SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. 1 [X]
Post-Effective Amendment No. File No. 33-87146 [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 1 File No. 811-8896 [X]
---
BUFFALO USA GLOBAL FUND, INC.
(Exact Name of Registrant as Specified in Charter)
2440 Pershing Road, G-15, Kansas City, MO 64108
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code (816) 471-5200
Larry D. Armel, President, BUFFALO USA GLOBAL FUND, INC.
2440 Pershing Road, G-15, Kansas City, Missouri 64108
(Name and Address of Agent for Service)
The Registrant has previously made an election pursuant to Rule 24f-2 to
register an indefinite number of its shares, and a filing fee of $500.00 was
paid with such election.
Please address inquiries and a carbon copy of all
and communications to: communications to:
John G. Dyer, Esq. Mark H. Plafker, Esq.
Buffalo USA Global Stradley, Ronon, Stevens & Young
Fund, Inc. 2600 One Commerce Square
2440 Pershing Road, G-15 Philadelphia, PA 19103-7098
Kansas City, MO 64108 Telephone: (215) 564-8024
Telephone: (816) 471-5200
Page 1 of pages
Exhibit Index Page
<PAGE>
BUFFALO USA GLOBAL FUND, INC.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Form N-1A Item Number Location in Prospectus
<S> <C>
Item 1. Cover Page ................................................................Cover Page
Item 2. Synopsis ..................................................................Not Applicable
Item 3. Condensed Financial Information ...........................................Per Share Capital and Income Changes
Item 4. General Description of Registrant .........................................Investment Objective and Portfolio
Management Policy
Item 5. Management of the Fund ....................................................Officers and Directors; Management and
Investment Counsel
Item 6. Capital Stock and Other Securities ........................................How to Purchase Shares; How to Redeem
Shares; How Share Price is Determined;
General Information and History;
Dividends, Distributions and their
Taxation
Item 7. Purchase of Securities
being Offered .............................................................Coverage Page; How to Purchase Shares;
Shareholder Services
Item 8. Redemption or Repurchase ..................................................How to Redeem Shares
Item 9. Pending Legal Proceedings .................................................Not Applicable
</TABLE>
<PAGE>
BUFFALO USA GLOBAL FUND, INC.
CROSS REFERENCE SHEET (Continued)
<TABLE>
<CAPTION>
Form N-1A Item Number Location in Statement
of Additional
Information
<S> <C>
Item 10. Cover Page ...............................................................Cover Page
Item 11. Table of Contents ........................................................Cover Page
Item 12. General Information and History ..........................................Investment Objectives and Policies;
Management and Investment Counsel
Item 13. Investment Objectives and Policies .......................................Investment Objectives and Policies;
Investment Restrictions
Item 14. Management of the Fund ...................................................Management and Investment Counsel
Item 15. Control Persons and Principal
Holders of Securities ....................................................Management and Investment Counsel;
Officers and Directors
Item 16. Investment Advisory and other
Services .................................................................Management and Investment Counsel
Item 17. Brokerage Allocation .....................................................Portfolio Transactions
Item 18. Capital Stock and Other Securities .......................................General Information and History
(Prospectus); Financial Statements
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered ..............................................How Share Purchases are Handled;
Redemption of Shares Financial Statements
Item 20. Tax Status ...............................................................Dividends, Distributions and their
taxation (Prospectus)
Item 21. Underwriters .............................................................How the Fund's Shares are Distributed
Item 22. Calculation of Yield Quotations
of Money Market Fund .....................................................Not Applicable
Item 23. Financial Statements .....................................................(To be supplied by further Amendment)
</TABLE>
<PAGE>
PROSPECTUS
(DATE)
BUFFALO
USA GLOBAL FUND, INC.
Managed and Distributed By:
JONES & BABSON, INC.
Three Crown Center
2440 Pershing Road, Suite G-15
Kansas City, Missouri 64108
Toll-Free 1-800-4-BABSON
(1-800-422-2766)
In the Kansas City area
471-5200
Investment Counsel:
KORNITZER CAPITAL MANAGEMENT, INC.
Shawnee Mission, Kansas
INVESTMENT OBJECTIVE
The Buffalo USA Global Fund seeks capital growth. Capital growth is intended to
be achieved primarily by the fund's investment in common stocks of companies
based in the United States that receive greater than fifty percent of their
revenues or pre-tax income from international operations, measured as of the
preceding four completed quarters of business or the companies' most recently
completed fiscal year. At least 65 percent of the value of the Fund's total
assets must be invested in common stocks of companies with international
operations (as described above) in at least three different countries. The Fund
will invest in common stocks considered by the manager to have above average
potential for appreciation; income is a secondary consideration. The Fund will
invest primarily in common stocks listed on the New York Stock Exchange.
PURCHASE INFORMATION
Minimum Investment
Initial Purchase $ 2,500
Initial IRA and Uniform Transfers (Gifts)
to Minors Purchases $ 250
Subsequent Purchase:
By Mail $ 100
By Telephone or Wire $ 1,000
All Automatic Purchases $ 100
Shares are purchased and redeemed at net asset value. There are no sales,
redemption or Rule 12b-1 distribution charges. If you need further information,
please call the Fund at the telephone numbers indicated.
ADDITIONAL INFORMATION
This prospectus should be read and retained for future reference. It contains
the information that you should know before you invest. A "Statement of
Additional Information" of the same date as this prospectus has been filed with
the Securities and Exchange Commission and is incorporated by reference.
Investors desiring additional information about the Fund may obtain a copy
without charge by writing or calling the Fund.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
TABLE OF CONTENTS
Page
Fund Expenses
Investment Objective and Portfolio Management Policy
Repurchase Agreements
Risk Factors
Investment Restrictions
Performance Measures
How to Purchase Shares
Initial Investments
Investments Subsequent to Initial Investment
Telephone Investment Service
Automatic Monthly Investment Plan
How to Redeem Shares
Systematic Redemption Plan
How to Exchange Shares Between Babson Funds
How Share Price is Determined
Officers and Directors
Management and Investment Counsel
General Information and History
Dividends, Distributions and Their Taxation
Shareholder Services
Shareholder Inquiries
Fixed Income Securities Described and Ratings
BUFFALO USA GLOBAL FUND, INC.
FUND EXPENSES
Shareholder Transaction Expenses
Maximum sales load imposed on purchases None
Maximum sales load imposed on reinvested dividends
None
Deferred sales load None
Redemption fee None
Exchange fee None
Annual Fund Operation Expenses
(as a percentage of average net assets)
Management fees 1.00%
12b-l fees None
Other expenses .08%
Total Fund operating expenses 1.08%
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
1 Year 3 Year
$11 $34
The above information is provided in order to assist you in understanding the
various costs and expenses that a shareholder of the Fund will bear directly or
indirectly. The expenses set forth above are an estimate only. "Other Expenses"
is based on estimated amounts for the current fiscal year. The example should
not be considered a representation of past or future expenses. Actual expenses
may be greater or less than those shown.
INVESTMENT OBJECTIVE AND
PORTFOLIO MANAGEMENT POLICY
The Buffalo USA Global Fund seeks capital growth. Capital growth is intended to
be achieved primarily by the Fund's investment in common stocks of companies
based in the United States that receive greater than fifty percent of their
revenues or pre-tax income from international operations, measured as of the
preceding four completed quarters of business or the respective company's most
recently completed fiscal year. At least 65 percent of the value of the Fund's
total assets must be invested in common stocks of companies with international
operations (as described above) in at least three different countries. The Fund
will invest in common stocks considered by the Manager to have above average
potential for appreciation; income is a secondary consideration. Under normal
circumstances, the Fund will invest in a majority of its assets in common stocks
listed on the New York Stock Exchange. The Fund is a no-load, open-end,
diversified management investment company commonly referred to as a "mutual
fund."
The Fund's manager believes that the investment policies of the Fund reduce or
eliminate several risks associated with direct investment in foreign securities.
Trading costs are usually higher in foreign countries because commission rates
are generally fixed rather than negotiated as in the U.S. Liquidity risk is
lowered because trading volumes are generally higher on U.S. exchanges. Many
foreign stock exchanges require extended clearance and settlement periods, which
can impair a manager from implementing specific investment policies. Finally,
there is generally less enforcement of security laws and supervision of
developing country stock exchanges.
When, in the manager's judgment, market conditions warrant substantial temporary
defensive investments in high-quality money market securities, the Fund may do
so.
The Fund is authorized to write (i.e. sell) covered call options on the
securities in which it may invest and to enter into closing purchase
transactions with respect to certain of such options. A covered call option is
an option where the Fund in return for a premium gives another party a right to
buy specified securities owned by the Fund at a specified future date and price
set at the time of the contract. (See "Risk Factors Applicable to Covered Call
Options".)
Covered call options serve as a partial hedge against the price of the
underlying security declining.
Investments in money market securities shall include government securities,
commercial paper, bank certificates of deposit and repurchase agreements
collateralized by government securities. Investment in commercial paper is
restricted to companies in the top two rating categories by Moody's and Standard
& Poor's. The Fund may also invest in issues of the United States Treasury or a
United States government agency subject to repurchase agreements. The use of
repurchase agreements by the Fund involves certain risks. For a discussion of
these risks, see "Risk Factors Applicable to Repurchase Agreements."
There is no assurance that the Fund's objective of capital growth can be
achieved. Portfolio turnover will be no more than is necessary to meet the
Fund's objective. Under normal circumstances, it is anticipated that portfolio
turnover for the Fund will not exceed 100% on an annual basis.
REPURCHASE AGREEMENTS
A repurchase agreement involves the sale of securities to the Fund with the
concurrent agreement by the seller to repurchase the securities at the Fund's
cost plus interest at an agreed rate upon demand or within a specified time,
thereby determining the yield during the purchaser's period of ownership. The
result is a fixed rate of return insulated from market fluctuations during such
period. Under the Investment Company Act of 1940, repurchase agreements are
considered loans by the Fund. The Fund will enter into such repurchase
agreements only with United States banks having assets in excess of $1 billion
which are members of the Federal Deposit Insurance Corporation, and with certain
securities dealers who meet the qualifications set from time to time by the
Board of Directors of the Fund. The term to maturity of a repurchase agreement
normally will be no longer than a few days. Repurchase agreements, maturing in
more than seven days and other illiquid securities will not exceed 10% of the
total assets of the Fund.
During the initial month of operations, it is anticipated that the Fund may be
invested up to 100% in repurchase agreement, however under normal circumstances,
the Fund may invest up to 25% of its assets in repurchase agreements. See "Risk
Factors Applicable to Repurchase Agreements."
RISK FACTORS
Risk Factors Applicable to Covered Call Options
Up to 25% of the Fund's total assets may be subject to covered call options. By
writing covered call options, the Fund gives up the opportunity, while the
option is in effect, to profit from any price increase in the underlying
security above the option exercise price. In addition, the Fund's ability to
sell the underlying security will be limited while the option is in effect
unless the Fund effects a closing purchase transaction. A closing purchase
transaction cancels out the Fund's position as the writer of an option by means
of an offsetting purchase of an identical option prior to the expiration of the
option it has written.
Upon the termination of the Fund's obligation under a covered call option other
than through exercise of the option, the Fund will realize a short-term capital
gain or loss. Any gain realized by the Fund from the exercise of an option will
be short- or long-term depending on the period for which the stock was held. The
writing of covered call options creates a straddle that is potentially subject
to the straddle rules, which may override some of the foregoing rules and result
in a deferral of some losses for tax purposes.
Risk Factors Applicable To Repurchase Agreements
The use of repurchase agreements involves certain risks. For example, if the
seller of the agreement defaults on its obligation to repurchase the underlying
securities at a time when the value of these securities has declined, the Fund
may incur a loss upon disposition of them. If the seller of the agreement
becomes insolvent and subject to liquidation or reorganization under the
Bankruptcy Code or other laws, disposition of the underlying securities may be
delayed pending court proceedings. Finally, it is possible that the Fund may not
be able to perfect its interest in the underlying securities. While the Fund's
management acknowledges these risks, it is expected that they can be controlled
through stringent security selection criteria and careful monitoring procedures.
Risk Factors Applicable to Global Operations
The risks to which the U.S. companies in which the Fund plans to invest are
exposed and, consequently, the concurrent risks experienced by the Fund as a
result of investing in such companies include: the risk of fluctuations in the
value of foreign currencies; adverse political and economic developments; and
the possibility of expropriation, nationalization or confiscatory taxation or
limitations on the removal of funds or other assets. The performance of foreign
currencies relative to the U.S. dollar and the relative strength of the U.S.
dollar may be an important factor in the performance of the Fund.
Risk Factors Applicable to Common Stocks
The Fund is subject to market risk and fund risk. Market risk is the possibility
that stock prices in general will decline over short or even extended periods of
time. Stock markets tend to be cyclical, with periods when stock prices
generally rise and periods when stock prices generally decline. Fund risk is the
possibility that a Fund's performance during a specific period may not meet or
exceed that of the stock market as a whole.
INVESTMENT RESTRICTIONS
In addition to the investment objective and portfolio management policies set
forth under the caption "Investment Objective and Portfolio Management Policy,"
the Fund is subject to certain other restrictions which may not be changed
without approval of the lesser of: (1) at least 67% of the voting securities
present at a meeting if the holders of more than 50% of the outstanding
securities of the Fund are present or represented by proxy, or (2) more than 50%
of the outstanding voting securities of the Fund. Among these restrictions, the
more important ones are that the Fund will not purchase the securities of any
issuer if more than 5% of the Fund's total assets would be invested in the
securities of such issuer, or the Fund would hold more than 10% of any class of
securities of such issuer; the Fund will not make any loan (the purchase of a
security subject to a repurchase agreement or the purchase of a portion of an
issue of publicly distributed debt securities is not considered the making of a
loan); and the Fund will not borrow or pledge its credit under normal
circumstances, except up to 10% of its total assets (computed at the lower of
fair market value or cost) temporarily for emergency or extraordinary purposes,
and not for the purpose of leveraging its investments; and provided further that
any borrowings shall have asset coverage of at least 3 to 1. The Fund will not
buy securities while borrowings are outstanding. The full text of these
restrictions are set forth in the "Statement of Additional Information."
PERFORMANCE MEASURES
From time to time, the Fund may advertise its performance in various ways, as
summarized below. Further discussion of these matters also appears in the
"Statement of Additional Information." A discussion of Fund performance will be
included in the Fund's Annual Report to Shareholders which is available from the
Fund upon request at no charge.
Total Return
The Fund may advertise "average annual total return" over various periods of
time. Such total return figures show the average percentage change in value of
an investment in the Fund from the beginning date of the measuring period to the
end of the measuring period. These figures reflect changes in the price of the
Fund's shares and assume that any income dividends and/or capital gains
distributions made by the Fund during the period were reinvested in shares of
the Fund. Figures will be given for recent one-, five- and ten-year periods (if
applicable), and may be given for other periods as well (such as from
commencement of the Fund's operations, or on a year-by-year basis). When
considering "average" total return figures for periods longer than one year, it
is important to note that a Fund's annual total return for any one year in the
period might have been greater or less than the average for the entire period.
Performance Comparisons
In advertisements or in reports to shareholders, the Fund may compare its
performance to that of other mutual funds with similar investment objectives and
to stock or other relevant indices. For example, it may compare its performance
to rankings prepared by Lipper Analytical Services, Inc. (Lipper), a widely
recognized independent service which monitors the performance of mutual funds.
The Fund may compare its performance to the Standard & Poor's 500 Stock Index
(S&P 500), an index of unmanaged groups of common stocks, the Dow Jones
Industrial Average, a recognized unmanaged index of common stocks of 30
industrial companies listed on the NYSE, or the Consumer Price Index.
Performance information, rankings, ratings, published editorial comments and
listings as reported in national financial publications such as Kiplinger's
Personal Finance Magazine, Business Week, Morningstar, Investor's Business
Daily, Institutional Investor, The Wall Street Journal, Mutual Fund Forecaster,
No Load Investor, Money, Forbes, Fortune and Barron's may also be used in
comparing performance of the Fund. Performance comparisons should not be
considered as representative of the future performance of any Fund. Further
information regarding the performance of the Fund is contained in the "Statement
of Additional Information."
Performance rankings, recommendations, published editorial comments and listings
reported in Money, Barron's, Kiplinger's Personal Finance Magazine, Financial
World, Forbes, U.S. News & World Report, Business Week, The Wall Street Journal,
Investors Business Daily, USA Today, Fortune and Stranger's, may also be cited
(if the Fund is listed in any such publication) or used for comparison, as well
as performance listings and rankings from Morningstar Mutual Funds, Personal
Finance, Income and Safety, The Mutual Fund Letter, No-Load Fund Investor,
United Mutual Fund Selector, No-Load Fund Analyst, No Load Fund X, Louis
Rukeyeser's Wall Street Newsletter, Donoghue's Money Letter, CDA Investment
Technologies, Inc., Wiesenberger Investment Company Service and Donoghue's
Mutual Fund Almanac.
HOW TO PURCHASE SHARES
Shares are purchased at net asset value (no sales charge) from the Fund through
its agent, Jones & Babson, Inc., Three Crown Center, 2440 Pershing Road, Suite
G-15, Kansas City, MO 64108. For information call toll free 1-800-4-BABSON
(1-800-422-2766), or in the Kansas City area 471-5200. If an investor wishes to
engage the services of any other broker to purchase (or redeem) shares of the
Fund, a fee may be charged by such broker. The Fund will not be responsible for
the consequences of delays including delays in the banking or Federal Reserve
wire systems. You do not pay a sales commission when you buy shares of the Fund.
Shares are purchased at the Fund's net asset value (price) per share next
effective after a purchase order and payment have been received by the Fund. In
the case of certain institutions which have made satisfactory payment
arrangements with the Fund, orders may be processed at the net asset value per
share next effective after a purchase order has been received by the Fund. The
Fund reserves the right in its sole discretion to withdraw all or any part of
the offering made by this prospectus or to reject purchase orders when, in the
judgment of management, such withdrawal or rejection is in the best interest of
the Fund and its shareholders. The Fund also reserves the right at any time to
waive or increase the minimum requirements applicable to initial or subsequent
investments with respect to any person or class of persons, which include
shareholders of the Fund's special investment programs. The Fund reserves the
right to refuse to accept orders for Fund shares unless accompanied by payment,
except when a responsible person has indemnified the Fund against losses
resulting from the failure of investors to make payment. In the event that the
Fund sustains a loss as the result of failure by a purchaser to make payment,
the Fund's underwriter, Jones & Babson, Inc. will cover the loss.
INITIAL INVESTMENTS
Initial investments By mail.
You may open an account and make an investment by completing and signing the
application which accompanies this prospectus. Make your check ($2,500 minimum
unless your purchase is pursuant to an IRA or the Uniform Transfers (Gifts) to
Minors Act in which case the minimum initial purchase is $250) payable to United
Missouri Bank, n.a. Mail your application and check to:
Buffalo USA Global Fund, Inc.
Three Crown Center
2440 Pershing Road, Suite G-15
Kansas City, Missouri 64108
Initial investments By wire.
You may purchase shares of the Fund by-wiring funds ($2,500 minimum) through the
Federal Reserve Bank to the custodian, United Missouri Bank, n.a. Prior to
sending your money, you must call the Fund toll free 1-800-4-BABSON
(1-800-422-2766), or in the Kansas City area 471-5200, and provide it with the
identity of the registered account owner, the registered address, the Social
Security or Taxpayer Identification Number of the registered owner, the amount
being wired, the name and telephone number of the wiring bank and the person to
be contacted in connection with the order. You will then be provided a Fund
account number, after which you should instruct your bank to wire the specified
amount, along with the account number and the account registration to:
United Missouri Bank, n.a.
Kansas City, Missouri, ABA f101000695
For Buffalo USA Global Fund, Inc./
AC=
OBI=(assigned Fund number and name in which registered.)
A completed application must be sent to the Fund as soon as possible so the
necessary remaining information can be recorded in your account. No redemptions
can occur until this is done.
INVESTMENTS SUBSEQUENT TO
INITIAL INVESTMENT
You may add to your Fund account at any time in amounts of $100 or more if
purchases are made by mail, or $1,000 or more if purchases are made by wire or
telephone. Automatic monthly investments must be in amounts of $100 or more.
Checks should be mailed to the Fund at its address, but make them payable to
United Missouri Bank, n.a. Always identify your account number or include the
detachable reminder stub which accompanies each confirmation.
Wire share purchases should include your account registration, your account
number and the Babson Fund in which you are purchasing shares. It also is
advisable to notify the Fund by telephone that you have sent a wire purchase
order to the bank.
TELEPHONE INVESTMENT SERVICE
To use the Telephone Investment Service, you must first establish your Fund
account and authorize telephone orders in the application form, or,
subsequently, on a special authorization form provided upon request. If you
elect the Telephone Investment Service, you may purchase Fund shares by
telephone and authorize the Fund to draft your checking account for the cost of
the shares so purchased. You will receive the next available price after the
Fund has received your telephone call. Availability and continuance of this
privilege is subject to acceptance and approval by the Fund and all
participating banks. During periods of increased market activity, you may have
difficulty reaching the Fund by telephone, in which case you should contact the
Fund by mail or telegraph. The Fund will not be responsible for the consequences
of delays including delays in the banking or Federal Reserve wire systems.
The Fund will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine, and if such procedures are not followed,
the Fund may be liable for losses due to unauthorized or fraudulent
instructions. Such procedures may include, but are not limited to, requiring
personal identification prior to acting upon instructions received by telephone,
providing written confirmations of such transactions, and/or tape recording of
telephone instructions.
The Fund reserves the right to initiate a charge for this service and to
terminate or modify any or all of the privileges in connection with this service
at any time upon 15 days written notice to shareholders, and to terminate or
modify the privileges without prior notice in any circumstances where such
termination or modification is in the best interest of the Fund and its
investors.
AUTOMATIC MONTHLY
INVESTMENT PLAN
You may elect to make monthly investments in a constant dollar amount from your
checking account ($100 minimum). The Fund will draft your checking account on
the same day each month in the amount you authorize in your application, or,
subsequently, on a special authorization form provided upon request.
Availability and continuance of this privilege is subject to acceptance and
approval by the Fund and all participating banks. If the date selected falls on
a day upon which the Fund shares are not priced, investment will be made on the
first date thereafter upon which Fund shares are priced. The Fund will not be
responsible for the consequences of delays including delays in the banking or
Federal Reserve wire systems.
The Fund reserves the right to initiate a charge for this service and to
terminate or modify any or all of the privileges in connection with this service
at any time upon 15 days written notice to shareholders, and to terminate or
modify the privileges without prior notice in any circumstances where such
termination or modification is in the best interest of the Fund and its
investors.
HOW TO REDEEM SHARES
The Fund will redeem shares at the price (net asset value per share) next
computed after receipt of a redemption request in "good order." (See "How Share
Price is Determined," page __.) A written request for redemption, together with
an endorsed share certificate where a certificate has been issued, must be
received by the Fund in order to constitute a valid tender for redemption. For
authorization of redemptions by a corporation, it will also be necessary to have
an appropriate certified copy of resolutions on file with the Fund before a
redemption request will be considered in "good order." In the case of certain
institutions which have made satisfactory redemption arrangements with the Fund,
redemption orders may be processed by facsimile or telephone transmission at net
asset value per share next effective after receipt by the Fund. If an investor
wishes to engage the services of any other broker to redeem (or purchase) shares
of the Fund, a fee may be charged by such broker.
To be in "good order" the request must include the following:
(1) A written redemption request or stock assignment (stock power)
containing the genuine signature of each registered owner exactly as the shares
are registered, with clear identification of the account by registered name(s)
and account number and the number of shares or the dollar amount to be redeemed;
(2) any outstanding stock certificates representing shares to be redeemed;
(3) signature guarantees as required; and (See Signature Guarantees page
__.)
(4) any additional documentation which the Fund may deem necessary to
insure a genuine redemption.
Where additional documentation is normally required to support redemptions as in
the case of corporations, fiduciaries, and others who hold shares in a
representative or nominee capacity such as certified copies of corporate
resolutions, or certificates of incumbency, or such other documentation as may
be required under the Uniform Commercial Code or other applicable laws or
regulations, it is the responsibility of the shareholder to maintain such
documentation on file and in a current status. A failure to do so will delay the
redemption. If you have questions concerning redemption requirements, please
write or telephone the Fund well ahead of an anticipated redemption in order to
avoid any possible delay.
Requests which are subject to special conditions or which specify an effective
date other than as provided herein cannot be accepted. All redemption requests
must be transmitted to the Fund at Three Crown Center, 2440 Pershing Road, Suite
G-15, Kansas City, Missouri 64108. The Fund will redeem shares at the price (net
asset value per share) next computed after receipt of a redemption request in
"good order." (See "How Share Price is Determined," page __.)
The Fund will endeavor to transmit redemption proceeds to the proper party, as
instructed, as soon as practicable after a redemption request has been received
in "good order" and accepted, but in no event later than the seventh day
thereafter. Transmissions are made by mail unless an expedited method has been
authorized and specified in the redemption request. The Fund will not be
responsible for the consequences of delays including delays in the banking or
Federal Reserve wire systems. Redemptions will not become effective until all
documents in the form required have been received. In the case of redemption
requests made within 15 days of the date of purchase, the Fund will delay
transmission of proceeds until such time as it is certain that unconditional
payment in federal funds has been collected for the purchase of shares being
redeemed or 15 days from the date of purchase. You can avoid the possibility of
delay by paying for all of your purchases with a transfer of federal funds.
Signature Guarantees are required in connection with all redemptions by mail, or
changes in share registration, except as hereinafter provided. These
requirements may be waived by the Fund in certain instances where it appears
reasonable to do so and will not unduly affect the interests of other
shareholders. Signature(s) must be guaranteed by an "eligible guarantor
institution" as defined under Rule l7Ad-15 under the Securities Exchange Act of
1934. Eligible guarantor institutions include: (1) national or state banks,
savings associations, savings and loan associations, trust companies, savings
banks, industrial loan companies and credit unions; (2) national securities
exchanges, registered securities associations and clearing agencies; or (3)
securities broker/dealers which are members of a national securities exchange or
clearing agency or which have a minimum net capital of $100,000. A notarized
signature will not be sufficient for the request to be in proper form.
Signature guarantees will be waived for mail redemptions of $10,000 or less, but
they will be required if the checks are to be payable to someone other than the
registered owner(s), or are to be mailed to an address different from the
registered address of the shareholder(s), or where there appears to be a pattern
of redemptions designed to circumvent the signature guarantee requirement, or
where the Fund has other reason to believe that this requirement would be in the
best interests of the Fund and its shareholders.
The right of redemption may be suspended or the date of payment postponed beyond
the normal seven-day period when the New York Stock Exchange is closed or under
emergency circumstances as determined by the Securities and Exchange Commission.
Further, the Fund reserves the right to redeem its shares in kind under certain
circumstances. If shares are redeemed in kind, the shareholder may incur
brokerage costs when converting into cash. Redemptions in-kind will be in the
form of readily marketable securities. Additional details are set forth in the
"Statement of Additional Information."
Due to the high cost of maintaining smaller accounts, the Board of Directors has
authorized the Fund to close shareholder accounts where their value falls below
the current minimum initial investment requirement at the time of initial
purchase as a result of redemptions and not as the result of market action, and
remains below this level for 60 days after each such shareholder account is
mailed a notice of: (1) the Fund's intention to close the account, (2) the
minimum account size requirement, and (3) the date on which the account will be
closed if the minimum size requirement is not met.
SYSTEMATIC REDEMPTION PLAN
If you own shares in an open account valued at $10,000 or more, and desire to
make regular monthly or quarterly withdrawals without the necessity and
inconvenience of executing a separate redemption request to initiate each
withdrawal, you may enter into a Systematic Withdrawal Plan by completing forms
obtainable from the Fund. For this service, the manager may charge you a fee not
to exceed $1.50 for each withdrawal. Currently the manager assumes the
additional expenses arising out of this type of plan, but it reserves the right
to initiate such a charge at any time in the future when it deems it necessary.
If such a charge is imposed, participants will be provided 30 days notice.
Subject to a $50 minimum, you may withdraw each period a specified dollar
amount. Shares also may be redeemed at a rate calculated to exhaust the account
at the end of a specified period of time.
Dividends and capital gains distributions must be reinvested in additional
shares. Under all withdrawal programs, liquidation of shares in excess of
dividends and distributions reinvested will diminish and may exhaust your
account, particularly during a period of declining share values.
You may revoke or change your plan or redeem all of your remaining shares at any
time. Withdrawal payments will be continued until the shares are exhausted or
until the Fund or you terminate the plan by written notice to the other.
HOW TO EXCHANGE SHARES
WITH BABSON FUNDS
Shareholders may exchange their Fund shares, which have been held in open
account for 30 days or more, and for which good payment has been received, for
identically registered shares of any Fund in the Babson Fund Group which is
legally registered for sale in the state of residence of the investor, except
Babson Enterprise Fund, Inc., provided that the minimum amount exchanged has a
value of $1,000 or more and meets the minimum investment requirement of the Fund
or Portfolio into which it is exchanged. Effective at the close of business on
January 31, 1992, the Directors of Babson Enterprise Fund, Inc. took action to
limit the offering of that Fund's shares. Babson Enterprise Fund, Inc. will not
accept any new accounts, including IRAs and other retirement plans, until
further notice, nor will Babson Enterprise Fund, Inc. accept transfers from
shareholders of other Babson Funds who were not shareholders of record of Babson
Enterprise Fund, Inc. at the close of business on January 31, 1992. Investors
may want to consider purchasing shares in Babson Enterprise Fund II, Inc. as an
alternative.
To authorize the Telephone/Telegraph Exchange Privilege, all registered owners
must sign the appropriate section on the original application, or the Fund must
receive a special authorization form, provided upon request. During periods of
increased market activity, you may have difficulty reaching the Fund by
telephone, in which case you should contact the Fund by mail or telegraph. The
Fund reserves the right to initiate a charge for this service and to terminate
or modify any or all of the privileges in connection with this service at any
time and without prior notice under any circumstances, where continuance of
these privileges would be detrimental to the Fund or its shareholders, such as
an emergency, or where the volume of such activity threatens the ability of the
Fund to conduct business, or under any other circumstances, upon 60 days written
notice to shareholders. The Fund will not be responsible for the consequences of
delays including delays in the banking or Federal Reserve wire systems.
The Fund will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine, and if such procedures are not followed,
the Fund may be liable for losses due to unauthorized or fraudulent
instructions. Such procedures may include, but are not limited to requiring
personal identification prior to acting upon instructions received by telephone,
providing written confirmations of such transactions, and/or tape recording of
telephone instructions.
Exchanges by mail may be accomplished by a written request properly signed by
all registered owners identifying the account, the number of shares or dollar
amount to be redeemed for exchange, and the Babson Fund into which the account
is being transferred.
If you wish to exchange part or all of your shares in the Fund for shares of a
Fund or Portfolio in the Babson Fund Group, you should review the prospectus of
the Fund to be purchased, which can be obtained from Jones & Babson, Inc. Any
such exchange will be based on the respective net asset values of the shares
involved. Any exchange between Funds involves the sale of an asset. Unless the
shareholder account is tax-deferred, this is a taxable event.
HOW SHARE PRICE IS DETERMINED
In order to determine the price at which new shares will be sold and at which
issued shares presented for redemption will be liquidated, the net asset value
per share is computed once daily, Monday through Friday, at the specific time
during the day that the Board of Directors sets at least annually, except on
days on which changes in the value of portfolio securities will not materially
affect the net asset value, or days during which no security is tendered for
redemption and no order to purchase or sell such security is received by the
Fund, or customary holidays. For a list of the holidays during which the Fund is
not open for business, see "How Share Price is Determined" in the "Statement of
Additional Information."
The price at which new shares of the Fund will be sold and at which issued
shares presented for redemption will be liquidated is computed once daily at
4:00 P.M. (Eastern Time), except on those days when the Fund is not open for
business.
The per share calculation is made by subtracting from the Fund's total assets
any liabilities and then dividing into this amount the total outstanding shares
as of the date of the calculation. Each security listed on an exchange is valued
at its last sale price on that exchange on the date as of which assets are
valued. Where the security is listed on more than one exchange, the Fund will
use the price of that exchange which it generally considers to be the principal
Exchange on which the security is traded. Lacking sales, the security is valued
at the mean between the current closing bid and asked prices. An unlisted
security for which over-the-counter market quotations are readily available is
valued at the mean between the last current bid and asked prices. When market
quotations are not readily available, any security or other asset is valued at
its fair value as determined in good faith by the Board of Directors.
OFFICERS AND DIRECTORS
The officers of the Fund manage its day-to-day operations. The Fund's manager
and its officers are subject to the supervision and control of the Board of
Directors. A list of the officers and directors of the Fund and a brief
statement of their present positions and principal occupations during the past
five years is set forth in the "Statement of Additional Information."
MANAGEMENT AND
INVESTMENT COUNSEL
Jones & Babson, Inc. was founded in 1960. It organized the Fund in 1994, and
acts as its manager and principal underwriter. Pursuant to the current
Management Agreement, Jones & Babson, Inc. provides or pays the cost of all
management, supervisory and administrative services required in the normal
operation of the Fund. This includes investment management and supervision; fees
of the custodian, independent auditors and legal counsel; remuneration of
officers, directors and other personnel; rent; shareholder services, including
the maintenance of the shareholder accounting system and transfer agency; and
such other items as are incidental to corporate administration.
Not considered normal operating expenses, and therefore payable by the Fund, are
taxes, interest, governmental charges and fees, including registration of the
Fund and its shares with the Securities and Exchange Commission and the
Securities Departments of the various States, brokerage costs, dues, and all
extraordinary costs and expenses including but not limited to legal and
accounting fees incurred in anticipation of or arising out of litigation or
administrative proceedings to which the Fund, its officers or directors may be
subject or a party thereto.
As a part of the Management Agreement, Jones & Babson, Inc. employs at its own
expense Kornitzer Capital Management, Inc. as its investment counsel to assist
in the investment advisory function. Kornitzer Capital Management, Inc. is an
independent investment counseling firm founded in 1989. It serves a broad
variety of individual, corporate and other institutional clients by maintaining
an extensive research and analytical staff. It has an experienced investment
analysis and research staff which eliminates the need for Jones & Babson, Inc.
and the Fund to maintain an extensive duplicate staff, with the consequent
increase in the cost of investment advisory service. The cost of the services of
Kornitzer Capital Management, Inc. is included in the fee of Jones & Babson,
Inc. The Management Agreement limits the liability of the manager and its
investment counsel, as well as their officers, directors and personnel, to acts
or omissions involving willful malfeasance, bad faith, gross negligence, or
reckless disregard of their duties. The organizational arrangements of the
investment counsel require that all investment decisions be made by committee,
and no person is primarily responsible for making recommendations to that
committee.
As compensation for all the foregoing services, the Fund pays Jones & Babson,
Inc. a fee at the annual rate of one percent (1%) of average daily net assets
from which Jones & Babson, Inc. pays Kornitzer Capital Management, Inc. a fee of
50/100 (.50%) of average daily net assets. The fees are computed daily and paid
semimonthly.
The annual fee charged by Jones & Babson, Inc. is higher than the fees of most
other investment advisers whose charges cover only investment advisory services
with all remaining operational expenses absorbed directly by the Fund, however,
it is anticipated that the total expenses of the Fund will compare favorably
with those of other mutual funds whose advisors' fees cover only investment
advisory services with all remaining operational expenses absorbed by the Funds.
Certain officers and directors of the Fund are also officers or directors or
both of other Babson Funds, Jones & Babson, Inc. or Kornitzer Capital
Management, Inc.
On September 30, 1993, Jones & Babson, Inc. became a wholly-owned subsidiary of
Business Men's Assurance Company of America, a major provider of life and health
insurance headquartered in Kansas City, Missouri. Business Men's Assurance
Company is considered to be a controlling person under the Investment Company
Act of 1940. It is a wholly-owned subsidiary of Assicurazioni Generali S.p.A.,
an insurance organization founded in 1831 based in Trieste, Italy. Mediobanca is
a 5% owner of Generali. Kornitzer Capital Management, Inc. is a closely held
corporation and has limitations in the ownership of its stock designed to
maintain control in those who are active in management. Owners of 5% or more of
Kornitzer Capital Management, Inc. are John C. Kornitzer, Kent W.
Gasaway, Willard R. Lynch, Thomas W. Laming and Susan Stack.
The current Management Agreement between the Fund and Jones & Babson, Inc.,
which includes the Investment Counsel Agreement between Jones & Babson, Inc. and
Kornitzer Capital Management, Inc. will continue in effect until October 31,
1996, and will continue automatically for successive annual periods ending each
October 31 so long as such continuance is specifically approved at least
annually by the Board of Directors of the Fund or by the vote of a majority of
the outstanding voting securities of the Fund, and, provided also that such
continuance is approved by the vote of a majority of the directors who are not
parties to the Agreements or interested persons of any such party at a meeting
held in person and called specifically for the purpose of evaluating and voting
on such approval. Both Agreements provide that either party may terminate by
giving the other 60 days written notice. The Agreements terminate automatically
if assigned by either party.
GENERAL INFORMATION
AND HISTORY
The Fund, incorporated in Maryland on November 23, 1994, has a present
authorized capitalization of 10,000,000 shares of $1 par value common stock. All
shares are of the same class with like rights and privileges. Each full and
fractional share, when issued and outstanding, has: (1) equal voting rights with
respect to matters which affect the Fund; and (2) equal dividend, distribution
and redemption rights to the assets of the Fund. Shares when issued are fully
paid and non-assessable. The Fund may create other series of stock but will not
issue any senior securities. Shareholders do not have pre-emptive or conversion
rights.
Non-cumulative voting These shares have non-cumulative voting rights, which
means that the holders of more than 50% of the shares voting for the election of
directors can elect 100% of the directors, if they choose to do so, and in such
event, the holders of the remaining less than 50% of the shares voting will not
be able to elect any directors.
The Maryland Statutes permit registered investment companies, such as the Fund,
to operate without an annual meeting of shareholders under specified
circumstances if an annual meeting is not required by the Investment Company Act
of 1940. There are procedures whereby the shareholders may remove directors.
These procedures are described in the Statement of Additional Information under
the caption "Officers and Directors." The Fund has adopted the appropriate
provisions in its By-Laws and may not, at its discretion, hold annual meetings
of shareholders for the following purposes unless required to do so: (1)
election of directors; (2) approval of any investment advisory agreement; (3)
ratification of the selection of independent auditors; and (4) approval of a
distribution plan. As a result, the Fund does not intend to hold annual
meetings.
The Fund may use the name "Buffalo" in its name so long as Kornitzer Capital
Management, Inc. is continued as its investment counsel. Complete details with
respect to the use of the name are set out in the Management Agreement between
the Fund and Jones & Babson, Inc.
This prospectus omits certain of the information contained in the registration
statement filed with the Securities and Exchange Commission, Washington, D.C.
These items may be inspected at the offices.of the Commission or obtained from
the Commission upon payment of the fee prescribed.
DIVIDENDS, DISTRIBUTIONS AND THEIR TAXATION
The Fund pays dividends from net investment income quarterly, usually in March,
June, September and December. Distribution from capital gains realized on the
sale of securities, if any, will be declared annually on or before December 31.
Dividend and capital gains distributions will be reinvested automatically in
additional shares at the net asset value per share computed and effective at the
close of business on the day after the record date, unless the shareholder has
elected on the original application, or by written instructions filed with the
Fund, to have them paid in cash.
The Fund intends to qualify for taxation as a "regulated investment company"
under the Internal Revenue Code so that the Fund will not be subject to federal
income tax to the extent that it distributes its income to its shareholders.
Dividends, either in cash or reinvested in shares, paid by the Fund from net
investment income will be taxable to shareholders as ordinary income, and will
generally qualify in part for the 70% dividends-received deduction for
corporations. The portion of the dividends so qualified depends on the aggregate
taxable qualifying dividend income received by the Fund from domestic (U.S.)
sources. The Fund will send to shareholders a statement each year advising the
amount of the dividend income which qualifies for such treatment.
Whether paid in cash or additional shares of the Fund, and regardless of the
length of time Fund shares have been owned by the shareholder, distributions
from long-term capital gains are taxable to shareholders as such, but are not
eligible for the dividends-received deduction for corporations. Shareholders are
notified annually by the Fund as to federal tax status of dividends and
distributions paid by the Fund. Such dividends and distributions may also be
subject to state and local taxes. Exchange and redemption of Fund shares are
taxable events for federal income tax purposes. Shareholders may also be subject
to state and municipal taxes on such exchanges and redemptions. You should
consult your tax adviser with respect to the tax status of distributions from
the Fund in your state and locality.
The Fund intends to declare and pay dividends and capital gains distributions so
as to avoid imposition of the federal excise tax. To do so, the Fund expects to
distribute during each calendar year an amount equal to: (1) 98% of its calendar
year ordinary income; (2) 98% of its capital gains net income (the excess of
short- and long-term capital gain over short- and long-term capital loss) for
the one-year period ending each November 30; and (3) 100% of any undistributed
ordinary or capital gain net income from the prior fiscal year. Dividends
declared in October, November or December and made payable to shareholders of
record in such a month are deemed to have been paid by the Fund and received by
shareholders on December 31 of such year, so long as the dividends are actually
paid before February 1 of the following year.
To comply with IRS regulations, the Fund is required by federal law to withhold
31% of reportable payments (which may include dividends, capital gains
distributions, and redemptions) paid to shareholders who have not complied with
IRS regulations. In order to avoid this withholding requirement, shareholders
must certify on their Application, or on a separate form supplied by the Fund,
that their Social Security or Taxpayer Identification Number provided is correct
and that they are not currently subject to backup withholding, or that they are
exempt from backup withholding.
The federal income tax status of all distributions will be reported to
shareholders each January as a part of the annual statement of shareholder
transactions. Shareholders not subject to tax on their income will not be
required to pay tax on amounts distributed to them.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED HEREIN FOR GENERAL INFORMATION
ONLY. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISERS WITH RESPECT
TO THE TAX CONSEQUENCES TO THEM OF AN INVESTMENT IN THE FUND.
SHAREHOLDER SERVICES
The Fund and its manager offer shareholders a broad variety of services
described throughout this prospectus. In addition, the following services are
available:
Automatic Monthly Investment. You may elect to make monthly investments in a
constant dollar amount from your checking account ($100 minimum). The Fund will
draft your checking account on the same day each month in the amount you
authorize in your application, or, subsequently, on a special authorization form
provided upon request.
Automatic Reinvestment. Dividends and capital gains distributions may be
reinvested automatically, or shareholders may elect to have dividends paid in
cash and capital gains reinvested, or to have both paid in cash.
Telephone Investments. You may make investments of $1,000 or more by telephone
if you have authorized such investments in your application, or, subsequently,
on a special authorization form provided upon request. See "Telephone Investment
Service." Exchange Shareholders may exchange their Fund shares which have been
held in open account for 30 days or more, for identically registered shares of
any other Babson Fund except Babson Enterprise Fund, Inc., and if prearranged,
this may be accomplished by telephone/telegraph. See "How to Exchange Shares
Between Babson Funds."
Automatic Exchange. A shareholder may elect to exchange shares in the Fund to an
identically registered account in any Babson Fund according to the shareholder's
instructions. Monthly exchanges will continue until all shares have been
exchanged or until the Automatic Exchange authorization has been terminated. A
special authorization form will be provided upon request. Transfer of Ownership
A shareholder may transfer shares to another shareholder account. The
requirements which apply to redemptions apply to transfers. A transfer to a new
account must meet initial investment requirements.
Systematic Redemption Plan. Shareholders who own shares in open account valued
at $10,000 or more may arrange to make regular withdrawals without the necessity
of executing & separate redemption request to initiate each withdrawal.
Sub-Accounting. Keogh and corporate tax qualified retirement plans, as well as
certain other investors who must maintain separate participant accounting
records, may meet these needs through services provided by the Fund's manager,
Jones & Babson, Inc. Investment minimums may be met by accumulating the separate
accounts of the group. Although there is currently no charge for sub-accounting,
the Fund and its manager reserve the right to make reasonable charges for this
service.
Prototype Retirement Plans. Jones & Babson, Inc. offers a defined contribution
prototype plan The Universal Retirement Plan which is suitable for all who are
self-employed, including sole proprietors, partnerships, and corporations. The
Universal Prototype includes both money purchase pension and profit-sharing plan
options.
Individual Retirement Accounts. Also available is an Individual Retirement
Account (IRA). The IRA uses the IRS model form of plan and provides an excel
lent way to accumulate a retirement fund which will earn tax-deferred dollars
until withdrawn. An IRA may also be used to defer taxes on certain distributions
from employer-sponsored retirement plans. You may contribute up to $2,000 of
compensation each year ($2,250 if a spousal IRA is established), some or all of
which may be deductible. Consult your tax adviser concerning the amount of the
tax deduction, if any.
Simplified Employee Pensions (SEPs). The Jones & Babson IRA may be used with IRS
Form 5305 - SEP to establish a SEP-IRA, to which the self-employed individual
may contribute up to 15% of net earned income or $30,000, whichever is less. A
SEP-IRA offers the employer the ability to make the same level of deductible
contributions as a Profit-Sharing Plan with greater ease of administration, but
less flexibility in plan coverage of employees.
SHAREHOLDER INQUIRIES
Telephone inquiries may be made toll free to the Fund, 1-800-4-BABSON
(1-800-422-2766), or in the Kansas City area 471-5200.
Shareholders may address written inquiries to the Fund at:
Buffalo USA Global Fund, Inc.
Three Crown Center
2440 Pershing Road, Suite G-15
Kansas City, MO 64108
INDEPENDENT AUDITORS
ERNST & YOUNG
Kansas City, Missouri
LEGAL COUNSEL
STRADLEY, RONON, STEVENS & YOUNG
Philadelphia, Pennsylvania
JOHN G. DYER
Kansas City, Missouri
CUSTODIAN
UNITED MISSOURI BANK, n.a.
Kansas City, Missouri
TRANSFER AGENT
JONES & BABSON, INC.
Kansas City, Missouri
<PAGE>
PART B
BUFFALO USA GLOBAL FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
___________ 1995
This Statement is not a prospectus but should be read in conjunction with the
Fund's current Prospectus dated _________, 1995. To obtain the Prospectus please
call the Fund toll-free 1-800-4-BABSON (1-800-422-2766), or in the Kansas City
area 471-5200.
TABLE OF CONTENTS
Page
Investment Objective and Policies
Portfolio Transactions
Investment Restrictions
How the Fund's Shares are Distributed
How Share Purchases are Handled
Redemption of Shares
Signature Guarantees
Management and Investment Counsel
How Share Price is Determined
Officers and Directors
Custodian
Independent Auditors
Other Jones & Babson Funds
Description of Commercial Paper Ratings
Financial Statements
INVESTMENT OBJECTIVE AND POLICIES
The following policies supplement the Fund's investment objective and policies
set forth in the Prospectus.
PORTFOLIO TRANSACTIONS
Decisions to buy and sell securities for the Fund are made by Jones & Babson,
Inc. pursuant to recommendations by Kornitzer Capital Management, Inc. Officers
of the Fund and Jones & Babson, Inc. are generally responsible for implementing
or supervising these decisions, including allocation of portfolio brokerage and
principal business as well as the negotiation of commissions and/or the price of
the securities. In instances where securities are purchased on a commission
basis, the Fund will seek competitive and reasonable commission rates based on
circumstances of the trade involved and to the extent that they do not detract
from the quality of the execution.
The Fund, in purchasing and selling portfolio securities, will seek the best
available combination of execution and overall price (which shall include the
cost of the transaction) consistent with the circumstances which exist at the
time. The Fund does not intend to solicit competitive bids on each transaction.
The Fund believes it is in its best interest and that of its shareholders to
have a stable and continuous relationship with a diverse group of financially
strong and technically qualified broker-dealers who will provide quality
executions at competitive rates. Broker-dealers meeting these qualifications
also will be selected for their demonstrated loyalty to the Fund, when acting on
its behalf, as well as for any research or other services provided to the Fund.
Substantially all of the portfolio transactions are through brokerage firms
which are members of the New York Stock Exchange because usually the most active
market in the size of the Fund's transactions and for the types of securities
predominant in the Fund's portfolio is to be found there. when buying securities
in the over-the-counter market, the Fund will select a broker who maintains a
primary market for the security unless it appears that a better combination of
price and execution may be obtained elsewhere. The Fund normally will not pay a
higher commission rate to broker-dealers providing benefits or services to it
than it would pay to broker-dealers who do not provide it such benefits or
services. However, the Fund reserves the right to do so within the principles
set out in Section 28(e) of the Securities Exchange Act of 1934 when it appears
that this would be in the best interests of the share-holders.
No commitment is made to any broker or dealer with regard to placing of orders
for the purchase or sale of Fund portfolio securities, and no specific formula
is used in placing such business. Allocation is reviewed regularly by both the
Board of Directors of the Fund and Jones & Babson, Inc.
Since the Fund does not market its shares through intermediary brokers or
dealers, it is not the Fund's practice to allocate brokerage or principal
business on the basis of sales of its shares which may be made through such
firms. However, it may place portfolio orders with qualified broker-dealers who
recommend the Fund to other clients, or who act as agent in the purchase of the
Fund's shares for their clients.
Research services furnished by broker-dealers may be useful to the Fund manager
and its investment counsel in serving other clients, as well as the Fund.
Conversely, the Fund may benefit from research services obtained by the manager
or its investment counsel from the placement of portfolio brokerage of other
clients.
When it appears to be in the best interest of its shareholders, the Fund may
join with other clients of the manager and its investment counsel in acquiring
or disposing of a portfolio holding. Securities acquired or proceeds obtained
will be equitably distributed between the Fund and other clients participating
in the transaction. In some instances, this investment procedure may affect the
price paid or received by the Fund or the size of the position obtained by the
Fund.
INVESTMENT RESTRICTIONS
In addition to the investment objective and portfolio management policies set
forth in the Prospectus under the caption "Investment Objective and Portfolio
Management Policy," the following restrictions also may not be changed without
approval of the "holders of a majority of the outstanding shares" of the Fund.
The Fund will not: (1) purchase the securities of any one issuer, except the
United States government, if immediately after and as a result of such purchase
(a) the value of the holdings of the Fund in the securities of such issuer
exceeds 5% of the value of the Fund's total assets, or (b) the Fund owns more
than 10% of the outstanding voting securities, or any other class of securities,
of such issuer; (2) engage in the purchase or sale of real estate, commodities
or futures contracts; (3) underwrite the securities of other issuers; (4) make
loans to any of its officers, directors, or employees, or to its manager, or
general distributor, or officers or directors thereof; (5) make any loan (the
purchase of a security subject to a repurchase agreement or the purchase of a
portion of an issue of publicly distributed debt securities is not considered
the making of a loan); (6) invest in companies for the purpose of exercising
control of management; (7) purchase securities on margin, or sell securities
short, except that the Fund may write covered call options; (8) purchase shares
of other investment companies except in the open market at ordinary broker's
commission or pursuant to a plan of merger or consolidation; (9) invest in the
aggregate more than 5% of the value of its gross assets in the securities of
issuers (other than federal, state, territorial, or local governments, or
corporations, or authorities established thereby), which, including
predecessors, have not had at least three years' continuous operations; (10)
except for transactions in its shares or other securities through brokerage
practices which are considered normal and generally accepted under circumstances
existing at the time, enter into dealings with its officers or directors, its
manager or underwriter, or their officers or directors, or any organization in
which such persons have a financial interest; (11) purchase or retain securities
of any company in which any Fund officers or directors, or Fund manager, its
partner, officer, or director beneficially owns more than 1/2 of 1% of said
company's securities, if all such persons owning more than 1/2 of 1% of such
company's securities, own in the aggregate more than 5% of the outstanding
securities of such company; (12) borrow or pledge its credit under normal
circumstances, except up to 10% of its gross assets (computed at the lower of
fair market value or cost) temporarily for emergency or extraordinary purposes,
and not for the purpose of leveraging its investments, and provided further that
any borrowing in excess of 5% of the total assets of the Fund shall have asset
coverage of at least 3 to 1; (13) make itself or its assets liable for the
indebtedness of others; or (14) invest in securities which are assessable or
involve unlimited liability; (15) purchase any securities which would cause 25%
or more of the Fund's total assets at the time of such purchase to be invested
in any one industry.
In addition to the fundamental investment restrictions set out above, in order
to comply with the law or regulations of various States, the Fund will not
engage in the following practices: (1) invest in securities which are not
readily marketable or in securities of foreign issuers which are not listed on a
recognized domestic or foreign securities exchange (the Fund does not intend to
invest directly in foreign securities; this policy is not a fundamental policy
of the Fund); (2) invest in puts, calls, straddles, spreads, and any combination
thereof if by reason thereof the value of its aggregate investment in such
classes of securities will exceed 5% of its total assets, except that the Fund
may write covered call options in excess of this limitation; (3) invest in oil,
gas and other mineral leases or arbitrage transactions; (4) purchase or sell
real estate (including limited partnership interests, but excluding readily
marketable interests in real estate investment trusts or readily marketable
securities of companies which invest in real estate); or (5) purchase
securities, including 144(a) securities, of issuers which the company is
restricted from selling to the public without registration under the securities
Act of 1933.
Certain States also require that the Fund's investments in warrants, valued at
the lower of cost or market, may not exceed 5% of the value of the Fund's net
assets. Included within that amount, but not to exceed 2% of the value of the
Fund's net assets may be warrants which are not listed on the New York or
American Stock Exchange. Warrants acquired by the Fund in units or attached to
securities may be deemed to be without value for purposes of this limitation. In
addition, the Fund has undertaken to the state of California to comply with the
expense limitations set forth in Rule 260.140.84(a) of Title 10 of the
California Administrative Code.
HOW THE FUND'S SHARES ARE DISTRIBUTED
Jones & Babson, Inc., as agent of the Fund, agrees to supply its best efforts as
sole distributor of the Fund's shares and, at its own expense, pay all sales and
distribution expenses in connection with their offering other than registration
fees and other government charges.
Jones & Babson, Inc. does not receive any fee or other compensation under the
distribution agreement which continues in effect until October 31, 1995, and
which will continue automatically for successive annual periods ending each
October 31, if continued at least annually by the Fund's Board of Directors,
including a majority of those Directors who are not parties to such Agreements
or interested persons of any such party. It terminates automatically if assigned
by either party or upon 60 days written notice by either party to the other.
Jones & Babson, Inc. also acts as sole distributor of the shares of David L.
Babson Growth Fund, Inc., D. L. Babson Bond Trust, D. L. Babson Money Market
Fund, Inc., D. L. Babson Tax-Free Income Fund, Inc., Babson Enterprise Fund,
Inc., Babson Enterprise Fund II, Inc., Babson Value Fund, Inc., Shadow Stock
Fund, Inc., Babson-Stewart Ivory International Fund, Inc., UMB Stock Fund, Inc.,
UMB Bond Fund, Inc., UMB Money Market Fund, Inc., UMB Tax-free Money Market
Fund, Inc., UMB Heartland Fund, Inc., UMB WorldWide Fund, Inc., Buffalo Balanced
Fund, Buffalo Premium Income Fund and Buffalo Equity Fund.
HOW SHARE PURCHASES ARE HANDLED
Each order accepted will be fully invested in whole and fractional shares,
unless the purchase of a certain number of whole shares is specified, at the net
asset value per share next effective after the order is accepted by the Fund.
Each investment is confirmed by a year-to-date statement which provides the
details of the immediate transaction, plus all prior transactions in your
account during the current year. This includes the dollar amount invested, the
number of shares purchased or redeemed, the price per share, and the aggregate
shares owned. A transcript of all activity in your account during the previous
year will be furnished each January. By retaining each annual summary and the
last year-to-date statement, you have a complete detailed history of your
account which provides necessary tax information. A duplicate copy of a past
annual statement is available from Jones & Babson, Inc. at its cost, subject to
a minimum charge of $5 per account, per year requested.
Normally, the shares which you purchase are held by the Fund in open account,
thereby relieving you of the responsibility of providing for the safekeeping of
a negotiable share certificate. Should you have a special need for a
certificate, one will be issued on request for all or a portion of the whole
shares in your account. There is no charge for the first certificate issued. A
charge of $3.50 will be made for any replacement certificates issued. In order
to protect the interests of the other shareholders, share certificates will be
sent to those shareholders who request them only after the Fund has determined
that unconditional payment for the shares represented by the certificate has
been received by its custodian, United Missouri Bank, n.a.
If an order to purchase shares must be canceled due to non-payment, the
purchaser will be responsible for any loss incurred by the Fund arising out of
such cancellation. To recover any such loss, the Fund reserves the right to
redeem shares owned by any purchaser whose order is canceled, and such purchaser
may be prohibited or restricted in the manner of placing further orders.
The Fund reserves the right in its sole discretion to withdraw all or any part
of the offering made by the prospectus or to reject purchase orders when, in the
judgment of management, such withdrawal or rejection is in the best interest of
the Fund and its shareholders. The Fund also reserves the right at any time to
waive or increase the minimum requirements applicable to initial or subsequent
investments with respect to any person or class of persons, which include
shareholders of the Fund's special investment programs.
REDEMPTION OF SHARES
The right of redemption may be suspended, or the date of payment postponed
beyond the normal seven-day period by the Fund' s Board of Directors under the
following conditions authorized by the Investment Company Act of 1940: (1) for
any period (a) during which the New York Stock Exchange is closed, other than
customary weekend and holiday closing, or (b) during which trading on the New
York Stock Exchange is restricted; (2) for any period during which an emergency
exists as a result of which (a) disposal by the Fund of securities owned by it
is not reasonably practicable, or (b) it is not reasonably practicable for the
Fund to determine the fair value of its net assets; or (3) for such other
periods as the Securities and Exchange Commission may by order permit for the
protection of the Fund's shareholders.
The Fund has elected to be governed by Rule 18f-1 under the Investment Company
Act of 1940 pursuant to which the Fund is obligated to redeem shares solely in
cash up to the lesser of $250,000 or 1% of the Fund's net asset value during any
90-day period for any one shareholder. Should redemptions by any shareholder
exceed such limitation, the Fund may redeem the excess in kind. If shares are
redeemed in kind, the redeeming shareholder may incur brokerage costs in
converting the assets to cash. The method of valuing securities used to make
redemptions in kind will be the same as the method of valuing portfolio
securities described under "How Share Price is Determined" in the Prospectus,
and such valuation will be made as of the same time the redemption price is
determined.
SIGNATURE GUARANTEES
Signature guarantees normally reduce the possibility of forgery and are required
in connection with each redemption method to protect shareholders from loss.
Signature guarantees are required in connection with all redemptions by mail or
changes in share registration, except as provided in the Prospectus.
Signature guarantees must appear together with the signature(s) of the
registered owner(s), on:
(1) a written request for redemption,
(2) a separate instrument of assignment, which should specify the total number
of shares to be redeemed (this "stock power" may be obtained from the Fund
or from most banks or stock brokers), or
(3) all stock certificates tendered for redemption.
MANAGEMENT AND INVESTMENT COUNSEL
As a part of the Management Agreement, Jones & Babson, Inc. employs at its own
expense Kornitzer Capital Management, Inc., as its investment counsel. Kornitzer
Capital Management, Inc., was founded in 1989. It is a private investment
research and counseling organization serving individual, corporate and other
institutional clients.
The annual fee charged by Jones & Babson, Inc. covers all normal operating costs
of the Fund.
Kornitzer Capital Management, Inc., has an experienced investment analysis and
research staff which eliminates the need for Jones & Babson, Inc. and the Fund
to maintain an extensive duplicate staff, with the consequent increase in the
cost of investment advisory service. The cost of the services of Kornitzer
Capital Management, Inc. is included in the fee of Jones & Babson, Inc.
HOW SHARE PRICE IS DETERMINED
The net asset value per share of the Fund portfolio is computed once daily,
Monday through Friday, at the specific time during the day that the Board of
Directors of the Fund sets at least annually, except on days on which changes in
the value of a Fund's portfolio securities will not materially affect the net
asset value, or days during which no security is tendered for redemption and no
order to purchase or sell such security is received by the Fund, or the
following holidays:
New Year's Day January 1
Presidents' Holiday Third Monday
in February
Good Friday Friday before Easter
Memorial Day Last Monday
in May
Independence Day July 4
Labor Day First Monday
in September
Thanksgiving Day Fourth Thursday
in November
Christmas Day December 25
OFFICERS AND DIRECTORS
The Fund is managed by Jones & Babson, Inc. subject to the supervision and
control of the Board of Directors. The following table lists the Officers and
Directors of the Fund. Unless noted otherwise, the address of each Officer and
Director is Three Crown Center, 2440 Pershing Road, Suite G-15, Kansas City,
Missouri 64108. Except as indicated, each has been an employee of Jones &
Babson, Inc. for more than five years.
* Larry D. Armel, President and Director.
President and Director, Jones & Babson, Inc.; David L. Babson Growth
Fund, Inc., D. L. Babson Money Market Fund, Inc., D. L. Babson Tax-Free Income
Fund, Inc., Babson Enterprise Fund, Inc., Babson Enterprise Fund II, Inc. Babson
Value Fund, Inc., Shadow Stock Fund, Inc., Babson-Stewart Ivory International
Fund, Inc; Buffalo Balanced Fund, Buffalo Premium Income Fund, Buffalo USA
Global Fund, Buffalo Equity Fund; UMB Stock Fund, Inc., UMB Bond Fund, Inc., UMB
Money Market Fund, Inc., UMB Tax-Free Money Market Fund, Inc., UMB Heartland
Fund, Inc., UMB WorldWide Fund, Inc.; President and Trustee, D. L. Babson Bond
Trust;
* Kent W. Gasaway, Director.
Senior Vice President, Kornitzer Capital Management, Inc., KCM
Building, Shawnee Mission, Kansas 66201. Formerly Assistant Vice President,
Waddell & Reed, Inc., 6300 Lamar Avenue, Shawnee Mission, Kansas 66202;
Director, Buffalo Balanced Fund, Buffalo Premium Income Fund, Buffalo USA Global
Fund, Buffalo Equity Fund;
Thomas S. Case, Director.
Director, Buffalo Balanced Fund, Inc., Buffalo Equity Fund, Inc.,
Buffalo USA Global Fund, Inc., Buffalo Premium Income Fund, Inc.; President and
Chief Executive Officer, the Frankona American Companies, 2405 Grant Blvd.,
Suite 900, Kansas City, Missouri 64108.
* Stephen S. Soden, Director.
President, BMA Financial Services, BMA Tower, One Penn Valley Park,
Kansas City, Missouri, 64141,Chairman and Director, Jones & Babson, Inc.;
Director, Buffalo Balanced Fund, Buffalo Premium Income Fund, Buffalo USA Global
Fund, Buffalo Equity Fund;
Francis C. Rood, Director.
Retired, 6429 West 92nd Street, Overland Park, Kansas 66212. Formerly,
Group Vice President-Administration, Hallmark Cards, Inc.; Director, David L.
Babson Growth Fund, Inc., D. L. Babson MoneyMarket Fund, Inc., D. L. Babson
Tax-Free Income Fund, Inc., Babson Enterprise Fund, Inc., Babson Enterprise Fund
II, Inc., Babson Value Fund, Inc., Shadow Stock Fund, Inc.; Trustee, D. L.
Babson Bond Trust.
William H. Russell, Director.
Financial consultant, 645 West 67th Street, Kansas City, Missouri
64113; Director, David L. Babson Growth Fund, Inc., D. L. Babson Money Market
Fund, Inc., D. L. Babson Tax-Free Income Fund, Inc., Babson Enterprise Fund,
Inc., Babson Enterprise Fund II; Inc., Babson Value Fund, Inc., Shadow Stock
Fund, Inc. and Babson-Stewart Ivory International Fund, Inc.; Buffalo Balanced
Fund, Buffalo Premium Income Fund, Buffalo USA Global Fund, Buffalo Equity Fund;
Trustee, D. L. Babson Bond Trust.
H. David Rybolt, Director.
Consultant, HDR Associates, P.O. Box 2468, Shawnee Mission, Kansas
66202; Director, David L. Babson Growth Fund, Inc., D. L. Babson Money Market
Fund, Inc., D. L. Babson Tax-Free Income Fund, Inc., Babson Enterprise Fund,
Inc., Babson Enterprise Fund II, Inc., Babson Value Fund, Inc., Shadow Stock
Fund, Inc.; Buffalo Balanced Fund, Buffalo Premium Income Fund, Buffalo USA
Global Fund, Buffalo Equity Fund; Trustee, D. L. Babson Bond Trust.
_______________
* Directors who are interested persons as that term is defined in the
Investment Company Act of 1940, as amended.
P. Bradley Adams, Vice President and Treasurer.
Vice President and Treasurer, Jones & Babson, Inc., David L. Babson Growth Fund,
Inc., D. L. Babson Money Market Fund, Inc., D. L. Babson Tax-Free Income Fund,
Inc., Babson Enterprise Fund, Inc., Babson Enterprise Fund II, Inc., Babson
Value Fund, Inc., Shadow Stock Fund, Inc., Babson-Stewart Ivory International
Fund, Inc., D. L. Babson Bond Trust, UMB Stock Fund, Inc., UMB Bond Fund, Inc.,
UMB Money Market Fund, Inc., UMB Tax-Free Money Market Fund, Inc., UMB Heartland
Fund, Inc., UMB WorldWide Fund, Inc.; Buffalo Balanced Fund, Buffalo Premium
Income Fund, Buffalo USA Global Fund, Buffalo Equity Fund;
Michael A. Brummel, Vice President, Assistant Secretary and
Assistant Treasurer.
Vice President, Assistant Secretary and Assistant Treasurer, Jones & Babson,
Inc., David L. Babson Growth Fund, Inc., D. L. Babson Money Market Fund, Inc.,
D. L. Babson Tax-Free Income Fund, Inc., Babson Enterprise Fund, Inc., Babson
Enterprise Fund II, Inc., Babson Value Fund, Inc., Shadow Stock Fund, Inc.,
Babson-Stewart Ivory International Fund, Inc., D. L. Babson Bond Trust, UMB
Stock Fund, Inc., UMB Bond Fund, Inc., UMB Money Market Fund, Inc., UMB Tax-Free
Money Market Fund, Inc., UMB Heartland Fund, Inc, UMB WorldWide Fund, Inc.;
Buffalo Balanced Fund, Buffalo Premium Income Fund, Buffalo USA Global Fund,
Buffalo Equity Fund;
Martin A. Cramer, Vice President and Secretary.
Vice President and Secretary, Jones & Babson, Inc., David L. Babson Growth Fund,
Inc., D. L. Babson Money Market Fund, Inc., D. L. Babson Tax-Free Income Fund,
Inc., Babson Enterprise Fund, Inc., Babson Enterprise Fund II, Inc., Babson
Value Fund, Inc., Shadow Stock Fund, Inc., Babson-Stewart Ivory International
Fund, Inc., D. L. Babson Bond Trust, UMB Stock Fund, Inc., UMB Bond Fund, Inc.,
UMB Money Market Fund, Inc., UMB Tax-Free Money Market Fund, Inc., UMB Heartland
Fund, Inc., UMB WorldWide Fund, Inc.; Buffalo Balanced Fund, Buffalo Premium
Income Fund, Buffalo USA Global Fund, Buffalo Equity Fund;
John G. Dyer, Vice President.
Vice President, Jones & Babson, Inc., UMB Stock Fund, Inc., UMB Bond Fund, Inc.,
UMB Money Market Fund, Inc., UMB Tax-Free Money Market Fund, Inc., UMB Heartland
Fund, Inc. , UMB WorldWide Fund, Inc.; Buffalo Balanced Fund, Buffalo Premium
Income Fund, Buffalo USA Global Fund, Buffalo Equity Fund;
Ruth Evans, Vice President.
Vice President, Jones & Babson, Inc., David L. Babson Growth Fund, Inc., D. L.
Babson Money Market Fund, Inc., D. L. Babson Tax-Free Income Fund, Inc., Babson
Enterprise Fund, Inc., Babson Enterprise Fund II, Inc., Babson Value Fund, Inc.,
Shadow Stock Fund, Inc., Babson-Stewart Ivory International Fund, Inc., D. L.
Babson Bond Trust, UMB Stock Fund, Inc., UMB Bond Fund, Inc., UMB Money Market
Fund, Inc., UMB Tax-Free Money Market Fund, Inc., UMB Heartland Fund, Inc., UMB
WorldWide Fund, Inc.; Buffalo Balanced Fund, Buffalo Premium Income Fund,
Buffalo USA Global Fund, Buffalo Equity Fund.
None of the officers or directors will be remunerated by the Fund for their
normal duties and services. Their compensation and expenses arising out of
normal operations will be paid by Jones & Babson, Inc. under the provisions of
the Management Agreement.
Messrs. Rood, Russell and Rybolt have no financial interest in, nor are they
affiliated with, either Jones & Babson, Inc. or Kornitzer Capital Management,
Inc.
The Audit Committee of the Board of Directors is composed of Messrs. Rood,
Russell and Rybolt.
The Officers and Directors of the Fund as a group own less than 1% of the Fund.
The Fund will not hold annual meetings except as required by the Investment
Company Act of 1940 and other applicable laws. The Fund is a Maryland
corporation. Under Maryland law, a special meeting of stockholders of the Fund
must be held if the Fund receives the written request for a meeting from the
stockholders entitled to cast at least 25 percent of all the votes entitled to
be cast at the meeting. The Fund has undertaken that its Directors will call a
meeting of stockholders if such a meeting is requested in writing by the holders
of not less than 10% of the outstanding shares of the Fund. To the extent
required by the undertaking, the Fund will assist shareholder communications in
such matters.
CUSTODIAN
The Fund's assets are held for safekeeping by an independent custodian, United
Missouri Bank, n.a. This means the bank, rather than the Fund, has possession of
the Fund's cash and securities. The custodian bank is not responsible for the
Fund's investment management or administration. But, as directed by the Fund's
officers, it delivers cash to those who have sold securities to the Fund in
return for such securities, and to those who have purchased portfolio securities
from the Fund, it delivers such securities in return for their cash purchase
price. It also collects income directly from issuers of securities owned by the
Fund and holds this for payment to shareholders after deduction of the Fund's
expenses. The custodian is compensated for its services by the manager. There is
no charge to the Fund.
INDEPENDENT AUDITORS
The Fund's financial statements are audited annually by independent auditors
approved by the directors each year, and in years in which an annual meeting is
held the directors may submit their selection of independent auditors to the
shareholders for ratification. Ernst & Young, One Kansas City Place, 1200 Main
Street, Suite 2000, Kansas City, Missouri 64105, is the Fund's present
independent auditor.
Reports to shareholders will be published at least semiannually.
OTHER JONES & BABSON FUNDS
Jones & Babson, Inc. sponsors and manages three additional no-load funds in
association with Kornitzer Capital Management, Inc.: Buffalo Balanced Fund,
Buffalo Premium Income Fund and Buffalo Equity Fund.
Jones & Babson, Inc. also sponsors and manages nine no-load funds comprising the
Babson Mutual Fund Group managed by Jones & Babson, Inc. in association with
David L. Babson & Co. Inc. The funds are:
EQUITY FUNDS
DAVID L. BABSON GROWTH FUND, INC. was organized in 1960 with the objective of
long-term growth of both capital and dividend income through investment in the
common stocks of well-managed companies which have a record of long term
above-average growth of both earnings and dividends.
BABSON ENTERPRISE FUND, INC. was organized in 1983 with the objective of
long-term growth of capital by investing in a diversified portfolio of common
stocks of smaller, faster-growing companies with market capital of $15 million
to $300 million at the time of purchase. This Fund is intended to be an
investment vehicle for that part of an investor's capital which can
appropriately be exposed to above-average risk in anticipation of greater
rewards. This Fund is currently closed to new shareholders.
BABSON ENTERPRISE FUND II, INC. was organized in 1991 with the objective of
long-term growth of capital by investing in a diversified portfolio of common
stocks of smaller, faster-growing companies which at the time of purchase are
considered by the Investment Adviser to be realistically valued in the smaller
company sector of the market. This Fund is intended to be an investment vehicle
for that part of an investor's capital which can appropriately be exposed to
above-average risk in anticipation of greater rewards.
SHADOW STOCK FUND, INC. was organized in 1987 with the objective of long-term
growth of capital that can be exposed to above-average risk in anticipation of
greater-than-average rewards. The Fund expects to reach its objective by
investing in small company stocks called "Shadow Stocks," i.e., stocks that
combine the characteristics of "small stocks" (as ranked by market
capitalization) and "neglected stocks" (least held by institutions and least
covered by analysts).
BABSON-STEWART IVORY INTERNATIONAL FUND, INC. was organized in 1987 with the
objective of seeking a favorable total return (from market appreciation and
income) by investing primarily in a diversified portfolio of equity securities
(common stocks and securities convertible into common stocks) of established
companies whose primary business is carried on outside the United States.
BABSON VALUE FUND, INC. was organized in 1984 with the objective of long-term
growth of capital and income by investing in a diversified portfolio of common
stocks which are considered to be undervalued in relation to earnings, dividends
and/or assets.
FIXED INCOME FUNDS
D. L. BABSON BOND TRUST was organized in 1944, and has been managed by Jones &
Babson, Inc. since 1972, with the objective of a high level of current income
and reasonable stability of principal. It offers two portfolios - Portfolio L
and Portfolio S.
D. L. BABSON MONEY MARKET FUND, INC. was organized in 1979 to provide investors
the opportunity to manage their money over the short term by investing in
high-quality short-term debt instruments for the purpose of maximizing income to
the extent consistent with safety of principal and maintenance of liquidity. It
offers two portfolios - Prime and Federal.
D. L. BABSON TAX-FREE INCOME FUND, INC. was organized in 1979 to provide
shareholders the highest level of regular income exempt from federal income
taxes consistent with investing in quality municipal securities. It offers three
separate high-quality portfolios (including a money market portfolio) which vary
as to average length of maturity.
A prospectus for any of the Funds may be obtained from Jones & Babson, Inc.,
Three Crown Center, 2440 Pershing Road, Suite G-15, Kansas City, Missouri 64108.
Jones & Babson, Inc. also sponsors and manages six mutual funds which especially
seek to provide services to customers of affiliate banks of United Missouri
Bancshares, Inc. (UMB). They are UMB Stock Fund, Inc., UMB Bond Fund, Inc., UMB
Money Market Fund, Inc., UMB Tax-Free Money Market Fund, Inc., UMB Heartland
Fund, Inc. and UMB WorldWide Fund, Inc.
<PAGE>
Report of Independent Auditors
The Shareholder and Board of Directors
Buffalo USA Global Fund, Inc.
We have audited the accompanying statement of net assets of Buffalo USA Global
Fund, Inc. (the Company) as of February 14, 1995. This statement of net assets
is the responsibility of the Company's management. Our responsibility is to
express an opinion on this statement of net assets based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of net assets is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statement of net assets. Our procedures
included confirmation of cash as of February 14, 1995, by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
statement of net assets presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statement of net assets referred to above presents fairly,
in all material respects, the financial position of Buffalo USA Global Fund,
Inc. at February 14, 1995, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
Ernst & Young LLP
Kansas City, Missouri
February 14, 1995
<PAGE>
Buffalo USA Global Fund, Inc.
Statement of Net Assets
February 14, 1995
Assets
Cash $100,000
--------
Net assets applicable to outstanding shares $100,000
========
Capital shares, $1.00 par value
Authorized 10,000,000
==========
Outstanding 10,000
======
Net asset value per share $10.00
======
Note
Buffalo USA Global Fund, Inc. (the Company) was organized as a Maryland
corporation on November 23, 1994 and is registered under the Investment Company
Act of 1940, as amended, as a diversified, open-end management investment
company. Shares outstanding on February 14, 1995 for the Company were issued to
Jones & Babson, Inc., the Company's investment manager. The costs of
organization will be paid by Jones & Babson, Inc.
<PAGE>
PART C
OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements
(b) (1) Registrant's Articles of Incorporation*
(2) Form of Registrant's By-laws*
(3) Not applicable, because there is no voting trust agreement
(4) Specimen copy of each security to be issued by the registrant*
(5) (a) Form of Management Agreement between Jones & Babson, Inc.
and the Registrant*
(b) Form of Investment Counsel Agreement between Jones & Babson,
Inc. and Kornitzer Capital Management, Inc.*
(6) Form of principal Underwriting Agreement between Jones & Babson,
Inc. and the Registrant*
(7) Not applicable, because there are no pension, bonus or other
agreements for the benefit of directors and officers
(8) Form of Custodian Agreement between Registrant and United
Missouri Bank of Kansas City, N.A.*
(9) There are no other material contracts not made in the ordinary
course of business between the Registrant and others
(10) Opinion and consent of counsel as to the legality of the
registrant's securities being registered. (To be supplied
annually pursuant to Rule 24f-2 of the Investment Company Act of
1940.)
(11) (a) Powers of Attorney* (b) Consent of Auditor
(12) Not applicable.
(13) Form of letter from contributors of initial capital to the
Registrant that purchase was made for investment purposes without
any present intention of redeeming or selling.
(14) Not applicable.
(15) Not applicable.
(16) Schedule for computation of performance quotations. (To be
supplied by further amendment)
_______________
* Incorporated by reference to Registrant's registration on Form
N-1A.
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL OF THE REGISTRANT.
NONE
Item 26. NUMBER OF HOLDERS OF SECURITIES.
The number of record holders of each class of securities of the
Registrant as of February 15, 1994, is as follows:
(1) (2)
Title of class Number of Record Holders
Common Stock
$1.00 par value one
Item 27. INDEMNIFICATION.
Under the terms of the Maryland General Corporation Law and the
company's By-laws, the company shall indemnify any person who was or
is a director, officer, or employee of the company to the maximum
extent permitted by the Maryland General Corporation Law; provided
however, that any such indemnification (unless ordered by a court)
shall be made by the company only as authorized in the specific case
upon a determination that indemnification of such persons is proper in
the circumstances. Such determination shall be made
(i) by the Board of Directors by a majority vote of a quorum which
consists of the directors who are neither "interested persons" of the
company as defined in Section 2(a)(19) of the 1940 Act, nor parties to
the proceedings, or
(ii) if the required quorum is not obtainable or if a quorum of such
directors so directs, by independent legal counsel in a written
opinion.
No indemnification will be provided by the company to any director of
officer of the company for any liability to the company or
shareholders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless
disregard of duty.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR.
The principal business of Jones & Babson, Inc. is the management of
the Babson and UMB family of mutual funds. It also has expertise in
the tax and pension plan field. It supervises a number of prototype
and profit-sharing plan programs sponsored by various organizations
eligible to be prototype plan sponsors.
The principal business of Kornitzer Capital Management, Inc. is to
provide investment counsel and advice to a wide variety of clients.
Kornitzer Capital Management has $850,000,000 under management.
Item 29. PRINCIPAL UNDERWRITERS.
(a) Jones & Babson, Inc., the only principal underwriter of the
Registrant, also acts as principal underwriter for the David L.
Babson Growth Fund, Inc., D.L. Babson Money Market Fund, Inc.,
D.L. Babson Tax-Free Income Fund, Inc., D.L. Babson Bond Trust,
Babson Value Fund, Inc., Shadow Stock Fund, Inc., Babson-Stewart
Ivory International Fund, Inc., UMB Stock Fund, Inc., UMB Bond
Fund, Inc., UMB Money Market Fund, Inc. and UMB Tax-Free Money
Market Fund, Inc., UMB Heartland Fund, Inc., UMB WorldWide Fund,
Inc., Buffalo Premium Income Fund, Buffalo Equity Fund and
Buffalo Balanced Fund.
(b) Herewith is the information required by the following table with
respect to each director, officer or partner of the only
underwriter named in answer to Item 21 of Part B:
<TABLE>
<CAPTION>
Name and Principal Position and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
Stephen S. Soden Chairman and Director Director
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
Larry D. Armel President and Director President and Director
Three Crown Center
2440 Pershing Road
Kansas City, MO 64108
Giorgio Balzer Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
J. William Sayler Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
Edward S. Ritter Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
Robert N. Sawyer Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
Vernon W. Voorhees Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
Richard S. Graber Sr. Vice President - Marketing and None
Three Crown Center Director
2440 Pershing Road,
G-15
Kansas City, Missouri 64108
P. Bradley Adams Vice President and Treasurer Vice President and Treasurer
Three Crown Center
2440 Pershing Road,
G-15
Kansas City, Missouri 64108
Michael A. Brummel Vice President Vice President
Three Crown Center
2440 Pershing Road,
G-15
Kansas City, Missouri 64108
Ruth Evans Vice President Vice President
Three Crown Center
2440 Pershing Road,
G-15
Kansas City, Missouri 64108
Martin A. Cramer Vice President and Secretary Vice President and Secretary
Three Crown Center
2440 Pershing Road,
G-15
Kansas City, Missouri 64108
</TABLE>
(c) The principal underwriter does not receive any remuneration or
compensation for the duties or services rendered to the
Registrant pursuant to the principal underwriting Agreement.
Item 30. LOCATION OF ACCOUNTS AND RECORDS.
Each account, book or other document to be maintained by Section 31(a)
of the 1940 Act and the Rules (17 CFR 270.31a-1 to 31a-3) promulgated
thereunder is in the physical possession of Jones & Babson, Inc., at
Three Crown Center, 2440 Pershing Road, G-15, Kansas City, Missouri
64108.
Item 31. MANAGEMENT SERVICES.
All management services are covered in the management agreement
between the Registrant and Jones & Babson, Inc., which are discussed
in Parts A and B.
Item 32. UNDERTAKINGS.
Registrant undertakes to file a post-effective amendment using
uncertified financial statements within four to six months from the
effective date of Registrant's 1933 Act Registration Statement.
Registrant undertakes that, if requested to do so by the holders of at
least 10% of the registrant's outstanding shares, to call a meeting of
shareholders for the purpose of voting upon the question of removal of
a director or directors and to assist in communications with other
shareholders as required by Section 16(c) of the Investment Company
Act of 1940, as amended.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto authorized,
in the City of Kansas City, and State of Missouri on the 7th day of March, 1995.
BUFFALO USA GLOBAL FUND, INC.
(Registrant)
By Larry D. Armel
(Larry D. Armel, President)
Pursuant to the requirements of the Securities Act of 1933, this
Pre-effective Amendment No. 1 to the Registration Statement has been signed
below by the following persons in the capacities and on the date indicated.
<TABLE>
<S> <C> <C>
Larry D. Armel President, March 7, 1995
Larry D. Armel Principal Executive
Officer, and Director
Kent W. Gasaway Director March 7, 1995
Kent W. Gasaway*
Stephen S. Soden Director March 7, 1995
Stephen S. Soden*
Director March 7, 1995
Thomas S. Case*
Francis C. Rood Director March 7, 1995
Francis C. Rood*
William H. Russell Director March 7, 1995
William H. Russell*
H. David Rybolt Director March 7, 1995
H. David Rybolt*
P. Bradley Adams Treasurer and March 7, 1995
P. Bradley Adams Principal Financial
and Accounting Officer
*Larry D. Armel
Larry D. Armel, By Power
of Attorney
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibits Page No.
Item 24(b): 11(a) Power of Attorney
11(b) Consent of Auditors
Exhibit 24(b)11(a)
POWER OF ATTORNEY
WHEREAS the undersigned is a Director of BUFFALO USA GLOBAL FUND, INC., a
Maryland Corporation which intends to do business as an open-end diversified
investment company (mutual fund), and
WHEREAS the BUFFALO USA GLOBAL FUND, INC. intends to register its shares with
the Securities and Exchange Commission under the Securities Act of 1933 and the
Investment Company Act of 1940 and with the Securities Departments of the
various states and the District of Columbia. Now, therefore,
KNOW ALL MEN BY THESE PRESENTS:
THAT the undersigned does hereby appoint each of the persons hereinafter set out
as his attorney each with the power to act severally in the name of the
undersigned and to execute on his behalf all forms and documents required by the
Securities and Exchange Commission, or any state of the United States of
America, or the District of Columbia, in connection with the initial
registration of the securities of the BUFFALO USA GLOBAL FUND, INC.
and in the maintenance of such registrations.
Larry D. Armel
Richard S. Graber
Martin A. Cramer
IN WITNESS WHEREOF, I have hereunto set my hand this 3rd day of February, 1995.
Thomas S. Case
Thomas S. Case
Sworn to before me this 3rd day of February , 1995.
Kandi Medlock
Kandi Medlock, Notary Public
County of Jackson, State of Missouri
My commission expires December 1, 1995.
Exhibit 24(b)11(b)
Consent of Independent Auditors
We consent to the references to our firm under the caption "Independent
Auditors" and to the use of our report dated February 14, 1995 in the
Registration Statement (Form N-1A) and related Prospectus of Buffalo USA Global
Fund, Inc. filed with the Securities and Exchange Commission in this
Pre-Effective Amendment No. 1 and Amendment No. 1 to the Registration Statement
under the Securities Act of 1933 and under the Investment Company Act of 1940.
Ernst & Young LLP
Ernst & Young LLP
Kansas City, Missouri
February 16, 1995
