What is happening in our world these days? Negative news is everywhere and the volume is staggering, particularly the number of natural disasters. Whether it is the tragic earthquake and tsunami in Japan, tornadoes in the Midwest and South or flooding due to the Mississippi River breaching its banks, media need not embellish the suffering these events caused. A regular dose of this “reality” could easily compromise one’s daily outlook, but I am an optimist. As evidenced, earlier in the year, I conveyed the merits of faith and hope in a client communication. Interestingly, in his annual letter to shareholders, Warren Buffet demonstrated his confidence in the direction of the United States by stating, “Money will always flow toward opportunity, and there is an abundance of that in America.” Perhaps we are both optimists!

Beyond my optimism, facts suggest there is good news to report about Brown Capital Management. We communicate imperatives diligently, in keeping with client contractual obligations, but fail to promote what we believe are exceptional new hires, organizational progress, noteworthy performance and asset growth. With a growing investor base, we will make steady progress to improve in this regard, but the following are brief updates on the aforementioned topics.

• People –The firm hired eight new employees since our last communication of this sort in 2007 (Daman Blakeney, Portfolio Manager/Analyst - Large/Mid Cap Team; Damien Davis, Research Associate – Small Company Team; Duncan Evered, Portfolio Manager/Analyst - International Team; Damon Hall, Trader; Yvonne Ragland, Administration; Sharon Lewis, Administration; Joe Southall, Technology and Melissa Saffran, Operations) growing our employee count to 29. Importantly, our thirteen investment team members average nearly 23 years of industry experience and 10 years at the firm.

• Organization – While I have no plans of decreasing my active involvement or retiring anytime soon, good leadership requires thoughtful, long-term planning. We completed a new plan that will broaden equity ownership to better align the firm’s interests with those of our clients while attracting and retaining top investment professionals. To achieve these objectives, effective December 31, 2010, Brown Capital Management, Inc. became Brown Capital Management, LLC.

• Performance – For the period ending March 31, 2011, 88% of our investment services outpaced primary benchmarks and 100% of median peers over three years, while 57% outpaced benchmarks and 71% of median peers over five years. These results do not ignore one-year outcomes, but seek to reinforce our long-term orientation. Importantly, attribution analysis suggests that the majority of our long-term outperformance is a function of stock selection, a priority as active managers.

• Assets – Many managers use assets under management as a proof statement of their progress. While, as of May 31, 2011, we oversee over $4.0 billion, we believe that after the tumultuous markets and exogenous product claims of the recent past, that there is renewed attention to the tenets that fuel Brown Capital Management, solid company analysis and long-term investing.

We will celebrate the firm’s twenty-eighth anniversary in July, a period of time that afforded us many successes and some failures. Among our recent successes: The Small Company Service, which will soon close to new investors, will celebrate its 20-year anniversary this year. This milestone will occur for the Mid Cap Service next year. The Concentrated Domestic All-Cap Service will celebrate a five-year anniversary in September while the Global Equity Service, launched at a client’s request, celebrated it first anniversary in January.

In closing, while encouraged by the firm’s progress, we recognize that, some, just getting to know us, may be purchasing a return or rating more than the tenets that drove the outcome. If so, we trust this information peaks your interest in learning more about our firm. As stated, we will do a better job of posting information to our website where you can currently find portfolio manager biographies, an overview of the investment programs and a collection of article reprints and summaries. Conversely, for those with the time and resources to perform detailed due diligence, we trust, as stated by Warren Buffet, that “money will always flow toward opportunity…” and that your investment or recommendation reflects your belief that Brown Capital Management is unique in that regard. At least, as an optimist, I hope that you view us that way!

Regards,

Eddie C. Brown
President & CEO


BCM is a registered investment advisor. More information about the advisor, including its investment strategies and objectives, can be obtained by visiting www.browncapital.com. A copy of BCM’s disclosure statement (Part2 of Form ADV) is available, without charge, upon request. Our Form ADV contains information regarding our Firm’s business practices and the backgrounds of our key personnel. Please contact BCM at (800) 809-3863 if you would like to receive this information.

Past performance is not indicative of future results


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