BUFFALO BALANCED FUND INC, 485BPOS, 1998-07-23

BUFFALO BALANCED FUND INC
485BPOS, 1998-07-23

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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. 6 File No. 33-75476 [X]

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. 8 File No. 811-8364 [X]

BUFFALO BALANCED FUND, INC.
______________________________________________________________
(Exact Name of Registrant as Specified in Charter)

700 Karnes Blvd., Kansas City, MO 64108-3306
______________________________________________________________
(Address of Principal Executive Office)

Registrant's Telephone Number, including Area Code (816) 751-5900

Larry D. Armel, President, BUFFALO BALANCED FUND, INC.
700 Karnes Blvd., Kansas City, Missouri 64108-3306
______________________________________________________________
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: July 31, 1998

It is proposed that this filing become effective:

X On July 31, 1998, pursuant to paragraph (b)

Title of securities being registered:

Common Stock, $1.00 par value

Please address inquiries and communications to:
Martin A. Cramer
Buffalo Balanced Fund, Inc.
700 Karnes Blvd.
Kansas City, MO 64108-3306
Telephone: (816) 751-5900

and a carbon copy of all communications to:
Mark H. Plafker, Esq.
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
Telephone: (215) 564-8000

<PAGE>
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. 6 File No. 33-87346 [X]

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. 8 File No. 811-8900 [X]

BUFFALO EQUITY FUND, INC.
______________________________________________________________
(Exact Name of Registrant as Specified in Charter)

700 Karnes Blvd., Kansas City, MO 64108-3306
______________________________________________________________
(Address of Principal Executive Office)

Registrant's Telephone Number, including Area Code (816) 751-5900

Larry D. Armel, President, BUFFALO EQUITY FUND, INC.
700 Karnes Blvd., Kansas City, Missouri 64108-3306
______________________________________________________________
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: July 31, 1998

It is proposed that this filing become effective:

X On July 31, 1998, pursuant to paragraph (b)

Title of securities being registered:

Common Stock, $1.00 par value

Please address inquiries and communications to:
Martin A. Cramer
Buffalo Equity Fund, Inc.
700 Karnes Blvd.
Kansas City, MO 64108-3306
Telephone: (816) 751-5900

and a carbon copy of all communications to:
Mark H. Plafker, Esq.
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
Telephone: (215) 564-8000

<PAGE>
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. 6 File No. 33-87148 [X]

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. 8 File No. 811-8898 [X]

BUFFALO HIGH YIELD FUND, INC.
______________________________________________________________
(Exact Name of Registrant as Specified in Charter)

700 Karnes Blvd., Kansas City, MO 64108-3306
______________________________________________________________
(Address of Principal Executive Office)

Registrant's Telephone Number, including Area Code (816) 751-5900

Larry D. Armel, President, BUFFALO HIGH YIELD FUND, INC.
700 Karnes Blvd., Kansas City, Missouri 64108-3306
______________________________________________________________
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: July 31, 1998

It is proposed that this filing become effective:

X On July 31, 1998, pursuant to paragraph (b)

Title of securities being registered:

Common Stock, $1.00 par value

Please address inquiries and communications to:
Martin A. Cramer
Buffalo High Yield Fund, Inc.
700 Karnes Blvd.
Kansas City, MO 64108-3306
Telephone: (816) 751-5900

and a carbon copy of all communications to:
Mark H. Plafker, Esq.
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
Telephone: (215) 564-8000

<PAGE>
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. 6 File No. 33-87146 [X]

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. 8 File No. 811-8896 [X]

BUFFALO USA GLOBAL FUND, INC.
______________________________________________________________
(Exact Name of Registrant as Specified in Charter)

700 Karnes Blvd., Kansas City, MO 64108-3306
______________________________________________________________
(Address of Principal Executive Office)

Registrant's Telephone Number, including Area Code (816) 751-5900

Larry D. Armel, President, BUFFALO USA GLOBAL FUND, INC.
700 Karnes Blvd., Kansas City, Missouri 64108-3306
______________________________________________________________
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: July 31, 1998

It is proposed that this filing become effective:

X On July 31, 1998, pursuant to paragraph (b)

Title of securities being registered:

Common Stock, $1.00 par value

Please address inquiries and communications to:
Martin A. Cramer
Buffalo USA Global Fund, Inc.
700 Karnes Blvd.
Kansas City, MO 64108-3306
Telephone: (816) 751-5900

and a carbon copy of all communications to:
Mark H. Plafker, Esq.
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
Telephone: (215) 564-8000

<PAGE>
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 File No. 333-40841 [X]

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. 2 File No. 811-08509 [X]

BUFFALO SMALL CAP FUND, INC.
______________________________________________________________
(Exact Name of Registrant as Specified in Charter)

700 Karnes Blvd., Kansas City, MO 64108-3306
______________________________________________________________
(Address of Principal Executive Office)

Registrant's Telephone Number, including Area Code (816) 751-5900

Larry D. Armel, President, BUFFALO SMALL CAP FUND, INC.
700 Karnes Blvd., Kansas City, Missouri 64108-3306
______________________________________________________________
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: July 31, 1998

It is proposed that this filing become effective:

X On July 31, 1998, pursuant to paragraph (b)

Title of securities being registered:

Common Stock, $1.00 par value

Please address inquiries and communications to:
Martin A. Cramer
Buffalo Small Cap Fund, Inc.
700 Karnes Blvd.
Kansas City, MO 64108-3306
Telephone: (816) 751-5900

and a carbon copy of all communications to:
Mark H. Plafker, Esq.
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
Telephone: (215) 564-8000

<PAGE>
BUFFALO EQUITY FUND, INC.
BUFFALO HIGH YIELD FUND, INC.
BUFFALO USA GLOBAL FUND, INC.
BUFFALO BALANCED FUND, INC.
BUFFALO SMALL CAP 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 Information Per Share Capital and
Income Changes

Item 4. General Description of Registrant Investment Objective
and Portfolio
Management Policy

Item 5. Management of the Fund Officers and Directors;
Management and
Investment Counsel

Item 6. Capital Stock and Other Securities How to Purchase Shares;
How to Redeem Shares;
How Share Price is
Determined; General
Information and
History; Dividends,
Distributions and their
Taxation

Item 7. Purchase of Securities being Offered Coverage Page; How to
Purchase Shares;
Shareholder Services
Item 8. Redemption or Repurchase How to Redeem Shares

Item 9. Pending Legal Proceedings Not Applicable

Item 10. Cover Page Cover Page

Item 11. Table of Contents Cover Page

Item 12. General Information and History Investment Objectives
and Policies;
Management and
Investment Counsel

Item 13. Investment Objectives and Policies Investment Objectives
and Policies;
Investment Restrictions

Item 14. Management of the Fund Management and
Investment Counsel

Item 15. Control Persons and Principal Management and
Holders of Securities Investment Counsel;
Officers and Directors

Item 16. Investment Advisory and Other Services Management and
Investment Counsel

Item 17. Brokerage Allocation Portfolio Transactions

Item 18. Capital Stock and Other Securities General Information and
History (Prospectus);
Financial Statements

Item 19. Purchase, Redemption and Pricing of How Share Purchases are
being Offered Handled; Redemption of
Shares Financial
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 Yield Quotations Not Applicable

Item 23. Financial Statements Financial Statements

<PAGE>

Buffalo
Funds

Balanced Fund
Equity Fund
High Yield Fund
Small Cap Fund
USA Global Fund

Prospectus
July 31, 1998

Buffalo Balanced Fund, Inc.
Buffalo Equity Fund, Inc.
Buffalo High Yield Fund, Inc.
Buffalo Small Cap Fund, Inc.
Buffalo USA Global Fund, Inc.

Managed and Distributed By:
Jones & Babson, Inc.
BMA Tower, 700 Karnes Blvd.
Kansas City, Missouri 64108-3306

Toll-Free:
1-800-49-BUFFALO
(1-800-492-8332)

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 bonds and convertible preferred stocks. High current income is
intended to be achieved by the Fund's investment in corporate bonds,
government bonds, convertible bonds, preferred stocks and convertible
preferred stocks.

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.

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 100% 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 Objectives and Portfolio Management Policies,"
page 13; "Risk Factors," page 18; "Investment Restrictions," page 20 and
"Description of Securities Ratings," page 32. Secondarily, the Fund may
invest up to 10% of the value of its total assets in common stocks and other
equity securities.

Buffalo Small Cap Fund seeks long-term capital growth. Long-term capital
growth is intended to be achieved primarily by the Fund's investment in equity
securities of small companies. Small companies are considered to be issuers
with individual market capitalization of up to $1 billion, or issuers whose
individual market capitalization would place them at the time of purchase in
the lowest 20% total market capitalization of companies that have equity
securities listed on a U.S. national securities exchange or traded in the
NASDAQ system.

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 companies' 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. This diversification is
achieved through 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. The Fund will invest primarily in common stocks
listed on the New York Stock Exchange.

Purchase Information

Minimum Investment (each Fund selected)
Initial Purchase (unless Automatic Monthly) $ 2,500
Initial IRA and Uniform Transfers (Gifts)
to Minors Purchases (unless Automatic Monthly) $ 250
Subsequent Purchase (unless Automatic Monthly):
By Mail $ 100
By Telephone (ACH) or Wire $ 1,000
All Automatic Monthly Purchases (ACH) $ 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 number indicated above.

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 Funds may obtain a copy
without charge by calling the Fund at the telephone number indicated above or
by writing to the address on the cover.

These securities have not been approved or disapproved by the Securities and
Exchange Commission nor has the Commission passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.

Table of Contents
Page

Highlights 5
Fund Expenses 8
Financial Highlights 9
Investment Objectives and Portfolio Management Policies 13
Repurchase Agreements 18
Asset-Backed Securities 18
Risk Factors 18
Investment Restrictions 20
Historical Performance of Kornitzer Capital Management, Inc. 21
Performance Measures 21
How to Purchase Shares 22
Initial Investments 23
Investments Subsequent to Initial Investment 24
Telephone Investment Service 24
Automatic Monthly Investment Plan 24
How to Redeem Shares 25
Systematic Redemption Plan 26
How to Exchange Shares Between Funds 27
How Share Price is Determined 28
Officers and Directors 28
Management and Investment Counsel 28
General Information and History 30
Dividends, Distributions and Their Taxation 30
Description of Securities Ratings 32
Shareholder Services 33
Shareholder Inquiries 34

Highlights

For more information on this subject see page . . .

The Funds

The Buffalo Funds consist of five open-end diversified investment companies
(commonly known as mutual funds), each of which invests in a diversified
portfolio of securities. Jones & Babson, Inc. manages and distributes the
Funds and Kornitzer Capital Management, Inc. serves as investment counsel.
28

Buffalo Balanced Fund, Inc. seeks both long-term capital 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. 13

Buffalo Equity Fund, Inc. seeks long-term capital appreciation by investment
primarily in a broad array of common stocks, in terms of companies and
industries. 14

Buffalo High Yield Fund, Inc. primarily seeks a high level of current income
and secondarily, capital growth. The Fund invests primarily in high-yielding
fixed income securities and may invest in preferred stock. 15

Buffalo Small Cap Fund, Inc. seeks long-term capital growth primarily through
investment in equity securities of small companies. 16

Buffalo USA Global Fund, Inc. seeks capital growth by investing primarily 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.
17

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 $2,500 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.
Subsequent purchases must be at least $100, except telephone and wire
purchases which must be at least $1,000 or more. 22

Telephone Investment - 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. 24

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. 24

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. There are no
redemption charges or fees. 25

Exchange Privilege with Other Buffalo or Babson Funds

For all accounts except Traditional and Roth IRAs, shareholders may exchange
shares of their Fund, without charge for shares of other Buffalo or Babson
Funds sponsored by Jones & Babson, Inc. (not including Babson Enterprise Fund,
Inc.). For Traditional and Roth IRAs, shareholders may exchange shares of
their Fund, without charge for shares of other Buffalo Funds or the D.L.
Babson Money Market Fund, Inc. The minimum exchange amount is $1,000 provided
this meets the minimum investment requirement of the Fund into which it is
exchanged ($100 for Automatic Exchanges). Exchanges may or may not be taxable
depending on the shareholder's tax status. 27

The Management Fee Covers the Investment Advisory Fee and All Other Normal
Operating Costs

Jones & Babson, Inc., as manager, supplies the Funds with all normal services.
The management fee covers all normal operating costs, other than taxes,
interest, fees and other charges of governments and their agencies (including
the cost of qualifying the Funds' shares for sale in any jurisdiction),
brokerage commissions, dues and extraordinary costs, if any. For this it
charges the Funds a fee based on an annual rate of one percent (1%) of average
daily net assets from which Jones & Babson, Inc. pays Kornitzer Capital
Management, Inc. an investment counsel fee of one-half of one percent (.50%)
of average daily net assets. 28

Dividend Policies

Buffalo Balanced Fund, Inc. and Buffalo High Yield Fund, Inc. will pay
substantially all of their net investment income quarterly, usually in March,
June, September and December. Buffalo Equity Fund, Inc., Buffalo Small Cap
Fund, Inc. and Buffalo USA Global Fund, Inc. will pay dividends from net
investment income semiannually, usually in June 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, Inc. and Buffalo
Small Cap Fund, Inc. Distributions from capital gains, if any, will be
declared semiannually, usually in June and December for Buffalo Equity Fund,
Inc., Buffalo High Yield Fund, Inc. and Buffalo USA Global Fund, Inc. 30

Taxes

The Funds will distribute substantially all of their net investment 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 depending upon the shareholder's tax
status. 30

Risk Factors

For a discussion of risk factors applicable to common stocks. 18

For a discussion of risk factors applicable to high yielding, high risk debt
securities. 18

For a discussion of risk factors applicable to small capitalization
securities. 19

For a discussion of risk factors applicable to global operations. 19

For a discussion of risk factors applicable to American Depository Receipts
(ADRs). 19

For a discussion of risk factors applicable to the Year 2000 Issue. 19

For a discussion of risk factors applicable to covered call options. 20

For a discussion of risk factors applicable to repurchase agreements. 20

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. Such costs and expenses, including management fees,
are explained in more detail in this prospectus. (See "Management and
Investment Counsel.") The expenses set forth below are based on each Fund's
fiscal year ended March 31, 1998, except that the expenses shown for Buffalo
Small Cap Fund, Inc. are based on estimates for the current fiscal year.
<TABLE>
<CAPTION>
Buffalo Buffalo Buffalo Buffalo Buffalo
Balanced Equity High Yield Small Cap USA Global
Fund, Inc. Fund, Inc. Fund, Inc. Fund, Inc. Fund, Inc.
</CAPTION>
<S> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum sales load imposed on purchases None None None None None
Maximum sales load imposed on
reinvested dividends None None None None None
Deferred sales load None None None None None
Redemption fee None None None None None
Exchange fee None None None None None

Annual Fund Operating Expenses
(as a percentage of average net assets)
Management fees 1.00% 1.00% 1.00% 1.00% 1.00%
12b-l fees None None None None None
Other expenses .04% .09% .03% .07% .09%
Total Fund operating expenses 1.04% 1.09% 1.03% 1.07% 1.09%
</TABLE>
Examples
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 Years 5 Years 10 Years
Buffalo Balanced Fund, Inc. $11 $33 $57 $127
Buffalo Equity Fund, Inc. $11 $35 $60 $133
Buffalo High Yield Fund, Inc. $11 $33 $57 $126
Buffalo Small Cap Fund, Inc. $11 $34 N/A N/A
Buffalo USA Global Fund, Inc. $11 $35 $60 $133

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 in the Examples 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.

Financial Highlights

Buffalo Balanced Fund, Inc.

The following financial highlights for the period from August 12, 1994
(inception date) to March 31, 1995, and each of the past three fiscal years
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 auditors, appearing in
the March 31, 1998, Annual Report to Shareholders which is incorporated by
reference into this prospectus.
<TABLE>
<CAPTION>
August 12, 1994
(Inception Date)
1998 1997 1996 to March 31, 1995*
</CAPTION>
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.57 $ 10.70 $ 10.06 $ 10.07

Income from investment operations:
Net investment income .65 .72 .65 .32
Net gains (losses) on securities
(both realized and unrealized) 1.84 .69 1.07 (.03)
Total from investment operations 2.49 1.41 1.72 .29

Less distributions:
Dividends from net investment income (.65) (.71) (.68) (.30)
Distributions from capital gains (.91) (.83) (.40) -
Total distributions (1.56) (1.54) (1.08) (.30)
Net asset value, end of period $ 11.50 $ 10.57 $ 10.70 $ 10.06

Total return 24.76% 13.22% 17.87% 2.91%

Ratios/Supplemental Data
Net assets, end of year (in millions) $ 55 $ 44 $ 50 $ 38
Ratio of expenses to average net assets 1.04% 1.05% 1.11% 1.06%
Ratio of net investment income to average
net assets 5.61% 6.20% 6.27% 8.89%
Portfolio turnover rate 61% 56% 61% 33%
**Average commission paid per equity
share traded $ .0438 $ .0420 - -
</TABLE>

*The Fund was capitalized on June 6, 1994 with $100,000, representing
10,000 shares at a net asset value of $10.00 per share.
Initial public offering was made on August 12, 1994, at which time net
asset value was $10.07 per share.
Ratios for this initial period of operations are annualized, except
total return.

**Disclosure required for fiscal years beginning after September 1, 1995.

Buffalo Equity Fund, Inc.

The following financial highlights for the period from May 19, 1995 (inception
date) to March 31, 1996, and each of the past two fiscal years have been
derived from audited financial statements of Buffalo Equity Fund, Inc. and
should be read in conjunction with the financial statements of the Fund and
the report of Ernst & Young LLP, independent auditors, appearing in the March
31, 1998, Annual Report to Shareholders which is incorporated by reference
into this prospectus.

<TABLE>
<CAPTION>
May 19, 1995
(Inception Date)
1998 1997 to March 31, 1996*
</CAPTION>
<S> <C> <C> <C>
Net asset value, beginning of period $ 13.93 $ 12.36 $ 10.14
Income from investment operations:
Net investment income .08 .15 .21
Net gains on securities (both realized
and unrealized) 4.85 2.51 2.72
Total from investment operations 4.93 2.66 2.93

Less distributions:
Dividends from net investment income (.10) (.10) (.20)
Distributions from capital gains (1.82) (.99) (.51)
Total distributions (1.92) (1.09) (.71)
Net asset value, end of period $ 16.94 $ 13.93 $ 12.36

Total return 36.97% 21.23% 29.11%

Ratios/Supplemental Data
Net assets, end of year (in millions) $ 35 $ 20 $ 6
Ratio of expenses to average net assets 1.09% 1.16% 1.06%
Ratio of net investment income to average
net assets .56% 1.35% 2.55%
Portfolio turnover rate 93% 123% 63%

**Average commission paid per equity
share traded $ .0469 $ .0492 -
</TABLE>

*The Fund was capitalized on February 13, 1995 with $100,000,
representing 10,000 shares at a net asset value of $10.00 per share.
Initial public offering was made on May 19, 1995, at which time net
asset value was $10.14 per share.
Ratios for this initial period of operations are annualized, except
total return.

**Disclosure required for fiscal years beginning after September 1, 1995.

Buffalo High Yield Fund, Inc.

The following financial highlights for the period from May 19, 1995 (inception
date) to March 31, 1996, and each of the past two fiscal years have been
derived from audited financial statements of Buffalo High Yield Fund, Inc. and
should be read in conjunction with the financial statements of the Fund and
the report of Ernst & Young LLP, independent auditors, appearing in the March
31, 1998, Annual Report to Shareholders which is incorporated by reference
into this prospectus.

<TABLE>
<CAPTION>
May 19, 1995
(Inception Date)
1998 1997 to March 31, 1996*
</CAPTION>
<S> <C> <C> <C>
Net asset value, beginning of period $ 11.73 $ 11.15 $ 10.14

Income from investment operations:
Net investment income .79 .82 .53
Net gains on securities (both realized
and unrealized) 1.35 .71 1.14
Total from investment operations 2.14 1.53 1.67

Less distributions:
Dividends from net investment income (.80) (.80) (.53)
Distributions from capital gains (.24) (.15) (.13)
Total distributions (1.04) (.95) (.66)
Net asset value, end of period $ 12.83 $ 11.73 $ 11.15

Total return 18.63% 14.02% 16.67%

Ratios/Supplemental Data
Net assets, end of year (in millions) $ 71 $ 20 $ 7
Ratio of expenses to average net assets 1.03% 1.13% 1.03%
Ratio of net investment income to average
net assets 6.43% 7.63% 7.40%
Portfolio turnover rate 24% 39% 25%
</TABLE>

*The Fund was capitalized on February 13, 1995 with $100,000, representing
10,000 shares at a net asset value of $10.00 per share.
Initial public offering was made on May 19, 1995, at which time net asset
value was $10.14 per share.
Ratios for this initial period of operations are annualized, except total
return.

Buffalo USA Global Fund, Inc.

The following financial highlights for the period from May 19, 1995 (inception
date) to March 31, 1996, and each of the past two fiscal years have been
derived from audited financial statements of Buffalo USA Global Fund, Inc. and
should be read in conjunction with the financial statements of the Fund and
the report of Ernst & Young LLP, independent auditors, appearing in the March
31, 1998, Annual Report to Shareholders which is incorporated by reference
into this prospectus.

<TABLE>
<CAPTION>
May 19, 1995
(Inception Date)
1998 1997 to March 31, 1996*
</CAPTION>
<S> <C> <C> <C>
Net asset value, beginning of period $ 14.10 $ 11.36 $ 10.14

Income from investment operations:
Net investment income .07 .08 .15
Net gains on securities (both realized
and unrealized) 4.20 3.32 1.61
Total from investment operations 4.27 3.40 1.76

Less distributions:
Dividends from net investment income (.06) (.05) (.15)
Distributions from capital gains (1.02) (.61) (.39)
Total distributions (1.08) (.66) (.54)
Net asset value, end of period $ 17.29 $ 14.10 $ 11.36

Total return 31.33% 29.87% 17.49%

Ratios/Supplemental Data
Net assets, end of year (in millions) $ 45 $ 27 $ 5
Ratio of expenses to average net assets 1.09% 1.13% 1.06%
Ratio of net investment income to average
net assets .47% .79% 1.94%
Portfolio turnover rate 64% 88% 123%

**Average commission paid per equity
share traded $ .0471 $ .0486 -
</TABLE>

*The Fund was capitalized on February 13, 1995 with $100,000, representing
10,000 shares at a net asset value of $10.00 per share.
Initial public offering was made on May 19, 1995, at which time net asset
value was $10.14 per share.
Ratios for this initial period of operations are annualized, except total
return.
**Disclosure required for fiscal years beginning after September 1, 1995.

Buffalo Small Cap Fund, Inc.

Financial Highlights information is not presented for Buffalo Small Cap Fund,
Inc. because it only recently commenced operations on April 14, 1998.
Shareholders will receive financial information in subsequent shareholder
reports and in next year's prospectus.

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

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.

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 include common stocks,
preferred stocks, convertible bonds, convertible preferred stocks, corporate
bonds and government bonds. It is expected that the majority of common stocks
purchased by 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.

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) or its equivalent
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 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.")

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 are 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 High Risk Debt
Securities.")

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 are intended to serve as a partial hedge against any
declining price of the underlying securities.

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 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.

Buffalo Equity Fund

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.

Covered call options are intended to serve as a partial hedge against any
declining price of the underlying securities.

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.

Buffalo High Yield Fund

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. High current income is
intended to be achieved by the Fund's investment in fixed income securities,
without restriction, 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 the appreciation of fixed income and equity investments held in the Fund.

The Fund may invest up to 100% of its assets in 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 subsequent 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. Taking a defensive posture as described above may
involve a reduction in the yield on the Fund's portfolio.

Covered call options are intended to serve as a partial hedge against any
declining price of the underlying securities.

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, see "Risk Factors
Applicable to Repurchase Agreements."

There is no assurance that the Fund's objective of a high level of current
income and secondarily, capital growth can be achieved. Portfolio turnover
will be no more than is necessary to meet the Fund's objective.

Buffalo Small Cap Fund

The Buffalo Small Cap Fund seeks long-term capital growth. Long-term capital
growth is intended to be achieved primarily by the Fund's investment in equity
securities of small companies. Equity securities include common stock,
preferred stock and securities convertible into common stock or preferred
stock.

The Buffalo Small Cap Fund will normally invest in a broad array of
securities, diversified in terms of companies and industries. The Fund invests
at least 65% of its total assets in equity securities of small companies,
during normal market conditions. Small companies are considered to be issuers
with individual market capitalization of up to $1 billion, or issuers whose
individual market capitalization would place them at the time of purchase in
the lowest 20% total market capitalization of companies that have equity
securities listed on a U.S. national securities exchange or traded in the
NASDAQ system.

The Fund may invest in foreign securities through dollar-denominated American
Depository Receipts (ADRs), which are issued by domestic banks and publicly
traded in the United States. ADRs do not involve the same direct currency and
liquidity risks as securities denominated in foreign currency. However, their
value will generally be affected by currency fluctuations that alter the value
of the security underlying the ADRs with respect to the U.S. dollar. The Fund
does not intend to invest directly in foreign securities or foreign
currencies. (See "Risk Factors Applicable to ADRs.")

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 are intended to serve as a partial hedge against any
declining price of the underlying securities.

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 shall
be restricted to companies in the top two rating categories by Moody's and
Standard & Poor's.

There is no assurance that the Fund's objective of long-term 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 the
portfolio turnover rate for securities held in the Fund's portfolio will not
exceed 100% on an annual basis. A high portfolio turnover rate may increase
transaction costs and result in additional taxable gains.

Buffalo USA Global Fund

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. This diversification
is achieved through 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'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 United
States. Liquidity risk is generally lowered because trading volumes are
typically higher on United States exchanges. Many foreign stock exchanges
require extended clearance and settlement periods, which can impair a manager
from implementing specific investment policies. Finally, there is generally
less enforcement of security laws and supervision of developing country stock
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 are intended to serve as a partial hedge against any
declining price of the underlying securities.

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.

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.

The Funds 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. 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 15% of the net assets of any Fund.

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 Common Stocks

Buffalo Equity Fund, Buffalo Balanced Fund, Buffalo Small Cap Fund and Buffalo
USA Global Fund invest in common stocks. Buffalo High Yield Fund may invest up
to 10% of its assets in common stocks. The Funds are subject to market risk
and performance 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. Performance 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

Buffalo Balanced Fund and 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 on 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.

The Funds are 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). Ratings of debt securities are defined
under the caption "Fixed Income Securities Described and Ratings."

Risk Factors Applicable to Small Capitalization Securities

Investments in common stocks in general are subject to market, economic and
business risks that will cause their price to fluctuate over time.
Additionally, securities of companies with smaller revenues and
capitalizations may offer greater opportunity for capital appreciation than
larger companies, but investment in such companies presents greater risks and
may involve greater price volatility than securities of larger, more
established companies. In addition, the market for small capitalization stocks
is generally less liquid than the markets for larger stocks, which can
contribute to increased price volatility of such stocks. Therefore, an
investment in the Buffalo Small Cap Fund may be more suitable for long-term
investors who can bear the risk of these fluctuations.

Risk Factors Applicable to Global Operations

The risks to which the U.S. companies in which 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 important factors in the
performance of the Fund.

Risk Factors Applicable to ADRs

Up to 25% of Buffalo Equity Fund's and Buffalo Small Cap 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 Year 2000 Issue

Like other mutual funds, as well as other financial and business organizations
around the world, the Funds could be adversely affected if the computer
systems used by Jones & Babson, Inc., Kornitzer Capital Management, Inc. and
other service providers, in performing their administrative functions do not
properly process and calculate date-related information and data as of and
after January 1, 2000. This is commonly known as the "Year 2000 Issue."
Jones & Babson, Inc. and Kornitzer Capital Management, Inc. are taking steps
that they believe are reasonably designed to address the Year 2000 Issue with
respect to computer systems that they use and to obtain reasonable assurances
that comparable steps are being taken by the Funds' other major service
providers. At this time, however, there can be no assurance that these steps
will be sufficient to avoid any adverse impact to the Funds.

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

The 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 when
the securities are sold. 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.

Investment Restrictions

In addition to the 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
borrowing in excess of 5% of the total assets of the Fund shall have asset
coverage of at least 3 to 1. The Fund will not buy securities while borrowings
are outstanding. The first restriction noted above applies to 75% of the
Buffalo Small Cap Fund's total assets and to 100% of the other Funds' total
assets. The full text of these restrictions is set forth in the "Statement of
Additional Information."

Historical Performance of
Kornitzer Capital Management, Inc.

Set forth below is certain information about the investment performance record
of Kornitzer Capital Management, Inc., Buffalo Small Cap Fund's investment
counsel responsible for managing the Fund's portfolio of small cap securities.

The performance information shown is for the Great Plains Trust Company Small
Cap Collective Retirement Fund (the "Small Cap Retirement Fund"), which is
managed by Kornitzer and had approximately $24.1 million in total assets as of
June 30, 1998. The Small Cap Retirement Fund has an investment objective,
strategy and investment policies that are substantially similar to those of
the Buffalo Small Cap Fund. The results shown assume the reinvestment of all
dividends and capital gains and reflect the deduction of all management fees
charged by Kornitzer. The results presented are not intended to predict or
suggest the return to be experienced by the Buffalo Small Cap Fund or the
return that an individual investor might achieve by investing in the Buffalo
Small Cap Fund. The Buffalo Small Cap Fund's results may be different from the
performance of the Small Cap Retirement Fund because of, among other things,
differences in fees and expenses, and because private accounts are not subject
to certain investment limitations, diversification requirements and other
restrictions imposed by the Investment Company Act of 1940 and the Internal
Revenue Code, each as amended, which, if applicable, may adversely affect the
performance of such accounts.

Annualized Returns for S&P 600
the Periods Ending Small Cap Small Cap
6/30/98 Retirement Fund Index*
One Year 19.78% 19.44%
Three Years 23.39% 22.32%
Since Inception 23.06% 20.72%
(3 yrs., 10 mos.)**
Annual Returns
1998 (1st 6 mos.) 0.11% 6.11%
1997 32.82% 25.58%
1996 28.49% 21.32%
1995 33.60% 29.95%
1994 (lst 4 mos.) -2.94% -3.32%

*The S&P 600 Small Cap Index is a capitalization-weighted index that
measures the performance of selected U.S. stocks with smaller market
capitalizations (generally less than $1 billion). The index is unmanaged and
therefore does not reflect the deduction of any fees.

**9/1/94 Inception Date.

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 High Yield Fund and Buffalo USA Global Fund
performance is included in the Funds' Annual Report to Shareholders which is
available from the Funds upon request at no charge. A discussion of Buffalo
Small Cap Fund's performance will be included in future shareholder reports.
Yield

Buffalo Balanced Fund and 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.

Total Return

The Funds 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 (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.

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. Buffalo Balanced Fund, Buffalo
Equity Fund, Buffalo High Yield Fund, Buffalo Small Cap Fund and 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. Buffalo
Balanced Fund may compare its performance to a hypothetical equal weighted
composite of the S&P 500 and the Merrill Lynch Bond Fund Index, an unmanaged
index of corporate bond funds. Buffalo High Yield Fund may compare its
performance to the Merrill Lynch Corporate Bond Index, an unmanaged index of
corporate bonds, Merrill Lynch High Yield Bond Index, an unmanaged index of
high yield bond funds, the Shearson/Lehman Government/Corporate Index, an
unmanaged index of government and corporate bonds, or the Consumer Price
Index. Buffalo Small Cap Fund may compare its performance to the Standard &
Poor's 600 Small Cap Index (S&P 600), an index of unmanaged groups of common
stocks, 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 Mutual Funds, 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 and Fortune, 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 Rukeyser'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. To complete a purchase order by mail,
wire or telephone, please provide information detailed below. For information
or assistance call toll free 1-800-49-BUFFALO (1-800-492-8332). 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 Funds. Shares are
purchased at the Fund's net asset value (price) per share next effective after
a purchase order and payment have been received and accepted by the Fund. 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 and accepted 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.
The minimum initial purchase is $2,500 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. However, if electing the Automatic Monthly
Investment Plan, the minimum initial purchase is reduced to $100 for all
accounts. Make your check payable to UMB Bank, n.a. Mail your application and
check to:

The Buffalo Fund Group
P.O. Box 419757
Kansas City, MO 64141-6757

Initial investments - By wire. You may purchase shares of a Fund by wiring
the purchase price ($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 1-800-49-BUFFALO (1-800-492-8332) and provide 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
Buffalo Equity Fund, Inc./AC= 987071-5880
Buffalo High Yield Fund, Inc./AC= 987071-5899
Buffalo Small Cap Fund, Inc./AC= 987090-8328
Buffalo USA Global Fund, Inc./AC= 987071-5902
(as appropriate)

For Account No. (insert assigned Fund account number and name in which account
is registered)

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 may 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 made payable to UMB Bank, n.a. and mailed to the Fund at:

P.O. Box 419779
Kansas City, MO 64141-6779

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 ($1,000
minimum) for the cost of the shares so purchased. Debits to your checking
account would be processed through the Automated Clearing House (ACH). 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 followed,
the Fund will not 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 shareholders.

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. Debits to your checking account would be processed through the
Automated Clearing House (ACH). 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.

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 shareholders.

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.")

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 (see Signature Guarantees); and

(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 relevant Fund at:

P.O. Box 419757
Kansas City, MO 64141-6757

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 third
business 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
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, whichever occurs first. 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 in Rule 17Ad-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 mare 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 three-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.
Since the minimum investment amount and the minimum account size are the same,
any redemption from an account containing only the minimum investment amount
may result in redemption of that account.

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.

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 Funds

For all accounts except Traditional and Roth IRAs, shareholders may exchange
their Fund shares, which have been held in open account for 15 days or more,
and for which good payment has been received and accepted, for identically
registered shares of any other Buffalo or Babson Fund which is authorized for
sale in the state of residence of the investor, except Babson Enterprise Fund,
Inc., provided that the minimum amount exchanged has a value of $1,000 and
meets the minimum investment requirement of the Fund into which it is
exchanged.

For Traditional and Roth IRAs, shareholders may exchange their Fund shares,
which have been held in open account for 15 days or more, and for which good
payment has been received and accepted, for identically registered shares of
any other Buffalo Fund or D.L. Babson Money Market Fund, Inc. which is
authorized for sale in the state of residence of the investor, provided that
the minimum amount exchanged has a value of $1,000 and meets the minimum
investment requirement of the Fund into which it is exchanged.

Automatic exchanges ($100 minimum) are also available for all accounts. Once
started, they continue monthly until all shares are exchanged or until you
terminate the Automatic Exchange authorization.

Effective at the close of business on January 31, 1992, the Directors of the
Babson Enterprise Fund, Inc. took action to limit the offering of that Fund's
shares. Babson Enterprise Fund will not accept any new accounts, including
IRAs and other retirement plans, until further notice, nor will Babson
Enterprise Fund accept transfers from shareholders of other Babson Funds, who
were not shareholders of record of Babson Enterprise Fund at the close of
business on January 31, 1992.

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 followed,
the Fund will not 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 by name and number, the number
of shares or dollar amount to be redeemed for exchange and the 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
another Buffalo Fund or Babson Fund, 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. An 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."

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 the Funds manage its day-to-day operations. The Funds' manager
and officers are subject to the supervision and control of the respective
Board of Directors. A list of the officers and directors 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,
except Buffalo Small Cap Fund organized in 1997, 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 Funds. 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 the Funds
are taxes; interest; fees and other charges of governments and their agencies,
including the cost of qualifying the Funds' shares for sale in any
jurisdiction; 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 the Funds. 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.

As compensation for all the foregoing services, the Funds 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 of 1% (.50%) of average daily net assets. Both fees are computed
daily; the fee to Jones & Babson, Inc. is paid semimonthly, and the fee to
Kornitzer Capital Management, Inc. is paid monthly. The total expenses of
Buffalo Balanced Fund for the fiscal year ended March 31, 1998, amounted to
1.04%. The total expenses of Buffalo Equity Fund for the fiscal year ended
March 31, 1998, amounted to 1.09%. The total expenses of Buffalo High Yield
Fund for the fiscal year ended March 31, 1998, amounted to 1.03%. The total
expenses of Buffalo USA Global Fund for the fiscal year ended March 31, 1998,
amounted to 1.09%. Buffalo Small Cap Fund was not in operation during the
fiscal year ended March 31, 1998.

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. Owners of 5% or more of Kornitzer Capital
Management, Inc. are John C. Kornitzer, Kent W. Gasaway, Willard R. Lynch,
Thomas W. Laming and Susan Stack.

The current Management Agreements between 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, 1998; for Buffalo Small Cap Fund, until October 31, 1999. 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, as required under the
Investment Company Act of 1940.

General Information and History

Buffalo Balanced Fund was incorporated in Maryland on January 25, 1994.
Buffalo Equity Fund, Buffalo High Yield Fund and Buffalo USA Global Fund were
incorporated in Maryland on November 23, 1994. Buffalo Small Cap Fund was
incorporated in Maryland on October 16, 1997. Each of the Buffalo Funds has a
present authorized capitalization of 10,000,000 shares of $1 par value common
stock. Each Fund may divide its shares into series or sub-series (classes)
with the approval of its Board of Directors. Each Fund currently issues a
single class of shares which all have 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.

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 General Corporation Law permits 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 their By-Laws and may not, at their
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 their names so long as Kornitzer
Capital Management, Inc. is continued as their investment counsel. Complete
details with respect to the use of the name are set out in 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

Buffalo Balanced Fund and Buffalo High Yield Fund pay dividends from net
investment income quarterly, usually in March, June, September and December.
Buffalo Equity Fund, Buffalo Small Cap Fund and Buffalo USA Global Fund pay
dividends from net investment income semiannually, usually in June and
December. Distributions from capital gains realized on the sale of securities,
if any, will be declared by Buffalo Balanced Fund and Buffalo Small Cap Fund
annually on or before December 31 and by Buffalo Equity Fund, Buffalo High
Yield Fund and Buffalo USA Global Fund 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 next
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 has qualified or intends to qualify for taxation as a
"regulated investment company" under the Internal Revenue Code so that a
Fund will not be subject to federal income tax to the extent that it
distributes its income to its shareholders. As such, a Fund will not be
subject to federal income tax, or to any excise tax, to the extent its
earnings are distributed as provided in the Internal Revenue Code and by
satisfying certain other requirements relating to the sources of its income
and diversification of its assets. Dividends, either in cash or in reinvested
shares, paid by a Fund from net investment income will be taxable to
shareholders as ordinary income, and may 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 the Fund from domestic (U.S.) sources. Each Fund will send to shareholders
information each year regarding dividend income which qualifies for such
treatment.

Dividends from net investment income or net short-term gains will be taxable
to those investors who are subject to income taxes as ordinary income, whether
received in cash or in additional shares. 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. The Funds do not try to realize any
particular amount of capital gains during a year; rather, realized gains are a
by-product of the Funds' management activities. Consequently, capital gains
distributions may be expected to vary considerably from year to year. Also,
for those investors subject to tax, if purchases of shares in a Fund are made
shortly before a record date for a dividend or capital gains distribution, a
portion of the investment will be returned as a taxable distribution.

The Taxpayer Relief Act of 1997 created a category of long-term capital gains
for individual taxpayers that will be taxed at new lower tax rates. For
investors who are in the 28% or higher federal income tax brackets, these
gains will be taxed at a maximum of 20%. For investors who are in the 15%
federal income tax bracket, these gains will be taxed at a maximum of 10%.
Capital gain distributions will qualify for these new maximum tax rates,
depending on when a Fund's portfolio securities were sold and how long they
were held by a Fund before they were sold. Investors who want more information
on holding periods and other qualifying rules relating to these new rates
should review the expanded discussion in the "Statement of Additional
Information," or should contact their personal tax advisors. Shareholders are
notified annually by the Funds as to federal tax status of dividends and
distributions paid by the Funds. Such dividends and distributions may also be
subject to state and local taxes.

Exchange and redemption of a Fund's shares are taxable events for federal
income tax purposes. Shareholders may also be subject to state and municipal
taxes on such exchanges and redemptions. Any loss incurred on a sale or
exchange of a Fund's shares held for six months or less will be treated as a
long-term capital loss to the extent of capital gain dividends received with
respect to such shares. You should consult your tax adviser with respect to
the tax status of distributions from a Fund in your state and locality.

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, the Funds are 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 any 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.

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 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.

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 - Unless your account is a Traditional or Roth IRA, you
may exchange shares from your account in any of the Buffalo Funds for shares
to be held in an identically registered account in any other Buffalo or Babson
Fund, except Babson Enterprise Fund, Inc., according to your instructions. If
your account is a Traditional or Roth IRA, you may exchange shares from your
account in any of the Buffalo Funds for shares to be held in an identically
registered account in any other Buffalo Fund or the D. L. Babson Money Market
Fund, Inc., according to your instructions. The minimum amount is $100, and
monthly exchanges will continue 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 a 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 Fund's 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 Fund and its 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 are the following Individual
Retirement Accounts (IRAs):

Traditional IRA: The IRS has increased the phase-out ranges for deductible
contributions. 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 ($4,000 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, as well as the best IRA for your
financial goals.

Roth IRA: Unlike the traditional IRA, contributions are non-deductible,
however, distribution will be exempt from federal taxes provided that, at the
time of withdrawal, the IRA has been held for five years and (1) the account
holder is 59 1/2 years old or (2) the withdrawals are used to purchase a first
home. The maximum contribution to a Roth IRA is $2,000 and eligibility is
subject to restrictions. Traditional IRAs may be converted into Roth IRAs.
Consult your tax adviser to determine the best IRA for your financial goals.

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 Funds,
1-800-49-BUFFALO (1-800-492-8332).
Shareholders may address written inquiries to the
Funds at:

Mailing Addresses

For Subsequent Purchases:
The Buffalo Fund Group
P.O. Box 419779
Kansas City, MO 64141-6779

For All Other Correspondence:
The Buffalo Fund Group
P.O. Box 419757
Kansas City, MO 64141-6757

Overnight Deliveries
The Buffalo Fund Group
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-3306

INVESTMENT COUNSEL
KORNITZER CAPITAL MANAGEMENT, INC.
Shawnee Mission, Kansas

INDEPENDENT AUDITORS
ERNST & YOUNG LLP
Kansas City, Missouri

LEGAL COUNSEL
STRADLEY, RONON, STEVENS & YOUNG, LLP
Philadelphia, Pennsylvania

CUSTODIAN
UMB BANK, n.a.
Kansas City, Missouri

TRANSFER AGENT
JONES & BABSON, INC.
Kansas City, Missouri

BUFFALO MUTUAL FUNDS

Balanced Fund
Equity Fund
High Yield Fund
Small Cap Fund
USA Global Fund

BUFFALO FUNDS
JONES & BABSON DISTRIBUTORS
A member of the Generali Group

P.O. Box 419757
Kansas City, Missouri 64141-6757

1-800-49-BUFFALO
(1-800-492-8332)

JB9B 7/98

<PAGE>
PART B

BUFFALO BALANCED FUND, INC.
BUFFALO EQUITY FUND, INC.
BUFFALO HIGH YIELD FUND, INC.
BUFFALO SMALL CAP FUND, INC.
BUFFALO USA GLOBAL FUND, INC.

STATEMENT OF ADDITIONAL INFORMATION

July 31, 1998

This Statement is not a Prospectus but should be read
in conjunction with the Funds'
current Prospectus dated July 31, 1998. To obtain
the Prospectus please call the
Fund toll-free at 1-800-49-BUFFALO (1-800-492-8332).

TABLE OF CONTENTS

Page

INVESTMENT OBJECTIVES AND POLICIES 1
PORTFOLIO TRANSACTIONS 1
INVESTMENT RESTRICTIONS 2
Buffalo Balanced Fund 2
Buffalo Equity Fund 3
Buffalo High Yield Fund 3
Buffalo Small Cap Fund 4
Buffalo USA Global Fund 4
PERFORMANCE MEASURES 5
HOW THE FUNDS' SHARES ARE DISTRIBUTED 6
HOW SHARE PURCHASES ARE HANDLED 6
REDEMPTION OF SHARES 7
DIVIDENDS, DISTRIBUTIONS AND TAXES 7
SIGNATURE GUARANTEES 9
MANAGEMENT AND INVESTMENT COUNSEL 9
HOW SHARE PRICE IS DETERMINED 11
OFFICERS AND DIRECTORS 11
CUSTODIAN 13
INDEPENDENT AUDITORS 14
OTHER JONES & BABSON FUNDS 14
DESCRIPTION OF COMMERCIAL PAPER RATINGS 15
FINANCIAL STATEMENTS 16

JB65 7/98

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 and
the negotiation of commissions and/or the price of the
securities. In instances where securities are purchased on
a commission basis, 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.

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.

The Funds believe it is in their best interest and that of
their 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. The Funds may execute a
substantial portion of the portfolio transactions through
brokerage firms which are members of the New York Stock
Exchange or through other major securities exchanges. When
buying securities in the over-the-counter market, 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, the Funds reserve 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 shareholders.

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 their
shareholders, 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.

Buffalo Balanced Fund's annualized turnover for the fiscal
year ended March 31, 1996, was 61%; for the fiscal year
ended March 31, 1997, it was 56%; and for the fiscal year
ended March 31, 1998, it was 61%. Commissions paid during
the fiscal year ended March 31, 1998, amounted to
$37,424.35.

Buffalo Equity Fund's annualized turnover for the period
from May 19, 1995 (inception) to March 31, 1996, was 63%;
for the fiscal year ended March 31, 1997, it was 123%; and
for the fiscal year ended March 31, 1998, it was 93%.
Commissions paid during the fiscal year ended March 31,
1998, amounted to $56,215.15.

Buffalo High Yield Fund's annualized turnover for the period
from May 19, 1995 (inception) to March 31, 1996, was 25%;
for the fiscal year ended March 31, 1997, it was 39%; and
for the fiscal year ended March 31, 1998, it was 24%.
Commissions paid during the fiscal year ended March 31,
1998, amounted to $4,997.40.

Buffalo USA Global Fund's annualized turnover for the period
from May 19, 1995 (inception) to March 31, 1996, was 123%;
for the fiscal year ended March 31, 1997, it was 88%; and
for the fiscal year ended March 31, 1998, it was 64%.
Commissions paid during the fiscal year ended March 31,
1998, amounted to $51,897.40.

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
Policies," 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 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 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
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;
(14) invest in securities which are assessable or involve
unlimited liability; or (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.

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 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 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
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;
(14) invest in securities which are assessable or involve
unlimited liability; or (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.

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 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 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
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;
(14) invest in securities which are assessable or involve
unlimited liability; or (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.

The Buffalo Small Cap Fund will not: (1) as to 75% of its
total assets, 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 or
commodities; (3) underwrite the securities of other issuers;
(4) make loans to other persons, except by the purchase of
debt obligations which are permitted under its policy (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); (5) purchase securities on margin, or sell
securities short, except that the Fund may write covered
call options; (6) 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 borrowing in excess of 5% of the total
assets of the Fund shall have asset coverage of at least 3
to 1; or (7) purchase any securities which would cause more
than 25% of the value of a Portfolio's total net assets at
the time of such purchase to be invested in any one
industry.

The following are "non-fundamental" restrictions which can
be changed by the Board of Directors of the Fund without
shareholder approval. The Fund may not: (1) invest in
companies for the purpose of exercising control of
management; (2) purchase shares of other investment
companies except as permitted under the Investment Company
Act of 1940, as amended from time to time or pursuant to a
plan of merger or consolidation or similar transaction; (3)
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; or (4) 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 organizations in which
such persons have a financial interest.

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 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 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
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;
(14) invest in securities which are assessable or involve
unlimited liability; or (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.

PERFORMANCE MEASURES

From time to time, the Buffalo Balanced Fund or 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)-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.

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).

The table below shows the average total return for each of
the Funds, except Buffalo Small Cap Fund, for the specified
periods. Buffalo Small Cap Fund commenced operation on
April 14, 1998.

BALANCED EQUITY HIGH YIELD GLOBAL
FUND FUND FUND FUND
For the one year
4/1/97-3/31/98
24.76% 36.97% 18.63% 31.33%

From commencement
of operations to 3/31/98*
15.96% 30.45% 17.24% 27.43%
_____________________________

* Buffalo Balanced Fund commenced operation on August 12,
1994; Buffalo Equity Fund, Buffalo High Yield Fund and
Buffalo USA Global Fund each commenced operation on May
19, 1995.

HOW THE FUNDS' 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 agreements with the
Buffalo Funds, which continues in effect until October 31,
1998 (for Buffalo Small Cap Fund, until October 31, 1999),
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., Scout
WorldWide Fund, Inc., Scout Balanced Fund, Inc., Scout
Kansas Tax-Exempt Bond Fund, Inc., Scout Capital
Preservation Fund, Inc. and AFBA Five Star 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 an order is accepted by the Fund.

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.

Each 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. Each
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 three-day period by the
Funds' Boards 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.

The Funds have elected to be governed by Rule 18f-1 under
the Investment Company Act of 1940 pursuant to which the
Funds are 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, a
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.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Distributions of Net Investment Income. The Funds receive
income generally in the form of dividends, interest,
original issue, market and acquisition discount, and other
income derived from their investments. This income, less
expenses incurred in the operation of the Funds, constitutes
the net investment income from which dividends may be paid
to you. Any distributions by a Fund from such income will
be taxable to you, whether you take them in cash or in
additional shares.

Distributions of Capital Gains. A Fund may derive capital
gains and losses in connection with sales or other
dispositions of its portfolio securities. Distributions
derived from the excess of net short-term capital gains over
net long-term capital losses will be taxable to you as
ordinary income. Distributions paid from long-term capital
gains realized by a Fund will be taxable to you as long-term
capital gain, regardless of how long you have held your
shares in such Fund. Any net short-term or long-term
capital gains realized by a Fund (net of any capital loss
carryovers) will generally be distributed once each year,
and may be distributed more frequently, if necessary, in
order to reduce or eliminate federal excise or income taxes
on a Fund.

Under the Taxpayer Relief Act of 1997 (the "1997 Act"), each
Fund is required to track their sales of portfolio
securities and to report its capital gain distributions to
you according to the following categories of holding
periods:

"28 percent tax rate gains:" Securities sold by a Fund
after July 28, 1997 that were held for more than one year
but not more than 18 months, and under a transitional rule
securities sold by a Fund before May 7, 1997 that were held
for more than 12 months. These gains will be taxable to
individual investors at a maximum rate of 28%.

"20 percent tax rate gains:" Securities sold by a Fund after
July 28, 1997 that were held for more than 18 months, and
under a transitional rule securities sold by a Fund between
May 7, 1997 and July 28, 1997 that were held for more than
12 months. These gains will be taxable to individual
investors at a maximum rate of 20% for investors in the 28%
or higher federal income tax rate brackets, and at a maximum
rate of 10% for investors in the 15% federal income tax rate
bracket.

"Qualified 5-year gains:" For individuals in the 15%
federal income tax rate bracket, qualified 5-year gains are
net gains on securities held for more than 5 years which are
sold after December 31, 2000. For individuals who are
subject to tax at higher federal income tax rate brackets,
qualified 5-year gains are net gains on securities which are
purchased after December 31, 2000 and are held for more than
5 years. Taxpayers subject to tax at the higher federal
income tax rate brackets may also make an election for
shares held on January 1, 2001 to recognize gain on their
shares in order to qualify such shares as qualified 5-year
property. These gains will be taxable to individual
investors at a maximum rate of 18% for investors in the 28%
or higher federal income tax brackets, and at a maximum rate
of 8% for investors in the 15% federal income tax rate
bracket.

A Fund will advise you in its annual information reporting
at calendar year end of the amount of its capital gain
distributions which will qualify for these maximum federal
tax rates for each calendar year. Questions concerning each
investor's personal tax reporting should be addressed to the
investor's personal tax advisor.

Election to be Taxed as a Regulated Investment Company.
Buffalo Balanced Fund, Inc., Buffalo Equity Fund, Inc.,
Buffalo High Yield Fund, Inc. and Buffalo USA Global Fund,
Inc. have elected to be treated as regulated investment
companies under Subchapter M of the Internal Revenue Code
("Code"), have qualified as such for their most recent
fiscal year and each Fund intends to so qualify during the
current fiscal year. The Buffalo Small Cap Fund, Inc. will
elect to be treated as a regulated investment company on its
initial income tax return. The directors reserve the right
not to maintain the qualification of the Fund as a regulated
investment company if they determine such course of action
to be beneficial to you. In such case, the Fund will be
subject to federal and possibly state corporate taxes on its
taxable income and gains, and distributions to you will be
taxed as ordinary dividend income to the extent of the
Fund's available earnings and profits.

In order to qualify as a regulated investment company for
federal income tax purposes, each Fund must meet certain
specific requirements, including:

The Fund must maintain a diversified portfolio of
securities, wherein no security (other than U.S.
Government securities and securities of other regulated
investment companies) can exceed 25% of the Fund's total
assets, and, with respect to 50% of the Fund's total
assets, no investment (other than cash and cash items,
U.S. Government securities and securities of other
regulated investment companies) can exceed 5% of the
Fund's total assets;

The Fund must derive at least 90% of its gross income
from dividends, interest, payments with respect to
securities loans and gains from the sale or disposition
of stock or securities or foreign currencies, or other
income derived with respect to its business of investing
in such stock, securities or currencies; and

The Fund must distribute to its shareholders at least 90%
of its net investment income and net tax-exempt income
for each of its fiscal years.

Excise Tax Distribution Requirements. The Code requires a
Fund to distribute at least 98% of its taxable ordinary
income earned during the calendar year and 98% of its
capital gain net income earned during the 12-month period
ending October 31 (in addition to amounts from the prior
year that were neither distributed nor taxed to a Fund) to
you by December 31 of each year in order to avoid federal
excise taxes. The Funds intend as a matter of policy to
declare and pay sufficient dividends in December or January
(which are treated by you as received in December) but do
not guarantee and can give no assurances that its
distributions will be sufficient to eliminate all such
taxes.

Dividends-Received Deduction for Corporations. Because a
Fund's income may be from dividends, a portion of its
distributions may be eligible for the intercorporate
dividends-received deduction. The dividends-received
deduction will be available only with respect to dividends
designated by a Fund as eligible for such treatment.
Dividends so designated by a Fund must be attributable to
dividends earned by the Fund from U.S. corporations which
are not debt-financed. A holding period requirement applies
both at the Fund level and the corporate shareholder level.
Under the 1997 Act, the amount that a Fund may designate as
eligible for the dividends-received deduction will be
reduced or eliminated if the shares on which the dividends
earned by a Fund are debt-financed or held by the Fund for
less than a 46-day period during a 90-day period beginning
45 days before the ex-dividend date and ending 45 days after
the ex-dividend date. Similarly, if your Fund shares are
debt-financed or held by you for less than a 46-day period
during a 90-day period beginning 45 days before the ex-
dividend date and ending 45 days after the ex-dividend date,
then the dividend-received deduction for fund dividends on
your shares may also be reduced or eliminated. Even if
designated as dividends eligible for the dividend-received
deduction, all dividends (including any deducted portion)
must be included in your alternative minimum taxable income
calculation.

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.

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 Agreements between Jones &
Babson, Inc., and Buffalo Balanced Fund, Inc., Buffalo
Equity Fund, Inc., Buffalo High Yield Fund, Inc., Buffalo
Small Cap Fund, Inc. and Buffalo USA Global Fund, Inc.,
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 aggregate management fees paid to Jones & Babson, Inc.
by Buffalo Balanced Fund during the three most recent fiscal
years ended March 31, 1996, 1997 and 1998 were $446,385,
$444,591 and $489,966, respectively. From the management
fees, Jones & Babson, Inc. paid all the Fund's expenses
except those payable directly by the Fund. The 1% annual
fee charged by Jones & Babson, Inc. covers all normal
operating costs of the Fund.

The aggregate management fees paid to Jones & Babson, Inc.
by Buffalo Equity Fund during the three most recent fiscal
years ended March 31, 1996, 1997 and 1998 were $29,668,
$135,178 and $293,680, respectively. From the management
fees, Jones & Babson, Inc. paid all the Fund's expenses
except those payable directly by the Fund. The 1% annual
fee charged by Jones & Babson, Inc. covers all normal
operating costs of the Fund.

The aggregate management fees paid to Jones & Babson, Inc.
by Buffalo High Yield Fund during the three most recent
fiscal years ended March 31, 1996, 1997 and 1998 were
$37,196, $129,964 and $329,029, respectively. From the
management fees, Jones & Babson, Inc. paid all the Fund's
expenses except those payable directly by the Fund. The 1%
annual fee charged by Jones & Babson, Inc. covers all normal
operating costs of the Fund.

The aggregate management fee to be paid to Jones & Babson,
Inc. by Buffalo Small Cap Fund during the current fiscal
year is 1%, from which Jones & Babson, Inc. will pay all the
Fund's expenses except those payable directly by the Fund.
The annual fee charged by Jones & Babson, Inc. covers all
normal operating costs of the Fund.

The aggregate management fees paid to Jones & Babson, Inc.
by Buffalo USA Global Fund during the three most recent
fiscal years ended March 31, 1996, 1997 and 1998 were
$25,935, $146,590 and $436,378, respectively. From the
management fees, Jones & Babson, Inc. paid all the Fund's
expenses except those payable directly by the Fund. The 1%
annual fee charged by Jones & Babson, Inc. covers all normal
operating costs of the Fund.

For its investment supervisory services and counsel in
connection with Buffalo Balanced Fund, Buffalo Equity Fund,
Buffalo High Yield Fund, Buffalo Small Cap Fund and Buffalo
USA Global Fund, Jones & Babson, Inc. pays Kornitzer Capital
Management, Inc., a fee computed on an annual basis at the
rate of .50% of the average daily total net assets of each
of these Funds.

During the three most recent fiscal years ended March 31,
1996, 1997 and 1998, Jones & Babson, Inc. paid Kornitzer
Capital Management, Inc., fees in connection with Buffalo
Balanced Fund of $223,192, $222,268 and $244,983,
respectively.

During the three most recent fiscal years ended March 31,
1996, 1997 and 1998, Jones & Babson, Inc. paid Kornitzer
Capital Management, Inc., fees in connection with Buffalo
Equity Fund of $14,866, $67,822 and $146,840, respectively.

During the three most recent fiscal years ended March 31,
1996, 1997 and 1998, Jones & Babson, Inc. paid Kornitzer
Capital Management, Inc., fees in connection with Buffalo
High Yield Fund of $18,630, $65,974 and $164,514,
respectively.

Buffalo Small Cap Fund, Inc. was not in operation during the
fiscal year ended March 31, 1998.

During the three most recent fiscal years ended March 31,
1996, 1997 and 1998, Jones & Babson, Inc. paid Kornitzer
Capital Management, Inc., fees in connection with Buffalo
USA Global Fund of $12,999, $73,332 and $218,189,
respectively.

Kornitzer Capital Management, Inc., has an experienced
investment analysis and research staff which eliminates the
need for Jones & Babson, Inc. and the Funds 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 Fund's portfolio is
computed once daily, Monday through Friday, at the specific
time during the day that the Boards of Directors of the
Funds set 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
Martin Luther King, Jr. Day Third Monday in January
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 Funds are managed by Jones & Babson, Inc. subject to the
supervision and control of the Boards of Directors. The
following table lists the officers and directors of the
Funds and their ages. Unless noted otherwise, the address
of each officer and director is BMA Tower, 700 Karnes Blvd.,
Kansas City, MO 64108-3306. Except as indicated, each has
been an employee of Jones & Babson, Inc. for more than five
years.

* Larry D. Armel (56), 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., 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., Scout Balanced Fund,
Inc., Scout Kansas Tax-Exempt Bond Fund, Inc., Scout
Capital Preservation Fund, Inc., Buffalo Balanced Fund,
Inc., Buffalo Equity Fund, Inc., Buffalo USA Global Fund,
Inc., Buffalo High Yield Fund, Inc., Buffalo Small Cap
Fund, Inc., Investors Mark Series Fund, Inc.; Director,
AFBA Five Star Fund, Inc.; President and Trustee, D.L.
Babson Bond Trust.

* Kent W. Gasaway (38), Director. Senior Vice President,
Kornitzer Capital Management, Inc., KCM Building, Shawnee
Mission, Kansas 66202. Director, Buffalo Balanced Fund,
Inc., Buffalo Equity Fund, Inc., Buffalo USA Global Fund,
Inc., Buffalo High Yield Fund, Inc., Buffalo Small Cap
Fund, Inc.; formerly Assistant Vice President, Waddell &
Reed, Inc.

* Stephen S. Soden (53), Director. President, BMA
Financial Services. Chairman and Director, Jones &
Babson, Inc.; Director, Buffalo Balanced Fund, Inc.,
Buffalo Equity Fund, Inc., Buffalo USA Global Fund, Inc.,
Buffalo High Yield Fund, Inc., Buffalo Small Cap Fund,
Inc.

_____________________________
* Directors who are interested persons as that term is
defined in the Investment Company Act of 1940, as
amended.

Thomas S. Case (57), Director. Retired, 3485 Paydirt Dr.,
Placerville, California 95667. Director, Buffalo Balanced
Fund, Inc., Buffalo Equity Fund, Inc., Buffalo High Yield
Fund, Inc., Buffalo USA Global Fund, Inc., Buffalo Small
Cap Fund, Inc.; formerly President and Chief Executive
Officer, the Frankona American Companies.

Francis C. Rood (64), Director. Retired, 73-395 Agave
Lane, Palm Desert, California 92260-6653. 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., Babson-Stewart Ivory International Fund,
Inc., Buffalo Balanced Fund, Inc., Buffalo Equity Fund,
Inc., Buffalo USA Global Fund, Inc., Buffalo High Yield
Fund, Inc., Buffalo Small Cap Fund, Inc., Investors Mark
Series Fund, Inc.; Trustee, D.L. Babson Bond Trust;
formerly Vice President of Finance, Hallmark Cards, Inc.

William H. Russell (75), 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., Babson-Stewart Ivory International
Fund, Inc., Buffalo Balanced Fund, Inc., Buffalo Equity
Fund, Inc., Buffalo USA Global Fund, Inc., Buffalo High
Yield Fund, Inc., Buffalo Small Cap Fund, Inc., Investors
Mark Series Fund, Inc.; Trustee, D.L. Babson Bond Trust;
formerly Vice President, Sprint.

H. David Rybolt (56), Director. Consultant, HDR
Associates, P.O. Box 2468, Shawnee Mission, Kansas 66201.
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, Inc., Buffalo
Equity Fund, Inc., Buffalo USA Global Fund, Inc., Buffalo
High Yield Fund, Inc., Buffalo Small Cap Fund, Inc.,
Investors Mark Series Fund, Inc.; Trustee, D.L. Babson
Bond Trust.

P. Bradley Adams (37), 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
WorldWide Fund, Inc., Scout Balanced Fund, Inc., Scout
Capital Preservation Fund, Inc., Scout Kansas Tax-Exempt
Bond Fund, Inc., Buffalo Balanced Fund, Inc., Buffalo
Equity Fund, Inc., Buffalo High Yield Fund, Inc., Buffalo
USA Global Fund, Inc., Buffalo Small Cap Fund, Inc.; Vice
President and Chief Financial Officer, AFBA Five Star
Fund, Inc.; Principal Financial Officer, Investors Mark
Series Fund, Inc.

Martin A. Cramer (48), Vice President and Secretary.
Vice President and Secretary, 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., Scout Balanced Fund, Inc., Scout Kansas Tax-Exempt
Bond Fund, Inc., Scout Capital Preservation Fund, Inc.,
Buffalo Balanced Fund, Inc., Buffalo Equity Fund, Inc.,
Buffalo High Yield Fund, Inc., Buffalo USA Global Fund,
Inc., Buffalo Small Cap Fund, Inc.; Secretary and
Assistant Vice President, AFBA Five Star Fund, Inc.;
Secretary, Investors Mark Series Fund, Inc.

Constance E. Martin (36), Vice President. Assistant Vice
President, Jones & Babson, Inc.; Vice President, 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., Scout Balanced Fund, Inc., Scout
Capital Preservation Fund, Inc., Scout Kansas Tax-Exempt
Bond Fund, Inc., Buffalo Balanced Fund, Inc., Buffalo
Equity Fund, Inc., Buffalo High Yield Fund, Inc., Buffalo
USA Global Fund, Inc., Buffalo Small Cap Fund, Inc.

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. Case, 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. Case, Rood, Russell and Rybolt.

The officers and directors of each of the Funds as a group
own less than 1% of any of the Funds.
<TABLE>
<CAPTION>
Compensation Table

Aggregate Pension or Retirement Estimated Total Compensation
Compensation Benefits Accrued as Annual Benefits From All Buffalo Funds
Name of Director From Each Fund Part of Fund Expenses upon Retirement Paid to Directors**
</CAPTION>
<S> <C> <C> <C> <C>
Larry D. Armel* -- -- -- --
Kent W. Gasaway* -- -- -- --
Thomas S. Case $5,250 -- -- $5,250
Stephen S. Soden* -- -- -- --
Francis C. Rood $2,125 -- -- $2,125
William H. Russell $2,125 -- -- $2,125
H. David Rybolt $2,125 -- -- $2,125
</TABLE>
* As "interested directors," Messrs. Armel, Gasaway and
Soden receive no compensation for their services as
directors.

** The amounts reported in this column reflect the total
compensation paid to each director for his services as a
director of five Buffalo Funds during the fiscal year
ended March 31, 1998. Directors' fees are paid by the
Funds' manager and not by the Funds themselves.

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% of all
the votes entitled to be cast at the meeting. All Funds
except Buffalo Small Cap Fund, Inc. have undertaken that
their Directors will call a meeting of stockholders if such
a meeting is requested in 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' portfolio assets are held for safe-keeping by an
independent custodian, UMB Bank, n.a. This means UMB Bank,
n.a., rather than the Funds, has possession of the Funds'
cash and securities. UMB Bank, n.a. is not responsible for
the Funds' investment management or administration. But, as
directed by the Funds' officers, it delivers cash to those
who have sold securities to a Fund in return for such
securities, and to those who have purchased portfolio
securities from a Fund, it delivers such securities in
return for their cash purchase price. It also collects
income directly from issuers of securities owned by a Fund
and holds this for payment to shareholders after deduction
of a Fund's expenses. The custodian is compensated for its
services by the manager. There is no charge to the Funds.

INDEPENDENT AUDITORS

The Funds' 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 LLP,
One Kansas City Place, 1200 Main Street, Suite 2000, Kansas
City, Missouri 64105, is the present independent auditor for
the Funds.

Reports to shareholders will be published at least
semiannually.

OTHER JONES & BABSON FUNDS

Jones & Babson, Inc. also sponsors and manages, in
association with its investment counsel, David L. Babson &
Co. Inc., nine no-load funds comprising the Babson Mutual
Fund Group. They are:

Equity Funds

David L. Babson Growth Fund, Inc. was organized in 1960,
with the objective of long-term growth of both capital and
dividend income through investment in the common stocks of
well-managed companies which have a record of long-term
above-average growth of both earnings and dividends.

Babson Enterprise Fund, Inc. was organized in 1983, with the
objective of long-term growth of capital by investing in a
diversified portfolio of common stocks of smaller, faster-
growing companies with market capital of $15 million to $300
million at the time of purchase. This Fund is intended to
be an investment vehicle for that part of an investor's
capital which can appropriately be exposed to above-average
risk in anticipation of greater rewards. This Fund is
currently closed to new shareholders.

Babson Enterprise Fund II, Inc. was organized in 1991, with
the objective of long-term growth of capital by investing in
a diversified portfolio of common stocks of smaller, faster-
growing companies which at the time of purchase are
considered by the Investment Adviser to be realistically
valued in the smaller company sector of the market. This
Fund is intended to be an investment vehicle for that part
of an investor's capital which can appropriately be exposed
to above-average risk in anticipation of greater rewards.

Babson Value Fund, Inc. was organized in 1984, with the
objective of long-term growth of capital and income by
investing in a diversified portfolio of common stocks which
are considered to be undervalued in relation to earnings,
dividends and/or assets.

Shadow Stock Fund, Inc. was organized in 1987, with the
objective of long-term growth of capital that can be exposed
to above-average risk in anticipation of greater-than-
average rewards. The Fund expects to reach its objective by
investing in small company stocks called "Shadow Stocks,"
i.e., stocks that combine the characteristics of "small
stocks" (as ranked by market capitalization) and "neglected
stocks" (least held by institutions and least covered by
analysts).

Babson-Stewart Ivory International Fund, Inc. was organized
in 1987, with the objective of seeking a favorable total
return (from market appreciation and income) by investing
primarily in a diversified portfolio of equity securities
(common stocks and securities convertible into common
stocks) of established companies whose primary business is
carried on outside the United States.

Fixed Income Funds

D.L. Babson Bond Trust was organized in 1944, and has been
managed by Jones & Babson, Inc. since 1972, with the
objective of a high level of current income and reasonable
stability of principal. It offers two portfolios -
Portfolio L and Portfolio S.

D.L. Babson Money Market Fund, Inc. was organized in 1979,
to provide investors the opportunity to manage their money
over the short term by investing in high-quality short-term
debt instruments for the purpose of maximizing income to the
extent consistent with safety of principal and maintenance
of liquidity. It offers two portfolios - Prime and Federal.
Money market funds are neither insured nor guaranteed by the
U.S. Government and there is no assurance that the funds
will maintain a stable net asset value.

D.L. Babson Tax-Free Income Fund, Inc. was organized in
1979, to provide shareholders the highest level of regular
income exempt from federal income taxes consistent with
investing in quality municipal securities. It offers three
separate high-quality portfolios (including a money market
portfolio) which vary as to average length of maturity.
Income from the Tax-Free Money Market portfolio may be
subject to state and local taxes, as well as the Alternative
Minimum Tax.

A prospectus for any of the Funds may be obtained from Jones
& Babson, Inc., BMA Tower, 700 Karnes Blvd., Kansas City, MO
64108-3306.

Jones & Babson, Inc. also sponsors nine mutual funds which
especially seek to provide services to customers of
affiliate banks of UMB Financial Corporation. 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., Scout WorldWide Fund, Inc., Scout
Balanced Fund, Inc., Scout Kansas Tax-Exempt Bond Fund, Inc.
and Scout Capital Preservation Fund, Inc.

Jones & Babson also sponsors the AFBA Five Star Fund, Inc.

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 issuer; 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.

FINANCIAL STATEMENTS

The audited financial statements of Buffalo Balanced Fund,
Inc., Buffalo Equity Fund, Inc., Buffalo High Yield Fund,
Inc. and Buffalo USA Global Fund, Inc. which are contained
in the March 31, 1998, Annual Report to Shareholders, are
incorporated herein by reference.

REPORT OF INDEPENDENT AUDITORS

The Shareholder and Board of Directors
Buffalo Small Cap Fund, Inc.

We have audited the accompanying statement of net assets of
Buffalo Small Cap Fund, Inc. (the Company) as of January 12,
1998. This statement of net assets is the responsibility of
the Company's management. Our responsibility is to express
an opinion on this statement of net assets based on our
audit.

We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about
whether the statement of net assets is free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
statement of net assets. Our procedures included
confirmation of cash as of January 12, 1998, by
correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall statement of net assets presentation. We believe
that our audit provides a reasonable basis for our opinion.

In our opinion, the statement of net assets referred to
above presents fairly, in all material respects, the
financial position of the Company at January 12, 1998, in
conformity with generally accepted accounting principles.

/s/Ernst & Young LLP
Ernst & Young LLP

Kansas City, Missouri
January 14, 1998

BUFFALO SMALL CAP FUND, INC.

Statement of Net Assets

January 12, 1998

Assets
Cash $100,000
----------

Net assets applicable to
outstanding shares $100,000
==========

Capital shares, $1.00 par value
Authorized 10,000,000
==========

Outstanding 10,000
==========

Net asset value per share $10.00
==========

Note - Significant Accounting Policies

Organization - Buffalo Small Cap Fund, Inc. (the Company)
was organized as a Maryland corporation on October 16, 1997
and is registered under the Investment Company Act of 1940,
as amended, as a diversified, open-end management investment
company. Shares outstanding for the Company on January 12,
1998 were issued to Jones & Babson, the Company's manager
and distributor (the Manager). The costs of organization
will be paid by the Manager.

Management Fees - The Manager will charge the Company a fee
based on an annual rate of one percent (1.00%) of the
Company's average daily net assets from which the Manager
will pay Kornitzer Capital Management, Inc., which serves as
investment counsel (the Adviser), a fee of one half of one
percent (0.50%) of average daily net assets. The Manager
will pay all other operating expenses except the cost of
acquiring and disposing of portfolio securities, the taxes,
if any, imposed directly on the Company and its shares and
the cost of qualifying the Company's shares for sale in any
jurisdiction. Certain officers and directors of the Company
are also officers or directors of the Manager.

<PAGE>
PART C

OTHER INFORMATION

Item 24. FINANCIAL STATEMENTS AND EXHIBITS.

(a) Financial Statements

Included in Part A - Prospectus:

Per Share Capital and Income Changes

Included in Part B - Statement of Additional Information:

The audited financial statements contained in
the most recent Annual Report to Shareholders of
Buffalo Balanced Fund, Inc., Buffalo Equity Fund,
Inc., Buffalo High Yield Fund, Inc., and Buffalo USA
Global Fund, Inc. are incorporated by reference into
Part B of this Registration Statement.

Initial auditied financial statements are contained in
Part B of the Registration Statment for the Buffalo Small
Cap Fund, Inc.

Included in Part C - Other Information:

Consents of Independent Public Accountants
Ernst & Young LLP

(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 agreements for the benefit of
directors and officers.

(8) Forms of Custodian Agreement between Registrant
and UMB Bank, 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.*

(11) (a) Powers of Attorney*

(b) Auditors Consent

(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.

(17) Financial Data Schedules for Buffalo Balanced
Fund, Inc., Buffalo Equity Fund, Inc., Buffalo
High Yield Fund, Inc., Buffalo USA Global Fund,
Inc. and Buffalo Small Cap Fund, Inc.

*Previously filed via EDGAR and incorporated by reference herein.

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
Registrants as of July 17, 1998, is as follows:

(1) (2)
Title of Class
Common Stock Number of Record Holders
$1.00 par value

Buffalo Balanced Fund 3,188

Buffalo Equity Fund 2,883

Buffalo USA Global Fund 4,332

Buffalo High Yield Fund 2,578

Buffalo Small Cap Fund, Inc. 371

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.

Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR.

The principal business of Jones & Babson, Inc. is the
management of the Babson and Buffalo family of mutual funds.
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 $1.2 billion 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., Babson Enterprise
Fund, Inc., Babson Enteprise Fund II, 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.,
Scout Capital Preservation Fund, Inc., Scout Kansas
Tax-Exempt Bond Fund, Inc., Scout Balanced Fund, Inc.,
and AFBA Five Star Fund, Inc.

(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
700 Karnes Blvd. Director
Kansas City, MO 64108-3306

Larry D. Armel President and President and
700 Karnes Blvd. Director Director
Kansas City, MO 64108-3306

Giorgio Balzer Director None
700 Karnes Blvd.
Kansas City, MO 64108-3306

Robert T. Rakich Director None
700 Karnes Blvd.
Kansas City, MO 64108-3306

Edward S. Ritter Director None
700 Karnes Blvd.
Kansas City, MO 64108-3306

Robert N. Sawyer Director None
700 Karnes Blvd.
Kansas City, MO 64108-3306

Vernon W. Voorhees Director None
700 Karnes Blvd.
Kansas City, MO 64108-3306

P. Bradley Adams Vice President Vice President
700 Karnes Blvd. and Treasurer and Treasurer
Kansas City, MO 64108-3306

Martin A. Cramer Vice President Vice President
700 Karnes Blvd. and Secretary and Secretary
Kansas City, MO 64108-3306

(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 700 Karnes Blvd., Kansas City, Missouri
64108-3306.

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.

Item 32. UNDERTAKINGS.

Not Applicable.

EXHIBIT INDEX

11(b) Consent of Auditors

11(c) 485(b) Letter from Counsel

27 Financial Data Schedules

<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
amendment to its 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 23rd day of July, 1998.

BUFFALO EQUITY FUND, INC.
BUFFALO HIGH YIELD FUND, INC.
BUFFALO USA GLOBAL FUND, INC.
BUFFALO BALANCED FUND, INC.
BUFFALO SMALL CAP FUND, INC.

By /s/Larry D. Armel
Larry D. Armel

Pursuant to the requirements of the Securities Act of 1933, this
Post-effective Amendment #6/#1 to the Registration Statement has been signed
below by the following persons in the capacities and on the date indicated.

/s/F.C. Rood* Director July 23, 1998
F.C. Rood

/s/H. David Rybolt* Director July 23, 1998
H. David Rybolt

/s/William H. Russell* Director July 23, 1998
William H. Russell

/s/Thomas S. Case* Director July 23, 1998
Thomas S. Case

/s/Kent W. Gasaway* Director July 23, 1998
Kent W. Gasaway

/s/Stephen S. Soden* Director July 23, 1998
Steven S. Soden

/s/Larry Armel Director July 23, 1998
Larry Armel

/s/P. Bradley Adams Vice President and July 23, 1998
P. Bradley Adams Principal Financial
and Accounting Officer

*Signed pursuant to Power of
Attorney

By /s/Larry D. Armel
Larry D. Armel
Attorney-in-Fact

Consent of Independent Auditors

We consent to the references to our firm under the captions
"Financial Highlights" in the Prospectus and "Independent
Auditors" in the Statement of Additional Information and to the
incorporation by reference of our report dated May 8, 1998, in the
Registration Statement (Form N-1A) and related Prospectus of
Buffalo Balanced Fund, Inc. filed with the Securities and Exchange
Commission in this Post-Effective Amendment No. 6 under the
Securities Act of 1933 (Registration No. 33-75476) and Amendment
No. 8 under the Investment Company Act of 1940 (Registration No.
811-8364).

/s/Ernst & Young LLP
Ernst & Young LLP

Kansas City, Missouri
July 17, 1998

<PAGE>
Consent of Independent Auditors

We consent to the references to our firm under the captions
"Financial Highlights" in the Prospectus and "Independent
Auditors" in the Statement of Additional Information and to the
incorporation by reference of our report dated May 8, 1998, in the
Registration Statement (Form N-1A) and related Prospectus of
Buffalo Equity Fund, Inc. filed with the Securities and Exchange
Commission in this Post-Effective Amendment No. 6 under the
Securities Act of 1933 (Registration No. 33-87346) and Amendment
No. 8 under the Investment Company Act of 1940 (Registration No.
811-8900).

/s/Ernst & Young LLP
Ernst & Young LLP

Kansas City. Missouri
July 17, 1998

<PAGE>
Consent of Independent Auditors

We consent to the references to our firm under the captions
"Financial Highlights" in the Prospectus and "Independent
Auditors" in the Statement of Additional Information and to the
incorporation by reference of our report dated May 8, 1998, in the
Registration Statement (Form N-lA) and related Prospectus of
Buffalo High Yield Fund, Inc. filed with the Securities and
Exchange Commission in this Post-Effective Amendment No. 6 under
the Securities Act of 1933 (Registration No. 33-87148) and
Amendment No. 8 under the Investment Company Act of 1940
(Registration No. 811-8898).

/s/Ernst & Young LLP
Ernst & Young LLP

Kansas City, Missouri
July 17, 1998

<PAGE>
Consent of Independent Auditors

We consent to the references to our firm under the captions
"Financial Highlights" in the Prospectus and "Independent
Auditors" in the Statement of Additional Information and to the
incorporation by reference of our report dated May 8, 1998, in the
Registration Statement (Form N-1A) and related Prospectus of
Buffalo USA Global Fund, Inc. filed with the Securities and
Exchange Commission in this Post-Effective Amendment No. 6 under
the Securities Act of 1933 (Registration No. 33-87146) and
Amendment No. 8 under the Investment Company Act of 1940
(Registration No. 811-8896).

/s/Ernst & Young LLP
Ernst & Young LLP

Kansas City, Missouri
July 17, 1998

<PAGE>
Consent of Independent Auditors

We consent to the reference to our firm under the caption
"Independent Auditors" in the Statement of Additional Information
and to the inclusion of our report dated January 14, 1998 in the
Registration Statement (Form N-lA) and related Prospectus of
Buffalo Small Cap Fund, Inc. filed with the Securities and
Exchange Commission in this Post-Effective Amendment No. 1 under
the Securities Act of 1933 (Registration No. 333-40841) and
Amendment No. 2 under the Investment Company Act of 1940
(Registration No. 811-08509).

/s/Ernst & Young LLP
Ernst & Young LLP

Kansas City, Missouri
July 17, 1998

Law Offices

Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, Pennsylvania 19103-7098
(215) 564-8000

July 23, 1998

FILED VIA EDGAR
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Attn: Filing Desk

Re: Buffalo Balanced Fund, Inc.
SEC File No. 811-8364
CIK No. 919228

Dear Sir or Madam:

Included for filing via EDGAR is Post-Effective Amendment No. 6
to the Registration Statement on Form N-1A for Buffalo Balanced Fund, Inc.
This post-effective amendment is being filed under Rule 485(b) for the
purpose of bring the Financial Statements and other information up-to-date,
and in conjunction therewith, making other appropriate non-material changes.
No material event requiring disclosure in the Prospectus has occurred since
the effective date of the most recent Post-Effective Amendment. The amendment
does not contain disclosures which would render it ineligible to become
effective pursuant to Rule 485(b). Questions related to this filing should
be directed to me at the number above.

Very truly yours,
Michael P. O'Hare
/s/Michael P. O'Hare

<PAGE>
Law Offices

Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, Pennsylvania 19103-7098
(215) 564-8000

July 23, 1998

FILED VIA EDGAR
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Attn: Filing Desk

Re: Buffalo Equity Fund, Inc.
SEC File No. 811-8900
CIK No. 933782

Dear Sir or Madam:

Included for filing via EDGAR is Post-Effective Amendment No. 6
to the Registration Statement on Form N-1A for Buffalo Equity Fund, Inc.
This post-effective amendment is being filed under Rule 485(b) for the
purpose of bring the Financial Statements and other information up-to-date,
and in conjunction therewith, making other appropriate non-material changes.
No material event requiring disclosure in the Prospectus has occurred since
the effective date of the most recent Post-Effective Amendment. The amendment
does not contain disclosures which would render it ineligible to become
effective pursuant to Rule 485(b). Questions related to this filing should
be directed to me at the number above.

Very truly yours,
Michael P. O'Hare
/s/Michael P. O'Hare

<PAGE>
Law Offices

Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, Pennsylvania 19103-7098
(215) 564-8000

July 23, 1998

FILED VIA EDGAR
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Attn: Filing Desk

Re: Buffalo High Yield Fund, Inc.
SEC File No. 811-8898
CIK No. 933781

Dear Sir or Madam:

Included for filing via EDGAR is Post-Effective Amendment No. 6
to the Registration Statement on Form N-1A for Buffalo High Yield Fund, Inc.
This post-effective amendment is being filed under Rule 485(b) for the
purpose of bring the Financial Statements and other information up-to-date,
and in conjunction therewith, making other appropriate non-material changes.
No material event requiring disclosure in the Prospectus has occurred since
the effective date of the most recent Post-Effective Amendment. The amendment
does not contain disclosures which would render it ineligible to become
effective pursuant to Rule 485(b). Questions related to this filing should
be directed to me at the number above.

Very truly yours,
Michael P. O'Hare
/s/Michael P. O'Hare

<PAGE>
Law Offices

Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, Pennsylvania 19103-7098
(215) 564-8000

July 23, 1998

FILED VIA EDGAR
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Attn: Filing Desk

Re: Buffalo USA GLobal Fund, Inc.
SEC File No. 811-8896
CIK No. 933779

Dear Sir or Madam:

Included for filing via EDGAR is Post-Effective Amendment No. 6
to the Registration Statement on Form N-1A for Buffalo USA Global Fund, Inc.
This post-effective amendment is being filed under Rule 485(b) for the
purpose of bring the Financial Statements and other information up-to-date,
and in conjunction therewith, making other appropriate non-material changes.
No material event requiring disclosure in the Prospectus has occurred since
the effective date of the most recent Post-Effective Amendment. The amendment
does not contain disclosures which would render it ineligible to become
effective pursuant to Rule 485(b). Questions related to this filing should
be directed to me at the number above.

Very truly yours,
Michael P. O'Hare
/s/Michael P. O'Hare

<PAGE>
Law Offices

Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, Pennsylvania 19103-7098
(215) 564-8000

July 23, 1998

FILED VIA EDGAR
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Attn: Filing Desk

Re: Buffalo Small Cap Fund, Inc.
SEC File No. 811-08509
CIK No. 1050039

Dear Sir or Madam:

Included for filing via EDGAR is Post-Effective Amendment No. 1
to the Registration Statement on Form N-1A for Buffalo Small Cap, Inc.
This post-effective amendment is being filed under Rule 485(b) for the
purpose of bring the Financial Statements and other information up-to-date,
and in conjunction therewith, making other appropriate non-material changes.
No material event requiring disclosure in the Prospectus has occurred since
the effective date of the most recent Post-Effective Amendment. The amendment
does not contain disclosures which would render it ineligible to become
effective pursuant to Rule 485(b). Questions related to this filing should
be directed to me at the number above.

Very truly yours,
Michael P. O'Hare
/s/Michael P. O'Hare

<ARTICLE> 6
<CIK> 0000919228
<NAME> BUFFALO BALANCED FUND INC

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<ARTICLE> 6
<CIK> 0000933782
<NAME> BUFFALO EQUITY FUND INC

<S> <C>
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<AVG-DEBT-OUTSTANDING> 0
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</TABLE>

<ARTICLE> 6
<CIK> 0000933781
<NAME> BUFFALO HIGH YIELD FUND INC

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 41689831
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</TABLE>

<ARTICLE> 6
<CIK> 0000933779
<NAME> BUFFALO USA GLOBAL FUND INC

<S> <C>
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<PERIOD-END> MAR-31-1998
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</TABLE>