Quick Facts
InvestorInstitutional
Ticker:BUFDXBUIDX
Inception Date:12/3/20127/1/2019
Expense Ratio:0.96%0.81%
Total Net Assets:$65.63 Million  (3/31/20)
Category:Large Cap Blend
Benchmark:Morningstar U.S. Large-Mid Cap
Dividend Distribution:Quarterly
Related Material:
   Fund Fact Sheet Q1 2020
   PM Commentary Q1 2020
   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.

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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™ of BUFDX based on risk-adjusted returns among 1,232 Large Blend funds as of 5/31/20.

Investment Style

Performance (%)

As of 5/31/203 MOYTD1 YR3 YR5 YRSince Inception
(12/3/12)
BUFFALO DIVIDEND FOCUS FUND - Investor1.59-6.069.657.647.3311.50
BUFFALO DIVIDEND FOCUS FUND - Institutional1.58-6.019.817.807.4911.66
  Morningstar U.S. Large-Mid Cap Index3.79-4.4413.1310.399.6813.14
  S&P 500 Index3.59-4.9712.8410.239.8613.14
  Morningstar Large Blend Category1.77-7.118.707.807.5810.77
As of 3/31/203 MOYTD1 YR3 YR5 YRSince Inception
(12/3/12)
BUFFALO DIVIDEND FOCUS FUND - Investor-20.35-20.35-8.322.264.649.29
BUFFALO DIVIDEND FOCUS FUND - Institutional-20.31-20.31-8.172.414.799.45
  Morningstar U.S. Large-Mid Cap Index-19.75-19.75-7.354.986.3510.78
  S&P 500 Index-19.60-19.60-6.985.106.7310.90
  Morningstar Large Blend Category-20.92-20.92-9.972.804.468.64

* Partial year. Inception to year-end.

For performance prior to 7/1/19 (Inception Date of Institutional Class), performance of the Investor Class shares is used and includes expenses not applicable and lower than those of Investor Class shares.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.
3 Year Risk Metrics
BUFDX vs Morningstar U.S. Large-Mid Cap Index (As of 3/31/20)
Upside Capture81.74
Downside Capture97.79
Alpha-2.35
Beta0.94
Sharpe Ratio0.04
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
6/18/20$18.26 (Inv)

$18.26 (Inst)
$0.03034499

$0.03590278
-

-
-

-
$0.03034499

$0.03590278
3/18/20$14.07 (Inv)

$14.07 (Inst)
$0.03107063

$0.03831320
-

-
-

-
$0.03107063

$0.03831320
12/18/19$18.82 (Inv)

$18.82 (Inst)
$0.04196909

$0.04964262
-

-
-

-
$0.04196909

$0.04964262
9/18/19$17.80 (Inv)

$17.80 (Inst)
$0.04731858

$0.05327159
-

-
-

-
$0.04731858

$0.05327159
6/18/19$17.20$0.06566509--$0.06566509
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
2020 Distribution Dates:

Record Date: September 17, 2020 | Payable Date: September 18, 2020

Record Date: December 17, 2020 | Payable Date: December 18, 2020


Portfolio

Portfolio Characteristics
(As of 3/31/20) 
 
# of Holdings77
Median Market Cap$57.07 B
Weighted Average Market Cap$254.60 B
3-Yr Annualized Turnover Ratio24.31%
% of Holdings with Free Cash Flow66.67%
30-day SEC Yield1.55%
Top 10 Holdings
HoldingTicker / MaturitySector% of Net
Assets
MicrosoftMSFTTechnology5.11%
AppleAAPLTechnology3.63%
VisaVFinancial Services3.22%
Edison IntlEIXUtilities2.59%
UnitedHealth GroupUNHHealth Care2.16%
S&P GlobalSPGIFinancial Services1.95%
American Electric PowerAEPUtilities1.94%
Johnson & JohnsonJNJHealth Care1.67%
AmazonAMZNConsumer Discretionary1.66%
Lumentum Holdings(12/15/2026, 0.500%)Technology1.58%
TOP 10 HOLDINGS TOTAL25.51%
As of 3/31/20. 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 3/31/20. 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 3/31/20. 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 3/31/20) — Global equity markets fell sharply in the 1st quarter of 2020 in reaction to the global spread of COVID-19. As the case count increased exponentially, the only effective response was for countries to go into lockdown. The economic impact of these actions became clear as the quarter progressed and virtually all asset classes suffered as a result. From February 19 through March 23, the U.S. stock market, as measured by the S&P 500 Index, declined around 34%, which was the fastest meltdown in history. Central banks and governments responded quickly to this event, with the U.S. Federal Reserve (the “Fed”) cutting interest rates twice in March and announcing unlimited quantitative easing. The U.S. Senate passed a $2 trillion stimulus package, providing assistance to individuals and businesses in distress. Optimism around these efforts helped the market rally into quarter end, leaving the S&P 500 Index down 19.60% from the start of the year.

The broad market Russell 3000 Index declined 20.90% in the 1st quarter. Growth outperformed value, with the Russell 3000 Growth Index declining 14.85% compared to the Russell 3000 Value Index decline of 27.32%. By capitalization size, large cap stocks held up best, with a -20.22% return in the quarter, represented by the Russell 1000 Index. The Russell Mid Cap Index fell -27.07%, followed by the smaller cap Russell 2000 Index which declined -30.61%. Best performing sectors were the Technology, Health Care, and Consumer Staples sectors. The Energy sector was hit hardest as falling demand and rising supply from Saudi Arabia caused oil prices to crater. The economically-sensitive Financial and Industrial sectors were also among the worst performing sectors in the quarter.

PERFORMANCE COMMENTARY

(As of 3/31/20) — The Buffalo Dividend Focus Fund (BUFDX) posted a return of -20.35%, slightly underperforming the Morningstar U.S. Large-Mid Cap Index return of -19.75% and the S&P 500 Index return of -19.60%. All sectors in the benchmark index posted double-digit
negative returns. The Fund’s sector performance experienced similar negative returns, with the exception of the Real Estate sector, which delivered a single-digit positive return. The Fund’s sectors with the highest weightings had mixed performance relative to the Index. Information Technology and Financials posted favorable relative performance compared to the benchmark, while Health Care experienced lagging relative returns. In addition to Real Estate, our Consumer Discretionary and Consumer Staples holdings also delivered constructive performance relative to the benchmark. Areas of the Fund that
detracted from performance included Utilities, Industrials, and Energy.

Top Contributors

Specific securities that contributed most positively to performance included Community Healthcare Trust (CHCT), Amazon (AMZN), and Digital Realty Trust (DLR). Fund management initiated a new position in Community Healthcare Trust, a health care real estate company, in the quarter during the general market sell-off. Shares of Amazon advanced, as the company’s operations are expected to benefit from the trend in consumers increasingly shifting to on-line buying as they work from home due to shelter-in-place orders. Digital Realty Trust, a provider of data centers, is another recently-added position that contributed to Fund results through timely purchases of
shares during the volatile quarter.

Top Detractors

Specific securities that detracted from performance included Energy Transfer, L.P. (ET), Viper Energy Partners L.P. (VNOM), and Truist Financial Corporation (TFC, formerly known as BB&T). Energy Transfer, an energy transportation services company, and Viper Energy Partners, a leased oil and gas properties company, dropped as energy prices plunged in response to the failure of an agreement between the Organization of the Petroleum Exporting Countries (OPEC) members on production cutbacks as well as the drop in demand caused by the Coronavirus pandemic. Meanwhile shares of Truist Financial Corporation fell on general economic decline and as a result of lower interest rates, as the Fed cut its benchmark lending rate to zero.

OUTLOOK

(As of 3/31/20) — The primary driver of the sharp decline in the stock market during the quarter was the Covid-19 pandemic and efforts to contain it, which has inflicted economic damage. Governments and healthcare experts have responded to the crisis by issuing stay at home orders to try to curtail the spread of the disease, new infections, and fatalities. The economic impact has resulted in a sharp decline in spending and an explosion in unemployment. To limit the economic damage, governments have passed and
are passing various financial aid programs in addition to health care measures to combat the pandemic. Central Banks have also cut benchmark lending rates and have expanded their balance sheets as they buy various assets of eligible securities. The fiscal and monetary response to the pandemic has been relatively swift and expansive, with indications that, if conditions do not improve, they will do “whatever it takes.”
Their efforts so far are encouraging and markets have begun to rebound. Over the intermediate term, the pandemic will need to be contained through a combination of better testing, improved therapies, vaccine development, and seasonal curtailment.
Hopefully, through these measures, the economy may begin to recover and generate sustainable growth.

Despite the uncertainty, we remain focused on wide moat, competitively-advantaged large capitalization companies trading at reasonable valuations, in our view. As stock market volatility spikes, we will look for opportunities to buy shares of 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.

Literature

General Account
Forms
Investor
Class
Institutional
Class
Both
  New Account Application
  New Account Application - Entity
  Change or Add Account Details
  Cost Basis Method Election
  Power of Attorney
Individual Retirement Account (IRA) Forms
  RMD Waiver   NEW
  IRA Account Application
  IRA Beneficiary Addition / Change
  IRA Required Minimum Distribution (RMD)
  IRA / Qualified Plan Distribution Request
  IRA Transfer
Coverdell Education Savings Accounts (ESA) Forms
  Coverdell ESA Application
  Coverdell ESA Distribution Request
  Coverdell ESA Transfer
Retirement Information
  Retirement Savings Options for Individuals

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 (BUFDX) received 3 stars among 1,232 for the 3-year period and 3 stars among 1,055 Large Blend funds for the 5-year period ending 5/31/20.

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. ©2020 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.