BUFFALO
FUNDS
Balanced Fund
Equity Fund
High Yield Fund
Small Cap Fund
USA Global Fund
ANNUAL REPORT
March 31, 2000
MESSAGE
To Our Shareholders
As you may know, Larry Armel retired as President and CEO of Jones & Babson at
the end of January. Larry had been with the company for 16 years, serving as
President since 1985. In recent years, we developed a close working relationship
and friendship as I have served as Chairman since 1993. During his tenure, new
funds and new fund families were added, extended services were developed, we
entered new marketplaces, dramatically updated technologically and the assets
grew tenfold. We wish Larry much happiness and thank him for his many years of
commitment, friendship and accomplishment!
Serving as Chairman of Jones & Babson since 1993 has given me a solid base and
perspective on which to build for the future. As the new President and CEO, I'm
very excited about the opportunity to lead the company into the 21st century. As
a senior officer of BMA (which is the parent company of Jones & Babson) since
1985, my responsibilities included overseeing and directing the strategy and
focus of the brokerage, retirement planning and financial services business
units. I look forward to communication with all of you in the future as the
Buffalo Funds continue to grow and prosper.
At March 31, the Buffalo Funds included about 18,000 accounts, totaling $193
million in assets under management. Please see the Portfolio Management Review
immediately following this letter, which contains detailed information on the
investment approach used by Kornitzer Capital Management, Inc., and the
performance of the Funds. We're looking forward to May of this year, when
Buffalo Equity, USA Global and High Yield Funds all achieve their 5-year
anniversaries, along with the performance numbers that coincide with that
milestone. And, though we all are aware that past performance is no guarantee of
future returns, we hope that you were pleased with the Funds' 1999 results, as
the blended management approach returned solid numbers.
We appreciate your continued interest in the Buffalo Funds. Please contact us
with any questions or comments, or should you desire additional information
about your investments.
Sincerely,
/s/Stephen S. Soden
Stephen S. Soden
President
Portfolio Management Review
We want to thank all our fellow shareholders for their continued support of
Kornitzer Capital Management, Inc. and the Buffalo Funds. We are pleased to
report the past twelve months have been a very positive period for the Buffalo
Fund group. Our blend (growth and value) approach to equity management has
served us well, particularly in early 2000 as the stock markets have experienced
extreme volatility. In addition, we believe we are seeing tangible benefits from
our decision made several years ago to invest based on long-term themes and
trends. These include trends such as changing demographics, the expansion of
global brands and the continuing high rate of investment in technology and
telecommunications to improve productivity.
We believe taking a close look at the Buffalo Small Cap Fund over the past year
is a good way to better understand and appreciate our blend equity style. Our
Small Cap Fund had a tremendous year, yet it was hardly a case of a rising tide
lifting all boats equally in the small cap sector. In fact, it was quite the
opposite. According to Lipper Analytical Services the average Small Cap Growth
Fund rose a remarkable 96.42% over the past twelve months while the average
Small Cap Value Fund rose 17.99%. The picture inside the Buffalo Small Cap Fund
performance was very similar. Of the some 60 stocks owned in the Fund, 10 to 15
drove the bulk of the performance for the year. Virtually all the winners were
growth companies and the majority were technology companies.
You might ask why not own all growth stocks? The answer goes back to the basic
philosophies we adopted at the time we started the Buffalo Funds. We strive for
consistency of performance over time with a reasonable to low degree of
volatility. The performance of the various indices since March 31, 2000 provide
a great example of what can happen when you only swing for the fences. In less
than one month (thru April 27th), the Lipper Small Cap Growth Index has declined
over 20% while the Lipper Small Cap Value Index has declined just over 2%. The
Buffalo Small Cap Fund has declined less than 3%. We believe our diversity is
serving shareholders well.
In the technology area we have been very careful to own companies with
sustainable long-term business models. We have been particularly careful in
avoiding companies that are not self-financing. This has excluded the majority
of all internet stocks. While we missed many opportunities in 1999 because of
this stance we now feel vindicated as the market has become much more discerning
in early 2000. We feel the performance differential between technology stocks
with and without viable long-term business models will widen further as the year
progresses. The financing window will likely close more tightly to those
internet companies that are far from generating profits or positive cashflow. As
a result, we could see numerous internet bankruptcies later this year.
We believe the outlook for the overall stock market going forward will be tied
to U.S. productivity. We believe the outlook remains bright. Corporations are
clearly faced with a tight labor market and the reality of rising labor costs.
Their challenge has been to absorb these higher labor costs without passing them
through as higher prices to their customers, but still deliver improved profits.
This has been and remains a tough challenge, but thus far corporations have
succeeded. We believe they have succeeded by motivating employees to work harder
through profit-sharing plans and through continued heavy investment in
technology. This combination has led to largest gains in U.S. productivity in
history. We believe Alan Greenspan and the Federal Reserve understand this
phenomenon and that is why their interest rate moves have been rather measured
in the face of a booming economy.
The rather lackluster absolute performance by bond funds will likely continue
until the economy cools or inflation is so tame that a greater consensus builds
in our higher productivity theme. We have no idea when either will take place.
We do know that corporate bonds, and high yield bonds in particular, offer
compelling yields and value at present levels. The patient investor in our High
Yield Fund is being paid a handsome current yield to wait for other investors to
return to this market. When they do return we are confident total returns will
improve significantly. We might note that on a relative basis the Buffalo High
Yield Fund has outperformed it's peer group during this difficult period.
We are very pleased to announce the hiring of David Eshnauer as a portfolio
manager and analyst who will begin co-managing the Buffalo High Yield Fund. Dave
joins Kornitzer Capital Management from Security Management Company where he was
portfolio manager of their high yield fund. Dave has 18 years of experience as a
bond and stock manager and research analyst.
As we move forward in 2000 we plan to intensify our research efforts and focus
on picking attractive stocks and bonds. We believe the easy ride in certain
segments is over and superior stock picking will stand out in 2000. As
shareholders, you can rest assured our commitment to research and a solid, deep
research team is stronger than ever.
The following is a snapshot and comment on how each of the Buffalo Funds
performed over the past twelve months.
Buffalo Balanced Fund
Buffalo Balanced Fund generated a total return (price change and reinvested
distributions) of 16.78% for the twelve months ended March 31, 2000. The average
balanced fund, as measured by Lipper Analytical Services, registered a return of
10.45% for the period. The Fund shifted more assets to equities during the
period. While this shift resulted in lower income distributions as the year
progressed, the Fund's total return to shareholders improved significantly.
Buffalo Equity Fund
Buffalo Equity Fund generated a total return (price change and reinvested
distributions) of 31.07% for the twelve months ended March 31, 2000. This return
surpassed the unmanaged Standard & Poor's 500 return of 17.93%. The Fund's peer
group, as measured by the Lipper Multi-Cap Core Equity Fund Index, produced a
return of 26.56% for the period.
The Fund's performance for the period was a product of the firm's blend equity
style as well as a very disciplined adherence to our identified long-term
investment themes.
Buffalo High Yield Fund
Buffalo High Yield Fund generated a total return (price change and reinvested
distributions) of 4.83% for the twelve months ended March 31, 2000. The average
high yield fund, as measured by Lipper Analytical Services, provided a return of
0.00% for the period.
Buffalo Small Cap Fund
Buffalo Small Cap Fund generated a total return (price change and reinvested
distributions) of 64.87% for the twelve months ended March 31, 2000. These
results surpassed the 44.80% return for the Lipper Small-Cap Core Equity Index.
As discussed previously we remain optimistic about the Fund's future given the
untapped potential for a large number of stocks in the portfolio.
Buffalo USA Global Fund
Buffalo USA Global Fund generated a total return (price change and reinvested
distributions) of 60.72% for the twelve months ended March 31, 2000. These
results surpassed the 17.93% return of the unmanaged S&P 500 Index and the
36.33% return for the Lipper Global Fund Index.
We continue to believe this unique Fund could be one of the biggest long-term
beneficiaries of the superior long-term growth potential of developing countries
around the globe. We say this with confidence because this Fund concentrates on
the type of U.S. companies that already have major sales, profits and a strong
presence in countries throughout Asia, South America, Latin America and many
other developing regions. We have never been more optimistic about the long-term
prospects for U.S. multi-national companies.
We look forward to tracking all the Funds with you in future letters. As fellow
shareholders we are fully committed to your financial success 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
Three Months One Year Five Years
Ended Ended Ended Since
3/31/00 3/31/00 3/31/00 Inception*
BUFFALO
BALANCED FUND 9.09% 16.78% 11.72% 10.89%
Lipper Balanced
Fund Index 2.98% 10.45% 15.65% 14.76%
BUFFALO
EQUITY FUND 14.12% 31.07% N/A 24.31%
Lipper Multi-Cap Core
Fund Index 7.39% 26.56% 23.43% 23.05%
BUFFALO
HIGH YIELD FUND 1.24% 4.83% N/A 8.53%
Lipper High Yield Bond
Fund Index -1.52% 0.00% 8.09% 7.33%
BUFFALO
SMALL CAP FUND 20.53% 64.87% N/A 25.87%
Lipper Small-Cap Core
Fund Index 10.32% 44.80% 17.70% 6.93%
BUFFALO
USA GLOBAL FUND 16.76% 60.72% N/A 26.48%
Lipper Capital Appreciation
Fund Index 9.00% 44.74% 25.29% 24.94%
Lipper Global
Fund Index 4.58% 36.33% 19.50% 18.72%
*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).
CHART - Buffalo Balanced Fund versus S&P 500
and Merrill Lynch Bond Fund Index Weighted Average
CHART - Buffalo Equity Fund versus S&P 500
CHART - Buffalo High Yield Fund versus
Merrill Lynch High Yield Bond Fund Index
CHART - Buffalo Small Cap Fund versus S&P 600
CHART - Buffalo USA Global Fund versus S&P 500
Buffalo
Balanced Fund
SCHEDULE OF INVESTMENTS
March 31, 2000
SHARES COMPANY MARKET VALUE
COMMON STOCKS - 58.31%
CONSUMER CYCLICAL - 12.77%
30,000 Argosy Gaming Co.* $ 427,500
13,500 Carnival Corp. 334,969
27,000 Elcor Corp. 931,500
20,000 Ethan Allen Interiors, Inc. 500,000
22,000 Mirage Resorts, Inc. 426,250
25,000 ServiceMaster (The) Co. 281,250
32,000 Strayer Education, Inc. 832,000
3,733,469
CONSUMER STAPLES - 3.33%
2,500 Bestfoods, Inc. 117,031
6,000 McDonald's Corp. 225,375
15,000 PepsiCo, Inc. 518,437
2,000 Procter & Gamble Co. 112,500
973,343
ENERGY - 4.83%
164,000 Frontier Oil Corp.* 1,230,000
20,000 McDermott International, Inc. 183,750
1,413,750
FINANCIAL - 11.94%
5,000 American Express Co. 744,687
5,500 Bank of America Corp. 288,406
6,500 Fleet Boston Financial Corp. 237,250
18,500 Kansas City Southern Industries, Inc. 1,589,844
3,500 PNC Bank Corp. 157,719
20,000 Unumprovident Corp. 340,000
5,000 Washington Mutual, Inc. 132,500
3,490,406
HEALTH CARE - 5.31%
3,000 Abbott Laboratories 105,562
500 American Home Products Corp. 26,813
3,000 Johnson & Johnson 210,187
12,000 Merck & Company, Inc. 745,500
10,000 Quintiles Transnational Corp. 170,625
8,000 Shering-Plough Corp. 294,000
1,552,687
TECHNOLOGY - 14.06%
3,500 Analog Devices, Inc.* 281,969
5,000 Atmel Corp.* 258,125
7,500 Cisco Systems, Inc.* 579,844
12,000 Compaq Computer Corp. 319,500
6,500 Hewlett-Packard Co. 861,656
6,500 Intel Corp. 857,594
3,000 Microsoft Corp. 318,750
10,000 Scientific-Atlantic, Inc. 634,375
4,111,813
TRANSPORTATION & SERVICES - 4.13%
15,000 FEDEX Corp.* 585,000
30,000 Southwest Airlines Co. 624,375
1,209,375
UTILITIES - 1.94%
5,500 Enron Corp. 411,813
1,000 GTE Corp. 71,000
2,000 SBC Communication, Inc. 84,000
566,813
TOTAL COMMON STOCKS 17,051,656
(Cost $13,659,844)
CONVERTIBLE PREFERRED STOCKS - 6.52%
14,550 Bethlehem Steel Corp. 400,125
69,400 ICO Holdings, Inc. 1,075,700
23,000 Lomak Petroleum, Inc. 431,250
TOTAL CONVERTIBLE PREFERRED STOCKS 1,907,075
(Cost $2,481,177)
FACE
AMOUNT DESCRIPTION MARKET VALUE
CORPORATE BONDS - 23.85%
$ 700,000 Argosy Gaming Co., 10.75% due 6-1-09 712,250
1,285,000 Callon Petroleum Co., 10.125% due 9-15-02 1,240,025
1,500,000 Eagle Geophysical, Inc., 10.75% due 7-15-08* 187,500
450,000 Fairchild Semiconductor Corp.,
10.125% due 3-15-07 438,750
680,000 Frontier Oil Corp., 9.125% due 2-15-06 588,200
460,000 Key Energy Group, Inc., 14.00% due 1-15-09 499,100
730,000 HS Resources, Inc., 9.875% due 12-1-03 722,700
400,000 Purina Mills, Inc., 9.00% due 3-15-10* 102,000
585,000 Republic Group, Inc., 9.50% due 7-15-08 523,575
1,750,000 United Refining Co., 10.75% due 6-15-07 1,058,750
1,120,000 Wiser Oil Co., 9.50% due 5-15-07 901,600
TOTAL CORPORATE BONDS 6,974,450
(Cost $9,377,386)
CONVERTIBLE CORPORATE BONDS - 10.28%
1,099,000 Allwaste, Inc., 7.25% due 6-1-14* 87,920
1,892,000 Exide Corp., 2.90% due 12-15-05 1,097,360
1,390,000 HMT Technology Corp., 5.75% due 1-15-04 611,600
238,000 Integrated Device Technology, Inc.,
5.50% due 6-1-02 332,308
1,340,000 Intevac, Inc., 6.50% due 3-1-04 690,100
250,000 Key Energy Group, Inc., 5.00% due 9-15-04 187,500
TOTAL CONVERTIBLE CORPORATE BONDS 3,006,788
(Cost $4,858,720)
TOTAL INVESTMENTS - 98.96% 28,939,969
(Cost $30,377,127)
Other assets less liabilities - 1.04% 304,505
TOTAL NET ASSETS - 100.00% $ 29,244,474
The identified cost of investments owned at March 31, 2000, was the same for
financial statement and federal income tax purposes.
Net unrealized depreciation for federal income tax purposes was $1,437,158,
which is comprised of unrealized appreciation of $4,926,942 and unrealized
depreciation of $6,364,100.
*Non-income producing security
See accompanying Notes to Financial Statements.
Buffalo
Equity Fund
SCHEDULE OF INVESTMENTS
March 31, 2000
SHARES COMPANY MARKET VALUE
COMMON STOCKS - 98.74%
CAPITAL GOODS - 2.91%
19,600 Tyco International Ltd. $ 977,550
CONSUMER CYCLICAL - 15.11%
37,300 Barnes & Noble, Inc. 857,900
27,400 Carnival Corp. 679,863
20,500 Coachmen Industries, Inc. 283,156
19,250 Elcor Corp. 664,125
34,050 Ethan Allen Interiors, Inc. 851,250
21,300 Fairfield Communities, Inc.* 169,069
62,300 Mirage Resorts, Inc. 1,207,062
33,300 ServiceMaster (The) Co. 374,625
5,087,050
CONSUMER STAPLES - 12.04%
7,500 Apollo Group, Inc. 211,406
6,500 DeVry, Inc. 198,250
15,400 Disney (Walt) Holding Co. 637,175
9,500 ITT Educational Services, Inc. 152,000
19,000 McDonald's Corp. 713,687
27,500 PepsiCo, Inc. 950,469
33,100 Sara Lee Corp. 595,800
26,000 Viad Corp. 594,750
4,053,537
ENERGY - 2.33%
13,600 Royal Dutch Petroleum Co. 782,850
FINANCIAL - 15.47%
24,200 Allstate Corp. 576,262
8,500 American Express Co. 1,265,969
19,200 Bank of America Corp. 1,006,800
21,400 Fleet Boston Financial Corp. 781,100
8,900 Kansas City Southern Industries, Inc. 764,844
13,900 PNC Bank Corp. 626,369
6,000 Union Planters Corp. 184,875
5,206,219
HEALTH CARE - 9.32%
25,000 Abbott Laboratories 879,687
8,700 Johnson & Johnson 609,544
16,600 Merck & Company, Inc. 1,031,275
16,800 Schering-Plough Corp. 617,400
3,137,906
SHARES
OR FACE
AMOUNT COMPANY AND DESCRIPTION MARKET VALUE
TECHNOLOGY - 29.72%
13,000 Analog Devices* 1,047,313
29,700 Atmel Corp.* 1,533,263
30,600 Cisco Systems, Inc.* 2,365,762
30,300 Diebold, Inc. 833,250
7,900 Hewlett-Packard Co. 1,047,244
5,700 Lucent Technologies, Inc. 346,275
11,800 Microsoft Corp. 1,253,750
19,800 Scientific-Atlanta, Inc. 1,256,062
8,900 Wind River Systems, Inc. 322,625
10,005,544
TRANSPORTATION & SERVICES - 5.79%
22,800 FEDEX Corp.* 889,200
50,925 Southwest Airlines Co. 1,059,877
1,949,077
UTILITIES - 6.05%
20,100 Enron Corp. 1,504,987
7,500 GTE Corp. 532,500
2,037,487
TOTAL COMMON STOCKS 33,237,220
(Cost $23,539,259)
REPURCHASE AGREEMENT - 2.97%
$1,000,000 UMB Bank, n.a., 5.60% due 4-3-00
(Collateralized by U.S. Treasury Notes,
6.625% due 7-31-01 with a value of $993,879
and 6.125% due 12-31-01 with a value
of $27,244) 1,000,000
(Cost $1,000,000)
TOTAL INVESTMENTS - 101.71% 34,237,220
(Cost $24,539,259)
Other assets less liabilities - (1.71%) (575,328)
TOTAL NET ASSETS - 100.00% $ 33,661,892
For federal income tax purposes, the identified cost of investments
owned at March 31, 2000, was $24,557,199.
Net unrealized appreciation for federal income tax purposes was
$9,680,021, which is comprised of unrealized appreciation of $11,579,563
and unrealized depreciation of $1,899,542.
*Non-income producing security
See accompanying Notes to Financial Statements.
Buffalo
High Yield Fund
SCHEDULE OF INVESTMENTS
March 31, 2000
SHARES
OR FACE
AMOUNT COMPANY AND DESCRIPTION MARKET VALUE
CONVERTIBLE PREFERRED STOCKS - 15.57%
22,000 Bethlehem Steel Corp. $ 605,000
20,000 Carriage Service Capital Trust 520,000
41,200 Freeport-McMoran Copper & Gold, Inc. 610,275
77,500 ICO Holdings, Inc. 1,201,250
35,175 Kmart Financing I 1,514,723
14,870 Lomak Financing Trust 278,813
38,000 Tesoro Petroleum Corp. 460,750
38,300 TXI Capital Trust I 1,230,387
10,000 Union Pacific Capital Trust 393,750
TOTAL CONVERTIBLE PREFERRED STOCKS 6,814,948
(Cost $8,747,845)
CORPORATE BONDS - 50.88%
$1,235,000 Argosy Gaming Co., 10.75% due 6-1-09 1,256,613
300,000 Bio-Rad Laboratories, 11.625% due 2-15-07 302,250
1,025,000 Callon Petroleum Co., 10.125% due 9-15-02 989,125
750,000 Cherokee International, 10.50% due 5-1-09 620,625
2,175,000 Eagle Geophysical, Inc., 10.75% due 7-15-08* 271,875
500,000 Exide Corp., 10.00% due 4-15-05 482,500
635,000 Fairchild Semiconductor Corp.,
10.125% due 3-15-07 619,125
250,000 Fairchild Semiconductor Corp.,
10.375% due 10-1-07 246,875
2,000,000 Frontier Oil Corp., 9.125% due 2-15-06 1,730,000
1,040,000 Giant Industries, Inc., 9.75% due 11-15-03 1,008,800
1,200,000 HS Resources, Inc., 9.875% due 12-1-03 1,188,000
790,000 ICO Holdings, Inc., 10.375% due 6-1-07 738,650
121,000 Kmart Corp., 9.78% due 1-5-20 129,982
185,000 Kmart Corp., 9.35% due 1-2-20 169,825
25,000 Kmart Funding Corp., 9.44% due 7-1-18 24,561
485,000 Key Energy Group, Inc., 14.00% due 1-15-09 526,225
805,000 Kaiser Aluminum & Chemical Corp.,
12.75% due 2-1-03 748,650
1,235,000 King Pharmacy, Inc., 10.75% due 2-15-09 1,228,825
1,000,000 Luigino's, Inc., 10.00% due 2-1-06 835,000
470,000 Packaging Corp. of America, 9.625% due 4-1-09 465,300
585,000 Pilgrim's Pride Corp., 10.875% due 8-1-03 589,388
1,275,000 Plains Resources, Inc., 10.25% due 3-15-06 1,230,375
1,250,000 Purina Mills, Inc., 9.00% due 3-15-10* 318,750
2,195,000 Republic Group, Inc., 9.50% due 7-15-08 1,964,525
200,000 Southern Mineral Corp., 6.875% due 10-1-07 70,000
1,300,000 Specialty Retailers, Inc., 9.00% due 7-15-07 263,250
1,000,000 Telecommunications Techniques Co. LLC,
9.75% due 5-15-08 917,500
2,515,000 United Refining Co., 10.75% due 6-15-07 1,521,575
500,000 Warner Chilcott Laboratories,
12.625% due 2-15-08 490,000
1,645,000 Wiser Oil Co., 9.50% due 5-15-07 1,324,225
TOTAL CORPORATE BONDS 22,272,394
(Cost $28,500,428)
CONVERTIBLE CORPORATE BONDS - 28.54%
1,076,000 Allwaste, Inc., 7.25% due 6-1-14* 86,080
1,950,000 Exide Corp., 2.90% due 12-15-05 1,131,000
3,430,000 HMT Technology Corp., 5.75% due 1-15-04 1,509,200
750,000 Hexcel Corp., 7.00% due 8-1-03 517,500
625,000 Integrated Device Technology, Inc.,
5.50% due 6-1-02 872,656
3,080,000 Intevac, Inc., 6.50% due 3-1-04 1,586,200
250,000 Key Energy Group, Inc., 7.00% due 7-1-03 292,813
1,635,000 Key Energy Group, Inc., 5.00% due 9-15-04 1,227,812
2,540,000 Lomak Petroleum, Inc., 6.00% due 2-1-07 1,336,675
500,000 Micron Technology, Inc., 7.00% due 7-1-04 942,500
1,041,000 Moran Energy, Inc., 8.75% due 1-15-08 983,745
526,000 OHM Corp., 8.00% due 10-1-06 461,565
1,590,000 Sunrise Assisted Living, Inc.,
5.50% due 6-15-02 1,252,125
1,500,000 Western Digital Corp., zero cpn. due 2-18-18 296,250
TOTAL CONVERTIBLE CORPORATE BONDS 12,496,121
(Cost $16,010,405)
REPURCHASE AGREEMENT - 3.06%
$1,340,000 UMB Bank, n.a., 5.60% due 4-3-00
(Collateralized by Federal National Mortgage
Association Discount Notes,
due 4-28-00 with a value of $1,367,567) 1,340,000
(Cost $1,340,000)
TOTAL INVESTMENTS - 98.05% 42,923,463
(Cost $54,598,678)
Other assets less liabilities - 1.95% 851,724
TOTAL NET ASSETS - 100.00% $ 43,775,187
The identified cost of investments owned at March 31, 2000, was the same for
financial statement and federal income tax purposes.
Net unrealized depreciation for federal income tax purposes was $11,675,215,
which is comprised of unrealized appreciation of $1,178,221and unrealized
depreciation of $12,853,436.
*Non-income producing security
See accompanying Notes to Financial Statements.
Buffalo
Small Cap Fund
SCHEDULE OF INVESTMENTS
March 31, 2000
SHARES COMPANY MARKET VALUE
COMMON STOCKS - 88.04%
BASIC MATERIALS - 2.47%
20,000 Steel Dynamics, Inc.* $ 231,250
20,000 Texas Industries, Inc. 622,500
853,750
CONSUMER CYCLICAL - 22.44%
30,000 AHL Services, Inc.* 303,750
120,000 Argosy Gaming Co.* 1,710,000
26,300 Brunswick Corp. 498,056
23,500 Coachmen Industries, Inc. 324,594
35,000 Elcor Corp. 1,207,500
34,900 Ethan Allen Interiors, Inc. 872,500
10,000 Exide Corp. 118,125
38,000 First Service Corp.* 419,188
43,400 Hollinger International, Inc. Cl. A 466,550
25,000 Interface, Inc. Cl. A 106,250
9,200 Liz Claiborne, Inc. 421,475
29,900 Paul Harris Stores, Inc.* 90,634
20,000 Premier Parks, Inc. 420,000
37,000 Station Casinos, Inc.* 807,063
7,765,685
CONSUMER STAPLES - 10.40%
15,000 Dial Corp. 206,250
55,000 Education Management Corp. 794,062
137,500 Edutrek International Cl. A* 197,656
51,700 ITT Educational Services, Inc. 827,200
17,000 Interstate Bakeries Corp. 242,250
39,000 Strayer Education, Inc. 1,014,000
20,000 Sylvan Learning Systems, Inc. 318,750
3,600,168
ENERGY - 3.74%
26,800 Callon Petroleum Co.* 324,950
10,000 Eagle Geophysical, Inc. 500
100,500 Frontier Oil Corp.* 753,750
18,600 ICO Holdings, Inc. 29,644
20,000 McDermott International, Inc. 183,750
1,292,594
FINANCIAL - 5.16%
10,500 Everest Reinsurance Holdings, Inc. 342,562
20,300 Heller Financial, Inc. Cl. A 469,437
12,000 Stancorp Financial Group 328,500
14,400 Susquehanna Bancshares, Inc. 198,900
9,200 Wilmington Trust Corp. 447,350
1,786,749
HEALTH CARE - 10.25%
14,000 Human Genome Sciences, Inc. 1,162,875
25,750 King Pharmaceuticals, Inc.* 811,125
5,000 PE Corp-Celera Genomics Group 457,812
33,800 Quintiles Transnational Corp. 576,713
9,000 Sunrise Assisted Living, Inc.* 119,250
26,000 Warner Chilcott Laboratories* 419,250
3,547,025
TECHNOLOGY - 31.54%
15,965 Applied Materials, Inc.* 1,504,739
26,400 Atmel Corp.* 1,362,900
7,500 Cadence Design System, Inc. 155,625
12,500 Ciena Corp.* 1,576,563
14,900 Diebold, Inc. 409,750
119,400 HMT Technology Corp.* 395,513
10,400 Integrated Device Technology, Inc. 412,100
39,100 Intevac, Inc.* 180,837
30,900 Meta Group, Inc.* 805,331
20,700 National Semiconductor Corp.* 1,254,938
19,000 Scientific-Atlantic, Inc. 1,205,312
7,500 Stamps.com, Inc. 144,844
32,900 SunGard Data Systems, Inc.* 1,241,975
10,500 Thermoquest Corp.* 175,875
12,000 Western Digital Corp. 89,250
10,915,552
TRANSPORTATION - 2.04%
27,600 Midwest Express Holdings 707,250
TOTAL COMMON STOCKS 30,468,773
(Cost $22,838,975)
FACE
AMOUNT DESCRIPTION MARKET VALUE
REPURCHASE AGREEMENT - 12.53%
$4,335,000 UMB Bank, n.a., 5.60% due 4-3-00
(Collateralized by Federal National Mortgage
Association Discount Notes,
due 4-28-00 with a value of $4,423,192) 4,335,000
(Cost $4,335,000)
TOTAL INVESTMENTS - 100.57% 34,803,773
(Cost $27,173,975)
Other assets less liabilities - (0.57%) (196,784)
TOTAL NET ASSETS - 100.00% $ 34,606,989
The identified cost of investments owned at March 31, 2000, was the same for
financial statement and federal income tax purposes.
Net unrealized appreciation for federal income tax purposes was $7,629,798,
which is comprised of unrealized appreciation of $9,882,402 and unrealized
depreciation of $2,252,604.
*Non-income producing security
See accompanying Notes to Financial Statements.
Buffalo
USA Global Fund
SCHEDULE OF INVESTMENTS
March 31, 2000
SHARES COMPANY MARKET VALUE
COMMON STOCKS - 91.80%
BASIC MATERIALS - 2.74%
16,300 Praxair, Inc. $ 678,488
27,800 Sigma-Aldrich Corp. 747,125
1,425,613
CAPITAL GOODS - 4.12%
17,950 Boeing Co. 680,978
14,900 Rockwell International Corp. 623,006
23,700 Teleflex, Inc. 841,350
2,145,334
CONSUMER CYCLICAL - 5.58%
106,900 Interface, Inc. Cl. A 454,325
18,000 Korn/Ferry International* 535,500
68,200 Lear Corp.* 1,918,125
2,907,950
CONSUMER STAPLES - 14.90%
25,200 Bestfoods, Inc. 1,179,675
18,000 Coca-Cola Co. 844,875
21,700 Gillette Co. 817,819
38,200 McDonald's Corp. 1,434,887
12,900 Procter & Gamble Co. 725,625
81,500 Sara Lee Corp. 1,467,000
16,800 Wrigley, (Wm.) Jr. Co. 1,290,450
7,760,331
FINANCIAL - 6.07%
30,000 AFLAC, Inc. 1,366,875
16,400 American International Group, Inc. 1,795,800
3,162,675
HEALTH CARE - 13.62%
32,000 American Home Products Corp. 1,716,000
29,200 Bristol-Myers Squibb Co. 1,686,300
19,400 Johnson & Johnson 1,359,213
49,300 Quintiles Transnational Corp. 841,181
40,600 Schering-Plough Corp. 1,492,050
7,094,744
TECHNOLOGY - 44.77%
18,400 Analog Devices, Inc.* 1,482,350
47,001 Applied Materials, Inc.* 4,429,844
17,000 Applied Science & Technology, Inc.* 514,250
50,000 Cisco Systems, Inc.* 3,865,625
16,000 Dallas Semiconductor 562,000
14,300 Hewlett-Packard Co. 1,895,644
175,500 HMT Technology Corp.* 581,344
16,500 Intel Corp. 2,176,969
75,500 Intevac, Inc.* 349,187
13,100 Micron Technology, Inc. 1,650,600
13,200 Microsoft Corp. 1,402,500
6,000 Motorola, Inc. 854,250
45,000 National Semiconductor Corp.* 2,728,125
27,100 Thermoquest Corp.* 453,925
50,200 Western Digital Corp. 373,362
23,319,975
TOTAL COMMON STOCKS 47,816,622
(Cost $33,751,504)
FACE
AMOUNT DESCRIPTION MARKET VALUE
REPURCHASE AGREEMENT - 6.57%
$3,420,000 UMB Bank, n.a., 5.60% due 4-3-00
(Collateralized by U.S. Treasury Notes, 6.25%
due 4-30-01 with a value of $202,850, 6.125%
due 12-31-01 with a value of $154,380 and Federal
National Mortgage Association Discount Notes,
due 4-28-00 with a value of $3,132,265) 3,420,000
(Cost $3,420,000)
TOTAL INVESTMENTS - 98.37% 51,236,622
(Cost $37,171,504)
Other assets less liabilities - 1.63% 847,069
TOTAL NET ASSETS - 100.00% $ 52,083,691
For federal income tax purposes, the identified cost of investments
owned at March 31, 2000, was $37,381,070.
Net unrealized appreciation for federal income tax purposes was
$13,855,552, which is comprised of unrealized appreciation of $17,727,534
and unrealized depreciation of $3,871,982.
*Non-income producing security
See accompanying Notes to Financial Statements.
STATEMENTS OF ASSETS
AND LIABILITIES
March 31, 2000
(In Thousands Except Per Share Data)
SMALL
BALANCED EQUITY HIGH YIELD CAP USA GLOBAL
FUND FUND FUND FUND FUND
ASSETS:
Investments at cost $30,377 $24,539 $54,598 $27,174 $37,172
Investments at value $28,940 $34,237 $42,923 $34,804 $51,237
Cash - 38 17 11 25
Receivables:
Investments sold 392 315 - 197 1,645
Dividends 9 27 11 6 20
Interest 288 - 909 1 -
Fund shares sold - - 1 - 3
Total assets 29,629 34,617 43,861 35,019 52,930
LIABILITIES AND NET ASSETS:
Cash overdraft 254 - - - -
Payables:
Management fees 25 27 38 30 43
Investments purchased 106 928 48 382 803
Total liabilities 385 955 86 412 846
NET ASSETS $29,244 $33,662 $43,775 $34,607 $52,084
NET ASSETS CONSIST OF:
Capital (capital stock and
paid-in capital) $29,537 $21,306 $55,233 $23,701 $32,596
Accumulated undistributed net
investment income 339 - 315 - -
Accumulated undistributed net
realized gain (loss) from
investment transactions 805 2,658 (98) 3,276 5,423
Net unrealized appreciation
(depreciation) of investments (1,437) 9,698 (11,675) 7,630 14,065
NET ASSETS APPLICABLE TO
OUTSTANDING SHARES $29,244 $33,662 $43,775 $34,607 $52,084
Capital shares, $1.00 par value:
Authorized 10,000 10,000 10,000 10,000 10,000
Outstanding 2,966 1,537 4,289 2,250 2,083
NET ASSET VALUE PER SHARE $ 9.86 $ 21.91 $ 10.21 $ 15.38 $ 25.01
See accompanying Notes to Financial Statements.
STATEMENTS
OF OPERATIONS
Year Ended March 31, 2000
(In Thousands)
SMALL
BALANCED EQUITY HIGH YIELD CAP USA GLOBAL
FUND FUND FUND FUND FUND
ASSETS:
Investments at cost $30,377 $24,539 $54,598 $27,174 $37,172
INVESTMENT INCOME:
Dividends $ 387 $ 330 $ 786 $ 95 $ 310
Interest 2,033 9 4,571 87 47
2,420 339 5,357 182 357
EXPENSES:
Management fees 354 312 532 213 406
Registration fees 15 16 18 27 17
369 328 550 240 423
Net investment income (loss) 2,051 11 4,807 (58) (66)
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain from
investment transactions 1,173 4,375 277 3,810 11,525
Net unrealized appreciation
(depreciation) during
the year on investments 1,991 4,103 (2,570) 7,228 8,081
Net gain (loss) on
investments 3,164 8,478 (2,293) 11,038 19,606
Net increase in net assets
resulting from operations $ 5,215 $ 8,489 $ 2,514 $10,980 $19,540
See accompanying Notes to Financial Statements.
STATEMENTS OF CHANGES
IN NET ASSETS
For The Years Ended March 31, 2000 and 1999, Except As Indicated
(In Thousands)
Balanced Fund
2000 1999
OPERATIONS:
Net investment income (loss) $ 2,051 $ 2,966
Net realized gain (loss) from
investment transactions 1,173 1,382
Net unrealized appreciation (depreciation)
during the year on investments 1,991 (9,654)
Net increase (decrease) in net assets
resulting from operations 5,215 (5,306)
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (1,690) (2,953)
Net realized gain from investment transactions - (2,878)
In excess of net investment income - _
In excess of net realized gains - (368)
Total distributions to shareholders (1,690) (6,199)
CAPITAL SHARE TRANSACTIONS:*
Shares sold 2,085 6,844
Reinvested distributions 1,455 6,093
3,540 12,937
Shares repurchased (18,187) (16,500)
Net increase (decrease) from capital
share transactions (14,647) (3,563)
Net increase (decrease) in net assets (11,122) (15,068)
Net assets:
Beginning of period 40,366 55,434
End of period $ 29,244 $ 40,366
Undistributed net investment income
at end of period $ 339 $ -
*Fund share transactions:
Shares sold 225 658
Reinvested distributions 161 657
386 1,315
Shares repurchased (1,970) (1,585)
Net increase (decrease) in fund shares (1,584) (270)
See accompanying Notes to Financial Statements.
STATEMENTS OF CHANGES
IN NET ASSETS
For The Years Ended March 31, 2000 and 1999, Except As Indicated
(In Thousands)
<TABLE>
<CAPTION>
EQUITY FUND HIGH YIELD FUND
2000 1999 2000 1999
</CAPTION>
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 11 $ 89 $ 4,807 $ 4,991
Net realized gain (loss) from
investment transactions 4,375 125 277 (375)
Net unrealized appreciation
(depreciation) during the year
on investments 4,103 533 (2,570) (11,543)
Net increase (decrease) in net assets
resulting from operations 8,489 747 2,514 (6,927)
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (16) (113) (4,958) (4,064)
Net realized gain from investment
transactions (400) (730) - (381)
In excess of net investment income - - - -
In excess of net realized gains - - - -
Total distributions to shareholders (416) (843) (4,958) (4,445)
CAPITAL SHARE TRANSACTIONS:*
Shares sold 9,496 7,611 8,625 31,624
Reinvested distributions 411 832 4,306 4,307
9,907 8,443 12,931 35,931
Shares repurchased (15,905) (11,993) (24,765) (37,764)
Net increase (decrease) from
capital share transactions (5,998) (3,550) (11,834) (1,833)
Net increase (decrease) in
net assets 2,075 (3,646) (14,278) (13,205)
Net assets:
Beginning of period 31,587 35,233 58,053 71,258
End of period $33,662 $31,587 $43,775 $58,053
Undistributed net investment
income at end of period $ - $ 48 $ 315 $ 990
*Fund share transactions:
Shares sold 506 467 844 2,645
Reinvested distributions 22 51 369 379
528 518 1,213 3,024
Shares repurchased (855) (735) (2,330) (3,171)
Net increase (decrease) in
fund shares (327) (217) (1,117) (147)
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENTS OF CHANGES
IN NET ASSETS
For The Years Ended March 31, 2000 and 1999, Except As Indicated
(In Thousands)
<TABLE>
<CAPTION>
SMALL CAP FUND USA GLOBAL FUND
For The Period
From April 14, 1998
(Inception)
2000 1999 2000 1999
</CAPTION>
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 11 $ 89 $ 4,807 $ 4,991
Net investment income (loss) $ (58) $ 40 $ (66) $ 133
Net realized gain (loss) from
investment transactions 3,810 (123) 11,525 186
Net unrealized appreciation
(depreciation) during the year
on investments 7,228 402 8,081 (1,790)
Net increase (decrease) in net assets
resulting from operations 10,980 319 19,540 (1,471)
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income - (40) (32) (149)
Net realized gain from investment
transactions (376) - (1,793) (1,164)
In excess of net investment income - (6) - -
In excess of net realized gains - - - -
Total distributions to shareholders (376) (46) (1,825) (1,313)
CAPITAL SHARE TRANSACTIONS:*
Shares sold 16,457 14,026 14,147 6,422
Reinvested distributions 354 45 1,764 1,282
16,811 14,071 15,911 7,704
Shares repurchased (6,036) (1,216) (16,827) (15,110)
Net increase (decrease) from capital
share transactions 10,775 12,855 (916) (7,406)
Net increase (decrease) in
net assets 21,379 13,128 16,799 (10,190)
Net assets:
Beginning of period 13,228 100 35,285 45,475
End of period $34,607 $13,228 $52,084 $35,285
Undistributed net investment income
at end of period $ - $ - $ - $ 59
*Fund share transactions:
Shares sold 1,300 1,526 675 397
Reinvested distributions 29 5 86 81
1,329 1,531 761 478
Shares repurchased (472) (138) (847) (939)
Net increase (decrease) in
fund shares 857 1,393 (86) (461)
</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. Investment Valuation - Corporate stocks, bonds and options traded on a
national securities exchange or national market are valued 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 currently traded are valued at fair
value as determined in good faith 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, High Yield, Small Cap and USA Global Funds designate $0,
$1,600,799, $0, $0 and $4,470,133, respectively as long-term capital gain
dividends. The Buffalo High Yield Fund has an accumulated net realized loss on
sales of investments for federal income tax purposes of $98,388, which expires
in 2007.
C. Options - In order to produce incremental earnings and protect gains, the
Funds may write covered call options on portfolio securities. When a Fund writes
an option, an amount equal to the premium received 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
written covered call options as of March 31, 2000 or any transactions during the
year then ended.
D. Investment Transactions and Investment Income - Investment transactions are
accounted for on the date the securities are purchased or sold. Dividend income
is recorded on the ex- dividend date. Interest income is recognized on the
accrual basis and includes accretion of market discounts. Premiums on debt
securities are not amortized. Realized gains and losses from investment
transactions and unrealized appreciation and depreciation of investments are
reported on the identified cost basis.
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 accounting principles generally accepted in
the United States. 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
accounting principles generally accepted in the United States 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 of 1% 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 year ended March 31, 2000, (excluding
maturities of short-term commercial notes and repurchase agreements) were as
follows:
Balanced Fund
Purchases $ 11,333,036
Proceeds from sales 24,915,243
Equity Fund
Purchases $ 8,670,760
Proceeds from sales 15,314,536
High Yield Fund
Purchases $ 8,211,438
Proceeds from sales 19,029,926
Small Cap Fund
Purchases $ 16,756,206
Proceeds from sales 9,379,262
USA Global Fund
Purchases $ 14,144,237
Proceeds from sales 21,260,969
For corporate shareholders, Buffalo Balanced, Equity, High Yield, Small Cap and
USA Global Funds percent of ordinary income distributions qualifying for the
corporate dividends received deduction are 15%, 22%, 16%, 8% and 23%,
respectively.
FINANCIAL HIGHLIGHTS
Condensed data for a share of capital
stock outstanding throughout the period.
Balanced Fund
YEARS ENDED March 31,
2000 1999 1998 1997 1996
Net asset value, beginning of period $ 8.87 $11.50 $10.57 $10.70 $10.06
Income from investment operations:
Net investment income 0.57 0.66 0.65 0.72 0.65
Net gains (losses) on securities
(both realized and unrealized) 0.87 (1.86) 1.84 0.69 1.07
Total from investment operations 1.44 (1.20) 2.49 1.41 1.72
Less distributions:
Dividends from net investment
income (0.45) (0.66) (0.65) (0.71) (0.68)
Distributions from capital gains - (0.64) (0.91) (0.83) (0.40)
Distribution in excess of
capital gains - (0.13) - - -
Total distributions (0.45) (1.43) (1.56) (1.54) (1.08)
Net asset value, end of period $ 9.86 $ 8.87 $11.50 $10.57 $10.70
Total return* 16.78% (10.49%) 24.76% 13.22% 17.87%
Ratios/Supplemental Data
Net assets, end of period
(in millions) $ 29 $ 40 $ 55 $ 44 $ 50
Ratio of expenses to average
net assets** 1.05% 1.04% 1.04% 1.05% 1.11%
Ratio of net investment income to
average net assets** 5.82% 6.19% 5.61% 6.20% 6.27%
Portfolio turnover rate 33% 57% 61% 56% 61%
*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
MAY 19, 1995
(INCEPTION) TO
YEARS ENDED MARCH 31, MARCH 31,
2000 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) 5.21 0.40 4.85 2.51 2.72
Total from investment operations 5.22 0.44 4.93 2.66 2.93
Less distributions:
Dividends from net investment
income (0.01) (0.05) (0.10) (0.10) (0.20)
Distributions from capital gains (0.25) (0.38) (1.82) (0.99) (0.51)
Distribution in excess of
capital gains - - - - -
Total distributions (0.26) (0.43) (1.92) (1.09) (0.71)
Net asset value, end of period $21.91 $16.95 $16.94 $13.93 $12.36
Total return* 31.07% 2.73% 36.97% 21.23% 29.11%
Ratios/Supplemental Data
Net assets, end of period
(in millions) $ 34 $ 32 $ 35 $ 20 $ 5
Ratio of expenses to average
net assets** 1.05% 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 27% 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
MAY 19, 1995
(INCEPTION) TO
YEARS ENDED MARCH 31, MARCH 31,
2000 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 1.05 0.93 0.79 0.82 0.53
Net gains (losses) on securities
(both realized and unrealized) (0.54) (2.18) 1.35 0.71 1.14
Total from investment operations 0.51 (1.25) 2.14 1.53 1.67
Less distributions:
Dividends from net investment
income (1.04) (0.76) (0.80) (0.80) (0.53)
Distributions from capital gains - (0.08) (0.24) (0.15) (0.13)
Total distributions (1.04) (0.84) (1.04) (0.95) (0.66)
Net asset value, end of period $10.21 $10.74 $12.83 $11.73 $11.15
Total return* 4.83% (9.92%) 18.63% 14.02% 16.67%
Ratios/Supplemental Data
Net assets, end of period
(in millions) $ 44 $ 58 $ 71 $ 20 $ 7
Ratio of expenses to average
net assets** 1.04% 1.05% 1.03% 1.13% 1.03%
Ratio of net investment income to
average net assets** 9.05% 7.76% 6.43% 7.63% 7.40%
Portfolio turnover rate 16% 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.
<TABLE>
<CAPTION>
SMALL CAP FUND
FOR THE PERIOD
FROM
APRIL 14, 1998
(INCEPTION) TO
YEAR ENDED MARCH 31,
March 31, 2000 1999
</CAPTION>
<S> <C> <C>
Net asset value, beginning of period $ 9.49 $10.00
Income from investment operations:
Net investment income (0.03) 0.04
Net gains (losses) on securities
(both realized and unrealized) 6.13 (0.51)
Total from investment operations 6.10 (0.47)
Less distributions:
Dividends from net investment income - (0.04)
Distributions from capital gains (0.21) -
Total distributions (0.21) (0.04)
Net asset value, end of period $15.38 $ 9.49
Total return* 64.87% (4.69%)
Ratios/Supplemental Data
Net assets, end of period (in millions) $ 35 $ 13
Ratio of expenses to average net assets** 1.12% 1.02%
Ratio of net investment income to
average net assets** (0.27%) 0.59%
Portfolio turnover rate 42% 34%
</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>
USA GLOBAL FUND
FOR THE PERIOD
FROM
MAY 19, 1995
(INCEPTION) TO
YEARS ENDED MARCH 31, MARCH 31,
2000 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 (0.03) 0.06 0.07 0.08 0.15
Net gains (losses) on securities
(both realized and unrealized) 9.71 (0.51) 4.20 3.32 1.61
9.68 (0.45) 4.27 3.40 1.76
Total from investment operations (0.02) (0.06) (0.06) (0.05) (0.15)
Less distributions:
Dividends from net investment
income (0.92) (0.51) (1.02) (0.61) (0.39)
Distributions from capital gains (0.94) (0.57) (1.08) (0.66) (0.54)
Total distributions $25.01 $16.27 $17.29 $14.10 $11.36
Net asset value, end of period $25.01 $16.27 $17.29 $14.10 $11.36
Total return* 60.72% (2.52%) 31.33% 29.87% 17.49%
Ratios/Supplemental Data
Net assets, end of period
(in millions) $ 52 $ 35 $ 45 $ 27 $ 5
Ratio of expenses to average
net assets** 1.04% 1.05% 1.09% 1.13% 1.06%
Ratio of net investment income to
average net assets** (0.16%) 0.34% 0.47% 0.79% 1.94%
Portfolio turnover rate 35% 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.
REPORT OF INDEPENDENT
AUDITORS
The Board of Directors and Shareholders of
Buffalo Balanced Fund, Inc.
Buffalo Equity Fund, Inc.
Buffalo High Yield Fund, Inc.
Buffalo Small Cap Fund, Inc.
Buffalo USA Global Fund, Inc.:
We have audited the accompanying statements of assets and liabilities, including
the schedule of investments, of Buffalo Balanced Fund, Inc., Buffalo Equity
Fund, Inc., Buffalo High Yield Fund, Inc., Buffalo Small Cap Fund, Inc. and
Buffalo USA Global Fund, Inc. (the Funds) as of March 31, 2000, and the related
statements of operations for the year then ended and the statements of changes
in net assets and financial highlights for each of the periods indicated
therein. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of investments owned as of March 31, 2000, by correspondence with
the custodian and brokers. As to certain securities relating to uncompleted
transactions, we performed other auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of each of the Funds referred to above at March 31, 2000, and the
results of their operations for the year then ended, and changes in their net
assets and financial highlights for each of the periods indicated therein, in
conformity with auditing principles generally accepted in the United States.
/s/Ernst & Young, LLP
Kansas City, Missouri
April 28, 2000
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 from Jones & Babson, Inc.
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, MO 64141-6757
1-800-49-BUFFALO
(1-800-492-8332)
www.buffalofunds.com
