(PUB) Investing 2015

Morningstar FundInvestor

March

2015

Morningstar Analyst Rating

02-02-15

Morningstar Pillars

Process

Performance

People

Parent

Price

Positive

Neutral

Positive

Morningstar Analyst Rating

Morningstar evaluates mutual funds based on five key pillars, which

its analysts believe lead to funds that are more likely to outperform

over the long term on a risk-adjusted basis.

Analyst Rating Spectrum

Œ „ ´ˇ ¨

Pillar Spectrum

Positive

Negative

Neutral

NAV

18.51

17.45

18.78

16.97

15.60

16.91

13.60

9.14

15.29

15.01

14.48

12.92

Total Return %

6.07

5.85

29.25

13.93

-5.83

24.34

48.80

-39.43

9.97

5.68

13.83

16.60

+/-S&P 500

3.50

-7.84

-3.14

-2.07

-7.94

9.28

22.34

-2.43

4.48

-10.11

8.92

5.72

+/-Russ MG

-4.26

-6.05

-6.49

-1.88

-4.18

-2.04

2.51

4.89

-1.46

-4.98

1.73

1.12

Income Return %

0.00

0.08

0.00

Capital Return %

6.07

5.85

29.25

13.85

-5.83

24.34

48.80

-39.43

9.97

5.68

13.83

16.60

Total Rtn % Rank Cat

Income $

0.00

0.01

0.00

Capital Gains $

0.00

2.42

3.08

0.79

0.32

0.00

0.18

1.22

0.29

0.22

0.16

Expense Ratio %

1.01

1.02

1.01

1.02

1.03

Income Ratio %

-0.20

0.07

-0.34

-0.23

-0.43

-0.26

-0.23

-0.32

-0.21

-0.39

-0.48

Turnover Rate %

Net Assets $mil

568

562

622

612

670

727

399

197

473

375

269

167

Performance

02-28-15

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Total

2010

2011

2012

2013

2014

9.49 -10.01 12.46 12.21 24.34

2.01 3.59 -19.08 10.13 -5.83

15.06 -7.97

2.60 4.85 13.93

5.72 4.85

8.77 7.21 29.25

2.61 3.68

-4.20 3.86

5.85

Trailing

Total

+/-

+/- Russ %Rank Growth of

Return% S&P 500

Cat

$10,000

3 Mo

6 Mo

1 Yr

3 Yr Avg

5 Yr Avg

10 Yr Avg

15 Yr Avg

6.38 4.07

-6.24

15 10,638

5.80 -0.32 -13.44

63 10,580

7.85 -7.66 -17.70

60 10,785

14.37 -3.63 -12.29

64 14,960

13.91 -2.27

-5.00

84 19,178

8.94 0.95

1.66

51 23,544

. . . . .

Tax Analysis

Tax-Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat

3 Yr (estimated)

5 Yr (estimated)

10 Yr (estimated)

11.63

2.40

12.19

1.51

7.89

0.96

Potential Capital Gain Exposure: 35% of assets

Rating and Risk

Time Load-Adj

Morningstar

Period Return % Rtn vs Cat

Risk vs Cat

Risk-Adj Rating

1 Yr

7.85

3 Yr

14.37

Avg

+Avg

5 Yr

13.91

-Avg

Avg

10 Yr

8.94

Avg

Incept

8.73

Other Measures

Standard Index

Best Fit Index

S&P 500 Mstar Mid Growth TR

Alpha

-3.7

-1.7

Beta

1.05

0.98

R-Squared

Standard Deviation

12.35

Mean

14.37

Sharpe Ratio

1.15

Morningstar’s Take

by David Kathman, CFA 02-02-15

Buffalo Mid Cap is undergoing a manager shift after

another tough year.

On Jan. 17, 2015, advisor Kornitzer Capital

Management announced several management changes

in the Buffalo funds. Kent Gasaway, who has

comanaged this fund with Bob Male since its 2001

inception, is stepping away to focus on Buffalo Small

Cap BUFSX, the firm’s struggling $3 billion flagship

fund. (The firm also hired Jamie Cuellar, formerly of the

PineBridge funds, as new comanager of Small Cap.)

Male’s new comanager here is Dave Carlsen, who has

comanaged Buffalo Growth BUFGX and Buffalo

Discovery BUFTX for the past decade.

These management shifts aren’t likely to result in

dramatic changes for this fund. Carlsen says he plans

to bring more valuation discipline to the portfolio and

to take a more tactical approach, though it remains to

be seen exactly what that will mean in practice.

Buffalo Discovery has put up strong results over the

decade that Calsen has helped manage it, though it

was a technology sector fund until 2012, so those

results are only partially relevant.

These moves come on the heels of a five-year

stretch of mediocre to poor relative returns, which

have been all the more disappointing given the strong

results the fund posted in its early years. To some

extent, this recent weakness has resulted from the

managers’ unwillingness to own the riskiest,

lowest-quality mid-cap growth stocks during a period

when risk has mostly been rewarded by the market.

There have been some missteps, such as 2011’s bad

bet on for-profit education stocks and energy-related

stocks that got hit in 2014 by falling oil prices.

The fund shouldn’t be judged too harshly for the

past five years, especially given that the same

strategy led to mostly stellar returns in the fund’s first

eight years of existence. But Male is the only one of

the managers responsible for that performance who is

still on the fund, after the retirement of Grant Sarris in

2013 and now Gasaway’s shift. That fact creates

enough uncertainty to drop the fund’s Morningstar

Analyst Rating to Neutral from Bronze.

Address:

Buffalo Funds

Milwaukee, WI 53201

800-492-8332

Web Address:

www.buffalofunds.com

Inception:

12-17-01

Advisor:

Kornitzer Capital Management Inc

Subadvisor:

None

NTF Plans:

Fidelity Retail-NTF, CommonWealth NTF

Minimum Purchase:

$2500

Add: $100 IRA: $250

Min Auto Inv Plan:

$100

Add: $100

Sales Fees:

No-load, 2.00%R

Management Fee:

1.00%

Actual Fees:

Mgt:1.00% Dist:

Expense Projections:

3Yr:$322

5Yr:$558 10Yr:$1236

Income Distribution:

Semi-Annually

Data through February 28, 2015

Buffalo Mid Cap

Ticker

Status Yield Total Assets

Mstar Category

BUFMX Open

0.0% $568 mil

Mid-Cap Growth

95% 99% 90% 92% 95% 99% 98% 99%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 02-15

Historical Profile

Return

Risk

Rating

Average

Neutral

Investment Style

Equity

Stock %

Manager Change

Partial Manager Change

Growth of $10,000

Investment Values of

Fund

Investment Values of

S&P 500

Performance Quartile

(within Category)

History

10.0

7.0

14.0

18.0

22.8

Portfolio Analysis

12-31-14

Share change since 09-14 Total Stocks:52 Sector

PE Tot Ret% % Assets

CME Group Inc Class A

Finan Svs 28.6

3.16

Acuity Brands Inc

Technology 37.5

3.00

Hospira Inc

Hlth care 44.8

2.97

Boston Beer Co Inc Class

Cnsmr Def 39.8

2.83

Lions Gate Entertainment

Cnsmr Cyc 23.5

2.81

The Whitewave Foods Comp

Cnsmr Def 51.8 17.03 2.60

Affiliated Managers Grou

Finan Svs 27.9

2.57

Williams-Sonoma Inc

Cnsmr Cyc 26.2

2.56

Harman International Ind

Technology 30.6

2.53

Life Time Fitness Inc

Cnsmr Cyc 19.7 2.08 2.43

Genesee & Wyoming Inc Cl

Industrl

22.5 14.66 2.42

Under Armour Inc Class A

Cnsmr Cyc 81.3

2.40

Equinix Inc

Technology

-1.13 2.34

Moody’s Corporation

Industrl

21.1

2.31

Perrigo Co PLC

Hlth care 60.2

2.27

BorgWarner Inc

Cnsmr Cyc 21.5

2.18

Akamai Technologies Inc

Technology 37.7 10.40 2.15

Kansas City Southern Inc

Industrl

25.4

2.12

LKQ Corp

Cnsmr Cyc 19.7 -12.61 2.04

MSC Industrial Direct Co

Industrl

19.3

1.95

Current Investment Style

Market Cap %

Giant

0.0

Large

11.2

Mid

72.5

Small

14.7

Micro

1.6

Avg $mil:

6,901

Value Blnd Growth

Large Mid Small

Value Measures

Rel Category

Price/Earnings

Price/Book

Price/Sales

Price/Cash Flow

Dividend Yield %

24.17

3.30

2.62

17.51

0.65

1.24

1.20

1.55

1.75

0.73

Growth Measures

% Rel Category

Long-Term Erngs

Book Value

Sales

Cash Flow

Historical Erngs

15.36

12.51

11.55

8.65

13.69

1.08

1.28

1.50

0.64

0.53

Profitability

% Rel Category

Return on Equity

Return on Assets

Net Margin

17.76

8.18

11.59

1.04

1.11

1.14

Sector

Weightings

% of

Stocks

Rel

S&P 500 High

3 Year

Low

Cyclical 40.90

BasicMat 1.69

3 2

CnsmrCyc29.02

29 21

FinanSvs 10.19

13 9

Real Est 0.00

. . .

Sensitive 43.12

CommSrvs 0.00

7 2

Energy 2.25

5 1

Industrl 19.45

21 18

Technlgy 21.42

27 21

Defensive15.99

CnsmrDef 5.49

5 1

Hlthcare 10.50

12 8

Utilities 0.00

. . .

Composition - Net

(% of Stock)

Cash

1.2

Stocks 98.8

Bonds 0.0

Other

0.0

Foreign 6.0

timely.Pastperformance isnoguaranteeof future results.Accessupdated reports at

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Mutual Funds

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