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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. 1 [X]
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1940 [X]
Amendment No. 3 [X]
BUFFALO EQUITY FUND, INC.
FILE NOS. 33-87346; 811-8900
(Exact Name of Registrant as Specified in Charter)
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. 1 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 3 [X]
BUFFALO HIGH YIELD FUND, INC.
FILE NOS. 33-87148; 811-8898
(Exact Name of Registrant as Specified in Charter)
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 1 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 3 [X]
BUFFALO USA GLOBAL FUND, INC.
FILE NOS. 33-87146; 811-8896
(Exact Name of Registrant as Specified in Charter)
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 1 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 3 [X]
BUFFALO BALANCED FUND, INC.
FILE NOS. 33-75476; 811-8364
(Exact Name of Registrant as Specified in Charter)
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2440 Pershing Road, G-15, Kansas City, MO 64108
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code (816) 471-5200
Larry D. Armel, President, BUFFALO GROUP OF FUNDS
2440 Pershing Road, G-15, Kansas City, Missouri 64108
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: Upon
effectiveness of this Registration Statement. It is proposed that this
filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph (b)
X 60 days after filing pursuant to paragraph (a)(1)
on (date) pursuant to paragraph (a)(1)
75 days after filing pursuant to paragraph (a)(2)
on (date) pursuant to paragraph (a)(2) of Rule 485.
Each of the Registrants has previously made an election
pursuant to Rule 24f-2 to register an indefinite number of its shares.
Buffalo Balanced Fund, Inc. filed its 24f-2 notice on or about May 11,
1995.
Please address inquiries and and a carbon copy of all
communicaions to: communicatios to:
John G. Dyer, Esq. Mark H. Plafker, Esq.
Buffalo Group of Funds Stradley, Ronon, Stevens & Young
2440 Pershing Road, G-15 2600 One Commerce Square
Kansas City, MO 64108 Philadelphia, PA 19103-7098
Telephone: (816) 471-5200 Telephone: (215) 564-8024
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BUFFALO EQUITY FUND, INC.
BUFFALO HIGH YIELD FUND, INC.
BUFFALO USA GLOBAL FUND, INC.
BUFFALO BALANCED FUND, INC.
CROSS REFERENCE SHEET
Form N-1A Item Number Location in Prospectus
Item 1. Cover Page Cover Page
Item 2. Synopsis Not Applicable
Item 3. Condensed Financial Per Share Capital and
Information Income Changes
Item 4. General Description Investment Objective
of Registrant and Portfolio
Management Policy
Item 5. Management of Officers and Directors;
the Fund Management and
Investment Counsel
Item 6. Capital Stock and How to Purchase Shares;
Other Securities How to Redeem Shares;
How Share Price is
Determined; General
Information and
History; Dividends,
Distributions and their
Taxation
Item 7. Purchase of Coverage Page; How to
Securities Purchase Shares;
being Offered Shareholder Services
Item 8. Redemption or Repurchase How to Redeem Shares
Item 9. Pending Legal Proceedings Not Applicable
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BUFFALO EQUITY FUND, INC.
BUFFALO HIGH YIELD FUND, INC.
BUFFALO USA GLOBAL FUND, INC.
BUFFALO BALANCED FUND, INC.
CROSS REFERENCE SHEET (Continued)
Form N-1A Item Number Location in Statement
of Additional
Information
Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
Item 12. General Information Investment Objectives
and History and Policies;
Management and
Investment Counsel
Item 13. Investment Investment Objectives
Objectives and Policies and Policies;
Investment
Restrictions
Item 14. Management Management and
of the Fund Investment Counsel
Item 15. Control Persons Management and
and Principal Investment Counsel;
Holders of Securities Officers and Directors
Item 16. Investment Advisory Management and
and other Services Investment Counsel
Item 17. Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock General Information and
and Other History (Prospectus);
Securities Financial Statements
Item 19. Purchase, Redemption How Share Purchases are
and Pricing of Handled; Redemption of
Securities Being Shares Financial
Offered Statements
Item 20. Tax Status Dividends, Distributions
and their taxation
(Prospectus)
Item 21. Underwriters How the Fund's Shares
are Distributed
Item 22. Calculation of Not Applicable
Yield Quotations of
Money Market Fund
Item 23. Financial (To be supplied by
Statements further Amendment)
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PROSPECTUS
July 31, 1995
Buffalo Balanced Fund, Inc. Buffalo USA Global Fund, Inc.
Buffalo Equity Fund, Inc. Buffalo High Yield Fund, Inc.
Managed and Distributed By: Toll-Free 1-800-4-BABSON
Jones & Babson, Inc. (1-800-422-2766)
Three Crown Center In the Kansas City
area 471-5200
2440 Pershing Road, Suite G-15
Kansas City, Missouri 64108
Investment Counsel: KORNITZER CAPITAL MANAGEMENT, INC.
Shawnee Mission, Kansas
INVESTMENT OBJECTIVES
Buffalo Balanced Fund seeks both long-term capital growth and high current
income. Long-term capital growth is intended to be achieved primarily by
the fund's investment in common stocks and secondarily by the fund's
investment in convertible preferred stocks. High current income is
intended to be achieved by the fund's investment in corporate bonds,
government bonds, mortgage-backed securities, convertible bonds, preferred
stocks and convertible preferred stocks.
The Buffalo Equity Fund seeks long-term capital appreciation. Long-term
capital appreciation is intended to be achieved primarily by the fund's
investment in common stocks. Realization of dividend income is a secondary
consideration to the extent that it supplements the return on the Fund's
investments and investment in the dividend-producing securities is
consistent with achieving the Fund's objective of long-term capital
appreciation.
The Buffalo High Yield Fund primarily seeks a high level of current income
and secondarily, capital growth. The Fund invests primarily in a
diversified portfolio of high-yielding fixed income securities. The Fund
will invest in debt securities and preferred stock. The Fund may invest in
any fixed income securities, whether nonconvertible or convertible without
restriction.
THIS FUND WILL INVEST IN A SIGNIFICANT PORTION, UP TO 90% OF ITS ASSETS, IN
LOWER RATED BONDS, COMMONLY KNOWN AS "JUNK BONDS," THAT ENTAIL GREATER
RISKS INCLUDING DEFAULT RISKS, THAN THOSE FOUND IN HIGHER RATED SECURITIES.
THE FUND'S FIXED INCOME INVESTMENTS MAY CONSIST TOTALLY OF SECURITIES RATED
BELOW INVESTMENT GRADE. INVESTORS SHOULD CAREFULLY CONSIDER THESE RISKS
BEFORE INVESTING. See "Investment Objective and Portfolio Management
Policy," page [ ]; "Risk Factors," page [ ]; "Investment Restrictions,"
page and "Fixed Income Securities Described and Ratings," page [ ].
Secondarily, the Fund may invest up to 10% of the value of its total assets
in common stocks and other equity securities.
The Buffalo USA Global Fund seeks capital growth. Capital growth is
intended to be achieved primarily by the fund's investment in common stocks
of companies based in the United States that receive greater than forty
percent of their revenues or pre-tax income from international operations,
measured as of the preceding four completed quarters of business or the
companies' most recently completed fiscal year. At least 65 percent of the
value of the Fund's total assets must be invested in at least three
different countries, which means represented by the international
operations of United States - based companies as described above. The Fund
will invest in common stocks considered by the manager to have above
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average potential for appreciation; income is a secondary consideration.
The Fund will invest primarily in common stocks listed on the New York
Stock Exchange.
PURCHASE INFORMATION
Minimum Investment
Initial Purchase $2,500
Initial IRA and Uniform Transfers (Gifts)
to Minors Purchases $250
Subsequent Purchase:
By Mail $100
By Telephone or Wire $1,000
All Automatic Purchases $100
Shares are purchased and redeemed at net asset value. There are no sales,
redemption or Rule 12b-1 distribution charges. If you need further
information, please call the Fund at the telephone numbers indicated.
ADDITIONAL INFORMATION
This prospectus should be read and retained for future reference. It
contains the information that you should know before you invest. A
"Statement of Additional Information" of the same date as this prospectus
has been filed with the Securities and Exchange Commission and is
incorporated by reference. Investors desiring additional information about
the Fund may obtain a copy without charge by writing or calling the Fund.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
Page
Fund Expenses
Investment Objectives and Portfolio Management Policies
Repurchase Agreements
Risk Factors
Investment Restrictions
Performance Measures
How to Purchase Shares
Initial Investments
Investments Subsequent to Initial Investment
Telephone Investment Service
Automatic Monthly Investment Plan
How to Redeem Shares
Systematic Redemption Plan
How to Exchange Shares Between Babson Funds
How Share Price is Determined
Officers and Directors
Management and Investment Counsel
General Information and History
Dividends, Distributions and Their Taxation
Shareholder Services
Shareholder Inquiries
Fixed Income Securities Described and Ratings
For more information on
HIGHLIGHTS this subject see page.[..]
The Funds
The Buffalo Funds are a group of four open-end diversified
investment companies sponsored by Jones & Babson, Inc., for which Kornitzer
Capital Management, Inc. serves as investment counsel.
Buffalo Balanced Fund, Inc. was incorporated in Maryland on January 25, 1994.
Buffalo Equity Fund, Inc., Buffalo High Yield Fund, Inc. and Buffalo USA
Global Fund, Inc. were incorporated in Maryland on November 23, 1994.
Buffalo Balanced Fund, Buffalo Equity Fund, Buffalo High Yield Fund and
Buffalo USA Global Fund each offer one class of non-assessable common shares
with equal voting rights.
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For more information on
HIGHLIGHTS this subject see page.[..]
The Funds
Buffalo Balanced Fund seeks long-term growth and high current
income. The fund will invest in a diversified array of common stocks,
preferred stocks, convertible bonds, convertible preferred stocks, corporate
bonds and government bonds.
Buffalo High Yield Fund primarily seeks a high level of current income and
secondarily, capital growth. The Fund invests primarily in debt securities
and may invest in preferred stock.
Buffalo USA Global Fund seeks capital growth by investing in common stocks of
companies based in the United States that receive greater than 40% of their
revenues or pre-tax income from international operations.
Buffalo Equity Fund seeks long-term capital appreciation by investment in a
broad array of common stocks, in terms of companies and industries.
How to Invest
Fund shares can only be purchased directly from the Funds
through their manager and principal underwriter, Jones & Babson, Inc. Because
no sales charges are added to the price of the shares, the full amount of any
purchase is invested for the benefit of the shareholder. The minimum initial
purchase is $1,000. Subsequent purchases must be at least $100, except wire
purchases which must be in the amount of $500 or more.
TELEPHONE INVESTMENT - You may make investment of $1,000 or more by telephone
if you have authorized such investment in your application, or, subsequently,
on a special authorization form provided upon request.
AUTOMATIC MONTHLY INVESTMENT - You may elect to make monthly investments in a
constant dollar amount from your checking account ($100 minimum). The Fund
will draft your checking account on the same day each month in the amount you
authorize in your application, or, subsequently, on a special authorization
form provided upon request.
Redemption
Shares of the Funds are redeemable at net asset value next
effective after receipt by the Fund of a shareholder's request in good order.
No redemption charge is made.
Exchange Privilege with Other Funds
Shareholders may transfer their
investments without charge to any other Buffalo Fund sponsored by Jones &
Babson, Inc. This exchange involves the liquidation of shares from one Fund
and a purchase of shares in the Fund to which the investment is being
transferred. This is a transaction which may or may not be taxable depending
on the shareholder's tax status.
AUTOMATIC EXCHANGE - You may exchange shares from your account ($100 minimum)
in any of the Buffalo Funds to an identically registered account in any other
Fund in the Buffalo Group according to your instructions. Monthly exchanges
will be continued until all shares have been exchanged or until you terminate
the Automatic Exchange authorization. A special authorization form will be
provided upon request.
Management of the Funds
The Funds are managed by Jones & Babson, Inc. which
employs Kornitzer Capital Management, Inc. to assist in the investment
advisory function for each of the Buffalo Funds.
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For more information on
HIGHLIGHTS this subject see page.[..]
The Management Fee Covers the Investment Advisory Fee and All Other Normal
Operating Costs
Jones & Babson, Inc., as manager, agrees to supply to the
Funds all normal services necessary for their functions as open-end
diversified investment companies, exclusive of taxes and other charges of
governments and their agencies (including the cost of qualifying the Fund's
shares for sale in any jurisdiction), certain fees, dues, interest, brokerage
commissions and extraordinary costs, if any. For this it charges Buffalo
Balanced Fund, Buffalo Equity Fund, Buffalo High Yield Fund and Buffalo USA
Global Fund a fee based on an annual rate of one percent (1%) of average daily
net assets from which Jones & Babson pays Kornitzer Capital Management, Inc.
an investment counsel fee of 50/100 (.50%) of average daily net assets.
Although these fees are higher than the fees of some other advisers whose
charges cover only investment advisory services with all remaining operational
expenses absorbed directly by the Fund, Jones & Babson's charges compare
favorably with other advisers when all expenses to Fund shareholders are taken
into account.
Dividend Policies
Buffalo Balanced Fund and Buffalo High Yield Fund will pay
substantially all of their net investment income quarterly, usually in March,
June, September and December. It is contemplated that distributions from
capital gains, if any, will be declared annually on or before December 31 for
Buffalo Balanced Fund. Distributions from capital gains, if any, will be
declared semi-annually, usually in June and December for Buffalo High Yield
Fund.
Buffalo Equity Fund and Buffalo USA Global Fund will pay dividends from net
investment income and capital gains semi-annually, usually in June and
December.
Taxes
The Funds will distribute substantially all of their net income each
year in order to be exempt from federal income tax. Dividend and capital
gains distributions will be taxable to each shareholder whether taken in cash
or reinvested in additional shares in accordance with the shareholder's tax
status.
Risk Factors
For a discussion of risk factors applicable to repurchase agreements
For a discussion of risk factors applicable to covered call options
For a discussion of risk factors applicable to ADRs
For a discussion of risk factors applicable to common stocks
For a discussion of risk factors applicable to global operations
For a discussion of risk factors applicable to high yield high risk debt
securities
FUND EXPENSES
The following information is provided in order to assist you in understanding
the various costs and expenses that a shareholder of a Buffalo Fund will bear
directly or indirectly.
BUFFALO EQUITY FUND, INC.
The expenses set forth below are estimated for the current fiscal year.
Shareholder Transaction Expenses
Maximum sales load imposed on purchases None
Maximum sales load imposed on reinvested dividends None
Deferred sales load None
Redemption fee None
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Exchange fee None
Annual Fund Operation Expenses
(as a percentage of average net assets)
Management fees 1.00%
12b-l fees None
Other expenses .08%
Total Fund operating expenses 1.08%
You would pay the following expenses on a $1,000 investment, assuming (1)
5% annual return and (2) redemption at the end of each time period:
1 Year 3 Year
$11 $34
BUFFALO BALANCED FUND, INC.
The expenses set forth below are for the fiscal year ended March 31, 1995.
Shareholder Transaction Expenses
Maximum sales load imposed on purchase None
Maximum sales load imposed on reinvested dividends None
Deferred sales load None
Redemption fee None
Exchange fee None
Annual Fund Operation Expenses
(as a percentage of average net assets)
Management fees 1.00%
12b-1 fees None
Other expenses .08%
Fund operating expenses 1.08%
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period:
1 Year 3 Year
$11 $34
BUFFALO USA GLOBAL FUND, INC.
The expenses set forth below are estimated for the current fiscal year.
Shareholder Transaction Expenses
Maximum sales load imposed on purchases None
Maximum sales load imposed on reinvested dividends None
Deferred sales load None
Redemption fee None
Exchange fee None
Annual Fund Operation Expenses
(as a percentage of average net assets)
Management fees 1.00%
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12b-1 fees None
Other expenses .08%
Total Fund operating expenses 1.08%
You would pay the following expenses on a $1,000 investment, assuming (1)
5% annual return and (2) redemption at the end of each time period:
1 Year 3 Year
$11 $34
BUFFALO HIGH YIELD FUND, INC.
The expenses set forth below are estimated for the current fiscal year.
Shareholder Transaction Expenses
Maximum sales load imposed on purchases None
Maximum sales load imposed on reinvested dividends None
Deferred sales load None
Redemption fee None
Exchange fee None
Annual Fund Operation Expenses
(as a percentage of average net assets)
Management fees 1.00%
12b-1 fees None
Other expenses .08%
Total Fund operating expenses 1.08%
You would pay the following expenses on a $1,000 investment, assuming (1)
5% annual return and (2) redemption at the end of each time period:
1 Year 3 Year
$11 $34
The above information is provided in order to assist you in understanding
the various costs and expenses that a shareholder of the Fund will bear
directly or indirectly. THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS HYPOTHETICAL AND
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE ANNUAL RETURN.
THE ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED AMOUNT.
The purpose of the foregoing fee tables is to assist the investor in
understanding the various costs and expenses that an investor in a Fund
will bear directly or indirectly. The various costs and expenses are
explained in more detail in this prospectus. Management fees are discussed
in greater detail under "Management and Investment Counsel".
FINANCIAL HIGHLIGHTS
BUFFALO BALANCED FUND, INC.
The following financial highlights for the fiscal period ended March 31,
1995, have been derived from audited financial statements of Buffalo
Balanced Fund, Inc. and should be read in conjunction with the financial
statements of the Fund and the report of Ernst & Young LLP, independent
public accountants, appearing in the March 31, 1995 annual report which is
incorporated by reference in this prospectus.
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[ ], 1994 to March 31, 1995
Net Asset Value, beginning of period
Income from investment operations:
Net investment income
Net gains (or losses) on securities
(both realized and unrealized)
Total from Investment Operations
Less distributions:
Dividends from net investment income
Distributions from capital gains
Total Distributions
Net asset value, end of year
Total Return
Ratios/Supplemental Data
Net assets, end of year (in millions)
Ratio of expenses to average net assets
Ratio of net investment income to average net assets
Portfolio turnover rate
* * * * * *
Buffalo Equity Fund, Buffalo USA Global Fund and Buffalo High Yield Fund
commenced operations after the March 31, 1995 fiscal year end.
INVESTMENT OBJECTIVES AND
PORTFOLIO MANAGEMENT POLICIES
Each Fund's objectives and policies as described in this section will not
be changed without approval of a majority of the Fund's outstanding shares.
BUFFALO BALANCED FUND
The Buffalo Balanced Fund seeks both long-term capital growth and high
current income. Long-term capital growth is intended to be achieved
primarily by the Fund's investment in common stocks and secondarily by the
Fund's investment in convertible bonds and convertible preferred stocks.
High current income is intended to be achieved by the Fund's investment in
corporate bonds, government bonds, mortgage-backed securities, convertible
bonds, preferred stocks and convertible preferred stocks.
The Buffalo Balanced Fund will normally invest in a broad array of
securities, diversified not only in terms of companies and industries, but
also in terms of types of securities. The types of securities includes
common stocks, preferred stocks, convertible bonds, convertible preferred
stocks, corporate bonds and government bonds. It is expected that the
majority of common stocks purchased in the Fund will be large
capitalization companies with most if not all listed on the New York Stock
Exchange. Large capitalization stocks are considered to be those with
capitalization in excess of $1 billion.
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It is not the manager's intention to make wide use of NASDAQ traded,
smaller capitalization common stocks. Smaller capitalization stocks are
considered to be those with capitalization of less than $1 billion. The
Fund may invest up to 75% of its assets in corporate bonds, convertible
bonds, preferred stocks and convertible preferred stocks. The manager
expects that from time-to-time these securities may be rated below
investment grade (BBB) by the major rating agencies. The manager believes
this policy is justified given the manager's view that these securities
from time-to-time offer superior value and given the manager's experience
and substantial in-house credit research capabilities with higher yielding
securities.
Securities rated Baa or higher by Moody's or BBB by Standard & Poor's or
higher are classified as investment grade securities. Although securities
rated Baa by Moody's and BBB by Standard & Poor's have speculative
characteristics, they are considered to be investment grade. Such
securities carry a lower degree of risk than lower rated securities. (See
"Risk Factors Applicable to High Yielding High Risk Debt Securities" on
page 6.)
Securities rated below Baa by Moody's or BBB by Standard & Poor's are
commonly known as junk bonds and are considered to be high risk. Yields on
such bonds will fluctuate over time, and achievement of the Fund's
investment objective may be more dependent on the Fund's own credit
analysis than is the case for higher rated bonds. (See "Risk Factors
Applicable to High Yielding High Risk Debt Securities.")
The Fund may also invest in high-yielding, high-risk corporate debt
securities (so-called "junk bonds"). Up to 20% of the Fund's assets may be
invested in debt securities which are rated less than B or unrated.
The Fund will not invest in securities that, at the time of initial
investment, are rated less than B by Moody's or Standard & Poor's.
Securities that are subsequently downgraded in quality below B may continue
to be held by the Fund, and will be sold only if the Fund's adviser
believes it would be advantageous to do so. In addition, the credit
quality of unrated securities purchased by the Fund must be, in the opinion
of the Fund's adviser, at least equivalent to a B rating by Moody's or
Standard & Poor's.
Securities rated less than Baa by Moody's or BBB by Standard & Poor's are
classified as non-investment grade securities. Such securities carry a
high degree of risk and are considered speculative by the major credit
rating agencies. (See "Risk Factors Applicable to High Yielding Debt
Securities.")
The proportion of the Fund invested in each type of security is expected to
change over time in accordance with the investment manager's interpretation
of economic conditions and underlying security values. However, it is
expected that a minimum of 25% of the Fund's total assets will always be
invested in fixed income senior securities and that minimum of 25% of its
total assets will always be invested in equity securities. When, in the
manager's judgment, market condition warrant substantial temporary
investments in high-quality money market securities, the Fund may do so.
The fund is authorized to write (i.e. sell) covered call options on the
securities in which it may invest and to enter into closing purchase
transactions with respect to certain of such options. A covered call
option is an option where the Fund in return for a premium gives another
party a right to buy specified securities owned by the Fund at a specified
future date and price set at the time of the contract. (See "Risk Factors
Applicable to Covered Call Options.")
Covered call options serve as a partial hedge against the price of the
underlying security declining.
Investments in money market securities shall include government securities,
commercial paper, bank certificates of deposit and repurchase agreements
collateralized by government securities. Investment in commercial paper is
restricted to companies in the top two rating categories by Moody's and
Standard & Poor's.
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The Fund may also invest in issues of the United States Treasury or a
United States government agency subject to repurchase agreements. The use
of repurchase agreements by the Fund involves certain risks. For a
discussion of these risks, see "Risk Factors Applicable to Repurchase
Agreements."
There is no assurance that the Fund's objective of long-term growth of
capital and high current income can be achieved. Portfolio turnover will
be no more than is necessary to meet the Fund's objective. Under normal
circumstances, it is anticipated that portfolio turnover for common stocks
in the Fund's portfolio will not exceed 100% on an annual basis, and that
portfolio turnover for other securities will not exceed 100% on an annual
basis.
The Buffalo Equity Fund seeks long-term capital appreciation. Long-term
capital appreciation is intended to be achieved primarily by the Fund's
investment in common stocks. Realization of dividend income is a secondary
consideration to the extent that it supplements the return on the Funds
investments and investment in the dividend-producing securities is
consistent with achieving the Fund's objective of long-term capital
appreciation. The Fund is a no-load open-end, diversified management
company commonly referred to as a "mutual fund."
BUFFALO EQUITY FUND
The Buffalo Equity Fund seeks long-term capital appreciation. Long-term
capital appreciation is intended to be achieved primarily by the Fund's
investment in common stocks. Realization of dividend income is a secondary
consideration to the extent that it supplements the return on the Funds
investments and investment in the dividend-producing securities is
consistent with achieving the Fund's objective of long-term capital
appreciation. The Fund is a no-load open-end, diversified management
company commonly referred to as a "mutual fund."
The Buffalo Equity Fund will normally invest in a broad array of common
stocks, in terms of companies and industries. It is expected that the
majority of common stocks purchased in the Fund will be large
capitalization companies with most, if not all, listed on the New York
Stock Exchange. Large capitalization stocks are considered to be those
with capitalization in excess of $1 billion.
The Fund may purchase foreign securities through dollar-denominated
American Depository Receipts (ADRs), which do not involve the same direct
currency and liquidity risks as securities denominated in foreign currency
and which are issued by domestic banks and publicly traded in the United
States. The Fund does not intend to invest directly in foreign securities
or foreign currencies.
The Fund will invest at least 65% of its assets in common stocks under
normal circumstances. When, in the manager's judgment, market conditions
warrant substantial temporary defensive investments in high-quality money
market securities, the Fund may do so.
The Fund is authorized to write (i.e. sell) covered call options on the
securities in which it may invest and to enter into closing purchase
transactions with respect to certain of such options. A covered call
option is an option where the Fund in return for a premium gives another
party a right to buy specified securities owned by the Fund at a specified
future date and price set at the time of the contract. (See "Risk Factors
Applicable to Covered Call Options".)
Covered call options serve as a partial hedge against the price of the
underlying security declining.
Investments in money market securities shall include government securities,
commercial paper, bank certificates of deposit and repurchase agreements
collateralized by government securities. Investment in commercial paper is
restricted to companies in the top two rating categories by Moody's and
Standard & Poor's. The Fund may also invest in issues of the United States
Treasury or a United States government agency subject to repurchase
agreements. The use of repurchase agreements by the Fund involves certain
risks. For a discussion of these risks, see "Risk Factors Applicable to
Repurchase Agreements."
<PAGE>
There is no assurance that the Fund's objective of long-term capital
appreciation can be achieved. Portfolio turnover will be no more than is
necessary to meet the Fund's objective. Under normal circumstances, it is
anticipated that portfolio turnover will not exceed 100% on an annual
basis.
BUFFALO USA GLOBAL FUND
The Buffalo USA Global Fund seeks capital growth. Capital growth is
intended to be achieved primarily by the Fund's investment in common stocks
of companies based in the United States that receive greater than 40% of
their revenues or pre-tax income from international operations, measured as
of the preceding four completed quarters of business or the respective
company's most recently completed fiscal year. At least 65% of the value
of the Fund's total assets must be invested in at least three different
countries, which means represented by the international operations of
United States - based companies as described above. The Fund will invest
in common stocks considered by the manager to have above average potential
for appreciation; income is a secondary consideration. Under normal
circumstances, the Fund will invest in a majority of its assets in common
stocks listed on the New York Stock Exchange. The Fund is a no-load, open-
end diversified management investment company commonly referred to as a
"mutual fund."
The Fund's manager believes that the investment policies of the Fund reduce
or eliminate several risks associated with direct investment in foreign
securities. Trading costs are usually higher in foreign countries because
commission rates are generally fixed rather than negotiated as in the U.S.
Liquidity risk is lowered because trading volumes are generally higher on
U.S. exchanges.
When, in the manager's judgment, market conditions warrant substantial
temporary defensive investments in high quality money market securities,
the Fund may do so.
The Fund is authorized to write (i.e. sell) covered call options on the
securities in which it may invest and to enter into closing purchased
transactions with respect to certain of such options. A covered call
option is an option where the Fund in return for a premium gives another
party a right to buy specified securities owned by the Fund at a specified
future date and price set at the time of the contract. (See "Risk Factors
Applicable to Covered Call Options.")
Covered call options serve as a partial hedge against the price of the
underlying security declining.
Investments in money market securities shall include government securities,
commercial paper, bank certificates of deposit and repurchase agreements
collateralized by government securities. Investment in commercial paper is
restricted to companies in the top two rating categories by Moody's and
Standard & Poor's.
The Fund may also invest in issues of the United States Treasury or a
United States government agency subject to repurchase agreements. The use
of repurchase agreements by the Fund involves certain risks. For a
discussion of these risks, see "Risk Factors Applicable to Repurchase
Agreements."
There is no assurance that the Fund's objective of capital growth can be
achieved. Portfolio turnover will be no more than is necessary to meet the
Fund's objective. Under normal circumstances, it is anticipated that
portfolio turnover for the Fund will not exceed 100% on an annual basis.
BUFFALO HIGH YIELD FUND
The Buffalo High Yield Fund primarily seeks a high level of current income
and secondarily, capital growth. The Fund invest primarily in a diversified
portfolio of high-yielding fixed income securities. High current income is
intended to be achieved by the Fund's investment in any fixed income
securities, without restrictions, such as corporate bonds, government
bonds, convertible bonds, preferred stocks and convertible preferred
stocks. The Fund may not invest in foreign government bonds. Capital
growth is intended to be achieved by
<PAGE>
the appreciation of fixed income and
equity investments held in the Fund. The Fund is a no-load, open-end,
diversified management company commonly referred to as a "mutual fund."
The Fund may invest up to 90% of its assets in any fixed income securities,
including without limitation, corporate bonds, convertible bonds, preferred
stocks and convertible preferred stocks. These securities may be rated
below investment grade (BB/Ba and B/B) by the major rating agencies or, if
unrated, are in the opinion of the manager of similar quality. The manager
believes this policy is justified given the manager's view that these
securities from time-to-time offer superior value and given the manager's
experience and substantial in-house credit research capabilities with
higher yielding securities.
Securities rated Baa or higher by Moody's or BBB by Standard & Poor's or
higher are classified as investment grade securities. Although securities
rated Baa by Moody's and BBB by Standard & Poor's have speculative
characteristics, they are considered to be "medium" investment grade. Such
securities carry a lower degree of risk than lower rated securities.
Securities rated Baa and below by Moody's or BBB and below by Standard &
Poor's are commonly known as "junk bonds" and are considered to be high
risk. Yields on such bonds will fluctuate over time, and achievement of
the Fund's investment objective may be more dependent on the Fund's own
credit analysis than is the case for higher rated bonds. (See "Risk
Factors Applicable to High Yielding High Risk Debt Securities.")
Up to 20% of the Fund's assets may be invested in debt securities which are
rated less than B at the time of purchase or if unrated are in the opinion
of the manager of similar quality. Securities rated B or higher at the
time of purchase, which are subsequently downgraded, will not be subject to
this limitation.
The lowest rating that may be held in the Fund is D, or that of defaulted
securities. (See "Risk Factors Applicable to High Yielding High Risk Debt
Securities.") The Fund will not purchase obligations that are in default,
but may hold in the portfolio securities which go into default subsequently
to acquisition by the Fund.
The proportion of the Fund invested in each type of security is expected to
change over time in accordance with the investment manager's interpretation
of economic conditions and underlying security values. However, it is
expected that a minimum of 65% of the Fund's total assets will always be
invested in fixed income securities and that a maximum of 10% of its total
assets will be invested in equity securities. The Fund's flexible
investment policy allows it to invest in securities with varying
maturities; however, it is anticipated that the average maturity of
securities acquired by the Fund will not exceed 15 years. The average
maturity of the Fund will be generally ten years or less. The manager may
look at a number of factors in selecting securities for the Fund's
portfolio. These include the past, current and estimated future: (1)
financial strength of the issuer; (2) cash flow; (3) management; (4)
borrowing requirements; and (5) responsiveness to changes in interest rates
and business conditions. Sometimes the manager may believe that a full or
partial temporary defensive position is desirable, due to present or
anticipated market or economic conditions. To achieve a defensive posture,
the manager may take any one or more of the following steps with respect to
assets in the Fund's portfolio: (1) shortening the average maturity of the
Fund's debt portfolio; (2) holding cash or cash equivalents; and (3)
emphasizing high-grade debt securities. Going defensive in any one or more
of these manners might involve a reduction in the yield on the Fund's
portfolio.
The table below shows the percentage of the Fund's assets to be invested in
securities assigned to the various rating categories by Moody's and
Standard & Poor's and in unrated securities determined by the Investment
Counsel to the Fund to be of comparable quality.
<PAGE>
Unrated securities of
Rated Securities, comparable quality,
as a percentage of as percentage of
Rating Fund's assets Fund's assets
AAA/Aaa up to 20% up to 20%
AA/Aa up to 20% up to 20%
A/A up to 20% up to 20%
BBB/Baa up to 90% up to 90%
BB/Ba up to 90% up to 90%
B/B up to 90% up to 90%
CCC/Caa* up to 20% up to 20%
CC/Ca* up to 20% up to 20%
D/D* up to 20% up to 20%
* THE INVESTMENTS IN SECURITIES WITH THIS RATING ARE SUBJECT TO AN AGGREGATE
MAXIMUM LIMIT OF 20% OF ALL SECURITIES SO NOTED. SECURITIES RATED B OR HIGHER
AT THE TIME OF PURCHASE, WHICH ARE SUBSEQUENTLY DOWNGRADED, WILL NOT BE
SUBJECT TO HIS LIMITATION.
The Fund is authorized to write (i.e. sell) covered call options on the
securities in which it may invest and to enter into closing purchase
transactions with respect to certain of such options. A covered call
option is an option where the Fund in return for a premium gives another
party a right to buy specified securities owned by the Fund at a specified
future date and price set at the time of the contract. (See "Risk Factors
Applicable to Covered Call Options.")
Covered call options serve as a partial hedge against the price of the
underlying security declining.
Investments in money market securities shall include government securities,
commercial paper, bank certificates of deposit and repurchase agreements
collateralized by government securities. Investment in commercial paper is
restricted to companies in the top two rating categories by Moody's and
Standard & Poor's.
REPURCHASE AGREEMENTS
A repurchase agreement involves the sale of securities to the Fund with the
concurrent agreement by the seller to repurchase the securities at the
Fund's cost plus interest at an agreed rate upon demand or within a
specified time, thereby determining the yield during the purchaser's period
of ownership. The result is a fixed rate of return insulated from market
fluctuations during such period. Under the Investment Company Act of 1940,
repurchase agreements are considered loans by a Fund.
A Fund will enter into such repurchase agreements only with United States
banks having assets in excess of $1 billion which are members of the
Federal Deposit Insurance Corporation, and with certain securities dealers
who meet the qualifications set from time to time by the Board of Directors
of the Fund. The term to maturity of a repurchase agreement normally will
be no longer than a few days. Repurchase agreements maturing in more than
seven days and other illiquid securities will not exceed 10% of the total
assets of any Fund.
During the initial month of operations, it is anticipated that a Fund may
be invested up to 100% in repurchase agreements, however under normal
circumstances, a Fund may invest up to 25% of its assets in repurchase
agreements. (See "Risk Factors Applicable to Repurchase Agreements.") Each
of the Buffalo Funds may enter into repurchase agreements.
<PAGE>
ASSET-BACKED SECURITIES
The Buffalo High Yield Fund may invest in asset-backed securities. Asset-
backed securities are collateralized by short maturity loans such as
automobile receivables, credit card receivables, other types of receivables
or assets. Credit support for asset-backed securities may be based on the
underlying assets and/or provided through credit enhancements by a third
party. Credit enhancement techniques include letters of credit, insurance
bonds, limited guarantees (which are generally provided by the issuer),
senior-subordinated structures and over-collateralization.
RISK FACTORS
Risk Factors Applicable to Covered Call Options
Each of the Buffalo Funds may engage in covered call option transactions as
described herein. Up to 25% of a Fund's total assets may be subject to
covered call options. By writing covered call options, the Fund gives up
the opportunity, while the option is in effect, to profit from any price
increase in the underlying security above the option exercise price. In
addition, a Fund's ability to sell the underlying security will be limited
while the option is in effect unless the Fund effects a closing purchase
transaction. A closing purchase transaction cancels out a Fund's position
as the writer of an option by means of an offsetting purchase of an
identical option prior to the expiration of the option it has written.
Upon the termination of a Fund's obligation under a covered call option
other than through exercise of the option, the Fund will realize a short-
term capital gain or loss. Any gain realized by a Fund from the exercise
of an option will be short- or long-term depending on the period for which
the stock was held. The writing of covered call options creates a straddle
that is potentially subject to the straddle rules, which may override some
of the foregoing rules and result in a deferral of some losses for tax
purposes.
Risk Factors Applicable To Repurchase Agreements
Each of the Buffalo Funds may enter into repurchase agreements. The use of
repurchase agreements involves certain risks. For example, if the seller of
the agreement defaults on its obligation to repurchase the underlying
securities at a time when the value of these securities has declined, a
Fund may incur a loss upon disposition of them. If the seller of the
agreement becomes insolvent and subject to liquidation or reorganization
under the Bankruptcy Code or other laws, disposition of the underlying
securities may be delayed pending court proceedings. Finally, it is
possible that a Fund may not be able to perfect its interest in the
underlying securities. While the Fund management acknowledges these risks,
it is expected that they can be controlled through stringent security
selection criteria and careful monitoring procedures.
<PAGE>
Risk Factors Applicable to ADRs
Up to 25% of the Buffalo Equity Fund's total assets may be invested in
ADRs. ADRs (sponsored or unsponsored) are receipts typically issued by a
U.S. bank or trust company evidencing ownership of the underlying foreign
securities. Most ADRs are traded on a U.S. stock exchange. Issuers of
unsponsored ADRs are not contractually obligated to disclose material
information in the U.S. and, therefore, there may not be a correlation
between such information and the market value of the unsponsored ADR.
Risk Factors Applicable to Common Stocks
The Buffalo Equity Fund, the Buffalo Balanced Fund and the Buffalo USA
Global Fund invest in common stocks. The Buffalo High Yield Fund may
invest up to 10% of it assets in common stocks. The Funds are subject to
market risk and fund risk. Market risk is the possibility that stock
prices in general will decline over short or even extended periods of time.
Stock markets tend to be cyclical, with periods when stock prices generally
rise and periods when stock prices generally decline. Fund risk is the
possibility that a fund's performance during a specific period may not meet
or exceed that of the stock market as a whole.
Risk Factors Applicable to High Yielding High Risk Debt Securities
The Buffalo Balanced Fund and the Buffalo High Yield Fund invest in high
yielding, high risk debt securities. Lower rated bonds involve a higher
degree of credit risk, the risk that the issuer will not make interest or
principal payments when due. In the event of an unanticipated default, a
Fund would experience a reduction in its income, and could expect a decline
in the market value of the securities so affected. More careful analysis
of the financial condition of each issuer of lower grade securities is
therefore necessary. During an economic downturn or substantial period of
rising interest rates, highly leveraged issuers may experience financial
stress which would adversely affect their ability to service their
principal and interest payment obligations, to meet projected business
goals and to obtain additional financing.
The market prices of lower grade securities are generally less sensitive to
interest rate changes than higher rated investments, but more sensitive to
adverse economic or political changes or, in the case of corporate issuers,
individual corporate developments. Periods of economic or political
uncertainty and change can be expected to result in volatility of prices of
these securities. Since the last major economic recession, there has been
a substantial increase in the use of high-yield debt securities to fund
highly leveraged corporate acquisitions and restructurings, so past
experience with high-yield securities in a prolonged economic downturn may
not provide an accurate indication of future performance during such
periods. Lower rated securities also may have less liquid markets than
higher rated securities, and their liquidity as well as their value may be
adversely affected by adverse economic conditions. Adverse publicity and
investor perceptions as well as new or proposed laws may also have a
negative impact on the market for high-yield/high-risk bonds.
Credit quality of high-yield high-risk securities (so-called "junk bonds")
can change suddenly and unexpectedly and even recently issued credit
ratings may not fully reflect the actual risks posed by a particular high-
yield high-risk security. For these reasons, it is the Funds' policy not
to rely primarily on ratings issued by established credit rating agencies,
but to utilize such ratings in conjunction with the investment adviser's
own independent and ongoing review of credit quality. As a mutual fund
investing in fixed income securities each of the Funds is subject primarily
to interest rate income and credit risk. Interest rate risk is the
potential for a decline in bond prices due to rising interest rates. In
general, bond prices vary inversely with interest rates. When interest
rates rise, bond prices generally fall. Conversely, when interest rates
fall, bond prices generally rise. The change in price depends in several
factors, including the bond's maturity date. In general, bonds with longer
maturities are more sensitive to interest rates than bonds with shorter
maturities.
<PAGE>
Each of the Funds is also subject to income risk which is the potential for
a decline in the respective Fund's income due to falling market interest
rates.
In addition to interest rate and income risks, each Fund is subject to
credit risk. Credit risk, also known as default risk, is the possibility
that a bond issuer will fail to make timely payments of interest or
principal to a Fund. The credit risk of a Fund depends on the quality of
its investments. Reflecting their higher risks, lower-quality bonds
generally offer higher yields (all other factors being equal). Rating of
debt securities are defined under the caption "Fixed Income Securities
Described and Ratings."
Risk Factors Applicable to Global Operations
The risks to which the U.S. companies in which the Buffalo USA Global Fund
plans to invest are exposed and, consequently, the concurrent risks
experienced by the Fund as a result of investing in such companies include:
the risk of fluctuations in the value of foreign currencies; adverse
political and economic developments; and the possibility of expropriation,
nationalization or confiscatory taxation or limitations on the removal of
funds or other assets. The performance of foreign currencies relative to
the U.S. dollar and the relative strength of the U.S. dollar may be an
important factor in the performance of the Fund.
INVESTMENT RESTRICTIONS
In addition to the investment objective and portfolio management policies
set forth under the caption "Investment Objectives and Portfolio Management
Policies," the Funds are subject to certain other restrictions which may
not be changed without approval of the lesser of: (1) at least 67% of the
voting securities present at a meeting if the holders of more than 50% of
the outstanding securities of the Fund are present or represented by proxy,
or (2) more than 50% of the outstanding voting securities of the Fund.
Among these restrictions, the more important ones are that the Fund will
not purchase the securities of any issuer if more than 5% of the Fund's
total assets would be invested in the securities of such issuer, or the
Fund would hold more than 10% of any class of securities of such issuer;
the Fund will not make any loan (the purchase of a security subject to a
repurchase agreement or the purchase of a portion of an issue of publicly
distributed debt securities is not considered the making of a loan); and
the Fund will not borrow or pledge its credit under normal circumstances,
except up to 10% of its total assets (computed at the lower of fair market
value or cost) temporarily for emergency or extraordinary purposes, and not
for the purpose of leveraging its investments; and provided further that
any borrowings shall have asset coverage of at least 3 to 1. The Fund will
not buy securities while borrowings are outstanding. The full text of
these restrictions are set forth in the "Statement of Additional
Information."
PERFORMANCE MEASURES
From time to time, each of the Funds may advertise its performance in
various ways, as summarized below. Further discussion of these matters also
appears in the "Statement of Additional Information." A discussion of
Buffalo Balanced Fund, Buffalo Equity Fund, Buffalo USA Global Fund and
Buffalo High Yield Fund performance will be included in the Fund's Annual
Report to Shareholders which will be available from the Fund upon request
at no charge.
Total Return
Buffalo Balanced Fund, Buffalo Equity Fund, Buffalo USA Global Fund and
Buffalo High Yield Fund may advertise "average annual total return" over
various periods of time. Such total return figures show the average
percentage change in value of an investment in the respective Fund from the
beginning date of the measuring period to the end of the measuring period.
These figures reflect changes in the price of the Fund's shares and assume
that any income dividends and/or capital gains distributions made by the
respective Fund during the period were reinvested in shares of the Fund.
Figures will be given for recent one-, five- and ten-year periods
<PAGE>
(if applicable), and may be given for other periods as well (such as from
commencement of the Fund's operations, or on a year-by-year basis). When
considering "average" total return figures for periods longer than one
year, it is important to note that a Fund's annual total return for any one
year in the period might have been greater or less than the average for the
entire period.
Yield
The Buffalo High Yield Fund may advertise a yield figure derived by
dividing the Fund's net investment income per share during a 30-day base
period by the per-share price on the last day of the base period.
Performance Comparisons
In advertisements or in reports to shareholders, each of the Funds may
compare its performance to that of other mutual funds with similar
investment objectives and to stock or other relevant indices. For example,
the Buffalo Funds may compare their performance to rankings prepared by
Lipper Analytical Services, Inc. (Lipper), a widely recognized independent
service which monitors the performance of mutual funds. The Buffalo
Balanced Fund, the Buffalo Equity Fund and the Buffalo USA Global Fund may
compare their performance to the Standard & Poor's 500 Stock Index (S&P
500), an index of unmanaged groups of common stocks, the Dow Jones
Industrial Average, a recognized unmanaged index of common stocks of 30
industrial companies listed on the NYSE, or the Consumer Price Index. The
Buffalo High Yield Fund may compare its performance to the Shearson/Lehman
Government/Corporate Index, an unmanaged index of government and corporate
bonds, or the Consumer Price Index. Performance information, rankings,
ratings, published editorial comments and listings as reported in national
financial publications such as Kiplinger's Personal Finance Magazine,
Business Week, Morningstar, Investor's Business Daily, Institutional
Investor, The Wall Street Journal, Mutual Fund Forecaster, No Load
Investor, Money, Forbes, Fortune and Barron's may also be used in comparing
performance of the Funds. Performance comparisons should not be considered
as representative of the future performance of any Fund. Further
information regarding the performance of the Buffalo Funds is contained in
the "Statement of Additional Information."
Performance rankings, recommendations, published editorial comments and
listings reported in Money, Barron's, Kiplinger's Personal Finance
Magazine, Financial World, Forbes, U.S. News & World Report, Business Week,
The Wall Street Journal, Investors Business Daily, USA Today, Fortune and
Stanger's, may also be cited (if any of the Funds is listed in any such
publication) or used for comparison, as well as performance listings and
rankings from Morningstar Mutual Funds, Personal Finance, Income and
Safety, The Mutual Fund Letter, No-Load Fund Investor, United Mutual Fund
Selector, No-Load Fund Analyst, No Load Fund X, Louis Rukeyeser's Wall
Street Newsletter, Donoghue's Money Letter, CDA Investment Technologies,
Inc., Wiesenberger Investment Company Service and Donoghue's Mutual Fund
Almanac.
HOW TO PURCHASE SHARES
You must specify the Fund in which you desire to invest on your application
form. Failure to do so will result in the application and your check or
bank wire being returned to you.
Shares are purchased at net asset value (no sales charge) from the Fund
through its agent, Jones & Babson, Inc., Three Crown Center, 2440 Pershing
Road, Suite G-15, Kansas City, MO 64108. For information call toll free 1-
800-4-BABSON (1-800-422-2766), or in the Kansas City area 471-5200. If an
investor wishes to engage the services of any other broker to purchase (or
redeem) shares of the Fund, a fee may be charged by such broker. The Fund
will not be responsible for the consequences of delays including delays in
the banking or Federal Reserve wire systems.
You do not pay a sales commission when you buy shares of the Fund. Shares
are purchased at the Fund's net asset value (price) per share next
effective after a purchase order and payment have been received by the
Fund.
<PAGE>
In the case of certain institutions which have made satisfactory
payment arrangements with a Fund, orders may be processed at the net asset
value per share next effective after a purchase order has been received by
the Fund.
The Funds reserve the right in their sole discretion to withdraw all or any
part of the offerings made by this prospectus or to reject purchase orders
when, in the judgment of management, such withdrawal or rejection is in the
best interest of a Fund and its shareholders. The Funds also reserve the
right at any time to waive or increase the minimum requirements applicable
to initial or subsequent investments with respect to any person or class of
persons, which include shareholders of the Funds' special investment
programs. The Funds reserve the right to refuse to accept orders for Fund
shares unless accompanied by payment, except when a responsible person has
indemnified the Fund against losses resulting from the failure of investors
to make payment. In the event that a Fund sustains a loss as the result of
failure by a purchaser to make payment, the Funds' underwriter, Jones &
Babson, Inc. will cover the loss.
INITIAL INVESTMENTS
Initial investments By mail.
You may open an account and make an investment by completing and signing
the application which accompanies this prospectus. Make your check ($2,500
minimum unless your purchase is pursuant to an IRA or the Uniform Transfers
(Gifts) to Minors Act in which case the minimum initial purchase is $250)
payable to UMB Bank, n.a. Mail your application and check to:
The Buffalo Fund Group
Three Crown Center
2440 Pershing Road, Suite G-15
Kansas City, Missouri 64108
Initial investments By wire.
You may purchase shares of a Fund by wiring funds ($2,500 minimum) through
the Federal Reserve Bank to the custodian, UMB Bank, n.a. Prior to sending
your money, you must call the Fund toll free 1-800-4-BABSON (1-800-422-
2766), or in the Kansas City area 471-5200, and provide it with the
identity of the registered account owner, the registered address, the
Social Security or Taxpayer Identification Number of the registered owner,
the amount being wired, the name and telephone number of the wiring bank
and the person to be contacted in connection with the order. You will then
be provided a Fund account number, after which you should instruct your
bank to wire the specified amount, along with the account number and the
account registration to:
UMB Bank, n.a.
Kansas City, Missouri, ABA #101000695
For Buffalo Balanced Fund, Inc./
AC= 987059-5095
For Buffalo Equity Fund, Inc./
AC= 987071-5880
For Buffalo USA Global Fund, Inc./
AC= 987071-5902
For Buffalo High Yield Fund, Inc./
AC= 987071-5899
OBI=(assigned Fund number and name in
which registered.)
<PAGE>
A completed application must be sent to the Fund as soon as possible so the
necessary remaining information can be recorded in your account. Payment of
redemption proceeds will be delayed until the completed application is
received by the Fund.
INVESTMENTS SUBSEQUENT TO
INITIAL INVESTMENT
You may add to your Fund account at any time in amounts of $100 or more if
purchases are made by mail, or $1,000 or more if purchases are made by wire
or telephone. Automatic monthly investments must be in amounts of $100 or
more.
Checks should be mailed to the Fund at its address, but make them payable
to UMB Bank, n.a. Always identify your account number or include the
detachable reminder stub which accompanies each confirmation.
Wire share purchases should include your account registration, your account
number and the Buffalo Fund in which you are purchasing shares. It also is
advisable to notify the Fund by telephone that you have sent a wire
purchase order to the bank.
TELEPHONE INVESTMENT SERVICE
To use the Telephone Investment Service, you must first establish your Fund
account and authorize telephone orders in the application form, or,
subsequently, on a special authorization form provided upon request. If you
elect the Telephone Investment Service, you may purchase Fund shares by
telephone and authorize the Fund to draft your checking account for the
cost of the shares so purchased. You will receive the next available price
after the Fund has received your telephone call. Availability and
continuance of this privilege is subject to acceptance and approval by the
Fund and all participating banks. During periods of increased market
activity, you may have difficulty reaching the Fund by telephone, in which
case you should contact the Fund by mail or telegraph. The Fund will not
be responsible for the consequences of delays including delays in the
banking or Federal Reserve wire systems.
The Fund will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine, and if such procedures are not
followed, the Fund may be liable for losses due to unauthorized or
fraudulent instructions. Such procedures may include, but are not limited
to, requiring personal identification prior to acting upon instructions
received by telephone, providing written confirmations of such
transactions, and/or tape recording of telephone instructions.
The Fund reserves the right to initiate a charge for this service and to
terminate or modify any or all of the privileges in connection with this
service at any time upon 15 days written notice to shareholders, and to
terminate or modify the privileges without prior notice in any
circumstances where such termination or modification is in the best
interest of the Fund and its investors.
AUTOMATIC MONTHLY
INVESTMENT PLAN
You may elect to make monthly investments in a constant dollar amount from
your checking account ($100 minimum). The Fund will draft your checking
account on the same day each month in the amount you authorize in your
application, or, subsequently, on a special authorization form provided
upon request. Availability and continuance of this privilege is subject to
acceptance and approval by the Fund and all participating banks. If the
date selected falls on a day upon which the Fund shares are not priced,
investment will be made on the first date thereafter upon which Fund shares
are priced. The Fund will not be responsible for the consequences of delays
including delays in the banking or Federal Reserve wire systems.
<PAGE>
The Funds reserve the right to initiate a charge for this service and to
terminate or modify any or all of the privileges in connection with this
service at any time upon 15 days written notice to shareholders, and to
terminate or modify the privileges without prior notice in any
circumstances where such termination or modification is in the best
interest of the Fund and its investors.
HOW TO REDEEM SHARES
Each of the Funds will redeem shares at the price (net asset value per
share) next computed after receipt of a redemption request in "good order."
(See "How Share Price is Determined," page __.)
A written request for redemption, together with an endorsed share
certificate where a certificate has been issued, must be received by the
Fund in order to constitute a valid tender for redemption. For
authorization of redemptions by a corporation, it will also be necessary to
have an appropriate certified copy of resolutions on file with the Fund
before a redemption request will be considered in "good order." In the case
of certain institutions which have made satisfactory redemption
arrangements with a Fund, redemption orders may be processed by facsimile
or telephone transmission at net asset value per share next effective after
receipt by the Fund. If an investor wishes to engage the services of any
other broker to redeem (or purchase) shares of any Fund, a fee may be
charged by such broker.
To be in "good order" the request must include the following:
(1) A written redemption request or stock assignment (stock power)
containing the genuine signature of each registered owner exactly as the
shares are registered, with clear identification of the account by
registered name(s) and account number and the number of shares or the
dollar amount to be redeemed;
(2) any outstanding stock certificates representing shares to be
redeemed;
(3) signature guarantees as required; and (See Signature Guarantees
page [ ].)
(4) any additional documentation which the Fund may deem necessary
to insure a genuine redemption.
Where additional documentation is normally required to support redemptions
as in the case of corporations, fiduciaries, and others who hold shares in
a representative or nominee capacity such as certified copies of corporate
resolutions, or certificates of incumbency, or such other documentation as
may be required under the Uniform Commercial Code or other applicable laws
or regulations, it is the responsibility of the shareholder to maintain
such documentation on file and in a current status. A failure to do so will
delay the redemption. If you have questions concerning redemption
requirements, please write or telephone the Fund well ahead of an
anticipated redemption in order to avoid any possible delay.
Requests which are subject to special conditions or which specify an
effective date other than as provided herein cannot be accepted. All
redemption requests must be transmitted to the Fund at Three Crown Center,
2440 Pershing Road, Suite G-15, Kansas City, Missouri 64108. Each of the
Funds will redeem shares at the price (net asset value per share) next
computed after receipt of a redemption request in "good order." (See "How
Share Price is Determined," page [ ].)
Each of the Funds will endeavor to transmit redemption proceeds to the
proper party, as instructed, as soon as practicable after a redemption
request has been received in "good order" and accepted, but in no event
later than the seventh day thereafter. Transmissions are made by mail
unless an expedited method has been authorized and specified in the
redemption request. The Funds will not be responsible for the consequences
of delays including delays in the banking or Federal Reserve wire systems.
Redemptions will not become effective until all documents in the form
required have been received. In the case of redemption requests made within
15 days of
<PAGE>
the date of purchase, the Fund will delay transmission of
proceeds until such time as it is certain that unconditional payment in
federal funds has been collected for the purchase of shares being redeemed
or 15 days from the date of purchase. You can avoid the possibility of
delay by paying for all of your purchases with a transfer of federal funds.
Signature Guarantees are required in connection with all redemptions by
mail, or changes in share registration, except as hereinafter provided.
These requirements may be waived by a Fund in certain instances where it
appears reasonable to do so and will not unduly affect the interests of
other shareholders. Signature(s) must be guaranteed by an "eligible
guarantor institution" as defined under Rule l7Ad-15 under the Securities
Exchange Act of 1934. Eligible guarantor institutions include: (1) national
or state banks, savings associations, savings and loan associations, trust
companies, savings banks, industrial loan companies and credit unions; (2)
national securities exchanges, registered securities associations and
clearing agencies; or (3) securities broker/dealers which are members of a
national securities exchange or clearing agency or which have a minimum net
capital of $100,000. A notarized signature will not be sufficient for the
request to be in proper form.
Signature guarantees will be waived for mail redemptions of $10,000 or
less, but they will be required if the checks are to be payable to someone
other than the registered owner(s), or are to be mailed to an address
different from the registered address of the shareholder(s), or where there
appears to be a pattern of redemptions designed to circumvent the signature
guarantee requirement, or where a Fund has other reason to believe that
this requirement would be in the best interests of the Fund and its
shareholders.
The right of redemption may be suspended or the date of payment postponed
beyond the normal seven-day period when the New York Stock Exchange is
closed or under emergency circumstances as determined by the Securities and
Exchange Commission. Further, each of the Funds reserves the right to
redeem its shares in kind under certain circumstances. If shares are
redeemed in kind, the shareholder may incur brokerage costs when converting
into cash. Redemptions in-kind must be in the form of readily marketable
securities. Additional details are set forth in the "Statement of
Additional Information."
Due to the high cost of maintaining smaller accounts, the Board of
Directors has authorized each of the Funds to close shareholder accounts
where their value falls below the current minimum initial investment
requirement at the time of initial purchase as a result of redemptions and
not as the result of market action, and remains below this level for 60
days after each such shareholder account is mailed a notice of: (1) the
Fund's intention to close the account, (2) the minimum account size
requirement, and (3) the date on which the account will be closed if the
minimum size requirement is not met.
SYSTEMATIC REDEMPTION PLAN
If you own shares in an open account valued at $10,000 or more, and desire
to make regular monthly or quarterly withdrawals without the necessity and
inconvenience of executing a separate redemption request to initiate each
withdrawal, you may enter into a Systematic Withdrawal Plan by completing
forms obtainable from the Fund. For this service, the manager may charge
you a fee not to exceed $1.50 for each withdrawal. Currently the manager
assumes the additional expenses arising out of this type of plan, but it
reserves the right to initiate such a charge at any time in the future when
it deems it necessary. If such a charge is imposed, participants will be
provided 30 days notice.
Subject to a $50 minimum, you may withdraw each period a specified dollar
amount. Shares also may be redeemed at a rate calculated to exhaust the
account at the end of a specified period of time.
Dividends and capital gains distributions must be reinvested in additional
shares. Under all withdrawal programs, liquidation of shares in excess of
dividends and distributions reinvested will diminish and may exhaust your
account, particularly during a period of declining share values.
<PAGE>
You may revoke or change your plan or redeem all of your remaining shares
at any time. Withdrawal payments will be continued until the shares are
exhausted or until the Fund or you terminate the plan by written notice to
the other.
HOW TO EXCHANGE SHARES
BETWEEN BUFFALO FUNDS
Shareholders may exchange their Fund shares, which have been held in open
account for 30 days or more, and for which good payment has been received,
for identically registered shares of any Fund in the Buffalo Fund Group
which is legally registered for sale in the state of residence of the
investor, provided that the minimum amount exchanged has a value of $1,000
or more and meets the minimum investment requirement of the Fund into which
it is exchanged.
To authorize the Telephone/Telegraph Exchange Privilege, all registered
owners must sign the appropriate section on the original application, or
the Fund must receive a special authorization form, provided upon request.
During periods of increased market activity, you may have difficulty
reaching the Fund by telephone, in which case you should contact the Fund
by mail or telegraph. The Fund reserves the right to initiate a charge for
this service and to terminate or modify any or all of the privileges in
connection with this service at any time and without prior notice under any
circumstances, where continuance of these privileges would be detrimental
to the Fund or its shareholders, such as an emergency, or where the volume
of such activity threatens the ability of the Fund to conduct business, or
under any other circumstances, upon 60 days written notice to shareholders.
The Fund will not be responsible for the consequences of delays including
delays in the banking or Federal Reserve wire systems.
The Fund will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine, and if such procedures are not
followed, the Fund may be liable for losses due to unauthorized or
fraudulent instructions. Such procedures may include, but are not limited
to requiring personal identification prior to acting upon instructions
received by telephone, providing written confirmations of such
transactions, and/or tape recording of telephone instructions.
Exchanges by mail may be accomplished by a written request properly signed
by all registered owners identifying the account, the number of shares or
dollar amount to be redeemed for exchange, and the Buffalo Fund into which
the account is being transferred.
If you wish to exchange part or all of your shares in the Fund for shares
of a Fund in the Buffalo Fund Group, you should review the prospectus of
the Fund to be purchased, which can be obtained from Jones & Babson, Inc.
Any such exchange will be based on the respective net asset values of the
shares involved. Any exchange between Funds involves the sale of an asset.
Unless the shareholder account is tax-deferred, this is a taxable event.
HOW SHARE PRICE IS DETERMINED
In order to determine the price at which new shares will be sold and at
which issued shares presented for redemption will be liquidated, the net
asset value per share of each Fund is computed once daily, Monday through
Friday, at the specific time during the day that the Board of Directors
sets at least annually, except on days on which changes in the value of
portfolio securities will not materially affect the net asset value, or
days during which no security is tendered for redemption and no order to
purchase or sell such security is received by a Fund, or customary
holidays. For a list of the holidays during which the Funds are not open
for business, see "How Share Price is Determined" in the "Statement of
Additional Information."
<PAGE>
The price at which new shares of a Fund will be sold and at which issued
shares presented for redemption will be liquidated is computed once daily
at 4:00 P.M. (Eastern Time), except on those days when the Fund is not open
for business.
The per share calculation is made by subtracting from each of the Fund's
total assets any liabilities and then dividing into this amount the total
outstanding shares as of the date of the calculation. Each security listed
on an exchange is valued at its last sale price on that exchange on the
date as of which assets are valued. Where the security is listed on more
than one exchange, each of the Funds will use the price of that exchange
which it generally considers to be the principal Exchange on which the
security is traded. Lacking sales, the security is valued at the mean
between the current closing bid and asked prices. An unlisted security for
which over-the-counter market quotations are readily available is valued at
the mean between the last current bid and asked prices. When market
quotations are not readily available, any security or other asset is valued
at its fair value as determined in good faith by the Board of Directors.
OFFICERS AND DIRECTORS
The officers of each of the Funds manage its day-to-day operations. The
Funds' manager and their officers are subject to the supervision and
control of the respective Board of Directors. A list of the officers and
directors of each of the Funds and a brief statement of their present
positions and principal occupations during the past five years is set forth
in the "Statement of Additional Information."
MANAGEMENT AND
INVESTMENT COUNSEL
Jones & Babson, Inc. was founded in 1960. It organized the Funds in 1994,
and acts as their manager and principal underwriter. Pursuant to the
current Management Agreement for each of the Buffalo Funds, Jones & Babson,
Inc. provides or pays the cost of all management, supervisory and
administrative services required in the normal operation of the Fund. This
includes investment management and supervision; fees of the custodian,
independent auditors and legal counsel; remuneration of officers, directors
and other personnel; rent; shareholder services, including the maintenance
of the shareholder accounting system and transfer agency; and such other
items as are incidental to corporate administration.
Not considered normal operating expenses, and therefore payable by each of
the Funds, are taxes, interest, governmental charges and fees, including
registration of a Fund and its shares with the Securities and Exchange
Commission and the Securities Departments of the various States, brokerage
costs, dues, and all extraordinary costs and expenses including but not
limited to legal and accounting fees incurred in anticipation of or arising
out of litigation or administrative proceedings to which a Fund, its
officers or directors may be subject or a party thereto.
As a part of the Management Agreement, Jones & Babson, Inc. employs at its
own expense Kornitzer Capital Management, Inc. as its investment counsel to
assist in the investment advisory function for Buffalo Balanced Fund,
Buffalo Equity Fund, Buffalo USA Global Fund and Buffalo High Yield Fund.
Kornitzer Capital Management, Inc. is an independent investment counseling
firm founded in 1989. It serves a broad variety of individual, corporate
and other institutional clients by maintaining an extensive research and
analytical staff. It has an experienced investment analysis and research
staff which eliminates the need for Jones & Babson, Inc. and the Fund to
maintain an extensive duplicate staff, with the consequent increase in the
cost of investment advisory service. The cost of the services of Kornitzer
Capital Management, Inc. is included in the fee of Jones & Babson, Inc. The
Management Agreement limits the liability of the manager and its investment
counsel, as well as their officers, directors and personnel, to acts or
omissions involving willful malfeasance, bad faith, gross negligence, or
reckless disregard of their duties. The organizational arrangements of the
investment counsel require that all investment decisions be made by
committee, and no person is primarily responsible for making
recommendations to that committee.
<PAGE>
As compensation for all the foregoing services, the Buffalo Balanced Fund,
the Buffalo Equity Fund, the Buffalo USA Global Fund and the Buffalo High
Yield Fund each pay Jones & Babson, Inc. a fee at the annual rate of one
percent (1%) of average daily net assets from which Jones & Babson, Inc.
pays Kornitzer Capital Management, Inc. a fee of 50/100 (.50%) of average
daily net assets. The fees are computed daily and paid semimonthly. The
total expenses of Buffalo Balanced Fund for the fiscal period ended March
31, 1995, amounted to .[ ]% of the Fund. Investment counsel fees of
$[ ] were paid to Kornitzer Capital Management. Buffalo Equity
Fund, Buffalo USA Global Fund and Buffalo High Yield Fund were not in
operation during the fiscal period ended March 31, 1995.
The annual fee charged by Jones & Babson, Inc. is higher than the fees of
most other investment advisers whose charges cover only investment advisory
services with all remaining operational expenses absorbed directly by the
Fund, however, it is anticipated that the total expenses of the Fund will
compare favorably with those of other mutual funds whose advisors' fees
cover only investment advisory services with all remaining operational
expenses absorbed by the Funds.
Certain officers and directors of the Fund are also officers or directors
or both of other Buffalo Funds, Jones & Babson, Inc. or Kornitzer Capital
Management, Inc.
Jones & Babson, Inc. is a wholly-owned subsidiary of Business Men's
Assurance Company of America, which is considered to be a controlling
person under the Investment Company Act of 1940. Assicurazioni Generali
S.p.A., an insurance organization founded in 1831 based in Trieste, Italy
is considered to be a controlling person and is the ultimate parent of
Business Men's Assurance Company of America. Mediobanca is a 5% owner of
Generali.
Kornitzer Capital Management, Inc. is a closely held corporation and has
limitations in the ownership of its stock designed to maintain control in
those who are active in management.
The current Management Agreements between each of the Funds and Jones &
Babson, Inc., which include the Investment Counsel Agreements between Jones
& Babson, Inc. and Kornitzer Capital Management, Inc. will continue in
effect until October 31, 1996, except the Buffalo Balanced Fund Agreements
which will continue in effect until October 31, 1995. The Agreements will
continue automatically for successive annual periods ending each October 31
so long as such continuance is specifically approved at least annually by
the Board of Directors of the respective Fund or by the vote of a majority
of the outstanding voting securities of the respective Fund, and, provided
also that such continuance is approved by the vote of a majority of the
directors who are not parties to the Agreements or interested persons of
any such party at a meeting held in person and called specifically for the
purpose of evaluating and voting on such approval. Both Agreements provide
that either party may terminate by giving the other 60 days written notice.
The Agreements terminate automatically if assigned by either party.
GENERAL INFORMATION
AND HISTORY
The Buffalo Balanced Fund was incorporated in Maryland on January 25, 1994.
The Buffalo Equity Fund, the Buffalo USA Global Fund and the Buffalo High
Yield Fund each were incorporated in Maryland on November 23, 1994. Each
of the Buffalo Funds has a present authorized capitalization of 10,000,000
shares of $1 par value common stock. All shares are of the same class with
like rights and privileges. Each full and fractional share, when issued and
outstanding, has: (1) equal voting rights with respect to matters which
affect the Fund; and (2) equal dividend, distribution and redemption rights
to the assets of the Fund. Shares when issued are fully paid and non-
assessable. The Funds may create other series of stock but will not issue
any senior securities. Shareholders do not have pre-emptive or conversion
rights.
<PAGE>
Non-cumulative voting - These shares have non-cumulative voting rights,
which means that the holders of more than 50% of the shares voting for the
election of directors can elect 100% of the directors, if they choose to do
so, and in such event, the holders of the remaining less than 50% of the
shares voting will not be able to elect any directors.
The Maryland Statutes permit registered investment companies, such as the
Funds, to operate without an annual meeting of shareholders under specified
circumstances if an annual meeting is not required by the Investment
Company Act of 1940. There are procedures whereby the shareholders may
remove directors. These procedures are described in the Statement of
Additional Information under the caption "Officers and Directors." The
Funds have adopted the appropriate provisions in its By-Laws and may not,
at its discretion, hold annual meetings of shareholders for the following
purposes unless required to do so: (1) election of directors; (2) approval
of any investment advisory agreement; (3) ratification of the selection of
independent auditors; and (4) approval of a distribution plan. As a result,
the Funds do not intend to hold annual meetings.
The Funds may use the name "Buffalo" in its name so long as Kornitzer
Capital Management, Inc. is continued as its investment counsel. Complete
details with respect to the use of the name are set out in each of the
Management Agreements between the Funds and Jones & Babson, Inc.
This prospectus omits certain of the information contained in the
registration statement filed with the Securities and Exchange Commission,
Washington, D.C. These items may be inspected at the offices.of the
Commission or obtained from the Commission upon payment of the fee
prescribed. In the opinion of the Staff of the Securities and Exchange
Commission, the use of this combined Prospectus may possibly subject all
Funds to a certain amount of liability for any losses arising out of any
statement or omission in this prospectus regarding a particular Fund. In
the opinion of the Funds' management, however, the risk of such liability
is not materially increased by the use of a combined Prospectus.
DIVIDENDS, DISTRIBUTIONS AND THEIR TAXATION
The Buffalo Balanced Fund and the Buffalo High Yield Fund pay dividends
from net investment income quarterly, usually in March, June, September and
December. Distribution from capital gains realized on the sale of
securities, if any, will be declared by the Buffalo Balanced Fund annually
on or before December 31 and by the Buffalo High Yield Fund semiannually,
usually in June and December. The Buffalo Equity Fund and the Buffalo USA
Global Fund pay dividends from net investment income and capital gains
semiannually, usually in June and December. Dividend and capital gains
distributions will be reinvested automatically in additional shares at the
net asset value per share computed and effective at the close of business
on the day after the record date, unless the shareholder has elected on the
original application, or by written instructions filed with the Fund, to
have them paid in cash.
Each of the Funds intends to qualify for taxation as a "regulated
investment company" under the Internal Revenue Code so that the Fund will
not be subject to federal income tax to the extent that it distributes its
income to its shareholders. Dividends, either in cash or reinvested in
shares, paid by a Fund from net investment income will be taxable to
shareholders as ordinary income, and will generally qualify in part for the
70% dividends-received deduction for corporations. The portion of the
dividends so qualified depends on the aggregate taxable qualifying dividend
income received by a Fund from domestic (U.S.) sources. The Funds will send
to shareholders a statement each year advising the amount of the dividend
income which qualifies for such treatment.
Whether paid in cash or additional shares of a Fund, and regardless of the
length of time Fund shares have been owned by the shareholder,
distributions from long-term capital gains are taxable to shareholders as
such, but are not eligible for the dividends-received deduction for
corporations. Shareholders are notified annually by the Funds as to federal
tax status of dividends and distributions paid by the Fund. Such dividends
and distributions may also be subject to state and local taxes. Exchange
and redemption of Fund shares are taxable events for
<PAGE>
federal income tax purposes. Shareholders may also be subject to state and
municipal taxes on such exchanges and redemptions. You should consult your tax
adviser with respect to the tax status of distributions from the Fund in your
state and locality.
The Funds intend to declare and pay dividends and capital gains
distributions so as to avoid imposition of the federal excise tax. To do
so, each Fund expects to distribute during each calendar year an amount
equal to: (1) 98% of its calendar year ordinary income; (2) 98% of its
capital gains net income (the excess of short- and long-term capital gain
over short- and long-term capital loss) for the one-year period ending each
November 30; and (3) 100% of any undistributed ordinary or capital gain net
income from the prior fiscal year. Dividends declared in October, November
or December and made payable to shareholders of record in such a month are
deemed to have been paid by the Fund and received by shareholders on
December 31 of such year, so long as the dividends are actually paid before
February 1 of the following year.
To comply with IRS regulations, each of the Funds is required by federal
law to withhold 31% of reportable payments (which may include dividends,
capital gains distributions, and redemptions) paid to shareholders who have
not complied with IRS regulations. In order to avoid this withholding
requirement, shareholders must certify on their Application, or on a
separate form supplied by the Fund, that their Social Security or Taxpayer
Identification Number provided is correct and that they are not currently
subject to backup withholding, or that they are exempt from backup
withholding.
The federal income tax status of all distributions will be reported to
shareholders each January as a part of the annual statement of shareholder
transactions. Shareholders not subject to tax on their income will not be
required to pay tax on amounts distributed to them.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED HEREIN FOR GENERAL
INFORMATION ONLY. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX
ADVISERS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF AN INVESTMENT IN
THE FUND.
DESCRIPTION OF SECURITIES RATINGS
FIXED INCOME SECURITIES
DESCRIBED AND RATINGS
Description of Bond Ratings:
Standard & Poor's Corporation (S&P).
AAA - Highest Grade. These securities possess the ultimate degree of
protection as to principal and interest. Marketwise, they move with
interest rates, and hence provide the maximum safety on all counts.
AA - High Grade. Generally, these bonds differ from AAA issues only
in a small degree. Here too, prices move with the long-term money market.
A - Upper-medium Grade. They have considerable investment
strength, but are not entirely free from adverse effects of changes in
economic and trade conditions. Interest and principal are regarded as
safe. They predominately reflect money rates in their market behavior but,
to some extent, also economic conditions.
BBB - Bonds rated BBB are regarded as having an adequate capacity to
pay principal and interest. Whereas they normally exhibit protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for
bonds in this category than for bonds in the A category.
<PAGE>
BB, B, CCC, CC - Bonds rated BB, B, CCC and CC are regarded, on balance,
as predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the
obligations. BB indicates the lowest degree of speculation and CC the
highest degree of speculation. While such bonds will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
Moody's Investors Service, Inc. (Moody's).
Aaa - Best Quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt-edge." Interest
payments are protected by a large, or by an exceptionally stable margin,
and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa - High Quality by All Standards. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities, fluctuation of protective elements may be of greater amplitude,
or there may be other elements present which make the long-term risks
appear somewhat greater.
A - Upper-medium Grade. Factors giving security to principal and
interest are considered adequate, but elements may be present which suggest
a susceptibility to impairment sometime in the future.
Baa - Bonds which are rated Baa are considered as medium grade
obligations, i. e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present, but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba - Bonds which are rated Ba are judged to have predominantly speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
maintenance of other terms of the contract over any long period of time may
be small.
Caa - Bonds which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with respect
to principal or interest.
Ca - Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
SHAREHOLDER SERVICES
The Funds and their manager offer shareholders a broad variety of services
described throughout this prospectus. In addition, the following services
are available:
Automatic Monthly Investment - You may elect to make monthly investments in
a constant dollar amount from your checking account ($100 minimum). The
Fund will draft your checking account on the same day each month in the
amount you authorize in your application, or, subsequently, on a special
authorization form provided upon request.
Automatic Reinvestment - Dividends and capital gains distributions may be
reinvested automatically, or shareholders may elect to have dividends paid
in cash and capital gains reinvested, or to have both paid in cash.
<PAGE>
Telephone Investments - You may make investments of $1,000 or more by
telephone if you have authorized such investments in your application, or,
subsequently, on a special authorization form provided upon request. See
"Telephone Investment Service."
Automatic Exchange - You may exchange shares from your account ($100
minimum) in any of the Buffalo Funds to an identically registered account
in any other Fund in the Buffalo Group according to your instructions.
Monthly exchanges will be continued until all shares have been exchanged or
until you terminate the Automatic Exchange authorization. A special
authorization form will be provided upon request.
Transfer of Ownership - A shareholder may transfer shares to another
shareholder account. The requirements which apply to redemptions apply to
transfers. A transfer to a new account must meet initial investment
requirements.
Systematic Redemption Plan - Shareholders who own shares in open account
valued at $10,000 or more may arrange to make regular withdrawals without
the necessity of executing & separate redemption request to initiate each
withdrawal.
Sub-Accounting - Keogh and corporate tax qualified retirement plans, as
well as certain other investors who must maintain separate participant
accounting records, may meet these needs through services provided by the
Funds' manager, Jones & Babson, Inc. Investment minimums may be met by
accumulating the separate accounts of the group. Although there is
currently no charge for sub-accounting, the Funds and their manager reserve
the right to make reasonable charges for this service.
Prototype Retirement Plans - Jones & Babson, Inc. offers a defined
contribution prototype plan - The Universal Retirement Plan - which is
suitable for all who are self-employed, including sole proprietors,
partnerships, and corporations. The Universal Prototype includes both money
purchase pension and profit-sharing plan options.
Individual Retirement Accounts - Also available is an Individual Retirement
Account (IRA). The IRA uses the IRS model form of plan and provides an
excellent way to accumulate a retirement fund which will earn tax-deferred
dollars until withdrawn. An IRA may also be used to defer taxes on certain
distributions from employer-sponsored retirement plans. You may contribute
up to $2,000 of compensation each year ($2,250 if a spousal IRA is
established), some or all of which may be deductible. Consult your tax
adviser concerning the amount of the tax deduction, if any.
Simplified Employee Pensions (SEPs) - The Jones & Babson IRA may be used
with IRS Form 5305 - SEP to establish a SEP-IRA, to which the self-employed
individual may contribute up to 15% of net earned income or $30,000,
whichever is less. A SEP-IRA offers the employer the ability to make the
same level of deductible contributions as a Profit-Sharing Plan with
greater ease of administration, but less flexibility in plan coverage of
employees.
SHAREHOLDER INQUIRIES
Telephone inquiries may be made toll free to the Fund, 1-800-49-BUFFALO (1-
800-492-8332).
Shareholders may address written inquiries to the Funds at:
The Buffalo Group of Funds
Three Crown Center
2440 Pershing Road, Suite G-15
Kansas City, MO 64108
<PAGE>
BUFFALO BALANCED FUND
BUFFALO EQUITY FUND
BUFFALO USA GLOBAL FUND
BUFFALO HIGH YIELD FUND
No Load Mutual Funds
Investment Counsel
Kornitzer Capital Management, Inc.
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
Kansas City, Missouri
LEGAL COUNSEL
STRADLEY, RONON, STEVENS & YOUNG
Philadelphia, Pennsylvania
JOHN G. DYER
Kansas City, Missouri
CUSTODIAN
UMB BANK, n.a.
Kansas City, Missouri
TRANSFER AGENT
JONES & BABSON, INC.
Kansas City, Missouri
PROSPECTUS
JULY 31, 1995
<PAGE>
PART B
BUFFALO BALANCED FUND, INC.
BUFFALO EQUITY FUND, INC.
BUFFALO USA GLOBAL FUND, INC.
BUFFALO HIGH YIELD FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
July 31, 1995
This Statement is not a prospectus but should be read in conjunction with
the Funds' current Prospectus dated July 31, 1995. To obtain the
Prospectus please call the Fund toll-free 1-800-49-BUFFALO (1-800-492-
8332).
TABLE OF CONTENTS
Page
Investment Objectives and Policies
Portfolio Transactions
Investment Restrictions
Buffalo Balanced Fund
Buffalo Equity Fund
Buffalo USA Global Fund
Buffalo High Yield Fund
Performance Measures
How the Fund's Shares are Distributed
How Share Purchases are Handled
Redemption of Shares
Signature Guarantees
Management and Investment Counsel
How Share Price is Determined
Officers and Directors
Custodian
Independent Auditors
Other Funds
Description of Commercial Paper Ratings
Financial Statements
INVESTMENT OBJECTIVES AND POLICIES
The following policies supplement the Fund's investment objective and
policies set forth in the Prospectus.
PORTFOLIO TRANSACTIONS
Decisions to buy and sell securities for the Funds are made by Jones &
Babson, Inc. pursuant to recommendations by Kornitzer Capital Management,
Inc. Officers of the Funds and Jones & Babson, Inc. are generally
responsible for implementing or supervising these decisions, including
allocation of portfolio brokerage and principal business as well as the
negotiation of commissions and/or the price of the securities. In
instances where securities are purchased on a commission basis, each of the
Funds will seek competitive and reasonable commission rates based on
circumstances of the trade involved and to the extent that they do not
detract from the quality of the execution.
<PAGE>
Each of the Funds, in purchasing and selling portfolio securities, will
seek the best available combination of execution and overall price (which
shall include the cost of the transaction) consistent with the
circumstances which exist at the time. The Funds do not intend to solicit
competitive bids on each transaction.
Each of the Funds believes it is in its best interest and that of its
shareholders to have a stable and continuous relationship with a diverse
group of financially strong and technically qualified broker-dealers who
will provide quality executions at competitive rates. Broker-dealers
meeting these qualifications also will be selected for their demonstrated
loyalty to the respective Fund, when acting on its behalf, as well as for
any research or other services provided to the respective Fund.
Substantially all of the portfolio transactions are through brokerage firms
which are members of the New York Stock Exchange because usually the most
active market in the size of the Funds' transactions and for the types of
securities predominant in the Funds' respective portfolios is to be found
there. When buying securities in the over-the-counter market, each of the
Funds will select a broker who maintains a primary market for the security
unless it appears that a better combination of price and execution may be
obtained elsewhere. The Funds normally will not pay a higher commission
rate to broker-dealers providing benefits or services to it than it would
pay to broker-dealers who do not provide it such benefits or services.
However, each of the Funds reserves the right to do so within the
principles set out in Section 28(e) of the Securities Exchange Act of 1934
when it appears that this would be in the best interests of the share-
holders.
No commitment is made to any broker or dealer with regard to placing of
orders for the purchase or sale of Fund portfolio securities, and no
specific formula is used in placing such business. Allocation is reviewed
regularly by both the Boards of Directors of the Funds and Jones & Babson,
Inc.
Since the Funds do not market their shares through intermediary brokers or
dealers, it is not the Funds' practice to allocate brokerage or principal
business on the basis of sales of their shares which may be made through
such firms. However, they may place portfolio orders with qualified
broker-dealers who recommend the Funds to other clients, or who act as
agent in the purchase of the Funds' shares for their clients.
Research services furnished by broker-dealers may be useful to the Funds'
manager and its investment counsel in serving other clients, as well as the
respective Funds. Conversely, the Funds may benefit from research services
obtained by the manager or its investment counsel from the placement of
portfolio brokerage of other clients.
When it appears to be in the best interest of its shareholders, each of the
Funds may join with other clients of the manager and its investment counsel
in acquiring or disposing of a portfolio holding. Securities acquired or
proceeds obtained will be equitably distributed among the Funds and other
clients participating in the transaction. In some instances, this
investment procedure may affect the price paid or received by a Fund or the
size of the position obtained by a Fund.
INVESTMENT RESTRICTIONS
In addition to the investment objective and portfolio management policies
set forth in the Prospectus under the caption "Investment Objective and
Portfolio Management Policy," the following restrictions also may not be
changed without approval of the "holders of a majority of the outstanding
shares" of the Fund.
The Buffalo Balanced Fund will not: (1) purchase the securities of any one
issuer, except the United States government, if immediately after and as a
result of such purchase (a) the value of the holdings of the Fund in the
securities of such issuer exceeds 5% of the value of the Fund's total
assets, or (b) the Fund owns more than 10% of the outstanding voting
securities, or any other class of securities, of such issuer; (2) engage in
the purchase or sale of real estate, commodities or futures contracts; (3)
underwrite the securities of other issuers; (4) make loans to any of its
officers, directors, or employees, or to its manager, or general
distributor, or officers or directors thereof; (5) make any loan (the
purchase of a security subject to a repurchase agreement or
<PAGE>
the purchase of a portion of an issue of publicly distributed debt securities
is not considered the making of a loan); (6) invest in companies for the
purpose of exercising control of management; (7) purchase securities on
margin, or sell securities short, except that the Fund may write covered call
options; (8) purchase shares of other investment companies except in the open
market at ordinary broker's commission or pursuant to a plan of merger or
consolidation; (9) invest in the aggregate more than 5% of the value of its
gross assets in the securities of issuers (other than federal, state,
territorial, or local governments, or corporations, or authorities
established thereby), which, including predecessors, have not had at least
three years' continuous operations; (10) except for transactions in its
shares or other securities through brokerage practices which are considered
normal and generally accepted under circumstances existing at the time,
enter into dealings with its officers or directors, its manager or
underwriter, or their officers or directors, or any organization in which
such persons have a financial interest; (11) purchase or retain securities
of any company in which any Fund officers or directors, or Fund manager,
its partner, officer, or director beneficially owns more than 1/2 of 1% of
said company's securities, if all such persons owning more than 1/2 of 1%
of such company's securities, own in the aggregate more than 5% of the
outstanding securities of such company; (12) borrow or pledge its credit
under normal circumstances, except up to 10% of its gross assets (computed
at the lower of fair market value or cost) temporarily for emergency or
extraordinary purposes, and not for the purpose of leveraging its
investments, and provided further that any borrowing in excess of 5% of the
total assets of the Fund shall have asset coverage of at least 3 to 1; (13)
make itself or its assets liable for the indebtedness of others; or (14)
invest in securities which are assessable or involve unlimited liability;
(15) purchase any securities which would cause 25% or more of the Fund's
total assets at the time of such purchase to be invested in any one
industry.
In addition to the fundamental investment restrictions set out above, in
order to comply with the law or regulations of various States, the Fund
will not engage in the following practices: (1) invest in securities which
are not readily marketable or in securities of foreign issuers which are
not listed on a recognized domestic or foreign securities exchange (the
Fund does not intend to invest in foreign securities; this policy is not
fundamental); (2) invest in puts, calls, straddles, spreads, and any
combination thereof if by reason thereof the value of its aggregate
investment in such classes of securities will exceed 5% of its total
assets, except that the Fund may write covered call options in excess of
this limitation; (3) invest in oil, gas and other mineral leases or
arbitrage transactions; (4) purchase or sell real estate (including limited
partnership interests, but excluding readily marketable interests in real
estate investment trusts or readily marketable securities of companies
which invest in real estate); or (5) purchase securities, including 144(a)
securities, of issuers which the company is restricted from selling to the
public without registration under the securities Act of 1933.
Certain States also require that the Fund's investments in warrants, valued
at the lower of cost or market, may not exceed 5% of the value of the
Fund's net assets. Included within that amount, but not to exceed 2% of
the value of the Fund's net assets may be warrants which are not listed on
the New York or American Stock Exchange. Warrants acquired by the Fund in
units or attached to securities may be deemed to be without value for
purposes of this limitation. In addition, the Fund has undertaken to the
state of California to comply with the expense limitations set forth in
Rule 260.140.84(a) of Title 10 of the California Administrative Code.
The Buffalo Equity Fund will not: (1) purchase the securities of any one
issuer, except the United States government, if immediately after and as a
result of such purchase (a) the value of the holdings of the Fund in the
securities of such issuer exceeds 5% of the value of the Fund's total
assets, or (b) the Fund owns more than 10% of the outstanding voting
securities, or any other class of securities, of such issuer; (2) engage in
the purchase or sale of real estate, commodities or futures contracts; (3)
underwrite the securities of other issuers; (4) make loans to any of its
officers, directors, or employees, or to its manager, or general
distributor, or officers or directors thereof; (5) make any loan (the
purchase of a security subject to a repurchase agreement or the purchase of
a portion of an issue of publicly distributed debt securities is not
considered the making of a loan); (6) invest in companies for the purpose
of exercising control of management; (7) purchase securities on margin, or
sell securities short, except that the Fund may write covered call options;
(8) purchase shares of other investment companies except in the open market
at ordinary broker's commission or pursuant to a plan of merger or
consolidation; (9) invest in the aggregate more than 5% of the value of its
gross assets in the
<PAGE>
securities of issuers (other than federal, state, territorial, or local
governments, or corporations, or authorities established thereby), which,
including predecessors, have not had at least three years' continuous
operations; (10) except for transactions in its shares or other securities
through brokerage practices which are considered normal and generally accepted
under circumstances existing at the time, enter into dealings with its
officers or directors, its manager or underwriter, or their officers or
directors, or any organization in which such persons have a financial
interest; (11) purchase or retain securities of any company in which any Fund
officers or directors, or Fund manager, its partner, officer, or director
beneficially owns more than 1/2 of 1% of said company's securities, if all
such persons owning more than 1/2 of 1% of such company's securities, own in
the aggregate more than 5% of the
outstanding securities of such company; (12) borrow or pledge its credit
under normal circumstances, except up to 10% of its gross assets (computed
at the lower of fair market value or cost) temporarily for emergency or
extraordinary purposes, and not for the purpose of leveraging its
investments, and provided further that any borrowing in excess of 5% of the
total assets of the Fund shall have asset coverage of at least 3 to 1; (13)
make itself or its assets liable for the indebtedness of others; or (14)
invest in securities which are assessable or involve unlimited liability;
(15) purchase any securities which would cause 25% or more of the Fund's
total assets at the time of such purchase to be invested in any one
industry.
In addition to the fundamental investment restrictions set out above, in
order to comply with the law or regulations of various States, the Fund
will not engage in the following practices: (1) invest in securities which
are not readily marketable or in securities of foreign issuers which are
not listed on a recognized domestic or foreign securities exchange (as a
non-fundamental policy, the Fund does not intend to invest directly in
foreign securities or foreign currencies but, may purchase foreign
securities through dollar-denominated American Depository Receipts); (2)
invest in puts, calls, straddles, spreads, and any combination thereof if
by reason thereof the value of its aggregate investment in such classes of
securities will exceed 5% of its total assets, except that the Fund may
write covered call options in excess of this limitation; (3) invest in oil,
gas and other mineral leases or arbitrage transactions; (4) purchase or
sell real estate (including limited partnership interests, but excluding
readily marketable interests in real estate investment trusts or readily
marketable securities of companies which invest in real estate); or (5)
purchase securities, including 144(a) securities, of issuers which the
company is restricted from selling to the public without registration under
the securities Act of 1933. The Fund intends to limit calls to writing
calls issued by the Options Clearing Corporation.
Certain States also require that the Fund's investments in warrants, valued
at the lower of cost or market, may not exceed 5% of the value of the
Fund's net assets. Included within that amount, but not to exceed 2% of
the value of the Fund's net assets may be warrants which are not listed on
the New York or American Stock Exchange. Warrants acquired by the Fund in
units or attached to securities may be deemed to be without value for
purposes of this limitation. In addition, the Fund has undertaken to the
state of California to comply with the expense limitations set forth in
Rule 260.140.84(a) of Title 10 of the California Administrative Code.
The Buffalo USA Global Fund will not: (1) purchase the securities of any
one issuer, except the United States government, if immediately after and
as a result of such purchase (a) the value of the holdings of the Fund in
the securities of such issuer exceeds 5% of the value of the Fund's total
assets, or (b) the Fund owns more than 10% of the outstanding voting
securities, or any other class of securities, of such issuer; (2) engage in
the purchase or sale of real estate, commodities or futures contracts; (3)
underwrite the securities of other issuers; (4) make loans to any of its
officers, directors, or employees, or to its manager, or general
distributor, or officers or directors thereof; (5) make any loan (the
purchase of a security subject to a repurchase agreement or the purchase of
a portion of an issue of publicly distributed debt securities is not
considered the making of a loan); (6) invest in companies for the purpose
of exercising control of management; (7) purchase securities on margin, or
sell securities short, except that the Fund may write covered call options;
(8) purchase shares of other investment companies except in the open market
at ordinary broker's commission or pursuant to a plan of merger or
consolidation; (9) invest in the aggregate more than 5% of the value of its
gross assets in the securities of issuers (other than federal, state,
territorial, or local governments, or corporations, or authorities
established thereby), which, including predecessors, have not had at least
three years' continuous operations; (10) except for transactions in its
shares or other securities through brokerage practices which are considered
<PAGE>
normal and generally accepted under circumstances existing at the time,
enter into dealings with its officers or directors, its manager or
underwriter, or their officers or directors, or any organization in which
such persons have a financial interest; (11) purchase or retain securities
of any company in which any Fund officers or directors, or Fund manager,
its partner, officer, or director beneficially owns more than 1/2 of 1% of
said company's securities, if all such persons owning more than 1/2 of 1%
of such company's securities, own in the aggregate more than 5% of the
outstanding securities of such company; (12) borrow or pledge its credit
under normal circumstances, except up to 10% of its gross assets (computed
at the lower of fair market value or cost) temporarily for emergency or
extraordinary purposes, and not for the purpose of leveraging its
investments, and provided further that any borrowing in excess of 5% of the
total assets of the Fund shall have asset coverage of at least 3 to 1; (13)
make itself or its assets liable for the indebtedness of others; or (14)
invest in securities which are assessable or involve unlimited liability;
(15) purchase any securities which would cause 25% or more of the Fund's
total assets at the time of such purchase to be invested in any one
industry.
In addition to the fundamental investment restrictions set out above, in
order to comply with the law or regulations of various States, the Fund
will not engage in the following practices: (1) invest in securities which
are not readily marketable or in securities of foreign issuers which are
not listed on a recognized domestic or foreign securities exchange (the
Fund does not intend to invest in foreign securities; this policy is not
fundamental); (2) invest in puts, calls, straddles, spreads, and any
combination thereof if by reason thereof the value of its aggregate
investment in such classes of securities will exceed 5% of its total
assets, except that the Fund may write covered call options in excess of
this limitation; (3) invest in oil, gas and other mineral leases or
arbitrage transactions; (4) purchase or sell real estate (including limited
partnership interests, but excluding readily marketable interests in real
estate investment trusts or readily marketable securities of companies
which invest in real estate); or (5) purchase securities, including 144(a)
securities, of issuers which the company is restricted from selling to the
public without registration under the securities Act of 1933.
Certain States also require that the Fund's investments in warrants, valued
at the lower of cost or market, may not exceed 5% of the value of the
Fund's net assets. Included within that amount, but not to exceed 2% of
the value of the Fund's net assets may be warrants which are not listed on
the New York or American Stock Exchange. Warrants acquired by the Fund in
units or attached to securities may be deemed to be without value for
purposes of this limitation. In addition, the Fund has undertaken to the
state of California to comply with the expense limitations set forth in
Rule 260.140.84(a) of Title 10 of the California Administrative Code.
The Buffalo High Yield Fund will not: (1) purchase the securities of any
one issuer, except the United States government, if immediately after and
as a result of such purchase (a) the value of the holdings of the Fund in
the securities of such issuer exceeds 5% of the value of the Fund's total
assets, or (b) the Fund owns more than 10% of the outstanding voting
securities, or any other class of securities, of such issuer; (2) engage in
the purchase or sale of real estate, commodities or futures contracts; (3)
underwrite the securities of other issuers; (4) make loans to any of its
officers, directors, or employees, or to its manager, or general
distributor, or officers or directors thereof; (5) make any loan (the
purchase of a security subject to a repurchase agreement or the purchase of
a portion of an issue of publicly distributed debt securities is not
considered the making of a loan); (6) invest in companies for the purpose
of exercising control of management; (7) purchase securities on margin, or
sell securities short, except that the Fund may write covered call options;
(8) purchase shares of other investment companies except in the open market
at ordinary broker's commission or pursuant to a plan of merger or
consolidation; (9) invest in the aggregate more than 5% of the value of its
gross assets in the securities of issuers (other than federal, state,
territorial, or local governments, or corporations, or authorities
established thereby), which, including predecessors, have not had at least
three years' continuous operations; (10) except for transactions in its
shares or other securities through brokerage practices which are considered
normal and generally accepted under circumstances existing at the time,
enter into dealings with its officers or directors, its manager or
underwriter, or their officers or directors, or any organization in which
such persons have a financial interest; (11) purchase or retain securities
of any company in which any Fund officers or directors, or Fund manager,
its partner, officer, or director beneficially owns more than 1/2 of 1% of
said company's securities, if all such persons owning more than 1/2 of 1%
of such company's securities, own in the
<PAGE>
aggregate more than 5% of the outstanding securities of such company; (12)
borrow or pledge its credit under normal circumstances, except up to 10% of
its gross assets (computed at the lower of fair market value or cost)
temporarily for emergency or extraordinary purposes, and not for the purpose
of leveraging its investments, and provided further that any borrowing in
excess of 5% of the total assets of the Fund shall have asset coverage of at
least 3 to 1; (13) make itself or its assets liable for the indebtedness of
others; or (14) invest in securities which are assessable or involve unlimited
liability; (15) purchase any securities which would cause 25% or more of the
Fund's total assets at the time of such purchase to be invested in any one
industry.
In addition to the fundamental investment restrictions set out above, in
order to comply with the law or regulations of various States, the Fund
will not engage in the following practices: (1) invest in securities which
are not readily marketable or in securities of foreign issuers which are
not listed on a recognized domestic or foreign securities exchange (the
Fund does not intend to invest in foreign securities; this policy is not
fundamental); (2) invest in puts, calls, straddles, spreads, and any
combination thereof if by reason thereof the value of its aggregate
investment in such classes of securities will exceed 5% of its total
assets, except that the Fund may write covered call options in excess of
this limitation; (3) invest in oil, gas and other mineral leases or
arbitrage transactions; (4) purchase or sell real estate (including limited
partnership interests, but excluding readily marketable interests in real
estate investment trusts or readily marketable securities of companies
which invest in real estate); or (5) purchase securities, including 144(a)
securities, of issuers which the company is restricted from selling to the
public without registration under the securities Act of 1933.
Certain States also require that the Fund's investments in warrants, valued
at the lower of cost or market, may not exceed 5% of the value of the
Fund's net assets. Included within that amount, but not to exceed 2% of
the value of the Fund's net assets may be warrants which are not listed on
the New York or American Stock Exchange. Warrants acquired by the Fund in
units or attached to securities may be deemed to be without value for
purposes of this limitation. In addition, the Fund has undertaken to the
state of California to comply with the expense limitations set forth in
Rule 260.140.84(a) of Title 10 of the California Administrative Code.
PERFORMANCE MEASURERS
From time to time, the Buffalo High Yield Fund may quote its yield in
advertisements, shareholder reports or other communications to
shareholders. Yield is calculated according to the following SEC
standardized formula.
Current yield reflects the income per share earned by a Fund's investments.
Current yield is determined by dividing the net investment income per share
earned during a 30-day base period by the maximum offering price per share
on the last day of the period and annualizing the result. Expenses accrued
for the period include any fees charged to all shareholders during the base
period.
The SEC standardized yield formula is as follows:
Yield = 2[a - b + 1)6 - 1]
cd
where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period
that were entitled to receive income distributions
d = the maximum offering price per share on the last day of the period.
<PAGE>
TOTAL RETURN
Each of the Buffalo Fund's "average annual total return" figures will be
computed according to a formula prescribed by the Securities and Exchange
Commission. The formula can be expressed as follows:
P(1+T)n = ERV
Where P = a hypothetical initial payment of $1000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value of a hypothetical
$1000 payment made at the beginning of the
1, 5 or 10 year (or other) periods at the end
of the 1, 5, or 10 year (or other) periods
(or fractional portions thereof).
Buffalo Balanced Fund total return from inception of the Fund through March
31, 1995 ___________________________.
HOW THE FUND'S SHARES ARE DISTRIBUTED
Jones & Babson, Inc., as agent of the Funds, agrees to supply its best
efforts as sole distributor of the Funds' shares and, at its own expense,
pay all sales and distribution expenses in connection with their offering
other than registration fees and other government charges.
Jones & Babson, Inc. does not receive any fee or other compensation under
the distribution agreement with each of the Buffalo Funds, which continue
in effect until October 31, 1995, and which will continue automatically for
successive annual periods ending each October 31, if continued at least
annually by the Funds' Boards of Directors, including a majority of those
Directors who are not parties to such Agreements or interested persons of
any such party. It terminates automatically if assigned by either party or
upon 60 days written notice by either party to the other.
Jones & Babson, Inc. also acts as sole distributor of the shares of David
L. Babson Growth Fund, Inc., D. L. Babson Bond Trust, D. L. Babson Money
Market Fund, Inc., D. L. Babson Tax-Free Income Fund, Inc., Babson
Enterprise Fund, Inc., Babson Enterprise Fund II, Inc., Babson Value Fund,
Inc., Shadow Stock Fund, Inc., Babson-Stewart Ivory International Fund,
Inc., Scout Stock Fund, Inc., Scout Bond Fund, Inc., Scout Money Market
Fund, Inc., Scout Tax-free Money Market Fund, Inc., Scout Regional Fund,
Inc., and Scout WorldWide Fund, Inc.
HOW SHARE PURCHASES ARE HANDLED
Each order accepted will be fully invested in whole and fractional shares,
unless the purchase of a certain number of whole shares is specified, at
the net asset value per share next effective after the order is accepted by
a Fund.
<PAGE>
Each investment is confirmed by a year-to-date statement which provides the
details of the immediate transaction, plus all prior transactions in your
account during the current year. This includes the dollar amount invested,
the number of shares purchased or redeemed, the price per share, and the
aggregate shares owned. A transcript of all activity in your account
during the previous year will be furnished each January. By retaining each
annual summary and the last year-to-date statement, you have a complete
detailed history of your account which provides necessary tax information.
A duplicate copy of a past annual statement is available from Jones &
Babson, Inc. at its cost, subject to a minimum charge of $5 per account,
per year requested.
Normally, the shares which you purchase are held by the Fund in open
account, thereby relieving you of the responsibility of providing for the
safekeeping of a negotiable share certificate. Should you have a special
need for a certificate, one will be issued on request for all or a portion
of the whole shares in your account. There is no charge for the first
certificate issued. A charge of $3.50 will be made for any replacement
certificates issued. In order to protect the interests of the other
shareholders, share certificates will be sent to those shareholders who
request them only after the Fund has determined that unconditional payment
for the shares represented by the certificate has been received by its
custodian, UMB Bank, n.a.
If an order to purchase shares must be canceled due to non-payment, the
purchaser will be responsible for any loss incurred by the Fund arising out
of such cancellation. To recover any such loss, the Fund reserves the
right to redeem shares owned by any purchaser whose order is canceled, and
such purchaser may be prohibited or restricted in the manner of placing
further orders.
The Fund reserves the right in its sole discretion to withdraw all or any
part of the offering made by the prospectus or to reject purchase orders
when, in the judgment of management, such withdrawal or rejection is in the
best interest of the Fund and its shareholders. The Fund also reserves the
right at any time to waive or increase the minimum requirements applicable
to initial or subsequent investments with respect to any person or class of
persons, which include shareholders of the Fund's special investment
programs.
REDEMPTION OF SHARES
The right of redemption may be suspended, or the date of payment postponed
beyond the normal seven-day period by each of the Fund' s Board of
Directors under the following conditions authorized by the Investment
Company Act of 1940: (1) for any period (a) during which the New York
Stock Exchange is closed, other than customary weekend and holiday closing,
or (b) during which trading on the New York Stock Exchange is restricted;
(2) for any period during which an emergency exists as a result of which
(a) disposal by the Fund of securities owned by it is not reasonably
practicable, or (b) it is not reasonably practicable for the Fund to
determine the fair value of its net assets; or (3) for such other periods
as the Securities and Exchange Commission may by order permit for the
protection of the Fund's shareholders.
Each of the Funds has elected to be governed by Rule 18f-1 under the
Investment Company Act of 1940 pursuant to which the Fund is obligated to
redeem shares solely in cash up to the lesser of $250,000 or 1% of the
Fund's net asset value during any 90-day period for any one shareholder.
Should redemptions by any shareholder exceed such limitation, the Fund may
redeem the excess in kind. If shares are redeemed in kind, the redeeming
shareholder may incur brokerage costs in converting the assets to cash.
The method of valuing securities used to make redemptions in kind will be
the same as the method of valuing portfolio securities described under "How
Share Price is Determined" in the Prospectus, and such valuation will be
made as of the same time the redemption price is determined.
SIGNATURE GUARANTEES
Signature guarantees normally reduce the possibility of forgery and are
required in connection with each redemption method to protect shareholders
from loss. Signature guarantees are required in connection with all
redemptions by mail or changes in share registration, except as provided in
the Prospectus.
<PAGE>
Signature guarantees must appear together with the signature(s) of the
registered owner(s), on:
(1) a written request for redemption,
(2) a separate instrument of assignment, which should specify the total
number of shares to be redeemed (this "stock power" may be obtained from
the Fund or from most banks or stock brokers), or
(3) all stock certificates tendered for redemption.
MANAGEMENT AND INVESTMENT COUNSEL
As a part of the Management Agreement, Jones & Babson, Inc. employs at its
own expense Kornitzer Capital Management, Inc., as its investment counsel.
Kornitzer Capital Management, Inc., was founded in 1989. It is a private
investment research and counseling organization serving individual,
corporate and other institutional clients.
The annual fee charged by Jones & Babson, Inc. covers all normal operating
costs of the Fund.
Kornitzer Capital Management, Inc., has an experienced investment analysis
and research staff which eliminates the need for Jones & Babson, Inc. and
the Fund to maintain an extensive duplicate staff, with the consequent
increase in the cost of investment advisory service. The cost of the
services of Kornitzer Capital Management, Inc. is included in the fee of
Jones & Babson, Inc.
HOW SHARE PRICE IS DETERMINED
The net asset value per share of each of the Fund's portfolio is computed
once daily, Monday through Friday, at the specific time during the day that
the Board of Directors of each of the Funds sets at least annually, except
on days on which changes in the value of a Fund's portfolio securities will
not materially affect the net asset value, or days during which no security
is tendered for redemption and no order to purchase or sell such security
is received by a Fund, or the following holidays:
New Year's Day January 1
Presidents' Holiday Third Monday in February
Good Friday Friday before Easter
Memorial Day Last Monday in May
Independence Day July 4
Labor Day First Monday in September
Thanksgiving Day Fourth Thursday in November
Christmas Day December 25
OFFICERS AND DIRECTORS
The Fund is managed by Jones & Babson, Inc. subject to the supervision and
control of the Board of Directors. The following table lists the Officers
and Directors of the Fund. Unless noted otherwise, the address of each
Officer and Director is Three Crown Center, 2440 Pershing Road, Suite G-15,
Kansas City, Missouri 64108. Except as indicated, each has been an employee
of Jones & Babson, Inc. for more than five years.
* Larry D. Armel, President and Director.
President and Director, Jones & Babson, Inc.; David L. Babson Growth
Fund, Inc., D. L. Babson Money Market Fund, Inc., D. L. Babson Tax-Free
Income Fund, Inc., Babson Enterprise Fund, Inc., Babson Enterprise Fund II,
Inc. Babson Value Fund, Inc., Shadow Stock Fund, Inc., Babson-Stewart Ivory
International Fund, Inc; Buffalo Balanced Fund, Buffalo High Yield Fund,
Buffalo USA Global Fund, Buffalo
<PAGE>
Equity Fund; Scout Stock Fund, Inc., Scout Bond Fund, Inc., Scout Money Market
Fund, Inc., Scout Tax-Free Money Market Fund, Inc., Scout Regional Fund, Inc.,
Scout WorldWide Fund, Inc.; President and Trustee, D. L. Babson Bond Trust.
* Kent W. Gasaway, Director.
Senior Vice President, Kornitzer Capital Management, Inc., KCM
Building, Shawnee Mission, Kansas 66201. Formerly Assistant Vice
President, Waddell & Reed, Inc., 6300 Lamar Avenue, Shawnee Mission, Kansas
66202; Director, Buffalo Balanced Fund, Buffalo Equity Fund, Buffalo High
Yield Fund, Buffalo USA Global Fund, Buffalo Equity Fund.
Thomas S. Case, Director.
Director, Buffalo Balanced Fund, Inc., Buffalo Equity Fund, Inc.,
Buffalo USA Global Fund, Inc., Buffalo High Yield Fund, Inc.; President and
Chief Executive Officer, the Frankona American Companies, 2405 Grant Blvd.,
Suite 900, Kansas City, Missouri 64108.
* Stephen S. Soden, Director.
President, BMA Financial Services, BMA Tower, One Penn Valley Park,
Kansas City, Missouri, 64141,Chairman and Director, Jones & Babson, Inc.;
Director, Buffalo Balanced Fund, Buffalo Equity Fund, Buffalo High Yield
Fund, Buffalo USA Global Fund.
Francis C. Rood, Director.
Retired, 6429 West 92nd Street, Overland Park, Kansas 66212.
Formerly, Group Vice President-Administration, Hallmark Cards, Inc.;
Director, David L. Babson Growth Fund, Inc., D. L. Babson MoneyMarket Fund,
Inc., D. L. Babson Tax-Free Income Fund, Inc., Babson Enterprise Fund,
Inc., Babson Enterprise Fund II, Inc., Babson Value Fund, Inc., Shadow
Stock Fund, Inc.; Buffalo Balanced Fund, Buffalo Equity Fund, Buffalo High
Yield Fund, Buffalo USA Global Fund, Trustee, D. L. Babson Bond Trust.
William H. Russell, Director.
Financial consultant, 645 West 67th Street, Kansas City, Missouri
64113; Director, David L. Babson Growth Fund, Inc., D. L. Babson Money
Market Fund, Inc., D. L. Babson Tax-Free Income Fund, Inc., Babson
Enterprise Fund, Inc., Babson Enterprise Fund II; Inc., Babson Value Fund,
Inc., Shadow Stock Fund, Inc. and Babson-Stewart Ivory International Fund,
Inc.; Buffalo Balanced Fund, Buffalo Equity Fund, Buffalo High Yield Fund,
Buffalo USA Global Fund, Trustee, D. L. Babson Bond Trust.
H. David Rybolt, Director.
Consultant, HDR Associates, P.O. Box 2468, Shawnee Mission, Kansas
66202; Director, David L. Babson Growth Fund, Inc., D. L. Babson Money
Market Fund, Inc., D. L. Babson Tax-Free Income Fund, Inc., Babson
Enterprise Fund, Inc., Babson Enterprise Fund II, Inc., Babson Value Fund,
Inc., Shadow Stock Fund, Inc.; Buffalo Balanced Fund, Buffalo Equity Fund,
Buffalo High Yield Fund, Buffalo USA Global Fund, Trustee, D. L. Babson
Bond Trust.
____________________________________
* Directors who are interested persons as that term is defined in the
Investment Company Act of 1940, as amended.
P. Bradley Adams, Vice President and Treasurer.
Vice President and Treasurer, Jones & Babson, Inc., David L. Babson Growth
Fund, Inc., D. L. Babson Money Market Fund, Inc., D. L. Babson Tax-Free
Income Fund, Inc., Babson Enterprise Fund, Inc., Babson Enterprise Fund II,
Inc., Babson Value Fund, Inc., Shadow Stock Fund, Inc., Babson-Stewart
Ivory International Fund, Inc., D. L. Babson Bond Trust, Scout Stock Fund,
Inc., Scout Bond Fund, Inc., Scout Money Market Fund, Inc., Scout Tax-Free
Money Market Fund, Inc., Scout Regional Fund, Inc., Scout
<PAGE>
WorldWide Fund, Inc.; Buffalo Balanced Fund, Buffalo Equity Fund, Buffalo
High Yield Fund, Buffalo USA Global Fund.
Michael A. Brummel, Vice President, Assistant Secretary and
Assistant Treasurer.
Vice President, Assistant Secretary and Assistant Treasurer, Jones &
Babson, Inc., David L. Babson Growth Fund, Inc., D. L. Babson Money Market
Fund, Inc., D. L. Babson Tax-Free Income Fund, Inc., Babson Enterprise
Fund, Inc., Babson Enterprise Fund II, Inc., Babson Value Fund, Inc.,
Shadow Stock Fund, Inc., Babson-Stewart Ivory International Fund, Inc., D.
L. Babson Bond Trust, Scout Stock Fund, Inc., Scout Bond Fund, Inc., Scout
Money Market Fund, Inc., Scout Tax-Free Money Market Fund, Inc., Scout
Regional Fund, Inc, Scout WorldWide Fund, Inc.; Buffalo Balanced Fund,
Buffalo Equity Fund, Buffalo High Yield Fund, Buffalo USA Global Fund.
Martin A. Cramer, Vice President and Secretary.
Vice President and Secretary, Jones & Babson, Inc., David L. Babson Growth
Fund, Inc., D. L. Babson Money Market Fund, Inc., D. L. Babson Tax-Free
Income Fund, Inc., Babson Enterprise Fund, Inc., Babson Enterprise Fund II,
Inc., Babson Value Fund, Inc., Shadow Stock Fund, Inc., Babson-Stewart
Ivory International Fund, Inc., D. L. Babson Bond Trust, Scout Stock Fund,
Inc., Scout Bond Fund, Inc., Scout Money Market Fund, Inc., Scout Tax-Free
Money Market Fund, Inc., Scout Regional Fund, Inc., Scout WorldWide Fund,
Inc.; Buffalo Balanced Fund, Buffalo Equity Fund, Buffalo High Yield Fund,
Buffalo USA Global Fund.
John G. Dyer, Vice President.
Vice President, Jones & Babson, Inc., Scout Stock Fund, Inc., Scout Bond
Fund, Inc., Scout Money Market Fund, Inc., Scout Tax-Free Money Market
Fund, Inc., Scout Heartland Fund, Inc. , Scout WorldWide Fund, Inc.;
Buffalo Balanced Fund, Buffalo Equity Fund, Buffalo High Yield Fund,
Buffalo USA Global Fund.
Ruth Evans, Vice President.
Vice President, Jones & Babson, Inc., David L. Babson Growth Fund, Inc., D.
L. Babson Money Market Fund, Inc., D. L. Babson Tax-Free Income Fund, Inc.,
Babson Enterprise Fund, Inc., Babson Enterprise Fund II, Inc., Babson Value
Fund, Inc., Shadow Stock Fund, Inc., Babson-Stewart Ivory International
Fund, Inc., D. L. Babson Bond Trust, Scout Stock Fund, Inc., Scout Bond
Fund, Inc., Scout Money Market Fund, Inc., Scout Tax-Free Money Market
Fund, Inc., Scout Regional Fund, Inc., Scout WorldWide Fund, Inc.; Buffalo
Balanced Fund, Buffalo Equity Fund, Buffalo High Yield Fund, Buffalo USA
Global Fund.
None of the officers or directors will be remunerated by the Funds for
their normal duties and services. Their compensation and expenses arising
out of normal operations will be paid by Jones & Babson, Inc. under the
provisions of the Management Agreement.
Messrs. Rood, Russell and Rybolt have no financial interest in, nor are
they affiliated with, either Jones & Babson, Inc. or Kornitzer Capital
Management, Inc.
The Audit Committee of the Board of Directors is composed of Messrs. Rood,
Russell and Rybolt.
The Officers and Directors of each of the Funds as a group own less than 1%
of each of the respective Funds.
The Funds will not hold annual meetings except as required by the
Investment Company Act of 1940 and other applicable laws. The Funds are
Maryland corporations. Under Maryland law, a special meeting of
stockholders of a Fund must be held if the Fund receives the written
request for a meeting from the stockholders entitled to cast at least 25
percent of all the votes entitled to be cast at the meeting. Each of the
Funds has undertaken that its Directors will call a meeting of stockholders
if such a meeting is requested in
<PAGE>
writing by the holders of not less than 10% of the outstanding shares of the
Fund. To the extent required by the undertaking, each Fund will assist
shareholder communications in such
matters.
CUSTODIAN
The Funds' assets are held for safekeeping by an independent custodian,
Scout Bank, n.a. This means the bank, rather than the Fund, has possession
of the Funds' cash and securities. The custodian bank is not responsible
for the Funds' investment management or administration. But, as directed
by the Fund's officers, it delivers cash to those who have sold securities
to the Fund in return for such securities, and to those who have purchased
portfolio securities from the Fund, it delivers such securities in return
for their cash purchase price. It also collects income directly from
issuers of securities owned by the Fund and holds this for payment to
shareholders after deduction of the Fund's expenses. The custodian is
compensated for its services by the manager. There is no charge to the
Fund.
INDEPENDENT AUDITORS
Each of the Fund's financial statements are audited annually by independent
auditors approved by the directors each year, and in years in which an
annual meeting is held the directors may submit their selection of
independent auditors to the shareholders for ratification. Ernst & Young,
One Kansas City Place, 1200 Main Street, Suite 2000, Kansas City, Missouri
64105, is each Fund's present independent auditor.
Reports to shareholders will be published at least semiannually.
OTHER JONES & BABSON FUNDS
Jones & Babson, Inc. also sponsors and manages nine no-load funds
comprising the Babson Mutual Fund Group managed by Jones & Babson, Inc. in
association with David L. Babson & Co. Inc. The funds are:
David L. Babson Growth Fund, Inc., Babson Enterprise Fund, Inc., Babson
Enterprise Fund II, Inc., Shadow Stock Fund, Inc., Babson-Stewart Ivory
International Fund, Inc., Babson Value Fund, Inc., D. L. Babson Bond Trust,
D. L. Babson Money Market Fund, Inc. and D. L. Babson Tax-Free Income Fund,
Inc.
Jones & Babson, Inc. also sponsor and manage six mutual funds which
especially seek to provide services to customers of affiliate banks of UMB
Financial Corporation (UMB). They are Scout Stock Fund, Inc., Scout Bond
Fund, Inc., Scout Money Market Fund, Inc., Scout Tax-Free Money Market
Fund, Inc., Scout Regional Fund, Inc. and Scout Worldwide Fund, Inc.
A prospectus for any of the Funds may be obtained from Jones & Babson,
Inc., Three Crown Center, 2440 Pershing Road, Suite G-15, Kansas City,
Missouri 64108.
<PAGE
DESCRIPTION OF COMMERCIAL
PAPER RATINGS
MOODY'S. . .Moody's commercial paper rating is an
opinion of the ability of an issuer to repay
punctually promissory obligations not having an original
maturity in excess of nine months. Moody's has one rating -
prime.Every such prime rating means Moody's believes that the commercial paper
note will be redeemed as agreed. Within this single rating category are
the following classifications:
PRIME - 1 HIGHEST QUALITY
PRIME - 2 HIGHER QUALITY
PRIME - 3 HIGH QUALITY
The criteria used by Moody's for rating a
commercial paper issuer under this graded system
include, but are not limited to the following factors:
(1) evaluation of the management of the issuer;
(2) economic evaluation of the issuer's industry or industries
and an appraisal of speculative type risks which may be inherent
in certain areas;
(3) evaluation of the issuer's products in relation to competition
and customer acceptance;
(4) liquidity;
(5) amount and quality of long-term debt;
(6) trend of earnings over a period of ten years;
(7) financial strength of a parent company and relationships
which exist with the issue; and
(8) recognition by the management of obligations which may be
present or may arise as a result of public interest questions
and preparations to meet such obligations.
S&P . . . Standard & Poor's commercial paper rating
is a current assessment of the likelihood of timely repayment
of debt having an original maturity of no more than 270 days.Ratings are graded
into four categories, ranging from "A" for the highest quality obligations to
"D" for the lowest. The four categories are as follows:
"A" Issues assigned this highest rating are regarded as having the
greatest capacity for timely payment. Issues in this category are
further refined with the designations 1, 2, and 3 to indicate the
relative degree of safety.
"A-1" This designation indicates that the degree of safety regarding
timely payment is very strong.
"A-2" Capacity for timely payment on issues with this designation
is strong. However, the relative degree of safety is not as
overwhelming.
"A-3" Issues carrying this designation have a satisfactory
capacity for timely payment. They are, however, somewhat more
vulnerable to the adverse effects of changes in circumstances
than obligations carrying the higher designations.
"B" Issues rated "B" are regarded as having only an adequate capacity
for timely payment. Furthermore, such capacity may be damaged by
changing conditions or short-term adversities.
"C" This rating is assigned to short-term debt obligations with a
doubtful capacity for payment.
"D" This rating indicates that the issuer is either in default or
is expected to be in default upon maturity.
<PAGE>
BUFFALO BALANCED FUND, INC.
BUFFALO EQUITY FUND, INC.
BUFFALO USA GLOBAL FUND, INC.
BUFFALO HIGH YIELD FUND, INC.
FINANCIAL STATEMENTS TO BE
SUPPLIED BY FURTHER AMENDMENT
<PAGE>
PART C
OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements
Included in Part B (to be supplied by amendment)
(b) (1) Registrants's Articles of Incorporation*
(2) Form of Registrant's By-laws*
(3) Not applicable, because there is
not voting trust agreement.
(4) Specimen copy of each security to
be issued by the registrant.*
(5) (a) Form of Management Agreement between
Jones & Babson, Inc. and the Registrant*
(b) Form of Investment Counsel Agreement
between Jones & Babson,Inc. and Kornitzer
Capital Management, Inc.*
(6) Form of principal Underwriting Agreement between
Jones & Babson, Inc. and the Registrant*
(7) Not applicable, because there are no pension,
bonus or other agreement for the benefit of
directors and officers.
(8) Forms of Custodian Agreement between Registrant
and United Missouri Bank of Kansas City, N.A.*
(9) There are no other material contracts not made in
the ordinary course of business between the
Registrant and others
(10) Opinion and consent of counsel as to the legality
of the registrant's securities being registered.
(To be supplied annually pursuant to Rule 24f-2
of the Investment Company Act of 1940.)
(11) (a) Powers of Attorney*
(b) Auditors Consent (to be supplied by
amendment)
(12) Not applicable.
(13) Form of letter from contributors of initial
capital to the Registrant that purchase was made
for investment purposes without any present
intention of redeeming or selling.
(14) Not applicable.
(15) Not applicable.
(16) Schedule for computation of performance
quotations. (To be supplied by further
amendment)
* Incorporated by reference to Registrant's Registration on N-1A.
<PAGE>
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL OF THE
REGISTRANT.
NONE
Item 26. NUMBER OF HOLDERS OF SECURITIES.
The number of record holders of each class of securities of the
Registrant as of May 31, 1995, is as follows:
(1)
Title of Class
Common Stock (2)
$1.00 par value Number of Record Holders
Buffalo Balanced Fund
Buffalo Equity Fund
Buffalo USA Global Fund
Buffalo High Yield Fund
Item 27. INDEMNIFICATION.
Under the terms of the Maryland General Corporation Law and the
company's By-laws, the company shall indemnify any person who
was or is a director, officer, or employee of the company to
the maximum extent permitted by the Maryland General
Corporation Law; provided however, that any such
indemnification (unless ordered by a court) shall be made by
the company only as authorized in the specific case upon a
determination that indemnification of such persons is proper in
the circumstances. Such determination shall be made.
(i) by the Board of Directors by a majority vote of a quorum
which consists of the directors who are neither "interested
persons" of the company as defined in Section 2(a)(19) of the
1940 Act, nor parties to the proceedings, or
(ii) if the required quorum is not obtainable or if a quorum
of such directors so directs, by independent legal counsel in a
written opinion.
No indemnification will be provided by the company to any
director or officer of the company for any liability to the
company or shareholders to which he would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence,
or reckless disregard of duty.
<PAGE>
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR.
The principal business of Jones & Babson, Inc. is the
management of the Babson and UMB family of mutual funds. It
also has expertise in the tax and pension plan field. It
supervises a number of prototype and profit-sharing plan
programs sponsored by various organizations eligible to be
prototype plan sponsors.
The principal business of Kornitzer Capital Management, Inc. is
to provide investment counsel and advice to a wide variety of
clients. Kornitzer Capital Management has $850,000,000 under
management.
Item 29. PRINCIPAL UNDERWRITERS.
(a) Jones & Babson, Inc., the only principal
underwriter of the Registrant, also acts as principal
underwriter for the David L. Babson Growth Fund, Inc.,
D.L. Babson Money Market Fund, Inc., D.L. Babson Tax-
Free Income Fund, Inc., D.L. Babson Bond Trust, Babson
Value Fund, Inc., Shadow Stock Fund, Inc., Babson-
Stewart Ivory International Fund, Inc., Scout Stock
Fund, Inc., Scout Bond Fund, Inc., Scout Money Market
Fund, Inc. and Scout Tax-Free Money Market Fund, Inc.,
Scout Regional Fund, Inc., Scout WorldWide Fund, Inc.,
Buffalo Balanced Fund, Buffalo High Yield Fund, Buffalo
Equity Fund and Buffalo USA Global Fund.
(b) Herewith is the information required by the
following table with respect to each director, officer
or partner of the only underwriter named in answer to
Item 21 of Part B:
Name and Position and Positions and
Principal Offices with Offices with
Business Address Underwriter Registrant
Stephen S. Soden Chairman and Director
BMA Tower Director
One Penn Value Park
Kansas City, MO 64141
Larry D. Armel President and President and
Three Crown Center Director Director
2440 Pershing Road
Kansas City, MO 64108
Giorgio Balzer Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
J. William Sayler Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
Edward S. Ritter Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
<PAGE>
Robert N. Sawyer Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
Vernon W. Voorhees Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
Richard S. Graver Sr. Vice President - None
Three Crown Center Marketing and
2440 Pershing Road, Director
G-15
Kansas City, MO 64108
P. Bradley Adams Vice President Vice President
Three Crown Center and Treasurer and Treasurer
2440 Pershing Road, G-15
Kansas City, MO 64108
Michael A. Brummel Vice President Vice President
Three Crown Center
2440 Pershing Road, G-15
Kansas City, MO 64108
Ruth Evans Vice President Vice President
Three Crown Center
2440 Pershing Road, G-15
Kansas City, MO 64108
Martin A. Cramer Vice President Vice President
Three Crown Center and Secretary and Secretary
2440 Pershing Road, G-15
Kansas City, MO 64108
(c) The principal underwriter does not receive any remuneration or
compensation for the duties or services rendered to the Registrant
pursuant to the principal underwriting Agreement.
Item 30. LOCATION OF ACCOUNTS AND RECORDS.
Each account, book or other document required to be maintained by
Section 31(a) of the 1940 Act and the Rules (17 CFR 270.31a-1 to
31a-3) promulgated thereunder is in the physical possession of
Jones & Babson, Inc., at Three Crown Center, 2440 Pershing Road,
G-15, Kansas City, Missouri 64108.
Item 31. MANAGEMENT SERVICES.
All management services are covered in the management agreement
between the Registrant and Jones & Babson, Inc., which are
discussed in Parts A and B.
<PAGE>
Item 32. UNDERTAKINGS.
Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, each Registrant has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto authorized, in the City of Kansas City, and State of Missouri
on the 19th day of June, 1995.
BUFFALO BALANCED FUND, INC.
BUFFALO USA GLOBAL FUND, INC.
BUFFALO HIGH YIELD FUND, INC.
BUFFALO EQUITY FUND, INC.
__________________________________
(Registrant)
By Larry D. Armel
__________________________________
(Larry D. Armel, President)**
Pursuant to the requirements of the Securities Act of 1933, this Post
- -effective Amendment No. 1 to each Registration Statement has been signed
below by the following persons in the capacities and on the date indicated.
Larry D. Armel President, Principal June 19, 1995
Larry D. Armel Executive Officer,
and Director**
Kent W. Gasaway Director** June 19, 1995
Kent W. Gasaway*
Stephen S. Soden Director** June 19, 1995
Stephen S. Soden*
Thomas S. Case Director** June 19, 1995
Thomas S. Case*
Francis C. Rood Director** June 19, 1995
Francis C. Rood*
William H. Russell Director** June 19, 1995
William H. Russell*
H. David Rybolt Director** June 19, 1995
H. David Rybolt*
P. Bradley Adams Treasurer and June 19, 1995
P. Bradley Adams Principal Financial
and Accounting Officer**
*
Larry D. Armel
By Larry D. Armel, pursuant
to Power of Attorney
** Position held with each registrant
