Mutual Fund Summary Prospectus (497k)
August 02 2013 - 4:42PM
Edgar (US Regulatory)
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Brown Capital Management Small Company Fund
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Summary Prospectus | July 29, 2013
Investor Shares (BCSIX)
CUSIP Number 115291833
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BROWN CAPITAL MANAGEMENT
Before you invest, you may want to review the Funds Prospectus, which contains more information
about the Fund and its risks. You can find the Funds Prospectus and other information about the
Fund online at www.browncapital.com. You can also get this information at no cost by calling 1-877-892-4BCM (1-877-892-4226) or by sending an e-mail request to information@browncapital.com. The
Funds Prospectus and Statement of Additional Information dated July 29, 2013 are incorporated by
reference into this Summary Prospectus.
Investment Objective.
The Small Company Fund seeks long-term capital appreciation. Current income is
a secondary consideration in selecting portfolio investments.
Fees and Expenses of the
Fund.
These tables describe the fees and expenses that you may pay if you buy
and hold shares of the Small Company Fund.
Shareholder
Fees
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(fees paid
directly from your investment)
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Investor
Shares
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Maximum Sales
Charge (Load) Imposed On Purchases
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(as
a percentage of offering price)
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None
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Redemption
Fee (as a percentage of amount redeemed)
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None
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Annual Fund Operating Expenses
(expenses that you pay each year as a % of the value of your investment)
Management
Fees
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1.00
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%
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Distribution
and/or Service (12b-1) Fees
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0.20
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%
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Other Expenses
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0.07
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%
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Acquired Fund
Fees and Expenses
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0.01
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%
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Total Annual
Fund Operating Expenses
1,2
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1.28
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%
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1.
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Total Annual Fund Operating Expenses does not correlate to the ratio of expenses to average net assets provided in the
Financial Highlights. The information in the Financial Highlights reflects the operating expenses of the Fund and does not
include Acquired Fund Fees and Expenses.
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2.
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The Advisor has entered into an Expense Limitation Agreement with the Small Company Fund under which it has agreed to
reduce the amount of the investment advisory fees to be paid to the Advisor by the Small Company Fund and to assume
other expenses of the Small Company Fund, if necessary, in an amount that limits the Small Company Funds annual
operating expenses (other than interest, taxes, brokerage commissions, acquired fund fees and expenses, other
expenditures which are capitalized in accordance with generally accepted accounting principles, other extraordinary
expenses not incurred in the ordinary course of the Small Company Funds business, and amounts, if any, payable under
a Rule 12b-1 distribution plan) to not more than 1.25% until July 31, 2014. The Expense Limitation Agreement may not be
terminated by either party prior to that date. Subject to certain conditions such as Fund asset levels being at certain
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thresholds and operating expenses for the Small Company Fund being less than the operating expense limit for the Small
Company Fund, the Small Company Fund may at a later date reimburse the Advisor for fees waived or limited and other
expenses assumed by the Advisor pursuant to the Expense Limitation Agreement. Reimbursement for fees previously
waived are subject to Board approval and are only applicable to fees waived or limited and other expenses assumed by the
Advisor in the prior three (3) fiscal years.
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Example
. This example is intended to help you compare the cost of investing in the Small Company Fund
with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Small Company
Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also
assumes that your investment has a 5% return each year and the Small Company Funds operating expenses remain the
same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
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1 Year
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3 Years
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5 Years
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10 Years
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Investor
Shares
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$130
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$406
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$702
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$1,543
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Portfolio
Turnover
. The Small Company Fund pays transaction costs, such as commissions,
when it buys and sells securities (or turns over its portfolio). A higher
portfolio turnover rate may indicate higher transaction costs and may result in
higher taxes when the Small Company Fund shares are held in a taxable account. These
costs, which are not reflected in annual fund operating expenses or in the example,
affect the Small Company Funds performance. During the most recent fiscal
year, the Small Company Funds portfolio turnover rate was 15% of the average
value of its portfolio.
Principal Investment Strategies.
The Small Company Fund invests at least 80% of its assets in the equity securities
of those companies with total operating revenues of $250 million or less at the
time of the initial investment, (small companies). The Small Company
Fund typically invests in common stocks, but has the ability to invest in other
types of equity securities such as preferred stocks, convertible bonds, and warrants.
The Advisor seeks to build a portfolio of exceptional small companies with the wherewithal
to become exceptional large companies.
While the Small Company Fund is managed
in a benchmark agnostic manner, the Small Company Fund is commonly compared to the
Russell 2000 Growth and Russell 2000 Indices. Both of these benchmarks are widely-recognized
unmanaged indices of small capitalization common stocks.
The Advisor believes that:
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a sustained
commitment to a portfolio of exceptional small companies will, over time, produce
a significant investment return and
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an investment analysis that identifies and successfully evaluates those few small
companies with the legitimate potential to become large companies can be a very
rewarding investment strategy.
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The Advisor employs analysis that:
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contains
elements of traditional dividend discount and earnings yield models;
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establishes
relative valuation for equity markets; and
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determines
the attractiveness of individual securities through evaluation of growth and risk
characteristics of the underlying company relative to the overall equity market.
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The Advisor identifies small companies with
the potential to become successful large companies by analyzing the potential for:
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sustainable
revenue growth;
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adequate
resources to establish and defend a viable product or service market, and market
share;
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sufficient
profitability to support long term growth; and
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management
skills and resources necessary to plan and execute a long-term growth plan.
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The Advisor generally expects to hold securities
for the long term, although securities will be sold when the Advisor feels their
potential for future growth is diminished.
Principal Risks of Investing in the Fund.
An investment in the Small Company Fund is subject to investment risks, including
the possible loss of some or all of the principal amount invested. There can be
no assurance that the Small Company Fund will be successful in meeting its investment
objective. Generally, the Small Company Fund will be subject to the following risks:
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Market
Risk:
Market risk refers to the possibility that the value of equity securities
held by the Small Company Fund may decline due to daily fluctuations in the securities
markets.
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Investment
Style Risk:
The performance of the Small Company Fund may be better or worse
than the performance of stock funds that focus on other types of stocks or have
a broader investment style.
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Investment
Advisor Risk:
The Advisors ability to choose suitable investments has
a significant impact on the ability of the Small Company Fund to achieve its investment
objectives.
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Market
Sector Risk:
The percentage of the Small Company Funds assets invested
in various industries and sectors will vary from time to time depending on the Advisors perception of investment opportunities. Investments in particular industries
or sectors may be more volatile than the overall stock market.
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Equity
Securities Risk:
To the extent that the majority of the Small Company Funds
portfolio consists of common stocks, it is expected that the Small Company Funds net asset value will be subject to greater price fluctuation than a portfolio
containing mostly fixed income securities.
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Small
Companies Risk:
Investing in the securities of small companies generally involves
greater risk than investing in larger, more established companies. Although investing
in securities of small companies offers potential above-average returns if the companies
are successful, the risk exists that the companies will not succeed and the prices
of the companies shares could significantly decline in value.
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Portfolio
Turnover Risk:
Although the Advisor intends to hold the Small Company Funds
portfolio securities for the long-term, the Small Company Fund may sell portfolio
securities without regard to the length of time they have been held. The Small Company
Funds portfolio turnover rate is expected to be less than 100%, but could
be higher in any given year. As a higher portfolio turnover rate may involve paying
brokerage commissions and other transactions costs, it could result in additional
expenses for the Small Company Fund.
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Performance Information.
The bar
chart and table shown below provide an indication of the risks of investing in the
Investor Shares of the Small Company Fund by showing changes in the Small Company
Funds performance from year to year and by showing how the Small Company Funds
average annual total returns compare to that of two broad-based securities market indexes. Prior to November 30, 2011, the Investor Shares did not have a 12b-1
fee. The performance reflected in the bar chart has been restated to
3
reflect the effect of the 12b-1 fee for
the Investor Shares. The Small Company Funds past performance is not necessarily
an indication of how the Small Company Fund will perform in the future. Updated
information on the Small Company Funds results can be obtained by visiting
http://www.browncapital.com/small-funds-overview.html.
Calendar Year Returns
Quarterly Returns During This Time Period
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Highest
return for a quarter
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21.93%
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Quarter
ended
June 30, 2003
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Lowest return
for a quarter
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-23.13%
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Quarter
ended
December 31, 2008
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Year-to-date
return as of most recent quarter
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15.54%
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Quarter
ended
June 30, 2013
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Average Annual Total Returns
Periods Ended December 31, 2012
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Past 1
Year
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Past 5
Years
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Past 10
Years
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Small Company Fund
Before taxes
After taxes on distributions
After taxes on distributions
and sale of shares
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17.47%
17.18%
11.72%
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7.95%
7.84%
6.87%
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11.83%
11.44%
10.51%
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Russell 2000® Index
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16.35%
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3.56%
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9.72%
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Russell 2000® Growth Index
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14.59%
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3.49%
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9.80%
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After-tax returns are calculated using the
historical highest individual federal marginal income tax rates and do not reflect
the impact of state and local taxes. Actual after-tax returns depend on an investors tax situation and may differ from those shown and are not applicable to investors
who hold Fund shares through tax-deferred arrangements such as a 401(k) plan or
an individual retirement account (IRA).
Management.
Investment
Advisor.
Brown Capital Management, LLC is the Small Company Funds Investment
Advisor.
Portfolio
Managers.
The Small Company Fund is team-managed by Keith A. Lee (President
and Chief Operating Officer of the Advisor), Robert E. Hall (Managing Director and
Senior Portfolio Manager of the Advisor), Kempton M. Ingersol (Managing Director
and Senior Portfolio Manager of the Advisor), Amy Y. Zhang (Managing Director and
Senior Portfolio Manager of the Advisor), and Damien Davis (Portfolio Manager of
the Advisor). Mr. Lee and Mr. Hall have each served as portfolio manager for the
Small Company Fund since its inception in 1992, Mr. Ingersol has served as portfolio
manager since
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2000, Ms. Zhang has served as portfolio
manager since 2002, and Mr. Davis has served as portfolio manager since 2013.
Purchase and Sale of Fund Shares.
The Funds minimum initial investment for Investor Shares is $5,000 ($2,000
for IRA and Keogh Plans). The Funds minimum subsequent investment is $500
($100 under an automatic investment plan).
Purchase and redemption orders by mail should
be sent to the Brown Capital Management Mutual Funds, specifying Fund name and share
class, c/o ALPS Fund Services, Inc., P.O. Box 1466, Denver, Colorado 80201. Redemption
orders by facsimile should be transmitted to 1-866-205-1499. Please call the Fund
at 1-877-892-4BCM (1-877-892-4226) to conduct telephone transactions or to receive
wire instructions for bank wire orders. The Fund has also authorized certain broker-dealers
to accept purchase or redemption orders on its behalf. Investors who wish to purchase
or redeem Fund shares through a broker-dealer should contact the broker-dealer directly.
Tax Information.
The Funds
distributions are taxable, and will be taxed as ordinary income or capital gains,
unless you are investing through a tax deferred arrangement (in such arrangement
taxes will be deferred until a later time), such as a 401(k) plan or an individual
retirement account.
Payments to Broker-Dealers and Other
Financial Intermediaries.
If you purchase shares of the Fund through a broker-dealer
or other financial intermediary (such as a bank), the Fund and its related companies
may pay the intermediary for the sale of Fund shares and related services. These
payments may create a conflict of interest by influencing the broker-dealer or other
intermediary and your salesperson to recommend the Fund over another investment.
Ask your salesperson or visit your financial intermediarys website for more
information.
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