Effective immediately, the primary benchmark index for the Brown Advisory Strategic Bond Fund has been changed to the Bank of America Merrill Lynch 0-3 Month U.S. Treasury Bill Index, and the Fund’s former primary benchmark index, the Bloomberg Barclays Intermediate US Aggregate Bond Index, will now be used as the Fund’s secondary benchmark index. The Adviser has determined that the Bank of America Merrill Lynch 0-3 Month U.S. Treasury Bill Index better reflects the Fund’s investment strategy.

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The Brown Advisory Strategic Bond Fund seeks to achieve capital appreciation and income with low correlation to interest rate movements.

Investment approach

The Strategic Bond Fund combines bottom-up credit analysis with relative value analysis to build a portfolio that is concentrated based on credit selection, with interest rate hedges, dynamic sector allocation, and opportunistic investments. In pursuit of this, the fund  invests at least 80% of its net assets in a broad set of fixed income securities, such as U.S. Government securities, corporate fixed income securities, high yield bonds, bank loans and collateralized loan obligations, tax-exempt municipal bonds, U.S. Treasury bonds, Treasury inflation-protected securities (TIPS), mortgage-backed and asset-backed securities, and derivatives.

Fund profile

The fund is not managed to a benchmark. This flexibility allows the managers to invest in fixed-income securities of any maturity and/or credit quality rating. Under normal circumstances, the fund's portfolio will seek to have a duration of 1 to 3 years.

(As of Dec 31, 2018)

Fund Benchmark
AAA/Aaa 23.8 77.9
AA/Aa 9.3 3.4
A 16.3 8.8
BBB/Baa 25.5 10.6
High Yield 23.2 0.0
Other 2.0 0.0
Source: FactSet® Credit quality is calculated using ratings assigned by Moody’s. If Moody’s does not rate a holding then Standard & Poor’s is used. If Moody’s and Standard & Poor’s do not rate a holding then Fitch is used. A bond is considered investment grade if its credit rating is BBB- or higher according to Standard & Poor’s; more specifically, a rating of “AAA” represents the highest credit quality with minimal risk of default and a rating of “BB” or below represents speculative financial security. High Yield, if noted, includes holdings that are rated BB+ or lower according to Moody’s. Not Rated category, if noted, includes holdings that are not rated by any rating agencies. All ratings are as of 12/31/2018.

(As of Dec, 31, 2018)

Sector Fund Benchmark
Cash & Equivalents -0.70
Treasuries/U.S. Agencies 43.80
Securitized 56.90 36.40
Corporates 40.30 19.80
Municipal - Revenue 1.30
Municipal - Taxable 2.00
Other 0.20
Source: FactSet® † Securitized sector weights include Mortgage-Backed Securities (MBS), Commercial MBS and Assetbacked Securities (ABS). # Cash balance can be negative to reflect economic exposure to derivatives and other forward contracts. Sector diversification include cash and equivalents and are subject to change andshould not be considered to be a recommendation or suggestion to engage in or refrain from a particular course of action or to make or hold a particular investment or pursue a particular investment strategy, including whether or not to buy, sell, or hold any of the securities mentioned. It should not be assumed that investments in such securities have been or will be profitable. Numbers may not total due to rounding.

(As of Dec 31, 2018)

Portfolio Attribute Fund Benchmark
Yield to Worst (%) 4.83 3.13
# of Holdings 298
Dividend Frequency Monthly
Source: Fund net assets provided by U.S. Bank; portfolio characteristics from FactSet® and include cash and equivalents . Total net assets are as of the last day of the quarter and include all share classes.

Average Annual Total Returns % (As of Dec 31, 2018)

Share Class Three Months YTD One Year Three Year Five Year Ten Year Since Inception
Investor (BATBX), Inception: 09/30/2011 -0.77 0.32 0.32 2.55 1.52 1.02
Bloomberg Barclays Intermediate Aggregate Bond Ind 1.80 0.92 0.92 1.72 2.09 0.00 1.91
Gross Expense Ratios: 0.70% (Investor), 0.65% (Institutional). 
Returns greater than one year are annualized.
Source: U.S. Bank. Performance data quoted represents past performance and is no guarantee of future results. Performance for periods greater than one year is annualized. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Shares redeemed or exchanged within 14 days of purchase will be charged a 1.00% fee. Performance data quoted does not reflect the redemption or exchange fee.  If reflected, total returns would be reduced. For the most recent month-end performance, please call 1-800-540-6807. Short-term performance, in particular, is not a good indication of the Fund’s future performance, and an investment should not be made based solely on returns.

(As of Dec 31, 2018)

Name Percentage
First American Government Obligations Fund, 2.28% 2.6
Fannie Mae Pool, 5.00% 2.2
Equinix Inc, 5.88% Due 01/15/2026 1.1
Huntsman International LLC, 4.88% Due 11/15/2020 1.1
Treman Park CLO Ltd 2015-1A ARR, 3.54% Due 10/20/2028 1.1
Dollar Tree Inc, 3.15% Due 04/17/2020 1.1
DT Auto Owner Trust 2016-1 2016-1A D, 4.66% Due 12/15/2022 1.1
Carlyle US Clo 2017-2 Ltd 2017-2A A1B, 3.69% Due 07/20/2031 1.1
Carlyle Global Market Strategies CLO 2013-4 Ltd 2013- 4A A1RR, 3.44% Due 01/15/2031 1.1
Bank of America Corp, 2.74% Due 01/23/2022 1.1
Source: U.S. Bank. Fund holdings include cash and equivalents and are subject to change and should not be considered a recommendation to engage in or refrain from a particular course of action or to make or hold a particular investment or pursue a particular investment strategy, including whether or not to buy, sell, or hold any of the securities mentioned.
Mutual fund investing involves risk. Principal loss is possible.
Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. Investments in lower-rated and non-rated securities present a greater risk of loss to principal and interest than higher-rated securities. Municipal securities are subject to adverse political or economic factors, including changes in the tax law. 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. A non-diversified fund may concentrate its assets in fewer individual holdings than a diversified fund. Therefore, non-diversified Fund is more exposed to individual stock volatility than a diversified fund. The Fund may invest in foreign securities which involve political, economic and currency risks, greater volatility and differences in accounting methods. In addition, the fund is susceptible to risks from investments in derivatives, U.S. Government securities, ETFs, and Mortgage- and Asset-Backed securities.
 
© 2019  Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. Morningstar Rating™ is a trademark of Morningstar, Inc. Morningstar Rating™ is for the Investor share class only; other classes may have different performance characteristics.“The Morningstar Rating™ for funds, or“star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance.The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star.The Overall Morningstar Rating™ for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating™ metrics.The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.” Morningstar Rankings represent a fund’s total-return percentile rank relative to all funds that have the same Morningstar Category. The highest percentile rank is 1 and the lowest is 100. It is based on Morningstar total return, which includes both income and capital gains or losses and is not adjusted for sales charges or redemption fees. Brown Advisory Strategic Bond Fund was rated against the following number of Nontraditional Bond funds over the following time periods: 271 funds in the last three years, 177 in the last five years and 62  in the last ten years for the period ending 12/31/2018 . With respect to these, Brown Advisory Strategic Bond received a Morningstar Rating of  3 stars and 3 stars for the three- and five-year periods respectively.
Morningstar Rating™ as of 12/31/2018 for Investor Shares among 271 Nontraditional Bond funds for the period ending 12/31/2018 (derived from a weighted average of the fund's three-, five- and 10-year risk adjusted return measure).
Total assets under management value as of 12/31/2018. 
Inception date for Investor share class.
Click here for a current prospectus. Please read and consider it carefully before investing. You may obtain a hardcopy of the prospectus by calling 1-800-540-6807.
Click here for index and financial term definitions.