |
| TOTAL NET ASSETS — 100.0% | | | | | | $ | 577,434,621 | |
Percentages are stated as a percent of net assets.
ADR — American Depositary Receipt
NVDR — Non-Voting Depository Receipt
PLC — Public Limited Company
| (a) | Non-income producing security. |
| (b) | Fair value determined using significant unobservable inputs in accordance with procedures established by and under the supervision of the Adviser, acting through its Valuation Committee. These securities represented $1,848 or 0.0% of net assets as of December 31, 2023. |
| (c) | Restricted security as to resale. As of the date of this report, the Fund held restricted securities with a fair value of $1,848 or 0.0% of net assets. Security was acquired from December 2021 to February 2022 at an acquisition cost of $2,890,347. |
| (d) | The rate shown represents the 7-day effective yield as of December 31, 2023. |
PORTFOLIO HOLDINGS
% of Net Assets
| China | 29.7% |
| India | 19.3% |
| South Korea | 15.0% |
| Taiwan | 11.6% |
| Brazil | 5.9% |
| Indonesia | 3.9% |
| Singapore | 3.5% |
| United States | 2.2% |
| Thailand | 1.7% |
| Money Market Fund | 1.5% |
| Australia | 1.4% |
| Hungary | 0.8% |
| United Arab Emirates | 0.8% |
| South Africa | 0.7% |
| United Kingdom | 0.6% |
| Turkey | 0.5% |
| Russia | 0.0% |
| Other Assets and Liabilities | 0.9% |
| | 100.0% |
The accompanying notes are an integral part of these financial statements.
Brown Advisory – Beutel Goodman Large-Cap Value FundA Message to Our Shareholders
December 31, 2023
Dear Shareholder:
During the six-month period ended December 31, 2023 (the “Period”), the Brown Advisory – Beutel Goodman Large-Cap Value Fund (the “Fund”) Institutional Shares increased 5.65%. During the same period, the Russell 1000 Value Index (the “Index”), the Fund’s benchmark, increased by 6.03%. Inflation and the response of central banks was a major driver of equity market performance during the Period. This was particularly the case in the final quarter of 2023 as the U.S. Federal Reserve indicated it was considering cutting rates in the near future. This change in sentiment led to a strong rally in equity markets to finish the year.
Relative underperformance was driven primarily by stock selection in Communication Services, in addition to a combination of stock selection and an overweight in Consumer Staples, as well as an underweight in Financials. The main contributors to relative performance were stock selection in Health Care and Industrials, as well as an overweight in the outperforming Information Technology sector.
From an individual stock perspective, Amgen Inc., Qualcomm and NetApp were among the top contributors on an absolute-return basis. Amgen’s most recent Q3 2023 earnings included 4% year-over-year revenue growth and a 5% increase in sales. The firm also completed its acquisition of Horizon Therapeutics during the Period. Qualcomm reported positive fiscal Q4 2023 earnings in November and emphasized that the extended global smartphone chip glut has started to clear. Revenue and EPS both beat expectations, and the company’s Q1 2024 guidance was well above Street estimates. NetApp reported fiscal Q2 2023 results (period ended October 31) in December that beat Street estimates on revenue, margins and EPS. The better-than-expected results were driven by the company’s new capacity flash storage system. After being caught off guard about a year ago when the market suddenly demanded such a product, NetApp quickly regained its footing and is now a leader in the sub-segment.
The primary detractors from performance included Polaris Industries, Amdocs Limited and Interpublic Group of Companies. Amid shifting consumer sentiment, Polaris’s most recent guidance indicated that EPS would come down by 6% in 2023, ahead of an even more severe decline in 2024, which negatively impacted the stock. Given the strength of the franchise over the last few years, we are not surprised by the nearer-term weakness and would note that the valuation, in our view, more than discounts this weakness. Amdocs continues to execute well, though its stock posted a return of -10% in the second half of the year. The company has highlighted a more restrictive investment environment among its big telecom customers in Q4, which prompted a lowering of Amdocs’ growth outlook range. We note that ~80% of Amdocs’ revenues are recurring in nature, so this does not constitute a big concern in terms of impact on financials and valuation, however the concern around slowing growth did impact the stock. In addition to this, the Israel-Hamas war also impacted the stock. Though the company’s senior management is based in Israel, operational impact should be minimal as Amdocs is a global company with operations and R&D centers in Europe, North America, India and other parts of Asia (Singapore). For Interpublic, a “tech-cession” in advertising spending combined with a delay in onboarding of recent new major account wins with Pfizer and Geico contributed to muted growth during the Period. Growth in health care, its biggest segment by far at close to 30% of ad budgets, was also slower than expected, but should reverse in the future based on the backlog of projects.
Value stocks lagged their Growth counterparts for much of 2023, which has been the case for most of the last 15 years. The combination of extreme divergence of a handful of stocks compared to the broader markets and some contradictory macroeconomic signals continue to cause volatility.
The increasing concentration in U.S. equities is concerning. Index concentration is now at its highest level in over five decades, with the top seven stocks in the S&P 500 Index representing a combined 28.2% of the entire index. The “Magnificent Seven” (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla) collectively returned 76.3% in 2023, compared to 13.8% for the rest of the S&P 500 Index.
The Magnificent Seven are trading at close to 29x forward earnings, compared to 18x forward earnings for the rest of the S&P 500 Index. Notwithstanding the fact that this spread could widen further, such disparity in valuations leaves growth stocks vulnerable should a market correction occur. Investors saw this scenario play out in late 2022 when many high-multiple stocks saw large price declines.
Brown Advisory – Beutel Goodman Large-Cap Value FundA Message to Our Shareholders
December 31, 2023
The P/E ratio gap between Value and Growth in the U.S. large-cap space sits in the 86th percentile of historical observations when looking at the past ~30 years. Given the wide disparities in equity market performance outcomes in 2023 and the uncertainty facing investors in 2024, we believe investors stand to benefit our unwavering focus on understanding the fundamental attributes of portfolio companies, while aiming to protect on the downside, through a focus on both business quality and valuation discounts.
We thank you for your support and continued investment in the Fund.
Sincerely,
| Rui Cardoso, CFA | Glenn Fortin, CFA |
| Portfolio Manager | Portfolio Manager |
Past performance is not a guarantee of future results.
Mutual fund investing involves risk. Principal loss is possible. The Fund is non-diversified, which means that it may invest a significant portion of its assets in the securities of a single issuer or small number of issuers. Investment by the Fund in securities of a limited number of issuers exposes it to greater risk and potential monetary losses than if its assets were diversified among the securities of a greater number of issuers. The Fund may invest in ETFs, which may trade at a discount to the aggregate value of the underlying securities and although expense ratios for ETFs are generally low, frequent trading of ETFs by the Fund can generate brokerage expenses. In addition, the Fund is susceptible to risks from investments in derivatives, private placements, REITs, and its investments in other investment companies.
Fund holdings and sector allocations are subject to change and should not be considered a recommendation to buy or sell any security. For a complete list of Fund holdings, please refer to the Schedule of Investments provided in this report.
Definitions for terms and indices are provided in the Glossary of Terms.
Brown Advisory – Beutel Goodman Large-Cap Value FundSchedule of Investments
December 31, 2023 (Unaudited)
| | | Shares | | | Value | |
| COMMON STOCKS — 97.8% | | | | | | |
| | | | | | | |
| Communication Services — 10.4% | | | | | | |
| Comcast Corp. — Class A | | | 1,169,005 | | | $ | 51,260,869 | |
| Interpublic Group of Cos., Inc. | | | 1,575,915 | | | | 51,437,866 | |
| Omnicom Group, Inc. | | | 884,802 | | | | 76,544,221 | |
| | | | | | | | 179,242,956 | |
| Consumer Discretionary — 14.2% | | | | | | | | |
| eBay, Inc. | | | 1,007,905 | | | | 43,964,816 | |
| Gentex Corp. | | | 1,320,190 | | | | 43,117,405 | |
| Harley-Davidson, Inc. | | | 1,648,184 | | | | 60,719,098 | |
| Polaris, Inc. | | | 473,880 | | | | 44,909,608 | |
| Tempur Sealy International, Inc. | | | 1,014,680 | | | | 51,718,240 | |
| | | | | | | | 244,429,167 | |
| Consumer Staples — 9.7% | | | | | | | | |
| Campbell Soup Co. | | | 1,134,050 | | | | 49,024,982 | |
| Kellogg Co. | | | 1,016,441 | | | | 56,829,216 | |
| Kimberly-Clark Corp. | | | 487,585 | | | | 59,246,453 | |
| WK Kellogg Co. | | | 216,735 | | | | 2,847,898 | |
| | | | | | | | 167,948,549 | |
| Financials — 17.1% | | | | | | | | |
| American Express Co. | | | 439,200 | | | | 82,279,728 | |
| Ameriprise Financial, Inc. | | | 157,510 | | | | 59,827,023 | |
| BlackRock, Inc. | | | 73,035 | | | | 59,289,813 | |
| Carlyle Group, Inc. | | | 923,770 | | | | 37,588,201 | |
| SEI Investments Co. | | | 881,800 | | | | 56,038,390 | |
| | | | | | | | 295,023,155 | |
| Health Care — 13.6% | | | | | | | | |
| Amgen, Inc. | | | 319,995 | | | | 92,164,961 | |
| Biogen, Inc.(a) | | | 213,630 | | | | 55,281,035 | |
| Cencora, Inc. | | | 139,951 | | | | 28,743,136 | |
| Merck & Co., Inc. | | | 525,915 | | | | 57,335,253 | |
| | | | | | | | 233,524,385 | |
| Industrials — 14.2% | | | | | | | | |
| Cummins, Inc. | | | 199,645 | | | | 47,828,953 | |
| Flowserve Corp. | | | 1,465,279 | | | | 60,398,800 | |
| Masco Corp. | | | 966,370 | | | | 64,727,463 | |
| Parker-Hannifin Corp. | | | 55,290 | | | | 25,472,103 | |
| Westinghouse Air Brake | | | | | | | | |
| Technologies Corp. | | | 358,300 | | | | 45,468,270 | |
| | | | | | | | 243,895,589 | |
| Information Technology — 17.8% | | | | | | | | |
| Amdocs Ltd. | | | 832,397 | | | | 73,159,372 | |
| Gen Digital, Inc. | | | 2,827,415 | | | | 64,521,610 | |
| NetApp, Inc. | | | 955,745 | | | | 84,258,479 | |
| QUALCOMM, Inc. | | | 592,800 | | | | 85,736,665 | |
| | | | | | | | 307,676,126 | |
| Materials — 0.8% | | | | | | | | |
| PPG Industries, Inc. | | | 88,640 | | | | 13,256,112 | |
| TOTAL COMMON STOCKS | | | | | | | | |
| (Cost $1,390,494,683) | | | | | | | 1,684,996,039 | |
| | | | | | | | | |
| SHORT-TERM INVESTMENTS — 2.2% | | | | | | | | |
| | | | | | | | | |
| Money Market Funds — 2.2% | | | | | | | | |
| First American Government Obligations | | | | | | | | |
| Fund — Class Z, 5.25%(b) | | | 38,275,927 | | | | 38,275,927 | |
| TOTAL SHORT-TERM INVESTMENTS | | | | | | | | |
| (Cost $38,275,927) | | | | | | | 38,275,927 | |
| TOTAL INVESTMENTS — 100.0% | | | | | | | | |
| (Cost $1,428,770,610) | | | | | | | 1,723,271,966 | |
| Other Assets in Excess of Liabilities — 0.0% | | | | | | | 795,355 | |
| TOTAL NET ASSETS — 100.0% | | | | | | $ | 1,724,067,321 | |
Percentages are stated as a percent of net assets.
| (a) | Non-income producing security. |
| (b) | The rate shown represents the 7-day effective yield as of December 31, 2023. |
PORTFOLIO HOLDINGS
% of Net Assets
| Information Technology | 17.8% |
| Financials | 17.1% |
| Consumer Discretionary | 14.2% |
| Industrials | 14.2% |
| Health Care | 13.6% |
| Communication Services | 10.4% |
| Consumer Staples | 9.7% |
| Money Market Funds | 2.2% |
| Materials | 0.8% |
| Other Assets and Liabilities | 0.0% |
| | 100.0% |
The accompanying notes are an integral part of these financial statements.
Statements of Assets and LiabilitiesDecember 31, 2023 (Unaudited)
| | | BROWN | | | BROWN | | | BROWN | | | BROWN | |
| | | ADVISORY | | | ADVISORY | | | ADVISORY | | | ADVISORY | |
| | | GROWTH | | | FLEXIBLE | | | EQUITY | | | SUSTAINABLE | |
| | | EQUITY | | | EQUITY | | | INCOME | | | GROWTH | |
| | | FUND | | | FUND | | | FUND | | | FUND | |
| ASSETS | | | | | | | | | | | | |
| Investments: | | | | | | | | | | | | |
| Total investments, at cost | | $ | 1,340,266,436 | | | $ | 349,461,626 | | | $ | 5,064,063 | | | $ | 5,582,247,837 | |
| Net unrealized appreciation (depreciation) | | | 1,030,887,281 | | | | 439,922,168 | | | | 14,970,192 | | | | 3,167,810,013 | |
| Total investments, at value | | | 2,371,153,717 | | | | 789,383,794 | | | | 20,034,255 | | | | 8,750,057,850 | |
| Receivables: | | | | | | | | | | | | | | | | |
| Due from adviser, net | | | — | | | | — | | | | 26,907 | | | | — | |
| Fund shares sold | | | 915,949 | | | | 136,723 | | | | — | | | | 10,991,186 | |
| Interest and dividends | | | 3,055,943 | | | | 346,523 | | | | 41,238 | | | | 5,257,179 | |
| Foreign tax reclaims | | | — | | | | — | | | | 27,070 | | | | — | |
| Prepaid expenses and other assets | | | 97,986 | | | | 62,681 | | | | 4,932 | | | | 208,416 | |
| Total Assets | | | 2,375,223,595 | | | | 789,929,721 | | | | 20,134,402 | | | | 8,766,514,631 | |
| LIABILITIES | | | | | | | | | | | | | | | | |
| Payables: | | | | | | | | | | | | | | | | |
| Fund shares redeemed | | | 11,641,285 | | | | 109,322 | | | | 37,335 | | | | 4,807,104 | |
| Accrued Liabilities: | | | | | | | | | | | | | | | | |
| Investment advisory fees | | | 1,143,318 | | | | 278,937 | | | | — | | | | 3,710,020 | |
| Service fees | | | 83,941 | | | | 61,335 | | | | 2,086 | | | | 349,556 | |
| Administration, accounting and transfer agent fees | | | 112,331 | | | | 38,062 | | | | 3,889 | | | | 401,044 | |
| Business management fees | | | 98,163 | | | | 32,750 | | | | 955 | | | | 362,816 | |
| Trustee fees | | | 10,941 | | | | 2,727 | | | | 566 | | | | 37,011 | |
| Distribution fees | | | 3,403 | | | | 1,231 | | | | 166 | | | | 82,796 | |
| Professional fees | | | 2,560 | | | | 8,859 | | | | 3,991 | | | | 16,204 | |
| Custodian fees | | | 13,273 | | | | 4,243 | | | | 974 | | | | 39,595 | |
| Other liabilities | | | 17,735 | | | | 5,950 | | | | 5,553 | | | | 34,936 | |
| Total Liabilities | | | 13,126,950 | | | | 543,416 | | | | 55,515 | | | | 9,841,082 | |
| NET ASSETS | | $ | 2,362,096,645 | | | $ | 789,386,305 | | | $ | 20,078,887 | | | $ | 8,756,673,549 | |
| | | | | | | | | | | | | | | | | |
| COMPONENTS OF NET ASSETS | | | | | | | | | | | | | | | | |
| Paid-in capital | | $ | 1,268,053,260 | | | $ | 333,900,164 | | | $ | (11,166,459 | ) | | $ | 5,804,987,570 | |
| Total distributable earnings (loss) | | | 1,094,043,385 | | | | 455,486,141 | | | | 31,245,346 | | | | 2,951,685,979 | |
| NET ASSETS | | $ | 2,362,096,645 | | | $ | 789,386,305 | | | $ | 20,078,887 | | | $ | 8,756,673,549 | |
| COMPUTATION OF NET ASSET VALUE | | | | | | | | | | | | | | | | |
| Institutional Shares: | | | | | | | | | | | | | | | | |
| Net assets | | $ | 1,697,392,482 | | | $ | 297,966,000 | | | $ | 5,424,669 | | | $ | 5,950,955,845 | |
| Shares outstanding (unlimited shares authorized) | | | 62,473,603 | | | | 8,558,918 | | | | 466,914 | | | | 123,720,522 | |
| Net asset value per share | | $ | 27.17 | | | $ | 34.81 | | | $ | 11.62 | | | $ | 48.10 | |
| Investor Shares: | | | | | | | | | | | | | | | | |
| Net assets | | $ | 647,559,817 | | | $ | 485,433,645 | | | $ | 13,934,776 | | | $ | 2,407,931,695 | |
| Shares outstanding (unlimited shares authorized) | | | 24,452,635 | | | | 13,979,563 | | | | 1,200,036 | | | | 51,022,446 | |
| Net asset value per share | | $ | 26.48 | | | $ | 34.72 | | | $ | 11.61 | | | $ | 47.19 | |
| Advisor Shares: | | | | | | | | | | | | | | | | |
| Net assets | | $ | 17,144,346 | | | $ | 5,986,660 | | | $ | 719,442 | | | $ | 397,786,009 | |
| Shares outstanding (unlimited shares authorized) | | | 715,831 | | | | 173,077 | | | | 62,020 | | | | 8,689,548 | |
| Net asset value per share | | $ | 23.95 | | | $ | 34.59 | | | $ | 11.60 | | | $ | 45.78 | |
The accompanying notes are an integral part of these financial statements.
Statements of Assets and LiabilitiesDecember 31, 2023 (Unaudited)
| | | BROWN | | | BROWN | | | BROWN | | | BROWN | |
| | | ADVISORY | | | ADVISORY | | | ADVISORY | | | ADVISORY | |
| | | MID-CAP | | | SMALL-CAP | | | SMALL-CAP | | | SUSTAINABLE | |
| | | GROWTH | | | GROWTH | | | FUNDAMENTAL | | | SMALL-CAP | |
| | | FUND | | | FUND | | | VALUE FUND | | | CORE FUND | |
| ASSETS | | | | | | | | | | | | |
| Investments: | | | | | | | | | | | | |
| Total investments, at cost | | $ | 71,852,239 | | | $ | 1,839,355,080 | | | $ | 947,971,058 | | | $ | 55,934,148 | |
| Net unrealized appreciation (depreciation) | | | 24,937,987 | | | | 410,768,158 | | | | 363,244,314 | | | | 9,621,138 | |
| Total investments, at value | | | 96,790,226 | | | | 2,250,123,238 | | | | 1,311,215,372 | | | | 65,555,286 | |
| Receivables: | | | | | | | | | | | | | | | | |
| Investments sold | | | — | | | | — | | | | 1,224,427 | | | | — | |
| Fund shares sold | | | 175,032 | | | | 2,351,311 | | | | 926,080 | | | | 6,338 | |
| Interest and dividends | | | 24,296 | | | | 1,844,166 | | | | 1,968,781 | | | | 46,726 | |
| Foreign tax reclaims | | | 1,540 | | | | — | | | | — | | | | — | |
| Prepaid expenses and other assets | | | 35,343 | | | | 101,306 | | | | 58,226 | | | | 39,131 | |
| Total Assets | | | 97,026,437 | | | | 2,254,420,021 | | | | 1,315,392,886 | | | | 65,647,481 | |
| LIABILITIES | | | | | | | | | | | | | | | | |
| Payables: | | | | | | | | | | | | | | | | |
| Investments purchased | | | — | | | | 2,727,252 | | | | 5,325,717 | | | | — | |
| Fund shares redeemed | | | 91,928 | | | | 29,559,489 | | | | 189,486 | | | | — | |
| Accrued Liabilities: | | | | | | | | | | | | | | | | |
| Investment advisory fees, net | | | 50,390 | | | | 1,584,659 | | | | 917,265 | | | | 37,779 | |
| Service fees | | | 3,248 | | | | 114,233 | | | | 79,280 | | | | 242 | |
| Administration, accounting and transfer agent fees | | | 4,966 | | | | 108,246 | | | | 61,168 | | | | 4,300 | |
| Business management fees | | | 4,013 | | | | 93,215 | | | | 53,957 | | | | 2,652 | |
| Trustee fees | | | 544 | | | | 9,305 | | | | 7,063 | | | | 295 | |
| Distribution fees | | | — | | | | 1,797 | | | | 693 | | | | — | |
| Professional fees | | | 10,067 | | | | 10,774 | | | | 4,996 | | | | 7,873 | |
| Custodian fees | | | 3,268 | | | | 11,480 | | | | 10,409 | | | | 270 | |
| Other liabilities | | | 4,077 | | | | 50,459 | | | | 9,150 | | | | 3,289 | |
| Total Liabilities | | | 172,501 | | | | 34,270,909 | | | | 6,659,184 | | | | 56,700 | |
| NET ASSETS | | $ | 96,853,936 | | | $ | 2,220,149,112 | | | $ | 1,308,733,702 | | | $ | 65,590,781 | |
| | | | | | | | | | | | | | | | | |
| COMPONENTS OF NET ASSETS | | | | | | | | | | | | | | | | |
| Paid-in capital | | $ | 86,280,956 | | | $ | 1,841,065,325 | | | $ | 950,147,632 | | | $ | 63,625,273 | |
| Total distributable earnings (loss) | | | 10,572,980 | | | | 379,083,787 | | | | 358,586,070 | | | | 1,965,508 | |
| NET ASSETS | | $ | 96,853,936 | | | $ | 2,220,149,112 | | | $ | 1,308,733,702 | | | $ | 65,590,781 | |
| COMPUTATION OF NET ASSET VALUE | | | | | | | | | | | | | | | | |
| Institutional Shares: | | | | | | | | | | | | | | | | |
| Net assets | | $ | 70,357,821 | | | $ | 1,299,495,839 | | | $ | 669,396,979 | | | $ | 63,487,235 | |
| Shares outstanding (unlimited shares authorized) | | | 4,801,034 | | | | 28,547,614 | | | | 22,738,539 | | | | 6,604,867 | |
| Net asset value per share | | $ | 14.65 | | | $ | 45.52 | | | $ | 29.44 | | | $ | 9.61 | |
| Investor Shares: | | | | | | | | | | | | | | | | |
| Net assets | | $ | 26,496,115 | | | $ | 912,012,015 | | | $ | 635,987,674 | | | $ | 2,103,546 | |
| Shares outstanding (unlimited shares authorized) | | | 1,825,638 | | | | 40,322,301 | | | | 21,635,723 | | | | 219,257 | |
| Net asset value per share | | $ | 14.51 | | | $ | 22.62 | | | $ | 29.40 | | | $ | 9.59 | |
| Advisor Shares: | | | | | | | | | | | | | | | | |
| Net assets | | $ | — | | | $ | 8,641,258 | | | $ | 3,349,049 | | | $ | — | |
| Shares outstanding (unlimited shares authorized) | | | — | | | | 404,291 | | | | 114,783 | | | | — | |
| Net asset value per share | | $ | — | | | $ | 21.37 | | | $ | 29.18 | | | $ | — | |
The accompanying notes are an integral part of these financial statements.
Statements of Assets and LiabilitiesDecember 31, 2023 (Unaudited)
| | | BROWN | | | BROWN | | | BROWN | | | BROWN | |
| | | ADVISORY | | | ADVISORY | | | ADVISORY | | | ADVISORY | |
| | | SUSTAINABLE | | | GLOBAL | | | SUSTAINABLE | | | INTERMEDIATE | |
| | | VALUE | | | LEADERS | | | INTERNATIONAL | | | INCOME | |
| | | FUND | | | FUND | | | LEADERS FUND | | | FUND | |
| ASSETS | | | | | | | | | | | | |
| Investments: | | | | | | | | | | | | |
| Investments – unaffiliated, at cost | | $ | 59,310,799 | | | $ | 1,172,134,341 | | | $ | 27,832,509 | | | $ | 109,302,523 | |
| Investments – affiliated, at cost (Note 3) | | | — | | | | — | | | | — | | | | 16,952,513 | |
| Total investments, at cost | | | 59,310,799 | | | | 1,172,134,341 | | | | 27,832,509 | | | | 126,255,036 | |
| Net unrealized appreciation (depreciation) – unaffiliated | | | 7,778,781 | | | | 504,863,745 | | | | 4,649,837 | | | | (5,106,789 | ) |
| Net unrealized appreciation (depreciation) – affiliated (Note 3) | | | — | | | | — | | | | — | | | | (1,796,219 | ) |
| Total net unrealized appreciation (depreciation) | | | 7,778,781 | | | | 504,863,745 | | | | 4,649,837 | | | | (6,903,008 | ) |
| Investments – unaffiliated, at value | | | 67,089,580 | | | | 1,676,998,086 | | | | 32,482,346 | | | | 104,195,734 | |
| Investments – affiliated, at value (Note 3) | | | — | | | | — | | | | — | | | | 15,156,294 | |
| Total investments, at value | | | 67,089,580 | | | | 1,676,998,086 | | | | 32,482,346 | | | | 119,352,028 | |
| Cash | | | 6,503 | | | | 135,872 | | | | — | | | | — | |
| Cash deposit at broker – futures contracts (Note 6) | | | — | | | | — | | | | — | | | | 198,564 | |
| Gross unrealized appreciation – futures contracts (Note 6) | | | — | | | | — | | | | — | | | | 388,630 | |
| Receivables: | | | | | | | | | | | | | | | | |
| Fund shares sold | | | 15,000 | | | | 2,904,555 | | | | 100 | | | | 39,210 | |
| Interest and dividends | | | 109,182 | | | | 510,849 | | | | 11,233 | | | | 716,435 | |
| Foreign tax reclaims | | | 13,839 | | | | 1,682,346 | | | | 22,576 | | | | — | |
| Prepaid expenses and other assets | | | 27,665 | | | | 51,426 | | | | 27,731 | | | | 29,176 | |
| Total Assets | | | 67,261,769 | | | | 1,682,283,134 | | | | 32,543,986 | | | | 120,724,043 | |
| LIABILITIES | | | | | | | | | | | | | | | | |
| Gross unrealized depreciation – futures contracts (Note 6) | | | — | | | | — | | | | — | | | | 370,551 | |
| Payables: | | | | | | | | | | | | | | | | |
| Investments purchased | | | 335,674 | | | | — | | | | 80,117 | | | | — | |
| Fund shares redeemed | | | — | | | | 135,238 | | | | — | | | | 3,107 | |
| Accrued Liabilities: | | | | | | | | | | | | | | | | |
| Investment advisory fees, net | | | 26,732 | | | | 898,728 | | | | 10,373 | | | | 26,296 | |
| Service fees | | | 39 | | | | 8,096 | | | | 207 | | | | 5,020 | |
| Administration, accounting and transfer agent fees | | | 2,965 | | | | 79,691 | | | | 2,027 | | | | 6,245 | |
| Business management fees | | | 2,742 | | | | 69,133 | | | | 1,324 | | | | 5,020 | |
| Trustee fees | | | 432 | | | | 7,220 | | | | 85 | | | | 193 | |
| Distribution fees | | | — | | | | — | | | | — | | | | 643 | |
| Professional fees | | | 7,662 | | | | 5,285 | | | | 8,108 | | | | 10,868 | |
| Custodian fees | | | 3,128 | | | | 32,142 | | | | 3,419 | | | | 942 | |
| Other liabilities | | | 2,206 | | | | 10,401 | | | | 5,944 | | | | 5,130 | |
| Total Liabilities | | | 381,580 | | | | 1,245,934 | | | | 111,604 | | | | 434,015 | |
| NET ASSETS | | $ | 66,880,189 | | | $ | 1,681,037,200 | | | $ | 32,432,382 | | | $ | 120,290,028 | |
| COMPONENTS OF NET ASSETS | | | | | | | | | | | | | | | | |
| Paid-in capital | | $ | 59,320,842 | | | $ | 1,222,003,252 | | | $ | 28,638,705 | | | $ | 135,917,775 | |
| Total distributable earnings (loss) | | | 7,559,347 | | | | 459,033,948 | | | | 3,793,677 | | | | (15,627,747 | ) |
| NET ASSETS | | $ | 66,880,189 | | | $ | 1,681,037,200 | | | $ | 32,432,382 | | | $ | 120,290,028 | |
| COMPUTATION OF NET ASSET VALUE | | | | | | | | | | | | | | | | |
| Institutional Shares: | | | | | | | | | | | | | | | | |
| Net assets | | $ | 66,528,013 | | | $ | 1,617,133,527 | | | $ | 30,747,058 | | | $ | — | |
| Shares outstanding (unlimited shares authorized) | | | 6,009,047 | | | | 68,464,950 | | | | 2,934,562 | | | | — | |
| Net asset value per share | | $ | 11.07 | | | $ | 23.62 | | | $ | 10.48 | | | $ | — | |
| Investor Shares: | | | | | | | | | | | | | | | | |
| Net assets | | $ | 352,176 | | | $ | 63,903,673 | | | $ | 1,685,324 | | | $ | 117,221,582 | |
| Shares outstanding (unlimited shares authorized) | | | 31,836 | | | | 2,713,276 | | | | 161,219 | | | | 12,045,250 | |
| Net asset value per share | | $ | 11.06 | | | $ | 23.55 | | | $ | 10.45 | | | $ | 9.73 | |
| Advisor Shares: | | | | | | | | | | | | | | | | |
| Net assets | | $ | — | | | $ | — | | | $ | — | | | $ | 3,068,446 | |
| Shares outstanding (unlimited shares authorized) | | | — | | | | — | | | | — | | | | 322,987 | |
| Net asset value per share | | $ | — | | | $ | — | | | $ | — | | | $ | 9.50 | |
The accompanying notes are an integral part of these financial statements.
Statements of Assets and LiabilitiesDecember 31, 2023 (Unaudited)
| | | | | | | | | | | | BROWN | |
| | | BROWN | | | BROWN | | | BROWN | | | ADVISORY | |
| | | ADVISORY | | | ADVISORY | | | ADVISORY | | | TAX-EXEMPT | |
| | | SUSTAINABLE | | | MARYLAND | | | TAX-EXEMPT | | | SUSTAINABLE | |
| | | BOND FUND | | | BOND FUND | | | BOND FUND | | | BOND FUND | |
| ASSETS | | | | | | | | | | | | |
| Investments: | | | | | | | | | | | | |
| Total investments, at cost | | $ | 688,740,008 | | | $ | 169,414,773 | | | $ | 840,675,650 | | | $ | 309,619,418 | |
| Net unrealized appreciation (depreciation) | | | (2,636,448 | ) | | | (2,493,871 | ) | | | 13,633,239 | | | | (5,234,945 | ) |
| Total investments, at value | | | 686,103,560 | | | | 166,920,902 | | | | 854,308,889 | | | | 304,384,473 | |
| Gross unrealized appreciation – futures contracts (Note 6) | | | 3,672,041 | | | | — | | | | — | | | | — | |
| Receivables: | | | | | | | | | | | | | | | | |
| Fund shares sold | | | 275,122 | | | | 82 | | | | 2,949,559 | | | | 270,076 | |
| Interest and dividends | | | 4,182,875 | | | | 1,933,693 | | | | 6,533,252 | | | | 3,136,813 | |
| Foreign tax reclaims | | | 21,638 | | | | — | | | | — | | | | — | |
| Prepaid expenses and other assets | | | 45,014 | | | | 17,061 | | | | 49,667 | | | | 50,069 | |
| Total Assets | | | 694,300,250 | | | | 168,871,738 | | | | 863,841,367 | | | | 307,841,431 | |
| LIABILITIES | | | | | | | | | | | | | | | | |
| Cash collateral from broker – futures contracts (Note 6) | | | 402,162 | | | | — | | | | — | | | | — | |
| Gross unrealized depreciation – futures contracts (Note 6) | | | 3,148,566 | | | | — | | | | — | | | | — | |
| Payables: | | | | | | | | | | | | | | | | |
| Investments purchased | | | 97,456,380 | | | | — | | | | — | | | | — | |
| Fund shares redeemed | | | 217,981 | | | | 96,122 | | | | 641,876 | | | | 199,296 | |
| Distribution to shareholders | | | — | | | | 362,112 | | | | 2,377,069 | | | | 716,063 | |
| Accrued Liabilities: | | | | | | | | | | | | | | | | |
| Investment advisory fees | | | 152,411 | | | | 42,825 | | | | 211,377 | | | | 78,437 | |
| Service fees | | | 481 | | | | 7,137 | | | | 362 | | | | 13,073 | |
| Administration, accounting and transfer agent fees | | | 37,229 | | | | 10,943 | | | | 39,198 | | | | 15,916 | |
| Business management fees | | | 25,402 | | | | 7,137 | | | | 35,230 | | | | 13,073 | |
| Trustee fees | | | 2,331 | | | | 201 | | | | 3,850 | | | | 882 | |
| Professional fees | | | 6,579 | | | | 10,637 | | | | 8,495 | | | | 7,779 | |
| Custodian fees | | | 2,267 | | | | 920 | | | | 3,738 | | | | 2,442 | |
| Other liabilities | | | 7,919 | | | | 4,377 | | | | 6,885 | | | | 4,504 | |
| Total Liabilities | | | 101,459,708 | | | | 542,411 | | | | 3,328,080 | | | | 1,051,465 | |
| NET ASSETS | | $ | 592,840,542 | | | $ | 168,329,327 | | | $ | 860,513,287 | | | $ | 306,789,966 | |
| | | | | | | | | | | | | | | | | |
| COMPONENTS OF NET ASSETS | | | | | | | | | | | | | | | | |
| Paid-in capital | | $ | 713,393,591 | | | $ | 179,839,877 | | | $ | 939,887,002 | | | $ | 328,680,552 | |
| Total distributable earnings (loss) | | | (120,553,049 | ) | | | (11,510,550 | ) | | | (79,373,715 | ) | | | (21,890,586 | ) |
| NET ASSETS | | $ | 592,840,542 | | | $ | 168,329,327 | | | $ | 860,513,287 | | | $ | 306,789,966 | |
| COMPUTATION OF NET ASSET VALUE | | | | | | | | | | | | | | | | |
| Institutional Shares: | | | | | | | | | | | | | | | | |
| Net assets | | $ | 581,297,724 | | | $ | — | | | $ | 851,856,521 | | | $ | — | |
| Shares outstanding (unlimited shares authorized) | | | 67,238,625 | | | | — | | | | 90,218,731 | | | | — | |
| Net asset value per share | | $ | 8.65 | | | $ | — | | | $ | 9.44 | | | $ | — | |
| Investor Shares: | | | | | | | | | | | | | | | | |
| Net assets | | $ | 11,542,818 | | | $ | 168,329,327 | | | $ | 8,656,766 | | | $ | 306,789,966 | |
| Shares outstanding (unlimited shares authorized) | | | 1,334,544 | | | | 16,873,828 | | | | 916,347 | | | | 33,507,899 | |
| Net asset value per share | | $ | 8.65 | | | $ | 9.98 | | | $ | 9.45 | | | $ | 9.16 | |
| Advisor Shares: | | | | | | | | | | | | | | | | |
| Net assets | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Shares outstanding (unlimited shares authorized) | | | — | | | | — | | | | — | | | | — | |
| Net asset value per share | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
The accompanying notes are an integral part of these financial statements.
Statements of Assets and LiabilitiesDecember 31, 2023 (Unaudited)
| | | | | | BROWN | | | | | | | |
| | | | | | ADVISORY – | | | | | | BROWN | |
| | | BROWN | | | WMC | | | BROWN | | | ADVISORY – | |
| | | ADVISORY | | | STRATEGIC | | | ADVISORY | | | BEUTEL | |
| | | MORTGAGE | | | EUROPEAN | | | EMERGING | | | GOODMAN | |
| | | SECURITIES | | | EQUITY | | | MARKETS | | | LARGE-CAP | |
| | | FUND | | | FUND | | | SELECT FUND | | | VALUE FUND | |
| ASSETS | | | | | | | | | | | | |
| Investments: | | | | | | | | | | | | |
| Total investments, at cost | | $ | 383,576,810 | | | $ | 227,009,671 | | | $ | 507,223,816 | | | $ | 1,428,770,610 | |
| Net unrealized appreciation (depreciation) | | | (10,475,138 | ) | | | 55,200,178 | | | | 64,759,886 | | | | 294,501,356 | |
| Total investments, at value | | | 373,101,672 | | | | 282,209,849 | | | | 571,983,702 | | | | 1,723,271,966 | |
| Cash | | | — | | | | — | | | | 147,439 | | | | — | |
| Foreign currency (Cost of $—, $17, $752,353, and $—, respectively.) | | | — | | | | 17 | | | | 752,248 | | | | — | |
| Gross unrealized appreciation – futures contracts (Note 6) | | | 819,939 | | | | — | | | | — | | | | — | |
| Receivables: | | | | | | | | | | | | | | | | |
| Investments sold | | | 10,687 | | | | 271,448 | | | | 3,218,372 | | | | — | |
| Fund shares sold | | | 1,893,310 | | | | 27,244 | | | | 76,027 | | | | 1,027,538 | |
| Interest and dividends | | | 911,889 | | | | 463,253 | | | | 1,916,913 | | | | 2,840,532 | |
| Foreign tax reclaims | | | — | | | | 1,738,797 | | | | 3,031 | | | | — | |
| Prepaid expenses and other assets | | | 40,938 | | | | 51,517 | | | | 58,556 | | | | 61,393 | |
| Total Assets | | | 376,778,435 | | | | 284,762,125 | | | | 578,156,288 | | | | 1,727,201,429 | |
| LIABILITIES | | | | | | | | | | | | | | | | |
| Cash collateral from broker - futures contracts (Note 6) | | | 11,474 | | | | — | | | | — | | | | — | |
| Gross unrealized depreciation – futures contracts (Note 6) | | | 328,491 | | | | — | | | | — | | | | — | |
| Payables: | | | | | | | | | | | | | | | | |
| Investments purchased | | | 73,231,794 | | | | 590,495 | | | | 2,573 | | | | — | |
| Fund shares redeemed | | | 84,865 | | | | 306,526 | | | | 144,299 | | | | 2,305,208 | |
| Accrued Liabilities: | | | | | | | | | | | | | | | | |
| Investment advisory fees | | | 76,380 | | | | 211,255 | | | | 428,275 | | | | 642,070 | |
| Service fees | | | 42 | | | | 1,808 | | | | 358 | | | | 693 | |
| Administration, accounting and transfer agent fees | | | 25,668 | | | | 14,599 | | | | 28,375 | | | | 84,378 | |
| Business management fees | | | 12,730 | | | | 11,736 | | | | 23,793 | | | | 71,341 | |
| Trustee fees | | | 94 | | | | 224 | | | | 1,399 | | | | 11,053 | |
| Distribution fees | | | — | | | | 559 | | | | 43 | | | | — | |
| Professional fees | | | 10,018 | | | | 11,046 | | | | 9,001 | | | | 4,284 | |
| Custodian fees | | | 4,913 | | | | 14,510 | | | | 79,617 | | | | 7,758 | |
| Other liabilities | | | 5,378 | | | | 5,407 | | | | 3,934 | | | | 7,323 | |
| Total Liabilities | | | 73,791,847 | | | | 1,168,165 | | | | 721,667 | | | | 3,134,108 | |
| NET ASSETS | | $ | 302,986,588 | | | $ | 283,593,960 | | | $ | 577,434,621 | | | $ | 1,724,067,321 | |
| | | | | | | | | | | | | | | | | |
| COMPONENTS OF NET ASSETS | | | | | | | | | | | | | | | | |
| Paid-in capital | | $ | 342,191,973 | | | $ | 248,682,243 | | | $ | 599,448,636 | | | $ | 1,470,341,385 | |
| Total distributable earnings (loss) | | | (39,205,385 | ) | | | 34,911,717 | | | | (22,014,015 | ) | | | 253,725,936 | |
| NET ASSETS | | $ | 302,986,588 | | | $ | 283,593,960 | | | $ | 577,434,621 | | | $ | 1,724,067,321 | |
| COMPUTATION OF NET ASSET VALUE | | | | | | | | | | | | | | | | |
| Institutional Shares: | | | | | | | | | | | | | | | | |
| Net assets | | $ | 301,983,650 | | | $ | 269,106,153 | | | $ | 574,533,883 | | | $ | 1,712,923,642 | |
| Shares outstanding (unlimited shares authorized) | | | 32,958,313 | | | | 21,681,489 | | | | 53,250,148 | | | | 120,614,677 | |
| Net asset value per share | | $ | 9.16 | | | $ | 12.41 | | | $ | 10.79 | | | $ | 14.20 | |
| Investor Shares: | | | | | | | | | | | | | | | | |
| Net assets | | $ | 1,002,938 | | | $ | 11,775,595 | | | $ | 2,685,112 | | | $ | 11,143,679 | |
| Shares outstanding (unlimited shares authorized) | | | 109,245 | | | | 951,357 | | | | 248,943 | | | | 786,825 | |
| Net asset value per share | | $ | 9.18 | | | $ | 12.38 | | | $ | 10.79 | | | $ | 14.16 | |
| Advisor Shares: | | | | | | | | | | | | | | | | |
| Net assets | | $ | — | | | $ | 2,712,212 | | | $ | 215,626 | | | $ | — | |
| Shares outstanding (unlimited shares authorized) | | | — | | | | 222,335 | | | | 19,913 | | | | — | |
| Net asset value per share | | $ | — | | | $ | 12.20 | | | $ | 10.83 | | | $ | — | |
The accompanying notes are an integral part of these financial statements.
Statements of OperationsFor the Six Months Ended December 31, 2023 (Unaudited)
| | | BROWN | | | BROWN | | | BROWN | | | BROWN | |
| | | ADVISORY | | | ADVISORY | | | ADVISORY | | | ADVISORY | |
| | | GROWTH | | | FLEXIBLE | | | EQUITY | | | SUSTAINABLE | |
| | | EQUITY | | | EQUITY | | | INCOME | | | GROWTH | |
| | | FUND | | | FUND | | | FUND | | | FUND | |
| INVESTMENT INCOME | | | | | | | | | | | | |
| Dividend income | | $ | 6,765,104 | | | $ | 3,025,987 | | | $ | 697,906 | | | $ | 23,141,990 | |
| Less: foreign taxes withheld | | | (76,200 | ) | | | (98,804 | ) | | | (161 | ) | | | — | |
| Interest Income | | | 1,744,149 | | | | 404,429 | | | | 62,308 | | | | 3,449,764 | |
| Total investment income | | | 8,433,053 | | | | 3,331,612 | | | | 760,053 | | | | 26,591,754 | |
| EXPENSES | | | | | | | | | | | | | | | | |
| Investment advisory fees | | | 6,797,887 | | | | 1,557,197 | | | | 175,237 | | | | 20,668,436 | |
| Service fees – Investor Shares (Note 3) | | | 482,611 | | | | 339,340 | | | | 32,494 | | | | 1,658,343 | |
| Service fees – Advisor Shares (Note 3) | | | 11,382 | | | | 4,079 | | | | 691 | | | | 278,476 | |
| Business management fees | | | 583,713 | | | | 182,081 | | | | 14,603 | | | | 2,003,232 | |
| Administration, accounting and transfer agent fees | | | 295,714 | | | | 93,194 | | | | 9,687 | | | | 1,014,823 | |
| Miscellaneous expenses | | | 46,504 | | | | 17,137 | | | | 13,639 | | | | 179,237 | |
| Professional fees | | | 54,053 | | | | 24,651 | | | | 5,558 | | | | 160,195 | |
| Trustee fees | | | 51,487 | | | | 14,426 | | | | 1,780 | | | | 162,238 | |
| Distribution fees – Advisor Shares (Note 3) | | | 18,970 | | | | 6,798 | | | | 1,152 | | | | 464,127 | |
| Custodian fees | | | 39,083 | | | | 11,153 | | | | 1,636 | | | | 120,194 | |
| Registration fees | | | 47,283 | | | | 22,845 | | | | 66,827 | | | | 106,158 | |
| Insurance fees | | | 15,594 | | | | 4,399 | | | | 908 | | | | 46,760 | |
| Total Expenses | | | 8,444,281 | | | | 2,277,300 | | | | 324,212 | | | | 26,862,219 | |
| Expenses waived by adviser – expense cap (Note 3) | | | — | | | | — | | | | (67,907 | ) | | | — | |
| Net Expenses | | | 8,444,281 | | | | 2,277,300 | | | | 256,305 | | | | 26,862,219 | |
| NET INVESTMENT INCOME (LOSS) | | | (11,228 | ) | | | 1,054,312 | | | | 503,748 | | | | (270,465 | ) |
| NET REALIZED AND UNREALIZED GAIN (LOSS) | | | | | | | | | | | | | | | | |
| Net realized gain (loss) on investments | | | 149,411,804 | | | | 22,760,338 | | | | 16,349,323 | | | | (145,175,781 | ) |
| Net change in unrealized appreciation (depreciation) on investments | | | 33,803,506 | | | | 60,661,105 | | | | (17,590,790 | ) | | | 1,049,124,904 | |
| NET REALIZED AND UNREALIZED GAIN (LOSS) | | | 183,215,310 | | | | 83,421,443 | | | | (1,241,467 | ) | | | 903,949,123 | |
| INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | | $ | 183,204,082 | | | $ | 84,475,755 | | | $ | (737,719 | ) | | $ | 903,678,658 | |
The accompanying notes are an integral part of these financial statements.
Statements of OperationsFor the Six Months Ended December 31, 2023 (Unaudited)
| | | BROWN | | | BROWN | | | BROWN | | | BROWN | |
| | | ADVISORY | | | ADVISORY | | | ADVISORY | | | ADVISORY | |
| | | MID-CAP | | | SMALL-CAP | | | SMALL-CAP | | | SUSTAINABLE | |
| | | GROWTH | | | GROWTH | | | FUNDAMENTAL | | | SMALL-CAP | |
| | | FUND | | | FUND | | | VALUE FUND | | | CORE FUND | |
| INVESTMENT INCOME | | | | | | | | | | | | |
| Dividend income | | $ | 214,333 | | | $ | 6,676,031 | | | $ | 9,731,752 | | | $ | 239,373 | |
| Less: foreign taxes withheld | | | (4,491 | ) | | | (81,584 | ) | | | (19,614 | ) | | | (399 | ) |
| Interest Income | | | 111,138 | | | | 4,825,091 | | | | 1,332,269 | | | | 96,357 | |
| Total investment income | | | 320,980 | | | | 11,419,538 | | | | 11,044,407 | | | | 335,331 | |
| EXPENSES | | | | | | | | | | | | | | | | |
| Investment advisory fees | | | 298,825 | | | | 9,140,682 | | | | 5,208,781 | | | | 241,145 | |
| Service fees – Investor Shares (Note 3) | | | 18,078 | | | | 643,268 | | | | 452,089 | | | | 1,212 | |
| Service fees – Advisor Shares (Note 3) | | | — | | | | 6,471 | | | | 2,070 | | | | — | |
| Business management fees | | | 22,986 | | | | 537,687 | | | | 306,399 | | | | 14,185 | |
| Administration, accounting and transfer agent fees | | | 12,964 | | | | 274,256 | | | | 150,309 | | | | 9,680 | |
| Miscellaneous expenses | | | 10,772 | | | | 141,126 | | | | 24,191 | | | | 10,780 | |
| Professional fees | | | 13,147 | | | | 48,732 | | | | 32,213 | | | | 9,100 | |
| Trustee fees | | | 2,126 | | | | 46,103 | | | | 27,676 | | | | 1,176 | |
| Distribution fees – Advisor Shares (Note 3) | | | — | | | | 10,786 | | | | 3,450 | | | | — | |
| Custodian fees | | | 7,819 | | | | 33,181 | | | | 24,884 | | | | 2,911 | |
| Registration fees | | | 17,406 | | | | 46,432 | | | | 26,755 | | | | 16,801 | |
| Insurance fees | | | 598 | | | | 14,087 | | | | 7,377 | | | | 310 | |
| Total Expenses | | | 404,721 | | | | 10,942,811 | | | | 6,266,194 | | | | 307,300 | |
| Expenses waived by adviser – expense cap (Note 3) | | | (9,664 | ) | | | — | | | | — | | | | (42,246 | ) |
| Net Expenses | | | 395,057 | | | | 10,942,811 | | | | 6,266,194 | | | | 265,054 | |
| NET INVESTMENT INCOME (LOSS) | | | (74,077 | ) | | | 476,727 | | | | 4,778,213 | | | | 70,277 | |
| NET REALIZED AND UNREALIZED GAIN (LOSS) | | | | | | | | | | | | | | | | |
| Net realized gain (loss) on investments | | | 2,703,397 | | | | (14,170,848 | ) | | | 32,509,133 | | | | (294,584 | ) |
| Net change in unrealized appreciation (depreciation) on investments | | | 4,974,151 | | | | 62,840,459 | | | | 112,336,264 | | | | 5,714,528 | |
| NET REALIZED AND UNREALIZED GAIN (LOSS) | | | 7,677,548 | | | | 48,669,611 | | | | 144,845,397 | | | | 5,419,944 | |
| INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | | $ | 7,603,471 | | | $ | 49,146,338 | | | $ | 149,623,610 | | | $ | 5,490,221 | |
The accompanying notes are an integral part of these financial statements.
Statements of OperationsFor the Six Months Ended December 31, 2023 (Unaudited)
| | | BROWN | | | BROWN | | | BROWN | | | BROWN | |
| | | ADVISORY | | | ADVISORY | | | ADVISORY | | | ADVISORY | |
| | | SUSTAINABLE | | | GLOBAL | | | SUSTAINABLE | | | INTERMEDIATE | |
| | | VALUE | | | LEADERS | | | INTERNATIONAL | | | INCOME | |
| | | FUND | | | FUND | | | LEADERS FUND | | | FUND | |
| INVESTMENT INCOME | | | | | | | | | | | | |
| Dividend income – unaffiliated | | $ | 585,151 | | | $ | 6,766,942 | | | $ | 122,987 | | | $ | — | |
| Dividend income – affiliated (Note 3) | | | — | | | | — | | | | — | | | | 304,284 | |
| Less: foreign taxes withheld | | | (3,316 | ) | | | (345,590 | ) | | | (15,765 | ) | | | — | |
| Interest Income | | | 70,202 | | | | 407,001 | | | | 18,225 | | | | 1,938,319 | |
| Total investment income | | | 652,037 | | | | 6,828,353 | | | | 125,447 | | | | 2,242,603 | |
| EXPENSES | | | | | | | | | | | | | | | | |
| Investment advisory fees | | | 171,282 | | | | 4,910,092 | | | | 102,413 | | | | 182,732 | |
| Service fees – Investor Shares (Note 3) | | | 196 | | | | 54,989 | | | | 1,090 | | | | 29,697 | |
| Service fees – Advisor Shares (Note 3) | | | — | | | | — | | | | — | | | | 758 | |
| Business management fees | | | 14,273 | | | | 377,699 | | | | 6,828 | | | | 30,455 | |
| Administration, accounting and transfer agent fees | | | 8,050 | | | | 195,894 | | | | 4,771 | | | | 21,777 | |
| Miscellaneous expenses | | | 11,612 | | | | 30,565 | | | | 11,202 | | | | 14,765 | |
| Professional fees | | | 9,396 | | | | 37,459 | | | | 8,689 | | | | 13,750 | |
| Trustee fees | | | 1,228 | | | | 31,347 | | | | 471 | | | | 2,104 | |
| Distribution fees – Advisor Shares (Note 3) | | | — | | | | — | | | | — | | | | 3,791 | |
| Custodian fees | | | 4,436 | | | | 102,273 | | | | 16,244 | | | | 3,667 | |
| Registration fees | | | 18,658 | | | | 23,844 | | | | 18,642 | | | | 22,451 | |
| Insurance fees | | | 266 | | | | 9,154 | | | | 135 | | | | 859 | |
| Total Expenses | | | 239,397 | | | | 5,773,316 | | | | 170,485 | | | | 326,806 | |
| Expenses waived by adviser – expense cap (Note 3) | | | (39,372 | ) | | | — | | | | (53,328 | ) | | | (283 | ) |
| Expenses waived by adviser – investments in affiliates (Note 3) | | | — | | | | — | | | | — | | | | (22,153 | ) |
| Net Expenses | | | 200,025 | | | | 5,773,316 | | | | 117,157 | | | | 304,370 | |
| NET INVESTMENT INCOME (LOSS) | | | 452,012 | | | | 1,055,037 | | | | 8,290 | | | | 1,938,233 | |
| NET REALIZED AND UNREALIZED GAIN (LOSS) | | | | | | | | | | | | | | | | |
| Net realized gain (loss) on: | | | | | | | | | | | | | | | | |
| Investments – unaffiliated | | | (120,254 | ) | | | 17,740,414 | | | | (634,729 | ) | | | (1,917,003 | ) |
| Investments – affiliated (Note 3) | | | — | | | | — | | | | — | | | | — | |
| Less: foreign capital gains taxes paid | | | — | | | | — | | | | — | | | | — | |
| Futures contracts (Note 6) | | | — | | | | — | | | | — | | | | (132,136 | ) |
| Net realized gain (loss) | | | (120,254 | ) | | | 17,740,414 | | | | (634,729 | ) | | | (2,049,139 | ) |
| Net change in unrealized appreciation (depreciation) on: | | | | | | | | | | | | | | | | |
| Investments – unaffiliated | | | 6,313,518 | | | | 100,340,752 | | | | 1,282,113 | | | | 3,058,410 | |
| Investments – affiliated (Note 3) | | | — | | | | — | | | | — | | | | 99,277 | |
| Futures contracts (Note 6) | | | — | | | | — | | | | — | | | | 243,903 | |
| Net change in unrealized appreciation (depreciation) | | | 6,313,518 | | | | 100,340,752 | | | | 1,282,113 | | | | 3,401,590 | |
| NET REALIZED AND UNREALIZED GAIN (LOSS) | | | 6,193,264 | | | | 118,081,166 | | | | 647,384 | | | | 1,352,451 | |
| INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | | $ | 6,645,276 | | | $ | 119,136,203 | | | $ | 655,674 | | | $ | 3,290,684 | |
The accompanying notes are an integral part of these financial statements.
Statements of OperationsFor the Six Months Ended December 31, 2023 (Unaudited)
| | | | | | | | | | | | BROWN | |
| | | BROWN | | | BROWN | | | BROWN | | | ADVISORY | |
| | | ADVISORY | | | ADVISORY | | | ADVISORY | | | TAX-EXEMPT | |
| | | SUSTAINABLE | | | MARYLAND | | | TAX-EXEMPT | | | SUSTAINABLE | |
| | | BOND FUND | | | BOND FUND | | | BOND FUND | | | BOND FUND | |
| INVESTMENT INCOME | | | | | | | | | | | | |
| Interest Income | | $ | 14,274,042 | | | $ | 2,748,633 | | | $ | 17,840,928 | | | $ | 5,935,903 | |
| Total investment income | | | 14,274,042 | | | | 2,748,633 | | | | 17,840,928 | | | | 5,935,903 | |
| EXPENSES | | | | | | | | | | | | | | | | |
| Investment advisory fees | | | 964,847 | | | | 248,011 | | | | 1,212,722 | | | | 437,835 | |
| Service fees – Investor Shares (Note 3) | | | 2,953 | | | | 41,335 | | | | 2,100 | | | | 72,972 | |
| Service fees – Advisor Shares (Note 3) | | | — | | | | — | | | | — | | | | — | |
| Business management fees | | | 160,808 | | | | 41,335 | | | | 202,120 | | | | 72,972 | |
| Administration, accounting and transfer agent fees | | | 98,056 | | | | 28,943 | | | | 113,196 | | | | 45,757 | |
| Miscellaneous expenses | | | 22,245 | | | | 12,744 | | | | 19,151 | | | | 13,795 | |
| Professional fees | | | 21,771 | | | | 14,528 | | | | 26,523 | | | | 14,396 | |
| Trustee fees | | | 14,911 | | | | 2,650 | | | | 17,196 | | | | 5,653 | |
| Distribution fees – Advisor Shares (Note 3) | | | — | | | | — | | | | — | | | | — | |
| Custodian fees | | | 11,808 | | | | 2,480 | | | | 12,127 | | | | 5,298 | |
| Registration fees | | | 24,395 | | | | 7,936 | | | | 31,875 | | | | 23,244 | |
| Insurance fees | | | 5,014 | | | | 1,083 | | | | 5,187 | | | | 1,957 | |
| Total expenses | | | 1,326,808 | | | | 401,045 | | | | 1,642,197 | | | | 693,879 | |
| NET INVESTMENT INCOME (LOSS) | | | 12,947,234 | | | | 2,347,588 | | | | 16,198,731 | | | | 5,242,024 | |
| NET REALIZED AND UNREALIZED GAIN (LOSS) | | | | | | | | | | | | | | | | |
| Net realized gain (loss) on: | | | | | | | | | | | | | | | | |
| Investments | | | (13,581,473 | ) | | | (219,660 | ) | | | (8,173,392 | ) | | | (2,064,186 | ) |
| Futures contracts (Note 6) | | | (10,476,272 | ) | | | — | | | | — | | | | — | |
| Net realized gain (loss) | | | (24,057,745 | ) | | | (219,660 | ) | | | (8,173,392 | ) | | | (2,064,186 | ) |
| Net change in unrealized appreciation (depreciation) on: | | | | | | | | | | | | | | | | |
| Investments | | | 20,743,540 | | | | 3,484,304 | | | | 22,174,248 | | | | 5,767,504 | |
| Futures contracts (Note 6) | | | 2,596,024 | | | | — | | | | — | | | | — | |
| Net change in unrealized appreciation (depreciation) | | | 23,339,564 | | | | 3,484,304 | | | | 22,174,248 | | | | 5,767,504 | |
| NET REALIZED AND UNREALIZED GAIN (LOSS) | | | (718,181 | ) | | | 3,264,644 | | | | 14,000,856 | | | | 3,703,318 | |
| INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | | $ | 12,229,053 | | | $ | 5,612,232 | | | $ | 30,199,587 | | | $ | 8,945,342 | |
The accompanying notes are an integral part of these financial statements.
Statements of OperationsFor the Six Months Ended December 31, 2023 (Unaudited)
| | | | | | BROWN | | | | | | | |
| | | | | | ADVISORY – | | | | | | BROWN | |
| | | BROWN | | | WMC | | | BROWN | | | ADVISORY – | |
| | | ADVISORY | | | STRATEGIC | | | ADVISORY | | | BEUTEL | |
| | | MORTGAGE | | | EUROPEAN | | | EMERGING | | | GOODMAN | |
| | | SECURITIES | | | EQUITY | | | MARKETS | | | LARGE-CAP | |
| | | FUND | | | FUND | | | SELECT FUND | | | VALUE FUND | |
| INVESTMENT INCOME | | | | | | | | | | | | |
| Dividend income | | $ | — | | | $ | 2,163,240 | | | $ | 7,359,187 | | | $ | 19,017,481 | |
| Less: foreign taxes withheld | | | — | | | | (129,533 | ) | | | (894,007 | ) | | | — | |
| Interest Income | | | 6,537,443 | | | | 211,762 | | | | 369,046 | | | | 1,187,641 | |
| Total investment income | | | 6,537,443 | | | | 2,245,469 | | | | 6,834,226 | | | | 20,205,122 | |
| EXPENSES | | | | | | | | | | | | | | | | |
| Investment advisory fees | | | 445,536 | | | | 1,167,000 | | | | 2,526,994 | | | | 3,685,541 | |
| Service fees – Investor Shares (Note 3) | | | 291 | | | | 8,806 | | | | 1,914 | | | | 2,263 | |
| Service fees – Advisor Shares (Note 3) | | | — | | | | 1,955 | | | | 165 | | | | — | |
| Business management fees | | | 74,256 | | | | 64,833 | | | | 140,389 | | | | 409,505 | |
| Administration, accounting and transfer agent fees | | | 72,080 | | | | 38,846 | | | | 77,029 | | | | 209,461 | |
| Miscellaneous expenses | | | 15,988 | | | | 17,123 | | | | 39,216 | | | | 26,276 | |
| Professional fees | | | 16,834 | | | | 16,755 | | | | 21,470 | | | | 40,886 | |
| Trustee fees | | | 5,121 | | | | 4,307 | | | | 10,496 | | | | 38,373 | |
| Distribution fees – Advisor Shares (Note 3) | | | — | | | | 3,258 | | | | 275 | | | | — | |
| Custodian fees | | | 13,655 | | | | 41,960 | | | | 239,848 | | | | 24,570 | |
| Registration fees | | | 18,452 | | | | 21,884 | | | | 23,706 | | | | 27,913 | |
| Insurance fees | | | 2,062 | | | | 1,629 | | | | 3,427 | | | | 10,495 | |
| Total Expenses | | | 664,275 | | | | 1,388,356 | | | | 3,084,929 | | | | 4,475,283 | |
| NET INVESTMENT INCOME (LOSS) | | | 5,873,168 | | | | 857,113 | | | | 3,749,297 | | | | 15,729,839 | |
| NET REALIZED AND UNREALIZED GAIN (LOSS) | | | | | | | | | | | | | | | | |
| Net realized gain (loss) on: | | | | | | | | | | | | | | | | |
| Investments | | | (6,802,392 | ) | | | 3,079,081 | | | | 1,222,046 | | | | (10,336,804 | ) |
| Less: foreign capital gains taxes paid | | | — | | | | — | | | | (312,777 | ) | | | — | |
| Futures contracts (Note 6) | | | (1,132,698 | ) | | | — | | | | — | | | | — | |
| Net realized gain (loss) | | | (7,935,090 | ) | | | 3,079,081 | | | | 909,269 | | | | (10,336,804 | ) |
| Net change in unrealized appreciation (depreciation) on: | | | | | | | | | | | | | | | | |
| Investments | | | 9,181,119 | | | | 13,191,931 | | | | 12,439,030 | | | | 84,691,785 | |
| Futures contracts (Note 6) | | | 965,923 | | | | — | | | | — | | | | — | |
| Net change in unrealized appreciation (depreciation) | | | 10,147,042 | | | | 13,191,931 | | | | 12,439,030 | | | | 84,691,785 | |
| NET REALIZED AND UNREALIZED GAIN (LOSS) | | | 2,211,952 | | | | 16,271,012 | | | | 13,348,299 | | | | 74,354,981 | |
| INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | | $ | 8,085,120 | | | $ | 17,128,125 | | | $ | 17,097,596 | | | $ | 90,084,820 | |
The accompanying notes are an integral part of these financial statements.
Statements of Changes in Net Assets
| | | BROWN ADVISORY | | | BROWN ADVISORY | |
| | | GROWTH EQUITY FUND | | | FLEXIBLE EQUITY FUND | |
| | | Six Months | | | | | | Six Months | | | | |
| | | Ended | | | Fiscal | | | Ended | | | Fiscal | |
| | | December 31, | | | Year Ended | | | December 31, | | | Year Ended | |
| | | 2023 | | | June 30, | | | 2023 | | | June 30, | |
| | | (Unaudited) | | | 2023 | | | (Unaudited) | | | 2023 | |
| OPERATIONS | | | | | | | | | | | | |
| Net investment income (loss) | | $ | (11,228 | ) | | $ | (4,279,886 | ) | | $ | 1,054,312 | | | $ | 2,198,868 | |
| Net realized gain (loss) | | | 149,411,804 | | | | 94,224,857 | | | | 22,760,338 | | | | 17,278,494 | |
| Net change in unrealized appreciation (depreciation) | | | 33,803,506 | | | | 345,339,165 | | | | 60,661,105 | | | | 105,107,069 | |
| Increase (Decrease) in Net Assets from Operations | | | 183,204,082 | | | | 435,284,136 | | | | 84,475,755 | | | | 124,584,431 | |
| DISTRIBUTIONS FROM EARNINGS | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (106,614,685 | ) | | | (107,639,242 | ) | | | (8,129,121 | ) | | | (7,731,108 | ) |
| Investor Shares | | | (42,711,889 | ) | | | (45,764,956 | ) | | | (12,731,778 | ) | | | (14,223,370 | ) |
| Advisor Shares | | | (1,128,327 | ) | | | (871,243 | ) | | | (147,368 | ) | | | (147,568 | ) |
| Total Distributions from earnings | | | (150,454,901 | ) | | | (154,275,441 | ) | | | (21,008,267 | ) | | | (22,102,046 | ) |
| CAPITAL SHARE TRANSACTIONS | | | | | | | | | | | | | | | | |
| Sale of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 114,287,138 | | | | 352,800,458 | | | | 22,986,792 | | | | 64,414,428 | |
| Investor Shares | | | 8,808,876 | | | | 36,590,247 | | | | 19,780,890 | | | | 30,651,069 | |
| Advisor Shares | | | 9,056,682 | | | | 10,151,247 | | | | 478,026 | | | | 309,244 | |
| Reinvestment of distributions: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 99,969,257 | | | | 100,551,486 | | | | 5,190,025 | | | | 4,788,472 | |
| Investor Shares | | | 36,922,572 | | | | 40,450,324 | | | | 7,923,735 | | | | 9,054,154 | |
| Advisor Shares | | | 885,281 | | | | 620,663 | | | | 127,563 | | | | 123,434 | |
| Redemption of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (380,120,702 | ) | | | (434,576,260 | ) | | | (13,737,002 | ) | | | (41,913,971 | ) |
| Investor Shares | | | (92,917,726 | ) | | | (167,203,846 | ) | | | (23,687,055 | ) | | | (63,537,532 | ) |
| Advisor Shares | | | (6,280,063 | ) | | | (11,934,066 | ) | | | (338,172 | ) | | | (418,189 | ) |
| Redemption fees: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 3,329 | | | | 6,352 | | | | 861 | | | | 777 | |
| Investor Shares | | | 1,286 | | | | 2,703 | | | | 1,463 | | | | 1,465 | |
| Advisor Shares | | | 28 | | | | 47 | | | | 17 | | | | 16 | |
| Increase (Decrease) from Capital Share Transactions | | | (209,384,042 | ) | | | (72,540,645 | ) | | | 18,727,143 | | | | 3,473,367 | |
| Increase (Decrease) in Net Assets | | | (176,634,861 | ) | | | 208,468,050 | | | | 82,194,631 | | | | 105,955,752 | |
| NET ASSETS | | | | | | | | | | | | | | | | |
| Beginning of period | | | 2,538,731,506 | | | | 2,330,263,456 | | | | 707,191,674 | | | | 601,235,922 | |
| End of period | | $ | 2,362,096,645 | | | $ | 2,538,731,506 | | | $ | 789,386,305 | | | $ | 707,191,674 | |
| SHARE TRANSACTIONS | | | | | | | | | | | | | | | | |
| Sale of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 4,236,231 | | | | 14,949,462 | | | | 684,117 | | | | 2,252,589 | |
| Investor Shares | | | 332,648 | | | | 1,590,304 | | | | 598,288 | | | | 1,088,185 | |
| Advisor Shares | | | 374,585 | | | | 457,461 | | | | 14,337 | | | | 10,885 | |
| Reinvestment of distributions: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 3,786,715 | | | | 4,371,804 | | | | 151,142 | | | | 173,202 | |
| Investor Shares | | | 1,434,443 | | | | 1,798,592 | | | | 231,877 | | | | 327,852 | |
| Advisor Shares | | | 38,028 | | | | 30,232 | | | | 3,751 | | | | 4,487 | |
| Redemption of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (14,281,721 | ) | | | (18,251,670 | ) | | | (415,550 | ) | | | (1,487,103 | ) |
| Investor Shares | | | (3,614,136 | ) | | | (7,257,688 | ) | | | (733,210 | ) | | | (2,239,954 | ) |
| Advisor Shares | | | (279,161 | ) | | | (554,229 | ) | | | (10,396 | ) | | | (14,896 | ) |
| Increase (Decrease) in shares outstanding | | | (7,972,368 | ) | | | (2,865,732 | ) | | | 524,356 | | | | 115,247 | |
The accompanying notes are an integral part of these financial statements.
Statements of Changes in Net Assets
| | | BROWN ADVISORY | | | BROWN ADVISORY | |
| | | EQUITY INCOME FUND | | | SUSTAINABLE GROWTH FUND | |
| | | Six Months | | | | | | Six Months | | | | |
| | | Ended | | | Fiscal | | | Ended | | | Fiscal | |
| | | December 31, | | | Year Ended | | | December 31, | | | Year Ended | |
| | | 2023 | | | June 30, | | | 2023 | | | June 30, | |
| | | (Unaudited) | | | 2023 | | | (Unaudited) | | | 2023 | |
| OPERATIONS | | | | | | | | | | | | |
| Net investment income (loss) | | $ | 503,748 | | | $ | 1,219,984 | | | $ | (270,465 | ) | | $ | 1,146,864 | |
| Net realized gain (loss) | | | 16,349,323 | | | | 5,843,278 | | | | (145,175,781 | ) | | | 5,075,647 | |
| Net change in unrealized appreciation (depreciation) | | | (17,590,790 | ) | | | 693,112 | | | | 1,049,124,904 | | | | 1,273,242,361 | |
| Increase (Decrease) in Net Assets from Operations | | | (737,719 | ) | | | 7,756,374 | | | | 903,678,658 | | | | 1,279,464,872 | |
| DISTRIBUTIONS FROM EARNINGS | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (1,190,101 | ) | | | (1,775,016 | ) | | | (633,789 | ) | | | (10,470 | ) |
| Investor Shares | | | (3,180,005 | ) | | | (5,219,631 | ) | | | — | | | | — | |
| Advisor Shares | | | (144,518 | ) | | | (96,254 | ) | | | — | | | | — | |
| Total Distributions from earnings | | | (4,514,624 | ) | | | (7,090,901 | ) | | | (633,789 | ) | | | (10,470 | ) |
| CAPITAL SHARE TRANSACTIONS | | | | | | | | | | | | | | | | |
| Sale of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 48,659 | | | | 1,100,358 | | | | 853,719,363 | | | | 2,078,959,516 | |
| Investor Shares | | | 62,339 | | | | 1,529,072 | | | | 231,973,635 | | | | 625,782,512 | |
| Advisor Shares | | | 13,527 | | | | 15,154 | | | | 44,413,486 | | | | 66,763,534 | |
| Reinvestment of distributions: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 709,739 | | | | 1,359,198 | | | | 415,941 | | | | 6,609 | |
| Investor Shares | | | 407,886 | | | | 2,987,657 | | | | — | | | | — | |
| Advisor Shares | | | 139,201 | | | | 88,881 | | | | — | | | | — | |
| Redemption of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (12,105,643 | ) | | | (4,518,036 | ) | | | (660,983,025 | ) | | | (1,155,544,299 | ) |
| Investor Shares | | | (36,104,153 | ) | | | (6,888,886 | ) | | | (225,557,635 | ) | | | (563,765,771 | ) |
| Advisor Shares | | | (371,227 | ) | | | (307,507 | ) | | | (43,331,990 | ) | | | (70,829,290 | ) |
| Redemption fees: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | — | | | | 110 | | | | 10,844 | | | | 39,252 | |
| Investor Shares | | | — | | | | 254 | | | | 4,426 | | | | 18,500 | |
| Advisor Shares | | | — | | | | 5 | | | | 746 | | | | 3,129 | |
| Increase (Decrease) from Capital Share Transactions | | | (47,199,672 | ) | | | (4,633,740 | ) | | | 200,665,791 | | | | 981,433,692 | |
| Increase (Decrease) in Net Assets | | | (52,452,015 | ) | | | (3,968,267 | ) | | | 1,103,710,660 | | | | 2,260,888,094 | |
| NET ASSETS | | | | | | | | | | | | | | | | |
| Beginning of period | | | 72,530,902 | | | | 76,499,169 | | | | 7,652,962,889 | | | | 5,392,074,795 | |
| End of period | | $ | 20,078,887 | | | $ | 72,530,902 | | | $ | 8,756,673,549 | | | $ | 7,652,962,889 | |
| SHARE TRANSACTIONS | | | | | | | | | | | | | | | | |
| Sale of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 3,547 | | | | 82,290 | | | | 19,306,229 | | | | 55,092,165 | |
| Investor Shares | | | 4,436 | | | | 114,756 | | | | 5,370,339 | | | | 17,015,921 | |
| Advisor Shares | | | 1,047 | | | | 1,115 | | | | 1,067,707 | | | | 1,818,879 | |
| Reinvestment of distributions: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 60,387 | | | | 100,311 | | | | 8,635 | | | | 192 | |
| Investor Shares | | | 34,821 | | | | 219,723 | | | | — | | | | — | |
| Advisor Shares | | | 11,939 | | | | 6,567 | | | | — | | | | — | |
| Redemption of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (918,842 | ) | | | (332,348 | ) | | | (15,046,072 | ) | | | (31,017,390 | ) |
| Investor Shares | | | (2,738,517 | ) | | | (511,748 | ) | | | (5,198,390 | ) | | | (15,389,715 | ) |
| Advisor Shares | | | (29,433 | ) | | | (21,222 | ) | | | (1,060,137 | ) | | | (1,952,691 | ) |
| Increase (Decrease) in shares outstanding | | | (3,570,615 | ) | | | (340,556 | ) | | | 4,448,311 | | | | 25,567,361 | |
The accompanying notes are an integral part of these financial statements.
Statements of Changes in Net Assets
| | | BROWN ADVISORY | | | BROWN ADVISORY | |
| | | MID-CAP GROWTH FUND | | | SMALL-CAP GROWTH FUND | |
| | | Six Months | | | | | | Six Months | | | | |
| | | Ended | | | Fiscal | | | Ended | | | Fiscal | |
| | | December 31, | | | Year Ended | | | December 31, | | | Year Ended | |
| | | 2023 | | | June 30, | | | 2023 | | | June 30, | |
| | | (Unaudited) | | | 2023 | | | (Unaudited) | | | 2023 | |
| OPERATIONS | | | | | | | | | | | | |
| Net investment income (loss) | | $ | (74,077 | ) | | $ | (324,396 | ) | | $ | 476,727 | | | $ | (3,980,177 | ) |
| Net realized gain (loss) | | | 2,703,397 | | | | (5,529,060 | ) | | | (14,170,848 | ) | | | (8,554,578 | ) |
| Net change in unrealized appreciation (depreciation) | | | 4,974,151 | | | | 21,470,002 | | | | 62,840,459 | | | | 286,188,644 | |
| Increase (Decrease) in Net Assets from Operations | | | 7,603,471 | | | | 15,616,546 | | | | 49,146,338 | | | | 273,653,889 | |
| DISTRIBUTIONS FROM EARNINGS | | | | | | | | | | | | | | | | |
| Institutional Shares | | | — | | | | (4,694,458 | ) | | | — | | | | (90,997,761 | ) |
| Investor Shares | | | — | | | | (1,478,899 | ) | | | — | | | | (59,674,115 | ) |
| Advisor Shares | | | — | | | | — | | | | — | | | | (715,728 | ) |
| Total Distributions from earnings | | | — | | | | (6,173,357 | ) | | | — | | | | (151,387,604 | ) |
| CAPITAL SHARE TRANSACTIONS | | | | | | | | | | | | | | | | |
| Sale of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 13,887,004 | | | | 22,890,113 | | | | 115,308,073 | | | | 313,252,992 | |
| Investor Shares | | | 1,159,619 | | | | 1,781,026 | | | | 87,400,085 | | | | 212,108,666 | |
| Advisor Shares | | | — | | | | — | | | | 607,499 | | | | 991,855 | |
| Reinvestment of distributions: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | — | | | | 3,302,277 | | | | — | | | | 81,812,339 | |
| Investor Shares | | | — | | | | 1,478,899 | | | | — | | | | 48,936,409 | |
| Advisor Shares | | | — | | | | — | | | | — | | | | 562,578 | |
| Redemption of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (21,137,199 | ) | | | (56,129,763 | ) | | | (194,232,772 | ) | | | (286,513,304 | ) |
| Investor Shares | | | (1,038,084 | ) | | | (4,037,738 | ) | | | (78,280,086 | ) | | | (131,723,686 | ) |
| Advisor Shares | | | — | | | | — | | | | (1,741,117 | ) | | | (1,734,771 | ) |
| Redemption fees: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 8 | | | | — | | | | 434 | | | | 996 | |
| Investor Shares | | | 3 | | | | — | | | | 291 | | | | 626 | |
| Advisor Shares | | | — | | | | — | | | | 3 | | | | 8 | |
| Increase (Decrease) from Capital Share Transactions | | | (7,128,649 | ) | | | (30,715,186 | ) | | | (70,937,590 | ) | | | 237,694,708 | |
| Increase (Decrease) in Net Assets | | | 474,822 | | | | (21,271,997 | ) | | | (21,791,252 | ) | | | 359,960,993 | |
| NET ASSETS | | | | | | | | | | | | | | | | |
| Beginning of period | | | 96,379,114 | | | | 117,651,111 | | | | 2,241,940,364 | | | | 1,881,979,371 | |
| End of period | | $ | 96,853,936 | | | $ | 96,379,114 | | | $ | 2,220,149,112 | | | $ | 2,241,940,364 | |
| SHARE TRANSACTIONS | | | | | | | | | | | | | | | | |
| Sale of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 1,080,888 | | | | 1,799,089 | | | | 2,698,331 | | | | 7,324,161 | |
| Investor Shares | | | 85,224 | | | | 141,511 | | | | 4,117,816 | | | | 9,912,100 | |
| Advisor Shares | | | — | | | | — | | | | 30,226 | | | | 48,938 | |
| Reinvestment of distributions: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | — | | | | 265,456 | | | | — | | | | 1,951,630 | |
| Investor Shares | | | — | | | | 119,846 | | | | — | | | | 2,345,945 | |
| Advisor Shares | | | — | | | | — | | | | — | | | | 28,456 | |
| Redemption of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (1,592,510 | ) | | | (4,464,660 | ) | | | (4,497,936 | ) | | | (6,684,586 | ) |
| Investor Shares | | | (78,511 | ) | | | (319,291 | ) | | | (3,686,216 | ) | | | (6,200,437 | ) |
| Advisor Shares | | | — | | | | — | | | | (86,744 | ) | | | (85,972 | ) |
| Increase (Decrease) in shares outstanding | | | (504,909 | ) | | | (2,458,049 | ) | | | (1,424,523 | ) | | | 8,640,235 | |
The accompanying notes are an integral part of these financial statements.
Statements of Changes in Net Assets
| | | BROWN ADVISORY SMALL-CAP | | | BROWN ADVISORY SUSTAINABLE | |
| | | FUNDAMENTAL VALUE FUND | | | SMALL-CAP CORE FUND | |
| | | Six Months | | | | | | Six Months | | | | |
| | | Ended | | | Fiscal | | | Ended | | | Fiscal | |
| | | December 31, | | | Year Ended | | | December 31, | | | Year Ended | |
| | | 2023 | | | June 30, | | | 2023 | | | June 30, | |
| | | (Unaudited) | | | 2023 | | | (Unaudited) | | | 2023 | |
| OPERATIONS | | | | | | | | | | �� | | |
| Net investment income (loss) | | $ | 4,778,213 | | | $ | 7,485,609 | | | $ | 70,277 | | | $ | 71,858 | |
| Net realized gain (loss) | | | 32,509,133 | | | | 96,965,631 | | | | (294,584 | ) | | | (6,281,256 | ) |
| Net change in unrealized appreciation (depreciation) | | | 112,336,264 | | | | 35,523,126 | | | | 5,714,528 | | | | 11,304,700 | |
| Increase (Decrease) in Net Assets from Operations | | | 149,623,610 | | | | 139,974,366 | | | | 5,490,221 | | | | 5,095,302 | |
| DISTRIBUTIONS FROM EARNINGS | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (38,971,460 | ) | | | (33,185,482 | ) | | | (104,329 | ) | | | (588 | ) |
| Investor Shares | | | (36,311,622 | ) | | | (34,842,760 | ) | | | (182 | ) | | | (28 | ) |
| Advisor Shares | | | (186,263 | ) | | | (166,836 | ) | | | — | | | | — | |
| Total Distributions from earnings | | | (75,469,345 | ) | | | (68,195,078 | ) | | | (104,511 | ) | | | (616 | ) |
| CAPITAL SHARE TRANSACTIONS | | | | | | | | | | | | | | | | |
| Sale of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 70,796,149 | | | | 123,319,902 | | | | 9,904,787 | | | | 33,653,477 | |
| Investor Shares | | | 29,089,616 | | | | 53,655,900 | | | | 545,288 | | | | 1,807,860 | |
| Advisor Shares | | | 586,288 | | | | 40,206 | | | | — | | | | — | |
| Reinvestment of distributions: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 24,734,303 | | | | 20,951,164 | | | | 28,260 | | | | 389 | |
| Investor Shares | | | 24,239,860 | | | | 24,128,958 | | | | 179 | | | | 28 | |
| Advisor Shares | | | 179,554 | | | | 138,370 | | | | — | | | | — | |
| Redemption of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (51,450,277 | ) | | | (154,796,904 | ) | | | (3,596,828 | ) | | | (19,543,834 | ) |
| Investor Shares | | | (46,096,386 | ) | | | (85,835,294 | ) | | | (151,985 | ) | | | (1,264,572 | ) |
| Advisor Shares | | | (266,486 | ) | | | (839,784 | ) | | | — | | | | — | |
| Redemption fees: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 369 | | | | 96 | | | | — | | | | 58 | |
| Investor Shares | | | 352 | | | | 99 | | | | — | | | | 2 | |
| Advisor Shares | | | 2 | | | | — | | | | — | | | | — | |
| Increase (Decrease) from Capital Share Transactions | | | 51,813,344 | | | | (19,237,287 | ) | | | 6,729,701 | | | | 14,653,408 | |
| Increase (Decrease) in Net Assets | | | 125,967,609 | | | | 52,542,001 | | | | 12,115,411 | | | | 19,748,094 | |
| NET ASSETS | | | | | | | | | | | | | | | | |
| Beginning of period | | | 1,182,766,093 | | | | 1,130,224,092 | | | | 53,475,370 | | | | 33,727,276 | |
| End of period | | $ | 1,308,733,702 | | | $ | 1,182,766,093 | | | $ | 65,590,781 | | | $ | 53,475,370 | |
| SHARE TRANSACTIONS | | | | | | | | | | | | | | | | |
| Sale of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 2,429,577 | | | | 4,488,167 | | | | 1,134,448 | | | | 4,020,237 | |
| Investor Shares | | | 1,002,862 | | | | 1,971,442 | | | | 61,718 | | | | 216,947 | |
| Advisor Shares | | | 20,088 | | | | 1,455 | | | | — | | | | — | |
| Reinvestment of distributions: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 862,977 | | | | 761,092 | | | | 2,898 | | | | 46 | |
| Investor Shares | | | 849,598 | | | | 878,374 | | | | 18 | | | | 3 | |
| Advisor Shares | | | 6,340 | | | | 5,080 | | | | — | | | | — | |
| Redemption of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (1,820,277 | ) | | | (5,538,829 | ) | | | (425,766 | ) | | | (2,377,529 | ) |
| Investor Shares | | | (1,629,121 | ) | | | (3,122,087 | ) | | | (17,751 | ) | | | (146,693 | ) |
| Advisor Shares | | | (9,586 | ) | | | (30,535 | ) | | | — | | | | — | |
| Increase (Decrease) in shares outstanding | | | 1,712,458 | | | | (585,841 | ) | | | 755,565 | | | | 1,713,011 | |
The accompanying notes are an integral part of these financial statements.
Statements of Changes in Net Assets
| | | BROWN ADVISORY | | | BROWN ADVISORY | |
| | | SUSTAINABLE VALUE FUND | | | GLOBAL LEADERS FUND | |
| | | Six Months | | | | | | Six Months | | | | |
| | | Ended | | | Period | | | Ended | | | Fiscal | |
| | | December 31, | | | Ended | | | December 31, | | | Year Ended | |
| | | 2023 | | | June 30, | | | 2023 | | | June 30, | |
| | | (Unaudited) | | | | 2023 | * | | (Unaudited) | | | | 2023 | |
| OPERATIONS | | | | | | | | | | | | | | |
| Net investment income (loss) | | $ | 452,012 | | | $ | 207,087 | | | $ | 1,055,037 | | | $ | 8,074,102 | |
| Net realized gain (loss) | | | (120,254 | ) | | | (98,682 | ) | | | 17,740,414 | | | | (28,013,222 | ) |
| Net change in unrealized appreciation (depreciation) | | | 6,313,518 | | | | 1,465,263 | | | | 100,340,752 | | | | 274,035,271 | |
| Increase (Decrease) in Net Assets from Operations | | | 6,645,276 | | | | 1,573,668 | | | | 119,136,203 | | | | 254,096,151 | |
| DISTRIBUTIONS FROM EARNINGS | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (656,605 | ) | | | — | | | | (8,537,871 | ) | | | (6,991,035 | ) |
| Investor Shares | | | (2,992 | ) | | | — | | | | (236,099 | ) | | | (395,703 | ) |
| Total Distributions from earnings | | | (659,597 | ) | | | — | | | | (8,773,970 | ) | | | (7,386,738 | ) |
| CAPITAL SHARE TRANSACTIONS | | | | | | | | | | | | | | | | |
| Sale of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 10,723,109 | | | | 49,585,364 | | | | 154,571,370 | | | | 325,301,984 | |
| Investor Shares | | | 166,034 | | | | 1,664,985 | | | | 3,580,140 | | | | 3,611,292 | |
| Reinvestment of distributions: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 118,098 | | | | — | | | | 2,087,276 | | | | 1,666,735 | |
| Investor Shares | | | 20 | | | | — | | | | 218,403 | | | | 326,640 | |
| Redemption of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (583,380 | ) | | | (889,573 | ) | | | (47,329,020 | ) | | | (206,154,158 | ) |
| Investor Shares | | | — | | | | (1,463,815 | ) | | | (21,600,828 | ) | | | (17,052,237 | ) |
| Redemption fees: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | — | | | | — | | | | 49 | | | | 14 | |
| Investor Shares | | | — | | | | — | | | | 3 | | | | 1 | |
| Increase (Decrease) from Capital Share Transactions | | | 10,423,881 | | | | 48,896,961 | | | | 91,527,393 | | | | 107,700,271 | |
| Increase (Decrease) in Net Assets | | | 16,409,560 | | | | 50,470,629 | | | | 201,889,626 | | | | 354,409,684 | |
| NET ASSETS | | | | | | | | | | | | | | | | |
| Beginning of period | | | 50,470,629 | | | | — | | | | 1,479,147,574 | | | | 1,124,737,890 | |
| End of period | | $ | 66,880,189 | | | $ | 50,470,629 | | | $ | 1,681,037,200 | | | $ | 1,479,147,574 | |
| SHARE TRANSACTIONS | | | | | | | | | | | | | | | | |
| Sale of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 1,039,728 | | | | 5,106,507 | | | | 7,069,605 | | | | 16,769,670 | |
| Investor Shares | | | 15,532 | | | | 167,746 | | | | 163,462 | | | | 187,404 | |
| Reinvestment of distributions: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 10,659 | | | | — | | | | 88,481 | | | | 88,798 | |
| Investor Shares | | | 2 | | | | — | | | | 9,286 | | | | 17,449 | |
| Redemption of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (54,975 | ) | | | (92,872 | ) | | | (2,161,465 | ) | | | (10,875,202 | ) |
| Investor Shares | | | — | | | | (151,444 | ) | | | (987,484 | ) | | | (865,869 | ) |
| Increase (Decrease) in shares outstanding | | | 1,010,946 | | | | 5,029,937 | | | | 4,181,885 | | | | 5,322,250 | |
| * | Inception date of Fund was February 28, 2023. Results of operations are for the period from March 1, 2023 to June 30, 2023. |
The accompanying notes are an integral part of these financial statements.
Statements of Changes in Net Assets
| | | BROWN ADVISORY SUSTAINABLE | | | BROWN ADVISORY | |
| | | INTERNATIONAL LEADERS FUND | | | INTERMEDIATE INCOME FUND | |
| | | Six Months | | | | | | Six Months | | | | |
| | | Ended | | | Fiscal | | | Ended | | | Fiscal | |
| | | December 31, | | | Year Ended | | | December 31, | | | Year Ended | |
| | | 2023 | | | June 30, | | | 2023 | | | June 30, | |
| | | (Unaudited) | | | 2023 | | | (Unaudited) | | | 2023 | |
| OPERATIONS | | | | | | | | | | | | |
| Net investment income (loss) | | $ | 8,290 | | | $ | 155,583 | | | $ | 1,938,233 | | | $ | 3,240,395 | |
| Net realized gain (loss) | | | (634,729 | ) | | | (165,459 | ) | | | (2,049,139 | ) | | | (4,258,695 | ) |
| Net change in unrealized appreciation (depreciation) | | | 1,282,113 | | | | 4,216,118 | | | | 3,401,590 | | | | (1,177,752 | ) |
| Increase (Decrease) in Net Assets from Operations | | | 655,674 | | | | 4,206,242 | | | | 3,290,684 | | | | (2,196,052 | ) |
| DISTRIBUTIONS FROM EARNINGS | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (147,645 | ) | | | (35,516 | ) | | | — | | | | — | |
| Investor Shares | | | (6,045 | ) | | | (3,388 | ) | | | (1,858,738 | ) | | | (3,207,474 | ) |
| Advisor Shares | | | — | | | | — | | | | (45,005 | ) | | | (75,420 | ) |
| Total Distributions from earnings | | | (153,690 | ) | | | (38,904 | ) | | | (1,903,743 | ) | | | (3,282,894 | ) |
| CAPITAL SHARE TRANSACTIONS | | | | | | | | | | | | | | | | |
| Sale of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 8,127,251 | | | | 13,043,816 | | | | — | | | | — | |
| Investor Shares | | | 233,369 | | | | 1,375,819 | | | | 10,054,743 | | | | 16,553,797 | |
| Advisor Shares | | | — | | | | — | | | | 63,299 | | | | 159,427 | |
| Reinvestment of distributions: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 50,961 | | | | 6,722 | | | | — | | | | — | |
| Investor Shares | | | 6,045 | | | | 2,778 | | | | 466,339 | | | | 925,384 | |
| Advisor Shares | | | — | | | | — | | | | 42,392 | | | | 70,124 | |
| Redemption of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (803,332 | ) | | | (215,587 | ) | | | — | | | | — | |
| Investor Shares | | | (30,623 | ) | | | (329,690 | ) | | | (17,290,955 | ) | | | (29,348,887 | ) |
| Advisor Shares | | | — | | | | — | | | | (212,975 | ) | | | (229,653 | ) |
| Redemption fees: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | — | | | | — | | | | — | | | | — | |
| Investor Shares | | | — | | | | — | | | | — | | | | 241 | |
| Advisor Shares | | | — | | | | — | | | | — | | | | 6 | |
| Increase (Decrease) from Capital Share Transactions | | | 7,583,671 | | | | 13,883,858 | | | | (6,877,157 | ) | | | (11,869,561 | ) |
| Increase (Decrease) in Net Assets | | | 8,085,655 | | | | 18,051,196 | | | | (5,490,216 | ) | | | (17,348,507 | ) |
| NET ASSETS | | | | | | | | | | | | | | | | |
| Beginning of period | | | 24,346,727 | | | | 6,295,531 | | | | 125,780,244 | | | | 143,128,751 | |
| End of period | | $ | 32,432,382 | | | $ | 24,346,727 | | | $ | 120,290,028 | | | $ | 125,780,244 | |
| SHARE TRANSACTIONS | | | | | | | | | | | | | | | | |
| Sale of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 833,248 | | | | 1,462,731 | | | | — | | | | — | |
| Investor Shares | | | 24,316 | | | | 164,665 | | | | 1,050,053 | | | | 1,695,318 | |
| Advisor Shares | | | — | | | | — | | | | 6,846 | | | | 16,547 | |
| Reinvestment of distributions: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 4,877 | | | | 740 | | | | — | | | | — | |
| Investor Shares | | | 580 | | | | 306 | | | | 49,294 | | | | 95,347 | |
| Advisor Shares | | | — | | | | — | | | | 4,588 | | | | 7,400 | |
| Redemption of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (79,065 | ) | | | (26,248 | ) | | | — | | | | — | |
| Investor Shares | | | (3,109 | ) | | | (34,394 | ) | | | (1,828,265 | ) | | | (3,014,392 | ) |
| Advisor Shares | | | — | | | | — | | | | (23,292 | ) | | | (24,348 | ) |
| Increase (Decrease) in shares outstanding | | | 780,847 | | | | 1,567,800 | | | | (740,776 | ) | | | (1,224,128 | ) |
The accompanying notes are an integral part of these financial statements.
Statements of Changes in Net Assets
| | | BROWN ADVISORY | | | BROWN ADVISORY | |
| | | SUSTAINABLE BOND FUND | | | MARYLAND BOND FUND | |
| | | Six Months | | | | | | Six Months | | | | |
| | | Ended | | | Fiscal | | | Ended | | | Fiscal | |
| | | December 31, | | | Year Ended | | | December 31, | | | Year Ended | |
| | | 2023 | | | June 30, | | | 2023 | | | June 30, | |
| | | (Unaudited) | | | 2023 | | | (Unaudited) | | | 2023 | |
| OPERATIONS | | | | | | | | | | | | |
| Net investment income (loss) | | $ | 12,947,234 | | | $ | 9,469,365 | | | $ | 2,347,588 | | | $ | 3,987,153 | |
| Net realized gain (loss) | | | (24,057,745 | ) | | | (25,159,484 | ) | | | (219,660 | ) | | | (3,837,761 | ) |
| Net change in unrealized appreciation (depreciation) | | | 23,339,564 | | | | 3,740,742 | | | | 3,484,304 | | | | 3,652,185 | |
| Increase (Decrease) in Net Assets from Operations | | | 12,229,053 | | | | (11,949,377 | ) | | | 5,612,232 | | | | 3,801,577 | |
| DISTRIBUTIONS FROM EARNINGS | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (13,052,322 | ) | | | (9,183,982 | ) | | | — | | | | — | |
| Investor Shares | | | (242,693 | ) | | | (287,987 | ) | | | (2,613,875 | ) | | | (4,607,468 | ) |
| Total Distributions from earnings | | | (13,295,015 | ) | | | (9,471,969 | ) | | | (2,613,875 | ) | | | (4,607,468 | ) |
| CAPITAL SHARE TRANSACTIONS | | | | | | | | | | | | | | | | |
| Sale of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 89,489,888 | | | | 180,573,932 | | | | — | | | | — | |
| Investor Shares | | | 1,596,500 | | | | 9,585,925 | | | | 30,247,678 | | | | 174,773,197 | |
| Reinvestment of distributions: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 3,354,532 | | | | 2,286,754 | | | | — | | | | — | |
| Investor Shares | | | 231,656 | | | | 266,441 | | | | 466,763 | | | | 929,140 | |
| Redemption of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (233,843,932 | ) | | | (71,731,117 | ) | | | — | | | | — | |
| Investor Shares | | | (3,143,252 | ) | | | (9,806,662 | ) | | | (29,344,789 | ) | | | (180,499,653 | ) |
| Redemption fees: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 1 | | | | 1,010 | | | | — | | | | — | |
| Investor Shares | | | — | | | | 36 | | | | — | | | | — | |
| Proceeds from shares issued in fund reorganization (Note 9) | | | | | | | | | | | | | | | | |
| Institutional Shares | | | — | | | | 331,003,377 | | | | — | | | | — | |
| Investor Shares | | | — | | | | 878,796 | | | | — | | | | — | |
| Increase (Decrease) from Capital Share Transactions | | | (142,314,607 | ) | | | 443,058,492 | | | | 1,369,652 | | | | (4,797,316 | ) |
| Increase (Decrease) in Net Assets | | | (143,380,569 | ) | | | 421,637,146 | | | | 4,368,009 | | | | (5,603,207 | ) |
| NET ASSETS | | | | | | | | | | | | | | | | |
| Beginning of period | | | 736,221,111 | | | | 314,583,965 | | | | 163,961,318 | | | | 169,564,525 | |
| End of period | | $ | 592,840,542 | | | $ | 736,221,111 | | | $ | 168,329,327 | | | $ | 163,961,318 | |
| SHARE TRANSACTIONS | | | | | | | | | | | | | | | | |
| Sale of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 10,634,629 | | | | 20,636,386 | | | | — | | | | — | |
| Investor Shares | | | 190,153 | | | | 1,081,597 | | | | 3,129,529 | | | | 18,023,157 | |
| Reinvestment of distributions: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 400,219 | | | | 260,828 | | | | — | | | | — | |
| Investor Shares | | | 27,638 | | | | 30,316 | | | | 48,174 | | | | 95,116 | |
| Redemption of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (27,872,096 | ) | | | (8,155,671 | ) | | | — | | | | — | |
| Investor Shares | | | (373,580 | ) | | | (1,108,532 | ) | | | (3,047,643 | ) | | | (18,676,506 | ) |
| Shares issued in fund reorganization (Note 9) | | | | | | | | | | | | | | | | |
| Institutional Shares | | | — | | | | 38,304,761 | | | | — | | | | — | |
| Investor Shares | | | — | | | | 101,652 | | | | — | | | | — | |
| Increase (Decrease) in shares outstanding | | | (16,993,037 | ) | | | 51,151,337 | | | | 130,060 | | | | (558,233 | ) |
The accompanying notes are an integral part of these financial statements.
Statements of Changes in Net Assets
| | | | | | | | | BROWN ADVISORY | |
| | | BROWN ADVISORY | | | TAX-EXEMPT SUSTAINABLE | |
| | | TAX-EXEMPT BOND FUND | | | BOND FUND | |
| | | Six Months | | | | | | Six Months | | | | |
| | | Ended | | | Fiscal | | | Ended | | | Fiscal | |
| | | December 31, | | | Year Ended | | | December 31, | | | Year Ended | |
| | | 2023 | | | June 30, | | | 2023 | | | June 30, | |
| | | (Unaudited) | | | 2023 | | | (Unaudited) | | | 2023 | |
| OPERATIONS | | | | | | | | | | | | |
| Net investment income (loss) | | $ | 16,198,731 | | | $ | 23,580,676 | | | $ | 5,242,024 | | | $ | 7,959,448 | |
| Net realized gain (loss) | | | (8,173,392 | ) | | | (47,633,476 | ) | | | (2,064,186 | ) | | | (13,460,318 | ) |
| Net change in unrealized appreciation (depreciation) | | | 22,174,248 | | | | 48,140,333 | | | | 5,767,504 | | | | 8,854,591 | |
| Increase (Decrease) in Net Assets from Operations | | | 30,199,587 | | | | 24,087,533 | | | | 8,945,342 | | | | 3,353,721 | |
| DISTRIBUTIONS FROM EARNINGS | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (16,312,931 | ) | | | (26,053,611 | ) | | | — | | | | — | |
| Investor Shares | | | (169,072 | ) | | | (287,501 | ) | | | (5,242,026 | ) | | | (7,959,450 | ) |
| Total Distributions from earnings | | | (16,482,003 | ) | | | (26,341,112 | ) | | | (5,242,026 | ) | | | (7,959,450 | ) |
| CAPITAL SHARE TRANSACTIONS | | | | | | | | | | | | | | | | |
| Sale of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 313,422,667 | | | | 663,635,553 | | | | — | | | | — | |
| Investor Shares | | | 1,909,585 | | | | 1,633,814 | | | | 103,784,763 | | | | 277,423,997 | |
| Reinvestment of distributions: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 3,168,219 | | | | 5,222,194 | | | | — | | | | — | |
| Investor Shares | | | 113,937 | | | | 198,959 | | | | 1,260,702 | | | | 1,966,078 | |
| Redemption of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (266,195,522 | ) | | | (684,366,338 | ) | | | — | | | | — | |
| Investor Shares | | | (1,664,226 | ) | | | (4,123,128 | ) | | | (90,951,484 | ) | | | (311,401,610 | ) |
| Redemption fees: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 2 | | | | 2,116 | | | | — | | | | — | |
| Investor Shares | | | — | | | | 27 | | | | — | | | | 3,970 | |
| Increase (Decrease) from Capital Share Transactions | | | 50,754,662 | | | | (17,796,803 | ) | | | 14,093,981 | | | | (32,007,565 | ) |
| Increase (Decrease) in Net Assets | | | 64,472,246 | | | | (20,050,382 | ) | | | 17,797,297 | | | | (36,613,294 | ) |
| NET ASSETS | | | | | | | | | | | | | | | | |
| Beginning of period | | | 796,041,041 | | | | 816,091,423 | | | | 288,992,669 | | | | 325,605,963 | |
| End of period | | $ | 860,513,287 | | | $ | 796,041,041 | | | $ | 306,789,966 | | | $ | 288,992,669 | |
| SHARE TRANSACTIONS | | | | | | | | | | | | | | | | |
| Sale of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 34,374,156 | | | | 72,302,156 | | | | — | | | | — | |
| Investor Shares | | | 206,499 | | | | 176,346 | | | | 11,756,885 | | | | 30,707,463 | |
| Reinvestment of distributions: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 345,533 | | | | 565,465 | | | | — | | | | — | |
| Investor Shares | | | 12,418 | | | | 21,550 | | | | 141,500 | | | | 217,344 | |
| Redemption of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (29,334,364 | ) | | | (74,745,047 | ) | | | — | | | | — | |
| Investor Shares | | | (181,462 | ) | | | (447,059 | ) | | | (10,276,466 | ) | | | (34,843,481 | ) |
| Increase (Decrease) in shares outstanding | | | 5,422,780 | | | | (2,126,589 | ) | | | 1,621,919 | | | | (3,918,674 | ) |
The accompanying notes are an integral part of these financial statements.
Statements of Changes in Net Assets
| | | | | | | | | BROWN ADVISORY – | |
| | | BROWN ADVISORY | | | WMC STRATEGIC | |
| | | MORTGAGE SECURITIES FUND | | | EUROPEAN EQUITY FUND | |
| | | Six Months | | | | | | Six Months | | | | |
| | | Ended | | | Fiscal | | | Ended | | | Fiscal | |
| | | December 31, | | | Year Ended | | | December 31, | | | Year Ended | |
| | | 2023 | | | June 30, | | | 2023 | | | June 30, | |
| | | (Unaudited) | | | 2023 | | | (Unaudited) | | | 2023 | |
| OPERATIONS | | | | | | | | | | | | |
| Net investment income (loss) | | $ | 5,873,168 | | | $ | 9,193,504 | | | $ | 857,113 | | | $ | 3,729,226 | |
| Net realized gain (loss) | | | (7,935,090 | ) | | | (3,920,342 | ) | | | 3,079,081 | | | | (4,071,080 | ) |
| Net change in unrealized appreciation (depreciation) | | | 10,147,042 | | | | (12,021,031 | ) | | | 13,191,931 | | | | 24,114,599 | |
| Increase (Decrease) in Net Assets from Operations | | | 8,085,120 | | | | (6,747,869 | ) | | | 17,128,125 | | | | 23,772,745 | |
| DISTRIBUTIONS FROM EARNINGS | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (6,086,108 | ) | | | (9,638,698 | ) | | | (3,510,805 | ) | | | (4,638,118 | ) |
| Investor Shares | | | (22,479 | ) | | | (52,840 | ) | | | (130,207 | ) | | | (312,015 | ) |
| Advisor Shares | | | — | | | | — | | | | (25,691 | ) | | | (66,310 | ) |
| Total Distributions from earnings | | | (6,108,587 | ) | | | (9,691,538 | ) | | | (3,666,703 | ) | | | (5,016,443 | ) |
| CAPITAL SHARE TRANSACTIONS | | | | | | | | | | | | | | | | |
| Sale of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 21,592,633 | | | | 61,373,989 | | | | 42,705,841 | | | | 74,999,578 | |
| Investor Shares | | | 500 | | | | 175,883 | | | | 1,931,545 | | | | 5,643,182 | |
| Advisor Shares | | | — | | | | — | | | | 103,687 | | | | 642,046 | |
| Reinvestment of distributions: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 1,319,740 | | | | 2,100,585 | | | | 918,481 | | | | 1,932,897 | |
| Investor Shares | | | 18,840 | | | | 46,398 | | | | 113,737 | | | | 209,903 | |
| Advisor Shares | | | — | | | | — | | | | 23,393 | | | | 61,604 | |
| Redemption of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (25,205,534 | ) | | | (55,235,735 | ) | | | (14,549,272 | ) | | | (99,210,794 | ) |
| Investor Shares | | | (398,888 | ) | | | (937,681 | ) | | | (5,897,263 | ) | | | (10,980,068 | ) |
| Advisor Shares | | | — | | | | — | | | | (235,498 | ) | | | (770,892 | ) |
| Redemption fees: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | — | | | | — | | | | 63 | | | | 93 | |
| Investor Shares | | | — | | | | — | | | | 4 | | | | 6 | |
| Advisor Shares | | | — | | | | — | | | | 1 | | | | 1 | |
| Increase (Decrease) from Capital Share Transactions | | | (2,672,709 | ) | | | 7,523,439 | | | | 25,114,719 | | | | (27,472,444 | ) |
| Increase (Decrease) in Net Assets | | | (696,176 | ) | | | (8,915,968 | ) | | | 38,576,141 | | | | (8,716,142 | ) |
| NET ASSETS | | | | | | | | | | | | | | | | |
| Beginning of period | | | 303,682,764 | | | | 312,598,732 | | | | 245,017,819 | | | | 253,733,961 | |
| End of period | | $ | 302,986,588 | | | $ | 303,682,764 | | | $ | 283,593,960 | | | $ | 245,017,819 | |
| SHARE TRANSACTIONS | | | | | | | | | | | | | | | | |
| Sale of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 2,427,840 | | | | 6,588,484 | | | | 3,617,488 | | | | 6,596,970 | |
| Investor Shares | | | 55 | | | | 18,626 | | | | 167,399 | | | | 483,769 | |
| Advisor Shares | | | — | | | | — | | | | 8,971 | | | | 61,589 | |
| Reinvestment of distributions: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 148,883 | | | | 228,007 | | | | 74,191 | | | | 180,946 | |
| Investor Shares | | | 2,117 | | | | 5,022 | | | | 9,209 | | | | 19,782 | |
| Advisor Shares | | | — | | | | — | | | | 1,922 | | | | 5,902 | |
| Redemption of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (2,828,960 | ) | | | (5,961,698 | ) | | | (1,254,740 | ) | | | (10,012,965 | ) |
| Investor Shares | | | (45,341 | ) | | | (101,285 | ) | | | (492,801 | ) | | | (1,081,748 | ) |
| Advisor Shares | | | — | | | | — | | | | (20,453 | ) | | | (70,370 | ) |
| Increase (Decrease) in shares outstanding | | | (295,406 | ) | | | 777,156 | | | | 2,111,186 | | | | (3,816,125 | ) |
The accompanying notes are an integral part of these financial statements.
Statements of Changes in Net Assets
| | | BROWN ADVISORY | | | BROWN ADVISORY – | |
| | | EMERGING MARKETS | | | BEUTEL GOODMAN | |
| | | SELECT FUND | | | LARGE-CAP VALUE FUND | |
| | | Six Months | | | | | | Six Months | | | | |
| | | Ended | | | Fiscal | | | Ended | | | Fiscal | |
| | | December 31, | | | Year Ended | | | December 31, | | | Year Ended | |
| | | 2023 | | | June 30, | | | 2023 | | | June 30, | |
| | | (Unaudited) | | | 2023 | | | (Unaudited) | | | 2023 | |
| OPERATIONS | | | | | | | | | | | | |
| Net investment income (loss) | | $ | 3,749,297 | | | $ | 7,700,454 | | | $ | 15,729,839 | | | $ | 27,863,500 | |
| Net realized gain (loss) | | | 909,269 | | | | (39,033,202 | ) | | | (10,336,804 | ) | | | (1,597,544 | ) |
| Net change in unrealized appreciation (depreciation) | | | 12,439,030 | | | | 50,890,808 | | | | 84,691,785 | | | | 204,984,398 | |
| Increase (Decrease) in Net Assets from Operations | | | 17,097,596 | | | | 19,558,060 | | | | 90,084,820 | | | | 231,250,354 | |
| DISTRIBUTIONS FROM EARNINGS | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (9,908,444 | ) | | | (6,069,695 | ) | | | (30,358,502 | ) | | | (52,068,822 | ) |
| Investor Shares | | | (42,165 | ) | | | (47,726 | ) | | | (181,163 | ) | | | (26,989 | ) |
| Advisor Shares | | | (2,868 | ) | | | (270 | ) | | | — | | | | — | |
| Total Distributions from earnings | | | (9,953,477 | ) | | | (6,117,691 | ) | | | (30,539,665 | ) | | | (52,095,811 | ) |
| CAPITAL SHARE TRANSACTIONS | | | | | | | | | | | | | | | | |
| Sale of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 62,888,144 | | | | 215,596,170 | | | | 164,015,889 | | | | 435,357,095 | |
| Investor Shares | | | 948,536 | | | | 611,646 | | | | 8,594,770 | | | | 2,340,189 | |
| Advisor Shares | | | 39,796 | | | | 192,224 | | | | — | | | | — | |
| Reinvestment of distributions: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 2,340,206 | | | | 1,405,878 | | | | 8,737,383 | | | | 27,731,260 | |
| Investor Shares | | | 41,242 | | | | 47,075 | | | | 160,124 | | | | 26,670 | |
| Advisor Shares | | | 2,868 | | | | 271 | | | | — | | | | — | |
| Redemption of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (35,257,574 | ) | | | (196,962,728 | ) | | | (183,386,579 | ) | | | (215,339,444 | ) |
| Investor Shares | | | (374,945 | ) | | | (3,226,011 | ) | | | (197,334 | ) | | | (163,756 | ) |
| Advisor Shares | | | (48,668 | ) | | | (7,708 | ) | | | — | | | | — | |
| Redemption fees: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 61 | | | | 2,375 | | | | 8 | | | | 557 | |
| Investor Shares | | | — | | | | 20 | | | | — | | | | — | |
| Advisor Shares | | | — | | | | — | | | | — | | | | — | |
| Increase (Decrease) from Capital Share Transactions | | | 30,579,666 | | | | 17,659,212 | | | | (2,075,739 | ) | | | 249,952,571 | |
| Increase (Decrease) in Net Assets | | | 37,723,785 | | | | 31,099,581 | | | | 57,469,416 | | | | 429,107,114 | |
| NET ASSETS | | | | | | | | | | | | | | | | |
| Beginning of period | | | 539,710,836 | | | | 508,611,255 | | | | 1,666,597,905 | | | | 1,237,490,791 | |
| End of period | | $ | 577,434,621 | | | $ | 539,710,836 | | | $ | 1,724,067,321 | | | $ | 1,666,597,905 | |
| SHARE TRANSACTIONS | | | | | | | | | | | | | | | | |
| Sale of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 5,800,348 | | | | 21,527,213 | | | | 12,220,507 | | | | 33,565,417 | |
| Investor Shares | | | 90,236 | | | | 61,146 | | | | 603,873 | | | | 179,132 | |
| Advisor Shares | | | 3,594 | | | | 18,626 | | | | — | | | | — | |
| Reinvestment of distributions: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | 221,821 | | | | 140,167 | | | | 614,876 | | | | 2,078,008 | |
| Investor Shares | | | 3,909 | | | | 4,693 | | | | 11,300 | | | | 2,023 | |
| Advisor Shares | | | 271 | | | | 27 | | | | — | | | | — | |
| Redemption of shares: | | | | | | | | | | | | | | | | |
| Institutional Shares | | | (3,348,572 | ) | | | (20,841,533 | ) | | | (13,902,621 | ) | | | (16,734,091 | ) |
| Investor Shares | | | (35,966 | ) | | | (306,384 | ) | | | (14,125 | ) | | | (12,640 | ) |
| Advisor Shares | | | (4,570 | ) | | | (724 | ) | | | — | | | | — | |
| Increase (Decrease) in shares outstanding | | | 2,735,641 | | | | 603,231 | | | | (466,190 | ) | | | 19,077,849 | |
The accompanying notes are an integral part of these financial statements.
Financial Highlights
| | | | | | | From Investment | | | Distributions to | | | | | | | | | | | | Ratios to Average | | | | |
| | | | | | | Operations(a) | | | Shareholders From | | | | | | | | | | | | Net Assets(b) | | | | |
| | | | | | | | | | Net | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For a Share | | | | | | | | Realized | | | | | | | | | | | | | | | Net | | | | | | Net | | | | | | | | | | | | | |
| Outstanding | | Net Asset | | | Net | | | & | | | | | | | | | | | | | | | Asset | | | | | | Assets at | | | Net | | | | | | | | | | |
| Throughout | | Value, | | | Investment | | | Unrealized | | | | | | Net | | | Net | | | | | | Value, | | | | | | End of | | | Investment | | | | | | Gross | | | Portfolio | |
| Each Fiscal Period: | | Beginning | | | Income | | | Gains | | | | | | Investment | | | Realized | | | | | | End of | | | Total | | | Period | | | Income | | | Net | | | Expenses | | | Turnover | |
| Beginning | Ending | | of Period | | | (Loss) | | | (Losses) | | | Total | | | Income | | | Gains | | | Total | | | Period | | Return(c) | | | | (000’s | ) | | (Loss) | | | Expenses | | | (d) | | | Rate(c) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BROWN ADVISORY GROWTH EQUITY FUND: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Institutional Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | $ | 26.74 | | | 0.01 | | | 2.22 | | | 2.23 | | | — | | | (1.80 | ) | | (1.80 | ) | | $ | 27.17 | | | 8.54 | % | | $ | 1,697,392 | | | 0.04 | % | | 0.68 | % | | 0.68 | % | | 15 | % |
| 07/01/22 | 06/30/23 | | | 23.82 | | | (0.03 | ) | | 4.59 | | | 4.56 | | | — | | | (1.64 | ) | | (1.64 | ) | | | 26.74 | | | 20.22 | | | | 1,837,801 | | | (0.14 | ) | | 0.68 | | | 0.68 | | | 21 | |
| 07/01/21 | 06/30/22 | | | 37.39 | | | (0.09 | ) | | (9.01 | ) | | (9.10 | ) | | — | | | (4.47 | ) | | (4.47 | ) | | | 23.82 | | | (27.88 | ) | | | 1,611,983 | | | (0.26 | ) | | 0.66 | | | 0.66 | | | 21 | |
| 07/01/20 | 06/30/21 | | | 29.05 | | | (0.06 | ) | | 10.02 | | | 9.96 | | | — | | | (1.62 | ) | | (1.62 | ) | | | 37.39 | | | 35.14 | | | | 2,321,278 | | | (0.19 | ) | | 0.67 | | | 0.67 | | | 25 | |
| 07/01/19 | 06/30/20 | | | 24.80 | | | (0.04 | ) | | 5.56 | | | 5.52 | | | — | | | (1.27 | ) | | (1.27 | ) | | | 29.05 | | | 22.88 | | | | 1,849,565 | | | (0.16 | ) | | 0.69 | | | 0.69 | | | 22 | |
| 07/01/18 | 06/30/19 | | | 23.91 | | | (0.04 | ) | | 3.38 | | | 3.34 | | | — | | | (2.45 | ) | | (2.45 | ) | | | 24.80 | | | 16.69 | | | | 1,523,633 | | | (0.19 | ) | | 0.70 | | | 0.70 | | | 22 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 26.12 | | | (0.01 | ) | | 2.17 | | | 2.16 | | | — | | | (1.80 | ) | | (1.80 | ) | | | 26.48 | | | 8.47 | | | | 647,560 | | | (0.11 | ) | | 0.83 | | | 0.83 | | | 15 | |
| 07/01/22 | 06/30/23 | | | 23.35 | | | (0.07 | ) | | 4.48 | | | 4.41 | | | — | | | (1.64 | ) | | (1.64 | ) | | | 26.12 | | | 20.03 | | | | 687,058 | | | (0.29 | ) | | 0.83 | | | 0.83 | | | 21 | |
| 07/01/21 | 06/30/22 | | | 36.79 | | | (0.13 | ) | | (8.84 | ) | | (8.97 | ) | | — | | | (4.47 | ) | | (4.47 | ) | | | 23.35 | | | (28.02 | ) | | | 704,341 | | | (0.41 | ) | | 0.81 | | | 0.81 | | | 21 | |
| 07/01/20 | 06/30/21 | | | 28.64 | | | (0.11 | ) | | 9.88 | | | 9.77 | | | — | | | (1.62 | ) | | (1.62 | ) | | | 36.79 | | | 34.98 | | | | 1,174,666 | | | (0.34 | ) | | 0.82 | | | 0.82 | | | 25 | |
| 07/01/19 | 06/30/20 | | | 24.50 | | | (0.08 | ) | | 5.49 | | | 5.41 | | | — | | | (1.27 | ) | | (1.27 | ) | | | 28.64 | | | 22.70 | | | | 983,640 | | | (0.31 | ) | | 0.84 | | | 0.84 | | | 22 | |
| 07/01/18 | 06/30/19 | | | 23.69 | | | (0.08 | ) | | 3.34 | | | 3.26 | | | — | | | (2.45 | ) | | (2.45 | ) | | | 24.50 | | | 16.50 | | | | 828,388 | | | (0.34 | ) | | 0.85 | | | 0.85 | | | 22 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Advisor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 23.82 | | | (0.04 | ) | | 1.97 | | | 1.93 | | | — | | | (1.80 | ) | | (1.80 | ) | | | 23.95 | | | 8.32 | | | | 17,144 | | | (0.36 | ) | | 1.08 | | | 1.08 | | | 15 | |
| 07/01/22 | 06/30/23 | | | 21.48 | | | (0.12 | ) | | 4.10 | | | 3.98 | | | — | | | (1.64 | ) | | (1.64 | ) | | | 23.82 | | | 19.76 | | | | 13,873 | | | (0.54 | ) | | 1.08 | | | 1.08 | | | 21 | |
| 07/01/21 | 06/30/22 | | | 34.27 | | | (0.20 | ) | | (8.12 | ) | | (8.32 | ) | | — | | | (4.47 | ) | | (4.47 | ) | | | 21.48 | | | (28.20 | ) | | | 13,940 | | | (0.66 | ) | | 1.06 | | | 1.06 | | | 21 | |
| 07/01/20 | 06/30/21 | | | 26.84 | | | (0.18 | ) | | 9.23 | | | 9.05 | | | — | | | (1.62 | ) | | (1.62 | ) | | | 34.27 | | | 34.63 | | | | 34,042 | | | (0.59 | ) | | 1.07 | | | 1.07 | | | 25 | |
| 07/01/19 | 06/30/20 | | | 23.09 | | | (0.14 | ) | | 5.16 | | | 5.02 | | | — | | | (1.27 | ) | | (1.27 | ) | | | 26.84 | | | 22.39 | | | | 13,692 | | | (0.56 | ) | | 1.09 | | | 1.09 | | | 22 | |
| 07/01/18 | 06/30/19 | | | 22.53 | | | (0.13 | ) | | 3.14 | | | 3.01 | | | — | | | (2.45 | ) | | (2.45 | ) | | | 23.09 | | | 16.22 | | | | 6,683 | | | (0.59 | ) | | 1.10 | | | 1.10 | | | 22 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BROWN ADVISORY FLEXIBLE EQUITY FUND: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Institutional Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 31.94 | | | 0.06 | | | 3.78 | | | 3.84 | | | (0.12 | ) | | (0.85 | ) | | (0.97 | ) | | | 34.81 | | | 12.08 | | | | 297,966 | | | 0.39 | | | 0.53 | | | 0.53 | | | 7 | |
| 07/01/22 | 06/30/23 | | | 27.31 | | | 0.13 | | | 5.55 | | | 5.68 | | | (0.13 | ) | | (0.92 | ) | | (1.05 | ) | | | 31.94 | | | 21.44 | | | | 259,933 | | | 0.45 | | | 0.54 | | | 0.54 | | | 12 | |
| 07/01/21 | 06/30/22 | | | 34.26 | | | 0.09 | | | (5.71 | ) | | (5.62 | ) | | (0.06 | ) | | (1.27 | ) | | (1.33 | ) | | | 27.31 | | | (17.18 | ) | | | 196,675 | | | 0.29 | | | 0.53 | | | 0.53 | | | 10 | |
| 07/01/20 | 06/30/21 | | | 24.36 | | | 0.07 | | | 10.76 | | | 10.83 | | | (0.09 | ) | | (0.84 | ) | | (0.93 | ) | | | 34.26 | | | 45.26 | | | | 201,849 | | | 0.25 | | | 0.54 | | | 0.54 | | | 13 | |
| 07/01/19 | 06/30/20 | | | 22.92 | | | 0.11 | | | 2.50 | | | 2.61 | | | (0.15 | ) | | (1.02 | ) | | (1.17 | ) | | | 24.36 | | | 11.29 | | | | 134,574 | | | 0.47 | | | 0.56 | | | 0.56 | | | 12 | |
| 07/01/18 | 06/30/19 | | | 21.94 | | | 0.17 | | | 1.63 | | | 1.80 | | | (0.08 | ) | | (0.74 | ) | | (0.82 | ) | | | 22.92 | | | 8.94 | | | | 135,190 | | | 0.78 | | | 0.57 | | | 0.57 | | | 14 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 31.84 | | | 0.04 | | | 3.77 | | | 3.81 | | | (0.08 | ) | | (0.85 | ) | | (0.93 | ) | | | 34.72 | | | 12.00 | | | | 485,434 | | | 0.24 | | | 0.68 | | | 0.68 | | | 7 | |
| 07/01/22 | 06/30/23 | | | 27.20 | | | 0.08 | | | 5.54 | | | 5.62 | | | (0.06 | ) | | (0.92 | ) | | (0.98 | ) | | | 31.84 | | | 21.24 | | | | 442,013 | | | 0.30 | | | 0.69 | | | 0.69 | | | 12 | |
| 07/01/21 | 06/30/22 | | | 34.16 | | | 0.04 | | | (5.70 | ) | | (5.66 | ) | | (0.03 | ) | | (1.27 | ) | | (1.30 | ) | | | 27.20 | | | (17.32 | ) | | | 400,090 | | | 0.14 | | | 0.68 | | | 0.68 | | | 10 | |
| 07/01/20 | 06/30/21 | | | 24.31 | | | 0.03 | | | 10.73 | | | 10.76 | | | (0.07 | ) | | (0.84 | ) | | (0.91 | ) | | | 34.16 | | | 45.05 | | | | 500,233 | | | 0.10 | | | 0.69 | | | 0.69 | | | 13 | |
| 07/01/19 | 06/30/20 | | | 22.88 | | | 0.07 | | | 2.49 | | | 2.56 | | | (0.11 | ) | | (1.02 | ) | | (1.13 | ) | | | 24.31 | | | 11.12 | | | | 362,695 | | | 0.32 | | | 0.71 | | | 0.71 | | | 12 | |
| 07/01/18 | 06/30/19 | | | 21.90 | | | 0.14 | | | 1.63 | | | 1.77 | | | (0.05 | ) | | (0.74 | ) | | (0.79 | ) | | | 22.88 | | | 8.77 | | | | 343,917 | | | 0.63 | | | 0.72 | | | 0.72 | | | 14 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Advisor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 31.72 | | | — | | | 3.75 | | | 3.75 | | | (0.03 | ) | | (0.85 | ) | | (0.88 | ) | | | 34.59 | | | 11.87 | | | | 5,987 | | | (0.01 | ) | | 0.93 | | | 0.93 | | | 7 | |
| 07/01/22 | 06/30/23 | | | 27.11 | | | 0.01 | | | 5.52 | | | 5.53 | | | — | | | (0.92 | ) | | (0.92 | ) | | | 31.72 | | | 20.93 | | | | 5,245 | | | 0.05 | | | 0.94 | | | 0.94 | | | 12 | |
| 07/01/21 | 06/30/22 | | | 34.10 | | | (0.04 | ) | | (5.68 | ) | | (5.72 | ) | | — | | | (1.27 | ) | | (1.27 | ) | | | 27.11 | | | (17.51 | ) | | | 4,471 | | | (0.11 | ) | | 0.93 | | | 0.93 | | | 10 | |
| 07/01/20 | 06/30/21 | | | 24.30 | | | (0.04 | ) | | 10.72 | | | 10.68 | | | (0.04 | ) | | (0.84 | ) | | (0.88 | ) | | | 34.10 | | | 44.69 | | | | 5,965 | | | (0.15 | ) | | 0.94 | | | 0.94 | | | 13 | |
| 07/01/19 | 06/30/20 | | | 22.90 | | | 0.02 | | | 2.48 | | | 2.50 | | | (0.08 | ) | | (1.02 | ) | | (1.10 | ) | | | 24.30 | | | 10.84 | | | | 4,403 | | | 0.07 | | | 0.96 | | | 0.96 | | | 12 | |
| 07/01/18 | 06/30/19 | | | 21.91 | | | 0.08 | | | 1.65 | | | 1.73 | | | — | | | (0.74 | ) | | (0.74 | ) | | | 22.90 | | | 8.52 | | | | 4,652 | | | 0.38 | | | 0.97 | | | 0.97 | | | 14 | |
The accompanying notes are an integral part of these financial statements.
Financial Highlights
| | | | | | | From Investment | | | Distributions to | | | | | | | | | | | | Ratios to Average | | | | |
| | | | | | | Operations(a) | | | Shareholders From | | | | | | | | | | | | Net Assets(b) | | | | |
| | | | | | | | | | Net | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For a Share | | | | | | | | Realized | | | | | | | | | | | | | | | Net | | | | | | Net | | | | | | | | | | | | | |
| Outstanding | | Net Asset | | | Net | | | & | | | | | | | | | | | | | | | Asset | | | | | | Assets at | | | Net | | | | | | | | | | |
| Throughout | | Value, | | | Investment | | | Unrealized | | | | | | Net | | | Net | | | | | | Value, | | | | | | End of | | | Investment | | | | | | Gross | | | Portfolio | |
| Each Fiscal Period: | | Beginning | | | Income | | | Gains | | | | | | Investment | | | Realized | | | | | | End of | | | Total | | | Period | | | Income | | | Net | | | Expenses | | | Turnover | |
| Beginning | Ending | | of Period | | | (Loss) | | | (Losses) | | | Total | | | Income | | | Gains | | | Total | | | Period | | Return(c) | | | | (000’s | ) | | (Loss) | | | Expenses | | | (d) | | | Rate(c) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BROWN ADVISORY EQUITY INCOME FUND: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Institutional Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | $ | 13.69 | | | 0.12 | | | 0.21 | | | 0.33 | | | (0.18 | ) | | (2.22 | ) | | (2.40 | ) | | $ | 11.62 | | | 2.46 | % | | $ | 5,425 | | | 1.84 | % | | 0.76 | % | | 0.91 | % | | 6 | % |
| 07/01/22 | 06/30/23 | | | 13.57 | | | 0.24 | | | 1.21 | | | 1.45 | | | (0.24 | ) | | (1.09 | ) | | (1.33 | ) | | | 13.69 | | | 10.95 | | | | 18,094 | | | 1.75 | | | 0.76 | | | 0.81 | | | 6 | |
| 07/01/21 | 06/30/22 | | | 15.98 | | | 0.23 | | | (0.96 | ) | | (0.73 | ) | | (0.23 | ) | | (1.45 | ) | | (1.68 | ) | | | 13.57 | | | (5.87 | ) | | | 19,964 | | | 1.46 | | | 0.76 | | | 0.79 | | | 11 | |
| 07/01/20 | 06/30/21 | | | 12.97 | | | 0.23 | | | 3.75 | | | 3.98 | | | (0.23 | ) | | (0.74 | ) | | (0.97 | ) | | | 15.98 | | | 31.84 | | | | 24,045 | | | 1.59 | | | 0.77 | | | 0.80 | | | 20 | |
| 07/01/19 | 06/30/20 | | | 14.15 | | | 0.23 | | | (0.10 | ) | | 0.13 | | | (0.23 | ) | | (1.08 | ) | | (1.31 | ) | | | 12.97 | | | 0.46 | | | | 22,026 | | | 1.66 | | | 0.80 | | | 0.80 | | | 16 | |
| 07/01/18 | 06/30/19 | | | 14.41 | | | 0.26 | | | 1.33 | | | 1.59 | | | (0.27 | ) | | (1.58 | ) | | (1.85 | ) | | | 14.15 | | | 13.12 | | | | 26,449 | | | 1.87 | | | 0.80 | | | 0.80 | | | 11 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 13.69 | | | 0.11 | | | 0.19 | | | 0.30 | | | (0.16 | ) | | (2.22 | ) | | (2.38 | ) | | | 11.61 | | | 2.30 | | | | 13,935 | | | 1.69 | | | 0.91 | | | 1.14 | | | 6 | |
| 07/01/22 | 06/30/23 | | | 13.56 | | | 0.22 | | | 1.22 | | | 1.44 | | | (0.22 | ) | | (1.09 | ) | | (1.31 | ) | | | 13.69 | | | 10.87 | | | | 53,364 | | | 1.60 | | | 0.91 | | | 0.96 | | | 6 | |
| 07/01/21 | 06/30/22 | | | 15.97 | | | 0.21 | | | (0.96 | ) | | (0.75 | ) | | (0.21 | ) | | (1.45 | ) | | (1.66 | ) | | | 13.56 | | | (6.02 | ) | | | 55,288 | | | 1.31 | | | 0.91 | | | 0.94 | | | 11 | |
| 07/01/20 | 06/30/21 | | | 12.96 | | | 0.21 | | | 3.75 | | | 3.96 | | | (0.21 | ) | | (0.74 | ) | | (0.95 | ) | | | 15.97 | | | 31.67 | | | | 63,600 | | | 1.44 | | | 0.92 | | | 0.95 | | | 20 | |
| 07/01/19 | 06/30/20 | | | 14.15 | | | 0.21 | | | (0.11 | ) | | 0.10 | | | (0.21 | ) | | (1.08 | ) | | (1.29 | ) | | | 12.96 | | | 0.24 | | | | 55,228 | | | 1.51 | | | 0.95 | | | 0.95 | | | 16 | |
| 07/01/18 | 06/30/19 | | | 14.40 | | | 0.24 | | | 1.34 | | | 1.58 | | | (0.25 | ) | | (1.58 | ) | | (1.83 | ) | | | 14.15 | | | 13.03 | | | | 62,309 | | | 1.72 | | | 0.95 | | | 0.95 | | | 11 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Advisor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 13.67 | | | 0.10 | | | 0.20 | | | 0.30 | | | (0.15 | ) | | (2.22 | ) | | (2.37 | ) | | | 11.60 | | | 2.27 | | | | 719 | | | 1.44 | | | 1.16 | | | 1.39 | | | 6 | |
| 07/01/22 | 06/30/23 | | | 13.55 | | | 0.18 | | | 1.21 | | | 1.39 | | | (0.18 | ) | | (1.09 | ) | | (1.27 | ) | | | 13.67 | | | 10.51 | | | | 1,073 | | | 1.35 | | | 1.16 | | | 1.21 | | | 6 | |
| 07/01/21 | 06/30/22 | | | 15.96 | | | 0.17 | | | (0.96 | ) | | (0.79 | ) | | (0.17 | ) | | (1.45 | ) | | (1.62 | ) | | | 13.55 | | | (6.24 | ) | | | 1,247 | | | 1.06 | | | 1.16 | | | 1.19 | | | 11 | |
| 07/01/20 | 06/30/21 | | | 12.96 | | | 0.17 | | | 3.74 | | | 3.91 | | | (0.17 | ) | | (0.74 | ) | | (0.91 | ) | | | 15.96 | | | 31.27 | | | | 1,182 | | | 1.19 | | | 1.17 | | | 1.20 | | | 20 | |
| 07/01/19 | 06/30/20 | | | 14.14 | | | 0.17 | | | (0.10 | ) | | 0.07 | | | (0.17 | ) | | (1.08 | ) | | (1.25 | ) | | | 12.96 | | | 0.05 | | | | 886 | | | 1.26 | | | 1.20 | | | 1.20 | | | 16 | |
| 07/01/18 | 06/30/19 | | | 14.40 | | | 0.21 | | | 1.33 | | | 1.54 | | | (0.22 | ) | | (1.58 | ) | | (1.80 | ) | | | 14.14 | | | 12.67 | | | | 1,017 | | | 1.47 | | | 1.20 | | | 1.20 | | | 11 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BROWN ADVISORY SUSTAINABLE GROWTH FUND: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Institutional Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 43.08 | | | 0.01 | | | 5.02 | | | 5.03 | | | (0.01 | ) | | — | | | (0.01 | ) | | | 48.10 | | | 11.66 | | | | 5,950,956 | | | 0.05 | | | 0.61 | | | 0.61 | | | 10 | |
| 07/01/22 | 06/30/23 | | | 35.42 | | | 0.03 | | | 7.63 | | | 7.66 | | | (0.00 | ) | | — | | | (0.00 | ) | | | 43.08 | | | 21.63 | | | | 5,145,711 | | | 0.08 | | | 0.63 | | | 0.63 | | | 13 | |
| 07/01/21 | 06/30/22 | | | 44.56 | | | (0.04 | ) | | (8.19 | ) | | (8.23 | ) | | — | | | (0.91 | ) | | (0.91 | ) | | | 35.42 | | | (19.02 | ) | | | 3,378,590 | | | (0.10 | ) | | 0.63 | | | 0.63 | | | 19 | |
| 07/01/20 | 06/30/21 | | | 31.96 | | | (0.03 | ) | | 12.63 | | | 12.60 | | | — | | | — | | | — | | | | 44.56 | | | 39.42 | | | | 3,364,728 | | | (0.08 | ) | | 0.65 | | | 0.65 | | | 23 | |
| 07/01/19 | 06/30/20 | | | 26.39 | | | 0.01 | | | 5.77 | | | 5.78 | | | — | | | (0.21 | ) | | (0.21 | ) | | | 31.96 | | | 22.01 | | | | 1,601,989 | | | 0.05 | | | 0.70 | | | 0.70 | | | 20 | |
| 07/01/18 | 06/30/19 | | | 23.02 | | | 0.03 | | | 4.12 | | | 4.15 | | | — | | | (0.78 | ) | | (0.78 | ) | | | 26.39 | | | 18.89 | | | | 749,949 | | | 0.10 | | | 0.73 | | | 0.73 | | | 21 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 42.29 | | | (0.02 | ) | | 4.92 | | | 4.90 | | | — | | | — | | | — | | | | 47.19 | | | 11.59 | | | | 2,407,932 | | | (0.10 | ) | | 0.76 | | | 0.76 | | | 10 | |
| 07/01/22 | 06/30/23 | | | 34.83 | | | (0.02 | ) | | 7.48 | | | 7.46 | | | — | | | — | | | — | | | | 42.29 | | | 21.42 | | | | 2,150,632 | | | (0.07 | ) | | 0.78 | | | 0.78 | | | 13 | |
| 07/01/21 | 06/30/22 | | | 43.90 | | | (0.11 | ) | | (8.05 | ) | | (8.16 | ) | | — | | | (0.91 | ) | | (0.91 | ) | | | 34.83 | | | (19.15 | ) | | | 1,714,513 | | | (0.25 | ) | | 0.78 | | | 0.78 | | | 19 | |
| 07/01/20 | 06/30/21 | | | 31.52 | | | (0.09 | ) | | 12.47 | | | 12.38 | | | — | | | — | | | — | | | | 43.90 | | | 39.28 | | | | 1,849,429 | | | (0.23 | ) | | 0.80 | | | 0.80 | | | 23 | |
| 07/01/19 | 06/30/20 | | | 26.07 | | | (0.03 | ) | | 5.69 | | | 5.66 | | | — | | | (0.21 | ) | | (0.21 | ) | | | 31.52 | | | 21.82 | | | | 1,108,023 | | | (0.10 | ) | | 0.85 | | | 0.85 | | | 20 | |
| 07/01/18 | 06/30/19 | | | 22.79 | | | (0.01 | ) | | 4.07 | | | 4.06 | | | — | | | (0.78 | ) | | (0.78 | ) | | | 26.07 | | | 18.68 | | | | 374,769 | | | (0.05 | ) | | 0.88 | | | 0.88 | | | 21 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Advisor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 41.08 | | | (0.07 | ) | | 4.77 | | | 4.70 | | | — | | | — | | | — | | | | 45.78 | | | 11.44 | | | | 397,786 | | | (0.35 | ) | | 1.01 | | | 1.01 | | | 10 | |
| 07/01/22 | 06/30/23 | | | 33.91 | | | (0.11 | ) | | 7.28 | | | 7.17 | | | — | | | — | | | — | | | | 41.08 | | | 21.14 | | | | 356,620 | | | (0.32 | ) | | 1.03 | | | 1.03 | | | 13 | |
| 07/01/21 | 06/30/22 | | | 42.87 | | | (0.21 | ) | | (7.84 | ) | | (8.05 | ) | | — | | | (0.91 | ) | | (0.91 | ) | | | 33.91 | | | (19.35 | ) | | | 298,972 | | | (0.50 | ) | | 1.03 | | | 1.03 | | | 19 | |
| 07/01/20 | 06/30/21 | | | 30.86 | | | (0.18 | ) | | 12.19 | | | 12.01 | | | — | | | — | | | — | | | | 42.87 | | | 38.92 | | | | 444,064 | | | (0.48 | ) | | 1.05 | | | 1.05 | | | 23 | |
| 07/01/19 | 06/30/20 | | | 25.59 | | | (0.09 | ) | | 5.57 | | | 5.48 | | | — | | | (0.21 | ) | | (0.21 | ) | | | 30.86 | | | 21.53 | | | | 285,542 | | | (0.35 | ) | | 1.10 | | | 1.10 | | | 20 | |
| 07/01/18 | 06/30/19 | | | 22.44 | | | (0.07 | ) | | 4.00 | | | 3.93 | | | — | | | (0.78 | ) | | (0.78 | ) | | | 25.59 | | | 18.39 | | | | 250,871 | | | (0.30 | ) | | 1.13 | | | 1.13 | | | 21 | |
The accompanying notes are an integral part of these financial statements.
Financial Highlights
| | | | | | | From Investment | | | Distributions to | | | | | | | | | | | | Ratios to Average | | | | |
| | | | | | | Operations(a) | | | Shareholders From | | | | | | | | | | | | Net Assets(b) | | | | |
| | | | | | | | | | Net | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For a Share | | | | | | | | Realized | | | | | | | | | | | | | | | Net | | | | | | Net | | | | | | | | | | | | | |
| Outstanding | | Net Asset | | | Net | | | & | | | | | | | | | | | | | | | Asset | | | | | | Assets at | | | Net | | | | | | | | | | |
| Throughout | | Value, | | | Investment | | | Unrealized | | | | | | Net | | | Net | | | | | | Value, | | | | | | End of | | | Investment | | | | | | Gross | | | Portfolio | |
| Each Fiscal Period: | | Beginning | | | Income | | | Gains | | | | | | Investment | | | Realized | | | | | | End of | | | Total | | | Period | | | Income | | | Net | | | Expenses | | | Turnover | |
| Beginning | Ending | | of Period | | | (Loss) | | | (Losses) | | | Total | | | Income | | | Gains | | | Total | | | Period | | Return(c) | | | | (000’s | ) | | (Loss) | | | Expenses | | | (d) | | | Rate(c) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BROWN ADVISORY MID-CAP GROWTH FUND: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Institutional Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | $ | 13.55 | | | (0.01 | ) | | 1.11 | | | 1.10 | | | — | | | — | | | — | | | $ | 14.65 | | | 8.20 | % | | $ | 70,358 | | | (0.12 | )% | | 0.82 | % | | 0.84 | % | | 33 | % |
| 07/01/22 | 06/30/23 | | | 12.29 | | | (0.04 | ) | | 2.11 | | | 2.07 | | | — | | | (0.81 | ) | | (0.81 | ) | | | 13.55 | | | 17.38 | | | | 71,960 | | | (0.28 | ) | | 0.82 | | | 0.83 | | | 55 | |
| 07/01/21 | 06/30/22 | | | 19.86 | | | (0.09 | ) | | (5.73 | ) | | (5.82 | ) | | — | | | (1.75 | ) | | (1.75 | ) | | | 12.29 | | | (31.54 | ) | | | 94,754 | | | (0.52 | ) | | 0.79 | | | 0.79 | | | 48 | |
| 07/01/20 | 06/30/21 | | | 13.86 | | | (0.08 | ) | | 6.08 | | | 6.00 | | | — | | | — | | | — | | | | 19.86 | | | 43.03 | | | | 159,180 | | | (0.44 | ) | | 0.76 | | | 0.79 | | | 48 | |
| 07/01/19 | 06/30/20 | | | 13.14 | | | (0.01 | ) | | 0.77 | | | 0.76 | | | — | | | (0.04 | ) | | (0.04 | ) | | | 13.86 | | | 5.68 | | | | 100,367 | | | (0.11 | ) | | 0.70 | | | 0.88 | | | 35 | |
| 07/02/18^ | 06/30/19 | | | 11.42 | | | (0.00 | ) | | 1.83 | | | 1.83 | | | — | | | (0.11 | ) | | (0.11 | ) | | | 13.14 | | | 16.36 | | | | 42,404 | | | (0.00 | ) | | 0.70 | | | 1.04 | | | 46 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 13.42 | | | (0.02 | ) | | 1.11 | | | 1.09 | | | — | | | — | | | — | | | | 14.51 | | | 8.12 | | | | 26,496 | | | (0.27 | ) | | 0.97 | | | 0.99 | | | 33 | |
| 07/01/22 | 06/30/23 | | | 12.20 | | | (0.05 | ) | | 2.08 | | | 2.03 | | | — | | | (0.81 | ) | | (0.81 | ) | | | 13.42 | | | 17.26 | | | | 24,419 | | | (0.43 | ) | | 0.97 | | | 0.98 | | | 55 | |
| 07/01/21 | 06/30/22 | | | 19.76 | | | (0.11 | ) | | (5.70 | ) | | (5.81 | ) | | — | | | (1.75 | ) | | (1.75 | ) | | | 12.20 | | | (31.70 | ) | | | 22,897 | | | (0.67 | ) | | 0.94 | | | 0.94 | | | 48 | |
| 07/01/20 | 06/30/21 | | | 13.81 | | | (0.10 | ) | | 6.05 | | | 5.95 | | | — | | | — | | | — | | | | 19.76 | | | 42.90 | | | | 33,381 | | | (0.59 | ) | | 0.91 | | | 0.94 | | | 48 | |
| 07/01/19 | 06/30/20 | | | 13.12 | | | (0.03 | ) | | 0.76 | | | 0.73 | | | — | | | (0.04 | ) | | (0.04 | ) | | | 13.81 | | | 5.46 | | | | 28,477 | | | (0.26 | ) | | 0.85 | | | 1.03 | | | 35 | |
| 07/01/18 | 06/30/19 | | | 11.36 | | | (0.02 | ) | | 1.89 | | | 1.87 | | | — | | | (0.11 | ) | | (0.11 | ) | | | 13.12 | | | 16.80 | | | | 2,933 | | | (0.15 | ) | | 0.85 | | | 1.19 | | | 46 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BROWN ADVISORY SMALL-CAP GROWTH FUND: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Institutional Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 44.48 | | | 0.02 | | | 1.02 | | | 1.04 | | | — | | | — | | | — | | | | 45.52 | | | 2.34 | | | | 1,299,496 | | | 0.11 | | | 0.96 | | | 0.96 | | | 10 | |
| 07/01/22 | 06/30/23 | | | 41.98 | | | (0.06 | ) | | 5.88 | | | 5.82 | | | — | | | (3.32 | ) | | (3.32 | ) | | | 44.48 | | | 14.33 | | | | 1,349,940 | | | (0.13 | ) | | 0.96 | | | 0.96 | | | 29 | |
| 07/01/21 | 06/30/22 | | | 63.00 | | | (0.32 | ) | | (13.47 | ) | | (13.79 | ) | | — | | | (7.23 | ) | | (7.23 | ) | | | 41.98 | | | (24.11 | ) | | | 1,165,292 | | | (0.59 | ) | | 0.95 | | | 0.95 | | | 27 | |
| 07/01/20 | 06/30/21 | | | 44.31 | | | (0.34 | ) | | 19.48 | | | 19.14 | | | — | | | (0.45 | ) | | (0.45 | ) | | | 63.00 | | | 43.31 | | | | 1,758,121 | | | (0.61 | ) | | 0.95 | | | 0.95 | | | 32 | |
| 07/01/19 | 06/30/20 | | | 44.24 | | | (0.20 | ) | | 1.15 | | | 0.95 | | | — | | | (0.88 | ) | | (0.88 | ) | | | 44.31 | | | 2.18 | | | | 1,039,126 | | | (0.48 | ) | | 0.97 | | | 0.97 | | | 29 | |
| 07/01/18 | 06/30/19 | | | 40.64 | | | (0.15 | ) | | 5.52 | | | 5.37 | | | (0.18 | ) | | (1.59 | ) | | (1.77 | ) | | | 44.24 | | | 14.56 | | | | 838,698 | | | (0.36 | ) | | 0.98 | | | 0.98 | | | 44 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 22.12 | | | (0.01 | ) | | 0.51 | | | 0.50 | | | — | | | — | | | — | | | | 22.62 | | | 2.26 | | | | 912,012 | | | (0.04 | ) | | 1.11 | | | 1.11 | | | 10 | |
| 07/01/22 | 06/30/23 | | | 20.91 | | | (0.06 | ) | | 2.92 | | | 2.86 | | | — | | | (1.65 | ) | | (1.65 | ) | | | 22.12 | | | 14.17 | | | | 882,356 | | | (0.28 | ) | | 1.11 | | | 1.11 | | | 29 | |
| 07/01/21 | 06/30/22 | | | 31.42 | | | (0.20 | ) | | (6.71 | ) | | (6.91 | ) | | — | | | (3.60 | ) | | (3.60 | ) | | | 20.91 | | | (24.23 | ) | | | 707,378 | | | (0.74 | ) | | 1.10 | | | 1.10 | | | 27 | |
| 07/01/20 | 06/30/21 | | | 22.13 | | | (0.21 | ) | | 9.72 | | | 9.51 | | | — | | | (0.22 | ) | | (0.22 | ) | | | 31.42 | | | 43.11 | | | | 822,075 | | | (0.76 | ) | | 1.10 | | | 1.10 | | | 32 | |
| 07/01/19 | 06/30/20 | | | 22.13 | | | (0.13 | ) | | 0.57 | | | 0.44 | | | — | | | (0.44 | ) | | (0.44 | ) | | | 22.13 | | | 2.02 | | | | 511,028 | | | (0.63 | ) | | 1.12 | | | 1.12 | | | 29 | |
| 07/01/18 | 06/30/19 | | | 20.34 | | | (0.10 | ) | | 2.77 | | | 2.67 | | | (0.08 | ) | | (0.80 | ) | | (0.88 | ) | | | 22.13 | | | 14.40 | | | | 493,421 | | | (0.51 | ) | | 1.13 | | | 1.13 | | | 44 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Advisor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 20.93 | | | (0.03 | ) | | 0.47 | | | 0.44 | | | — | | | — | | | — | | | | 21.37 | | | 2.10 | | | | 8,641 | | | (0.29 | ) | | 1.36 | | | 1.36 | | | 10 | |
| 07/01/22 | 06/30/23 | | | 19.83 | | | (0.11 | ) | | 2.78 | | | 2.67 | | | — | | | (1.57 | ) | | (1.57 | ) | | | 20.93 | | | 13.91 | | | | 9,644 | | | (0.53 | ) | | 1.36 | | | 1.36 | | | 29 | |
| 07/01/21 | 06/30/22 | | | 29.88 | | | (0.26 | ) | | (6.37 | ) | | (6.63 | ) | | — | | | (3.42 | ) | | (3.42 | ) | | | 19.83 | | | (24.44 | ) | | | 9,309 | | | (0.99 | ) | | 1.35 | | | 1.35 | | | 27 | |
| 07/01/20 | 06/30/21 | | | 21.10 | | | (0.26 | ) | | 9.25 | | | 8.99 | | | — | | | (0.21 | ) | | (0.21 | ) | | | 29.88 | | | 42.74 | | | | 14,939 | | | (1.01 | ) | | 1.35 | | | 1.35 | | | 32 | |
| 07/01/19 | 06/30/20 | | | 21.15 | | | (0.18 | ) | | 0.55 | | | 0.37 | | | — | | | (0.42 | ) | | (0.42 | ) | | | 21.10 | | | 1.78 | | | | 12,159 | | | (0.88 | ) | | 1.37 | | | 1.37 | | | 29 | |
| 07/01/18 | 06/30/19 | | | 19.46 | | | (0.15 | ) | | 2.64 | | | 2.49 | | | (0.04 | ) | | (0.76 | ) | | (0.80 | ) | | | 21.15 | | | 14.08 | | | | 14,489 | | | (0.76 | ) | | 1.38 | | | 1.38 | | | 44 | |
The accompanying notes are an integral part of these financial statements.
Financial Highlights
| | | | | | | From Investment | | | Distributions to | | | | | | | | | | | | Ratios to Average | | | | |
| | | | | | | Operations(a) | | | Shareholders From | | | | | | | | | | | | Net Assets(b) | | | | |
| | | | | | | | | | Net | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For a Share | | | | | | | | Realized | | | | | | | | | | | | | | | Net | | | | | | Net | | | | | | | | | | | | | |
| Outstanding | | Net Asset | | | Net | | | & | | | | | | | | | | | | | | | Asset | | | | | | Assets at | | | Net | | | | | | | | | | |
| Throughout | | Value, | | | Investment | | | Unrealized | | | | | | Net | | | Net | | | | | | Value, | | | | | | End of | | | Investment | | | | | | Gross | | | Portfolio | |
| Each Fiscal Period: | | Beginning | | | Income | | | Gains | | | | | | Investment | | | Realized | | | | | | End of | | | Total | | | Period | | | Income | | | Net | | | Expenses | | | Turnover | |
| Beginning | Ending | | of Period | | | (Loss) | | | (Losses) | | | Total | | | Income | | | Gains | | | Total | | | Period | | Return(c) | | | | (000’s | ) | | (Loss) | | | Expenses | | | (d) | | | Rate(c) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BROWN ADVISORY SMALL-CAP FUNDAMENTAL VALUE FUND: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Institutional Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | $ | 27.68 | | | 0.12 | | | 3.43 | | | 3.55 | | | (0.21 | ) | | (1.58 | ) | | (1.79 | ) | | $ | 29.44 | | | 13.02 | % | | $ | 669,397 | | | 0.85 | % | | 0.95 | % | | 0.95 | % | | 19 | % |
| 07/01/22 | 06/30/23 | | | 26.09 | | | 0.20 | | | 3.09 | | | 3.29 | | | (0.13 | ) | | (1.57 | ) | | (1.70 | ) | | | 27.68 | | | 12.67 | | | | 588,594 | | | 0.71 | | | 0.95 | | | 0.95 | | | 35 | |
| 07/01/21 | 06/30/22 | | | 29.65 | | | 0.09 | | | (3.45 | ) | | (3.36 | ) | | (0.10 | ) | | (0.10 | ) | | (0.20 | ) | | | 26.09 | | | (11.45 | ) | | | 562,382 | | | 0.29 | | | 0.95 | | | 0.95 | | | 27 | |
| 07/01/20 | 06/30/21 | | | 19.25 | | | 0.11 | | | 10.44 | | | 10.55 | | | (0.15 | ) | | — | | | (0.15 | ) | | | 29.65 | | | 54.97 | | | | 591,096 | | | 0.43 | | | 0.95 | | | 0.95 | | | 42 | |
| 07/01/19 | 06/30/20 | | | 24.77 | | | 0.21 | | | (4.46 | ) | | (4.25 | ) | | (0.13 | ) | | (1.14 | ) | | (1.27 | ) | | | 19.25 | | | (18.38 | ) | | | 336,819 | | | 0.94 | | | 0.97 | | | 0.97 | | | 56 | |
| 07/01/18 | 06/30/19 | | | 29.16 | | | 0.29 | | | (1.54 | ) | | (1.25 | ) | | (0.21 | ) | | (2.93 | ) | | (3.14 | ) | | | 24.77 | | | (2.91 | ) | | | 447,846 | | | 1.10 | | | 0.97 | | | 0.97 | | | 36 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 27.62 | | | 0.10 | | | 3.42 | | | 3.52 | | | (0.16 | ) | | (1.58 | ) | | (1.74 | ) | | | 29.40 | | | 12.98 | | | | 635,988 | | | 0.70 | | | 1.10 | | | 1.10 | | | 19 | |
| 07/01/22 | 06/30/23 | | | 26.04 | | | 0.16 | | | 3.08 | | | 3.24 | | | (0.09 | ) | | (1.57 | ) | | (1.66 | ) | | | 27.62 | | | 12.49 | | | | 591,487 | | | 0.56 | | | 1.10 | | | 1.10 | | | 35 | |
| 07/01/21 | 06/30/22 | | | 29.60 | | | 0.04 | | | (3.45 | ) | | (3.41 | ) | | (0.05 | ) | | (0.10 | ) | | (0.15 | ) | | | 26.04 | | | (11.59 | ) | | | 564,689 | | | 0.14 | | | 1.10 | | | 1.10 | | | 27 | |
| 07/01/20 | 06/30/21 | | | 19.22 | | | 0.07 | | | 10.42 | | | 10.49 | | | (0.11 | ) | | — | | | (0.11 | ) | | | 29.60 | | | 54.74 | | | | 648,403 | | | 0.28 | | | 1.10 | | | 1.10 | | | 42 | |
| 07/01/19 | 06/30/20 | | | 24.75 | | | 0.18 | | | (4.46 | ) | | (4.28 | ) | | (0.11 | ) | | (1.14 | ) | | (1.25 | ) | | | 19.22 | | | (18.49 | ) | | | 432,498 | | | 0.79 | | | 1.12 | | | 1.12 | | | 56 | |
| 07/01/18 | 06/30/19 | | | 29.12 | | | 0.25 | | | (1.53 | ) | | (1.28 | ) | | (0.16 | ) | | (2.93 | ) | | (3.09 | ) | | | 24.75 | | | (3.05 | ) | | | 577,212 | | | 0.95 | | | 1.12 | | | 1.12 | | | 36 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Advisor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 27.42 | | | 0.06 | | | 3.39 | | | 3.45 | | | (0.11 | ) | | (1.58 | ) | | (1.69 | ) | | | 29.18 | | | 12.80 | | | | 3,349 | | | 0.45 | | | 1.35 | | | 1.35 | | | 19 | |
| 07/01/22 | 06/30/23 | | | 25.86 | | | 0.09 | | | 3.07 | | | 3.16 | | | (0.03 | ) | | (1.57 | ) | | (1.60 | ) | | | 27.42 | | | 12.25 | | | | 2,685 | | | 0.31 | | | 1.35 | | | 1.35 | | | 35 | |
| 07/01/21 | 06/30/22 | | | 29.43 | | | (0.03 | ) | | (3.43 | ) | | (3.46 | ) | | (0.01 | ) | | (0.10 | ) | | (0.11 | ) | | | 25.86 | | | (11.82 | ) | | | 3,154 | | | (0.11 | ) | | 1.35 | | | 1.35 | | | 27 | |
| 07/01/20 | 06/30/21 | | | 19.10 | | | 0.01 | | | 10.36 | | | 10.37 | | | (0.04 | ) | | — | | | (0.04 | ) | | | 29.43 | | | 54.37 | | | | 8,125 | | | 0.03 | | | 1.35 | | | 1.35 | | | 42 | |
| 07/01/19 | 06/30/20 | | | 24.64 | | | 0.12 | | | (4.44 | ) | | (4.32 | ) | | (0.08 | ) | | (1.14 | ) | | (1.22 | ) | | | 19.10 | | | (18.71 | ) | | | 4,480 | | | 0.54 | | | 1.37 | | | 1.37 | | | 56 | |
| 07/01/18 | 06/30/19 | | | 28.98 | | | 0.19 | | | (1.51 | ) | | (1.32 | ) | | (0.09 | ) | | (2.93 | ) | | (3.02 | ) | | | 24.64 | | | (3.27 | ) | | | 8,393 | | | 0.70 | | | 1.37 | | | 1.37 | | | 36 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BROWN ADVISORY SUSTAINABLE SMALL-CAP CORE FUND: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Institutional Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 8.81 | | | 0.01 | | | 0.81 | | | 0.82 | | | (0.02 | ) | | — | | | (0.02 | ) | | | 9.61 | | | 9.26 | | | | 63,487 | | | 0.25 | | | 0.93 | | | 1.08 | | | 13 | |
| 07/01/22 | 06/30/23 | | | 7.74 | | | 0.01 | | | 1.06 | | | 1.07 | | | — | | | (0.00 | ) | | (0.00 | ) | | | 8.81 | | | 13.83 | | | | 51,935 | | | 0.18 | | | 0.93 | | | 1.16 | | | 66 | |
| 09/30/21^ | 06/30/22 | | | 10.00 | | | (0.02 | ) | | (2.24 | ) | | (2.26 | ) | | — | | | — | | | — | | | | 7.74 | | | (22.60 | ) | | | 32,915 | | | (0.22 | ) | | 0.93 | | | 1.36 | | | 19 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 8.79 | | | — | | | 0.80 | | | 0.80 | | | (0.00 | ) | | — | | | (0.00 | ) | | | 9.59 | | | 9.11 | | | | 2,104 | | | 0.10 | | | 1.08 | | | 1.23 | | | 13 | |
| 07/01/22 | 06/30/23 | | | 7.73 | | | — | | | 1.06 | | | 1.06 | | | — | | | (0.00 | ) | | (0.00 | ) | | | 8.79 | | | 13.71 | | | | 1,540 | | | 0.03 | | | 1.08 | | | 1.31 | | | 66 | |
| 09/30/21^ | 06/30/22 | | | 10.00 | | | (0.02 | ) | | (2.25 | ) | | (2.27 | ) | | — | | | — | | | — | | | | 7.73 | | | (22.70 | ) | | | 812 | | | (0.37 | ) | | 1.08 | | | 1.51 | | | 19 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BROWN ADVISORY SUSTAINABLE VALUE FUND: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Institutional Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 10.03 | | | 0.08 | | | 1.07 | | | 1.15 | | | (0.11 | ) | | — | | | (0.11 | ) | | | 11.07 | | | 11.47 | | | | 66,528 | | | 1.58 | | | 0.70 | | | 0.84 | | | 11 | |
| 02/28/23^ | 06/30/23 | | | 10.00 | | | 0.06 | | | (0.03 | ) | | 0.03 | | | — | | | — | | | — | | | | 10.03 | | | 0.30 | | | | 50,307 | | | 1.72 | | | 0.70 | | | 1.17 | | | 7 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 10.02 | | | 0.07 | | | 1.07 | | | 1.14 | | | (0.10 | ) | | — | | | (0.10 | ) | | | 11.06 | | | 11.38 | | | | 352 | | | 1.43 | | | 0.85 | | | 0.99 | | | 11 | |
| 02/28/23^ | 06/30/23 | | | 10.00 | | | 0.05 | | | (0.03 | ) | | 0.02 | | | — | | | — | | | — | | | | 10.02 | | | 0.20 | | | | 163 | | | 1.57 | | | 0.85 | | | 1.32 | | | 7 | |
The accompanying notes are an integral part of these financial statements.
Financial Highlights
| | | | | | | From Investment | | | Distributions to | | | | | | | | | | | | Ratios to Average | | | | |
| | | | | | | Operations(a) | | | Shareholders From | | | | | | | | | | | | Net Assets(b) | | | | |
| | | | | | | | | | Net | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For a Share | | | | | | | | Realized | | | | | | | | | | | | | | | Net | | | | | | Net | | | | | | | | | | | | | |
| Outstanding | | Net Asset | | | Net | | | & | | | | | | | | | | | | | | | Asset | | | | | | Assets at | | | Net | | | | | | | | | | |
| Throughout | | Value, | | | Investment | | | Unrealized | | | | | | Net | | | Net | | | | | | Value, | | | | | | End of | | | Investment | | | | | | Gross | | | Portfolio | |
| Each Fiscal Period: | | Beginning | | | Income | | | Gains | | | | | | Investment | | | Realized | | | | | | End of | | | Total | | | Period | | | Income | | | Net | | | Expenses | | | Turnover | |
| Beginning | Ending | | of Period | | | (Loss) | | | (Losses) | | | Total | | | Income | | | Gains | | | Total | | | Period | | Return(c) | | | | (000’s | ) | | (Loss) | | | Expenses | | | (d) | | | Rate(c) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BROWN ADVISORY GLOBAL LEADERS FUND: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Institutional Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | $ | 22.08 | | | 0.02 | | | 1.65 | | | 1.67 | | | (0.13 | ) | | — | | | (0.13 | ) | | $ | 23.62 | | | 7.54 | % | | $ | 1,617,134 | | | 0.15 | % | | 0.76 | % | | 0.76 | % | | 10 | % |
| 07/01/22 | 06/30/23 | | | 18.24 | | | 0.13 | | | 3.83 | | | 3.96 | | | (0.12 | ) | | — | | | (0.12 | ) | | | 22.08 | | | 21.83 | | | | 1,401,528 | | | 0.66 | | | 0.76 | | | 0.76 | | | 19 | |
| 07/01/21 | 06/30/22 | | | 22.60 | | | 0.10 | | | (4.19 | ) | | (4.09 | ) | | (0.02 | ) | | (0.25 | ) | | (0.27 | ) | | | 18.24 | | | (18.34 | ) | | | 1,048,587 | | | 0.45 | | | 0.75 | | | 0.75 | | | 25 | |
| 07/01/20 | 06/30/21 | | | 16.38 | | | 0.03 | | | 6.22 | | | 6.25 | | | (0.03 | ) | | — | | | (0.03 | ) | | | 22.60 | | | 38.17 | | | | 1,149,790 | | | 0.16 | | | 0.76 | | | 0.76 | | | 14 | |
| 07/01/19 | 06/30/20 | | | 15.24 | | | 0.07 | | | 1.13 | | | 1.20 | | | (0.06 | ) | | — | | | (0.06 | ) | | | 16.38 | | | 7.85 | | | | 605,983 | | | 0.45 | | | 0.75 | | | 0.82 | | | 27 | |
| 10/31/18^ | 06/30/19 | | | 13.13 | | | 0.07 | | | 2.07 | | | 2.14 | | | (0.03 | ) | | — | | | (0.03 | ) | | | 15.24 | | | 16.38 | | | | 214,263 | | | 0.71 | | | 0.75 | | | 0.88 | | | 23 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 22.00 | | | — | | | 1.64 | | | 1.64 | | | (0.09 | ) | | — | | | (0.09 | ) | | | 23.55 | | | 7.44 | | | | 63,904 | | | 0.00 | | | 0.91 | | | 0.91 | | | 10 | |
| 07/01/22 | 06/30/23 | | | 18.18 | | | 0.10 | | | 3.82 | | | 3.92 | | | (0.10 | ) | | — | | | (0.10 | ) | | | 22.00 | | | 21.63 | | | | 77,619 | | | 0.51 | | | 0.91 | | | 0.91 | | | 19 | |
| 07/01/21 | 06/30/22 | | | 22.54 | | | 0.07 | | | (4.17 | ) | | (4.10 | ) | | (0.01 | ) | | (0.25 | ) | | (0.26 | ) | | | 18.18 | | | (18.45 | ) | | | 76,150 | | | 0.30 | | | 0.90 | | | 0.90 | | | 25 | |
| 07/01/20 | 06/30/21 | | | 16.36 | | | — | | | 6.20 | | | 6.20 | | | (0.02 | ) | | — | | | (0.02 | ) | | | 22.54 | | | 37.91 | | | | 95,940 | | | 0.01 | | | 0.91 | | | 0.91 | | | 14 | |
| 07/01/19 | 06/30/20 | | | 15.23 | | | 0.05 | | | 1.12 | | | 1.17 | | | (0.04 | ) | | — | | | (0.04 | ) | | | 16.36 | | | 7.68 | | | | 66,813 | | | 0.30 | | | 0.90 | | | 0.97 | | | 27 | |
| 07/01/18 | 06/30/19 | | | 13.82 | | | 0.08 | | | 1.36 | | | 1.44 | | | (0.03 | ) | | — | | | (0.03 | ) | | | 15.23 | | | 10.49 | | | | 18,943 | | | 0.60 | | | 0.86 | | | 1.07 | | | 23 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BROWN ADVISORY SUSTAINABLE INTERNATIONAL LEADERS FUND: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Institutional Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 10.52 | | | — | | | 0.01 | | | 0.01 | | | (0.05 | ) | | — | | | (0.05 | ) | | | 10.48 | | | 0.10 | | | | 30,747 | | | 0.07 | | | 0.85 | | | 1.24 | | | 15 | |
| 07/01/22 | 06/30/23 | | | 8.43 | | | 0.10 | | | 2.01 | | | 2.11 | | | (0.02 | ) | | — | | | (0.02 | ) | | | 10.52 | | | 25.09 | | | | 22,884 | | | 1.04 | | | 0.85 | | | 1.58 | | | 21 | |
| 02/28/22^ | 06/30/22 | | | 10.00 | | | 0.06 | | | (1.63 | ) | | (1.57 | ) | | — | | | — | | | — | | | | 8.43 | | | (15.70 | ) | | | 6,221 | | | 1.96 | | | 0.85 | | | 4.26 | | | 12 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 10.49 | | | — | | | — | | | — | | | (0.04 | ) | | — | | | (0.04 | ) | | | 10.45 | | | (0.02 | ) | | | 1,685 | | | (0.08 | ) | | 1.00 | | | 1.39 | | | 15 | |
| 07/01/22 | 06/30/23 | | | 8.42 | | | 0.08 | | | 2.01 | | | 2.09 | | | (0.02 | ) | | — | | | (0.02 | ) | | | 10.49 | | | 24.88 | | | | 1,463 | | | 0.89 | | | 1.00 | | | 1.73 | | | 21 | |
| 02/28/22^ | 06/30/22 | | | 10.00 | | | 0.05 | | | (1.63 | ) | | (1.58 | ) | | — | | | — | | | — | | | | 8.42 | | | (15.80 | ) | | | 75 | | | 1.81 | | | 1.00 | | | 4.41 | | | 12 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BROWN ADVISORY INTERMEDIATE INCOME FUND: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 9.60 | | | 0.15 | | | 0.13 | | | 0.28 | | | (0.15 | ) | | — | | | (0.15 | ) | | | 9.73 | | | 2.98 | | | | 117,222 | | | 3.19 | | | 0.49 | | | 0.53 | | | 17 | |
| 07/01/22 | 06/30/23 | | | 9.99 | | | 0.24 | | | (0.38 | ) | | (0.14 | ) | | (0.25 | ) | | — | | | (0.25 | ) | | | 9.60 | | | (1.44 | ) | | | 122,641 | | | 2.47 | | | 0.49 | | | 0.52 | | | 32 | |
| 07/01/21 | 06/30/22 | | | 11.05 | | | 0.12 | | | (0.94 | ) | | (0.82 | ) | | (0.14 | ) | | (0.10 | ) | | (0.24 | ) | | | 9.99 | | | (7.60 | ) | | | 139,856 | | | 1.17 | | | 0.46 | | | 0.50 | | | 58 | |
| 07/01/20 | 06/30/21 | | | 11.06 | | | 0.11 | | | 0.02 | | | 0.13 | | | (0.13 | ) | | (0.01 | ) | | (0.14 | ) | | | 11.05 | | | 1.11 | | | | 167,774 | | | 1.02 | | | 0.47 | | | 0.50 | | | 50 | |
| 07/01/19 | 06/30/20 | | | 10.72 | | | 0.24 | | | 0.35 | | | 0.59 | | | (0.25 | ) | | — | | | (0.25 | ) | | | 11.06 | | | 5.55 | | | | 148,300 | | | 2.24 | | | 0.49 | | | 0.53 | | | 105 | |
| 07/01/18 | 06/30/19 | | | 10.35 | | | 0.27 | | | 0.36 | | | 0.63 | | | (0.26 | ) | | — | | | (0.26 | ) | | | 10.72 | | | 6.24 | | | | 135,175 | | | 2.63 | | | 0.47 | | | 0.53 | | | 82 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Advisor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 9.38 | | | 0.14 | | | 0.12 | | | 0.26 | | | (0.14 | ) | | — | | | (0.14 | ) | | | 9.50 | | | 2.81 | | | | 3,068 | | | 2.94 | | | 0.74 | | | 0.78 | | | 17 | |
| 07/01/22 | 06/30/23 | | | 9.76 | | | 0.21 | | | (0.37 | ) | | (0.16 | ) | | (0.22 | ) | | — | | | (0.22 | ) | | | 9.38 | | | (1.62 | ) | | | 3,139 | | | 2.22 | | | 0.74 | | | 0.77 | | | 32 | |
| 07/01/21 | 06/30/22 | | | 10.80 | | | 0.10 | | | (0.93 | ) | | (0.83 | ) | | (0.11 | ) | | (0.10 | ) | | (0.21 | ) | | | 9.76 | | | (7.82 | ) | | | 3,273 | | | 0.92 | | | 0.71 | | | 0.75 | | | 58 | |
| 07/01/20 | 06/30/21 | | | 10.82 | | | 0.08 | | | 0.01 | | | 0.09 | | | (0.10 | ) | | (0.01 | ) | | (0.11 | ) | | | 10.80 | | | 0.79 | | | | 3,661 | | | 0.77 | | | 0.72 | | | 0.75 | | | 50 | |
| 07/01/19 | 06/30/20 | | | 10.49 | | | 0.21 | | | 0.34 | | | 0.55 | | | (0.22 | ) | | — | | | (0.22 | ) | | | 10.82 | | | 5.32 | | | | 3,624 | | | 1.99 | | | 0.74 | | | 0.78 | | | 105 | |
| 07/01/18 | 06/30/19 | | | 10.13 | | | 0.24 | | | 0.36 | | | 0.60 | | | (0.24 | ) | | — | | | (0.24 | ) | | | 10.49 | | | 6.01 | | | | 3,615 | | | 2.38 | | | 0.72 | | | 0.78 | | | 82 | |
The accompanying notes are an integral part of these financial statements.
Financial Highlights
| | | | | | | From Investment | | | Distributions to | | | | | | | | | | | | Ratios to Average | | | | |
| | | | | | | Operations(a) | | | Shareholders From | | | | | | | | | | | | Net Assets(b) | | | | |
| | | | | | | | | | Net | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For a Share | | | | | | | | Realized | | | | | | | | | | | | | | | Net | | | | | | Net | | | | | | | | | | | | | |
| Outstanding | | Net Asset | | | Net | | | & | | | | | | | | | | | | | | | Asset | | | | | | Assets at | | | Net | | | | | | | | | | |
| Throughout | | Value, | | | Investment | | | Unrealized | | | | | | Net | | | Net | | | | | | Value, | | | | | | End of | | | Investment | | | | | | Gross | | | Portfolio | |
| Each Fiscal Period: | | Beginning | | | Income | | | Gains | | | | | | Investment | | | Realized | | | | | | End of | | | Total | | | Period | | | Income | | | Net | | | Expenses | | | Turnover | |
| Beginning | Ending | | of Period | | | (Loss) | | | (Losses) | | | Total | | | Income | | | Gains | | | Total | | | Period | | Return(c) | | | | (000’s | ) | | (Loss) | | | Expenses | | | (d) | | | Rate(c) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BROWN ADVISORY SUSTAINABLE BOND FUND: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Institutional Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | $ | 8.60 | | | 0.17 | | | 0.06 | | | 0.23 | | | (0.18 | ) | | — | | | (0.18 | ) | | $ | 8.65 | | | 2.74 | % | | $ | 581,298 | | | 4.03 | % | | 0.41 | % | | 0.41 | % | | 158 | % |
| 07/01/22 | 06/30/23 | | | 9.14 | | | 0.25 | | | (0.54 | ) | | (0.29 | ) | | (0.25 | ) | | — | | | (0.25 | ) | | | 8.60 | | | (3.22 | ) | | | 723,393 | | | 2.81 | | | 0.43 | | | 0.43 | | | 277 | |
| 07/01/21 | 06/30/22 | | | 10.42 | | | 0.14 | | | (1.13 | ) | | (0.99 | ) | | (0.15 | ) | | (0.14 | ) | | (0.29 | ) | | | 9.14 | | | (9.71 | ) | | | 301,917 | | | 1.43 | | | 0.44 | | | 0.44 | | | 113 | |
| 07/01/20 | 06/30/21 | | | 10.54 | | | 0.16 | | | 0.10 | | | 0.26 | | | (0.17 | ) | | (0.21 | ) | | (0.38 | ) | | | 10.42 | | | 2.44 | | | | 218,476 | | | 1.56 | | | 0.45 | | | 0.45 | | | 89 | |
| 07/01/19 | 06/30/20 | | | 10.13 | | | 0.27 | | | 0.54 | | | 0.81 | | | (0.28 | ) | | (0.12 | ) | | (0.40 | ) | | | 10.54 | | | 8.14 | | | | 153,472 | | | 2.63 | | | 0.48 | | | 0.48 | | | 97 | |
| 07/02/18^ | 06/30/19 | | | 9.70 | | | 0.30 | | | 0.42 | | | 0.72 | | | (0.29 | ) | | — | | | (0.29 | ) | | | 10.13 | | | 7.60 | | | | 126,466 | | | 3.08 | | | 0.55 | | | 0.52 | | | 66 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 8.61 | | | 0.17 | | | 0.05 | | | 0.22 | | | (0.18 | ) | | — | | | (0.18 | ) | | | 8.65 | | | 2.59 | | | | 11,543 | | | 3.98 | | | 0.46 | | | 0.46 | | | 158 | |
| 07/01/22 | 06/30/23 | | | 9.14 | | | 0.24 | | | (0.53 | ) | | (0.29 | ) | | (0.24 | ) | | — | | | (0.24 | ) | | | 8.61 | | | (3.16 | ) | | | 12,829 | | | 2.76 | | | 0.48 | | | 0.48 | | | 277 | |
| 07/01/21 | 06/30/22 | | | 10.42 | | | 0.13 | | | (1.13 | ) | | (1.00 | ) | | (0.14 | ) | | (0.14 | ) | | (0.28 | ) | | | 9.14 | | | (9.76 | ) | | | 12,667 | | | 1.38 | | | 0.49 | | | 0.49 | | | 113 | |
| 07/01/20 | 06/30/21 | | | 10.54 | | | 0.16 | | | 0.10 | | | 0.26 | | | (0.17 | ) | | (0.21 | ) | | (0.38 | ) | | | 10.42 | | | 2.39 | | | | 5,009 | | | 1.51 | | | 0.50 | | | 0.50 | | | 89 | |
| 07/01/19 | 06/30/20 | | | 10.13 | | | 0.26 | | | 0.54 | | | 0.80 | | | (0.27 | ) | | (0.12 | ) | | (0.39 | ) | | | 10.54 | | | 8.09 | | | | 2,125 | | | 2.58 | | | 0.53 | | | 0.53 | | | 97 | |
| 07/01/18 | 06/30/19 | | | 9.70 | | | 0.29 | | | 0.43 | | | 0.72 | | | (0.29 | ) | | — | | | (0.29 | ) | | | 10.13 | | | 7.54 | | | | 884 | | | 3.03 | | | 0.60 | | | 0.57 | | | 66 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BROWN ADVISORY MARYLAND BOND FUND: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | �� | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 9.79 | | | 0.14 | | | 0.21 | | | 0.35 | | | (0.16 | ) | | — | | | (0.16 | ) | | | 9.98 | | | 3.57 | | | | 168,329 | | | 2.84 | | | 0.49 | | | 0.49 | | | 20 | |
| 07/01/22 | 06/30/23 | | | 9.80 | | | 0.24 | | | 0.02 | | | 0.26 | | | (0.27 | ) | | — | | | (0.27 | ) | | | 9.79 | | | 2.73 | | | | 163,961 | | | 2.41 | | | 0.49 | | | 0.49 | | | 51 | |
| 07/01/21 | 06/30/22 | | | 10.88 | | | 0.19 | | | (1.04 | ) | | (0.85 | ) | | (0.23 | ) | | — | | | (0.23 | ) | | | 9.80 | | | (7.90 | ) | | | 169,565 | | | 1.79 | | | 0.47 | | | 0.47 | | | 22 | |
| 07/01/20 | 06/30/21 | | | 10.67 | | | 0.21 | | | 0.26 | | | 0.47 | | | (0.26 | ) | | — | | | (0.26 | ) | | | 10.88 | | | 4.41 | | | | 186,483 | | | 1.94 | | | 0.48 | | | 0.48 | | | 17 | |
| 07/01/19 | 06/30/20 | | | 10.80 | | | 0.25 | | | (0.09 | ) | | 0.16 | | | (0.29 | ) | | — | | | (0.29 | ) | | | 10.67 | | | 1.44 | | | | 176,198 | | | 2.31 | | | 0.49 | | | 0.49 | | | 37 | |
| 07/01/18 | 06/30/19 | | | 10.50 | | | 0.28 | | | 0.30 | | | 0.58 | | | (0.28 | ) | | — | | | (0.28 | ) | | | 10.80 | | | 5.65 | | | | 182,072 | | | 2.69 | | | 0.49 | | | 0.49 | | | 33 | |
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| BROWN ADVISORY TAX-EXEMPT BOND FUND: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Institutional Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 9.29 | | | 0.18 | | | 0.16 | | | 0.34 | | | (0.19 | ) | | — | | | (0.19 | ) | | | 9.44 | | | 3.72 | | | | 851,857 | | | 4.01 | | | 0.41 | | | 0.41 | | | 35 | |
| 07/01/22 | 06/30/23 | | | 9.29 | | | 0.29 | | | 0.04 | | | 0.33 | | | (0.33 | ) | | — | | | (0.33 | ) | | | 9.29 | | | 3.59 | | | | 787,874 | | | 3.14 | | | 0.44 | | | 0.44 | | | 79 | |
| 07/01/21 | 06/30/22 | | | 10.50 | | | 0.18 | | | (1.08 | ) | | (0.90 | ) | | (0.26 | ) | | (0.05 | ) | | (0.31 | ) | | | 9.29 | | | (8.75 | ) | | | 805,608 | | | 1.73 | | | 0.41 | | | 0.41 | | | 50 | |
| 07/01/20 | 06/30/21 | | | 10.08 | | | 0.20 | | | 0.49 | | | 0.69 | | | (0.27 | ) | | — | | | (0.27 | ) | | | 10.50 | | | 6.87 | | | | 1,190,436 | | | 1.92 | | | 0.40 | | | 0.40 | | | 47 | |
| 07/01/19 | 06/30/20 | | | 10.20 | | | 0.24 | | | (0.08 | ) | | 0.16 | | | (0.28 | ) | | — | | | (0.28 | ) | | | 10.08 | | | 1.59 | | | | 1,072,444 | | | 2.38 | | | 0.42 | | | 0.42 | | | 80 | |
| 07/02/18^ | 06/30/19 | | | 9.90 | | | 0.33 | | | 0.30 | | | 0.63 | | | (0.33 | ) | | — | | | (0.33 | ) | | | 10.20 | | | 6.51 | | | | 950,832 | | | 3.36 | | | 0.43 | | | 0.43 | | | 53 | |
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| Investor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 9.29 | | | 0.18 | | | 0.17 | | | 0.35 | | | (0.19 | ) | | — | | | (0.19 | ) | | | 9.45 | | | 3.80 | | | | 8,657 | | | 3.96 | | | 0.46 | | | 0.46 | | | 35 | |
| 07/01/22 | 06/30/23 | | | 9.29 | | | 0.29 | | | 0.03 | | | 0.32 | | | (0.32 | ) | | — | | | (0.32 | ) | | | 9.29 | | | 3.54 | | | | 8,167 | | | 3.09 | | | 0.49 | | | 0.49 | | | 79 | |
| 07/01/21 | 06/30/22 | | | 10.50 | | | 0.17 | | | (1.07 | ) | | (0.90 | ) | | (0.26 | ) | | (0.05 | ) | | (0.31 | ) | | | 9.29 | | | (8.80 | ) | | | 10,484 | | | 1.68 | | | 0.46 | | | 0.46 | | | 50 | |
| 07/01/20 | 06/30/21 | | | 10.09 | | | 0.19 | | | 0.48 | | | 0.67 | | | (0.26 | ) | | — | | | (0.26 | ) | | | 10.50 | | | 6.72 | | | | 11,537 | | | 1.87 | | | 0.45 | | | 0.45 | | | 47 | |
| 07/01/19 | 06/30/20 | | | 10.20 | | | 0.24 | | | (0.07 | ) | | 0.17 | | | (0.28 | ) | | — | | | (0.28 | ) | | | 10.09 | | | 1.64 | | | | 9,982 | | | 2.33 | | | 0.47 | | | 0.47 | | | 80 | |
| 07/01/18 | 06/30/19 | | | 9.90 | | | 0.33 | | | 0.30 | | | 0.63 | | | (0.33 | ) | | — | | | (0.33 | ) | | | 10.20 | | | 6.49 | | | | 19,395 | | | 3.31 | | | 0.48 | | | 0.48 | | | 53 | |
The accompanying notes are an integral part of these financial statements.
| | | | | | | From Investment | | | Distributions to | | | | | | | | | | | | Ratios to Average | | | | |
| | | | | | | Operations(a) | | | Shareholders From | | | | | | | | | | | | Net Assets(b) | | | | |
| | | | | | | | | | Net | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For a Share | | | | | | | | Realized | | | | | | | | | | | | | | | Net | | | | | | Net | | | | | | | | | | | | | |
| Outstanding | | Net Asset | | | Net | | | & | | | | | | | | | | | | | | | Asset | | | | | | Assets at | | | Net | | | | | | | | | | |
| Throughout | | Value, | | | Investment | | | Unrealized | | | | | | Net | | | Net | | | | | | Value, | | | | | | End of | | | Investment | | | | | | Gross | | | Portfolio | |
| Each Fiscal Period: | | Beginning | | | Income | | | Gains | | | | | | Investment | | | Realized | | | | | | End of | | | Total | | | Period | | | Income | | | Net | | | Expenses | | | Turnover | |
| Beginning | Ending | | of Period | | | (Loss) | | | (Losses) | | | Total | | | Income | | | Gains | | | Total | | | Period | | Return(c) | | | | (000’s | ) | | (Loss) | | | Expenses | | | (d) | | | Rate(c) | |
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| BROWN ADVISORY TAX-EXEMPT SUSTAINABLE BOND FUND: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Investor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | $ | 9.06 | | | 0.16 | | | 0.10 | | | 0.26 | | | (0.16 | ) | | — | | | (0.16 | ) | | $ | 9.16 | | | 2.95 | % | | $ | 306,790 | | | 3.59 | % | | 0.48 | % | | 0.48 | % | | 21 | % |
| 07/01/22 | 06/30/23 | | | 9.09 | | | 0.24 | | | (0.03 | ) | | 0.21 | | | (0.24 | ) | | — | | | (0.24 | ) | | | 9.06 | | | 2.39 | | | | 288,993 | | | 2.63 | | | 0.50 | | | 0.50 | | | 111 | |
| 07/01/21 | 06/30/22 | | | 10.19 | | | 0.15 | | | (1.01 | ) | | (0.86 | ) | | (0.14 | ) | | (0.10 | ) | | (0.24 | ) | | | 9.09 | | | (8.60 | ) | | | 325,606 | | | 1.49 | | | 0.49 | | | 0.49 | | | 61 | |
| 07/01/20 | 06/30/21 | | | 9.88 | | | 0.13 | | | 0.32 | | | 0.45 | | | (0.13 | ) | | (0.01 | ) | | (0.14 | ) | | | 10.19 | | | 4.57 | | | | 179,123 | | | 1.32 | | | 0.49 | | | 0.49 | | | 66 | |
| 12/02/19^ | 06/30/20 | | | 10.00 | | | 0.08 | | | (0.12 | ) | | (0.04 | ) | | (0.08 | ) | | — | | | (0.08 | ) | | | 9.88 | | | (0.37 | ) | | | 157,032 | | | 1.45 | | | 0.55 | | | 0.55 | | | 39 | |
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| BROWN ADVISORY MORTGAGE SECURITIES FUND: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Institutional Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 9.10 | | | 0.18 | | | 0.06 | | | 0.24 | | | (0.18 | ) | | — | | | (0.18 | ) | | | 9.16 | | | 2.77 | | | | 301,984 | | | 3.95 | | | 0.45 | | | 0.45 | | | 179 | |
| 07/01/22 | 06/30/23 | | | 9.59 | | | 0.28 | | | (0.48 | ) | | (0.20 | ) | | (0.29 | ) | | — | | | (0.29 | ) | | | 9.10 | | | (2.06 | ) | | | 302,293 | | | 2.98 | | | 0.45 | | | 0.45 | | | 229 | |
| 07/01/21 | 06/30/22 | | | 10.56 | | | 0.10 | | | (0.92 | ) | | (0.82 | ) | | (0.15 | ) | | — | | | (0.15 | ) | | | 9.59 | | | (7.86 | ) | | | 310,388 | | | 0.94 | | | 0.44 | | | 0.44 | | | 204 | |
| 07/01/20 | 06/30/21 | | | 10.46 | | | (0.03 | ) | | 0.19 | | | 0.16 | | | (0.06 | ) | | — | | | (0.06 | ) | | | 10.56 | | | 1.53 | | | | 288,526 | | | (0.27 | ) | | 0.45 | | | 0.45 | | | 148 | |
| 07/01/19 | 06/30/20 | | | 10.02 | | | 0.11 | | | 0.50 | | | 0.61 | | | (0.17 | ) | | — | | | (0.17 | ) | | | 10.46 | | | 6.09 | | | | 238,202 | | | 1.07 | | | 0.47 | | | 0.47 | | | 139 | |
| 07/01/18 | 06/30/19 | | | 9.65 | | | 0.22 | | | 0.42 | | | 0.64 | | | (0.27 | ) | | — | | | (0.27 | ) | | | 10.02 | | | 6.72 | | | | 281,728 | | | 2.29 | | | 0.47 | | | 0.47 | | | 200 | |
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| Investor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 9.12 | | | 0.17 | | | 0.07 | | | 0.24 | | | (0.18 | ) | | — | | | (0.18 | ) | | | 9.18 | | | 2.73 | | | | 1,003 | | | 3.90 | | | 0.50 | | | 0.50 | | | 179 | |
| 07/01/22 | 06/30/23 | | | 9.61 | | | 0.27 | | | (0.47 | ) | | (0.20 | ) | | (0.29 | ) | | — | | | (0.29 | ) | | | 9.12 | | | (2.11 | ) | | | 1,390 | | | 2.93 | | | 0.50 | | | 0.50 | | | 229 | |
| 07/01/21 | 06/30/22 | | | 10.57 | | | 0.09 | | | (0.91 | ) | | (0.82 | ) | | (0.14 | ) | | — | | | (0.14 | ) | | | 9.61 | | | (7.81 | ) | | | 2,211 | | | 0.89 | | | 0.49 | | | 0.49 | | | 204 | |
| 07/01/20 | 06/30/21 | | | 10.47 | | | (0.03 | ) | | 0.19 | | | 0.16 | | | (0.06 | ) | | — | | | (0.06 | ) | | | 10.57 | | | 1.48 | | | | 31,876 | | | (0.32 | ) | | 0.50 | | | 0.50 | | | 148 | |
| 07/01/19 | 06/30/20 | | | 10.02 | | | 0.11 | | | 0.50 | | | 0.61 | | | (0.16 | ) | | — | | | (0.16 | ) | | | 10.47 | | | 6.15 | | | | 9,755 | | | 1.02 | | | 0.52 | | | 0.52 | | | 139 | |
| 07/01/18 | 06/30/19 | | | 9.66 | | | 0.22 | | | 0.40 | | | 0.62 | | | (0.26 | ) | | — | | | (0.26 | ) | | | 10.02 | | | 6.55 | | | | 266 | | | 2.24 | | | 0.52 | | | 0.52 | | | 200 | |
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| BROWN ADVISORY — WMC STRATEGIC EUROPEAN EQUITY FUND: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Institutional Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 11.82 | | | 0.04 | | | 0.71 | | | 0.75 | | | (0.16 | ) | | — | | | (0.16 | ) | | | 12.41 | | | 6.37 | | | | 269,106 | | | 0.67 | | | 1.06 | | | 1.06 | | | 18 | |
| 07/01/22 | 06/30/23 | | | 10.34 | | | 0.19 | | | 1.58 | | | 1.77 | | | (0.21 | ) | | (0.08 | ) | | (0.29 | ) | | | 11.82 | | | 17.50 | | | | 227,407 | | | 1.74 | | | 1.08 | | | 1.08 | | | 73 | |
| 07/01/21 | 06/30/22 | | | 13.08 | | | 0.15 | | | (1.68 | ) | | (1.53 | ) | | (0.11 | ) | | (1.10 | ) | | (1.21 | ) | | | 10.34 | | | (12.75 | ) | | | 232,340 | | | 1.22 | | | 1.04 | | | 1.04 | | | 43 | |
| 07/01/20 | 06/30/21 | | | 10.51 | | | 0.13 | | | 3.20 | | | 3.33 | | | (0.03 | ) | | (0.73 | ) | | (0.76 | ) | | | 13.08 | | | 32.55 | | | | 417,419 | | | 1.12 | | | 1.05 | | | 1.05 | | | 51 | |
| 07/01/19 | 06/30/20 | | | 11.15 | | | 0.03 | | | (0.07 | ) | | (0.04 | ) | | (0.10 | ) | | (0.50 | ) | | (0.60 | ) | | | 10.51 | | | (0.66 | ) | | | 287,081 | | | 0.29 | | | 1.09 | | | 1.09 | | | 53 | |
| 07/01/18 | 06/30/19 | | | 12.42 | | | 0.07 | | | (0.16 | ) | | (0.09 | ) | | (0.20 | ) | | (0.98 | ) | | (1.18 | ) | | | 11.15 | | | 0.84 | | | | 470,903 | | | 0.62 | | | 1.07 | | | 1.07 | | | 34 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 11.77 | | | 0.03 | | | 0.72 | | | 0.75 | | | (0.14 | ) | | — | | | (0.14 | ) | | | 12.38 | | | 6.38 | | | | 11,776 | | | 0.52 | | | 1.21 | | | 1.21 | | | 18 | |
| 07/01/22 | 06/30/23 | | | 10.30 | | | 0.17 | | | 1.58 | | | 1.75 | | | (0.20 | ) | | (0.08 | ) | | (0.28 | ) | | | 11.77 | | | 17.30 | | | | 14,922 | | | 1.59 | | | 1.23 | | | 1.23 | | | 73 | |
| 07/01/21 | 06/30/22 | | | 13.03 | | | 0.13 | | | (1.67 | ) | | (1.54 | ) | | (0.09 | ) | | (1.10 | ) | | (1.19 | ) | | | 10.30 | | | (12.89 | ) | | | 19,007 | | | 1.07 | | | 1.19 | | | 1.19 | | | 43 | |
| 07/01/20 | 06/30/21 | | | 10.48 | | | 0.12 | | | 3.18 | | | 3.30 | | | (0.02 | ) | | (0.73 | ) | | (0.75 | ) | | | 13.03 | | | 32.36 | | | | 39,751 | | | 0.97 | | | 1.20 | | | 1.20 | | | 51 | |
| 07/01/19 | 06/30/20 | | | 11.12 | | | 0.01 | | | (0.06 | ) | | (0.05 | ) | | (0.09 | ) | | (0.50 | ) | | (0.59 | ) | | | 10.48 | | | (0.77 | ) | | | 22,224 | | | 0.14 | | | 1.24 | | | 1.24 | | | 53 | |
| 07/01/18 | 06/30/19 | | | 12.41 | | | 0.05 | | | (0.17 | ) | | (0.12 | ) | | (0.19 | ) | | (0.98 | ) | | (1.17 | ) | | | 11.12 | | | 0.58 | | | | 18,100 | | | 0.47 | | | 1.22 | | | 1.22 | | | 34 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Advisor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 11.60 | | | 0.02 | | | 0.70 | | | 0.72 | | | (0.12 | ) | | — | | | (0.12 | ) | | | 12.20 | | | 6.18 | | | | 2,712 | | | 0.27 | | | 1.46 | | | 1.46 | | | 18 | |
| 07/01/22 | 06/30/23 | | | 10.17 | | | 0.14 | | | 1.56 | | | 1.70 | | | (0.19 | ) | | (0.08 | ) | | (0.27 | ) | | | 11.60 | | | 17.05 | | | | 2,689 | | | 1.34 | | | 1.48 | | | 1.48 | | | 73 | |
| 07/01/21 | 06/30/22 | | | 12.88 | | | 0.10 | | | (1.65 | ) | | (1.55 | ) | | (0.06 | ) | | (1.10 | ) | | (1.16 | ) | | | 10.17 | | | (13.09 | ) | | | 2,387 | | | 0.82 | | | 1.44 | | | 1.44 | | | 43 | |
| 07/01/20 | 06/30/21 | | | 10.38 | | | 0.08 | | | 3.16 | | | 3.24 | | | (0.01 | ) | | (0.73 | ) | | (0.74 | ) | | | 12.88 | | | 32.01 | | | | 3,728 | | | 0.72 | | | 1.45 | | | 1.45 | | | 51 | |
| 07/01/19 | 06/30/20 | | | 11.03 | | | (0.01 | ) | | (0.07 | ) | | (0.08 | ) | | (0.07 | ) | | (0.50 | ) | | (0.57 | ) | | | 10.38 | | | (1.04 | ) | | | 3,816 | | | (0.11 | ) | | 1.49 | | | 1.49 | | | 53 | |
| 07/01/18 | 06/30/19 | | | 12.30 | | | 0.02 | | | (0.16 | ) | | (0.14 | ) | | (0.15 | ) | | (0.98 | ) | | (1.13 | ) | | | 11.03 | | | 0.42 | | | | 7,563 | | | 0.22 | | | 1.47 | | | 1.47 | | | 34 | |
The accompanying notes are an integral part of these financial statements.
Financial Highlights
| | | | | | | From Investment | | | Distributions to | | | | | | | | | | | | Ratios to Average | | | | |
| | | | | | | Operations(a) | | | Shareholders From | | | | | | | | | | | | Net Assets(b) | | | | |
| | | | | | | | | | Net | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For a Share | | | | | | | | Realized | | | | | | | | | | | | | | | Net | | | | | | Net | | | | | | | | | | | | | |
| Outstanding | | Net Asset | | | Net | | | & | | | | | | | | | | | | | | | Asset | | | | | | Assets at | | | Net | | | | | | | | | | |
| Throughout | | Value, | | | Investment | | | Unrealized | | | | | | Net | | | Net | | | | | | Value, | | | | | | End of | | | Investment | | | | | | Gross | | | Portfolio | |
| Each Fiscal Period: | | Beginning | | | Income | | | Gains | | | | | | Investment | | | Realized | | | | | | End of | | | Total | | | Period | | | Income | | | Net | | | Expenses | | | Turnover | |
| Beginning | Ending | | of Period | | | (Loss) | | | (Losses) | | | Total | | | Income | | | Gains | | | Total | | | Period | | Return(c) | | | | (000’s | ) | | (Loss) | | | Expenses | | | (d) | | | Rate(c) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BROWN ADVISORY EMERGING MARKETS SELECT FUND: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Institutional Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | $ | 10.63 | | | 0.07 | | | 0.28 | | | 0.35 | | | (0.19 | ) | | — | | | (0.19 | ) | | $ | 10.79 | | | 3.30 | % | | $ | 574,534 | | | 1.34 | % | | 1.10 | % | | 1.10 | % | | 40 | % |
| 07/01/22 | 06/30/23 | | | 10.13 | | | 0.16 | | | 0.47 | | | 0.63 | | | (0.13 | ) | | — | | | (0.13 | ) | | | 10.63 | | | 6.27 | | | | 537,466 | | | 1.55 | | | 1.11 | | | 1.11 | | | 69 | |
| 07/01/21 | 06/30/22 | | | 12.57 | | | 0.14 | | | (2.50 | ) | | (2.36 | ) | | (0.08 | ) | | — | | | (0.08 | ) | | | 10.13 | | | (18.87 | ) | | | 504,216 | | | 1.25 | | | 1.10 | | | 1.10 | | | 70 | |
| 07/01/20 | 06/30/21 | | | 8.86 | | | 0.09 | | | 3.69 | | | 3.78 | | | (0.07 | ) | | — | | | (0.07 | ) | | | 12.57 | | | 42.71 | | | | 529,908 | | | 0.78 | | | 1.12 | | | 1.12 | | | 61 | |
| 07/01/19 | 06/30/20 | | | 9.34 | | | 0.11 | | | (0.48 | ) | | (0.37 | ) | | (0.11 | ) | | — | | | (0.11 | ) | | | 8.86 | | | (4.04 | ) | | | 267,282 | | | 1.27 | | | 1.16 | | | 1.16 | | | 62 | |
| 07/01/18 | 06/30/19 | | | 10.06 | | | 0.11 | | | (0.48 | ) | | (0.37 | ) | | (0.35 | ) | | — | | | (0.35 | ) | | | 9.34 | | | (3.35 | ) | | | 326,693 | | | 1.20 | | | 1.26 | | | 1.26 | | | 131 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 10.62 | | | 0.06 | | | 0.28 | | | 0.34 | | | (0.17 | ) | | — | | | (0.17 | ) | | | 10.79 | | | 3.26 | | | | 2,685 | | | 1.19 | | | 1.25 | | | 1.25 | | | 40 | |
| 07/01/22 | 06/30/23 | | | 10.13 | | | 0.14 | | | 0.46 | | | 0.60 | | | (0.11 | ) | | — | | | (0.11 | ) | | | 10.62 | | | 6.01 | | | | 2,025 | | | 1.40 | | | 1.26 | | | 1.26 | | | 69 | |
| 07/01/21 | 06/30/22 | | | 12.56 | | | 0.13 | | | (2.50 | ) | | (2.37 | ) | | (0.06 | ) | | — | | | (0.06 | ) | | | 10.13 | | | (18.93 | ) | | | 4,368 | | | 1.10 | | | 1.25 | | | 1.25 | | | 70 | |
| 07/01/20 | 06/30/21 | | | 8.85 | | | 0.07 | | | 3.69 | | | 3.76 | | | (0.05 | ) | | — | | | (0.05 | ) | | | 12.56 | | | 42.56 | | | | 5,908 | | | 0.63 | | | 1.27 | | | 1.27 | | | 61 | |
| 07/01/19 | 06/30/20 | | | 9.33 | | | 0.10 | | | (0.49 | ) | | (0.39 | ) | | (0.09 | ) | | — | | | (0.09 | ) | | | 8.85 | | | (4.29 | ) | | | 4,202 | | | 1.12 | | | 1.31 | | | 1.31 | | | 62 | |
| 07/01/18 | 06/30/19 | | | 10.03 | | | 0.10 | | | (0.48 | ) | | (0.38 | ) | | (0.32 | ) | | — | | | (0.32 | ) | | | 9.33 | | | (3.42 | ) | | | 5,063 | | | 1.05 | | | 1.41 | | | 1.41 | | | 131 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Advisor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 10.65 | | | 0.05 | | | 0.28 | | | 0.33 | | | (0.15 | ) | | — | | | (0.15 | ) | | | 10.83 | | | 3.12 | | | | 216 | | | 0.94 | | | 1.50 | | | 1.50 | | | 40 | |
| 07/01/22 | 06/30/23 | | | 10.16 | | | 0.12 | | | 0.46 | | | 0.58 | | | (0.09 | ) | | — | | | (0.09 | ) | | | 10.65 | | | 5.76 | | | | 220 | | | 1.15 | | | 1.51 | | | 1.51 | | | 69 | |
| 07/01/21 | 06/30/22 | | | 12.60 | | | 0.10 | | | (2.50 | ) | | (2.40 | ) | | (0.04 | ) | | — | | | (0.04 | ) | | | 10.16 | | | (19.11 | ) | | | 27 | | | 0.85 | | | 1.50 | | | 1.50 | | | 70 | |
| 07/01/20 | 06/30/21 | | | 8.87 | | | 0.04 | | | 3.70 | | | 3.74 | | | (0.01 | ) | | — | | | (0.01 | ) | | | 12.60 | | | 42.17 | | | | 24 | | | 0.38 | | | 1.52 | | | 1.52 | | | 61 | |
| 07/01/19 | 06/30/20 | | | 9.37 | | | 0.08 | | | (0.50 | ) | | (0.42 | ) | | (0.08 | ) | | — | | | (0.08 | ) | | | 8.87 | | | (4.61 | ) | | | 52 | | | 0.87 | | | 1.56 | | | 1.56 | | | 62 | |
| 07/01/18 | 06/30/19 | | | 10.07 | | | 0.07 | | | (0.47 | ) | | (0.40 | ) | | (0.30 | ) | | — | | | (0.30 | ) | | | 9.37 | | | (3.66 | ) | | | 167 | | | 0.80 | | | 1.66 | | | 1.66 | | | 131 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BROWN ADVISORY — BEUTEL GOODMAN LARGE-CAP VALUE FUND: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Institutional Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 13.68 | | | 0.13 | | | 0.64 | | | 0.77 | | | (0.25 | ) | | — | | | (0.25 | ) | | | 14.20 | | | 5.65 | | | | 1,712,924 | | | 1.92 | | | 0.55 | | | 0.55 | | | 6 | |
| 07/01/22 | 06/30/23 | | | 12.04 | | | 0.25 | | | 1.86 | | | 2.11 | | | (0.22 | ) | | (0.25 | ) | | (0.47 | ) | | | 13.68 | | | 17.67 | | | | 1,664,063 | | | 1.89 | | | 0.55 | | | 0.55 | | | 17 | |
| 07/01/21 | 06/30/22 | | | 14.41 | | | 0.23 | | | (1.42 | ) | | (1.19 | ) | | (0.20 | ) | | (0.98 | ) | | (1.18 | ) | | | 12.04 | | | (8.68 | ) | | | 1,237,283 | | | 1.71 | | | 0.55 | | | 0.55 | | | 33 | |
| 07/01/20 | 06/30/21 | | | 10.61 | | | 0.20 | | | 3.99 | | | 4.19 | | | (0.39 | ) | | — | | | (0.39 | ) | | | 14.41 | | | 40.12 | | | | 1,149,351 | | | 1.52 | | | 0.55 | | | 0.55 | | | 42 | |
| 07/01/19 | 06/30/20 | | | 10.47 | | | 0.56 | | | (0.20 | ) | | 0.36 | | | (0.10 | ) | | (0.12 | ) | | (0.22 | ) | | | 10.61 | | | 3.27 | | | | 452,012 | | | 5.26 | | | 0.57 | | | 0.57 | | | 32 | |
| 07/01/18 | 06/30/19 | | | 9.58 | | | 0.20 | | | 0.89 | | | 1.09 | | | (0.11 | ) | | (0.09 | ) | | (0.20 | ) | | | 10.47 | | | 11.62 | | | | 296,963 | | | 1.97 | | | 0.60 | | | 0.60 | | | 45 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investor Shares* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 07/01/23 | 12/31/23 | | | 13.64 | | | 0.12 | | | 0.65 | | | 0.77 | | | (0.25 | ) | | — | | | (0.25 | ) | | | 14.16 | | | 5.63 | | | | 11,144 | | | 1.77 | | | 0.70 | | | 0.70 | | | 6 | |
| 07/01/22 | 06/30/23 | | | 12.02 | | | 0.23 | | | 1.85 | | | 2.08 | | | (0.21 | ) | | (0.25 | ) | | (0.46 | ) | | | 13.64 | | | 17.46 | | | | 2,535 | | | 1.74 | | | 0.70 | | | 0.70 | | | 17 | |
| 07/01/21^ | 06/30/22 | | | 14.41 | | | 0.21 | | | (1.42 | ) | | (1.21 | ) | | (0.20 | ) | | (0.98 | ) | | (1.18 | ) | | | 12.02 | | | (8.87 | ) | | | 208 | | | 1.56 | | | 0.70 | | | 0.70 | | | 33 | |
| * | Information for periods beginning after June 30, 2023 is unaudited. Redemption fees of less than $0.005/share are not presented and are included in net realized & unrealized gains (losses) from investment operations. The increase in the portfolio turnover rate for Brown Advisory Emerging Markets Select Fund for the year ended June 30, 2019 was primarily the result of a change in sub-advisers during the year. |
| ^ | Information presented is for the entire history of the share class. |
+ | Distribution made was less than $0.005/share. |
| (a) | Calculated based on average shares outstanding during the fiscal period. |
| (b) | Annualized for periods less than one year. Ratios include only income and expenses of the funds themselves, as presented in the Statements of Operations, and do not include any additional or pro rata amounts of income or expenses from the ownership of any other investment companies (as applicable). |
| (c) | Not annualized for periods less than one year. Portfolio turnover rates are calculated at the fund level (not by individual share class). |
| (d) | Reflects the expense ratio excluding any expense waivers or expense recoupments. |
The accompanying notes are an integral part of these financial statements.
Notes to Financial StatementsDecember 31, 2023 (Unaudited)
Note 1. Organization
Brown Advisory Funds (the “Trust”) is registered under the Investment Company Act of 1940 as an open-ended management investment company. The Trust offers the following series of shares (each a “Fund,” and collectively, the “Funds”):
| • | Brown Advisory Growth Equity Fund (“Growth Equity Fund”) seeks to achieve capital appreciation by primarily investing in equity securities, |
| | |
| • | Brown Advisory Flexible Equity Fund (“Flexible Equity Fund”) seeks to achieve long-term growth of capital, |
| | |
| • | Brown Advisory Equity Income Fund (“Equity Income Fund”) seeks to provide current dividend yield and dividend growth, |
| | |
| • | Brown Advisory Sustainable Growth Fund (“Sustainable Growth Fund”) seeks to achieve capital appreciation, |
| | |
| • | Brown Advisory Mid-Cap Growth Fund (“Mid-Cap Growth Fund”) seeks to achieve long-term capital appreciation, |
| | |
| • | Brown Advisory Small-Cap Growth Fund (“Small-Cap Growth Fund”) seeks to achieve long-term capital appreciation by primarily investing in equity securities, |
| | |
| • | Brown Advisory Small-Cap Fundamental Value Fund (“Small-Cap Fundamental Value Fund”) seeks to achieve long-term capital appreciation, |
| | |
| • | Brown Advisory Sustainable Small-Cap Core Fund (“Sustainable Small-Cap Core Fund”) seeks to achieve long-term capital appreciation by investing primarily in equity securities of small-cap companies, |
| | |
| • | Brown Advisory Sustainable Value Fund (“Sustainable Value Fund”) seeks to achieve long-term capital appreciation, |
| | |
| • | Brown Advisory Global Leaders Fund (“Global Leaders Fund”) seeks to achieve long-term capital appreciation by investing primarily in global equities, |
| | |
| • | Brown Advisory Sustainable International Leaders Fund (“Sustainable International Leaders Fund”) seeks to achieve long- term capital appreciation by investing primarily in international equities, |
| | |
| • | Brown Advisory Intermediate Income Fund (“Intermediate Income Fund”) seeks to provide a high level of current income consistent with the preservation of principal within an intermediate-term maturity structure, |
| | |
| • | Brown Advisory Sustainable Bond Fund (“Sustainable Bond Fund”) seeks to provide a competitive total return consistent with the preservation of principal while giving special consideration to certain environmental, social and governance criteria, |
| | |
| • | Brown Advisory Maryland Bond Fund (“Maryland Bond Fund”) seeks to provide a high level of current income exempt from both Federal and Maryland State income taxes without undue risk, |
| | |
| • | Brown Advisory Tax-Exempt Bond Fund (“Tax-Exempt Bond Fund”) seeks to provide a high level of current income exempt from Federal income tax by investing primarily in intermediate-term investment grade municipal bonds, |
| | |
| • | Brown Advisory Tax-Exempt Sustainable Bond Fund (“Tax-Exempt Sustainable Bond Fund”) seeks to provide a high level of current income exempt from Federal income tax by investing primarily in intermediate-term investment grade municipal bonds while giving special consideration to certain environmental, social, and governance criteria, |
| | |
| • | Brown Advisory Mortgage Securities Fund (“Mortgage Securities Fund”) seeks to maximize total return consistent with preservation of capital, |
| | |
| • | Brown Advisory – WMC Strategic European Equity Fund (“WMC Strategic European Equity Fund”) seeks to achieve total return by investing principally in equity securities issued by companies established or operating in Europe, |
| | |
| • | Brown Advisory Emerging Markets Select Fund (“Emerging Markets Select Fund”) seeks to achieve total return by investing principally in equity securities issued by companies established or operating in emerging markets, and |
| | |
| • | Brown Advisory – Beutel Goodman Large-Cap Value Fund (“Beutel Goodman Large-Cap Value Fund”) seeks to achieve capital appreciation. |
Notes to Financial StatementsDecember 31, 2023 (Unaudited)
The Funds inception dates are as follows. Operations commenced the first business day after the inception date.
| | Institutional | | Investor | | Advisor | | | Institutional | | Investor | | Advisor |
Fund | Shares | | Shares | | Shares | | Fund | Shares | | Shares | | Shares |
| Growth Equity | 10/19/2012 | | 6/28/1999 | | 5/18/2006 | | Intermediate Income | — | | 11/2/1995 | | 5/13/1991 |
| Flexible Equity | 10/19/2012 | | 11/30/2006 | | 1/24/2007 | | Sustainable Bond | 7/2/2018 | | 8/7/2017 | | — |
| Equity Income | 10/19/2012 | | 12/29/2011 | | 12/29/2011 | | Maryland Bond | — | | 12/21/2000 | | — |
| Sustainable Growth | 6/29/2012 | | 6/29/2012 | | 6/29/2012 | | Tax-Exempt Bond | 7/2/2018 | | 6/29/2012 | | — |
| Mid-Cap Growth | 7/2/2018 | | 10/2/2017 | | — | | Tax-Exempt | | | | | |
| Small-Cap Growth | 9/20/2002 | | 6/28/1999 | | 4/25/2006 | | Sustainable Bond | — | | 12/2/2019 | | — |
| Small-Cap | | | | | | | Mortgage Securities | 5/13/2014 | | 12/26/2013 | | — |
| Fundamental Value | 10/19/2012 | | 12/31/2008 | | 7/28/2011 | | WMC Strategic | | | | | |
| Sustainable | | | | | | | European Equity | 10/21/2013 | | 10/21/2013 | | 10/21/2013 |
| Small-Cap Core | 9/30/2021 | | 9/30/2021 | | — | | Emerging | | | | | |
| Sustainable Value | 2/28/2023 | | 2/28/2023 | | — | | Markets Select | 12/12/2012 | | 12/12/2012 | | 12/12/2012 |
| Global Leaders | 10/31/2018 | | 7/1/2015 | | — | | Beutel Goodman | | | | | |
| Sustainable | | | | | | | Large-Cap Value | 2/13/2018 | | 6/30/2021 | | — |
| International Leaders | 2/28/2022 | | 2/28/2022 | | — | | | | | | | |
Note 2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Funds. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Funds are investment companies and follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standards Codification Topic 946 Financial Services – Investment Companies, which is part of U.S. GAAP.
A. Security Valuation – The Funds have adopted pricing and valuation procedures pursuant to Rule 2a-5 under the 1940 Act. Under these procedures, the Adviser serves as the Funds Valuation Designee. The Valuation Designee performs all fair value determinations along with all other responsibilities in accordance with Rule 2a-5. As Valuation Designee, the Adviser is authorized to make all necessary determinations of fair values of portfolio securities and other assets for which market quotations are not readily available or if it is deemed that the prices obtained from independent pricing services are inaccurate or unreliable.
The Funds have adopted US GAAP fair value accounting standards which establish an authoritative definition of fair value and set out a hierarchy for measuring fair value. These standards require additional disclosures about the various inputs and valuation techniques used to develop the measurements of fair value and a discussion of changes in valuation techniques and related inputs, if any, during the period. These inputs are summarized in the three broad levels listed below:
| Level 1 – | Quoted prices in active markets for identical securities. |
| | |
| Level 2 – | Evaluated price based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment spreads, credit risk, etc). |
| | |
| Level 3 – | Significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Domestic Equity Securities – Domestic equity securities that are traded on a national securities exchange, except those listed on the NASDAQ Global Market® (“NASDAQ”), are valued at the last reported sale price on the exchange on which the security is principally traded. Securities traded on NASDAQ will be valued at the NASDAQ Official Closing Price (“NOCP”). If, on a particular day, an exchange-traded or NASDAQ security does not trade, then the mean between the most recent quoted bid and asked prices will be used. All equity securities that are not traded on a listed exchange are valued at the last sale price in the over- the counter market. If a non-exchange traded security does not trade on a particular day, then the mean between the last quoted closing bid and asked price will be used. Such domestic equity securities are typically categorized as Level 1 securities. Investments in other domestic open-ended mutual funds are valued at their reported Net Asset Value (“NAV”) and are typically categorized as Level 1 securities. Investments in Exchange Traded Funds (“ETFs”) and Closed-End Funds are valued at their last reported sale price and are typically categorized as Level 1 securities.
Notes to Financial StatementsDecember 31, 2023 (Unaudited)
Foreign Equity Securities – For foreign equity securities that are traded on foreign exchanges, the Funds have selected ICE Data Services (“ICE”) to provide pricing data. The use of ICE’s pricing services with respect to these foreign exchange traded securities is designed to capture events occurring after a foreign exchange closes that may affect the value of certain holdings of the Funds that are traded on those foreign exchanges. The Funds utilize a confidence interval when determining whether or not to utilize these prices provided by ICE. The confidence interval is a measure of the relationship that each foreign exchange traded security has to movements in various indices and the price of the foreign exchange traded security’s corresponding American Depositary Receipt, if one exists. ICE provides a confidence interval for each foreign exchange traded security for which it provides a price. If the confidence interval provided by ICE is equal to or greater than a predefined level utilized by the Funds, the Funds will value that foreign exchange traded security at that price. If the confidence interval provided by ICE is less than the predefined level utilized by the Funds, the Funds will value that foreign exchange traded security at the preceding closing price on its respective foreign exchange, or, if there were no transactions on the preceding day, at the mean between the bid and the asked prices. Such foreign securities are typically categorized as Level 2 securities. Foreign securities for which the local market closing prices are utilized are typically categorized as Level 1 securities.
Debt Securities – Debt securities are valued by using the mean between the closing bid and asked prices provided by an independent pricing service. If the closing bid and asked prices are not readily available, the independent pricing service may provide a price determined by a matrix pricing method. These techniques generally consider such factors as yields or prices of bonds of comparable quality, type of issue, coupon, maturity, ratings and general market conditions. Fixed income debt instruments, such as commercial paper, banker’s acceptances and U.S. Treasury Bills, having a maturity of less than 60 days are valued at amortized cost when the amortized cost value is determined to approximate fair value established using market-based and issuer-specific factors. Such debt securities are typically categorized as Level 2.
Exchange Traded Options – Exchange traded options are valued at the composite price, using the National Best Bid and Offer quotes (NBBO). NBBO consists of the highest bid price and lowest ask price across any of the exchanges on which an option is quoted, thus providing a view across the entire U.S. options marketplace. Specifically, composite pricing calculates the mean of the highest bid price and lowest ask price across the exchanges where the option is traded. Such options are typically categorized as Level 2.
Futures Contracts – Futures contracts are generally valued at the settlement prices established each day on the exchange on which they are traded and are categorized as Level 1 securities.
Forward Foreign Currency Contracts – Forward foreign currency contracts are valued at the prevailing forward exchange rates of the underlying currencies and are categorized as Level 2 securities.
Securities for which quotations are not readily available, or for which quotations are deemed to be inaccurate or unreliable, are valued at their respective fair values as determined in good faith under guidelines and procedures adopted by the Board of Trustees. These are generally considered Level 3 securities when significant unobservable inputs are utilized in the determination of the fair value. When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the guidelines and procedures adopted by the Board of Trustees. Fair value pricing is an inherently subjective process, and no single standard exists for determining fair value. Different funds could reasonably arrive at different values for the same security. The use of fair value pricing by a fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated without regard to such considerations. As of the date of this report, the Small-Cap Growth Fund and Emerging Markets Select Fund held Level 3 securities for which significant and unobservable inputs or assumptions were used in the determination of fair value. The total value of such securities held as of the date of this report was $1,147,545 or 0.1% of Small-Cap Growth Fund’s net assets and $1,848 or 0.0% of Emerging Market Select Fund’s net assets. The following is a summary of inputs used to value the Funds’ investments as of December 31, 2023:
Notes to Financial StatementsDecember 31, 2023 (Unaudited)
| | | Level 1 | | | Level 2 | | | Level 3 | |
| Growth Equity Fund | | | | | | | | | |
| Common Stocks | | $ | 2,223,790,300 | | | $ | — | | | $ | — | |
| REIT^ | | | 86,135,112 | | | | — | | | | — | |
| Short-Term Investments | | | 61,228,305 | | | | — | | | | — | |
| Total Investments | | $ | 2,371,153,717 | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | |
| Flexible Equity Fund | | | | | | | | | | | | |
| Common Stocks | | $ | 748,192,159 | | | $ | — | | | $ | — | |
| REIT^ | | | 9,330,465 | | | | — | | | | — | |
| Short-Term Investments | | | 31,861,170 | | | | — | | | | — | |
| Total Investments | | $ | 789,383,794 | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | |
| Equity Income Fund | | | | | | | | | | | | |
| Common Stocks | | $ | 19,137,308 | | | $ | — | | | $ | — | |
| Short-Term Investments | | | 896,947 | | | | — | | | | — | |
| Total Investments | | $ | 20,034,255 | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | |
| Sustainable Growth Fund | | | | | | | | | | | | |
| Common Stocks | | $ | 8,288,566,616 | | | $ | — | | | $ | — | |
| REIT^ | | | 298,395,812 | | | | — | | | | — | |
| Short-Term Investments | | | 163,095,422 | | | | — | | | | — | |
| Total Investments | | $ | 8,750,057,850 | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | |
| Mid-Cap Growth Fund | | | | | | | | | | | | |
| Common Stocks | | $ | 90,420,022 | | | $ | — | | | $ | — | |
| REIT^ | | | 1,336,693 | | | | — | | | | — | |
| Short-Term Investments | | | 5,033,511 | | | | — | | | | — | |
| Total Investments | | $ | 96,790,226 | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | |
| Small-Cap Growth Fund† | | | | | | | | | | | | |
| Common Stocks | | $ | 1,978,881,249 | | | $ | — | | | $ | — | |
| Exchange Traded Funds | | | 47,579,159 | | | | — | | | | — | |
| REIT^ | | | 38,790,261 | | | | — | | | | — | |
| Private Placements | | | — | | | | — | | | | 1,147,545 | |
| Short-Term Investments | | | 183,725,024 | | | | — | | | | — | |
| Total Investments | | $ | 2,248,975,693 | | | $ | — | | | $ | 1,147,545 | |
| | | | | | | | | | | | | |
| Small-Cap Fundamental Value Fund | | | | | | | | | | | | |
| Common Stocks | | $ | 1,156,832,195 | | | $ | — | | | $ | — | |
| REIT^ | | | 103,934,048 | | | | — | | | | — | |
| Short-Term Investments | | | 50,449,129 | | | | — | | | | — | |
| Total Investments | | $ | 1,311,215,372 | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | |
| Sustainable Small-Cap Core Fund | | | | | | | | | | | | |
| Common Stocks | | $ | 59,331,542 | | | $ | — | | | $ | — | |
| REIT^ | | | 2,584,253 | | | | — | | | | — | |
| Short-Term Investments | | | 3,639,491 | | | | — | | | | — | |
| Total Investments | | $ | 65,555,286 | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | |
| Sustainable Value Fund | | | | | | | | | | | | |
| Common Stocks | | $ | 63,961,314 | | | $ | — | | | $ | — | |
| Short-Term Investments | | | 3,128,266 | | | | — | | | | — | |
| Total Investments | | $ | 67,089,580 | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | |
| Global Leaders Fund | | | | | | | | | | | | |
| Common Stocks: | | | | | | | | | | | | |
| Brazil | | $ | — | | | $ | 31,605,992 | | | $ | — | |
| China | | | — | | | | 44,150,976 | | | | — | |
| Denmark | | | — | | | | 37,628,640 | | | | — | |
| France | | | — | | | | 55,827,872 | | | | — | |
| Germany | | | — | | | | 106,039,418 | | | | — | |
| India | | | — | | | | 61,322,101 | | | | — | |
| Indonesia | | | — | | | | 38,208,002 | | | | — | |
| Netherlands | | | 37,581,078 | | | | 39,059,442 | | | | — | |
| Sweden | | | — | | | | 32,910,422 | | | | — | |
| Switzerland | | | — | | | | 51,983,277 | | | | — | |
| Taiwan | | | 52,979,472 | | | | — | | | | — | |
| United Kingdom | | | — | | | | 111,838,583 | | | | — | |
| United States | | | 928,255,249 | | | | — | | | | — | |
| Short-Term Investments | | | 47,607,562 | | | | — | | | | — | |
| Total Investments | | $ | 1,066,423,361 | | | $ | 610,574,725 | | | $ | — | |
| | | | | | | | | | | | | |
| Sustainable International Leaders Fund | | | | | | | | | | | | |
| Common Stocks: | | | | | | | | | | | | |
| Brazil | | $ | — | | | $ | 1,246,329 | | | $ | — | |
| Canada | | | 1,471,725 | | | | — | | | | — | |
| China | | | — | | | | 1,144,185 | | | | — | |
| Denmark | | | — | | | | 590,185 | | | | — | |
| Finland | | | — | | | | 1,075,152 | | | | — | |
| France | | | — | | | | 2,554,608 | | | | — | |
| Germany | | | — | | | | 2,885,159 | | | | — | |
| India | | | 1,415,551 | | | | 850,578 | | | | — | |
| Indonesia | | | — | | | | 1,061,321 | | | | — | |
| Japan | | | — | | | | 1,623,888 | | | | — | |
| Netherlands | | | — | | | | 1,957,737 | | | | — | |
| Sweden | | | — | | | | 1,066,214 | | | | — | |
| Switzerland | | | — | | | | 2,256,196 | | | | — | |
| United Kingdom | | | — | | | | 8,227,503 | | | | — | |
| United States | | | 2,352,441 | | | | — | | | | — | |
| Short-Term Investments | | | 703,574 | | | | — | | | | — | |
| Total Investments | | $ | 5,943,291 | | | $ | 26,539,055 | | | $ | — | |
| | | | | | | | | | | | | |
| Intermediate Income Fund | | | | | | | | | | | | |
| U.S. Treasury Securities | | $ | — | | | $ | 37,259,211 | | | $ | — | |
| Corporate Bonds | | | — | | | | 30,111,310 | | | | — | |
| Mortgage Backed Securities | | | — | | | | 26,972,872 | | | | — | |
| Affiliated Mutual Funds | | | 15,156,294 | | | | — | | | | — | |
| Asset Backed Securities | | | — | | | | 4,559,677 | | | | — | |
| Short-Term Investments | | | 5,292,664 | | | | — | | | | — | |
| Total Investments | | $ | 20,448,958 | | | $ | 98,903,070 | | | $ | — | |
| Futures Contracts — Long* | | $ | 388,630 | | | $ | — | | | $ | — | |
| Futures Contracts — Short* | | $ | (370,551 | ) | | $ | — | | | $ | — | |
Notes to Financial StatementsDecember 31, 2023 (Unaudited)
| | | Level 1 | | | Level 2 | | | Level 3 | |
| Sustainable Bond Fund | | | | | | | | | |
| Mortgage Backed Securities | | $ | — | | | $ | 209,552,530 | | | $ | — | |
| Corporate Bonds | | | — | | | | 175,824,434 | | | | — | |
| Foreign Government Bonds | | | — | | | | 142,325,140 | | | | — | |
| U.S. Treasury Securities | | | — | | | | 100,268,777 | | | | — | |
| Asset Backed Securities | | | — | | | | 38,678,391 | | | | — | |
| Municipal Bonds | | | — | | | | 8,391,646 | | | | — | |
| Short-Term Investments | | | 9,015,318 | | | | 2,047,324 | | | | — | |
| Total Investments | | $ | 9,015,318 | | | $ | 677,088,242 | | | $ | — | |
| Futures Contracts — Long* | | $ | 3,672,041 | | | $ | — | | | $ | — | |
| Futures Contracts — Short* | | $ | (3,148,566 | ) | | $ | — | | | $ | — | |
| | | | | | | | | | | | | |
| Maryland Bond Fund | | | | | | | | | | | | |
| Municipal Bonds | | $ | — | | | $ | 166,152,557 | | | $ | — | |
| Short-Term Investments | | | 768,345 | | | | — | | | | — | |
| Total Investments | | $ | 768,345 | | | $ | 166,152,557 | | | $ | — | |
| | | | | | | | | | | | | |
| Tax-Exempt Bond Fund | | | | | | | | | | | | |
| Municipal Bonds | | $ | — | | | $ | 835,878,769 | | | $ | — | |
| Short-Term Investments | | | 18,430,120 | | | | — | | | | — | |
| Total Investments | | $ | 18,430,120 | | | $ | 835,878,769 | | | $ | — | |
| | | | | | | | | | | | | |
| Tax-Exempt Sustainable Bond Fund | | | | | | | | | | | | |
| Municipal Bonds | | $ | — | | | $ | 302,155,202 | | | $ | — | |
| Short-Term Investments | | | 2,229,271 | | | | — | | | | — | |
| Total Investments | | $ | 2,229,271 | | | $ | 302,155,202 | | | $ | — | |
| | | | | | | | | | | | | |
| Mortgage Securities Fund | | | | | | | | | | | | |
| Mortgage Backed Securities | | $ | — | | | $ | 267,228,050 | | | $ | — | |
| Asset Backed Securities | | | — | | | | 35,870,328 | | | | — | |
| Municipal Bonds | | | — | | | | 408,753 | | | | — | |
| Short-Term Investments | | | 8,594,541 | | | | 61,000,000 | | | | — | |
| Total Investments | | $ | 8,594,541 | | | $ | 364,507,131 | | | $ | — | |
| Futures Contracts — Long* | | $ | 819,939 | | | $ | — | | | $ | — | |
| Futures Contracts — Short* | | $ | (328,491 | ) | | $ | — | | | $ | — | |
| | | | | | | | | | | | | |
| WMC Strategic European Equity Fund | | | | | | | | | | | | |
| Common Stocks: | | | | | | | | | | | | |
| Austria | | $ | — | | | $ | 11,398,163 | | | $ | — | |
| Belgium | | | — | | | | 17,223,705 | | | | — | |
| Czech Republic | | | — | | | | 2,437,709 | | | | — | |
| Denmark | | | — | | | | 1,828,881 | | | | — | |
| France | | | — | | | | 33,858,453 | | | | — | |
| Germany | | | 45,924 | | | | 39,393,392 | | | | — | |
| Ireland | | | — | | | | 6,387,934 | | | | — | |
| Netherlands | | | — | | | | 15,075,470 | | | | — | |
| Portugal | | | — | | | | 6,008,781 | | | | — | |
| Spain | | | — | | | | 15,905,021 | | | | — | |
| Sweden | | | — | | | | 14,682,891 | | | | — | |
| Switzerland | | | — | | | | 20,197,663 | | | | — | |
| United Kingdom | | | 2,764,485 | | | | 82,131,390 | | | | — | |
| Preferred Stocks | | | — | | | | 2,933,751 | | | | — | |
| Short-Term Investments | | | 9,936,236 | | | | — | | | | — | |
| Total Investments | | $ | 12,746,645 | | | $ | 269,463,204 | | | $ | — | |
| | | | | | | | | | | | | |
| Emerging Markets Select Fund† | | | | | | | | | | | | |
| Common Stocks: | | | | | | | | | | | | |
| Australia | | $ | — | | | $ | 7,825,812 | | | $ | — | |
| Brazil | | | — | | | | 21,390,320 | | | | — | |
| China | | | 7,432,772 | | | | 164,308,067 | | | | — | |
| Hungary | | | — | | | | 4,859,526 | | | | — | |
| India | | | — | | | | 111,712,484 | | | | — | |
| Indonesia | | | — | | | | 22,679,447 | | | | — | |
| Russia | | | — | | | | — | | | | 1,848 | |
| Singapore | | | — | | | | 19,996,460 | | | | — | |
| South Africa | | | — | | | | 3,762,597 | | | | — | |
| South Korea | | | — | | | | 86,714,603 | | | | — | |
| Taiwan | | | — | | | | 67,002,764 | | | | — | |
| Thailand | | | — | | | | 9,542,300 | | | | — | |
| Turkey | | | — | | | | 2,657,986 | | | | — | |
| United Arab Emirates | | | 4,816,520 | | | | — | | | | — | |
| United Kingdom | | | — | | | | 3,473,883 | | | | — | |
| United States | | | 12,454,967 | | | | — | | | | — | |
| Preferred Stocks | | | — | | | | 12,747,310 | | | | — | |
| Short-Term Investments | | | 8,604,036 | | | | — | | | | — | |
| Total Investments | | $ | 33,308,295 | | | $ | 538,673,559 | | | $ | 1,848 | |
| | | | | | | | | | | | | |
| Beutel Goodman Large-Cap Value Fund | | | | | | | | | | | | |
| Common Stocks | | $ | 1,684,996,039 | | | $ | — | | | $ | — | |
| Short-Term Investments | | | 38,275,927 | | | | — | | | | — | |
| Total Investments | | $ | 1,723,271,966 | | | $ | — | | | $ | — | |
| ^ | Real Estate Investment Trusts |
| * | Amounts presented for Futures Contracts represent total unrealized appreciation (depreciation) as of the date of this report. |
| † | A reconciliation of Level 3 investments is presented when the Fund has a significant amount of Level 3 investments at the beginning and/or end of the period in relation to net assets. |
B. Securities Transactions and Investment Income – Investment securities transactions are accounted for on trade date. Discounts/premiums on debt securities purchased are accreted/amortized to contractual maturity, estimated maturity, or next call date, as applicable. Dividend income is recorded on the ex-dividend date. Interest income is recorded on an accrual basis. Income and capital gains on some foreign securities may be subject to foreign withholding or capital gains taxes. Identified cost of investments sold is used to determine the gain and loss for both financial statement and Federal income tax purposes. Distributions deemed to be a return of capital are recorded as a reduction of the cost of the related investments or as realized capital gains when there is no remaining cost basis on the investments.
Notes to Financial StatementsDecember 31, 2023 (Unaudited)
C. Expenses and Share Class Allocations – Expenses directly attributable to a Fund are charged to that Fund. Expenses attributable to more than one Fund are allocated to the respective Funds on the basis of relative net assets or other appropriate methods. In Funds with multiple share classes, each share class has equal rights to earnings and assets except that each share class bears different shareholder servicing and/or Rule 12b-1 distribution expenses. Each share class has exclusive voting rights with respect to matters that affect just that share class. Income, expenses (other than expenses attributable to a specific share class), and realized and unrealized capital gains or losses on investments are allocated to each share class on the basis of relative net assets.
D. Foreign Currency – Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. Dollar amounts at the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. Dollar amounts on the respective dates of such transactions.
The Funds do not isolate the portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Some of the Funds may invest in forward foreign currency contracts. These amounts are presented separately from realized and unrealized gains and losses from investments in the financial statements.
E. Options – The Funds may invest in options. When a Fund writes an option, an amount equal to the premium received by a Fund is recorded as a liability and is subsequently adjusted to the current value of the option written. Premiums received from writing options that expire unexercised are treated by a Fund on the expiration date as realized gain from investments. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security or currency determining whether a Fund has a realized gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchase by a Fund. A Fund, as a writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option.
When a Fund purchases an option, an amount equal to the premium paid by a Fund is recorded as an investment and is subsequently adjusted to the current value of the option purchased. If an option expires on the stipulated expiration date or if a Fund enters into a closing sale transaction, a gain or loss is realized. If a call option is exercised, the cost of the security acquired is increased by the premium paid for the call. If a put option is exercised, a gain or loss is realized from the sale of the underlying security, and the proceeds from such sale are decreased by the premium originally paid. Written and purchased options are non- income producing securities. None of the Funds purchased, sold or wrote any options during the six months ended December 31, 2023.
F. To-Be-Announced Securities – Some of the Funds may invest in to-be-announced securities (“TBAs”). TBAs is a term that is generally used to describe forward-settling mortgage-backed securities. These TBAs are generally issued by U.S. Government Agencies or U.S. Government Sponsored Entities such as Freddie Mac, Fannie Mae and Ginnie Mae. The actual mortgage-backed security that will be delivered to the buyer at the time TBAs trades are entered into is not known, however, the terms of the acceptable pools of loans that will comprise the mortgage-backed security are determined at the time the trade is entered into (coupon rate, maturity, credit quality, etc.). Investment in TBAs will generally increase a Fund’s exposure to interest rate risk and could also expose a Fund to counterparty default risk. In order to mitigate counterparty default risk, the Funds only enter into TBAs with counterparties for which the risk of default is determined to be remote. As a purchaser or seller of TBAs, the Funds segregate cash or cash equivalents as collateral as required in accordance with applicable industry regulations.
G. Tender Option Bonds – Maryland Bond Fund, Tax-Exempt Bond Fund and Tax-Exempt Sustainable Bond Fund may engage in tender option bond (“TOB”) transactions up to 5% of its net assets which are accounted for by the funds as a secured borrowing. In a typical TOB transaction, a Fund or another party deposits fixed-rate municipal bonds or other securities into a special purposes entity, referred to as a tender option bond trust (a “TOB Trust”). The TOB Trust generally issues short-term floating rate interests (“Floaters”), which are generally sold to third party investors (often money market funds) and residual interests (“Residual Interests”), which are generally held by the Fund or party that contributed the securities to the TOB Trust. The interest rates payable on the Residual Interests bear an inverse relationship to the interest rate on the Floaters. The interest rate on the Floaters is reset by a remarketing process typically every 7 to 35 days. After income is paid on the Floaters at current, short- term rates, the residual income from the underlying bond held by the TOB Trust goes to the Residual Interests. If a Fund is the depositor of the municipal bonds or other securities to the TOB Trust, the Fund will receive the proceeds from the TOB Trust’s sale of the Floaters, less certain transaction costs. These proceeds may be used by the Fund to invest in other securities, which would have a leveraging effect on the Fund.
Notes to Financial StatementsDecember 31, 2023 (Unaudited)
Residual Interests may be more volatile and less liquid than other municipal bonds of comparable maturity. In most circumstances, the holder of the Residual Interests bears substantially all of the underlying bond’s downside investment risk and also benefits from any appreciation in the value of the underlying bond. Investments in Residual Interests typically will involve greater risk than investments in the underlying municipal bond, including the risk of loss of principal. Because changes in the interest rate on the Floaters inversely affect the residual interest paid on the Residual Interests, the value of the Residual Interests is generally more volatile than that of a fixed-rate municipal bond. Floaters and Residual Interests are subject to interest rate adjustment formulas which generally reduce or, in the extreme, eliminate the interest received by the Residual Interests when short-term interest rates rise, and increase the interest received when short-term interest rates fall.
The Residual Interests held by a Fund provide the Fund with the right to: (1) cause the holders of the Floaters to tender their notes at par, and (2) cause the sale of the underlying bond held by the TOB Trust, thereby collapsing the TOB Trust. A Fund may invest in a TOB Trust on either a non-recourse and recourse basis. Each Fund does not currently intend to invest in a TOB Trust on a recourse basis, although each Fund reserves the right to do so in the future. TOB Trusts are typically supported by a liquidity facility provided by a third-party bank or other financial institution (the “Liquidity Provider”) that allows the holders of the Floaters to tender their Floaters in exchange for payment of par plus accrued interest on any business day (subject to the non- occurrence of a TOTE, as such term is defined below). Depending on the structure of the TOB Trust, the Liquidity Provider may purchase the tendered Floaters, or the TOB Trust may draw upon a loan from the Liquidity Provider to purchase the tendered Floaters.
The TOB Trust may also be collapsed without the consent of a Fund, as the holder of the Residual Interest, upon the occurrence of certain “tender option termination events” (or “TOTEs”) as defined in the TOB Trust agreements. Such termination events typically include the bankruptcy or default of the municipal bond, a substantial downgrade in credit quality of the municipal bond, or a judgment or ruling that interest on the underlying municipal bond is subject to federal income taxation. Upon the occurrence of a TOTE, the TOB Trust would generally be liquidated in full with the proceeds typically applied first to any accrued fees owed to the trustee, remarketing agent and liquidity provider, and then to the holders of the Floaters up to par plus accrued interest owed on the Floaters and a portion of gain share, if any, with the balance paid out to the holder of the Residual Interests. In the case of a mandatory termination event, as defined in the TOB Trust agreements, after the payment of fees, the holders of the Floaters would be paid before the holders of the Residual Interests (i.e., the Fund). In contrast, in the case of a TOTE, after payment of fees, the holders of the Floaters and the holders of the Residual Interests would be paid pro rata in proportion to the respective face values of their certificates.
Under GAAP, securities of a Fund that are deposited into a TOB Trust continue to be treated as investments of the Fund and are presented on the Fund’s Schedule of Investments and outstanding Floaters issued by a TOB Trust are presented as “Floating rate note obligations, interest and fees” in the liabilities section of the Fund’s Statement of Assets and Liabilities and also includes interest and fees associated with the floating rate obligations. Interest income from the underlying security is recorded by the Fund on an accrual basis and included as part of “Interest Income” on the Statements of Operations. Interest expense and other fees incurred on the Floaters is included on the Statement of Operations as “Interest expense and fees on floating rate note obligations”. During the six months ended December 31, 2023, none of the Funds engaged in TOB transactions.
H. Distributions to Shareholders – For Maryland Bond Fund, Tax-Exempt Bond Fund and Tax-Exempt Sustainable Bond Fund, distributions of net investment income, if any, are declared daily and paid monthly. Distributions to shareholders of net investment income, if any, are declared and paid monthly for the Intermediate Income Fund, Sustainable Bond Fund and Mortgage Securities Fund and quarterly for the Equity Income Fund. The remaining Funds declare and pay net investment income, if any, at least annually. Distributions to shareholders of net capital gains, if any, are declared and paid at least annually. Distributions are recorded on the ex-dividend date. If a Fund is involved in a reorganization in which it acquires, or is being acquired by another fund, an additional distribution of net investment income and/or capital gains may be made prior to such reorganization.
I. Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Notes to Financial StatementsDecember 31, 2023 (Unaudited)
J. Federal Taxes – Each Fund has elected to be taxed as a “regulated investment company” and intends to distribute substantially all taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. Therefore, no provision for federal income taxes or excise taxes has been made.
The Funds recognize tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities.
The Funds have analyzed their tax positions and have concluded that no liability for unrecognized tax benefits should be recorded related to uncertain income tax positions taken on returns filed for open tax years (2020-2022) as of June 30, 2023 or are expected to be taken in the Funds’ 2023 tax returns. The Funds identify their major tax jurisdictions as U.S. Federal and Delaware State; however, the Funds are not aware of any tax position for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next year.
K. Redemption Fees – A shareholder who redeems or exchanges shares of the Funds within fourteen days of purchase will incur a redemption fee of 1.00% of the current net asset value of shares redeemed or exchanged, subject to certain exceptions. The fee is charged for the benefit of the remaining shareholders and will be paid to the Fund to help offset transaction costs. The fee is accounted for as an addition to paid-in capital. Each Fund reserves the right to modify the terms of or terminate the fee at any time.
L. Guarantees and Indemnifications – In the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote.
M. New Accounting Pronouncements and SEC Regulations –In June 2022, the FASB issued Accounting Standards Update No. 2022-03 (“ASU 2022-03”), Fair Value Measurement (Topic 820)—Fair Value Measurement of Equity Securities Subject to Contractual Sales Restrictions. The amendments in ASU 2022-03 clarify that a contractual restriction on a sale of an equity security is not considered a part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The amendments in ASU 2022-03 also require the following disclosures for equity securities subject to contractual sale restrictions: (i) the fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet, (ii) the nature and remaining duration of the restriction(s), and (iii) the circumstances that could cause a lapse in the restriction(s). The amendments in ASU 2022-03 are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years for public business entities (early adoption is also permitted). Management is currently evaluating the potential effect that this ASU amendment will have on the Funds’ financial statements.
Notes to Financial StatementsDecember 31, 2023 (Unaudited)
Note 3. Commitments and Other Affiliated Party Transactions
Investment Adviser – Brown Advisory LLC serves as Investment Adviser (“the Adviser”) to the Funds. Pursuant to investment advisory agreements, the Adviser receives a management fee, accrued daily and payable monthly, from each Fund at an annual rate of the Fund’s average daily net assets as follows:
Fund | Breakpoint | Annual Fee |
| Fund | Breakpoint | Annual Fee |
| Growth Equity and | First $1.5 billion | 0.60% | | Flexible Equity | First $150 million | 0.50% |
| Sustainable Growth | $1.5 billion to $3 billion | 0.55% | | | $150 million to $250 million | 0.45% |
| | $3 billion to $6 billion | 0.50% | | | $250 million to $1 billion | 0.40% |
| | Over $6 billion | 0.45% | | | Over $1 billion | 0.38% |
Fund | Annual Fee |
| Fund | Annual Fee |
| Equity Income | 0.60% | | Sustainable Bond | 0.30% |
| Mid-Cap Growth | 0.65% | | Maryland Bond | 0.30% |
| Small-Cap Growth | 0.85% | | Tax-Exempt Bond | 0.30% |
| Small-Cap Fundamental Value | 0.85% | | Tax-Exempt Sustainable Bond | 0.30% |
| Sustainable Small-Cap Core | 0.85% | | Mortgage Securities Fund | 0.30% |
| Sustainable Value | 0.60% | | WMC Strategic European Equity2 | 0.90% |
Global Leaders1 | 0.65% | | Emerging Markets Select2,3 | 0.90% |
Sustainable International Leaders1 | 0.75% | | Beutel Goodman Large-Cap Value4 | 0.45% |
| Intermediate Income | 0.30% | | | |
1 | Brown Advisory Limited (“BAL”) serves as sub-adviser to the Global Leaders Fund and the Sustainable International Leaders Fund and makes investment decisions on their behalf. BAL is compensated for its services by the Adviser. |
2 | Wellington Management Company LLP (“Wellington”) serves as sub-adviser to the WMC Strategic European Equity Fund and the Emerging Markets Select Fund and makes investment decisions on their behalf. Wellington is compensated for its services by the Adviser. |
3 | Pzena Investment Management, LLC (“Pzena”) serves as sub-adviser to the Emerging Markets Select Fund and makes investment decisions on its behalf. Pzena is compensated for its services by the Adviser. |
4 | Beutel, Goodman & Company Ltd. (“Beutel Goodman”) serves as sub-adviser to the Beutel Goodman Large-Cap Value Fund and makes investment decisions on its behalf. Beutel Goodman is compensated for its services by the Adviser. |
These fees are reported on the Funds’ Statements of Operations as “Investment advisory fees”.
Business Management Fees – The Adviser is also entitled to receive an annual business management fee of 0.05%, accrued daily and payable monthly, of the Funds’ average daily net assets in exchange for its management and oversight of the non-investment advisory services provided to the Funds and the Trust. These fees are reported on the Funds’ Statements of Operations as “Business management fees”.
Fee Waivers and Expense Reimbursements (Operating Expense Caps) – The Adviser has contractually agreed to waive a portion of its fees and reimburse certain expenses to limit total annual operating expenses as follows:
Fund(s): | Institutional Shares | Investor Shares | Advisor Shares |
| Growth Equity, Flexible Equity, Sustainable Growth and Mid-Cap Growth | 0.82% | 0.97% | 1.22% |
| Equity Income | 0.76% | 0.91% | 1.16% |
| Small-Cap Growth | 1.04% | 1.19% | 1.44% |
| Small-Cap Fundamental Value | 1.03% | 1.18% | 1.43% |
| Sustainable Small-Cap Core | 0.93% | 1.08% | 1.33% |
| Global Leaders | 0.87% | 1.02% | 1.27% |
| Sustainable International Leaders | 0.85% | 1.00% | 1.25% |
| Intermediate Income | 0.48% | 0.53% | 0.78% |
| Sustainable Bond | 0.53% | 0.58% | 0.83% |
| Maryland Bond and Mortgage Securities | 0.55% | 0.60% | 0.85% |
| Tax-Exempt Bond and Tax-Exempt Sustainable Bond | 0.62% | 0.67% | 0.92% |
| WMC Strategic European Equity | 1.11% | 1.26% | 1.51% |
| Emerging Markets Select | 1.17% | 1.32% | 1.57% |
| Sustainable Value and Beutel Goodman Large-Cap Value | 0.70% | 0.85% | 1.10% |
Notes to Financial StatementsDecember 31, 2023 (Unaudited)
During the six months ended December 31, 2023, the Adviser waived $67,907 in expenses for Equity Income Fund, $9,664 in expenses for Mid-Cap Growth Fund, $42,246 in expenses for Sustainable Small-Cap Core Fund, $39,372 in expenses for Sustainable Value Fund, $53,328 in expenses for Sustainable International Leaders Fund, and $283 in expenses for Intermediate Income Fund. The Adviser may recoup any waived amounts from the Funds if such reimbursement does not cause the Funds to exceed its existing expense limitations or the limitation in place at the time the reduction was originally made and the amount recouped is made within three years after the date on which the Adviser waived the expense. The Funds must pay their current ordinary operating expenses before the Adviser is entitled to any recoupment of previously waived fees and/or expenses. The cumulative amounts of previously waived fees that the Adviser may recoup from the Funds are shown below:
| | | June 30, | |
| | | 2024 | | | 2025 | | | 2026 | | | Total | |
| Equity Income Fund | | $ | 20,506 | | | $ | 22,413 | | | $ | 40,287 | | | $ | 83,206 | |
| Mid-Cap Growth Fund | | | 53,751 | | | | — | | | | 11,288 | | | | 65,039 | |
| Sustainable Small-Cap Core Fund | | | N/A | | | | 89,225 | | | | 96,918 | | | | 186,143 | |
| Sustainable Value Fund | | | N/A | | | | N/A | | | | 56,368 | | | | 56,368 | |
| Global Leaders Fund | | | 84,839 | | | | — | | | | — | | | | 84,839 | |
| Sustainable International Leaders Fund | | | N/A | | | | 59,952 | | | | 110,385 | | | | 170,337 | |
Distribution – ALPS Distributors, Inc. (the “Distributor”) serves as principal underwriter for shares of the Funds and acts as each Fund’s Distributor in a continuous public offering of each Fund’s shares.
Rule 12b-1 Distribution Fees – Under a Distribution Plan adopted pursuant to Rule 12b-1 under the Act (“Distribution Plan”), each Fund pays ALPS Distributors, Inc. (the “Distributor”), or any other entity as authorized by the Board, as compensation for the distribution-related and/or shareholder services provided by such entities an aggregate fee equal to 0.25% of the average daily net assets of Advisor Shares for each Fund. The Distributor may pay any or all amounts received under the Rule 12b-1 Plan to financial intermediaries or other persons, including the Adviser, for any distribution or service activity. These fees are reported in the Funds’ Statements of Operations as “Distribution fees – Advisor Shares”.
Shareholder Servicing Fees – The Trust has also adopted a Shareholder Service Plan under which each Fund may pay a fee of up to 0.15% of the average daily net assets of each Fund’s Investor and Advisor Shares (except for the Intermediate Income Fund, Sustainable Bond Fund, Maryland Bond Fund, Tax-Exempt Bond Fund, Tax-Exempt Sustainable Bond Fund and Mortgage Securities Fund, which may pay a fee of up to 0.05%) for shareholder services provided to the Funds by financial institutions, including the Adviser. The Adviser serves as the shareholder servicing agent of the Funds. These fees are reported in the Funds’ Statements of Operations as “Service fees – Investor Shares” and “Service fees – Advisor Shares”.
Investments in Affiliates – Intermediate Income Fund – The Intermediate Income Fund and Mortgage Securities Fund are considered affiliates since Brown Advisory LLC is the Adviser to both of the Funds. In seeking to achieve its investment objective, the Intermediate Income Fund invests a portion of its assets into the Mortgage Securities Fund. As of December 31, 2023, the Intermediate Income Fund owned shares of the Mortgage Securities Fund with a total value of $15,156,294 or 12.6% of the Intermediate Income Fund’s net assets.
The Intermediate Income Fund has entered into a Fee Waiver Agreement (the “Agreement”) with the Adviser. Per the Agreement, the Intermediate Income Fund will waive Advisory Fees in an amount equal to the Advisory Fees earned by the Mortgage Securities Fund on the assets invested into it by the Intermediate Income Fund. For example, if the Intermediate Income Fund owned $10,000,000 worth of the Mortgage Securities Fund for an entire year, it would waive, on an annual basis, $30,000 in Advisory Fees ($10,000,000 multiplied by 0.30%, the annual Advisory Fee ratio for the Mortgage Securities Fund). For the six months ended December 31, 2023 the Intermediate Income Fund waived $22,153 in Advisory Fees per the terms of the Agreement. This is a permanent waiver of fees and these waived fees may not be recouped by the Adviser at any time in the future.
Notes to Financial StatementsDecember 31, 2023 (Unaudited)
See the table below for details of the Intermediate Income Fund’s investment in the Mortgage Securities Fund Institutional Shares for the six months ended December 31, 2023:
| | | | Net | Change In | | | | |
| Beginning | | | Realized | Unrealized | Ending | | | Shares |
| Market Value | | | Gains | Appreciation | Market Value | Dividend | Capital Gain | Owned at |
06/30/2023 | Purchases | Sales | (Losses) | (Depreciation) | 12/31/2023 | Income | Distributions | 12/31/2023 |
| $15,057,017 | $— | $— | $— | $99,277 | $15,156,294 | $304,284 | $— | 1,654,617 |
Other Service Providers – U.S. Bancorp Fund Services, LLC (“Fund Services”), doing business as U.S. Bank Global Fund Services, an indirect wholly-owned subsidiary of U.S. Bancorp, serves as the Funds’ Administrator (“Administrator”), and in that capacity, performs various administrative services for the Funds. Fund Services also serves as the Funds’ fund accountant and transfer agent. Certain officers of the Trust are employees of Fund Services and the Funds’ custodian, U.S. Bank, N.A., is an affiliate of the Administrator. Fees paid to Fund Services and U.S. Bank, N.A. for its service can be found in the Statements of Operations as “Administration, accounting and transfer agent fees” and “Custodian fees”, respectively. Additional amounts for miscellaneous expenses may be paid by the Funds to Fund Services and included in “Miscellaneous expenses” in the Statements of Operations.
Rule 17a-7 Transactions – Each Fund is permitted to purchase and sell securities to certain affiliated parties under specified conditions outlined in procedures adopted by the Board of Trustees pursuant to Rule 17a-7 under the 1940 Act. Pursuant to these procedures, during six months ended December 31, 2023, the WMC Strategic European Equity Fund engaged in such securities sales of $134,022, resulting in realized loss of $25,752. These transactions are included in the purchases and sales table in Note 4.
Note 4. Purchases and Sales of Securities
The cost of purchases and the proceeds from sales of investments (including maturities), other than short-term investments, for the six months ended December 31, 2023 were as follows:
| Fund | | Purchases | | | Sales | | Fund | | Purchases | | | Sales | |
| Growth Equity | | $ | 349,065,538 | | | $ | 680,035,149 | | Sustainable International Leaders | | $ | 11,558,597 | | | $ | 4,071,403 | |
| Flexible Equity | | | 47,699,826 | | | | 61,622,560 | | Intermediate Income | | | 18,799,132 | | | | 20,359,821 | |
| Equity Income | | | 3,131,655 | | | | 53,231,862 | | Sustainable Bond | | | 1,044,925,569 | | | | 1,053,244,708 | |
| Sustainable Growth | | | 972,045,024 | | | | 794,343,546 | | Maryland Bond | | | 35,371,347 | | | | 31,526,860 | |
| Mid-Cap Growth | | | 28,895,313 | | | | 34,886,648 | | Tax-Exempt Bond | | | 319,723,977 | | | | 279,957,168 | |
| Small-Cap Growth | | | 202,474,193 | | | | 247,992,518 | | Tax-Exempt Sustainable Bond | | | 73,651,904 | | | | 59,577,404 | |
| Small-Cap Fundamental Value | | | 225,830,631 | | | | 232,081,350 | | Mortgage Securities | | | 529,622,328 | | | | 521,446,881 | |
| Sustainable Small-Cap Core | | | 16,486,889 | | | | 6,977,028 | | WMC Strategic European Equity | | | 65,319,251 | | | | 44,703,946 | |
| Sustainable Value | | | 18,411,550 | | | | 6,026,801 | | Emerging Markets Select | | | 243,963,586 | | | | 216,168,271 | |
| Global Leaders | | | 205,983,854 | | | | 153,177,930 | | Beutel Goodman Large-Cap Value | | | 90,625,681 | | | | 99,327,313 | |
Purchases and sales of U.S. Government securities are included in the totals above and include U.S. Treasury Bonds and Notes. The Funds listed below purchased and sold U.S. Government securities during the six months ended December 31, 2023 as follows:
| Fund | | Purchases | | | Sales | | Fund | | Purchases | | | Sales | |
| Intermediate Income | | $ | — | | | $ | 5,589,465 | | Mortgage Securities | | $ | — | | | $ | 4,374,654 | |
| Sustainable Bond | | | 29,266,249 | | | | 18,969,705 | | | | | | | | | | |
Notes to Financial StatementsDecember 31, 2023 (Unaudited)
Note 5. Federal Income Tax and Distribution Information
Distributions during the fiscal periods ended as noted were characterized for tax purposes as follows:
| | | Tax Exempt Income | | | Ordinary Income | | | Long-Term Capital Gain^ | |
| | | December 31, | | | June 30, | | | December 31, | | | June 30, | | | December 31, | | | June 30, | |
| Fund | | 2023 | | | 2023 | | | 2023 | | | 2023 | | | 2023 | | | 2023 | |
| Growth Equity | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 150,454,901 | | | $ | 154,275,441 | |
| Flexible Equity | | | — | | | | — | | | | 2,099,783 | | | | 1,834,982 | | | | 18,908,484 | | | | 20,267,064 | |
| Equity Income | | | — | | | | — | | | | 498,279 | | | | 1,210,713 | | | | 4,016,345 | | | | 5,880,188 | |
| Sustainable Growth | | | — | | | | — | | | | 633,789 | | | | 10,470 | | | | — | | | | — | |
| Mid-Cap Growth | | | — | | | | — | | | | — | | | | — | | | | — | | | | 6,173,357 | |
| Small-Cap Growth | | | — | | | | — | | | | — | | | | — | | | | — | | | | 151,387,604 | |
| Small-Cap Fundamental Value | | | — | | | | — | | | | 8,209,043 | | | | 4,527,234 | | | | 67,260,302 | | | | 63,667,844 | |
| Sustainable Small-Cap Core | | | — | | | | — | | | | 104,511 | | | | 440 | | | | — | | | | 176 | |
| Sustainable Value | | | — | | | | — | | | | 659,597 | | | | — | | | | — | | | | — | |
| Global Leaders | | | — | | | | — | | | | 8,773,970 | | | | 7,386,738 | | | | — | | | | — | |
| Sustainable International Leaders | | | — | | | | — | | | | 153,690 | | | | 38,904 | | | | — | | | | — | |
| Intermediate Income | | | — | | | | — | | | | 1,903,743 | | | | 3,282,894 | | | | — | | | | — | |
| Sustainable Bond | | | — | | | | — | | | | 13,295,015 | | | | 9,471,969 | | | | — | | | | — | |
| Maryland Bond | | | 2,535,954 | | | | 4,470,119 | | | | 77,921 | | | | 137,349 | | | | — | | | | — | |
| Tax-Exempt Bond | | | 15,328,691 | | | | 24,497,918 | | | | 1,153,312 | | | | 1,843,194 | | | | — | | | | — | |
| Tax-Exempt Sustainable Bond | | | 4,804,989 | | | | 7,295,855 | | | | 437,037 | | | | 663,595 | | | | — | | | | — | |
| Mortgage Securities | | | — | | | | — | | | | 6,108,587 | | | | 9,691,538 | | | | — | | | | — | |
| WMC Strategic European Equity | | | — | | | | — | | | | 3,666,703 | | | | 3,633,267 | | | | — | | | | 1,383,176 | |
| Emerging Markets Select | | | — | | | | — | | | | 9,953,477 | | | | 6,117,691 | | | | — | | | | — | |
| Beutel Goodman Large-Cap Value | | | — | | | | — | | | | 30,539,665 | | | | 36,650,998 | | | | — | | | | 15,444,813 | |
| ^ | Designated as a long-term capital gain dividend, pursuant to Internal Revenue Code Section 852(b)(3). The Funds, as applicable, have also designated earnings and profits distributed to shareholders on the redemption of shares as capital gains in order to reduce earnings and profits of the Fund related to net capital gains to zero as of the date of this report. |
At June 30, 2023, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
| | | Growth | | | Flexible | | | Equity | | | Sustainable | | | Mid-Cap | | | Small-Cap | |
| | | Equity | | | Equity | | | Income | | | Growth | | | Growth | | | Growth | |
| | | Fund | | | Fund | | | Fund | | | Fund | | | Fund | | | Fund | |
| Cost of investments | | $ | 1,535,723,919 | | | $ | 328,324,983 | | | $ | 40,268,342 | | | $ | 5,582,240,678 | | | $ | 78,039,082 | | | $ | 1,905,904,882 | |
| Unrealized appreciation | | | 1,140,360,699 | | | | 396,823,553 | | | | 34,119,508 | | | | 2,467,452,019 | | | | 22,276,670 | | | | 497,691,030 | |
| Unrealized depreciation | | | (166,455,345 | ) | | | (18,630,560 | ) | | | (1,647,428 | ) | | | (409,027,378 | ) | | | (4,543,763 | ) | | | (154,903,391 | ) |
| Net unrealized app (dep) | | | 973,905,354 | | | | 378,192,993 | | | | 32,472,080 | | | | 2,058,424,641 | | | | 17,732,907 | | | | 342,787,639 | |
| Undistributed income | | | — | | | | 1,552,294 | | | | 9,272 | | | | 633,371 | | | | — | | | | — | |
| Undistributed capital gains | | | 89,595,945 | | | | 12,273,366 | | | | 4,016,337 | | | | — | | | | — | | | | — | |
| Total undistributed earnings | | | 89,595,945 | | | | 13,825,660 | | | | 4,025,609 | | | | 633,371 | | | | — | | | | — | |
| Other accumulated gains (losses) | | | (2,207,095 | ) | | | — | | | | — | | | | (10,416,902 | ) | | | (14,763,398 | ) | | | (12,850,190 | ) |
| Total distributable earnings (losses) | | $ | 1,061,294,204 | | | $ | 392,018,653 | | | $ | 36,497,689 | | | $ | 2,048,641,110 | | | $ | 2,969,509 | | | $ | 329,937,449 | |
Notes to Financial StatementsDecember 31, 2023 (Unaudited)
| | | Small-Cap | | | Sustainable | | | Sustainable | | | Global | | | Sustainable | | | Intermediate | |
| | | Fundamental | | | Small-Cap | | | Value | | | Leaders | | | International | | | Income | |
| | | Value Fund | | | Core Fund | | | Fund | | | Fund | | | Leaders Fund | | | Fund | |
| Cost of investments | | $ | 942,751,710 | | | $ | 51,311,851 | | | $ | 46,760,185 | | | $ | 1,079,850,957 | | | $ | 20,710,081 | | | $ | 135,650,291 | |
| Unrealized appreciation | | | 328,662,910 | | | | 7,152,961 | | | | 2,664,240 | | | | 417,862,519 | | | | 3,611,319 | | | | 62,650 | |
| Unrealized depreciation | | | (94,311,012 | ) | | | (7,959,108 | ) | | | (1,220,854 | ) | | | (24,075,031 | ) | | | (317,356 | ) | | | (10,333,050 | ) |
| Net unrealized app (dep) | | | 234,351,898 | | | | (806,147 | ) | | | 1,443,386 | | | | 393,787,488 | | | | 3,293,963 | | | | (10,270,400 | ) |
| Undistributed income | | | 4,395,256 | | | | 60,483 | | | | 207,087 | | | | 7,529,353 | | | | 145,740 | | | | 203,200 | |
| Undistributed capital gains | | | 45,684,651 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Total undistributed earnings | | | 50,079,907 | | | | 60,483 | | | | 207,087 | | | | 7,529,353 | | | | 145,740 | | | | 203,200 | |
| Other accumulated gains (losses) | | | — | | | | (2,674,538 | ) | | | (76,805 | ) | | | (52,645,126 | ) | | | (148,010 | ) | | | (6,947,488 | ) |
| Total distributable earnings (losses) | | $ | 284,431,805 | | | $ | (3,420,202 | ) | | $ | 1,573,668 | | | $ | 348,671,715 | | | $ | 3,291,693 | | | $ | (17,014,688 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Sustainable | | | Maryland | | | Tax-Exempt | | | Tax-Exempt | | | Mortgage | | | WMC Strategic | |
| | | Bond | | | Bond | | | Bond | | | Sustainable | | | Securities | | | European | |
| | | Fund | | | Fund | | | Fund | | | Bond Fund | | | Fund | | | Equity Fund | |
| Cost of investments | | $ | 992,202,229 | | | $ | 171,275,315 | | | $ | 803,858,955 | | | $ | 297,656,057 | | | $ | 399,373,258 | | | $ | 217,772,421 | |
| Unrealized appreciation | | | 952,692 | | | | 416,711 | | | | 11,074,889 | | | | 954,522 | | | | 526,789 | | | | 48,963,948 | |
| Unrealized depreciation | | | (24,420,261 | ) | | | (8,270,932 | ) | | | (24,553,724 | ) | | | (11,956,972 | ) | | | (20,183,046 | ) | | | (24,331,845 | ) |
| Net unrealized app (dep) | | | (23,467,569 | ) | | | (7,854,221 | ) | | | (13,478,835 | ) | | | (11,002,450 | ) | | | (19,656,257 | ) | | | 24,632,103 | |
| Undistributed income | | | 236,768 | | | 325,158 | ^ | | 2,037,489 | ^ | | 589,676 | ^ | | | 726,635 | | | | 3,666,609 | |
| Undistributed capital gains | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Total undistributed earnings | | | 236,768 | | | | 325,158 | | | | 2,037,489 | | | | 589,676 | | | | 726,635 | | | | 3,666,609 | |
| Other accumulated gains (losses) | | | (96,256,286 | ) | | | (6,979,844 | ) | | | (81,649,953 | ) | | | (15,181,128 | ) | | | (22,252,296 | ) | | | (6,848,417 | ) |
| Total distributable earnings (losses) | | $ | (119,487,087 | ) | | $ | (14,508,907 | ) | | $ | (93,091,299 | ) | | $ | (25,593,902 | ) | | $ | (41,181,918 | ) | | $ | 21,450,295 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Emerging | | | Beutel Goodman | | | | | | | | | | | | | | | | | |
| | | Markets | | | Large-Cap | | | | | | | | | | | | | | | | | |
| | | Select Fund | | | Value Fund | | | | | | | | | | | | | | | | | |
| Cost of investments | | $ | 503,380,053 | | | $ | 1,471,401,478 | | | | | | | | | | | | | | | | | |
| Unrealized appreciation | | | 88,415,689 | | | | 250,521,408 | | | | | | | | | | | | | | | | | |
| Unrealized depreciation | | | (53,117,842 | ) | | | (65,498,869 | ) | | | | | | | | | | | | | | | | |
| Net unrealized app (dep) | | | 35,297,847 | | | | 185,022,539 | | | | | | | | | | | | | | | | | |
| Undistributed income | | | 5,806,405 | | | | 9,158,242 | | | | | | | | | | | | | | | | | |
| Undistributed capital gains | | | — | | | | — | | | | | | | | | | | | | | | | | |
| Total undistributed earnings | | | 5,806,405 | | | | 9,158,242 | | | | | | | | | | | | | | | | | |
| Other accumulated gains (losses) | | | (70,262,386 | ) | | | — | | | | | | | | | | | | | | | | | |
| Total distributable earnings (losses) | | $ | (29,158,134 | ) | | $ | 194,180,781 | | | | | | | | | | | | | | | | | |
| ^ | Represents income that is exempt from federal income taxes. |
At June 30, 2023 the differences between tax basis and book basis amounts were primarily due to wash sales, post-October losses, post-December ordinary losses, timing differences related to the amortization of premium on certain fixed income securities, and distributions payable.
Note 6. Futures Contracts
The Intermediate Income Fund, Sustainable Bond Fund, and Mortgage Securities Fund invested in futures contracts during the six months December 31, 2023. At the time a Fund purchases or enters into a futures contract, the Fund deposits and maintains as collateral an initial margin with the broker, as required by the terms of the contract. This collateral may consist of cash and/or securities (generally U.S. Treasury Bills). Thereafter, in connection with changes in the value of the futures contracts, the Funds may send or receive collateral to or from the broker. Such amounts are included on the Statements of Assets and Liabilities as “Cash deposit at broker – futures contracts” or “Cash collateral from broker – futures contracts”. Securities pledged as collateral, if
Notes to Financial StatementsDecember 31, 2023 (Unaudited)
there are any, are included on the Statements of Assets and Liabilities as part of “Total investments, at value”. These securities are also tickmarked on the Schedules of Investments as being pledged in connection with open futures contracts.
Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the fluctuation in the value of the contract. These daily fluctuations are known as variation margin and are recorded by the Fund as unrealized gains or losses on futures contracts. When these futures contracts are closed, realized gains or losses on futures contracts are recorded by the Fund. The realized gains or losses are reported in the Statement of Operations as net realized gains or losses from futures contracts. Depending upon the agreement with the broker, the Funds may or may not settle variation margin daily. The Funds attempt to mitigate counterparty credit risk by only entering into futures contracts with brokers that the Funds believe have the financial resources to honor their obligations and by monitoring the financial stability of these brokers. The “Notional Amount” of futures contracts shown on the Schedule of Investments represents the notional value of the futures contracts on the day they were opened. The “Notional Value” of futures contracts shown on the Schedule of Investments represents the notional value of the futures contracts as of the date of this report. For long futures contracts, an excess of Notional Value over Notional Amount results in unrealized appreciation on the futures contract (and an excess of Notional Amount over Notional Value results in unrealized depreciation on the futures contract). The opposite is true for short futures contracts. For futures contracts denominated in foreign currencies, both the Notional Amount and Notional Value have been translated into U.S. Dollars as of the date of this report. These unrealized appreciation (depreciation) amounts represent the net impact on a Fund’s net assets as a result of open futures contracts as of the date of this report. The use of long futures contracts by the Funds subjects them to a risk of loss in excess of the gross unrealized appreciation and/or gross unrealized depreciation amounts shown on the Statements of Assets and Liabilities and up to the total Notional Amount of the futures contract as shown on the Schedule of Investments. The use of short futures contracts by the Funds subjects them to a risk of loss in excess of the gross unrealized appreciation and/or gross unrealized depreciation amounts shown on the Statements of Assets and Liabilities and, hypothetically, up to an unlimited amount of loss that could exceed the Notional Amount of the futures contracts as shown on the Schedules of Investments.
During the six months ended December 31, 2023, investments in futures contracts were as follows:
| | | | Average Notional Value Outstanding |
Fund | Risk Type | Long Futures Contracts | | Short Futures Contracts |
| Intermediate Income | Interest Rate | | $ | 23,941,518 | | | | $ | 8,513,077 | |
| Sustainable Bond | Interest Rate | | | 125,478,010 | | | | | 42,812,229 | |
| Mortgage Securities | Interest Rate | | | 25,784,996 | | | | | 8,098,283 | |
Investment in long futures contracts increases a Fund’s exposure to interest rate risk, while investment in short futures contracts serves to reduce a Fund’s exposure to interest rate risk. Assets and/or liabilities related to futures contracts were not subject to an arrangement wherein those assets and/or liabilities were, or could have been, settled on a net basis with any other derivative related obligations.
Note 7. Line of Credit
As of December 31, 2023, Brown Advisory Funds has a secured line of credit of up to $100,000,000 with U.S. Bank, N.A. The interest rate on the line of credit as of the date of this report was 8.50% (prime rate). None of the Funds borrowed during the six months ended December 31, 2023.
Note 8. Market Disruptions
On February 24, 2022, Russia commenced a military attack on Ukraine. The outbreak of hostilities between the two countries could result in more widespread conflict and could have a severe adverse effect on the region and the markets. In addition, sanctions imposed on Russia by the United States and other countries, and any sanctions imposed in the future could have a significant adverse impact on the Russian economy and related markets. The price and liquidity of investments may fluctuate widely as a result of the conflict and related events. How long such conflict and related events will last and whether it will escalate further cannot be predicted, nor its effect on the Funds.
Notes to Financial StatementsDecember 31, 2023 (Unaudited)
Note 9. Closure and Liquidation of Equity Income Fund
On October 19, 2023, the Board of Trustees (the “Board”) of Brown Advisory Funds, based upon the recommendation of the Adviser, determined to close and liquidate the Brown Advisory Equity Income Fund (the “Fund”). The Board concluded that it would be in the best interests of the Fund and its shareholders that the Fund be closed and liquidated as of the close of business on January 12, 2024. The Fund liquidated on January 12, 2024 and is no longer operating or available for purchase.
Note 10. Subsequent Events
In preparing these financial statements, the Funds have evaluated events and transactions for potential recognition through the date the financial statements were issued. No material events or transactions occurred subsequent to December 31, 2023 that would require recognition or disclosure in these financial statements.
Expense Example For the Six Months Ended December 31, 2023 (Unaudited)
As a shareholder of a Fund you incur two types of costs: (1) transaction costs, including redemption fees and exchange fees; and (2) ongoing costs, including investment advisory fees; distribution and/or service fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the six month period and held for the entire period (July 1, 2023 – December 31, 2023).
Actual Expenses
The Actual Expenses columns in the following table provides information about actual account values based on actual returns and actual expenses. As a shareholder you will be assessed fees for outgoing wire transfers, returned checks and stop payment orders at prevailing rates charged by U.S. Bancorp Fund Services, LLC, the Funds’ transfer agent. If you request that a redemption be made by wire transfer, currently, the Funds’ transfer agent charges a $15.00 fee. You will be charged a redemption fee equal to 1.00% of the net amount of the redemption if you redeem your shares less than 14 days after you purchase, with certain limited exceptions. Individual Retirement Accounts (“IRA”) that are held directly at the Funds will be charged a $15.00 annual maintenance fee. IRAs held by broker-dealers or through other means, may or may not incur an annual maintenance fee. Yet, if IRAs maintenance fees are charged to accounts held elsewhere, the fees charged may be more or may be less than $15.00. To the extent the Funds invest in shares of other investment companies as part of their investment strategy, you will indirectly bear your proportionate share of any fees and expenses charged by the underlying funds in which the Funds invest in addition to the expenses of the Funds. Actual expenses of the underlying funds may vary. These expenses are not included in the example below. The example below includes, but is not limited to, investment advisory, shareholder servicing, fund accounting, custody and transfer agent fees. However, the example below does not include portfolio trading commissions and related expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6). Then, multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The Hypothetical Expenses columns in the following table provides information about hypothetical account values based on a hypothetical return and hypothetical expenses based on the Funds’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees or exchange fees. Therefore, the hypothetical information in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| | | Actual Expenses | | Hypothetical Expenses | |
| | Beginning | Ending | Expenses | | Ending | Expenses | Annualized |
| | Account Value | Account Value | Paid During | | Account Value | Paid During | Net Expense |
| | July 1, 2023 | December 31, 2023 | the Period* | | December 31, 2023 | the Period* | Ratio* |
| Growth Equity Fund | | | | | | | |
| Institutional Shares | $1,000.00 | $1,085.40 | $3.56 | | $1,021.72 | $3.46 | 0.68% |
| Investor Shares | $1,000.00 | $1,084.70 | $4.35 | | $1,020.96 | $4.22 | 0.83% |
| Advisor Shares | $1,000.00 | $1,083.20 | $5.66 | | $1,019.71 | $5.48 | 1.08% |
| | | | | | | | |
| Flexible Equity Fund | | | | | | | |
| Institutional Shares | $1,000.00 | $1,120.80 | $2.83 | | $1,022.47 | $2.69 | 0.53% |
| Investor Shares | $1,000.00 | $1,120.00 | $3.62 | | $1,021.72 | $3.46 | 0.68% |
| Advisor Shares | $1,000.00 | $1,118.70 | $4.95 | | $1,020.46 | $4.72 | 0.93% |
| | | | | | | | |
| Equity Income Fund | | | | | | | |
| Institutional Shares | $1,000.00 | $1,024.60 | $3.87 | | $1,021.32 | $3.86 | 0.76% |
| Investor Shares | $1,000.00 | $1,023.00 | $4.63 | | $1,020.56 | $4.62 | 0.91% |
| Advisor Shares | $1,000.00 | $1,022.70 | $5.90 | | $1,019.30 | $5.89 | 1.16% |
Expense Example For the Six Months Ended December 31, 2023 (Unaudited)
| | | Actual Expenses | | Hypothetical Expenses | |
| | Beginning | Ending | Expenses | | Ending | Expenses | Annualized |
| | Account Value | Account Value | Paid During | | Account Value | Paid During | Net Expense |
| | July 1, 2023 | December 31, 2023 | the Period* |
| December 31, 2023 | the Period* | Ratio* |
| Sustainable Growth Fund | | | | | | | |
| Institutional Shares | $1,000.00 | $1,116.60 | $3.25 | | $1,022.07 | $3.10 | 0.61% |
| Investor Shares | $1,000.00 | $1,115.90 | $4.04 | | $1,021.32 | $3.86 | 0.76% |
| Advisor Shares | $1,000.00 | $1,114.40 | $5.37 | | $1,020.06 | $5.13 | 1.01% |
| | | | | | | | |
| Mid-Cap Growth Fund | | | | | | | |
| Institutional Shares | $1,000.00 | $1,082.00 | $4.29 | | $1,021.01 | $4.17 | 0.82% |
| Investor Shares | $1,000.00 | $1,081.20 | $5.07 | | $1,020.26 | $4.93 | 0.97% |
| | | | | | | | |
| Small-Cap Growth Fund | | | | | | | |
| Institutional Shares | $1,000.00 | $1,023.40 | $4.88 | | $1,020.31 | $4.88 | 0.96% |
| Investor Shares | $1,000.00 | $1,022.60 | $5.64 | | $1,019.56 | $5.63 | 1.11% |
| Advisor Shares | $1,000.00 | $1,021.00 | $6.91 | | $1,018.30 | $6.90 | 1.36% |
| | | | | | | | |
| Small-Cap Fundamental Value Fund | | | | | | |
| Institutional Shares | $1,000.00 | $1,130.20 | $5.09 | | $1,020.36 | $4.82 | 0.95% |
| Investor Shares | $1,000.00 | $1,129.80 | $5.89 | | $1,019.61 | $5.58 | 1.10% |
| Advisor Shares | $1,000.00 | $1,128.00 | $7.22 | | $1,018.35 | $6.85 | 1.35% |
| | | | | | | | |
| Sustainable Small-Cap Core Fund | | | | | | |
| Institutional Shares | $1,000.00 | $1,092.60 | $4.89 | | $1,020.46 | $4.72 | 0.93% |
| Investor Shares | $1,000.00 | $1,091.10 | $5.68 | | $1,019.71 | $5.48 | 1.08% |
| | | | | | | | |
| Sustainable Value Fund | | | | | | | |
| Institutional Shares | $1,000.00 | $1,114.70 | $3.72 | | $1,021.62 | $3.56 | 0.70% |
| Investor Shares | $1,000.00 | $1,113.80 | $4.52 | | $1,020.86 | $4.32 | 0.85% |
| | | | | | | | |
| Global Leaders Fund | | | | | | | |
| Institutional Shares | $1,000.00 | $1,075.40 | $3.96 | | $1,021.32 | $3.86 | 0.76% |
| Investor Shares | $1,000.00 | $1,074.40 | $4.75 | | $1,020.56 | $4.62 | 0.91% |
| | | | | | | | |
| Sustainable International Leaders Fund | | | | | | |
| Institutional Shares | $1,000.00 | $1,001.00 | $4.28 | | $1,020.86 | $4.32 | 0.85% |
| Investor Shares | $1,000.00 | $ 999.80 | $5.03 | | $1,020.11 | $5.08 | 1.00% |
| | | | | | | | |
| Intermediate Income Fund | | | | | | | |
| Investor Shares | $1,000.00 | $1,029.80 | $2.50 | | $1,022.67 | $2.49 | 0.49% |
| Advisor Shares | $1,000.00 | $1,028.10 | $3.77 | | $1,021.42 | $3.76 | 0.74% |
| | | | | | | | |
| Sustainable Bond Fund | | | | | | | |
| Institutional Shares | $1,000.00 | $1,027.40 | $2.09 | | $1,023.08 | $2.08 | 0.41% |
| Investor Shares | $1,000.00 | $1,025.90 | $2.34 | | $1,022.82 | $2.34 | 0.46% |
| | | | | | | | |
| Maryland Bond Fund | | | | | | | |
| Investor Shares | $1,000.00 | $1,035.70 | $2.51 | | $1,022.67 | $2.49 | 0.49% |
| | | | | | | | |
| Tax-Exempt Bond Fund | | | | | | | |
| Institutional Shares | $1,000.00 | $1,037.20 | $2.10 | | $1,023.08 | $2.08 | 0.41% |
| Investor Shares | $1,000.00 | $1,038.00 | $2.36 | | $1,022.82 | $2.34 | 0.46% |
| | | | | | | | |
| Tax-Exempt Sustainable Bond Fund | | | | | | |
| Investor Shares | $1,000.00 | $1,029.50 | $2.45 | | $1,022.72 | $2.44 | 0.48% |
| | | | | | | | |
| Mortgage Securities Fund | | | | | | | |
| Institutional Shares | $1,000.00 | $1,027.70 | $2.29 | | $1,022.87 | $2.29 | 0.45% |
| Investor Shares | $1,000.00 | $1,027.30 | $2.55 | | $1,022.62 | $2.54 | 0.50% |
Expense Example For the Six Months Ended December 31, 2023 (Unaudited)
| | | Actual Expenses | | Hypothetical Expenses | |
| | Beginning | Ending | Expenses | | Ending | Expenses | Annualized |
| | Account Value | Account Value | Paid During | | Account Value | Paid During | Net Expense |
| | July 1, 2023 | December 31, 2023 | the Period* |
| December 31, 2023 | the Period* | Ratio* |
| WMC Strategic European Equity Fund | | | | | | |
| Institutional Shares | $1,000.00 | $1,063.70 | $5.50 | | $1,019.81 | $5.38 | 1.06% |
| Investor Shares | $1,000.00 | $1,063.80 | $6.28 | | $1,019.05 | $6.14 | 1.21% |
| Advisor Shares | $1,000.00 | $1,061.80 | $7.57 | | $1,017.80 | $7.41 | 1.46% |
| | | | | | | | |
| Emerging Markets Select Fund | | | | | | | |
| Institutional Shares | $1,000.00 | $1,033.00 | $5.62 | | $1,019.61 | $5.58 | 1.10% |
| Investor Shares | $1,000.00 | $1,032.60 | $6.39 | | $1,018.85 | $6.34 | 1.25% |
| Advisor Shares | $1,000.00 | $1,031.20 | $7.66 | | $1,017.60 | $7.61 | 1.50% |
| | | | | | | |
| Beutel Goodman Large-Cap Value Fund | | | | | | |
| Institutional Shares | $1,000.00 | $1,056.30 | $2.84 | | $1,022.37 | $2.80 | 0.55% |
| Investor Shares | $1,000.00 | $1,056.50 | $3.62 | | $1,021.62 | $3.56 | 0.70% |
| * | The calculations are based on expenses incurred during the most recent six-month period ended as of the date of this report. The dollar amounts shown as expenses paid during the period are equal to the annualized six-month net expense ratio multiplied by the average account value during the period, multiplied by the number of days (184) in the most recent six-month period divided by the number of days in the Funds’ fiscal year (366). |
Board of Trustees Approval of: (i) the Continuation of the Investment Advisory Agreement for the Funds and (ii) the Continuation of the Sub-Investment Advisory Agreements for the Sub-Advised Funds (Unaudited)
In accordance with the Investment Company Act of 1940 Act, the Board of Trustees of the Trust is required, on an annual basis, to consider: (i) the continuation of the Investment Advisory Agreement between the Trust, on behalf of each of the Funds, and Brown Advisory LLC (“Brown Advisory” or the “Adviser”), as well as (ii) the continuation of each of the applicable Sub-Advisory Agreements that are being considered for continuation, and this must take place at an in-person meeting of the Board. The relevant provisions of the Investment Company Act of 1940 specifically provide that it is the duty of the Board to request and evaluate such information as the Board determines is necessary to allow them to properly consider the continuation of the Investment Advisory Agreement and each of the Sub-Advisory Agreements, and it is the duty of the Adviser, and each of the Sub-Advisers, as applicable, to furnish the Trustees with such information that is responsive to their request.
Set forth below is information regarding the Board’s most recent consideration of the approval of the continuation of the Investment Advisory Agreement for each of the Funds (other than the Sustainable Value Fund, which had only recently commenced operations) and each of the Sub-Advisory Agreements. The first section provides information regarding the Board’s review of matters with respect to the continuation of the Investment Advisory Agreement with Brown Advisory. In addition, set forth immediately following that section are separate discussions of the Board’s consideration of matters with respect to: (1) the approval of the continuation of the Sub-Investment Advisory Agreement with respect to the Brown Advisory-WMC Strategic European Equity Fund; (2) the approval of the continuation of the Sub-Investment Advisory Agreement with respect to the Brown Advisory Global Leaders Fund; (3) the approval of the continuation of the Sub-Investment Advisory Agreement with respect to the Brown Advisory Sustainable International Leaders Fund; (4) the approval of the continuation of the Sub-Investment Advisory Agreement with respect to the Brown Advisory-Beutel Goodman Large-Cap Value Fund; and (5) the approval of the continuation of each of the Sub-Investment Advisory Agreements for the Brown Advisory Emerging Markets Select Fund.
1. Board of Trustees Approval of the Continuation of the Investment Advisory Agreement for the Funds
In determining whether to approve the continuation of the Investment Advisory Agreement with respect to each of the applicable Funds, the Trustees requested, and Brown Advisory provided, information and data relevant to the Board’s consideration. This included materials prepared by Brown Advisory and by the Funds’ administrator that provided the Board with information regarding the investment performance of the Funds, and information regarding the fees and expenses of the Funds, as compared to other similar mutual funds. As part of its deliberations, the Board also considered and relied upon information about the Funds and Brown Advisory that they had received during the past year in connection with their regular Board meetings at which they engage in the ongoing oversight of the Funds and their operations.
The Board most recently considered the continuation of the Investment Advisory Agreement at an in-person meeting held on September 7, 2023. At this meeting, the Board engaged in a thorough review process in connection with determining whether to continue the Investment Advisory Agreement. In addition, the Board also considered the continuation of the currently effective Expense Limitation Agreement with respect to each Fund which would limit the total operating expenses for each class of shares of each of the Funds through October 31, 2024.
Following their review and consideration, the Trustees determined that the continuation of the Investment Advisory Agreement with respect to each of the subject Funds was advisable and would enable shareholders of the Funds to continue to obtain high quality services at a cost that is appropriate, reasonable, and in the best interests of the Funds and their shareholders. Accordingly, the Board, including those Trustees who are not considered to be “interested persons” of the Trust, as that term is defined in the 1940 Act (the “Independent Trustees”), unanimously approved the continuation of the Investment Advisory Agreement. In reaching their decision, the Trustees requested and obtained from the Adviser such information as they deemed reasonably necessary to evaluate the Investment Advisory Agreement. The Trustees also carefully considered the profitability data and comparative fee, expense and performance information prepared for their use. In considering the continuation of the Investment Advisory Agreement with respect to each applicable Fund, the Trustees evaluated a number of factors that they believed, in light of their reasonable business judgment, to be relevant. They based their decision on the following considerations, among others, although they did not identify any one specific consideration or any particular information that was controlling of their decision:
The nature, extent and quality of the advisory services provided. The Trustees concluded that Brown Advisory is capable of providing high quality services to the Funds, as indicated by the nature, extent and quality of the services provided in the past by Brown Advisory to each of the Funds, Brown Advisory’s management capabilities as demonstrated with respect to the Funds, the professional qualifications and experience of each of the portfolio managers of the Funds, Brown Advisory’s investment
Board of Trustees Approval of: (i) the Continuation of the Investment Advisory Agreement for the Funds and (ii) the Continuation of the Sub-Investment Advisory Agreements for the Sub-Advised Funds (Unaudited)
management and compliance oversight processes, and the competitive investment performance of the Funds. On the basis of the Trustees’ assessment of the nature, extent and quality of the advisory services provided by Brown Advisory, the Trustees concluded that Brown Advisory is capable of generating a level of long-term investment performance that is appropriate in light of the Funds’ investment objectives, policies and strategies and is competitive with many other comparable investment companies.
The Board received and reviewed performance information for each of the Funds separately, including performance information for applicable one-, three-, five- and ten-year periods ended June 30, 2023, and for shorter periods as applicable with respect to those Funds with shorter operating histories. The Board also reviewed with the representatives of Brown Advisory other information and data, including each Fund’s performance against its primary benchmark index and its peers, as follows:
1. Equity Income Fund
The Board first reviewed information and materials regarding the performance results for the Equity Income Fund, noting that the Institutional Shares of the Fund had underperformed its primary benchmark index, the S&P 500 Index, for the one-, three-, five- and ten-year periods ended June 30, 2023. The Board noted that the Institutional Shares of the Fund had underperformed its peer group median for the one-, three-, five- and ten-year periods ended June 30, 2023. The members of the Board also considered and discussed the factors contributing to the Fund’s underperformance and they reviewed them with the Adviser and they took into consideration the Adviser’s discussion of its plans for addressing the Fund’s operations in the near future.
2. Flexible Equity Fund
The Board next reviewed information and materials regarding the performance results for the Flexible Equity Fund, noting that the Institutional Shares of the Fund had outperformed its primary benchmark index, the S&P 500 Index, for the one-year period ended June 30, 2023, but had underperformed its primary benchmark index for the three-, five and ten-year periods ended June 30, 2023. The Board noted that the Institutional Shares of the Fund had underperformed its peer group median for the one- and ten-year periods ended June 30, 2023, but had outperformed its peer group median for the three- and five-year periods ended June 30, 2023.
3. Growth Equity Fund
The Board then reviewed information and materials regarding the performance results for the Growth Equity Fund, noting that the Institutional Shares of the Fund had underperformed its primary benchmark index, the Russell 1000 Growth Index, for the one-, three-, five- and ten-year periods ended June 30, 2023. The Board noted that the Institutional Shares of the Fund had underperformed its peer group median for the one-, three-, five- and ten-year periods ended June 30, 2023. The members of the Board considered and discussed the factors contributing to the Fund’s underperformance and they reviewed them with the Adviser.
4. Small-Cap Fundamental Value Fund
The Board next reviewed information and materials regarding the performance results for the Small-Cap Fundamental Value Fund, noting that the Institutional Shares of the Fund had outperformed its primary benchmark index, the Russell 2000 Value Index, for the one-, three-, five- and ten-year periods ended June 30, 2023. The Board noted that the Institutional Shares of the Fund had underperformed its peer group median for the one-, five- and ten-year periods ended June 30, 2023, but had outperformed its peer group median for the three-year period ended June 30, 2023.
5. Small-Cap Growth Fund
The Board then reviewed information and materials regarding the performance results for the Small-Cap Growth Fund, noting that the Institutional Shares of the Fund had outperformed its primary benchmark index, the Russell 2000 Growth Index, for the three-, five- and ten-year periods ended June 30, 2023, but had underperformed its primary benchmark index for the one-year period ended June 30, 2023. The Board noted that the Institutional Shares of the Fund had outperformed its peer group median for the three-, five- and ten-year periods ended June 30, 2023, but had underperformed its peer group median for the one-year period ended June 30, 2023.
6. Sustainable Growth Fund
The Board next reviewed information and materials regarding the performance results for the Sustainable Growth Fund, noting that the Institutional Shares of the Fund had underperformed its primary benchmark index, the Russell 1000 Growth Index, for the one-, three- and five-year periods ended June 30, 2023, but had outperformed its primary benchmark index for the ten-year
Board of Trustees Approval of: (i) the Continuation of the Investment Advisory Agreement for the Funds and (ii) the Continuation of the Sub-Investment Advisory Agreements for the Sub-Advised Funds (Unaudited)
period ended June 30, 2023. The Board noted that the Institutional Shares of the Fund had outperformed its peer group median for the one-, five- and ten-year periods ended June 30, 2023, but had underperformed its peer group median for the three-year period ended June 30, 2023.
7. Intermediate Income Fund
The Board then reviewed information and materials regarding the performance results for the Intermediate Income Fund, noting that the Investor Shares of the Fund had underperformed its primary benchmark index, the Bloomberg Intermediate US Aggregate Bond Index, for the one-, five- and ten-year periods ended June 30, 2023, but had outperformed its primary benchmark index for the three-year period ended June 30, 2023. The Board noted that the Investor Shares of the Fund had underperformed its peer group median for the one-, three-, five- and ten-year periods ended June 30, 2023. The members of the Board considered and discussed the factors contributing to the Fund’s underperformance and they reviewed them with the Adviser.
8. Maryland Bond Fund
The Board next reviewed information and materials regarding the performance results for the Maryland Bond Fund, noting that the Investor Shares of the Fund had outperformed its primary benchmark index, the Bloomberg 1-10 Year Blended Municipal Bond Index, for the one-year period ended June 30, 2023, but had underperformed its primary benchmark for the three-, five- and ten-year periods ended June 30, 2023. The Board noted that the Investor Shares of the Fund had outperformed its peer group median for the one-, three- and five-year periods ended June 30, 2023, but had underperformed its peer group median for the ten-year period ended June 30, 2023.
9. Tax-Exempt Bond Fund
The Board next reviewed information and materials regarding the performance results for the Tax-Exempt Bond Fund, noting that the Institutional Shares of the Fund had outperformed its primary benchmark index, the Bloomberg 1-10 Year Blended Municipal Bond Index, for the one-, three-, five- and ten-year periods ended June 30, 2023. The Board noted that the Institutional Shares of the Fund had outperformed its peer group median for the one-, three- and five-year periods ended June 30, 2023, and had performed in line with its peer group median for the ten-year period ended June 30, 2023.
10. Emerging Markets Select Fund
The Board then reviewed information and materials regarding the performance results for the Emerging Markets Select Fund, noting that the Institutional Shares of the Fund had outperformed its primary benchmark index, the MSCI Emerging Markets Index, for the one-, three- and five-year periods ended June 30, 2023, but had underperformed its primary benchmark index for the ten-year period ended June 30, 2023. The Board noted that the Institutional Shares of the Fund had outperformed its peer group median for the one-, three- and five-year periods ended June 30, 2023, but had underperformed its peer group median for the ten-year period ended June 30, 2023. The members of the Board took into consideration that in February 2019 the Fund’s previous Sub-Adviser that had been sub-advising the Fund since its inception in December 2012 was replaced by two new Sub-Advisers and the Fund became subject to new principal investment strategies at that time.
11. WMC Strategic European Equity Fund
The Board next reviewed information and materials regarding the performance results for the WMC Strategic European Equity Fund, noting that the Institutional Shares of the Fund had outperformed its primary benchmark index, the MSCI Europe Index, for the three- and five-year periods ended June 30, 2023, but had underperformed its primary benchmark index for the one-year period ended June 30, 2023. The Board noted that the Institutional Shares of the Fund had outperformed its peer group median for the three- and five-year periods ended June 30, 2023, but had underperformed its peer group median for the one-year period ended June 30, 2023.
12. Mortgage Securities Fund
The Board then reviewed information and materials regarding the performance results for the Mortgage Securities Fund, noting that the Institutional Shares of the Fund had outperformed its primary benchmark index, the Bloomberg Mortgage Backed Securities Index, for the three- and five-year periods ended June 30, 2023, but had underperformed its primary benchmark index for the one-year period ended June 30, 2023. The Board noted that the Institutional Shares of the Fund had outperformed its peer group median for the one-, three- and five-year periods ended June 30, 2023.
Board of Trustees Approval of: (i) the Continuation of the Investment Advisory Agreement for the Funds and (ii) the Continuation of the Sub-Investment Advisory Agreements for the Sub-Advised Funds (Unaudited)
13. Global Leaders Fund
The Board then reviewed information and materials regarding the performance results for the Global Leaders Fund, noting that the Institutional Shares of the Fund had outperformed its primary benchmark index, the MSCI All Country World Index, for the one-, three- and five-year periods ended June 30, 2023. The Board noted that the Institutional Shares of the Fund had outperformed its peer group median for the one-, three- and five-year periods ended June 30, 2023.
14. Mid-Cap Growth Fund
The Board next reviewed information and materials regarding the performance results for the Mid-Cap Growth Fund, noting that the Institutional Shares of the Fund had underperformed its primary benchmark index, the Russell Midcap Growth Index, for the one-, three and five-year periods ended June 30, 2023. The Board noted that the Institutional Shares of the Fund had underperformed its peer group median for the one-, three- and five-year periods ended June 30, 2023. The members of the Board considered and discussed the factors contributing to the Fund’s underperformance and they reviewed them with the Adviser.
15. Sustainable Bond Fund
The Board then reviewed information and materials regarding the performance results for the Sustainable Bond Fund, noting that the Institutional Shares of the Fund had outperformed its primary benchmark index, the Bloomberg US Aggregate Bond Index, for the three- and five-year periods ended June 30, 2023, but had underperformed its primary benchmark index for the one-year period ended June 30, 2023. The Board noted that the Institutional Shares of the Fund had underperformed its peer group median for the one-, three- and five-year periods ended June 30, 2023.
16. Beutel Goodman Large-Cap Value Fund
The Board next reviewed information and materials regarding the performance results for the Beutel Goodman Large-Cap Value Fund, noting that the Institutional Shares of the Fund had outperformed its primary benchmark index, the Russell 1000 Value Index, for the one-, three- and five-year periods ended June 30, 2023. The Board noted that the Institutional Shares of the Fund had outperformed its peer group median for the one- and five-year periods ended June 30, 2023, but had underperformed its peer group median for the three-year period ended June 30, 2023.
17. Tax-Exempt Sustainable Bond Fund
The Board then reviewed information and materials regarding the performance results for the Tax-Exempt Sustainable Bond Fund, noting that the Investor Shares of the Fund had outperformed its primary benchmark index, the Bloomberg 1-10 Year Blended Municipal Bond Index, for the one-year period ended June 30, 2023, but had underperformed its primary benchmark index for the three-year period ended June 30, 2023. The Board noted that the Investor Shares of the Fund had outperformed its peer group median for the three-year period ended June 30, 2023, but had underperformed its peer group median for the one-year period ended June 30, 2023. The Board also noted that, because the Fund commenced operations in December 2019, the Fund has a relatively short performance history.
18. Sustainable Small-Cap Core Fund
The Board then reviewed information and materials regarding the performance results for the Sustainable Small-Cap Core Fund, noting that the Institutional Shares of the Fund had outperformed its primary benchmark index, the Russell 2000 Index, for the one-year period ended June 30, 2023. The Board noted that the Institutional Shares of the Fund had underperformed its peer group median for the one-year period ended June 30, 2023. The Board also noted that, because the Fund commenced operations in September 2021, the Fund has a relatively short performance history.
19. Sustainable International Leaders Fund
The Board then reviewed information and materials regarding the performance results for the Sustainable International Leaders Fund, noting that the Institutional Shares of the Fund had outperformed its primary benchmark index, the MSCI All Country World Index ex U.S. Index, for the one-year period ended June 30, 2023. The Board noted that the Institutional Shares of the Fund had outperformed its peer group median for the one-year period ended June 30, 2023. The Board also noted that, because the Fund commenced operations in February 2022, the Fund has a relatively short performance history
Board of Trustees Approval of: (i) the Continuation of the Investment Advisory Agreement for the Funds and (ii) the Continuation of the Sub-Investment Advisory Agreements for the Sub-Advised Funds (Unaudited)
The cost of advisory services provided and the level of profitability. The Board also considered the advisory fees and overall expenses of the Funds as compared to the advisory fees and overall expenses of other mutual funds in each Fund’s peer group, as well as profitability information with respect to Brown Advisory’s management and operation of the Funds. On the basis of this comparative information, the Trustees determined that the overall advisory fees and expense ratios of the Funds are competitive with industry averages. The Trustees noted that Brown Advisory had proposed the continuation of their contractual commitment for the benefit of shareholders of the Funds to limit the Funds’ operating expenses through October 31, 2024, subject to recoupment by the Adviser of certain amounts under specified circumstances.
The Board also considered Brown Advisory’s level of profitability with respect to each of the subject Funds, and noted that Brown Advisory’s level of profitability was acceptable and not unreasonable. The Board reviewed the extent to which Brown Advisory uses its own financial resources to help promote and market the Funds in order to support various components of the distribution efforts of the Funds. In considering the profitability of Brown Advisory from their operation of the Funds, the Trustees considered the level of profitability realized by Brown Advisory before the imposition of any distribution and marketing expenses incurred by the firm from its own resources. The Board also considered information regarding the fees that Brown Advisory charges to its other clients for investment advisory services that are similar to the advisory services provided to the Funds and the Board noted that the fees charged to the Funds by the Adviser were reasonable in light of the nature of the services provided by the Adviser to the other accounts, the types of accounts involved, and the applicable services provided in each case. Accordingly, on the basis of the Board’s review of the fees charged by Brown Advisory for investment advisory services, the investment advisory and other services provided to the Funds by Brown Advisory, and the level of profitability from Brown Advisory’s relationship with the Funds, the Board concluded that the level of investment advisory fees and Brown Advisory’s profitability were appropriate in light of the management fees, overall expense ratios and investment performance of comparable investment companies.
The Board reviewed with the representatives of Brown Advisory certain fee and expense information for the relevant share classes of the Funds as compared to the advisory fees and overall expenses (excluding Rule 12b-1 fees) of other mutual funds in each Fund’s peer group, as follows:
1. Equity Income Fund
The Board first reviewed expense information and materials for the Equity Income Fund, noting that the Investment Advisory Agreement provided for a 0.60% investment advisory fee for the Fund, which was below the median compared to its peer funds. The Board also noted that the net expense ratio of the Fund’s Institutional Shares was 0.76%, which was lower than the median net expense ratio of its peer funds.
2. Flexible Equity Fund
The Board next reviewed expense information and materials for the Flexible Equity Fund, noting that due to the breakpoints provided for in the Investment Advisory Agreement, the investment advisory fee for the period was 0.43% for the Fund, which was below the median compared to its peer funds. The Board also noted that the net expense ratio of the Fund’s Institutional Shares was 0.54%, which was lower than the median net expense ratio of its peer funds. The Board took into account that the Investment Advisory Agreement included breakpoints to the Fund’s investment advisory fee such that the advisory fee charged with respect to the Fund would be 0.50% on all assets less than $150 million; 0.45% on all assets greater than or equal to $150 million but less than $250 million; 0.40% on all assets greater than or equal to $250 million but less than $1 billion; and 0.38% on all assets greater than or equal to $1 billion.
3. Growth Equity Fund
The Board then reviewed expense information and materials for the Growth Equity Fund, noting that due to the breakpoints provided for in the Investment Advisory Agreement, the investment advisory fee for the period was 0.58% for the Fund, which was below the median compared to its peer funds. The Board also noted that the net expense ratio of the Fund’s Institutional Shares was 0.68%, which was lower than the median net expense ratio of its peer funds. The Board took into account that the Investment Advisory Agreement included breakpoints to the Fund’s investment advisory fee such that the advisory fee charged with respect to the Fund would be 0.60% on all assets less than $1.5 billion; 0.55% on all assets greater than or equal to $1.5 billion but less than $3 billion; 0.50% on all assets greater than or equal to $3 billion but less than $6 billion; and 0.45% on all assets greater than or equal to $6 billion.
Board of Trustees Approval of: (i) the Continuation of the Investment Advisory Agreement for the Funds and (ii) the Continuation of the Sub-Investment Advisory Agreements for the Sub-Advised Funds (Unaudited)
4. Small-Cap Fundamental Value Fund
The Board then reviewed expense information and materials for the Small-Cap Fundamental Value Fund, noting that the Investment Advisory Agreement provided for a 0.85% investment advisory fee for the Fund, which was above the median compared to its peer funds. The Board also noted that the net expense ratio of the Fund’s Institutional Shares was 0.95%, which was higher than the median net expense ratio of its peer funds.
5. Small-Cap Growth Fund
The Board next reviewed expense information and materials for the Small-Cap Growth Fund, noting that the Investment Advisory Agreement provided for a 0.85% investment advisory fee for the Fund, which was above the median compared to its peer funds. The Board also noted that the net expense ratio of the Fund’s Institutional Shares was 0.96%, which was higher than the median net expense ratio of its peer funds.
6. Sustainable Growth Fund
The Board next reviewed expense information and materials for the Sustainable Growth Fund, noting that due to the breakpoints provided for in the Investment Advisory Agreement, the investment advisory fee for the period was 0.53% for the Fund, which was below the median compared to its peer funds. The Board also noted that the net expense ratio of the Fund’s Institutional Shares was 0.63%, which was lower than the median net expense ratio of its peer funds. The Board took into account that the Investment Advisory Agreement included breakpoints to the Fund’s investment advisory fee such that the advisory fee charged with respect to the Fund would be 0.60% on all assets less than $1.5 billion; 0.55% on all assets greater than or equal to $1.5 billion but less than $3 billion; 0.50% on all assets greater than or equal to $3 billion but less than $6 billion; and 0.45% on all assets greater than or equal to $6 billion.
7. Intermediate Income Fund
The Board then reviewed expense information and materials for the Intermediate Income Fund, noting that the Investment Advisory Agreement provided for a 0.30% investment advisory fee for the Fund, which was below the median compared to its peer funds. The Board also noted that the net expense ratio of the Fund’s Investor Shares was 0.49%, which was lower than the median net expense ratio of its peer funds.
8. Maryland Bond Fund
The Board next reviewed expense information and materials for the Maryland Bond Fund, noting that the Investment Advisory Agreement provided for a 0.30% investment advisory fee for the Fund, which was below the median compared to its peer funds. The Board also noted that the net expense ratio of the Fund’s Investor Shares was 0.49%, which was lower than the median net expense ratio of its peer funds.
9. Tax-Exempt Bond Fund
The Board next reviewed expense information and materials for the Tax-Exempt Bond Fund, noting that the Investment Advisory Agreement provided for a 0.30% investment advisory fee for the Fund, which was below the median compared to its peer funds. The Board also noted that the net expense ratio of the Fund’s Institutional Shares was 0.44%, which was lower than the median net expense ratio of its peer funds.
10. Emerging Markets Select Fund
The Board next reviewed expense information and materials for the Emerging Markets Select Fund, noting that the Investment Advisory Agreement provided for a 0.90% investment advisory fee for the Fund, which was below the median compared to its peer funds. The Board also noted that the net expense ratio of the Fund’s Institutional Shares was 1.11%, which was lower than the median net expense ratio of its peer funds.
11. WMC Strategic European Equity Fund
The Board next reviewed expense information and materials for the WMC Strategic European Equity Fund, noting that the Investment Advisory Agreement provided for a 0.90% investment advisory fee for the Fund, which was in line with its peer funds. The Board also noted that the net expense ratio of the Fund’s Institutional Shares was 1.08%, which was lower than the median net expense ratio of its peer funds.
Board of Trustees Approval of: (i) the Continuation of the Investment Advisory Agreement for the Funds and (ii) the Continuation of the Sub-Investment Advisory Agreements for the Sub-Advised Funds (Unaudited)
12. Mortgage Securities Fund
The Board then reviewed expense information and materials for the Mortgage Securities Fund, noting that the Investment Advisory Agreement provided for a 0.30% investment advisory fee for the Fund, which was below the median compared to its peer funds. The Board also noted that the net expense ratio of the Fund’s Institutional Shares was 0.45%, which was lower than the median net expense ratio of its peer funds.
13. Global Leaders Fund
The Board then reviewed expense information and materials for the Global Leaders Fund, noting that the Investment Advisory Agreement provided for a 0.65% investment advisory fee for the Fund, which was below the median compared to its peer funds. The Board also noted that the net expense ratio of the Fund’s Institutional Shares was 0.76%, which was lower than the median net expense ratio of its peer funds.
14. Mid-Cap Growth Fund
The Board then reviewed expense information and materials for the Mid-Cap Growth Fund, noting that the Investment Advisory Agreement provided for a 0.65% investment advisory fee for the Fund, which was below the median compared to its peer funds. The Board also noted that the net expense ratio of the Fund’s Institutional Shares was 0.82%, which was lower than the median net expense ratio of its peer funds.
15. Sustainable Bond Fund
The Board next reviewed expense information and materials for the Sustainable Bond Fund, noting that the Investment Advisory Agreement provided for a 0.30% investment advisory fee for the Fund, which was below the median compared to its peer funds. The Board also noted that the net expense ratio of the Fund’s Institutional Shares was 0.43%, which was lower than the median net expense ratio of its peer funds.
16. Beutel Goodman Large-Cap Value Fund
The Board then reviewed expense information and materials for the Beutel Goodman Large-Cap Value Fund, noting that the Investment Advisory Agreement provided for a 0.45% investment advisory fee for the Fund, which was below the median compared to its peer funds. The Board also noted that the net expense ratio of the Fund’s Institutional Shares was 0.55%, which was lower than the median net expense ratio of its peer funds.
17. Tax-Exempt Sustainable Bond Fund
The Board then reviewed expense information and materials for the Tax-Exempt Sustainable Bond Fund, noting that the Investment Advisory Agreement provided for a 0.30% investment advisory fee for the Fund, which was below the median compared to its peer funds. The Board also noted that the net expense ratio of the Fund’s Investor Shares was 0.50%, which was in line with the median net expense ratio of its peer funds.
18. Sustainable Small-Cap Core Fund
The Board next reviewed expense information and materials for the Sustainable Small-Cap Core Fund, noting that the Investment Advisory Agreement provided for a 0.85% investment advisory fee for the Fund, which was in line with its peer funds. The Board also noted that the net expense ratio of the Fund’s Institutional Shares was 0.93%, which was lower than the median net expense ratio of its peer funds.
19. Sustainable International Leaders Fund
The Board then reviewed expense information and materials for the Sustainable International Leaders Fund, noting that the Investment Advisory Agreement provided for a 0.75% investment advisory fee for the Fund, which was below the median compared to its peer funds. The Board also noted that the net expense ratio of the Fund’s Institutional Shares was 0.85%, which was lower than the median net expense ratio of its peer funds.
The extent to which economies of scale may be realized as the Funds grow and whether the advisory fees reflect possible economies of scale. While it was noted that, for most of the Funds, the Funds’ investment advisory fees will not decrease as those Funds’ assets grow because they are not subject to investment advisory fee breakpoints, the Trustees concluded that the Funds’
Board of Trustees Approval of: (i) the Continuation of the Investment Advisory Agreement for the Funds and (ii) the Continuation of the Sub-Investment Advisory Agreements for the Sub-Advised Funds (Unaudited)
investment advisory fees are appropriate in light of the size of the Funds, and appropriately reflect the current economic environment for Brown Advisory and the competitive nature of the mutual fund market. The Trustees took into consideration that the Adviser has previously informed the Board that the Adviser has consistently attempted to set the investment advisory fees at a level that provides for economies of scale by being set at a starting point that is at a reasonable rate without necessarily requiring the imposition of breakpoints, which approach has been favorably recognized by relevant court decisions as one of the acceptable means of achieving economies of scale. The Trustees also noted that the Funds’ advisory fees are competitive against their peers. The Trustees further noted that they will have the opportunity to periodically re-examine whether any of the Funds not currently subject to breakpoints have achieved economies of scale, and the appropriateness of investment advisory fees payable to Brown Advisory with respect to the Funds, in the future at which time the implementation of fee breakpoints on other Funds could be considered further.
Benefits to Brown Advisory from its relationship with the Funds (and any corresponding benefits to the Funds). The Trustees concluded that certain benefits that may be derived by Brown Advisory from its relationship with the Funds, including “soft dollar” benefits in connection with Fund brokerage transactions and use of the Funds’ performance track record in advertising materials, are reasonable and fair, and consistent with industry practice and the best interests of the Funds and their shareholders. In addition, the Trustees determined that the Funds benefit from their relationship with Brown Advisory by virtue of Brown Advisory’s provision of business management and shareholder services, in addition to investment advisory services, at a cost to the Funds that is generally comparable to the costs of an outside service provider, which the Trustees have previously determined to be reasonable, fair and in the best interests of the shareholders of the Funds in light of the nature and quality of the services provided and the necessity of the services for the Funds’ operations.
Other Considerations. In approving the continuation of the Investment Advisory Agreement, the Trustees determined that Brown Advisory has made a substantial commitment to the recruitment and retention of high-quality personnel, and maintains the financial, compliance and operational resources reasonably necessary to manage the Funds in a professional manner that is consistent with the best interests of the Funds and their shareholders. The Board also acknowledged the experience and expertise of members of the Brown Advisory senior management team and the focus these individuals have on ensuring the Funds operate successfully. The Trustees also concluded that Brown Advisory has made a significant entrepreneurial commitment to the management and success of the Funds, which entails a substantial financial and professional commitment, including the Expense Limitation Agreement under which Brown Advisory has undertaken to waive a portion of its fees and to reimburse expenses of the Funds to the benefit of Fund shareholders to the extent necessary in accordance with the terms of the Expense Limitation Agreement. The Board also considered matters with respect to the brokerage practices of Brown Advisory, including its soft dollar arrangements and its best-execution procedures, and noted that these were reasonable and consistent with standard industry practice.
The Board also considered various matters with respect to the distribution and shareholder servicing arrangements applicable to the Funds and they considered the distribution fees and the non-distribution shareholder servicing fees payable with respect to certain of the share classes of the Funds, including certain of such fees which are payable to the Adviser for the shareholder administrative services that it provides to shareholders of the Funds. The Board took note of the fact that the non-distribution related shareholder administrative fees payable to the Adviser are intended to compensate the Adviser for providing certain administrative services to those Fund shareholders covered by the applicable servicing arrangements in the relevant share classes.
The Board also took into consideration the nature and extent of the business management fees payable to the Adviser by each of the Funds pursuant to which Brown Advisory provides certain business management services to the Funds, which the Board had previously considered and approved at a prior meeting based upon a finding that the business management fees charged are fair and reasonable in light of the usual and customary charges made by others for services of the same nature and quality.
Additionally, the Trustees considered the overall nature and extent of the risks incurred by the Adviser as a result of managing its own proprietary family of mutual funds, which risks include, but are not necessarily limited to, entrepreneurial risk, reputational risk, financial risk, litigation risk, regulatory risk and business risk.
The Trustees also took into consideration the Adviser’s statements that the Adviser has in the past, and intends to continue to going forward, reinvest profits into its business in order to make the necessary investments in personnel and infrastructure to continue to build out the Adviser’s portfolio management and research capabilities and its operational, technology, compliance and cybersecurity infrastructure.
Board of Trustees Approval of: (i) the Continuation of the Investment Advisory Agreement for the Funds and (ii) the Continuation of the Sub-Investment Advisory Agreements for the Sub-Advised Funds (Unaudited)
The Trustees also reviewed with the Adviser the efforts that the Adviser has taken in response to recent regulatory developments relating to the Securities and Exchange Commission’s ongoing monitoring and oversight of various types of investment strategies and practices relating to ESG-related and sustainable-related investment practices, including with respect to marketing and disclosure in connection with such investment strategies and practices, and the Trustees considered the extensive resources that the Adviser has devoted to its sustainable investing business and to its compliance oversight operations that are related to its sustainable investing business.
In reaching their conclusion with respect to the approval of the continuation of the Investment Advisory Agreement and the level of fees paid under the Agreement, the Trustees did not identify any one single factor as being controlling, but rather, the Board took note of a combination of factors that had influenced their decision-making process. They noted the level and quality of the investment advisory services provided by Brown Advisory to each of the Funds in the Trust, and they found that these services will continue to benefit the Funds and their shareholders and also reflected the Adviser’s overall commitment to the continued growth and development of the Funds.
Based upon their review and consideration of these factors and other matters deemed relevant by the Board in reaching an informed business judgment, a majority of the Board of Trustees, including a majority of the Independent Trustees, concluded that the terms of the Investment Advisory Agreement, were fair and reasonable and the Board voted to renew the Investment Advisory Agreement with respect to the Funds for an additional one-year period.
2. Board of Trustees Approval of the Continuation of the Sub-Investment Advisory Agreement With Respect to the Brown Advisory-WMC Strategic European Equity Fund
The continuation of the Sub-Investment Advisory Agreement with respect to the Brown Advisory-WMC Strategic European Equity Fund between Brown Advisory and Wellington Management Company LLP, the sub-investment adviser to the Fund (“Wellington”), was also approved by the Board of Trustees at the Board meeting held on September 7, 2023.
In accordance with the Investment Company Act of 1940, the Board of Trustees was required to consider the approval of the continuation of the Sub-Investment Advisory Agreement, and this was required to take place at an in-person meeting of the Board. The relevant provisions of the Investment Company Act of 1940 specifically provide that it is the duty of the Board to request and evaluate such information as the Board determines is necessary to allow them to properly consider the approval of the continuation of the Sub-Advisory Agreement, and it is the duty of Brown Advisory and Wellington, as applicable, to furnish the Trustees with such information that is responsive to their request.
Accordingly, in determining whether to approve the continuation of the Sub-Investment Advisory Agreement between Brown Advisory and Wellington, the Board of Trustees requested, and Brown Advisory and Wellington provided, information and data relevant to the Board’s consideration.
The Board then undertook the consideration of various matters with respect to the proposed approval of the continuation of the Sub-Investment Advisory Agreement between Brown Advisory and Wellington. The Trustees considered various matters involving the respective services provided by each of Brown Advisory and Wellington in connection with the management and operation of the Fund and they took note of the extensive oversight duties performed by Brown Advisory including investment management and compliance oversight of the operations of Wellington. The Trustees considered that Brown Advisory is actively engaged in conducting an ongoing monitoring program involving Wellington’s investment activities with respect to Wellington’s day-to-day portfolio management of the Fund’s assets in order to make sure that Wellington is adhering to all of the stated investment objectives, policies, limitations and restrictions that the Fund is subject to. In addition, the Trustees also took note of the fact that in connection with Brown Advisory’s oversight of the investment program maintained by Wellington with respect to the Fund, Brown Advisory prepares extensive reports to the Board regarding the investment activities of Wellington, which reports contain detailed analyses of how Wellington is performing.
The Board reviewed and evaluated the information that Brown Advisory and Wellington had presented for the Board’s review. The Board particularly noted, among other considerations, that the Fund’s investment advisory fees and overall operating expenses were competitive with comparable mutual funds. The Board also took into account presentations made by Wellington and Brown Advisory throughout the year. Based on its review of all of the information, the Board determined that the Sub-Investment Advisory Agreement was consistent with the best interests of the Fund and its shareholders and would enable the Fund to continue to receive high quality sub-advisory services at a cost that is appropriate, reasonable, and in the best interests of the Fund and its shareholders. In reaching these conclusions, the Board considered the following:
Board of Trustees Approval of: (i) the Continuation of the Investment Advisory Agreement for the Funds and (ii) the Continuation of the Sub-Investment Advisory Agreements for the Sub-Advised Funds (Unaudited)
The nature, extent and quality of the sub-investment advisory services provided. The Trustees concluded that Wellington is capable of providing high quality sub-advisory services to the Fund as indicated by the professional qualifications and experience of the portfolio managers of the Fund, and Wellington’s investment management processes. On the basis of the Trustees’ assessment of the nature, extent and quality of the sub-advisory services provided by Wellington, the Trustees concluded that Wellington is capable of generating a level of long-term investment performance that is appropriate in light of the Fund’s investment objectives, policies and strategies and competitive with many other comparable investment companies.
The cost of advisory services provided and the expected level of profitability. On the basis of comparative information derived from the data that had been provided to the Board members, the Trustees determined that the expense ratios for each class of shares of the Fund are competitive with industry averages. The Trustees also noted that the Fund is subject to a contractual expense limitation agreement for the benefit of shareholders of the Fund to limit the Fund’s operating expenses through October 31, 2024. The Board also took note of the fact that the sub-advisory fees for the Fund had been separately negotiated by Brown Advisory and Wellington. Accordingly, on the basis of the Board’s review of the fees charged by Wellington for sub-investment advisory services provided to the Fund, the Board concluded that the level of sub-investment advisory fees is appropriate in light of the management fees, overall expense ratios and investment performance of comparable investment companies, and that the sub-advisory fee had been separately negotiated at arm’s-length by independent third parties.
The extent to which economies of scale may be realized as the Fund grows and whether the advisory fees reflect possible economies of scale. While it was noted that the Fund’s investment sub-advisory fees will not decrease as the Fund’s assets grow because they will not be subject to investment sub-advisory fee breakpoints, the Trustees concluded that the Fund’s investment sub-advisory fees are appropriate in light of the size of the Fund, and appropriately reflect the current economic environment for Brown Advisory and Wellington and the competitive nature of the mutual fund market. The Trustees then noted that they will have the opportunity to periodically re-examine whether the Fund has achieved economies of scale, and the appropriateness of the investment sub-advisory fees with respect to the Fund, in the future at which time the implementation of fee breakpoints on the Fund could be further considered.
Benefits to Wellington from its relationship with the Fund (and any corresponding benefits to the Fund). The Trustees concluded that other benefits that may be derived by Wellington from its relationship with the Fund, including any potential “soft dollar” benefits in connection with the Fund’s brokerage transactions and use of the Fund’s performance track record in advertising materials, are reasonable and fair, and consistent with industry practice and the best interests of the Fund and its shareholders.
Other Considerations. In approving the continuation of the Sub-Investment Advisory Agreement, the Trustees determined that Wellington has made a substantial commitment to the recruitment and retention of high quality personnel, and maintains the financial, compliance and operational resources reasonably necessary to provide sub-advisory services to the Fund in a professional manner that is consistent with the best interests of the Fund and its shareholders. The Board also considered matters with respect to the brokerage practices of Wellington, including its soft dollar arrangements and its best-execution procedures, and noted that these were reasonable and consistent with standard industry practice.
It was noted that in making their determinations, the Trustees had considered and relied upon the materials provided to them by Wellington with respect to the contract and the presentation of the representatives of Brown Advisory. In reaching their conclusion with respect to the approval of the continuation of the Sub-Investment Advisory Agreement and the level of fees paid under the Agreement, the Trustees did not identify any one single factor as being controlling, rather, the Trustees took note of a combination of factors that had influenced their decision-making process. They noted the level and quality of investment advisory services provided by Wellington to the Fund and determined that these services will continue to benefit the Fund and its shareholders. They also considered the nature of the allocation of the duties and responsibilities for the management and operation of the Fund between Brown Advisory and Wellington and they determined that the sub-advisory fees for the Fund, as negotiated by Brown Advisory and Wellington, reasonably reflected the nature and extent of the services provided by Wellington with respect to the Fund.
Board of Trustees Approval of: (i) the Continuation of the Investment Advisory Agreement for the Funds and (ii) the Continuation of the Sub-Investment Advisory Agreements for the Sub-Advised Funds (Unaudited)
3. Board of Trustees Approval of the Continuation of the Sub-Investment Advisory Agreement With Respect to the Brown Advisory Global Leaders Fund
At their September 7, 2023 Board meeting, the Board also undertook the consideration of matters with respect to the proposed continuation of the Sub-Investment Advisory Agreement between Brown Advisory and its affiliate Brown Advisory Ltd. with respect to the Brown Advisory Global Leaders Fund.
In accordance with the Investment Company Act of 1940, the Board of Trustees was required to consider the approval of the continuation of the Sub-Investment Advisory Agreement, and this was required to take place at an in-person Board meeting. The relevant provisions of the Investment Company Act of 1940 specifically provide that it is the duty of the Board to request and evaluate such information as the Board determines is necessary to allow them to properly consider the approval of the continuation of the Sub-Advisory Agreement, and it is the duty of Brown Advisory and Brown Advisory Ltd., as applicable, to furnish the Trustees with such information that is responsive to their request.
Accordingly, in determining whether to approve the continuation of the Sub-Investment Advisory Agreement between Brown Advisory and Brown Advisory Ltd., the Board of Trustees requested, and Brown Advisory and Brown Advisory Ltd. provided, information and data relevant to the Board’s consideration. In connection with these matters with respect to the sub-advisory arrangements for the Global Leaders Fund, the Trustees took into consideration the fact that the two firms are affiliates of one another and under common control.
The Board then undertook the consideration of various matters with respect to the proposed approval of the continuation of the Sub-Investment Advisory Agreement between Brown Advisory and Brown Advisory Ltd. The Trustees considered various matters involving the respective services provided by each of Brown Advisory and Brown Advisory Ltd. in connection with the management and operation of the Fund and they took note of the extensive oversight duties performed by Brown Advisory including investment management and compliance oversight of the operations of Brown Advisory Ltd. The Trustees considered that Brown Advisory is actively engaged in conducting an ongoing monitoring program involving Brown Advisory Ltd.’s investment activities with respect to Brown Advisory Ltd.’s day-to-day portfolio management of the Fund’s assets in order to make sure that Brown Advisory Ltd. is adhering to all of the stated investment objectives, policies, limitations and restrictions that the Fund is subject to. In addition, the Trustees also took note of the fact that in connection with Brown Advisory’s oversight of the investment program maintained by Brown Advisory Ltd. with respect to the Fund, Brown Advisory prepares extensive reports to the Board regarding the investment activities of Brown Advisory Ltd., which reports contain detailed analyses of how Brown Advisory Ltd. is performing.
The Board reviewed and evaluated the information that Brown Advisory and Brown Advisory Ltd. had presented for the Board’s review. The Board particularly noted, among other considerations, that the Fund’s investment advisory fees and overall operating expenses were competitive with comparable mutual funds. The Board also took into account presentations made by Brown Advisory Ltd. and Brown Advisory throughout the year. Based on its review of all of the information, the Board determined that the Sub-Investment Advisory Agreement was consistent with the best interests of the Fund and its shareholders and would enable the Fund to continue to receive high quality sub-advisory services at a cost that is appropriate, reasonable, and in the best interests of the Fund and its respective shareholders. In reaching these conclusions, the Board considered the following:
The nature, extent and quality of the sub-investment advisory services provided. The Trustees concluded that Brown Advisory Ltd. is capable of providing high quality sub-advisory services to the Fund as indicated by the professional qualifications and experience of the portfolio managers of the Fund, and Brown Advisory Ltd.’s investment management processes. On the basis of the Trustees’ assessment of the nature, extent and quality of the sub-advisory services provided by Brown Advisory Ltd., the Trustees concluded that Brown Advisory Ltd. is capable of generating a level of long-term investment performance that is appropriate in light of the Fund’s investment objectives, policies and strategies and competitive with many other comparable investment companies.
The cost of advisory services provided and the expected level of profitability. On the basis of comparative information derived from the data that had been provided to the Board members, the Trustees determined that the expense ratios for each respective class of shares of the Fund are competitive with industry averages. The Trustees also noted that the Fund is subject to a contractual expense limitation agreement for the benefit of shareholders of the Fund to limit the Fund’s operating expenses through October 31, 2024. Accordingly, on the basis of the Board’s review of the fees charged by Brown Advisory Ltd. for sub-investment advisory services
Board of Trustees Approval of: (i) the Continuation of the Investment Advisory Agreement for the Funds and (ii) the Continuation of the Sub-Investment Advisory Agreements for the Sub-Advised Funds (Unaudited)
provided to the Fund, the Board concluded that the level of sub-investment advisory fees is appropriate in light of the management fees, overall expense ratios and investment performance of comparable investment companies.
The extent to which economies of scale may be realized as the Fund grows and whether the advisory fees reflect possible economies of scale. While it was noted that the Fund’s investment sub-advisory fees will not decrease as the Fund’s assets grow because they will not be subject to investment sub-advisory fee breakpoints, the Trustees concluded that the Fund’s investment sub-advisory fees are appropriate in light of the size of the Fund, and appropriately reflect the current economic environment for Brown Advisory and Brown Advisory Ltd. and the competitive nature of the mutual fund market. The Trustees then noted that they will have the opportunity to periodically re-examine whether the Fund has achieved economies of scale, and the appropriateness of the investment sub-advisory fees with respect to the Fund, in the future at which time the implementation of fee breakpoints on the Fund could be further considered.
Benefits to Brown Advisory Ltd. from its relationship with the Fund (and any corresponding benefits to the Fund). The Trustees concluded that other benefits that may be derived by Brown Advisory Ltd. from its relationship with the Fund, including any potential “soft dollar” benefits in connection with the Fund’s brokerage transactions and use of the Fund’s performance track record in advertising materials, are reasonable and fair, and consistent with industry practice and the best interests of the Fund and its shareholders.
Other Considerations. In approving the continuation of the Sub-Investment Advisory Agreement, the Trustees determined that Brown Advisory Ltd. has made a substantial commitment to the recruitment and retention of high quality personnel, and maintains the financial, compliance and operational resources reasonably necessary to provide sub-advisory services to the Fund in a professional manner that is consistent with the best interests of the Fund and its shareholders. The Board also considered matters with respect to the brokerage practices of Brown Advisory Ltd., including its soft dollar arrangements and its best-execution procedures, and noted that these were reasonable and consistent with standard industry practice.
It was noted that in making their determinations, the Trustees had considered and relied upon the materials provided to them by Brown Advisory Ltd. with respect to the contract and the presentation of the representatives of Brown Advisory. In reaching their conclusion with respect to the approval of the continuation of the Sub-Investment Advisory Agreement and the level of fees paid under the Agreement, the Trustees did not identify any one single factor as being controlling, rather, the Trustees took note of a combination of factors that had influenced their decision-making process. They noted the level and quality of investment advisory services provided by Brown Advisory Ltd. to the Fund and determined that these services will continue to benefit the Fund and its shareholders. They also considered the nature of the allocation of the duties and responsibilities for the management and operation of the Fund between Brown Advisory and Brown Advisory Ltd. and they determined that the sub-advisory fees for the Fund, as negotiated by Brown Advisory and Brown Advisory Ltd., reasonably reflected the nature and extent of the services provided by Brown Advisory Ltd. with respect to the Fund. The Trustees also took into consideration the fact that Brown Advisory and Brown Advisory Ltd. are affiliated entities and are under common control.
4. Board of Trustees Approval of the Continuation of the Sub-Investment Advisory Agreement With Respect to the Brown Advisory Sustainable International Leaders Fund
At their September 7, 2023 Board meeting, the Board also undertook the consideration of matters with respect to the proposed continuation of the Sub-Investment Advisory Agreement between Brown Advisory and its affiliate Brown Advisory Ltd. with respect to the Brown Advisory Sustainable International Leaders Fund.
In accordance with the Investment Company Act of 1940, the Board of Trustees was required to consider the approval of the continuation of the Sub-Investment Advisory Agreement, and this was required to take place at an in-person Board meeting. The relevant provisions of the Investment Company Act of 1940 specifically provide that it is the duty of the Board to request and evaluate such information as the Board determines is necessary to allow them to properly consider the approval of the continuation of the Sub-Advisory Agreement, and it is the duty of Brown Advisory and Brown Advisory Ltd., as applicable, to furnish the Trustees with such information that is responsive to their request.
Accordingly, in determining whether to approve the continuation of the Sub-Investment Advisory Agreement between Brown Advisory and Brown Advisory Ltd., the Board of Trustees requested, and Brown Advisory and Brown Advisory Ltd. provided, information and data relevant to the Board’s consideration. In connection with these matters with respect to the sub-advisory arrangements for the Sustainable International Leaders Fund, the Trustees took into consideration the fact that the two firms are affiliates of one another and under common control.
Board of Trustees Approval of: (i) the Continuation of the Investment Advisory Agreement for the Funds and (ii) the Continuation of the Sub-Investment Advisory Agreements for the Sub-Advised Funds (Unaudited)
The Board then undertook the consideration of various matters with respect to the proposed approval of the continuation of the Sub-Investment Advisory Agreement between Brown Advisory and Brown Advisory Ltd. The Trustees considered various matters involving the respective services provided by each of Brown Advisory and Brown Advisory Ltd. in connection with the management and operation of the Fund and they took note of the extensive oversight duties performed by Brown Advisory including investment management and compliance oversight of the operations of Brown Advisory Ltd. The Trustees considered that Brown Advisory is actively engaged in conducting an ongoing monitoring program involving Brown Advisory Ltd.’s investment activities with respect to Brown Advisory Ltd.’s day-to-day portfolio management of the Fund’s assets in order to make sure that Brown Advisory Ltd. is adhering to all of the stated investment objectives, policies, limitations and restrictions that the Fund is subject to. In addition, the Trustees also took note of the fact that in connection with Brown Advisory’s oversight of the investment program maintained by Brown Advisory Ltd. with respect to the Fund, Brown Advisory prepares extensive reports to the Board regarding the investment activities of Brown Advisory Ltd., which reports contain detailed analyses of how Brown Advisory Ltd. is performing.
The Board reviewed and evaluated the information that Brown Advisory and Brown Advisory Ltd. had presented for the Board’s review. The Board particularly noted, among other considerations, that the Fund’s investment advisory fees and overall operating expenses were competitive with comparable mutual funds. The Board also took into account presentations made by Brown Advisory Ltd. and Brown Advisory throughout the year. Based on its review of all of the information, the Board determined that the Sub-Investment Advisory Agreement was consistent with the best interests of the Fund and its shareholders and would enable the Fund to continue to receive high quality sub-advisory services at a cost that is appropriate, reasonable, and in the best interests of the Fund and its respective shareholders. In reaching these conclusions, the Board considered the following:
The nature, extent and quality of the sub-investment advisory services provided. The Trustees concluded that Brown Advisory Ltd. is capable of providing high quality sub-advisory services to the Fund as indicated by the professional qualifications and experience of the portfolio manager of the Fund, and Brown Advisory Ltd.’s investment management processes. On the basis of the Trustees’ assessment of the nature, extent and quality of the sub-advisory services provided by Brown Advisory Ltd., the Trustees concluded that Brown Advisory Ltd. is capable of generating a level of long-term investment performance that is appropriate in light of the Fund’s investment objectives, policies and strategies and competitive with many other comparable investment companies.
The cost of advisory services provided and the expected level of profitability. On the basis of comparative information derived from the data that had been provided to the Board members, the Trustees determined that the expense ratios for each respective class of shares of the Fund are competitive with industry averages. The Trustees also noted that the Fund is subject to a contractual expense limitation agreement for the benefit of shareholders of the Fund to limit the Fund’s operating expenses through October 31, 2024. Accordingly, on the basis of the Board’s review of the fees charged by Brown Advisory Ltd. for sub-investment advisory services provided to the Fund, the Board concluded that the level of sub-investment advisory fees is appropriate in light of the management fees, overall expense ratios and investment performance of comparable investment companies.
The extent to which economies of scale may be realized as the Fund grows and whether the advisory fees reflect possible economies of scale. While it was noted that the Fund’s investment sub-advisory fees will not decrease as the Fund’s assets grow because they will not be subject to investment sub-advisory fee breakpoints, the Trustees concluded that the Fund’s investment sub-advisory fees are appropriate in light of the size of the Fund, and appropriately reflect the current economic environment for Brown Advisory and Brown Advisory Ltd. and the competitive nature of the mutual fund market. The Trustees then noted that they will have the opportunity to periodically re-examine whether the Fund has achieved economies of scale, and the appropriateness of the investment sub-advisory fees with respect to the Fund, in the future at which time the implementation of fee breakpoints on the Fund could be further considered.
Benefits to Brown Advisory Ltd. from its relationship with the Fund (and any corresponding benefits to the Fund). The Trustees concluded that other benefits that may be derived by Brown Advisory Ltd. from its relationship with the Fund, including any potential “soft dollar” benefits in connection with the Fund’s brokerage transactions and use of the Fund’s performance track record in advertising materials, are reasonable and fair, and consistent with industry practice and the best interests of the Fund and its shareholders.
Other Considerations. In approving the continuation of the Sub-Investment Advisory Agreement, the Trustees determined that Brown Advisory Ltd. has made a substantial commitment to the recruitment and retention of high quality personnel, and
Board of Trustees Approval of: (i) the Continuation of the Investment Advisory Agreement for the Funds and (ii) the Continuation of the Sub-Investment Advisory Agreements for the Sub-Advised Funds (Unaudited)
maintains the financial, compliance and operational resources reasonably necessary to provide sub-advisory services to the Fund in a professional manner that is consistent with the best interests of the Fund and its shareholders. The Board also considered matters with respect to the brokerage practices of Brown Advisory Ltd., including its soft dollar arrangements and its best-execution procedures, and noted that these were reasonable and consistent with standard industry practice.
It was noted that in making their determinations, the Trustees had considered and relied upon the materials provided to them by Brown Advisory Ltd. with respect to the contract and the presentation of the representatives of Brown Advisory. In reaching their conclusion with respect to the approval of the continuation of the Sub-Investment Advisory Agreement and the level of fees paid under the Agreement, the Trustees did not identify any one single factor as being controlling, rather, the Trustees took note of a combination of factors that had influenced their decision-making process. They noted the level and quality of investment advisory services provided by Brown Advisory Ltd. to the Fund and determined that these services will continue to benefit the Fund and its shareholders. They also considered the nature of the allocation of the duties and responsibilities for the management and operation of the Fund between Brown Advisory and Brown Advisory Ltd. and they determined that the sub-advisory fees for the Fund, as negotiated by Brown Advisory and Brown Advisory Ltd., reasonably reflected the nature and extent of the services provided by Brown Advisory Ltd. with respect to the Fund. The Trustees also took into consideration the fact that Brown Advisory and Brown Advisory Ltd. are affiliated entities and are under common control.
5. Board of Trustees Approval of the Continuation of the Sub-Investment Advisory Agreement With Respect to the Brown Advisory-Beutel Goodman Large-Cap Value Fund
The continuation of the Sub-Investment Advisory Agreement with respect to the Brown Advisory-Beutel Goodman Large-Cap Value Fund between Brown Advisory and Beutel Goodman & Company, Ltd., the sub-investment adviser to the Fund (“Beutel Goodman”), was also approved by the Board of Trustees at the Board meeting held on September 7, 2023.
In accordance with the Investment Company Act of 1940, the Board of Trustees was required to consider the approval of the continuation of the Sub-Investment Advisory Agreement, and this was required to take place at an in-person meeting of the Board. The relevant provisions of the Investment Company Act of 1940 specifically provide that it is the duty of the Board to request and evaluate such information as the Board determines is necessary to allow them to properly consider the approval of the continuation of the Sub-Advisory Agreement, and it is the duty of Brown Advisory and Beutel Goodman, as applicable, to furnish the Trustees with such information that is responsive to their request.
Accordingly, in determining whether to approve the continuation of the Sub-Investment Advisory Agreement between Brown Advisory and Beutel Goodman, the Board of Trustees requested, and Brown Advisory and Beutel Goodman provided, information and data relevant to the Board’s consideration.
The Board then undertook the consideration of various matters with respect to the proposed approval of the continuation of the Sub-Investment Advisory Agreement between Brown Advisory and Beutel Goodman. The Trustees considered various matters involving the respective services provided by each of Brown Advisory and Beutel Goodman in connection with the management and operation of the Fund and they took note of the extensive oversight duties performed by Brown Advisory including investment management and compliance oversight of the operations of Beutel Goodman. The Trustees considered that Brown Advisory is actively engaged in conducting an ongoing monitoring program involving Beutel Goodman’s investment activities with respect to Beutel Goodman’s day-to-day portfolio management of the Fund’s assets in order to make sure that Beutel Goodman is adhering to all of the stated investment objectives, policies, limitations and restrictions that the Fund is subject to. In addition, the Trustees also took note of the fact that in connection with Brown Advisory’s oversight of the investment program maintained by Beutel Goodman with respect to the Fund, Brown Advisory prepares extensive reports to the Board regarding the investment activities of Beutel Goodman, which reports contain detailed analyses of how Beutel Goodman is performing.
The Board reviewed and evaluated the information that Brown Advisory and Beutel Goodman had presented for the Board’s review. The Board particularly noted, among other considerations, that the Fund’s investment advisory fees and overall operating expenses were competitive with comparable mutual funds. The Board also took into account presentations made by Beutel Goodman and Brown Advisory throughout the year. Based on its review of all of the information, the Board determined that the Sub-Investment Advisory Agreement was consistent with the best interests of the Fund and its shareholders and would enable the Fund to continue to receive high quality sub-advisory services at a cost that is appropriate, reasonable, and in the best interests of the Fund and its respective shareholders. In reaching these conclusions, the Board considered the following:
Board of Trustees Approval of: (i) the Continuation of the Investment Advisory Agreement for the Funds and (ii) the Continuation of the Sub-Investment Advisory Agreements for the Sub-Advised Funds (Unaudited)
The nature, extent and quality of the sub-investment advisory services provided. The Trustees concluded that Beutel Goodman is capable of providing high quality sub-advisory services to the Fund as indicated by the professional qualifications and experience of the portfolio managers of the Fund, and Beutel Goodman’s investment management processes. On the basis of the Trustees’ assessment of the nature, extent and quality of the sub-advisory services provided by Beutel Goodman, the Trustees concluded that Beutel Goodman is capable of generating a level of long-term investment performance that is appropriate in light of the Fund’s investment objectives, policies and strategies and competitive with many other comparable investment companies.
The cost of advisory services provided and the expected level of profitability. On the basis of comparative information derived from the data that had been provided to the Board members, the Trustees determined that the expense ratios for each respective class of shares of the Fund are competitive with industry averages. The Trustees also noted that the Fund is subject to a contractual expense limitation agreement for the benefit of shareholders of the Fund to limit the Funds’ operating expenses through October 31, 2024. The Board also took note of the fact that the sub-advisory fees for the Fund had been separately negotiated by Brown Advisory and Beutel Goodman. Accordingly, on the basis of the Board’s review of the fees charged by Beutel Goodman for sub-investment advisory services provided to the Fund, the Board concluded that the level of sub-investment advisory fees are appropriate in light of the management fees, overall expense ratios and investment performance of comparable investment companies.
The extent to which economies of scale may be realized as the Fund grows and whether the advisory fees reflect possible economies of scale. While it was noted that the Fund’s investment sub-advisory fees will not decrease as the Fund’s assets grow because they will not be subject to investment sub-advisory fee breakpoints, the Trustees concluded that the Fund’s investment sub-advisory fees are appropriate in light of the size of the Fund, and appropriately reflect the current economic environment for Brown Advisory and Beutel Goodman and the competitive nature of the mutual fund market. The Trustees then noted that they will have the opportunity to periodically re-examine whether the Fund has achieved economies of scale, and the appropriateness of the investment sub-advisory fees with respect to the Fund, in the future at which time the implementation of fee breakpoints on the Fund could be further considered.
Benefits to Beutel Goodman from its relationship with the Fund (and any corresponding benefits to the Fund). The Trustees concluded that other benefits that may be derived by Beutel Goodman from its relationship with the Fund, including any potential “soft dollar” benefits in connection with the Fund’s brokerage transactions and use of the Fund’s performance track record in advertising materials, are reasonable and fair, and consistent with industry practice and the best interests of the Fund and its shareholders.
Other Considerations. In approving the continuation of the Sub-Investment Advisory Agreement, the Trustees determined that Beutel Goodman has made a substantial commitment to the recruitment and retention of high quality personnel, and maintains the financial, compliance and operational resources reasonably necessary to provide sub-advisory services to the Fund in a professional manner that is consistent with the best interests of the Fund and its shareholders. The Board also considered matters with respect to the brokerage practices of Beutel Goodman, including its soft dollar arrangements and its best-execution procedures, and noted that these were reasonable and consistent with standard industry practice.
It was noted that in making their determinations, the Trustees had considered and relied upon the materials provided to them by Beutel Goodman with respect to the contract and the presentation of the representatives of Brown Advisory. In reaching their conclusion with respect to the approval of the continuation of the Sub-Investment Advisory Agreement and the level of fees paid under the Agreement, the Trustees did not identify any one single factor as being controlling, rather, the Trustees took note of a combination of factors that had influenced their decision-making process. They noted the level and quality of investment advisory services provided by Beutel Goodman to the Fund and determined that these services will continue to benefit the Fund and its shareholders. They also considered the nature of the allocation of the duties and responsibilities for the management and operation of the Fund between Brown Advisory and Beutel Goodman and they determined that the sub-advisory fees for the Fund, as negotiated by Brown Advisory and Beutel Goodman, reasonably reflected the nature and extent of the services provided by Beutel Goodman with respect to the Fund.
6. Board of Trustees Approval of the Continuation of the Sub-Investment Advisory Agreements With Respect to the Brown Advisory Emerging Markets Select Fund
At their September 7, 2023 Board meeting, the Board also undertook the consideration of matters with respect to the proposed continuation of the Sub-Investment Advisory Agreements between Brown Advisory and Wellington and Pzena Investment Management LLC (“Pzena”) with respect to the Brown Advisory Emerging Markets Select Fund.
Board of Trustees Approval of: (i) the Continuation of the Investment Advisory Agreement for the Funds and (ii) the Continuation of the Sub-Investment Advisory Agreements for the Sub-Advised Funds (Unaudited)
In accordance with the Investment Company Act of 1940, the Board of Trustees was required to consider the approval of the continuation of the Sub-Investment Advisory Agreements, and this was required to take place at an in-person meeting of the Board. The relevant provisions of the Investment Company Act of 1940 specifically provide that it is the duty of the Board to request and evaluate such information as the Board determines is necessary to allow them to properly consider the approval of the continuation of the Sub-Advisory Agreements, and it is the duty of Brown Advisory, Wellington and Pzena, as applicable, to furnish the Trustees with such information that is responsive to their request.
Accordingly, in determining whether to approve the continuation of the Sub-Investment Advisory Agreements between Brown Advisory and Wellington and Pzena, the Board of Trustees requested, and Brown Advisory, Wellington and Pzena provided, information and data relevant to the Board’s consideration.
Approval of the Continuation of the Sub-Investment Advisory Agreement with Wellington Management Company LLC
The Board then undertook the consideration of various matters with respect to the proposed approval of the continuation of the Sub-Investment Advisory Agreement between Brown Advisory and Wellington. The Trustees considered various matters involving the respective services provided by each of Brown Advisory and Wellington in connection with the management and operation of Wellington’s allocated portion of the Fund’s portfolio and they took note of the extensive oversight duties performed by Brown Advisory including investment management and compliance oversight of the operations of Wellington. The Trustees considered that Brown Advisory is actively engaged in conducting an ongoing monitoring program involving Wellington’s investment activities with respect to Wellington’s day-to-day portfolio management of the Fund’s assets that have been allocated to Wellington to manage in order to make sure that Wellington is adhering to all of the stated investment objectives, policies, limitations and restrictions that the Fund is subject to. In addition, the Trustees also took note of the fact that in connection with Brown Advisory’s oversight of the investment program maintained by Wellington with respect to the Fund, Brown Advisory prepares extensive reports to the Board regarding the investment activities of Wellington, which reports contain detailed analyses of how Wellington is performing.
The Board reviewed and evaluated the information that Brown Advisory and Wellington had presented for the Board’s review. The Board particularly noted, among other considerations, that the Fund’s investment advisory fees and overall operating expenses were competitive with comparable mutual funds. The Board also took into account presentations made by Wellington and Brown Advisory throughout the year. Based on its review of all of the information, the Board determined that the Sub-Investment Advisory Agreement was consistent with the best interests of the Fund and its shareholders and would enable the Fund to continue to receive high quality sub-advisory services at a cost that is appropriate, reasonable, and in the best interests of the Fund and its respective shareholders. In reaching these conclusions, the Board considered the following:
The nature, extent and quality of the sub-investment advisory services provided. The Trustees concluded that Wellington is capable of providing high quality sub-advisory services to the Fund as indicated by the professional qualifications and experience of the portfolio managers for Wellington, and Wellington’s investment management processes. On the basis of the Trustees’ assessment of the nature, extent and quality of the sub-advisory services provided by Wellington, the Trustees concluded that Wellington is capable of generating a level of long-term investment performance that is appropriate in light of the Fund’s investment objectives, policies and strategies and competitive with many other comparable investment companies.
The cost of advisory services provided and the expected level of profitability. On the basis of comparative information derived from the data that had been provided to the Board members, the Trustees determined that the expense ratios for each respective class of shares of the Fund are competitive with industry averages. The Trustees also noted that the Fund is subject to a contractual expense limitation agreement for the benefit of shareholders of the Fund to limit the Fund’s operating expenses through October 31, 2024. The Board also took note of the fact that the sub-advisory fees for the Fund had been separately negotiated by Brown Advisory and Wellington. Accordingly, on the basis of the Board’s review of the fees charged by Wellington for sub-investment advisory services provided to the Fund, the Board concluded that the level of sub-investment advisory fees is appropriate in light of the management fees, overall expense ratios and investment performance of comparable investment companies, and that the sub-advisory fees had been separately negotiated at arm’s-length by independent third parties.
The extent to which economies of scale may be realized as the Fund grows and whether the advisory fees reflect possible economies of scale. While it was noted that the Fund’s investment sub-advisory fees will not decrease as the Fund’s assets grow because they will not be subject to investment sub-advisory fee breakpoints, the Trustees concluded that the Fund’s investment
Board of Trustees Approval of: (i) the Continuation of the Investment Advisory Agreement for the Funds and (ii) the Continuation of the Sub-Investment Advisory Agreements for the Sub-Advised Funds (Unaudited)
sub-advisory fees are appropriate in light of the size of the Fund, and appropriately reflect the current economic environment for Brown Advisory and Wellington and the competitive nature of the mutual fund market. The Trustees then noted that they will have the opportunity to periodically re-examine whether the Fund has achieved economies of scale, and the appropriateness of the investment sub-advisory fees with respect to the Fund, in the future at which time the implementation of fee breakpoints on the Fund could be further considered.
Benefits to Wellington from its relationship with the Fund (and any corresponding benefits to the Fund). The Trustees concluded that other benefits that may be derived by Wellington from its relationship with the Fund, including any potential “soft dollar” benefits in connection with the Fund’s brokerage transactions and use of the Fund’s performance track record in advertising materials, are reasonable and fair, and consistent with industry practice and the best interests of the Fund and its shareholders.
Other Considerations. In approving the continuation of the Sub-Investment Advisory Agreement with Wellington, the Trustees determined that Wellington has made a substantial commitment to the recruitment and retention of high quality personnel, and maintains the financial, compliance and operational resources reasonably necessary to provide sub-advisory services to the Fund in a professional manner that is consistent with the best interests of the Fund and its shareholders. The Board also considered matters with respect to the brokerage practices of Wellington, including its soft dollar arrangements and its best-execution procedures, and noted that these were reasonable and consistent with standard industry practice.
It was noted that in making their determinations, the Trustees had considered and relied upon the materials provided to them by Wellington with respect to the contract and the presentation of the representatives of Brown Advisory. In reaching their conclusion with respect to the approval of the continuation of the Sub-Investment Advisory Agreement with Wellington and the level of fees paid under the Agreement, the Trustees did not identify any one single factor as being controlling, rather, the Trustees took note of a combination of factors that had influenced their decision-making process. They noted the level and quality of investment advisory services provided by Wellington to the Fund and determined that these services will continue to benefit the Fund and its shareholders. They also considered the nature of the allocation of the duties and responsibilities for the management and operation of the Fund between Brown Advisory and Wellington and they determined that the sub-advisory fees for the Fund, as negotiated by Brown Advisory and Wellington, reasonably reflected the nature and extent of the services provided by Wellington with respect to the Fund.
Approval of the Continuation of the Sub-Investment Advisory Agreement with Pzena Investment Management LLC
The Board then undertook the consideration of various matters with respect to the proposed approval of the continuation of the Sub-Investment Advisory Agreement between Brown Advisory and Pzena. The Trustees considered various matters involving the respective services provided by each of Brown Advisory and Pzena in connection with the management and operation of Pzena’s allocated portion of the Fund’s portfolio and they took note of the extensive oversight duties performed by Brown Advisory including investment management and compliance oversight of the operations of Pzena. The Trustees considered that Brown Advisory is actively engaged in conducting an ongoing monitoring program involving Pzena’s investment activities with respect to Pzena’s day-to-day portfolio management of the Fund’s assets that have been allocated to Pzena to manage in order to make sure that Pzena is adhering to all of the stated investment objectives, policies, limitations and restrictions that the Fund is subject to. In addition, the Trustees also took note of the fact that in connection with Brown Advisory’s oversight of the investment program maintained by Pzena with respect to the Fund, Brown Advisory prepares extensive reports to the Board regarding the investment activities of Pzena, which reports contain detailed analyses of how Pzena is performing.
The Board reviewed and evaluated the information that Brown Advisory and Pzena had presented for the Board’s review. The Board particularly noted, among other considerations, that the Fund’s investment advisory fees and overall operating expenses were competitive with comparable mutual funds. The Board also took into account presentations made by Pzena and Brown Advisory throughout the year. Based on its review of all of the information, the Board determined that the Sub-Investment Advisory Agreement was consistent with the best interests of the Fund and its shareholders and would enable the Fund to continue to receive high quality sub-advisory services at a cost that is appropriate, reasonable, and in the best interests of the Fund and its respective shareholders. In reaching these conclusions, the Board considered the following:
The nature, extent and quality of the sub-investment advisory services provided. The Trustees concluded that Pzena is capable of providing high quality sub-advisory services to the Fund as indicated by the professional qualifications and experience
Board of Trustees Approval of: (i) the Continuation of the Investment Advisory Agreement for the Funds and (ii) the Continuation of the Sub-Investment Advisory Agreements for the Sub-Advised Funds (Unaudited)
of the portfolio managers for Pzena, and Pzena’s investment management processes. On the basis of the Trustees’ assessment of the nature, extent and quality of the sub-advisory services provided by Pzena, the Trustees concluded that Pzena is capable of generating a level of long-term investment performance that is appropriate in light of the Fund’s investment objectives, policies and strategies and competitive with many other comparable investment companies.
The cost of advisory services provided and the expected level of profitability. On the basis of comparative information derived from the data that had been provided to the Board members, the Trustees determined that the expense ratios for each respective class of shares of the Fund are competitive with industry averages. The Trustees also noted that the Fund is subject to a contractual expense limitation agreement for the benefit of shareholders of the Fund to limit the Fund’s operating expenses through October 31, 2024. The Board also took note of the fact that the sub-advisory fees for the Fund had been separately negotiated by Brown Advisory and Pzena. Accordingly, on the basis of the Board’s review of the fees charged by Pzena for sub-investment advisory services provided to the Fund, the Board concluded that the level of sub-investment advisory fees is appropriate in light of the management fees, overall expense ratios and investment performance of comparable investment companies, and that the sub-advisory fees had been separately negotiated at arm’s-length by independent third parties.
The extent to which economies of scale may be realized as the Fund grows and whether the advisory fees reflect possible economies of scale. While it was noted that the Fund’s investment sub-advisory fees will not decrease as the Fund’s assets grow because they will not be subject to investment sub-advisory fee breakpoints, the Trustees concluded that the Fund’s investment sub-advisory fees are appropriate in light of the size of the Fund, and appropriately reflect the current economic environment for Brown Advisory and Pzena and the competitive nature of the mutual fund market. The Trustees then noted that they will have the opportunity to periodically re-examine whether the Fund has achieved economies of scale, and the appropriateness of the investment sub-advisory fees with respect to the Fund, in the future at which time the implementation of fee breakpoints on the Fund could be further considered.
Benefits to Pzena from its relationship with the Fund (and any corresponding benefits to the Fund). The Trustees concluded that other benefits that may be derived by Pzena from its relationship with the Fund, including any potential “soft dollar” benefits in connection with the Fund’s brokerage transactions and use of the Fund’s performance track record in advertising materials, are reasonable and fair, and consistent with industry practice and the best interests of the Fund and its shareholders.
Other Considerations. In approving the continuation of the Sub-Investment Advisory Agreement with Pzena, the Trustees determined that Pzena has made a substantial commitment to the recruitment and retention of high quality personnel, and maintains the financial, compliance and operational resources reasonably necessary to provide sub-advisory services to the Fund in a professional manner that is consistent with the best interests of the Fund and its shareholders. The Board also considered matters with respect to the brokerage practices of Pzena, including its soft dollar arrangements and its best-execution procedures, and noted that these were reasonable and consistent with standard industry practice.
It was noted that in making their determinations, the Trustees had considered and relied upon the materials provided to them by Pzena with respect to the contract and the presentation of the representatives of Brown Advisory. In reaching their conclusion with respect to the approval of the continuation of the Sub-Investment Advisory Agreement with Pzena and the level of fees paid under the Agreement, the Trustees did not identify any one single factor as being controlling, rather, the Trustees took note of a combination of factors that had influenced their decision-making process. They noted the level and quality of investment advisory services provided by Pzena to the Fund and determined that these services will continue to benefit the Fund and its shareholders. They also considered the nature of the allocation of the duties and responsibilities for the management and operation of the Fund between Brown Advisory and Pzena and they determined that the sub-advisory fees for the Fund, as negotiated by Brown Advisory and Pzena, reasonably reflected the nature and extent of the services provided by Pzena with respect to the Fund.
Information About Proxy Voting (Unaudited)
A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available without charge upon request by calling toll-free at (800) 540-6807 and by accessing the Funds’ website at www.brownadvisory.com/mf/how-to-invest (refer to Appendix B in the Statement of Additional Information). Furthermore, you can obtain the description on the SEC’s website at www.sec.gov.
Information regarding how the Funds voted proxies relating to portfolio securities during the year ended June 30 is available without charge, by calling toll-free at (800) 540-6807. In addition, you can obtain the Funds’ proxy voting records on the SEC’s website at www.sec.gov.
Information About the Portfolio Holdings (Unaudited)
The Funds file their complete schedule of portfolio holdings for their first and third fiscal quarters with the SEC on Form N-PORT. The Funds’ Form N-PORT is available without charge, upon request, by calling toll-free at (800) 540-6807. Furthermore, you can obtain the Form N-PORT on the SEC’s website at www.sec.gov. The Funds’ schedules of portfolio holdings are posted on their website at www.brownadvisory.com/mf/how-to-invest within ten business days after calendar quarter end.
Householding (Unaudited)
In an effort to decrease costs, the Funds will reduce the number of duplicate Prospectuses and annual and semi-annual reports that you receive by sending only one copy of each to those addresses shown by two or more accounts. Please call the Transfer Agent toll free at (800) 540-6807 to request individual copies of these documents. The Funds will begin sending individual copies 30 days after receiving your request. This policy does not apply to account statements.
BROWN ADVISORY FUNDS
At Brown Advisory, we believe that you deserve frank and open communication on all aspects of our relationship. In this spirit, we provide this annual summary of our policies relating to confidentiality and privacy of client information, mutual funds, conflicts of interest, trading commissions, proxy voting and Form ADV annual notice.
CONFIDENTIALITY AND PRIVACY POLICY
Brown Advisory takes the confidentiality of your personal information and the privacy of your account very seriously. Our commitment to safeguard your personal information goes beyond our legal obligation to process your transactions accurately and securely. Whether we serve you online, in person, on the telephone or by mail, the principles that guide the way in which we conduct business are built upon the core values of trust and integrity.
We limit access to your personal information to only those employees with a business reason to know such information. We train and consistently remind all employees to respect client privacy and to recognize the importance of the confidentiality of such information. Those who violate our privacy policy are subject to disciplinary action. This commitment also applies to the sharing of information among Brown Advisory and its affiliates.
We maintain physical, electronic and procedural safeguards that comply with applicable laws and regulations to protect your personal information, including various measures to protect your personal information while it is stored electronically.
Federal law requires us to inform you that we have on record personal information about you and that we obtain such information from you directly (e.g., information you provide to us on account applications and other forms, such as your name, address, social security number, occupation, assets and income) and indirectly (e.g., information on our computer systems about your transactions with us, such as your account balance and account holdings). Any personal information you choose to provide is kept confidential and allows us to: (i) provide better and more complete investment and strategic advice; (ii) develop new services that meet additional needs you may have; and, (iii) comply with legal and regulatory requirements.
In addition, in the normal conduct of our business, it may become necessary for us to share information relating to our clients that we have on record, as described above, with companies not affiliated with us who are under contract to perform services on our behalf. For example, we have contracted with companies to assist us in complying with anti-terrorist and anti-money laundering statutory requirements (including the identification and reporting of activities that may involve terrorist acts or money laundering activities), companies that provide clearing services, and other vendors that provide services directly related to your account relationship with us. Our agreements with these companies require that they keep your information confidential and not use such information for any unrelated purpose.
We do not sell information about you to third parties, and we do not otherwise disclose information to third parties without your permission or unless required by law.
INVESTMENT ADVISER
Brown Advisory LLC
901 South Bond Street, Suite 400
Baltimore, MD 21231
www.brownadvisory.com
DISTRIBUTOR
ALPS Distributors, Inc.
1290 Broadway, Suite 1000
Denver, CO 80203
CUSTODIAN
U.S. Bank, N.A.
Custody Operations
1555 North Rivercenter Drive, Suite 302
Milwaukee, WI 53212
TRANSFER AGENT
U.S. Bank Global Fund Services
P.O. Box 701
Milwaukee, WI 53201-0701
(800) 540-6807
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Tait, Weller & Baker LLP
Two Liberty Place
50 South 16th Street, Suite 2900
Philadelphia, PA 19102
LEGAL COUNSEL
Dechert LLP
1900 K Street, NW
Washington, DC 20006
| | Institutional Shares | | Investor Shares | | Advisor Shares |
| | Symbol | CUSIP | | Symbol | CUSIP | | Symbol | CUSIP |
| Growth Equity Fund | BAFGX | 115233702 | | BIAGX | 115233504 | | BAGAX | 115233603 |
| Flexible Equity Fund | BAFFX | 115233843 | | BIAFX | 115233868 | | BAFAX | 115233850 |
| Sustainable Growth Fund | BAFWX | 115233207 | | BIAWX | 115233306 | | BAWAX | 115233405 |
| Mid-Cap Growth Fund | BAFMX | 115233413 | | BMIDX | 115233439 | | — | — |
| Small-Cap Growth Fund | BAFSX | 115233819 | | BIASX | 115233835 | | BASAX | 115233827 |
| Small-Cap Fundamental Value Fund | BAUUX | 115233777 | | BIAUX | 115233793 | | BAUAX | 115233785 |
| Sustainable Small-Cap Core Fund | BAFYX | 115233298 | | BIAYX | 115233280 | | — | —- |
| Sustainable Value Fund | BASVX | 115233256 | | BISVX | 115233249 | | — | —- |
| Global Leaders Fund | BAFLX | 115233355 | | BIALX | 115233462 | | — | — |
| Sustainable International Leaders Fund | BAILX | 115233272 | | BISLX | 115233264 | | — | — |
| Intermediate Income Fund | — | — | | BIAIX | 115233744 | | BAIAX | 115233736 |
| Sustainable Bond Fund | BAISX | 115233389 | | BASBX | 115233447 | | — | — |
| Maryland Bond Fund | — | — | | BIAMX | 115233751 | | — | — |
| Tax-Exempt Bond Fund | BTEIX | 115233371 | | BIAEX | 115233108 | | — | — |
| Tax-Exempt Sustainable Bond Fund | — | — | | BITEX | 115233348 | | — | — |
| Mortgage Securities Fund | BAFZX | 115233546 | | BIAZX | 115233587 | | — | — |
| WMC Strategic European Equity Fund | BAFHX | 115233629 | | BIAHX | 115233611 | | BAHAX | 115233595 |
| Emerging Markets Select Fund | BAFQX | 115233652 | | BIAQX | 115233645 | | BAQAX | 115233637 |
| Beutel Goodman Large-Cap Value Fund | BVALX | 115233421 | | BIAVX | 115233314 | | — | — |
This report is submitted for the general information of the shareholders of each Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus, which includes information regarding the Funds’ risks, objectives, fees and expenses, experience of their management, and other information.
BX-SEMIANNUAL
Item 1. Reports to Stockholders (Continued).
Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable for semi-annual reports.
Item 6. Schedule of Investments.
| (a) | Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form. |
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 9. Purchases of Equity Securities by Closed‑End Management Investment Company and Affiliated Purchasers.
Not applicable to open-end investment companies.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of trustees.
Item 11. Controls and Procedures.
| (a) | The Registrant’s Principal Executive Officer and Principal Financial Officer have reviewed the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as of a date within 90 days of the filing of this report, as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d‑15(b) under the Securities Exchange Act of 1934. Based on their review, such officers have concluded that the disclosure controls and procedures are effective in ensuring that information required to be disclosed in this report is appropriately recorded, processed, summarized and reported and made known to them by others within the Registrant and by the Registrant’s service provider. |
| (b) | There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting. |
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 13. Exhibits.
(3) Any written solicitation to purchase securities under Rule 23c‑1 under the Act sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable to open-end investment companies.
(4) Change in the registrant’s independent public accountant. There was no change in the registrant’s independent public accountant for the period covered by this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Brown Advisory Funds
By (Signature and Title)* /s/Paul J. Chew
Paul J. Chew, Principal Executive Officer
Date March 5, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By (Signature and Title)* /s/Paul J. Chew
Paul J. Chew, Principal Executive Officer
Date March 5, 2024
By (Signature and Title)* /s/Jason T. Meix
Jason T. Meix, Principal Financial Officer
Date March 5, 2024
* Print the name and title of each signing officer under his or her signature.
