BUFFALO
FUNDS
Balanced Fund
Equity Fund
High Yield Fund
Small Cap Fund
USA Global Fund
SEMIANNUAL REPORT
September 30, 1999
MESSAGE
To Our Shareholders
The six months ended September 30, 1999 saw a
continuation of various trends started more than a
year before. Economic expansion generally
continued and many market indices advanced, but
overall market volatility made portfolio
management more difficult. Specific Buffalo Fund
performance data is contained in the Investment
Results chart later in this report.
This report includes the second in a series of
discussions concerning overall portfolio and
investment strategies of the various Buffalo
Funds. The Portfolio Management Review immediately
following this letter will discuss international
investing generally, and techniques utilized by
Kornitzer Capital Management, Inc. with respect to
Buffalo USA Global Fund.
In the past twelve to eighteen months, investors
have been deluged with articles and news reports
concerning Year 2000 implications of various
investments, including mutual funds. The directors
and officers of the Buffalo Funds understand these
concerns, and have paid very close attention to
such issues. I am happy to report that all mission
critical systems with respect to the Buffalo
Funds, including transfer agency, custodian, and
portfolio accounting, are Y2K compliant.
Monitoring and testing of such systems will
continue through year-end, and we will do whatever
is required to assure that your investment is
secure, and that your account information is
properly processed.
We appreciate the opportunity to serve all of our
investors, both old and new, and will be happy to
answer your questions and comments, or to provide
additional information.
Sincerely,
/s/Larry D. Armel
Larry D. Armel
President
Portfolio Management Review
Is Now the Time to Go Global?
Since the start of the Asian financial crisis
during the summer of 1997, world financial markets
have been particularly volatile. Although there
remains many troubled spots in the world, notably
Indonesia and Latin America, most of Asia is on
the mend and the United States economy remains
very strong. We thought this would be a good time
to review the Buffalo USA Global Fund managed by
Kornitzer Capital Management. The Fund invests in
U.S-based companies that receive at least 40% of
their sales or income from outside the U.S. The
objective is to own companies taking advantage of
worldwide growth, while minimizing the risks
associated with owning foreign stocks. So read on
to learn of the advantages of this global
investing approach.
Why Invest Globally?
A primary reason for investing globally is
diversification. Because U.S. and foreign stock
markets do not move up and down together in lock
step, investors may reduce the overall risk of
their portfolio (typically measured by the
standard deviation of returns) by including both
domestic and international stocks in their
portfolios.
A second reason for investing globally is economic
growth potential. Asia and the developing world
have experienced growth rates that have
outstripped those of the U.S. and Europe - largely
driven by a combination of population growth and
productivity improvements. Rapid economic
expansion gives companies the opportunity to
generate strong revenue and earnings growth.
CHART - Figure 1. Contribution to World GDP, 1997
Where to Invest?
There are ample opportunities to invest outside of
the United States. The U.S. stock market accounted
for 47% of total world stock market capitalization
through 1997. With over half of the world's equity
capitalization in foreign stocks, investors should
not ignore international opportunities. Additional
evidence of the importance of taking a global view
of investing is provided by Figure 1, which shows
the allocation of total contribution to worldwide
GDP. Note that the United States accounts for only
one fifth of the world's economy.
Foreign vs. Domestic Investing - Differences
Investing in foreign stocks (or in international
mutual funds, which buy foreign stocks) adds
several additional risks and costs not generally
encountered by purely domestic investors.
Commissions and Taxes. While commissions are fully
negotiable in the U.S., the government or stock
exchange in other countries often fixes them. Not
surprisingly, fixed commission rates generally
lead to higher costs for the foreign stock
investor. Additionally, investors will frequently
have to deal with withholding taxes on dividends.
Liquidity. Transaction volumes on U.S. exchanges
are generally much higher than on foreign
exchanges, leading to superior liquidity
associated with domestic markets. This becomes
very important when investment managers - faced
with redemptions from their mutual funds - are
forced to sell stocks. In addition, some countries
restrict the type and number of shares foreign
investors may own.
Exchange Rules. Many foreign stock exchanges
require extended clearance and settlement periods.
E.g., stock trades settle in 5 days on the Italian
Stock Exchange versus 3 days on the NYSE. Also,
rules governing the safekeeping of shares held by
custodian banks may not be as developed as in the
United States, putting those shares at risk should
the custodian fail.
Supervision of Exchanges and Legal Remedies. There
is generally less enforcement of security laws and
supervision of stock exchanges in developing
countries. Attempting to deal with a legal issue
related to a foreign investment might require you
to sue a company in a country where you have far
fewer rights than what you may have in the United
States. And collecting a judgement from a U.S.
court against a foreign company may also be
impossible.
Information. There is usually less publicly
available information regarding foreign companies
than there is for U.S.-based companies. In
particular, foreign accounting practices may not
require companies to report financial information
as frequently as is required of U.S.-based
corporations, and foreign companies are not
necessarily subject to uniform accounting and
auditing standards.
Political Risk. These are generally risks
associated with the stability of national
governments, including; coups, assassinations,
civil unrest, expropriation of foreigner's assets
and nationalization of corporations. For example,
the French government nationalized steel and
chemical companies in themid-1980's in an effort
to protect jobs.
Table 1. Top 10 Most Widely Held ADRs*
<TABLE>
<CAPTION>
SOURCE OF REVENUES
COMPANY COUNTRY INFORMATION SOURCE USA REST OF WORLD
</CAPTION>
<S> <C> <C> <C> <C>
Royal Dutch Petroleum Netherlands RD 1998 Annual Report 21% 79%
BP Amoco p.l.c. United Kingdom BP 1998 Annual Report 47% 53%
Nokia Corporation Finland NOK 1998 Annual Report 21%+ 79%
Unilever N.V. Netherlands UN 1998 Annual Report 21% 79%
SmithKline Beecham United Kingdom SBH 1998 Annual Report 51% 49%
Telefonos de Mexico Mexico Na Na Na
Elan Corporation Ireland ELN 1998 Annual Report 74% 26%
Royal Philips Electronics NetherlandsPHG 1998 Annual Report 24% 76%
YPF Sociedad Anonima Argentina YPF 1998 Annual Report 3% 97%
LM Ericsson Telephone Sweden ERICY 1998 Annual Report 10%# 90%
</TABLE>
+ 21% from Americas
# Includes North America
*Most widely held ADRs as of July 23, 1999
Table 2. Top 10 Holdings in the Buffalo USA Global
Fund*
<TABLE>
<CAPTION>
SOURCE OF REVENUES
COMPANY COUNTRY INFORMATION SOURCE USA REST OF WORLD
</CAPTION>
<S> <C> <C> <C> <C>
Cisco Systems USA CSCO 1998 Annual Report 41% 59%
National Semiconductor USA NSM 1998 Annual Report 38% 62%
Intel USA INTC 1998 Annual Report 45%# 55%
McDonald's USA MCD 1998 Annual Report 39% 61%
Analog Devices USA ADI 1998 Annual Report 50%# 50%
Sara Lee USA SLE 1998 Annual Report 53% 47%
Applied Micro Circuits USA AMCC 1998 Annual Report 59% 41%
Microsoft USA MSFT 1998 Annual Report 47% 53%
Hewlett-Packard USA HWP 1998 Annual Report 46% 54%
Johnson & Johnson USA JNJ 1998 Annual Report 53% 47%
# Includes North America
* Buffalo USA Global Top 10 Holdings as of 9/30/99, statement of assets.
Subject to change.
How Global is your Mutual Fund?
Table 1 shows the top ten most widely held ADRs
along with the fraction of revenue that each
company receives from the United States. Note that
some of the companies get a substantial (and
sometimes a majority) of their revenue from
customers in the U.S. Other widely held
international stocks with significant percentages
of their sales coming from the U.S. include; Sony
of Japan (32%), News Corporation of Australia
(74%), DaimlerChrysler of Germany (50%), Novartis
of Switzerland (37%), and Seagram of Canada (68%).
Clearly, owning foreign securities may not provide
the diversification across the world's economies
that might be expected. Similarly, Table 2 shows
the ten largest holdings of the Buffalo USA Global
Fund as of September 30, 1999. Note that the
revenue outside of the United States as a
percentage of total revenue is comparable to the
majority of the widely held foreign stocks in
Table 1. Table 2 demonstrates that it is possible
to build a portfolio with significant
international (non-U.S.) revenue exposure without
investing on foreign exchanges or directly in
foreign stocks. Indeed, this is one of the key
objectives of the Buffalo USA Global Fund.
Why do we Expect U.S. Companies to Dominate?
Recognized Brand Names. From Calcutta to Cairo,
many products of U.S.-based companies are as
recognizable in other countries as the best
foreign brands. Building a worldwide recognized
brand takes years of hard work, billions of
dollars in marketing, and a great product. For
example, Coca-Cola was introduced in France in
1933. Thirty-three years later, in 1966, it became
the number-one soft drink, and today, has a 6-to-1
lead over the second-place brand. What does it
take to maintain the leading brand position? Coca-
Cola invested 3 billion francs in France from 1989
through 1997.
Customization of Products. Local tastes often
dictate which products will succeed or fail. The
reluctance or inability to design products that
satisfy the tastes of customers in a particular
country assures long-term failure. Consider what
it takes to be a worldwide success. McDonald's, a
U.S.-based company, has developed the world's
largest restaurant chain by tailoring its menu to
the local tastes of virtually every country.
Low Penetration. The vast majority of recognized
and widely distributed brands of U.S. companies
still have tremendous growth opportunities
overseas. While many of these products are used
daily in the U.S. (such as computers, cell phones
and pharmaceuticals), they are just beginning to
be discovered by consumers in many of the most
populous countries. Importantly, in many of the
countries with the lowest penetration, branded
products have already attained high levels of
brand recognition.
Superior Products. In many industries U.S.
companies have very little, if any, foreign
competition. Often the only competitors are other
U.S. companies. Nowhere is this more evident than
in the technology sector. Intel, Microsoft and
Cisco Systems, all of which receive more than one-
half of their revenue from outside the United
States, primarily compete with other U.S.-based
firms.
In summary, we are extremely excited about
prospects for global growth. Looking around the
world we see rising population and wealth, and a
rapid adoption of new products and technologies.
The world's demand for such diverse products as
microprocessors, software, Internet infrastructure
equipment, soft drinks, aircraft, fast food, and
wireless communications equipment should continue
to be very strong. Respectively, we see the world
leaders in each of these areas as Intel,
Microsoft, Cisco Systems, Coca-Cola, Boeing,
McDonald's, and Motorola - all U.S.-based
companies. In many other industries we seethe same
pattern of high growth markets with U.S.-based
corporations in product leadership positions
moving quickly to capture that growth. We believe
that owning these opportunistic U.S.-based
corporations, rather than their foreign
competitors is the smartest, and safest, way to
play global growth.
We hope this discussion of the Buffalo USA Global
Fund has been useful in giving you insight to the
management of the Fund. We look forward to
discussing other Funds with you in the future.
Sincerely,
/s/John C. Kornitzer /s/Kent W. Gasaway
John C. Kornitzer Kent W. Gasaway
President Sr. Vice President
/s/Tom W. Laming
Tom W. Laming
Sr. Vice President
Investment Results - Total Return
NINE MONTHS ONE YEAR FIVE YEARS
ENDED ENDED ENDED SINCE
9/30/99 9/30/99 9/30/99 INCEPTION*
BUFFALO BALANCED FUND -0.26% 3.87% 9.27% 8.95%
Lipper Balanced Fund Index 1.77% 13.48% 14.50% 14.11%
BUFFALO EQUITY FUND 3.02% 23.36% n/a 20.49%
Lipper Capital Appreciation Fund
Index 10.41% 34.86% 18.84% 19.15%
BUFFALO HIGH YIELD FUND 1.28% 1.19-% n/a 9.08%
Lipper High Yield Bond Fund
Index 2.04% 5.25% 8.60% 7.92%
BUFFALO SMALL CAP FUND 13.29% 30.75% n/a 6.45%
Lipper Small-Cap Fund Index 7.00% 26.79% 12.90% -3.27%
BUFFALO USA GLOBAL FUND 13.31% 31.89% n/a 20.01%
Lipper Capital Appreciation Fund
Index 10.41% 34.86% 18.84% 19.15%
Lipper Global Fund Index 8.52% 27.15% 12.56% 14.23%
Buffalo Balanced Fund (8/12/94), Buffalo
Equity Fund (5/19/95),
Buffalo High Yield Fund (5/19/95), Buffalo
Small Cap Fund (4/14/98), Buffalo USA Global
Fund (5/19/95).
Performance data contained in this report is
for past periods only. Past performance is
not predictive of future performance.
Investment return and share value will
fluctuate, and redemption value may be more
or less than original cost.
BUFFALO
BALANCED FUND
SCHEDULE OF INVESTMENTS
September 30, 1999 (unaudited)
SHARES COMPANY MARKET VALUE
COMMON STOCKS - 38.95%
CAPITAL GOODS - 1.87%
10,000 Lockheed Martin Corp. $ 326,875
3,000 Tyco International Ltd. 309,750
636,625
CONSUMER CYCLICAL - 12.10%
12,500 Carnival Corp. 543,750
45,000 Elcor Corp. 1,125,000
20,000 Ethan Allen Interiors, Inc. 636,250
50,000 Kmart Corp.* 584,375
20,000 Mirage Resorts, Inc.* 281,250
22,000 ServiceMaster Co. 353,375
30,000 Strayer Education, Inc. 596,250
4,120,250
CONSUMER STAPLES - 2.47%
15,000 Disney (Walt) Holding Co.* 388,125
15,000 PepsiCo, Inc. 453,750
841,875
ENERGY - 5.25%
191,200 Frontier Oil Corp.* 1,302,550
24,000 McDermott International, Inc. 486,000
1,788,550
FINANCIAL - 5.74%
5,000 American Express Co.* 673,125
20,000 Kansas City Southern Industries, Inc. 928,750
7,000 UNUMProvident Corp. 206,063
5,000 Washington Mutual, Inc.* 146,250
1,954,188
HEALTH CARE - 2.96%
12,000 Merck & Company, Inc. 777,750
12,000 Quintiles Transnational Corp.* 228,375
1,006,125
TECHNOLOGY - 4.54%
4,000 Cisco Systems, Inc. 274,250
15,000 Diebold, Inc. 346,875
4,000 Intel Corp. 297,250
2,000 Microsoft Corp.* 181,125
9,000 Scientific-Atlantic, Inc. 446,063
1,545,563
TRANSPORTATION - 3.05%
15,000 FDX Corp. 581,250
30,000 Southwest Airlines Co. 455,625
1,036,875
UTILITIES - 0.97%
8,000 Enron Corp. 330,000
TOTAL COMMON STOCKS 13,260,051
CONVERTIBLE PREFERRED STOCKS - 8.09%
16,500 Bethlehem Steel Corp. 552,750
14,000 Cyprus Amax Minerals Co. 673,750
69,400 ICO Holdings, Inc. 902,200
26,000 Lomak Petroleum, Inc. 624,000
TOTAL CONVERTIBLE PREFERRED STOCKS 2,752,700
FACE
AMOUNT DESCRIPTION MARKET VALUE
CORPORATE BONDS - 32.27%
$ 450,000 Advance Stores, Inc., 10.25%, due 4-15-08 420,750
1,400,000 Callon Petroleum Co., 10.125%, due 9-15-02 1,361,500
1,500,000 Eagle Geophysical, Inc., 10.75%, due 7-15-08 277,500
650,000 Fairchild Semiconductor Corp., 10.125%, due 3-15-07 641,875
750,000 Frontier Oil Corp., 9.125%, due 2-15-06 716,250
800,000 Giant Industries, Inc., 9.75%, due 11-15-03 790,000
1,135,000 HS Resources, Inc., 9.875%, due 12-1-03 1,149,187
250,000 ICO Holdings, Inc., 10.375%, due 6-1-07 213,750
1,000,000 Kaiser Aluminum & Chemical Corp., 9.875%, due 2-15-02 995,000
500,000 Kaiser Aluminum & Chemical Corp., 12.75%, due 2-1-03 500,000
500,000 Key Energy Services, Inc., 14.00%, due 1-15-09 535,000
100,000 Pilgrim's Pride Corp., 10.875%, due 8-1-03 101,000
400,000 Purina Mills, Inc., 9.00%, due 3-15-10 86,000
1,000,000 Republic Group, Inc., 9.50%, due 7-15-08 930,000
1,800,000 United Refining Co., 10.75%, due 6-15-07 1,197,000
1,300,000 Wiser Oil Co., 9.50%, due 5-15-07 1,072,500
TOTAL CORPORATE BONDS 10,987,312
CONVERTIBLE CORPORATE BONDS - 19.67%
1,099,000 Allwaste, Inc., 7.25%, due 6-1-14 87,920
1,500,000 Argosy Gaming Co., 12.00%, due 6-1-01 1,554,375
1,992,000 Exide Corp., 2.90%, due 12-15-05 1,170,300
1,450,000 HMT Technology Corp., 5.75%, due 1-15-04 551,000
1,053,000 Integrated Device Technology, Inc., 5.50%, due 6-1-02 1,001,666
1,450,000 Intevac, Inc., 6.50%, due 3-1-04 761,250
250,000 Key Energy Group, Inc., 5.00%, due 9-15-04 175,000
300,000 Moran Energy, Inc., 8.75%, due 1-15-08 291,750
1,000,000 National Semiconductor Corp., 6.50%, due 10-1-02 1,000,000
125,000 Swift Energy Co., 6.25%, due 11-15-06 103,281
TOTAL CONVERTIBLE CORPORATE BONDS 6,696,542
TOTAL INVESTMENTS - 98.98% 33,696,605
Other assets less liabilities - 1.02% 348,481
TOTAL NET ASSETS - 100.00% $ 34,045,086
The identified cost of investments owned at
September 30, 1999, was the same for federal
income tax and book purposes.
Net unrealized depreciation for federal
income tax purposes was $4,460,401, which is
comprised of unrealized appreciation of
$2,171,753, and unrealized depreciation of
$6,632,154.
*Non-income producing security
See accompanying Notes to Financial
Statements.
BUFFALO
EQUITY FUND
SCHEDULE OF INVESTMENTS
September 30, 1999 (unaudited)
SHARES COMPANY MARKET VALUE
COMMON STOCKS - 97.58%
CAPITAL GOODS - 3.63%
6,800 Lockheed Martin Corp. $ 222,275
8,300 Tyco International Ltd. 856,975
1,079,250
CONSUMER CYCLICAL - 14.07%
21,300 Barnes & Noble, Inc.* 553,800
21,000 Brunswick Corp. 522,375
20,500 Coachmen Industries, Inc. 315,188
38,900 CompUSA, Inc.* 238,262
23,250 Elcor Corp. 581,250
25,650 Ethan Allen Interiors, Inc. 815,991
49,200 Mirage Resorts, Inc.* 691,875
29,000 ServiceMaster Co. 465,812
4,184,553
CONSUMER STAPLES - 12.89%
27,800 Disney (Walt) Holding Co.* 719,325
19,000 McDonald's Corp. 817,000
26,500 PepsiCo, Inc. 801,625
33,100 Sara Lee Corp. 775,781
24,300 Viad Corp. 716,850
3,830,581
ENERGY - 2.80%
14,100 Royal Dutch Petroleum Co. 832,781
FINANCIAL - 15.90%
25,200 Allstate Corp. 628,425
9,100 American Express Co.* 1,225,088
7,300 American Financial Group, Inc.* 204,856
2,000 CIT Group, Inc. Cl. A 41,125
18,900 Fleet Financial Group, Inc. 692,213
12,700 Kansas City Southern Industries, Inc. 589,756
13,900 PNC Bank Corp. 732,356
12,200 Union Planters Corp. 497,150
3,900 UNUMProvident Corp. 114,806
4,725,775
HEALTH CARE - 10.33%
17,500 Abbott Laboratories 643,125
8,700 Johnson & Johnson* 799,312
13,800 Merck & Company, Inc. 894,413
16,800 Schering-Plough Corp. 732,900
3,069,750
TECHNOLOGY - 25.31%
17,500 Analog Devices* 896,875
26,000 Atmel Corp.* 879,125
27,400 Cisco Systems, Inc. 1,878,613
26,800 Diebold, Inc. 619,750
9,100 Hewlett-Packard Co. 837,200
16,400 Microsoft Corp.* 1,485,225
18,700 Scientific-Atlantic, Inc. 926,819
7,523,607
TRANSPORTATION & SERVICES - 5.58%
22,800 FDX Corp. 883,500
50,925 Southwest Airlines Co. 773,423
1,656,923
UTILITIES - 7.07%
31,400 Enron Corp. 1,295,250
10,500 GTE Corp. 807,188
2,102,438
TOTAL COMMON STOCKS 29,005,658
TOTAL INVESTMENTS - 97.58% 29,005,658
Other assets less liabilities - 2.42% 720,474
TOTAL NET ASSETS - 100.00% $ 29,726,132
The identified cost of investments owned at
September 30, 1999, was the same for federal
income tax and book purposes.
Net unrealized appreciation for federal
income tax purposes was $5,490,521, which is
comprised of unrealized appreciation of
$7,780,438, and unrealized depreciation of
$2,289,917.
*Non-income producing security
See accompanying Notes to Financial
Statements.
BUFFALO
HIGH YIELD FUND
SCHEDULE OF INVESTMENTS
September 30, 1999 (unaudited)
SHARES COMPANY MARKET VALUE
COMMON STOCK - 0.19%
20,033 Fedders Corp. Cl. A (non-voting) $ 98,913
CONVERTIBLE PREFERRED STOCKS - 17.73%
22,000 Bethlehem Steel Corp. 737,000
20,000 Carriage Service Capital Trust 740,000
30,270 Cyprus Amax Minerals Co. 1,456,744
41,200 Freeport-McMoran Copper & Gold, Inc. 726,150
15,000 Hollinger International, Inc. 178,125
76,300 ICO Holdings, Inc. 991,900
35,800 Kmart Financing I 1,704,975
14,870 Lomak Financing Trust 356,880
38,000 Tesoro Petroleum Corp. 596,125
40,100 TXI Capital Trust I 1,493,725
10,000 Union Pacific Capital Trust 456,250
TOTAL CONVERTIBLE PREFERRED STOCKS 9,437,874
FACE
AMOUNT DESCRIPTION MARKET VALUE
CORPORATE BONDS - 48.54%
$1,250,000 Advance Stores, Inc., 10.25%, due 4-15-08 1,168,750
1,000,000 Argosy Gaming Co., 10.75%, due 6-1-09 1,036,250
65,000 Bethlehem Steel Corp., 10.375%, due 9-1-03 66,625
1,000,000 Callon Petroleum Co., 10.125%, due 9-15-02 972,500
750,000 Cherokee International, 10.50%, due 5-1-09 693,750
500,000 Cliffs Drilling Co., 10.25%, due 5-15-03 500,000
2,175,000 Eagle Geophysical, Inc., 10.75%, due 7-15-08 402,375
500,000 Exide Corp., 10.00%, due 4-15-05 505,000
535,000 Fairchild Semiconductor Corp., 10.125%, due 3-15-07 528,313
250,000 Fairchild Semiconductor Corp., 10.375%, due 10-1-07 249,375
2,000,000 Frontier Oil Corp., 9.125%, due 2-15-06 1,910,000
435,000 Giant Industries, Inc., 9.75%, due 11-15-03 429,562
1,260,000 HS Resources, Inc., 9.875%, due 12-1-03 1,275,750
750,000 ICO Holdings, Inc., 10.375%, due 6-1-07 641,250
650,000 Kaiser Aluminum & Chemical Corp., 9.875%, due 2-15-02 646,750
1,200,000 Kaiser Aluminum & Chemical Corp., 12.75%, due 2-1-03 1,200,000
500,000 Key Energy Services, Inc., 14.00%, due 1-15-09 535,000
1,250,000 King Pharmacy, Inc., 10.75%, due 2-15-09 1,293,750
215,000 Kmart Corp., 9.35%, due 1-2-20 231,115
121,000 Kmart Corp., 9.78%, due 1-5-20 129,045
65,000 Kmart Funding Corp., 9.44%, due 7-1-18 64,728
1,000,000 Luigino's, Inc., 10.00%, due 2-1-06 940,000
500,000 Packaging Corp. of America, 9.625%, due 4-1-09 507,500
100,000 Parker Drilling Co., 9.75%, due 11-15-06 97,000
600,000 Pilgrim's Pride Corp., 10.875%, due 8-1-03 606,000
1,275,000 Plains Resources, Inc., 10.25%, due 3-15-06 1,294,125
1,250,000 Purina Mills, Inc., 9.00%, due 3-15-10 268,750
3,110,000 Republic Group, Inc., 9.50%, due 7-15-08 2,892,300
1,300,000 Specialty Retailers, Inc., 9.00%, due 7-15-07 773,500
1,000,000 Telecommunications Techniques Co. LLC,
9.75%, due 5-15-08 947,500
2,515,000 United Refining Co., 10.75%, due 6-15-07 1,672,475
1,650,000 Wiser Oil Co., 9.50%, due 5-15-07 1,361,250
TOTAL CORPORATE BONDS 25,840,288
CONVERTIBLE CORPORATE BONDS - 30.65%
1,076,000 Allwaste, Inc., 7.25%, due 6-1-14 86,080
1,950,000 Exide Corp., 2.90%, due 12-15-05 1,145,625
3,430,000 HMT Technology Corp., 5.75%, due 1-15-04 1,303,400
750,000 Hexel Corp., 7.00%, due 8-1-03 598,125
1,870,000 Integrated Device Technology, Inc., 5.50%, due 6-1-02 1,778,837
3,080,000 Intevac, Inc., 6.50%, due 3-1-04 1,617,000
500,000 Key Energy Group, Inc., 7.00%, due 7-1-03 402,500
1,635,000 Key Energy Group, Inc., 5.00%, due 9-15-04 1,146,063
2,540,000 Lomak Petroleum, Inc., 6.00%, due 2-1-07 1,581,150
1,510,000 Micron Technology, Inc., 7.00%, due 7-1-04 1,776,138
761,000 Moran Energy, Inc., 8.75%, due 1-15-08 740,072
1,200,000 National Semiconductor Corp., 6.50%, due 10-1-02 1,200,000
550,000 OHM Corp., 8.00%, due 10-1-06 501,875
1,010,000 Sabratek Corp., 6.00%, due 4-15-05 270,175
200,000 Southern Mineral Corp., 6.875%, due 10-1-07 69,000
1,590,000 Sunrise Assisted Living, Inc., 5.50%, due 6-15-02 1,542,300
1,500,000 Western Digital Corp., zero cpn., due 2-18-18 211,875
378,000 Weston (Roy F.), Inc., 7.00%, due 4-15-02 347,760
TOTAL CONVERTIBLE CORPORATE BONDS 16,317,975
TOTAL INVESTMENTS - 97.11% 51,695,050
Other assets less liabilities - 2.89% 1,539,460
TOTAL NET ASSETS - 100.00% $ 53,234,510
The identified cost of investments owned at
September 30, 1999, was the same for federal
income tax and book purposes.
Net unrealized depreciation for federal
income tax purposes was $9,915,636, which is
comprised of unrealized appreciation of
$1,228,186, and unrealized depreciation of
$11,143,822.
See accompanying Notes to Financial
Statements.
BUFFALO
SMALL CAP FUND
SCHEDULE OF INVESTMENTS
September 30, 1999 (unaudited)
SHARES COMPANY MARKET VALUE
COMMON STOCKS - 89.61%
BASIC MATERIALS - 1.71%
13,000 Republic Group, Inc. $ 181,188
10,000 Steel Dynamics, Inc.* 156,875
338,063
CONSUMER CYCLICAL - 35.88%
10,000 AHL Services, Inc.* 260,625
90,000 Argosy Gaming Co.* 1,192,500
4,700 Brunswick Corp. 116,913
14,500 Coachmen Industries, Inc. 222,938
14,200 CompUSA, Inc.* 86,975
30,000 Education Management Corp.* 371,250
97,500 Edutrek International Cl. A* 188,906
25,000 Elcor Corp. 625,000
18,900 Ethan Allen Interiors, Inc. 601,256
3,000 Exide Corp. 28,688
40,000 Fedders Corp. Cl. A (non-voting) 197,500
32,500 First Service Corp. 392,031
39,800 Hollinger International, Inc. Cl. A 472,625
22,000 Interface, Inc. Cl. A 112,750
8,000 Liz Claiborne, Inc. 248,000
29,900 Paul Harris Stores, Inc.* 117,731
10,000 Premier Parks, Inc.* 290,000
30,000 Racing Champions * 170,625
27,500 Stage Stores, Inc.* 170,156
6,000 Stewart Enterprises, Inc. 36,375
28,500 Strayer Education, Inc. 566,437
10,000 Sylvan Learning Systems, Inc.* 193,750
18,500 Vail Resorts, Inc.* 428,969
7,092,000
CONSUMER STAPLES - 1.40%
12,000 Interstate Bakeries Corp. 276,000
ENERGY - 6.35%
26,800 Callon Petroleum Co.* 408,700
10,000 Eagle Geophysical, Inc.* 3,750
73,000 Frontier Oil Corp.* 497,313
23,300 Global Industries, Inc.* 189,312
18,600 ICO Holdings, Inc.* 32,550
25,000 Key Energy Group, Inc.* 123,437
1,255,062
FINANCIAL - 7.59%
10,500 Everest Reinsurance Holdings, Inc. 250,031
14,800 Heller Financial, Inc. Cl. A 333,000
1,300 Money (The) Group, Inc. 37,538
1,700 Paula Financial 10,519
12,000 Stancorp Financial Group 268,500
14,400 Susquehanna Bancshares, Inc.* 248,400
11,500 UST Corp. 353,625
1,501,613
HEALTH CARE - 5.69%
8,000 CombiChem, Inc.* 40,000
7,200 Human Genome Sciences, Inc.* 531,000
8,700 Kendle International * 69,056
7,000 King Pharmaceuticals, Inc. 245,000
9,000 Sunrise Assisted Living, Inc.* 239,063
1,124,119
TECHNOLOGY - 28.59%
8,500 Analog Devices, Inc.* 435,625
5,000 Applied Micro Circuits Corp. 285,000
16,500 Atmel Corp.* 557,906
13,500 Ciena Corp.* 492,750
14,900 Diebold, Inc. 344,562
9,600 Etec Systems, Inc.* 361,200
40,400 HMT Technology Corp.* 141,400
8,000 HNC Software, Inc.* 317,500
11,900 Integrated Device Technology, Inc.* 220,150
39,100 Intevac, Inc.* 175,950
13,400 Meta Group, Inc.* 237,850
20,700 National Semiconductor Corp.* 631,350
6,500 Remec, Inc.* 89,375
9,500 Scientific-Atlantic, Inc. 470,844
7,500 Stamps.com, Inc.* 260,625
18,200 SunGard Data Systems, Inc.* 478,888
10,500 Thermoquest Corp.* 106,312
12,000 Western Digital Corp.* 45,000
5,652,287
TRANSPORTATION & SERVICES - 2.40%
18,100 Midwest Express Holdings* 473,994
TOTAL COMMON STOCKS 17,713,138
FACE
AMOUNT DESCRIPTION MARKET VALUE
REPURCHASE AGREEMENT - 10.62%
$2,100,000 UMB Bank, n.a., 4.70%, due 10-1-99
(Collateralized by Federal National
Mortgage Discount Notes,
due 10-5-99 with a value of $2,142,428) $ 2,100,000
TOTAL INVESTMENTS - 100.23% 19,813,138
Other assets less liabilities - (0.23%) (46,325)
TOTAL NET ASSETS - 100.00% $ 19,766,813
The identified cost of investments owned at
September 30, 1999, was the same for federal
income tax and book purposes.
Net unrealized appreciation for federal
income tax purposes was $1,785,647, which is
comprised of unrealized appreciation of
$4,131,146, and unrealized depreciation of
$2,345,499.
*Non-income producing security
See accompanying Notes to Financial
Statements.
BUFFALO
USA GLOBAL FUND
SCHEDULE OF INVESTMENTS
September 30, 1999 (unaudited)
SHARES COMPANY MARKET VALUE
COMMON STOCKS - 96.24%
BASIC MATERIALS - 3.94%
13,000 Praxair, Inc. $ 598,000
27,800 Sigma-Aldrich Corp. 882,650
1,480,650
CAPITAL GOODS - 8.62%
12,900 Allied-Signal, Inc. 773,194
9,900 Applied Materials, Inc.* 770,962
17,950 Boeing Co. 765,119
23,700 Teleflex, Inc. 934,669
3,243,944
CONSUMER CYCLICAL - 4.38%
96,900 Interface, Inc. Cl. A 496,612
18,000 Korn/Ferry International* 415,125
20,900 Lear Corp.* 735,419
1,647,156
CONSUMER STAPLES - 17.40%
20,800 Bestfoods, Inc. 1,008,800
18,000 Coca-Cola Co. 865,125
30,000 McDonald's Corp. 1,290,000
10,000 Procter & Gamble Co. 937,500
55,000 Sara Lee Corp. 1,289,063
16,800 Wrigley, (Wm.) Jr. Co. 1,156,050
6,546,538
ENERGY - 4.92%
9,600 Mobil Corp. 967,200
14,200 Schlumberger Ltd. 884,838
1,852,038
FINANCIAL - 1.30%
11,700 AFLAC, Inc. 489,937
HEALTH CARE - 12.10%
27,800 American Home Products Corp. 1,153,700
16,200 Bristol-Myers Squibb Co. 1,093,500
13,100 Johnson & Johnson* 1,203,562
9,800 Quintiles Transnational Corp.* 186,506
20,900 Schering-Plough Corp. 911,763
4,549,031
TECHNOLOGY - 43.58%
25,800 Analog Devices, Inc.* 1,322,250
21,300 Applied Micro Circuits Corp. 1,214,100
33,500 Cisco Systems, Inc. 2,296,844
8,000 Dallas Semiconductor 427,500
21,000 Etec Systems, Inc.* 790,125
14,300 Hewlett-Packard Co. 1,315,600
148,000 HMT Technology Corp.* 518,000
44,800 Integrated Device Technology, Inc.* 828,800
18,700 Intel Corp. 1,389,644
75,500 Intevac, Inc.* 339,750
13,200 Microsoft Corp.* 1,195,425
12,300 Motorola, Inc. 1,082,400
66,300 National Semiconductor Corp.* 2,022,150
11,400 Rockwell International Corp. 598,500
19,100 Seagate Technology, Inc.* 588,519
27,100 Thermoquest Corp.* 274,387
50,200 Western Digital Corp.* 188,250
16,392,244
TOTAL COMMON STOCKS 36,201,538
FACE
AMOUNT DESCRIPTION MARKET VALUE
REPURCHASE AGREEMENT - 3.87%
$1,455,000 UMB Bank, n.a., 4.70%, due 10-1-99
(Collateralized by Federal National
Mortgage Discount Notes,
due 10-5-99 with a value of $1,484,910) 1,455,000
TOTAL INVESTMENTS - 100.11% 37,656,538
Other assets less liabilities - (0.11%) (43,103)
TOTAL NET ASSETS - 100.00% $ 37,613,435
The identified cost of investments owned at
September 30, 1999, was the same for federal
income tax and book purposes.
Net unrealized appreciation for federal
income tax purposes was $8,504,167, which is
comprised of unrealized appreciation
of $11,977,911, and unrealized depreciation
of $3,473,744.
*Non-income producing security
See accompanying Notes to Financial
Statements.
STATEMENTS OF ASSETS
AND LIABILITIES
September 30, 1999 (unaudited)
</TABLE>
<TABLE>
<CAPTION>
BALANCED EQUITY HIGH YIELD SMALL CAP USA GLOBAL
FUND FUND FUND FUND FUND
</CAPTION>
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value (identified cost
$38,157,006, $23,515,137,
$61,610,686, $18,027,491 and
$29,152,370, respectively) $ 33,696,605 $ 29,005,658 $ 51,695,050 $ 19,813,138 $ 37,656,538
Cash - 902,646 - 72,776 125,076
Dividends receivable 38,720 30,088 97,048 7,266 25,176
Interest receivable 566,722 - 1,250,433 270 187
Receivable for investments sold 49,397 30,580 697,425 - 154,995
Total assets 34,351,444 29,968,972 53,739,956 19,893,450 37,961,972
LIABILITIES AND NET ASSETS:
Cash overdraft 277,344 - 347,026 - -
Fees payable 29,014 25,390 45,228 16,637 32,698
Payable for investments purchased - 217,450 113,192 110,000 315,839
Total liabilities 306,358 242,840 505,446 126,637 348,537
NET ASSETS $ 34,045,086 $ 29,726,132 $ 53,234,510 $ 19,766,813 $ 37,613,435
NET ASSETS CONSIST OF:
Capital (capital stock and
paid-in capital) $ 38,404,254 $ 23,063,399 $ 62,421,754 $ 17,543,456 $ 26,902,237
Accumulated undistributed
net investment income 133,120 55,021 1,223,040 (25,102) 21,671
Accumulated undistributed
net realized gain (loss)
on sale of investments (31,887) 1,117,191 (494,648) 462,812 2,185,360
Net unrealized appreciation (depreciation)
in value of investments (4,460,401) 5,490,521 (9,915,636) 1,785,647 8,504,167
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 34,045,086 $ 29,726,132 $ 53,234,510 $ 19,766,813 $ 37,613,435
Capital shares, $1.00 par value:
Authorized 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000
Outstanding 3,907,407 1,710,475 5,030,986 1,811,289 2,035,466
NET ASSET VALUE PER SHARE $ 8.71 $ 17.38 $ 10.58 $ 10.91 $ 18.48
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENTS
OF OPERATIONS
Six months ended September 30, 1999 (unaudited)
<TABLE>
<CAPTION>
BALANCED EQUITY HIGH YIELD SMALL CAP USA GLOBAL
FUND FUND FUND FUND FUND
</CAPTION>
<S> <C) <C> <C> <C> <C>
INVESTMENT INCOME:
Income:
Dividends (net of foreign taxes withheld) $ 213,232 $ 175,521 $ 451,996 $ 40,474 $ 153,682
Interest 1,247,487 2,422 2,479,360 34,900 10,244
1,460,719 177,943 2,931,356 75,374 163,926
Expenses (Note 2):
Management fees 194,894 157,732 287,542 83,221 187,449
Registration fees and expenses 13,205 13,575 16,031 17,255 13,614
208,099 171,307 303,573 100,476 201,063
Net investment income 1,252,620 6,636 2,627,783 (25,102) (37,137)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions
(excluding repurchase agreements):
Proceeds from sales of investments 11,665,775 6,777,997 7,876,937 2,488,143 7,188,400
Cost of investments sold 11,082,844 5,781,873 7,996,657 1,896,131 5,090,256
Net realized gain (loss) from sales
of investments 582,931 996,124 (119,720) 592,012 2,098,144
Gain from option contracts written - - - - -
Net realized gain (loss) from
investment transactions 582,931 996,124 (119,720) 592,012 2,098,144
Unrealized appreciation (depreciation)
on investments:
Beginning of period (3,427,803) 5,594,875 (9,104,881) 402,293 5,984,047
End of period (4,460,401) 5,490,521 (9,915,636) 1,785,647 8,504,167
Increase (decrease) in net unrealized
appreciation (depreciation) on investments (1,032,598) (104,354) (810,755) 1,383,354 2,520,120
Net gain (loss) on investments (449,667) 891,770 (930,475) 1,975,366 4,618,264
Increase in net assets resulting
from operations $ 802,953 $ 898,406 $ 1,697,308 $ 1,950,264 $ 4,581,127
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENTS OF CHANGES
IN NET ASSETS
BALANCED FUND
SIX MONTHS
ENDED YEAR
SEPTEMBER 30, ENDED
1999 MARCH 31,
(unaudited) 1999
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 1,252,620 $ 2,965,686
Net realized gain (loss) from
investment transactions 582,931 1,382,238
Net unrealized appreciation (depreciation) of
investments during the period (1,032,598) (9,654,104)
Net increase (decrease) in net assets
resulting from operations 802,953 (5,306,180)
DISTRIBUTIONS TO SHAREHOLDERS FROM:**
Net investment income (1,119,501) (2,952,429)
Net realized gain from investment transactions - (2,877,691)
In excess of net investment income - -
In excess of net realized gains - (368,421)
Total distributions to shareholders (1,119,501) (6,198,541)
INCREASE (DECREASE) FROM CAPITAL
SHARE TRANSACTIONS:*
Proceeds from shares sold 1,356,624 6,844,399
Net asset value of shares issued for
reinvestment of distributions 1,063,292 6,092,480
2,419,916 12,936,879
Cost of shares repurchased (8,424,225) (16,500,070)
Net increase (decrease) from capital
share transactions (6,004,309) (3,563,191)
Total increase (decrease) in net assets (6,320,857) (15,067,912)
NET ASSETS:
Beginning of period 40,365,943 55,433,855
End of period $ 34,045,086 $ 40,365,943
Undistributed net investment income at
end of period $ 133,120 $ -
*Shares issued and repurchased:
Number of shares sold 146,606 657,856
Number of shares issued for reinvestment
of distributions 117,399 656,634
264,005 1,314,490
Number of shares repurchased (906,702) (1,584,966)
Net increase (decrease) (642,697) (270,476)
**Distributions to shareholders:
Income dividends per share $ .28 $ .66
Capital gains distribution per share $ - $ .77
See accompanying Notes to Financial Statements.
STATEMENTS OF CHANGES
IN NET ASSETS
<TABLE>
<CAPTION>
EQUITY FUND HIGH YIELD FUND
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
SEPTEMBER 30, ENDED SEPTEMBER 30, ENDED
1999 MARCH 31, 1999 MARCH 31,
(unaudited) 1999 (unaudited) 1999
</CAPTION>
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 6,636 $ 88,789 $ 2,627,783 $ 4,991,372
Net realized gain (loss) from
investment transactions 996,124 125,209 (119,720) (374,928)
Net unrealized appreciation (depreciation) of
investments during the period (104,354) 532,930 (810,755) (11,543,193)
Net increase (decrease) in net assets
resulting from operations 898,406 746,928 1,697,308 (6,926,749)
DISTRIBUTIONS TO SHAREHOLDERS FROM:**
Net investment income - (112,732) (2,394,279) (4,063,980)
Net realized gain from investment transactions - (729,946) - (380,905)
In excess of net investment income - - - -
In excess of net realized gains - - - -
Total distributions to shareholders - (842,678) (2,394,279) (4,444,885)
INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS:*
Proceeds from shares sold 3,648,504 7,611,572 5,413,578 31,624,268
Net asset value of shares issued for
reinvestment of distributions - 831,725 2,131,131 4,306,579
3,648,504 8,443,297 7,544,709 35,930,847
Cost of shares repurchased (6,408,178) (11,993,087) (11,666,436) (37,763,697)
Net increase (decrease) from capital
share transactions (2,759,674) (3,549,790) (4,121,727) (1,832,850)
Total increase (decrease) in net assets (1,861,268) (3,645,540) (4,818,698) (13,204,484)
NET ASSETS:
Beginning of period 31,587,400 35,232,940 58,053,208 71,257,692
End of period $ 29,726,132 $ 31,587,400 $ 53,234,510 $ 58,053,208
Undistributed net investment income at end of period $ 55,021 $ 48,385 $ 1,223,040 $ 989,536
*Shares issued and repurchased:
Number of shares sold 201,967 466,748 533,480 2,645,243
Number of shares issued for reinvestment
of distributions - 51,559 156,943 378,664
201,967 518,307 690,423 3,023,907
Number of shares repurchased (355,266) (734,834) (1,065,158) (3,170,583)
Net increase (decrease) (153,299) (216,527) (374,735) (146,676)
**Distributions to shareholders:
Income dividends per share $ - $ .05 $ .47 $ .76
Capital gains distribution per share $ - $ .38 $ - $ .08
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENTS OF CHANGES
IN NET ASSETS
<TABLE>
<CAPTION>
SMALL CAP FUND USA GLOBAL FUND
PERIOD FROM
SIX MONTHS APRIL 14 SIX MONTHS
ENDED 1998 ENDED YEAR
SEPTEMBER 30, (INCEPTION) SEPTEMBER 30, ENDED
1999 TO MARCH 31, 1999 MARCH 31,
(unaudited) 1999 (unaudited) 1999
</CAPTION>
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ (25,102) $ 40,066 $ (37,137) $ 133,205
Net realized gain (loss) from
investment transactions 592,012 (123,586) 2,098,144 185,662
Net unrealized appreciation (depreciation) of
investments during the period 1,383,354 402,293 2,520,120 (1,790,383)
Net increase (decrease) in net assets
resulting from operations 1,950,264 318,773 4,581,127 (1,471,516)
DISTRIBUTIONS TO SHAREHOLDERS FROM:**
Net investment income - (40,066) - (149,346)
Net realized gain from
investment transactions - - - (1,163,523)
In excess of net investment income - (5,614) - -
In excess of net realized gains - - - -
Total distributions to shareholders - (45,680) - (1,312,869)
INCREASE (DECREASE) FROM CAPITAL
SHARE TRANSACTIONS:*
Proceeds from shares sold 5,956,843 14,026,235 4,290,105 6,422,253
Net asset value of shares issued for
reinvestment of distributions - 44,750 - 1,282,254
5,956,843 14,070,985 4,290,105 7,704,507
Cost of shares repurchased (1,368,421) (1,215,951) (6,543,156) (15,110,198)
Net increase (decrease) from capital
share transactions 4,588,422 12,855,034 (2,253,051) (7,405,691)
Total increase (decrease) in net assets 6,538,686 13,128,127 2,328,076 (10,190,076)
NET ASSETS:
Beginning of period 13,228,127 100,000 32,285,359 45,475,435
End of period $ 19,766,813 $ 13,228,127 $ 34,613,435 $ 35,285,359
Undistributed net investment income at
end of period $ (25,102) $ - $ 21,671 $ 58,808
*Shares issued and repurchased:
Number of shares sold 545,935 1,526,344 227,111 397,233
Number of shares issued for reinvestment
of distributions - 4,827 - 80,691
545,935 1,531,171 227,111 477,924
Number of shares repurchased (127,839) (137,978) (360,318) (938,682)
Net increase (decrease) 418,096 1,393,193 (133,207) (460,758)
**Distributions to shareholders:
Income dividends per share $ - $ .04 $ - $ .06
Capital gains distribution per share $ - $ - $ - $ .51
</TABLE>
See accompanying Notes to Financial Statements.
NOTES TO FINANCIAL
STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES:
The Funds are registered under the Investment
Company Act of 1940, as amended, as
diversified open-end management investment
companies. The following is a summary of
significant accounting policies consistently
followed by the Funds in the preparation of
their financial statements.
A. Security Valuation - Corporate stocks,
bonds and options traded on a national
securities exchange or national market
arevalued at the latest sales price thereof,
or if no sale was reported on that date, the
mean between the closing bid and asked price
is used.
Securities which are traded over-the-counter
are priced at the mean between the latest bid
and asked price. Securities not
currentlytraded are valued at fair value as
determined by the Board of Directors.
Securities with maturities of 60 days or less
when acquired or subsequently within 60 days
of maturity are valued at amortized cost,
which approximates market value.
B. Federal and State Taxes - The Funds
complied with the requirements of the
Internal Revenue Code applicable to regulated
investment companies and therefore, no
provision for federal or state tax is
required. The Buffalo Balanced, Equity,
HighYield, Small Cap and USA Global Funds
designated $2,487,281, $103,034, $177,756, $0
and $1,063,658, respectively as long-term
capital gain dividends during the fiscal year
ended March 31, 1999. As of March 31, 1999,
the Buffalo High Yield Fund had an
accumulated net realized loss on sales of
investments for federal income tax purposes
of $248,566, which expires in 2007.
C. Options - In order to produce incremental
earnings andprotect gains, the Funds may
write covered call options on portfolio
securities. When a Fund writes an option, an
amount equal to the premium received by the
Fund is reflected as an asset and an
equivalent liability. The amount of the
liability is subsequently marked to market to
reflect the current market value of the
option written. If an option which a Fund has
written either expires on its stipulated
expiration date, or if a Fund enters into a
closing purchase transaction, the Fund
realizes a gain (or loss if the cost of a
closing purchase transaction exceeds the
premium received when the option was written)
without regard to any unrealized gain or loss
on the underlying security, and the liability
related to such option is extinguished. If a
call option which the Fund has written is
exercised, the Fund realizes a capital gain
or loss from the sale of the underlying
security and the proceeds from such sale are
increased by the premium originally received.
The primary risks associated with the use of
options are an imperfect correlation between
the change in market value of the securities
held by the Fund and the price of the option,
the possibility of an illiquid market, and
the inability of the counterparty to meet the
terms of the contract. There were no
outstanding covered call options or
transactions in call options written as of
and for the period ended September 30, 1999.
D. Security Transactions and Investment
Income - Security transactions are accounted
for on the date the securities are purchased
or sold. Dividend income less foreign taxes
withheld (if any) are recorded on the ex-
dividend date. Interest income is recognized
on the accrual basis. Realized gains and
losses from investment transactions and
unrealized appreciation and depreciation of
investments are reported on the identified
cost basis. Market discounts on debt
securities are amortized; premiums are not
amortized.
E. Distributions to Shareholders -
Distributions to shareholders are recorded on
the ex-dividend date. Distributions are
determined in accordance with income tax
regulations which may differ from generally
accepted accounting principles. These
differences are primarily due to differing
treatments for amounts related to redemptions
of shares as a part of the deduction for
dividends paid for income tax purposes, and
deferral of post October and wash sale
losses.
F. Use of Estimates - The preparation of
financial statements in conformity with
generally accepted accounting principles
requires management to make estimates and
assumptions that affect the amounts reported
in the financial statements and accompanying
notes. Actual results could differ from such
estimates.
2. MANAGEMENT FEES:
Management fees are paid to Jones & Babson,
Inc. at the rate of1% per annum of the
average daily net asset values of the Funds
for services which include administration,
and all other operating expenses of the Funds
except the cost of acquiring and disposing of
portfolio securities, the taxes, if any,
imposed directly on the Funds and its shares
and the cost of qualifying the Funds' shares
for sale in any jurisdiction. Certain
officers and/or directors of the Funds are
also officers and/or directors of Jones &
Babson, Inc.
3. INVESTMENT TRANSACTIONS:
Investment transactions for the period ended
September 30, 1999, (excluding maturities of
short-term commercial notes and repurchase
agreements) are as follows:
Balanced Fund
Purchases $ 6,593,512
Proceeds from sales 11,665,775
Equity Fund
Purchases $ 3,489,473
Proceeds from sales 6,777,997
High Yield Fund
Purchases $ 6,063,338
Proceeds from sales 7,876,937
Small Cap Fund
Purchases $ 6,138,734
Proceeds from sales 2,488,143
USA Global Fund
Purchases $ 3,443,977
Proceeds from sales 7,188,400
This report has been prepared for the
information of the Shareholders of the
Buffalo Funds, and is not to be construed as
an offering of the shares of the Funds.
Shares of the Funds are offered only by the
Prospectus, a copy of which may be obtained
fromJones & Babson, Inc.
FINANCIAL HIGHLIGHTS
Condensed data for a share of capital
stock outstanding throughout the period.
<TABLE>
<CAPTION>
BALANCED FUND
FOR THE SIX MONTH
PERIOD ENDED
SEPTEMBER 30, 1999 YEARS ENDED MARCH 31,
(unaudited) 1999 1998 1997
</CAPTION>
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.87 $ 11.50 $ 10.57 $ 10.70
Income from investment operations:
Net investment income 0.31 0.66 0.65 0.72
Net gains (losses) on securities
(both realized and unrealized) (0.19) (1.86) 1.84 0.69
Total from investment operations 0.12 (1.20) 2.49 1.41
Less distributions:
Dividends from net investment income (0.28) (0.66) (0.65) (0.71)
Distributions from capital gains - (0.77) (0.91) (0.83)
Total distributions (0.28) (1.43) (1.56) (1.54)
Net asset value, end of period $ 8.71 $ 8.87 $ 11.50 $ 10.57
Total return* 1.26% (10.49%) 24.76% 13.22%
Ratios/Supplemental Data
Net assets, end of period (in millions) $ 34 $ 40 $ 55 $ 44
Ratio of expenses to average net assets** 1.07% 1.04% 1.04% 1.05%
Ratio of net investment income to
average net assets** 6.43% 6.19% 5.61% 6.20%
Portfolio turnover rate 18% 57% 61% 56%
</TABLE>
*Total return not annualized for periods less than one full year
**Annualized for periods less than one full year
See accompanying Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
Condensed data for a share of capital
stock outstanding throughout the period.
BALANCED FUND
FOR THE
PERIOD FROM
YEAR AUGUST 12, 1994
ENDED (INCEPTION)
MARCH 31, TO MARCH 31,
1996 1995
Net asset value, beginning of period $ 10.06 $ 10.07
Income from investment operations:
Net investment income 0.65 0.32
Net gains (losses) on securities
(both realized and unrealized) 1.07 (0.03)
Total from investment operations 1.72 0.29
Less distributions:
Dividends from net investment income (0.68) (0.30)
Distributions from capital gains (0.40) -
Total distributions (1.08) (0.30)
Net asset value, end of period $ 10.70 $ 10.06
Total return* 17.87% 2.91%
Ratios/Supplemental Data
Net assets, end of period (in millions) $ 50 $ 38
Ratio of expenses to average net assets** 1.11% 1.06%
Ratio of net investment income to
average net assets** 6.27% 8.89%
Portfolio turnover rate 61% 33%
*Total return not annualized for periods less than one full year
**Annualized for periods less than one full year
See accompanying Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
Condensed data for a share of capital
stock outstanding throughout the period.
<TABLE>
<CAPTION>
EQUITY FUND
FOR THE
PERIOD FROM
FOR THE SIX MONTH MAY 19, 1995
PERIOD ENDED (INCEPTION)
SEPTEMBER 30, 1999 YEARS ENDED MARCH 31, TO MARCH 31,
(unaudited) 1999 1998 1997 1996
</CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.95 $ 16.94 $13.93 $ 12.36 $ 10.14
Income from investment operations:
Net investment income 0.01 0.04 0.08 0.15 0.21
Net gains (losses) on securities
(both realized and unrealized) 0.42 0.40 4.85 2.51 2.72
Total from investment operations 0.43 0.44 4.93 2.66 2.93
Less distributions:
Dividends from net investment income - (0.05) (0.10) (0.10) (0.20)
Distributions from capital gains - (0.38) (1.82) (0.99) (0.51)
Total distributions - (0.43) (1.92) (1.09) (0.71)
Net asset value, end of period $ 17.38 $ 16.95 $16.94 $ 13.93 $ 12.36
Total return* 2.54% 2.73% 36.97% 21.23% 29.11%
Ratios/Supplemental Data
Net assets, end of period (in millions) $ 30 $ 32 $ 35 $ 20 $ 5
Ratio of expenses to average net assets** 1.09% 1.06% 1.09% 1.16% 1.06%
Ratio of net investment income to
average net assets** 0.04% 0.27% 0.56% 1.35% 2.55%
Portfolio turnover rate 11% 83% 93% 123% 63%
</TABLE>
*Total return not annualized for periods less than one full year
**Annualized for periods less than one full year
See accompanying Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
Condensed data for a share of capital
stock outstanding throughout the period.
<TABLE>
<CAPTION>
HIGH YIELD FUND
FOR THE
PERIOD FROM
FOR THE SIX MONTH MAY 19, 1995
PERIOD ENDED (INCEPTION)
SEPTEMBER 30, 1999 YEARS ENDED MARCH 31, TO MARCH 31,
(unaudited) 1999 1998 1997 1996
</CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.74 $ 12.83 $11.73 $ 11.15 $10.14
Income from investment operations:
Net investment income 0.70 0.93 0.79 0.82 0.53
Net gains (losses) on securities
(both realized and unrealized) (0.39) (2.18) 1.35 0.71 1.14
Total from investment operations 0.31 (1.25) 2.14 1.53 1.67
Less distributions:
Dividends from net investment income (0.47) (0.76) (0.80) (0.80)
(0.53)
Distributions from capital gains - (0.08) (0.24) (0.15) (0.13)
Total distributions (0.47) (0.84) (1.04) (0.95) (0.66)
Net asset value, end of period $ 10.58 $ 10.74 $12.83 $ 11.73 $11.15
Total return* 2.84% (9.92%) 18.63% 14.02% 16.67%
Ratios/Supplemental Data
Net assets, end of period (in millions) $ 53 $ 58 $ 71 $ 20 $ 7
Ratio of expenses to average net assets** 1.06% 1.05% 1.03% 1.13% 1.03%
Ratio of net investment income to
average net assets** 9.14% 7.76% 6.43% 7.63% 7.40%
Portfolio turnover rate 14% 30% 24% 39% 25%
</TABLE>
*Total return not annualized for periods less than one full year
**Annualized for periods less than one full year
See accompanying Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
Condensed data for a share of capital
stock outstanding throughout the period.
SMALL CAP FUND
FOR THE FOR THE
SIX MONTH PERIOD FROM
PERIOD ENDED APRIL 14, 1998
SEPTEMBER 30, (INCEPTION)
1999 TO MARCH 31,
(unaudited) 1999
Net asset value, beginning of period $ 9.49 $ 10.00
Income from investment operations:
Net investment income (0.01) 0.04
Net gains (losses) on securities
(both realized and unrealized) 1.43 (0.51)
Total from investment operations 1.42 (0.47)
Less distributions:
Dividends from net investment income - (0.04)
Distributions from capital gains - -
Total distributions - (0.04)
Net asset value, end of period $ 10.91 $ 9.49
Total return* 14.96% (4.69%)
Ratios/Supplemental Data
Net assets, end of period (in millions) $ 20 $ 13
Ratio of expenses to average net assets** 1.21% 1.02%
Ratio of net investment income to
average net assets** (0.30%) 0.59%
Portfolio turnover rate 15% 34%
*Total return not annualized for periods less than one full year
**Annualized for periods less than one full year
See accompanying Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
Condensed data for a share of capital
stock outstanding throughout the period.
<TABLE>
<CAPTION>
USA GLOBAL FUND
FOR THE
PERIOD FROM
FOR THE SIX MONTH MAY 19, 1995
PERIOD ENDED (INCEPTION)
SEPTEMBER 30, 1999 YEARS ENDED MARCH 31, TO MARCH 31,
(unaudited) 1999 1998 1997 1996
</CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.27 $ 17.29 $ 14.10 $ 11.36 $ 10.14
Income from investment operations:
Net investment income (0.02) 0.06 0.07 0.08 0.15
Net gains (losses) on securities
(both realized and unrealized) 2.23 (0.51) 4.20 3.32 1.61
Total from investment operations 2.21 (0.45) 4.27 3.40 1.76
Less distributions:
Dividends from net investment income - (0.06) (0.06) (0.05) (0.15)
Distributions from capital gains - (0.51) (1.02) (0.61) (0.39)
Total distributions - (0.57) (1.08) (0.66) (0.54)
Net asset value, end of period $ 18.48 $ 16.27 $ 17.29 $ 14.10 $11.36
Total return* 13.58% (2.52%) 31.33% 29.87% 17.49%
Ratios/Supplemental Data
Net assets, end of period (in millions) $ 38 $ 35 $ 45 $ 27 $ 5
Ratio of expenses to average net assets** 1.07% 1.05% 1.09% 1.13% 1.06%
Ratio of net investment income to
average net assets** (0.20%) 0.34% 0.47% 0.79% 1.94%
Portfolio turnover rate 9% 42% 64% 88% 123%
</TABLE>
*Total return not annualized for periods less than one full year
**Annualized for periods less than one full year
See accompanying Notes to Financial Statements.
Buffalo Mutual Funds
Balanced Fund
Equity Fund
High Yield Fund
Small Cap Fund
USA Global Fund
BUFFALOr
FUNDS
BUFFALO FUNDS
P.O. Box 419757
Kansas City, MO 64141-6757
1-800-49-BUFFALO
(1-800-492-8332)
www.buffalofunds.com
JB9C-1(11/99) 510848
