Brown Advisory Funds N-CSRCertified annual shareholder report (management investment company)

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.

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 Barclays 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 Barclays 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 Barclays US Aggregate Bond Index.

Bloomberg Barclays Mortgage Backed Securities Index is a market value-weighted index which covers the mortgage-backed securities component of the Bloomberg Barclays 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 Barclays 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 Barclays 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.

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.

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.

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.

Dear Shareholders:

During the year ended June 30, 2021, the Brown Advisory Growth Equity Fund – Investor Shares (the “Fund”) increased 34.98% in value. During the same period, the Russell 1000^® Growth Index (the “Index”), the Fund’s benchmark, increased 42.50%.

Low interest rates and strong corporate earnings helped to keep equity markets buoyant as investors looked to move beyond the COVID-19 pandemic. As vaccination levels rose in many countries, the path to reopening began. Investors embraced the notion of normalcy throughout global economies, however the spreading delta variant is threatening to stall recovery efforts in several geographies and we believe is likely to delay the all clear signal for some time. Market leadership vacillated between value and growth stocks as investors attempted to handicap the progress of the recovery or lack thereof. While the momentum has slowed in the consumer discretionary and technology stocks that were the biggest COVID-19 beneficiaries, they remained the biggest drivers of benchmark returns over the course the past twelve months. The Fund performed well on an absolute basis, however it trailed the benchmark primarily due to an underweight to the aforementioned COVID-19 trade. The Fund made up some ground relative to the Index in recent months as the momentum bled off some of the mega-cap technology and consumer stocks that had been dominating market returns.

All economic sectors provided a positive contribution to the portfolio. However, as mentioned previously, the consumer discretionary and technology stocks that rode the COVID-19 wave detracted from a relative perspective. There were only three stocks in the portfolio that were down in absolute terms. One of the underperforming stocks was a recent addition to the portfolio, and the other two were eliminated during the period, specifically Illumina and Vontier, which was a spinoff from another holding. The biggest positive contributors to performance were primarily technology companies such as PayPal, Alphabet, and NXP Semiconductors that have participated in the technology rally.

The COVID-19 pandemic provided a temporary accelerant to many stocks associated with digital transformation; however, some business models are likely to be more resilient than others. We believe that digital advertising is likely to be one of them. The secular trend in digital advertising which began many years before COVID-19 and then accelerated during the pandemic, has remained quite strong as evidenced by the recent results of companies like Alphabet and Facebook. For these two companies alone, digital advertising grew more than 30% in the last quarter. While the portfolio has had exposure to this trend for years, we have added additional exposure, with the recent purchase of Pinterest. Pinterest’s revenues of $1.7 billion represent a small fraction of the total addressable market and Pinterest is as close to a pure play in online advertising as one can get. We believe the business model is much earlier in its lifecycle than many of the other players in this industry and we believe a long runway for growth remains.

Sincerely,

Kenneth M. Stuzin, CFA Portfolio Manager

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.

The following chart reflects the change in value of a hypothetical $10,000 investment, including reinvested dividends and distributions, in the Fund as measured against broad-based securities market indices. The Russell 1000^® Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000^® companies with higher price to book ratios and higher forecasted growth values. The S&P 500 Index is a market-value weighted index representing the performance of 500 widely held, publicly traded large capitalization stocks. The indexes are unmanaged and do not reflect the deduction of fees, such as investment management fees.  Investors cannot invest directly in an index.

Dear Shareholders:

During the year ended June 30, 2021, the Brown Advisory Flexible Equity Fund – Investor Shares (the “Fund”) increased 45.05% in value. During the same period, the S&P 500^® Index (the “Index”), the Fund’s benchmark, increased 40.79%.

The U.S. equity market returns for the 12-month period are, in our opinion, nothing short of impressive against a backdrop of a worldwide pandemic.

Despite tremendous uncertainty due to the unknown nature of the pandemic and a world-wide lockdown, we had confidence in the recovery of the economy and the U.S. equity markets. We are pleased that our process, which is based on bottom-up stock picking focused on investing in well-managed businesses that can weather uncertain economic environment, has helped the Fund outperform its benchmark over the last 12 months, a period that has witnessed extreme macroeconomic volatility.

We do not overly rely on anyone’s ability to predict macroeconomic environment correctly since we consider this exercise as incredibly challenging given the complexities of the global economy and the number of factors that can influence its ultimate outcome. In addition, we believe economic forecasting models are unreliable in predicting turns. This is especially true in the current environment of unprecedented monetary policy, fiscal stimulus and change in the political climate. Given the complexity and uncertainty, we refrain from overlaying a top-down macro view on our strategy. That’s not to say that we ignore every evolving macro condition and its potential impact on individual holdings. With the recent surge in inflationary data, we undertook the exercise of combing through our portfolio to better understand its impact on the various business models. It was imperative given that consumer prices have continued to rise rapidly in the U.S. in recent months, reflecting a surge in demand along with shortages of labor and material with the continued opening of the U.S. economy. Some of the inflation numbers being reported are the highest since 2008 and are running meaningfully above the Federal Reserve’s longer run goal of 2%. The Federal Reserve has continued to downplay inflationary risk and maintained that the current inflation numbers are ‘transitory.’ According to the Fed, the numbers are being impacted due to an easy comparison with 2020 when inflation was particularly weak and also due to temporary disruptions in supply chains, which it expects to adjust in short order.

Stock selection was a more meaningful contributor to the return than our sector allocation relative to the Index. No sector declined during the period and all sectors had double-digit returns. Communications services, financials and health care contributed the most to the portfolio’s return relative to the Index. Communications services and financials both had a higher weighting and a higher return than the Index, while health care had a lower weighting but a higher return.

Compared to the Index, the Fund’s energy and real estate holdings detracted the most from results. While the weightings were similar, the sectors in the portfolio did not increase as much as those in the Index.

The biggest contributors to returns in the 12-month period were Alphabet Inc. CL C, a holding company for Google and Other Bets segments, Facebook, a leader in social media, Apple Inc., a manufacturer of various personal digital, computing and communications devices, Microsoft Corp., a leading technology services and software business and Berkshire Hathaway, Inc., a diversified insurance and industrial company (Warren Buffett’s company). These companies are all long-term holdings and among the largest in the Fund. We continue to like their long-term prospects.

Two holdings detracted from the returns, Kinder Morgan, a pipeline transportation company and Organon, a spin-off from Merck focused on women’s health, biosimilars and established brands. We eliminated both. Despite its low valuation, Kinder Morgan does not provide a compelling investment for us because its growth opportunities appear to be diminished. We sold Organon in favor of adding to our Merck holding. We view Merck as having greater appreciation potential than the Organon businesses.

In total, we added five new investments and eliminated four since our December 31, 2020 Semi- Annual Report to shareholders.

We initiated a position in retailer Bed Bath and Beyond. The company is in the midst of a significant turnaround creating an opportunity to invest in a company with meaningful upside.

We invested in First Citizens BancShares, Inc. and CIT Group. First Citizens BancShares is a hundred plus year-old well-run bank with meaningful insider ownership and a demonstrated record of superior risk management and value creation. With its pending merger with CIT Group, the bank expects to have over $100 billion in assets and we believe should achieve higher earnings power due to cost reduction and balance sheet synergies.

We initiated a position in Pinterest, a pinboard-style photo sharing website. We believe that Pinterest is well positioned to capture a larger share of the growing global digital advertising spend related to e-commerce.

New holding T-Mobile US, Inc. is a well-positioned competitor in wireless services with, what we believe to be a better network than Verizon or AT&T and is poised to gain market share with 5G.

The exercise of combing through the portfolio with the lens of an inflationary risk led us to eliminate Dollar Tree and deploy capital in more promising areas. We believe that the company’s business model of selling items for a dollar or a low price will be challenged to maintain profits in an inflationary environment. We believe Dollar Tree lacks true pricing power due to its business model.

We exited our position in Hain Celestial Group. The company’s CEO has done a terrific job of turning around the business, which has led to meaningful stock price appreciation. However, after having realized the gains, we deployed the capital to more attractive opportunities.

We thank you for trusting us with your investment capital and we reiterate our approach as follows.

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. In our opinion, 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 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, CFA

Portfolio Manager

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.

The following chart reflects the change in value of a hypothetical $10,000 investment, including reinvested dividends and distributions, in the Fund as measured against the broad-based securities market index. The S&P 500 Index (“Index”) is a market-value weighted index representing the performance of 500 widely held, publicly traded large capitalization stocks. The Index is unmanaged and does not reflect the deduction of fees, such as investment management fees.  Investors cannot invest directly in an index.

Dear Shareholders:

During the year ended June 30, 2021, the Brown Advisory Equity Income Fund – Investor  Shares (the “Fund”) increased 31.67% in value. During the same period, the S&P 500^® Index (the “Index”), the Fund’s benchmark, increased 40.79%.

The past twelve months was a period of robust performance for the U.S. stock market. Many sectors flourished as economies recovered and reopened for business following the onset of the global COVID-19 pandemic. In the U.S., a brightening economic outlook, increased COVID-19 vaccination rates, falling unemployment rates, and government-backed stimulus programs combined to create a strong demand environment for consumer and business spending alike. As a result, economically sensitive sectors of the market such as financials, energy, industrials and materials were the best performers for the Index during the period.

The financials sector was the primary relative performance driver for the Fund during the past year. The improving macroeconomic environment provided a tailwind for business areas such as credit cards and investment banking for holding JPMorgan Chase and for the advice and wealth management services offered by Ameriprise Financial. Both companies reported strong financial results and their stocks increased accordingly. Among other financial sector holdings, the Fund swapped commercial insurer Cincinnati Financial during the period in favor of a new position in fellow insurer Chubb. In our opinion, Chubb offered an attractive long-term business outlook similar to Cincinnati Financial but at a more reasonable valuation.

The Fund’s holdings in the consumer discretionary sector also added to relative performance, led by a large jump in the stock price of retailer Target. The company thrived during the period and took market share from smaller rivals when the pandemic reduced physical shopping trips in the U.S.

Given the Fund’s generally conservative investment approach, it has historically been a challenge to keep up with the Index when stock prices are advancing rapidly. Indeed, this was the case over the past year in the information technology and health care sectors in particular. While several of the Fund’s holdings in these two sectors performed well on an absolute basis, both areas ultimately detracted from relative performance. The consumer staples sector also detracted from relative performance and was among the lowest-returning areas of the Index during the period. Many companies in the sector were faced with the challenge of growing their sales and earnings against what were exceptionally strong results from a year ago, when consumers were stocking up on essentials in the early days of the pandemic.

The Fund took advantage of the relative stock price weakness in consumer staples and added leading household product companies Clorox and Procter & Gamble during the period. Meanwhile, tobacco companies Altria and Philip Morris International and beverage maker Coca-Cola were eliminated due to their less favorable long-term earnings growth outlooks. There were several changes in the Fund’s industrial holdings during the period as well. Specifically, aerospace and defense companies General Dynamics and Raytheon Technologies were eliminated in favor of new investments in engine and power systems provider Cummins, parcel delivery company United Parcel Service, and defense supplier L3Harris Technologies.

Elsewhere, the Fund added regulated utility company Dominion Energy and eliminated oil sands producer Suncor Energy. A small position in a mandatory convertible preferred security issued by alternative asset manager KKR & Co. was also purchased during the period. And finally, the Fund eliminated Organon, a recent spin-off from pharmaceutical holding Merck. The proceeds from the small Organon stake were re- invested in Merck, which we believe offered a relatively better long-term earnings growth outlook.

The earnings picture for many large, high-quality companies has brightened over the past year as economic conditions in the U.S. and elsewhere have strengthened. The Fund remains committed to our long-term goal of seeking to provide both dividend yield and growth through the selection of a portfolio of investments that focuses on holdings with above-average yields and growth potential at reasonable valuations.

Sincerely,

Brian Graney, CFA

Portfolio Manager

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.

Because the Fund’s ESG criteria exclude securities of certain issuers for nonfinancial reasons, the Fund may forgo some market opportunities available to the funds that do not use these criteria.

Definitions for terms and indices are provided in the Glossary of Terms.

The following chart reflects the change in value of a hypothetical $10,000 investment, including reinvested dividends and distributions, in the Fund as measured against a broad-based securities market index. The S&P 500 Index (“Index”) is a market-value weighted index representing the performance of 500 widely held, publicly traded large capitalization stocks. The Index is unmanaged and does not reflect the deduction of fees, such as investment management fees. Investors cannot invest directly in an index.

ADR — American Depositary Receipt

Dear Shareholders:

During the year ended June 30, 2021, the Brown Advisory Sustainable Growth Fund – Institutional Shares (the “Fund”) increased 39.42% in value. During the same period, the Russell 1000^® Growth Index (the “Index”), the Fund’s benchmark, increased 42.50%.

Our 12-month look-back starts in the third quarter of 2020, a quarter marked by volatility with returns for large growth stocks heavily dominated by the “FAANG” stocks, namely Facebook, Amazon, Apple, Netflix and Alphabet. While the portfolio performed well from a bottom-up perspective, our underweight or lack of ownership of some of these names held us back on a relative basis. In the fourth quarter of 2020, strong gains in several of our health care and technology names propelled the portfolio ahead of the benchmark. Market optimism and reopening of the economy drove value and small-cap stocks to new highs in the first quarter of 2021. As such, the strategy slightly underperformed its benchmark with solid performance from technology and consumer discretionary companies unable to offset underperformance from several of our names in industrials and health care, which have historically helped performance over the years. In the second quarter of 2021, the strategy again beat its benchmark. After abandoning high-quality, large-cap growth stocks in the first quarter, investors regained their appetite for some of the “COVID-19 winners” and faded the rotation toward cyclicals. We were pleased to see the market react positively to strong results from many of our companies which helped us achieve both attractive absolute and relative performance in the year-to-date 2021 period.

In the last year we initiated on six names: Cadence Design Systems (CDNS), Chegg (CHGG), Dynatrace (DT), MSCI (MSCI), Nvidia (NVDA), and Square (SQ). All of these trades are, we believe, upgrades to the portfolio with companies that are better positioned to grow sustainably, and/or companies that diversify the portfolio’s exposure to uncorrelated markets. For example, Chegg is our first holding whose core business is to provide educational resources. It is our belief that Chegg’s Sustainable Business Advantage or SBA is that the company helps improve the return on investment of education by helping students learn more, in less time, and at a lower cost – a compelling value proposition whether students are in a four-year college program, or engaged in skills-based learning. And while we believe we have had exposure to the financial sector through various holding such as Verisk Analytics and Visa, MSCI is our first holding that is classified in our benchmark’s financial sector. MSCI is a data analytics provider to the investment industry worldwide. The characteristics of its strong business model include a highly-recurring, scalable subscription revenue model built on the company’s dominant market share in index benchmarking. MSCI is also one of the leading firms driving the adoption of ESG standards worldwide through its ESG research and indexes. We sold out of Aspen Technology, Ball Corporation, Illumina, Nordson, TJX Companies, Vontier, and Tyler Technologies to make room for these new holdings.

We remain fully invested and disciplined in our process of finding investment opportunities at the intersection of strong fundamentals, sustainable business advantages and attractive valuations, as this philosophy has served us well over the past eleven and a half years.

Sincerely,

David Powell, CFA and Karina Funk, CFA

Portfolio Managers

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.

Because the Fund’s ESG criteria exclude securities of certain issuers for nonfinancial reasons, the Fund may forgo some market opportunities available to the funds that do not use these criteria.

Definitions for terms and indices are provided in the Glossary of Terms.

The following chart reflects the change in value of a hypothetical $1,000,000 investment, including reinvested dividends and distributions, in the Fund as measured against a broad-based securities market index. The Russell 1000^® Growth Index (“Index”) measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000^® companies with higher price to book ratios and higher forecasted growth values.  The Index is unmanaged and does not reflect the deduction of fees, such as investment management fees.  Investors cannot invest directly in an index.

Dear Shareholders:

During the year ended June 30, 2021, the Brown Advisory Mid-Cap Growth Fund – Investor Shares (the “Fund”) increased 42.90% in value. During the same period, the Russell Midcap^® Growth Index (the “Index”), the Fund’s benchmark, increased 43.77%.

The market snapped back smartly during the year ended June 30, 2021 following the pandemic-driven declines during the first quarter of 2020. Leadership in top market performers shifted from “growth” to “value” and back to “growth” as global COVID-19 case counts ebbed and flowed, effective vaccines were introduced, economies re-opened, and viral variants emerged complicating government responses. Concurrently, the yield on the U.S. 10-year Treasury jumped 80 basis points to 1.45% as investors’ fears faded and potential signs of inflation emerged.

During the full period, despite oscillating leadership in top market performers, value outpaced growth in the mid-cap space (as measured by the Russell Midcap^® Value and Midcap^® Growth Indexes) and small-caps beat large caps (as measured by the Russell 2000^® Growth and 1000 Growth Indexes). Industrials and technology stocks generally drove returns, while consumer staples, financials, and materials equity prices lagged. Given that this Fund typically sports a beta closer to 0.9 than 1.0, we were happy it nearly kept pace with its benchmark in a surging market that seemed to favor, ironically, more cyclical- and momentum-oriented approaches. From a sector perspective, underperformance in the industrials, technology and real estate sectors offset positive selection effects in the communication services, consumer and financials sectors.

Pinterest and Etsy were top contributors to the fund during the period. Both companies benefited from an acceleration in adoption of e-commerce and time spent online in 2020, as well as from an investor rotation into technology and internet stocks. Both also benefited from company-specific initiatives. Pinterest accelerated the monetization of its large and growing user base with platform improvements like auto bidding, video-enabled ads, international expansion, and “shoppable” pins. Etsy continued to improve seller and buyer experiences on its two-sided marketplace by improving search and recommendations and with seller initiatives like free shipping and Etsy ads. Other contributors included semiconductor-maker Marvell Technologies, Charles River Labs (a clinical research organization, or CRO, to biotechnology companies), and salvage-vehicle auctioneer IAA.

ACV Auctions (AVCA) was the largest detractor during the 12-month period. Share-price weakness stemmed from a combination of concerns over used car prices peaking, competitor KAR growing its competing offering faster than ACV Auctions, and what appears to be selling pressure after a partial lock-up expired following the stock’s 30% post-IPO run. The company continues to track ahead of our forecasts and we remain excited about its long-term prospects. Neurocrine Biosciences also crimped returns during the period. Revenue growth of the pharmaceutical company’s marketed drug, INGREZZA, as well as its pipeline experienced delays due to COVID-19. We exited the position to fund other opportunities. Other detractors included Jack Henry Associates, Ascendis Pharma and DoorDash.

The Fund added 26 new investments during the period, including 14 in technology and communication services, six in the consumer discretionary sector, three in health care, two in industrials, and one in the consumer staples vertical. The Fund exited 30 investments during the period to fund those opportunities. Turnover was mildly above our long-term average due to market volatility and enthusiastic capital market activity.

We remain committed to seeking to achieve a diversified portfolio of high-quality companies that we believe are well positioned to seek to contribute to the Fund’s investment objective. We are grateful for your support and look forward to updating you again.

Sincerely,

George Sakellaris, CFA

Portfolio Manager

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.

Because the Fund’s ESG criteria exclude securities of certain issuers for nonfinancial reasons, the Fund may forgo some market opportunities available to the funds that do not use these criteria.

Definitions for terms and indices are provided in the Glossary of Terms.

The following chart reflects the change in value of a hypothetical $10,000 investment, including reinvested dividends and distributions, in the Fund compared with the broad-based securities market index. The Russell Midcap Growth Index (“Index”) measures the performance of the mid-capitalization growth sector of the U.S. equity market. The Index is unmanaged and does not reflect the deduction of fees, such as investment management fees.  Investors cannot invest directly in an index.

Dear Shareholders:

During the year ended June 30, 2021, the Brown Advisory Small-Cap Growth Fund – Institutional Shares (the “Fund”) increased 43.31% in value. During the same period, the Russell 2000^® Growth Index (the “Index”), the Fund’s benchmark, increased 51.36%.

Stylistically, the portfolio netted strong results for the parts of the period when “quality” mattered but faced headwinds when low-quality market leadership dominated. Overall, we were pleased with the portfolio’s gains given the relative risk assumed to produce the appreciation. More importantly progress remained sound as well as our team’s productivity, as measured by pipeline build and due diligence. We believe both are foundational to producing sound risk-adjusted returns over the long-term.

The investment environment over the last 12 months was, in our opinion, extraordinary—you almost cannot make up the macroeconomic twists and turns and their impact on public equity markets. While we were fascinated by the “risk-on, risk-off” dynamics, meme stock performance, retail fund flows, the explosion of the Federal Reserve’s balance sheet, the erratic movement of the 10-year treasury yield, and the eye popping headline (and underlying) inflation data being witnessed, we strived to remain wholly focused on our core objective. We believe finding, evaluating, and owning, at the right price, 3G (durable growth, sound governance and scalable go- to-market strategies) businesses over a multi-year time frame can make the difficult journey from small- to mid- to large-cap status.

This investment process has yielded a portfolio with low- to mid-90% active share, a beta below 1, a standard deviation less than the benchmark, and generally solid capital conservation. While we believe our attention to valuation and portfolio diversification aids in producing these characteristics, the lion’s share is likely due to the higher-than-average quality of our individual portfolio holdings. Business attributes such as a strong and diverse board of directors, capable and shareholder-friendly management teams, well above-average gross margins, strong prospective returns on investor capital, low capital intensity and responsibly constructed balance sheets are all things we seek out, positively skewing the “quality” of our portfolio compared to the average small- cap company. Thus, while we expect our bottom-up stock selection to drive returns over time, our “quality” bias remains relevant to relative short-term investment results.

Diving one level down on performance, there were two sectors that detracted from overall relative gains and one sector that was demonstratively positive. Health care was highly additive to results driven by solid, bottom-up security selection. Industrials and information technology produced attractive absolute gains, but a relative lack of cyclicality and momentum, respectively, did not enable these areas to keep up with their benchmark constituents.

During the past year, there were a few contributors and detractors of note. On the positive side of the ledger, we had two health care and one technology holding stand out. Charles River Laboratories, Inc. (CRL) was the top contributor for the period. CRL is an early-stage contract research organization (CRO), which provides essential products and services to help pharmaceutical and biotechnology companies, government agencies and academic institutions. Charles River Laboratories continues to execute at a high level as the leading pre-clinical CRO, supporting hundreds of well-funded biotechnology assets. Strategic M&A in the high growth areas of cell and gene therapy continued this quarter and investors continued to gain confidence in the durability of CRL’s growth profile. Workiva, Inc. (WK) was the second top contributor for the period. Workiva engages in the provision of cloud-based compliance and regulatory reporting solutions that are designed to solve business challenges at the intersection of data, process and people. Workiva reported accelerating bookings on broad-based demand. The company also announced an ESG-specific reporting product that expands the company’s addressable market opportunity markedly. Numerous growth drivers appear intact over the next few years, providing comfort with the holding despite meaningful multiple expansion since acquiring the position. The third largest contributor for the period was Establishment Labs Holdings, Inc. (ESTA). Establishment Labs Holdings is a technology company which engages in the design, development, manufacture and marketing of silicone breast implants. Establishment Labs Holdings continues to garner more investor attention following several new and novel product announcements that dramatically expand its total addressable market. The management team executed well during the pandemic and appears set up well as global economies re-open.

Interestingly, the stocks on the negative side of the ledger matched our contributors with two health care and one technology holding. Neurocrine Biosciences, Inc. (NBIX) was the largest detractor during the period. Neurocrine is a neuroscience-focused, biopharmaceutical company. It discovers, develops and intends to commercialize drugs for the treatment of neurological and endocrine- related diseases and disorders. Neurocrine has under-performed over the last year because sales of Ingrezza, the company’s multi-billion-dollar drug for tardive dyskinesia (TD), have grown at a slower rate than expected. Some investors

question whether this is due to saturation of the TD market, but we believe that there is a still plenty more room for penetration in the TD market, and that a majority of TD patients still go undiagnosed. We subscribe to the view that Ingrezza sales have disappointed due to the disruption of in-person psychiatry visits due to COVID-19. TD involves persistent involuntary movements and tics which are less easily diagnosed virtually, so we expect that with a return to in-person psychiatry visits we’ll see a re-acceleration in Ingrezza sales, and a recovery in the Neurocrine share price. The second largest detractor during the period was ON24, Inc. (ONTF). ON24 provides webcasting and video communications solutions. ON24 was a recent IPO, going public in February of 2020. We have sat tight with our initial position, which is relatively small. The stock has underperformed since its initial pop post-offering as investors question the long-term competitive landscape. We remain relatively constructive on the company’s ability to navigate the difficult comparisons presented by the boom in demand from COVID-19. FibroGen, Inc. (FGEN) was the third largest detractor during the period. FibroGen is a biopharmaceutical company, which engages in the discovery, development, and commercialization of novel therapeutics. FibroGen declined in the fourth quarter of 2020 due to the FDA’s decision to extend the review period for the company’s lead asset, Roxadustat, in order to fulfill a request for additional analyses. The position was eliminated.

The volatility and market leadership changes during the period made it an active one for the portfolio. The Fund made 28 new investments over the course of the year, which was driven primarily by the dramatic changes in valuations that necessitated nearly 19 eliminations. Notable additions include: Agilon Health, Inc. and AZEK Company, Inc.

Agilon Health, Inc. (AGL), which was purchased in April 2021, engages in providing necessary capabilities, capital and business model for existing physician groups to create a Medicare-centric, globally capitated line of business. Agilon Health partners with primary care groups enabling them to practice medicine more fully, having greater influence on downstream costs and share in created savings. The model empowers doctors through capital, resources and collaboration to have immediate impact while practicing more complete, tailored primary care. The company came public in mid-April 2021 also to meaningful investor interest. We received an out-sized allocation of the deal.

AZEK Company, Inc. (AZEK), purchased at the beginning of 2021, is a manufacturer of premium building products that replace traditional materials and provide value through lower maintenance, refined aesthetics and reduced total cost. AZEK is a leading manufacturer of low-maintenance and environmentally sustainable building products, best known for its residential decking brand TimberTech. AZEK operates in an attractive composite decking space that offers a combination of secular growth, less cyclicality given decking replacement demand and margin enhancement opportunities.

We remain confident that following an investment philosophy and process can yield favorable risk-adjusted returns in the U.S. small-cap market over time. We are confident that the foundation of our efforts and our team, remains solid. With the recent robust initial public offering environment, we believe the population of small- to mid-capitalization securities is more robust today than it has been in years. We are optimistic that we can continue to find business franchises that fit our underlying “3G” (durable growth, sound governance and scalable go-to-market) investment filter that we believe can tilt the odds of success in our favor over time. Our challenge is that we inhabit a complex macroeconomic and equity market environment of which one of the byproducts is elevated valuations within the small-cap growth space in general. To cope with these higher prices, we intend to continue to drive our investment pipeline so that we can take advantage of idiosyncratic or market dislocations to add long-term value to shareholders. Our mantra remains the same: you cannot predict volatility, but you can attempt to prepare for it.

We move into the back half of calendar year 2021 with the belief that we are well prepared and optimistic that our philosophy and process can yield attractive risk-adjusted returns to our investors in the future.

Sincerely,

Chris Berrier

Portfolio Manager

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.

The following chart reflects the change in value of a hypothetical $1,000,000 investment, including reinvested dividends and distributions, in the Fund compared with the broad-based securities market index. The Russell 2000^® Growth Index (“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 ratios and higher forecasted growth values. The Index is unmanaged and does not reflect the deduction of fees, such as investment management fees.  Investors cannot invest directly in an index.

Dear Shareholders:

During the year ended June 30, 2021, the Brown Advisory Small-Cap Fundamental Value Fund – Investor Shares (the “Fund”) increased 54.74% in value. During the same period, the Russell 2000^® Value Index (the “Index”), the Fund’s benchmark, increased 73.28%.

The second half of 2020 represented what we believe to be a more normalized pace of activity. Despite the sharp rebound in share prices that preceded the period, we were able to find businesses with what we believe were attractive cash flow profiles trading at discounted valuations.

For the year ended June 30, 2021, the Fund trailed its benchmark. Consumer discretionary and information technology were the largest detractors to performance overall, while our financials holdings were the biggest positive contributor during the period.

Virtus Investment Partners (VRTS) was the top contributor for the period. Virtus is an asset management company which engages in the provision of investment management and related services to individuals and institutions. Virtus acquired a sizable portion of Allianz Global’s U.S. asset management business. Virtus continues to benefit from a strong equity market as well as the incremental positive impact from the acquisition.

EchoStar Corporation (SATS) was the largest detractor during the period. The company is a leading provider of satellite operations and broadband services in more than 100 countries across the globe. Echostar’s multiple contracted over the last year despite resilient revenue and profit results. We expect continued share repurchase activity, the satisfaction of regulatory requirements to maintain rights to a key portion of the S Band spectrum in Europe, and the approach of the company’s Jupiter 3 satellite launch in 2022 should all drive shareholder value over the coming year.

The Fund made 14 new investments over the course of the year. Notable additions include: ChampionX Corporation, Vista Outdoor and Ingevity Corporation.

ChampionX Corporation (CHX), which was purchased at the end of 2020, is an oilfield services company that was created when Apergy and ChampionX (a former division of Ecolab) combined through a Reverse Morris Trust in June of 2020. The combination of COVID-19 and the ensuing collapse in oil and gas demand during the second quarter made the timing of this transaction rather unfortunate. While both Apergy and ChampionX were strong in their respective market on their own prior to the merger, we believe the newly-formed entity should have increased global scale and structurally higher EBITDA margins given the sizable operating synergies that are expected to be realized over time. Over 80% of ChampionX Corporation’s combined revenue base is tied to production as opposed to drilling, thus making the underlying revenues less cyclical than many other small-cap energy names. The company’s core production chemicals technologies business has 25% global share of a consolidated industry that is consumption based (as opposed to equipment/asset based) and requires little ongoing capital investment. Management expects that total capex for ChampionX Corporation should remain near 2.5% of sales going forward and all free cash flow (FCF) will be targeted towards debt reduction until a leverage ratio of under <1x EBITDA is reached. At the time of our purchase, ChampionX Corp. was trading at 9.3x enterprise value to EBITDA and a 9% FCF yield.

Vista Outdoor (VSTO), purchased in November of 2020, was the second biggest contributor over the past 12 months. Vista Outdoor is a leading manufacturer of ammunition and outdoor recreational products. Over the past two plus years under new management, Vista Outdoor has focused on key strategic initiatives to improve operations and strengthen its balance sheet. We believe that the recent acquisition of Remington’s ammunition business out of bankruptcy will help to accelerate these new initiatives and serve to increase the effective valuation.

Ingevity Corporation (NGVT), purchased in the beginning of the second quarter of 2021, is a specialty chemicals company with industry leading margins, that is trading at a sizable discount to peers for the first time in years. The company has demonstrated strong pricing power historically across all its businesses given its leading market shares and its FCF conversion remains near the top end of the group. We believe that the stock’s recent underperformance provides a compelling opportunity and at the time of our initial purchase Ingevity was trading at less than 9x EBITDA with a 7.5% FCF yield.

The Fund was also active in selling its investments, with 19 eliminations over the course of the year. The majority of exits were in the financial sector and included National General and Waddell Reed, which were sold in cash transactions.

Over the next several months, we expect the economy to continue to open and gain momentum. We intend to be acutely focused on monitoring whether the actual results can match the high expectations that have been set in many small-cap sub-sectors. We believe that our process and philosophy are designed to assemble a portfolio of investments that seeks our investment objective and can deliver attractive performance to our investors.

Sincerely,

J. David Schuster

Portfolio Manager

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.

The following chart reflects the change in value of a hypothetical $10,000 investment, including reinvested dividends and distributions, in the Fund as measured against a broad-based securities market index. The Russell 2000^® Value Index (“Index”) measures the performance of small-cap value segment of the U.S. equity universe. It includes those Russell 2000^® companies with lower price to book ratios and lower forecasted growth values. The Index is unmanaged and does not reflect the deduction of fees, such as investment management fees.  Investors cannot invest directly in an index.

Dear Shareholders:

During the year ended June 30, 2021, the Brown Advisory Global Leaders Fund – Investor Shares (the “Fund”) increased 37.91% in value. During the same period, the FTSE All-World Index (the “Index”), the Fund’s benchmark, increased 39.18%.

The Fund returned an annualized 14.67% since inception compared to 11.17% for the Index.

The Fund is focused on delivering long-term performance by investing in equity securities of companies that we believe are leaders within their industry or country, as demonstrated by an ability to deliver high relative return on invested capital over time. We are bottom-up investors and invest in securities based on fundamentals rather than geographic or macroeconomic factors. We believe patience and a long-time horizon are underrated virtues in investing, and we remain disciplined on both. We continue to believe that overpaying for good businesses is an ever-present risk for quality- focused investors and we do our best to avoid this mistake too.

For the year ended June 30, 2021, the biggest contributing sector to relative performance was information technology. Financials was the worst performing sector mainly due to a rally in interest rate sensitive financials which are not the core focus of the Fund’s financials exposure. Not having any exposure to energy, utilities or real estate benefited the performance during the reporting period. The reporting period was marked by significant global advancements in the fight against the global COVID-19 pandemic. Progress was made on testing, vaccine development, implementation of vaccination programs and the re-opening of global economies, particularly in developed markets. The result was a strong rally for market segments that have suffered from a prolonged lockdown and manifested itself in a rotation from growth and quality into more value-oriented stocks for the rest of the reporting period. While this was a challenging environment for the quality focused Fund, its valuation discipline and global diversification helped it to keep up with the Index. This was particularly notable in the 6-month period from October 30, 2020 to April 30, 2021 after Pfizer, Moderna and AstraZeneca received approval for their COVID-19 vaccines.

From an individual stock perspective, the best performers were information technology stocks, Taiwan Semiconductor Manufacturing Company (TSMC), Alphabet and Microsoft, followed by Charles Schwab. As mentioned in our semi-annual report we believe TSMC has been taking the lead as the most advanced semiconductor manufacturer with main competitor Intel delaying production and falling behind TSMC. Charles Schwab’s share price more than doubled during the last year. This was driven by the expectation for higher medium-to-long-term interest rates moving net interest income and net interest margins up. More near term, the company’s financials benefited from a successful integration of TD Ameritrade and surging retail trading activity, particularly in the beginning of 2021. Deutsche Bourse detracted the most, due in our opinion to concerns around the impact that low volatility would have on equity index volumes at Eurex. We conducted a drawdown review and added to the position based on strong structural growth drivers and an attractive internal rate of return (IRR).

During the past year we have invested in two new companies, Adobe and Fair Isaac Corporation, while the position in Aspen Technology was sold. Fair Isaac is the creator of the FICO score, a single published score for consumer creditworthiness used in over 90% of U.S. consumer lending decisions. The company has a strong Sustainable Advantage Driver as it enables financial inclusion opportunities for consumers and financial institutions to rely on the FICO score to reduce losses and extend credit responsibly. Adobe is the leader in digital content creation, management and delivery, a massive and growing opportunity that presented itself during the quality sell off in February. We sold the position in Aspen Technology as the company had reached our return expectations much faster than expected and we decided to allocate the capital to Adobe and what we believe to be a higher IRR opportunity.

The Global Leaders’ team remains dedicated to executing on our investment process and scouring the globe for high quality companies at attractive prices.

Sincerely,

Mick Dillon, CFA

Portfolio Manager

Bertie Thomson, CFA

Portfolio Manager

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.

The following chart reflects the change in value of a hypothetical $10,000 investment, including reinvested dividends and distributions, in the Fund as measured against a broad-based securities market index.  The FTSE All-World Index (“Index”) is a market capitalization weighted index representing the performance of large and mid-capitalization stocks from the FTSE Global Equity Index Series.  The Index is unmanaged and does not reflect the deduction of fees, such as investment management fees.  Investors cannot invest directly in an index.