Quick Facts
Ticker:BUFDX
Inception Date:12/3/2012
Total Net Assets:$58.15 Million  (3/31/19)
Expense Ratio:0.95%
Dividend Distribution:Quarterly
Category:Large Cap Blend
Benchmark:Morningstar U.S. Large-Mid Cap
Related Material:
   Fund Fact Sheet Q1 2019
   PM Commentary Q1 2019
   Summary Prospectus
FUND OBJECTIVE & INVESTMENT PROCESS

The investment objective of the Buffalo Dividend Focus Fund is primarily current income, with long-term growth of capital as a secondary objective.

To pursue its investment objective, the Fund invests in dividend-paying equity securities, consisting of domestic common stocks, preferred stocks, and convertible securities. During normal market conditions, at least 80% of the Fund’s assets will be invested in dividend-paying equity securities, companies that declare and pay cash dividends on at least an annual basis.

While the Fund may invest in securities of companies of any size, the Fund managers expect the majority of common stocks purchased will be of large-cap companies, those with market capitalizations in excess of $10 billion at the time of initial purchase. In addition to investments in domestic securities, the Fund may invest up to 20% of its net assets in sponsored or unsponsored ADRs and securities of foreign companies that are traded on U.S. stock exchanges.

|

We are focused on buying dividend-paying companies that can have sustainable competitive advantages, generate strong return on capital and free cash flow, have conservative balance sheets, and have great management teams.

We seek to buy these companies at reasonable valuations and believe that holding them for the long-term will generate favorable risk adjusted returns.

Paul Dlugosch, Portfolio Manager

Morningstar Rating

       

Overall Morningstar Rating™ based on risk-adjusted returns among 1,197 Large Blend funds as of 5/31/19.

Investment Style

Performance (%)

As of 5/31/193 MOYTD1 YR3 YR5 YRSince Inception
(12/3/12)
BUFFALO DIVIDEND FOCUS FUND-0.05  9.373.3910.169.0511.79
  Morningstar U.S. Large-Mid Cap Index-0.7311.174.4111.749.4713.14
  S&P 500 Index-0.6710.743.7811.729.6613.19
  Morningstar Large Blend Category-1.39  9.881.8310.057.7911.11
As of 3/31/193 MOYTD1 YR3 YR5 YRSince Inception
(12/3/12)
BUFFALO DIVIDEND FOCUS FUND10.9010.907.4811.3410.2112.36
  Morningstar U.S. Large-Mid Cap Index13.9913.999.4313.5110.6313.96
  S&P 500 Index13.6513.659.5013.5110.9114.03
  Morningstar Large Blend Category12.9412.946.9011.848.9111.89

* Partial year. Inception to year-end.

Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the fund may be lower of higher than the performance quoted and can be obtained here. Performance is annualized for periods greater than 1 year. Each Morningstar category average represents a universe of funds with similar objectives.

As of July 27, 2018 the Morningstar U.S. Large-Mid Cap Index has replaced the S&P 500 Index as the Fund’s primary benchmark. The Advisor believes that the new index is more appropriate given the Fund’s holdings.

3 Year Risk Metrics
vs Morningstar U.S. Large-Mid Cap Index (As of 3/31/19)
Upside Capture87.78
Downside Capture96.75
Alpha-0.70
Beta0.90
Sharpe Ratio1.03
Hypothetical Growth of $10,000

This chart illustrates the performance of a hypothetical $10,000 investment made in the Fund on the Inception Date. Assumes reinvestment of dividends and capital gains. This chart does not imply future performance.

Distributions
Payable
Date
Distribution
NAV
Net Investment
Income
Short-Term Capital
Gains
Long-Term Capital
Gains
Distribution
Total
3/19/19$16.72$0.05232873--$0.05232873
12/18/18$15.33$0.08791977$0.02500$0.51339$0.62630977
9/18/18$17.96$0.05499230--$0.05499230
6/19/18$16.99$0.05791680--$0.05791680
3/20/18$16.72$0.04369471--$0.04369471
12/19/17$16.73$0.05315489$0.15204-$0.20519489
9/19/17$15.79$0.05107348--$0.05107348
6/20/17$15.53$0.04405814--$0.04405814
3/20/17$15.37$0.04662158--$0.04662158
12/20/16$14.58$0.04502534$0.06489$0.03508$0.14499534
9/20/16$13.78$0.04538819--$0.04538819
6/20/16$13.34$0.04391608--$0.04391608
3/18/16$13.15$0.04845082--$0.04845082
12/18/15$12.88$0.04061333$0.14263$0.11942$0.30266333
9/18/15$12.94$0.03816853--$0.03816853
6/18/15$14.29$0.04120635--$0.04120635
3/18/15$13.89$0.04200730--$0.04200730
12/18/14$13.53$0.03066401$0.54808$0.10086$0.67960401
9/18/14$13.50$0.02424009--$0.02424009
6/18/14$13.05$0.03496855--$0.03496855
3/18/14$12.11$0.03702784--$0.03702784
12/18/13$11.56$0.04725764$0.38271-$0.42996764
9/18/13$11.47$0.03960545--$0.03960545
6/18/13$11.13$0.03967611--$0.03967611
3/19/13$10.36$0.01492578--$0.01492578
2019 Distribution Dates:

Record Date: June 17 | Payable Date: June 18

Record Date: September 17 | Payable Date: September 18

Record Date: December 17 | Payable Date: December 18


Portfolio

Portfolio Characteristics
(As of 3/31/19) 
 
# of Holdings82
Median Market Cap$92.12 B
Weighted Average Market Cap$228.84 B
3-Yr Annualized Turnover Ratio22.59%
% of Holdings with Free Cash Flow73.08%
30-day SEC Yield1.50%
Top 10 Holdings
HoldingTicker / MaturitySector% of Net
Assets
MicrosoftMSFTTechnology4.43%
VisaVFinancial Services3.47%
AppleAAPLTechnology2.98%
8x80.500%, 2/1/24Communications2.65%
The Walt Disney CoDISConsumer Discretionary2.29%
American Electric PowerAEPUtilities2.26%
AnthemANTMHealth Care2.11%
JPMorgan ChaseJPMFinancial Services1.91%
Bank of AmericaBACFinancial Services1.90%
Berkshire HathawayBRK/BFinancial Services1.87%
TOP 10 HOLDINGS TOTAL25.87%
As of 3/31/19. Top 10 Holdings for the quarter are not disclosed until 60 days after quarter end. Fund holdings are subject to change and are not recommendations to buy or sell any securities.
Sector Weighting

As of 3/31/19. Security weightings are subject to change and are not recommendations to buy or sell any securities. Sector Allocation may not equal 100% due to rounding.

Market Capitalization

As of 3/31/19. Market Cap percentages may not equal 100% due to rounding.

Management

Paul Dlugosch, CFA
Portfolio Manager

22 Years of Experience

 View full bio

Jeff Sitzmann, CFA
Portfolio Manager

32 Years of Experience

 View full bio

Jeff Deardorff, CFA
Portfolio Manager

21 Years of Experience

 View full bio

Commentary

CAPITAL MARKET OVERVIEW

(As of 3/31/19) — Equity markets rebounded sharply to start 2019. The widely followed S&P 500 Index returned 13.65% in the 1st quarter, its best quarterly performance in 10 years. The market advance can be largely attributed to the Federal Reserve’s decision to put quarterly short term interest rate hikes on hold and end its balance sheet runoff. Additionally, prospects for a trade agreement between the U.S. and China appeared to improve, and the U.S. Government reopened after its longest shut down in history.

The Russell 3000 Index advanced 14.04% in the 1st quarter. Growth outperformed value, with the Russell 3000 Growth Index returning 16.18% compared to a return of 11.93% for the Russell 3000 Value. By size, midcaps led the way this quarter with the Russell Midcap Index returning 16.54%, followed by a return of 14.58% for the small cap Russell 2000 Index and 14.00% for the large cap Russell 1000 Index. Technology, Real Estate, and Industrials were the best performing sectors, while Health Care and Financials were relative underperformers.

PERFORMANCE COMMENTARY

(As of 3/31/19) — The Buffalo Dividend Focus Fund posted a return of 10.90%, underperforming the Morningstar U.S. Large-Mid Cap Index return of 13.99% and the S&P 500 Index return of 13.65%. Sector weightings and security selection hindered the Fund’s relative performance. The Fund’s highest weighted sectors (Financials, Health Care, and Information Technology) posted positive returns, however, they lagged returns relative to comparable index sectors. On the other hand, some of the Fund’s least weighted sectors (Energy, Real Estate, and Utilities – comprising less than 14% of Fund assets) had returns greater than the comparable index sectors.

Top Contributors
Specific securities that contributed most positively to performance included Microsoft, Visa, and Apple. Microsoft improved on growing momentum from its cloud services and enterprise products. Visa advanced on a favorable earnings release and healthy transaction volumes. Apple rose on positive earnings relative to expectations and prospects for continued growth in its services business.

Top Detractors
Specific securities that detracted from performance included CVS Health Corp., CME Group, and AbbVie Inc. CVS fell on weak earnings forecast due to rising costs, poor results from its Omnicare unit, and integration with its recent purchase of Aetna. CME Group dropped primarily due to lower trading volumes and reduced volatility levels. AbbVie declined on weaker than expected results and concerns regarding generic completion for its top selling drug (Humira).

OUTLOOK

(As of 3/31/19) — After experiencing consecutive quarters of double-digit markets moves (one negative and one positive), we expect the market to encounter continued volatility in the coming quarters, as the Federal Reserve has paused rate increases and future actions are expected to be data dependent. Other market concerns include inflation expectations, potential strengthening of the U.S. dollar, vagaries regarding protectionism efforts from the Administration, evolving geopolitical risks, slowing economic growth and prospects for a recession to develop, rising energy prices, and the divided Congress. Valuation metrics, while off recent highs, are still above historical market averages, leading us to believe the stock market may have a difficult time achieving further multiple expansion. On the other hand, prospective tailwinds for the economy include further job growth, wage increases, lower tax rates, and robust business and consumer confidence, all of which could lead to higher Gross Domestic Product (GDP) growth.

Despite the expectation of continued volatility, we remain focused on wide moat, large capitalization companies that are competitively advantaged and trading at reasonable valuations, in our view. If stock market volatility spikes, we will look for opportunities to find companies that fit our investment criteria, as we continue to follow our process of finding new investment ideas and to be ready when market declines provide better entry points.

The opinions expressed are those of the Portfolio Manager(s) and are subject to change, are not guaranteed and should not be considered recommendations to buy or sell any security. Earnings growth is not representative of the fund’s future performance.

Fundamental Approach

We get to know the companies we invest in and learn how they run their business.

Top-Down & Bottom-Up

We identify Top-Down broad, secular growth trends and search for companies from the Bottom-Up.

Proprietary Philosophy

We construct our portfolios based on our own proprietary investment strategy.

Disciplined Investing

Sticking to our disciplined investment strategy ensures we maintain a consistent, balanced approach.

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.

The Buffalo Dividend Focus Fund received 3 stars among 1197 for the three-year period and 4 stars among 1065 Large Blend funds for the five-year period ending 5/31/19.

In each Morningstar Category, the 10% of funds with the lowest measured risk are described as Low Risk, the next 22.5% Below Average, the middle 35% Average, the next 22.5% Above Average, and the top 10% High. Morningstar Risk is measured for up to three time periods (three, five, and 10 years). These separate measures are then weighted and averaged to produce an overall measure for the fund. Funds with less than three years of performance history are not rated. ©2018 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (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. The Morningstar Style Box™ reveals a fund’s investment strategy by showing its investment style and market capitalization based on the fund’s portfolio holdings.