Quick Facts
InvestorInstitutional
Ticker:BUFDXBUIDX
Inception Date:12/3/20127/1/2019
Expense Ratio:0.96%0.81%
Total Net Assets:$75.78 Million  (6/30/20)
Category:Large Cap Blend
Benchmark:Morningstar U.S. Large-Mid Cap
Dividend Distribution:Quarterly
Related Material:
   Fund Fact Sheet Q2 2020
   PM Commentary Q2 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 1,223 Large Blend funds as of 8/31/20.

Investment Style

Performance (%)

As of 8/31/203 MOYTD1 YR3 YR5 YRSince Inception
(12/3/12)
BUFFALO DIVIDEND FOCUS FUND - Investor12.265.4615.3911.3611.6212.78
BUFFALO DIVIDEND FOCUS FUND - Institutional12.355.6015.5611.5411.8012.95
  Morningstar U.S. Large-Mid Cap Index16.3611.2023.3114.9714.4614.91
  S&P 500 Index15.489.7421.9414.5214.4614.80
  Morningstar Large Blend Category13.525.7616.5011.5811.8312.20
As of 6/30/203 MOYTD1 YR3 YR5 YRSince Inception
(12/3/12)
BUFFALO DIVIDEND FOCUS FUND - Investor19.93-4.475.678.178.2611.61
BUFFALO DIVIDEND FOCUS FUND - Institutional19.97-4.405.848.338.4211.78
  Morningstar U.S. Large-Mid Cap Index21.76-2.298.1310.9610.5913.32
  S&P 500 Index20.54-3.087.5110.7310.7313.28
  Morningstar Large Blend Category19.61-5.483.748.158.3510.88

* 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 6/30/20)
Upside Capture84.58
Downside Capture97.79
Alpha-2.06
Beta0.95
Sharpe Ratio0.40
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
9/18/20$19.13 (Inv)

$19.13 (Inst)
$0.03170945

$0.03903915
-

-
-

-
$0.03170945

$0.03903915
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: December 17, 2020 | Payable Date: December 18, 2020


Portfolio

Portfolio Characteristics
(As of 6/30/20) 
 
# of Holdings91
Median Market Cap$58.10 B
Weighted Average Market Cap$345.44 B
3-Yr Annualized Turnover Ratio22.45%
% of Holdings with Free Cash Flow67.53%
30-day SEC Yield1.27%
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 6/30/20. 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 6/30/20. 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 6/30/20) — Equity markets rebounded sharply in the 2nd quarter following steep losses in the previous period. The S&P 500 Index produced a return of 20.54%, marking the best quarterly performance results in 20 years. Stimulus efforts by the Federal Reserve (the “Fed”) and the U.S. Treasury Department to limit COVID-related economic damage helped equity markets find a floor in late March. Declining COVID-19 case counts, optimism about treatment and potential vaccines, along with better-than-expected economic data also contributed to improved investor sentiment during the period. Although confirmed virus cases began spiking again in the final days of June, it was not enough to undo the best quarterly market results since the dot-com boom.

The broad market Russell 3000 Index advanced 22.03% in the quarter, and Growth outperformed Value as the Russell 3000 Growth Index moved up 27.99% during the period, compared to the Russell 3000 Value Index’s advance of 14.55%. Relative performance was inversely-correlated by market cap as the Russell Micro Cap Index advanced 30.54%, well above the large cap Russell 1000 Index’s return of 21.82%. Meanwhile the small cap Russell 2000 Index and the Russell Mid Cap Index were up 25.42% and 24.61%, respectively. The best performing sectors were Technology, Consumer Discretionary, and Energy while the less cyclically exposed, more defensive areas like Utilities, Telecommunication, and Consumer Staples lagged in the quarter.

PERFORMANCE COMMENTARY

(As of 6/30/20) — The Buffalo Dividend Focus Fund (BUFDX) posted a return of 19.93% during the period, a result that slightly trailed the Morningstar U.S. Large-Mid Cap Index return of 21.76% and the S&P 500 Index return of 20.54%. All sectors in the Fund and benchmark Index posted positive returns. The Fund’s sectors with the highest weightings had mixed performance relative to the Index. Health Care and Financials posted favorable relative performance compared to the benchmark’s sectors, while Information Technology experienced lagging relative returns. Smaller-weighted sectors like Industrials, Energy, and Utilities also delivered constructive performance relative to the benchmark, while Consumer Discretionary, Consumer Staples, Materials, and Telecommunications Services experienced weaker stock selection.

Top Contributors

Specific securities that contributed most positively to performance include Apple Inc. (AAPL), Microsoft Corporation (MSFT), and Horizon Therapeutics Investments Ltd. (HZNP). Apple advanced on solid quarterly results, guidance on iPhone sales, strength in services, and the expected rebound in COVID-19 disruptions. Microsoft improved on growing momentum from cloud services and enterprise products, which boosted quarterly results above analyst’s estimates and drove expansion in the company’s valuation metrics. Meanwhile, shares of the biopharmaceuticals company Horizon Therapeutics rose on strong quarterly results, driven by the launch of Tepezza for thyroid eye disease and favorable study data on Krystexxa in combination with immunomodulation (methotrexate).

Top Detractors

Conversely, Delta Airlines Inc. (DAL), Elanco Animal Health, Inc. (ELAN), and Otis Worldwide Corp. (OTIS) were the largest detractors from the Fund’s performance. Delta declined on reduced demand for airline travel due to COVID-19. Elanco Animal Health fell on poor quarterly results due to distributor inventory destocking. While OTIS, the elevator and escalator manufacturing and installation company, dropped as the investor base digested the shares from the spin out from United Technologies (now Raytheon Technologies). All three positions were liquidated during the quarter in favor of more attractive risk-reward opportunities.

OUTLOOK

(As of 6/30/20) — The primary driver of the sharp rise in the stock market during the quarter was the expectations that the economy can recover from the COVID-19 pandemic. Central Banks have cut benchmark lending rates and expanded their balance sheets as they buy various assets of eligible securities. Investors have reacted by accumulating more risk assets as they have been driven by the need to boost returns as well as the perception that Central Banks stand ready as a backstop to bail them out. The fiscal stimulus and financial aid programs passed by governments have begun to work their way into the economy. If the economy does not recover, politicians appear to be reluctantly willing to pass additional stimulus as needed. In addition, during the quarter, COVID-19 cases started to decline from peak levels, allowing domestic and international regions to reduce shelter in place orders and slowly get back to work. Nevertheless, as the restrictions are relaxed, the COVID-19 case count has begun to accelerate from trough levels. However, policy makers appear reluctant to re-impose shelter in place orders. Several promising therapies appear to lessen the death rate of the virus, but, over the intermediate term, for the economy to recover and generate sustainable growth, the pandemic will need to be contained through vaccine development, which still appears several quarters out.

Despite the uncertainty, we remain focused on wide-moat, large-capitalization companies trading at reasonable valuations, in our view. As always, the Fund will continue to place an emphasis on competitively-advantaged companies that can be purchased at a fair value, in our opinion. As 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.

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 1,223 for the 3-year period and 3 stars among 1,061 Large Blend funds for the 5-year period ending 8/31/20.

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.