In August 2020, BBH Select Series – Large Cap Fund (“BBH Select” or “the Fund”) rose by 4.61%, which compared to a gain of 7.19% for the S&P 500 Index. Our top performer in the month was Mastercard and our largest detractor was Diageo. We initiated a position in Amazon.com, Inc., the world’s largest e-commerce and cloud computing provider, and we exited our position in Unilever.

Mastercard reported Q2 results that were negatively impacted by restrictions related to COVID-19 and the general macroeconomic slowdown. The 26% decline in operating profit for the quarter reflected a de-leveraging against fixed expenses, but less severe than we had contemplated. Nevertheless, the quarter’s operating profit margin was still strong at nearly 52%. Growth in Mastercard’s differentiated services strategy remains exceptional and should continue to be a durable top-line contributor given that electronic payments generate more data than cash and check transactions. As such, with card-based payments continuing to gain share, Mastercard’s clients will increasingly consume the analytics and security tools offered by the company’s value-added services. In the face of currently steep revenue declines related to the pandemic, we believe that Mastercard’s competitive position and importance to customers is strengthening.

Diageo reported results that were relatively solid considering the environment, with the U.S. – where spirits and beer sales are 20% on-premise – showing particular resilience. Most other regions faced steep volume declines due to a mix of forced closures, government sale/manufacturing prohibitions, and social distancing measures. Overall organic volume declines drove substantial de-leveraging of fixed costs and resultant pressures on consolidated gross margin. This in turn suppressed organic operating margins, leading to a 14% organic profit decline for the full year. Management deferred certain discretionary spending and put in place incremental productivity initiatives, but not to a degree that could fully offset cost headwinds. Despite current challenges, we continue to believe Diageo can leverage its strong product lineup and its in-market infrastructure to take advantage of the increasing penetration of Western spirits in the developing world and the ongoing premiumization tailwind across the industry over time.

Select Series-Large Cap Performance as of 8/31/2020 and 6/30/2020.

Select Series-Large Cap Portfolio Characteristics as of 8/31/2020.

Holdings are subject to change. Totals may not sum due to rounding.

Price/Earnings (P/E) ratio is a company’s current share price divided by earnings per-share.

Turnover ratio is the rate of trading in a portfolio; higher values imply more frequent trading.

Opinions, forecasts, and discussions about investment strategies represent the author’s views as of the date of this commentary and are subject to change without notice. References to specific securities, asset classes, and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as recommendations.

Purchase and sale information provided should not be considered as a recommendation to purchase or sell a particular security and that there is no assurance, as of the date of publication, that the securities purchased remain in a fund's portfolio or that securities sold have not been repurchased.

RISKS

Investors in the Fund should be able to withstand short-term fluctuations in the equity markets and fixed income markets in return for potentially higher returns over the long term. The value of portfolios change every day and can be affected by changes in interest rates, general market conditions and other political, social and economic developments.

The Fund is ‘non-diversified’ and may assume large positions in a small number of issuers which can increase the potential for greater price fluctuation.

International investing involves special risks including currency risk, increased volatility, political risks, and differences in auditing and other financial standards.

For more complete information, visit www.bbhfunds.com for a prospectus. You should consider the fund's investment objectives, risks, charges and expenses carefully before you invest. Information about these and other important subjects is in the fund's prospectus, which you should read carefully before investing.
Shares of the Fund are distributed by ALPS Distributors, Inc. and is located at 1290 Broadway, Suite 1000, Denver, CO 80203.

Brown Brothers Harriman & Co. ("BBH"), a New York limited partnership, was founded in 1818 and provides investment advice to registered mutual funds through a separately identifiable department (the "SID"). The SID is registered with the U.S. Securities and Exchange Commission under the Investment Advisers Act of 1940. BBH acts as the Fund Administrator and is located at 140 Broadway, New York, NY 10005.

Not FDIC Insured                                  No Bank Guarantee                            May Lose Money

IM-08435-2020-09-14                BBH003044        Exp. Date 10/31/2020