Frequently Asked Questions

A mutual fund is an SEC-registered open-end investment company that pools money from many investors and invests the money in stocks, bonds, short-term money-market instruments, other securities or assets, or some combination of these investments. The combined securities and assets the mutual fund owns are known as its portfolio, which is managed by an SEC-registered investment adviser. Each mutual fund share represents an investor’s proportionate ownership of the mutual fund’s portfolio and the income the portfolio generates. The Securities and Exchange Commission (SEC) does not approve, endorse, nor indemnify any security.

Professional Management – Most funds are managed by investment advisers who are registered with the SEC.

Diversification – Spreading investments across a wide range of companies or industry sectors can help lower risk if a company or sector fails. Many investors find it less expensive to achieve such diversification through ownership of certain mutual funds than through ownership of individual stocks or bonds. Diversification does not assure a profit, nor does it protect against a loss in a declining market.

Low Minimum Investment – Some mutual funds accommodate investors who don’t have a lot of money to invest by setting relatively low dollar amounts for the initial purchase, subsequent monthly purchases, or both.

Liquidity and Trading Convenience – Mutual fund investors can readily redeem their shares at the next calculated NAV, minus any fees and charges assessed on redemption, on any business day. Mutual funds must send investors payment for the shares within seven days, but many funds provide payment sooner.

Costs Despite Negative Returns – Investors in some mutual funds must pay sales charges, annual fees, management fees and other expenses, regardless of how the mutual fund performs. Investors may also have to pay taxes on any capital gains distribution they receive.

Lack of Control – Investors in mutual funds cannot directly influence which securities are included in the funds’ portfolios.

Potential Price Uncertainty – With an individual stock an investor can obtain real-time (or close to real-time) pricing information with relative ease by checking financial websites or by calling a broker. By contrast, with a mutual fund, the price at which an investor purchases or redeems shares will depend on the fund’s NAV, which the fund might not calculate until many hours after an order has been placed.

The Buffalo Funds cannot guarantee that they will achieve their investment objectives. As with any mutual fund, the value of a fund’s investments may fluctuate. If the value of a fund’s investments decreases, the value of the fund’s shares will also decrease and you may lose money. Please refer to our prospectus for more detailed information on risks related to the Buffalo Funds.

Open-end funds (like all Buffalo Funds) are the most common type of mutual fund. Most open-end funds sell shares to the public every day, priced at NAV. A professional investment manager oversees the portfolio, buying and selling securities as appropriate. The total investment in the fund will vary based on share purchases, share redemptions and fluctuation in market valuation. There is no legal limit on the number of shares that can be issued.

Closed-end funds generally issue shares to the public only once, when they are created through an initial public offering. Their shares are then listed for trading on a stock exchange. Investors who no longer wish to invest in the fund cannot sell their shares back to the fund (as they can with an open-end fund). Instead, they must sell their shares to another investor in the market. A professional investment manager oversees the portfolio, buying and selling securities as appropriate.

Exchange-traded funds combine characteristics of both closed-end funds and open-end funds. ETFs are traded throughout the day on a stock exchange. An arbitrage mechanism is used to keep the trading price close to net asset value of the ETF holdings.

Mutual funds can have a variety of transaction fees (purchase, redemption, exchange) and periodic fees (management, account, 12b-1 distribution and service) as well as other operating expenses and loads. A load is a type of commission, charged to the investor at time of purchase (front-end load), time of sale (back-end load), or a mix of both. All Buffalo Funds are no-load, however management and other expenses still apply. Please refer to the prospectus for further details.

Class A shares typically impose a front-end sales load. They also tend to have a lower 12b-1 fee and lower annual expenses than other mutual fund share classes.

Class B shares typically do not have a front-end sales load. Instead, they may impose a contingent deferred sales load and a 12b-1 fee (along with other annual expenses).

Class C shares might have a 12b-1 fee, other annual expenses, and either a front- or back-end sales load. But the front- or back-end load for Class C shares tends to be lower than for Class A or Class B shares, respectively.

Class I shares are usually subject to very high minimum investment requirements and are, therefore, known as “institutional” shares. They are no-load shares.

Class R shares are usually for use in retirement plans such as 401(k) plans. They typically do not charge loads, but do charge a small distribution and services fee.

An actively managed fund seeks to outperform a relevant index through superior security selection. Expenses are generally higher than index funds. An index fund or passively managed fund seeks to match the performance of a market index, such as the S&P 500 index.

A Net Asset Value is calculated by subtracting from the fund’s total assets any liabilities and then dividing this amount by the total outstanding shares as of the date of the calculation. The NAV is computed once daily, Monday through Friday, at 4:00 p.m. (Eastern time), on days when the fund is open for business. The Buffalo Funds are closed on weekends, days when the NYSE is not open for unrestricted trading, and certain national holidays as disclosed in the SAI.

Smaller denominations of mutual funds provide mutual fund investors the ability to make periodic investments through monthly purchase plans while taking advantage of dollar-cost averaging. So, rather than having to wait until you have enough money to buy higher-cost investments, you can get in right away with mutual funds. The Buffalo Funds offers the option for periodic investing through our Automatic Investment Plan. Click here for the form. Automatic Investment Plans do not assure a profit, nor do they protect against a loss in declining markets.