-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IoPyt6dwV4aBmoOYra/NNPb4g/AdFs3fz+WhhCuohnIARlOM6GwOd8P3rh7Sxc7I wlmO2eHHabCHIcDWr9JuYQ== 0000909012-07-001500.txt : 20071207 0000909012-07-001500.hdr.sgml : 20071207 20071207164619 ACCESSION NUMBER: 0000909012-07-001500 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20070930 FILED AS OF DATE: 20071207 DATE AS OF CHANGE: 20071207 EFFECTIVENESS DATE: 20071207 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BUFFALO HIGH YIELD FUND INC CENTRAL INDEX KEY: 0000933781 IRS NUMBER: 431703571 STATE OF INCORPORATION: MD FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-08898 FILM NUMBER: 071293092 BUSINESS ADDRESS: STREET 1: KORNITZER CAPITAL MANAGEMENT, INC STREET 2: 5420 WEST 61ST PLACE CITY: SHAWNEE MISSION STATE: KS ZIP: 66205 BUSINESS PHONE: 8004928332 MAIL ADDRESS: STREET 1: KORNITZER CAPITAL MANAGEMENT, INC STREET 2: 5420 WEST 61ST PLACE CITY: SHAWNEE MISSION STATE: KS ZIP: 66205 FORMER COMPANY: FORMER CONFORMED NAME: BUFFALO PREMIUM INCOME FUND INC /MO/ DATE OF NAME CHANGE: 19950519 FORMER COMPANY: FORMER CONFORMED NAME: BUFFALO PREMIUM INCOME FUND INC DATE OF NAME CHANGE: 19950519 0000933781 S000006559 BUFFALO HIGH YIELD FUND C000017898 BUFFALO HIGH YIELD FUND BUFHX N-CSRS 1 t303869.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act File number 811-08898 Buffalo High Yield Fund, Inc. (Exact name of registrant as specified in charter) 5420 W. 61st Place Shawnee Mission, KS 66205 (Address of principal executive offices) (Zip code) Kent W. Gasaway 5420 W. 61st Place Shawnee Mission, KS 66205 (Name and address of agent for service) (913) 384-1513 Registrant's telephone number, including area code Date of fiscal year end: March 31, 2008 Date of reporting period: September 30, 2007 ITEM 1. REPORT TO STOCKHOLDERS. The following is a copy of the report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1) SEMI-ANNUAL REPORT [GRAPHIC] BUFFALO FUNDS September 30, 2007 MESSAGE TO OUR SHAREHOLDERS (Unaudited) I am pleased to report that all the Buffalo Funds, except Micro Cap, generated strong positive returns for the six months ending September 30, 2007. The accompanying portfolio management review provides a detailed look at the results for each Fund. Total assets for the Buffalo Funds family have grown to $3.7 billion as of this writing. As mentioned above, the past six months have been favorable for the stock market and our Funds. Additionally, for the first time in many years, it has been a more favorable environment for growth equities versus value. This is a positive development for most of our Funds as well. Will it continue? Given a slowing U.S. economy, we believe the chances are that investors will continue to gravitate toward secular growth companies. However, we must profess some worry that a "nifty-fifty" mentality of ignoring valuation (for the sake of high growth) appears to be taking hold in a narrow group of stocks. You can rest assured that valuations still matter to the managers of the Buffalo Funds. Prognosticators on the stock market and the economy will argue about the positives and the negatives as they always do every year. Positives include low unemployment, good wage growth, strengthening exports and low interest rates. Negatives include high consumer debt, high oil prices, rising food prices, falling home prices and a tightening credit market. How each of these factors will balance out in the near- term is impossible to forecast. Thus, we continue to focus on long-term issues we think are more predictable. What are the competitive advantages of our companies? Are there underlying trends giving certain industries much greater growth potential than the overall economy? Do our companies have untapped growth potential internationally that is underappreciated? We believe focusing on this type of analysis versus trying to predict macro-economic data is what keeps us on course as long-term stewards of the Funds. We are excited to announce the opening of our tenth fund, the Buffalo International Fund, in late September. This Fund will invest in both American Depository Receipts (ADRs) and foreign traded equities of internationally based companies. The Fund's exposure to different markets around the globe will be very broadly based. Like all the Buffalo Funds, research on companies will be intensive and fundamentally based. The start of this Fund marks an important milestone for our company, the build-out of an internal investment team dedicated solely to international investing. This team includes Bill Kornitzer, Nicole Kornitzer and Kara Tan Bala. Each individual will play a key role in this new endeavor for our firm. Bill will act as the U.S. based lead portfolio manager, having previously co- managed other Buffalo equity funds and having a long history of working and living overseas. Nicole, fluent in French and Spanish, and having previously been a domestic analyst for the growth team, will move to Europe to perform company research first-hand on that continent. Finally, Kara, fluent in Cantonese, Malay and Indonesian and a long history of managing international equities, will follow Asian companies for the Fund. We encourage shareholders to consider this new Fund for diversification and exposure to international markets. Finally, I am pleased to announce the addition of John Bichelmeyer as co-manager of the Buffalo Micro Cap Fund and as a member of the growth team. John has 10 years experience as an analyst and portfolio manager of growth equities. It is our plan to continue adding research and management depth to our micro- cap efforts with the eventual goal of opening the Fund to supermarket platforms (it has only been open to direct investment and 401(k) plans since inception). The micro-cap sector has been the weakest performing area of all equity markets in 2007, yet we believe it maintains the greatest potential over the long-term. As always, we thank you for your business and support over the years. As fellow shareholders, you can trust the Buffalo team is doing our best to look after your long-term best interests. Sincerely, /s/ Kent W. Gasaway Kent W. Gasaway President Buffalo Funds Past performance does not guarantee future results. Mutual fund investing involves risk; loss of principal is possible. Please see the following Semi-Annual Report for the Funds' holdings information. - -------------------------------------------------------------------------------- 2 PORTFOLIO MANAGEMENT REVIEW (Unaudited) Our domestic equity funds continue to adhere to a philosophy of investing only in industries and companies that should benefit from trends (demographic, technological, societal, etc) that offer what we believe to be significant growth opportunities. These trends are long-term oriented (i.e. 5 years) and provide a certain level of predictability. We also apply fundamental analysis to identify companies that we believe have a competitive advantage, can either sustain or grow their profit margins, have solid management teams, and have the financial strength to weather difficult economic environments. We are disciplined, long term investors who emphasize preparation and independent thought, and our belief in our investment process is strong. As such, we typically take advantage of market situations in which fear or greed causes consensus opinion to stray from the long term competitive positioning and growth prospects of our companies. We believe Wall Street's obsession with short-term corporate earnings results creates considerable opportunities for patient long-term investors. The BUFFALO BALANCED FUND outperformed the weighted average (60/40%) of the S&P 500 Index and the Merrill Lynch High Yield Master Index for the six month period ended September 30, 2007 (9.18% vs. 5.28%). The Fund currently has 61% of the portfolio invested in equities, 7% in convertible bonds, 22% in corporate bonds, and 10% in cash. The Fund has maintained its attractive yield, and is actively managed with the goal of providing income plus capital appreciation. This particular Fund does not use the firm's trend- based strategy used for investing in growth stocks. The majority of equities chosen for this Fund are income and/or value oriented. The Fund looks for equities that increase their dividend at least every other year. We buy companies that have good cash flows, stock repurchases and rising earnings. We also look for shareholder friendliness and integrity of management. In the broad market indexes, energy was the top performing sector over the last 6 months. The Fund benefited, as energy holdings were among the Fund's top contributors, including ConocoPhillips, Schlumberger, Chevron and Exxon. The Fund's industrials (GE, Lockheed, United Technologies) were also strong performers, followed by Wrigley and PepsiCo, consumer discretionary holdings benefiting from growth in their oversees markets. Bonds held in the Fund are primarily high yield corporate bonds, with some convertibles as well. The bonds are diversified across industry segments and maturity dates, with an average S&P rating of B-. We buy mostly unsecured, high yield bonds with ratings of BBB or lower, feeling that we can add value in that area because of our portfolio manager and research team's depth, experience and expertise. The BUFFALO HIGH YIELD FUND outperformed the Merrill Lynch High Yield Master Index for the six months ending September 30, 2007. The Fund returned 2.21% compared to a return of 0.66% for the Merrill Lynch High Yield Master Index. The favorable performance reflects favorable returns on several of our convertible holdings and our emphasis on high-quality corporate bonds that held up well during the turmoil in the broader high yield marketplace. In spite of the considerable volatility that impacted the credit markets during the summer months, our long term strategy remains unchanged. We are holding a mix of approximately 69% corporate bonds, 18% convertibles and 8% cash. In terms of credit quality, our corporate bonds are primarily rated single B by the rating agencies.* We continue to diversify our portfolio across industry segments with only one sector (hotels, restaurants, and leisure -- principally gaming) having a weighting over 10%. Our corporate bond emphasis is on high-quality companies with improving credit quality and manageable leverage. With the recent turmoil in the mortgage, credit, and housing markets we are carefully monitoring our existing holdings to minimize exposure to issuers that we believe are at risk, while using cash to purchase bonds we believe have unfairly sold off along with the broader market and represent good values. We continue to stay away from emerging market (and all foreign) bonds, and are also avoiding most bonds issued in connection with leveraged buyouts ("LBO's") feeling that their high debt levels could lead to problems in a decelerating economic growth environment. Within the convertible segment, our strategy is similar to most of our equity portfolios - -------------------------------------------------------------------------------- 3 MESSAGE TO OUR SHAREHOLDERS (Unaudited) (Continued) at the Buffalo Funds, where we look for companies that should benefit from long-term trends, and have significant equity upside. During the six months ending September 30, 2007, we were able to use our cash to add several new issues with appealing risk/reward tradeoffs. Our cash is still higher than we prefer, but we will continue to maintain our yield discipline on what we are willing to accept to maintain an adequate risk/reward balance in the current environment. We believe that continued uncertainty about the health of the economy and credit markets as well as a large supply calendar should allow us to deploy the cash opportunistically in the final quarter of 2007, as well as early 2008. For the six-month period ended September 30, 2007, the BUFFALO JAYHAWK CHINA FUND was up 33.17%, versus the performance of the MSCI China Free Index (total return) of 76.58%. The strong performance of the index masks the extreme volatility of the market. Through this turbulent time, we have adhered to our investment strategies of identifying and investing in value opportunities through bottom up fundamental analysis. Consequently we have managed to generate a strong positive return while keeping our volatility much lower than the overall market. While we see increasing market concerns about the "over-frothy" Chinese economy, we believe that our portfolio is well positioned to sustain a positive return through market volatility. The price action in the greater China equity markets over the course of the third quarter was extreme in its volatility. At its trough on August 17, 2007, the MSCI China Index was down nearly 20% for the month. Yet it finished August up more than 7% -- a rally of more than 30% during the last two weeks of August which continued through September. All told, from the trough in mid-August to the end of the third quarter the index rose well over 50% in value. While earnings growth in China has been undoubtedly strong, fundamentals have not been moving these markets. Rather, liquidity and momentum have driven prices beyond what we believe to be reasonable in a remarkably short period of time. First, Chinese investors, who have high savings rates exceeding 40% and approximately $2.2 trillion in personal cash savings earning low rates of return, are returning to the A-share market in droves. (A-shares represent companies incorporated in mainland China and are traded in the mainland A-share markets. The prices of A shares are quoted in Renminbi, and currently only mainlanders and selected foreign institutional investors are allowed to trade A shares.) More than 34 million brokerage accounts have been opened this year alone, fueling a fivefold increase in the A-share index since the lows in the summer of 2005. Second, overseas investors have been front running the potential inflow from the Chinese "through train" program. On August 20, 2007, SAFE (the State Administration of Foreign Exchange) very quietly announced that mainland Chinese individuals would be allowed to buy individual stocks (i.e. not required to invest via a fund) overseas with Hong Kong designated as the first market for the program. This initiative has been given the nickname of the "through train." Despite the fact that mainland investors through mutual funds or directly have not bought a single Chinese stock through Qualified Domestic Institutional Investors funds or the "through train" individual investor scheme, the market as defined by the MSCI China Free Index has rallied more than 50% from its August lows. The "invest in H-shares because mainland money is coming" theme was widely promoted by the sell side and obviously implemented by the buy side. (An H-share is a share of a Chinese company listed on the Hong Kong Stock Exchange.) This also explains the disparity in performance between large and small cap stocks, with the large and mega cap H-shares with dual listings in the A-share markets (big state-owned banks and insurance companies for example) leading the market rally. These are also large constituents of the MSCI China Free Index. Meanwhile stock prices of many, if not most, large and mega cap Chinese stocks have decoupled completely from fundamental valuations. Instead, the gravitational pull of A-share valuations is strong enough to cause even richly valued Hong Kong stocks to trade higher. As mentioned earlier, the Fund's investment strategy is driven by bottom-up, stock and value focus. Therefore, during the period in review, the Fund's performance was hurt by our avoidance of high valuation stocks in overbought sectors of the stock market. The top five - -------------------------------------------------------------------------------- 4 holdings of the portfolio tend to be in small capitalization stocks that we believe are deeply undervalued. At the same time, we have avoided the big Chinese banks and life insurance companies with rich valuations. During the sell-off in shares of Chinese companies in mid- February to early March this year, our portfolio composition was defensive and stood up well to the selling pressure. Going forward, as investors get increasingly nervous about the high valuation of large-cap Chinese companies, we believe that our value-oriented investment strategy should stand the test of time. The BUFFALO LARGE CAP FUND (up 8.50% for the six- month period ended September 30, 2007) trailed the Russell 1000 Growth Index (+11.35%), but performed nearly in line with the S&P 500 (+8.44%). The strongest sectors in the Russell 1000 Growth were energy, technology and materials, particularly after the Federal Reserve initially lowered the discount rate in August. The Fund's overweighting in health care, as well as the out performance of our health care holdings, strongly contributed to our relative and absolute returns in the quarter. Five strong performers in health care during the period were Bayer, MedImmune, Schering-Plough, Medco and Teva Pharmaceuticals. Relative to the benchmark, our underweighting of energy and industrials accounted for our underperformance. To a lesser extent, our sector allocation as well as stock selection within financials was a drag on performance. While large cap growth stocks have generally underperformed over the last five years, we believe that the prospects for them to continue to regain positive market leadership are favorable, given their relative fundamental stability in this time of slowing economic growth. BUFFALO MICRO CAP, down 1.43%, underperformed the Russell Microcap Growth Index, which was up 2.82% for the six-month period ended September 30, 2007. Performance was negative in the consumer discretionary and financial sectors, and positive in healthcare (our heaviest sector), industrials and technology. Healthcare was the top contributing sector in the Fund. In economic environments like we are having, investors flock to companies and sectors that are not macroeconomically sensitive, and healthcare was a beneficiary. Healthcare performers included Align (the only provider in the clear dental aligner market worldwide), Lifecell (tissue-based products for use in surgical procedures to repair soft tissue defects) and Meridian Bioscience (diagnostic test kits primarily for respiratory, gastrointestinal, viral, and parasitic infectious diseases). Several strong performers in the industrial sector were in the education industry (Capella and ecollege.com), fitting both our education and e-commerce trends. The consumer discretionary holdings were the primary negative force in the Fund, driven by travel and leisure and retail related stocks. Microcaps in general have trailed the overall market year to date. As the economy slows, the smallest companies experience the most negative operating leverage. In addition, many micro caps lack exposure to foreign markets and the growth in foreign economies. There is tremendous volatility of returns/stock prices in this size of company (less than $600 million in size). The portfolio had a number of holdings move over 20% in the last 6 months: 17 holdings declined over 20% and 13 increased over 20%. As long-term investors we ignore short-term volatility of individual holdings, keeping our primary focus on company fundamentals, management execution, and the reconfirmation of the larger trends (demographic, technology, etc.) that are benefiting the company. On September 28, 2007, John Bichelmeyer was added to the Fund as a co-manager. Mr. Bichelmeyer has over 10 years of industry experience, and has been with the Fund's management company since 2005. The Fund is now managed by a team of four co-portfolio managers (Kent Gasaway, Bob Male, Grant Sarris, and John Bichelmeyer) and supported by research analysts. The BUFFALO MID CAP FUND, up 11.85%, strongly outperformed the Russell Midcap Growth Index, up 9.03%, for the six-month period ended September 30, 2007. The strongest performing sectors in the index were energy and industrials. Energy typically does not fit our strategy of long-term stable growth, and the Fund was underweighted in industrials, with a concentration in business services. Despite this headwind, the Fund outperformed based on stock selection, with very strong performance within the healthcare, technology and financial sectors. - -------------------------------------------------------------------------------- 5 MESSAGE TO OUR SHAREHOLDERS (Unaudited) (Continued) The top performing holding was Garmin, which the Fund has held for approximately four years. Garmin has benefited from the proliferation of navigational devices, and we believe they have a sustainable advantage within the industry. Other top contributors were in the healthcare sector, including MedImmune which was acquired by AstraZeneca PLC, Amylin, and Dade Behring (acquired by Siemens). Detractors from performance included Chicos, Urban Outfitters and Talbots. Monster Worldwide was also down, hurt by employment concerns. We continue to believe that some consumer discretionary, healthcare and technology names are attractively valued at this point, given a long-term view. We have been acting opportunistically, adding to positions when valuations warrant. The BUFFALO SCIENCE AND TECHNOLOGY FUND (up 13.28%) outperformed the NASDAQ Composite Index (up 11.99%) for the six-month period ended September 30, 2007. While we believe our exposure to the healthcare technology segment should lead to higher relative risk- adjusted returns over the long-term, the Fund's performance was hurt by our allocation to this segment as it underperformed the Lipper group. At the end of the period, the Fund had 52% invested in the information technology and services sector, 36% in the healthcare technology, 4% in industrials, and 6% in cash. Top contributing names in the period were Cree, Nokia, and Align. Cree's standout performance was driven by profitability improvement and the anticipation that the company's energy efficient LED light sources will begin to populate new applications like TV and monitor backlights and architectural lighting. Nokia's recent stock price outperformance was due to strong fundamental growth driven by share gains in the wireless handset market. Negative contributors included Monster, MKS Instruments, and ev3. Monster's relative under- performance is due to employment concerns related to the broader economy. MKS Instruments' stock has been pressured by declining orders in the semiconductor equipment, and ev3's performance was impacted by the challenges of digesting the Foxhollow acquisition. We ended the quarter with 70 holdings, within our targeted range of 65 - 75 holdings. Based on our bottom-up fundamental analysis, we continue to find investment opportunities that we believe should benefit from long-term secular growth trends and trade at attractive valuations within the healthcare and technology universe. Market volatility has picked up recently in the wake of consumer credit concerns. The impact to the overall economy will play out over the next few quarters. We expect volatility to continue. Our time tested investment process with its emphasis on secular growth and finding value, and our diversity across information technology and healthcare technology, helps provide relative stability to the portfolio in uncertain economic periods. The BUFFALO SMALL CAP FUND was up 3.64% in the six months ended September 30, 2007, outperforming the Russell 2000 Index (up 1.19%) but underperforming the Russell 2000 Growth Index (up 6.70%). Within the Russell 2000 Growth Index, healthcare, industrials, energy and materials were the strongest performers, followed by the technology sector. Our lack of exposure to energy and materials continued to be a headwind, however we offset that somewhat through strong stock selection, particularly in technology and healthcare. The Fund currently has its heaviest weightings in the consumer discretionary (28% of the portfolio), healthcare (25%), technology (23%), and industrials (15%) sectors. Our strategy maintains a strong discipline toward valuation. We are long term investors, and don't stray from our discipline -- whether we're outperforming or underperforming. We continue to stick to our strategy of buying growth companies (at reasonable prices) that we feel are well positioned to benefit from solid underlying growth trends regardless of the state of the economy. The Fund was hit in the industrials sector, as most of our "industrial" names are business services such as recruiting, consulting or outsourcing rather than more traditional, cyclical industries. As concerns about the economy and employment increased, our business services names performed poorly. The consumer discretionary sector had slightly negative performance. However, we continue to believe that many business - -------------------------------------------------------------------------------- 6 services and consumer names are attractively valued at this point, given a long term view. We had lowered our consumer discretionary weightings almost two years ago before the sector was hit, and are selectively adding to positions based on valuations. We also continue to find compelling names in technology and healthcare. Healthcare as a sector is less economically sensitive, and as a result it did well in the period. The Fund was overweighted healthcare, making healthcare the Fund's biggest contributor to performance. Gamestop was the Fund's biggest individual contributor. The company is a retailer of video game products and personal computer (PC) entertainment software, with over 5000 stores in 16 countries. Another strong contributor was Align, which continued to profit from their position as the only provider in the clear dental aligner market worldwide. Other strong contributors were in healthcare (including Amylin and Covance) and technology (Cree and Cabot). Many of the weaker performers were those affected by a slower economy and concerns for employment, including holdings in the retail (Coldwater Creek, PF Changs and Christopher & Banks) and the industrials/ business services mentioned earlier (Heidrick & Struggles, Korn/Ferry International and Navigant Consulting). We continue to view the long term fundamentals of each of these companies very favorably. The BUFFALO USA GLOBAL FUND was up 8.20%, trailing the Russell 3000 Growth Index (+10.95%) and almost in line with the S&P 500 Index (+8.44%) for the period ended September 30, 2007. Because of the Fund's unique strategy of focusing on U.S. based companies with more than 40% of their sales or income from international sources, there is not a benchmark that provides a true comparison. However, the Russell 3000 Index does reflect the multi-cap nature of the Fund. In the Russell 3000 Index the best performing sectors were materials, energy and technology. The weakest were financials and consumer discretionary. The Fund's largest contributors were technology, consumer staples and consumer discretionary. While consumer discretionary was negative for the index, it was a strong contributor in the Fund. Because the Fund looks for companies making a significant percentage of their sales or income from international sources, the U.S. consumer is not affecting the consumer discretionary holdings in this portfolio as much as other funds. Consumer-oriented performers included Las Vegas Sands, McDonalds, Wrigley and Coca Cola. This Fund was really designed for the environment we're in today and should remain in for some time. The global economy is growing faster than the U.S., with the growth of many countries far outpacing that of the U.S. The Fund should be well positioned for continued strong international growth and a weak dollar. We have a good deal of flexibility in this fund, investing in growth companies from a broad spectrum of market capitalizations, industries and geographic exposures. Using this approach, shareholders gain exposure to much of the dynamic growth of an increasingly globally-based economy. /s/ John C. Kornitzer /s/ Kent W. Gasaway John C. Kornitzer Kent W. Gasaway President Sr. Vice President /s/ Robert Male /s/ Grant P. Sarris Robert Male Grant P. Sarris Sr. Vice President Sr. Vice President /s/ William J. Kornitzer III William J. Kornitzer III Sr. Vice President * According to S&P: An obligation rated 'BBB' exhibits adequate protection parameters. An obligation rated 'B' is more vulnerable to nonpayment than obligations rated 'BB', but the obligor currently has the capacity to meet its financial commitment on the obligation. - -------------------------------------------------------------------------------- 7 INVESTMENT RESULTS
TOTAL RETURNS AS OF SEPTEMBER 30, 2007 (Unaudited) - ------------------------------------------------------------------------------------------------------------------------------------ AVERAGE ANNUAL GROSS --------------------------------------------------------- EXPENSE SIX SINCE RATIO* MONTHS ONE YEAR FIVE YEARS TEN YEARS INCEPTION - ------------------------------------------------------------------------------------------------------------------------------------ BUFFALO BALANCED FUND (inception date 8/12/94) ............. 1.03% 9.18% 15.76% 16.15% 6.00% 8.49% S&P 500 Index .............................................. N/A 8.44% 16.44% 15.45% 6.57% 11.48% S&P 500 Index & Merrill Lynch High Yield Master Index Weighted Average** .......................... N/A 5.28% 12.89% 14.27% 6.63% 10.26% Lipper Balanced Funds Index ................................ N/A 6.07% 13.19% 11.76% 6.42% 8.97% BUFFALO HIGH YIELD FUND (inception date 5/19/95) ........... 1.02% 2.21% 7.39% 8.94% 5.47% 7.99% Merrill Lynch High Yield Master Index ...................... N/A 0.66% 7.66% 12.27% 6.20% 7.36% Lipper High Yield Bond Funds Index ......................... N/A 0.63% 7.74% 11.65% 4.25% 5.95% BUFFALO JAYHAWK CHINA FUND (inception date 12/18/06) ....... 2.19% 33.17% N/A N/A N/A 40.22%*** MSCI China Free Index ...................................... N/A 76.58% N/A N/A N/A 87.67%*** BUFFALO LARGE CAP FUND (inception date 5/19/95) ............ 1.06% 8.50% 16.60% 14.84% 5.49% 10.58% Russell 1000 Growth Index .................................. N/A 11.35% 19.35% 13.84% 4.06% 8.86% S&P 500 Index .............................................. N/A 8.44% 16.44% 15.45% 6.57% 10.98% Lipper Large-Cap Growth Fund Index ......................... N/A 13.47% 21.42% 12.95% 3.61% 8.17% BUFFALO MICRO CAP FUND (inception date 5/21/04) ............ 1.51% -1.43% 10.95% N/A N/A 10.28% Russell Microcap Growth Index .............................. N/A 2.82% 14.31% N/A N/A 9.19% Russell 2000 Index ......................................... N/A 1.19% 12.34% N/A N/A 13.61% Lipper Micro-Cap Funds Index ............................... N/A 3.54% 15.32% N/A N/A 12.71% BUFFALO MID CAP FUND (inception date 12/17/01) ............. 1.02% 11.85% 21.79% 20.56% N/A 10.92% Russell Midcap Growth Index ................................ N/A 9.03% 21.22% 20.39% N/A 9.66% S&P Midcap 400 Index ....................................... N/A 4.92% 18.76% 18.17% N/A 11.78% Lipper Mid-Cap Growth Funds Index .......................... N/A 15.94% 30.80% 19.02% N/A 9.20% BUFFALO SCIENCE & TECHNOLOGY FUND (inception date 4/16/01).. 1.03% 13.28% 20.51% 25.98% N/A 7.78% NASDAQ Composite Index ..................................... N/A 11.99% 20.52% 18.95% N/A 6.13% S&P 500 Index .............................................. N/A 8.44% 16.44% 15.45% N/A 5.90% Lipper Science & Technology Funds Index .................... N/A 16.79% 25.52% 19.47% N/A 1.45% BUFFALO SMALL CAP FUND (inception date 4/14/98) ............ 1.01% 3.64% 15.96% 21.04% N/A 16.35% Russell 2000 Growth Index .................................. N/A 6.70% 18.94% 18.70% N/A 3.50% S&P Smallcap 600 Index ..................................... N/A 3.26% 14.93% 18.73% N/A 9.00% Lipper Small-Cap Growth Funds Index ........................ N/A 8.89% 21.73% 17.29% N/A 6.16% BUFFALO USA GLOBAL FUND (inception date 5/19/95) ........... 1.05% 8.20% 19.36% 15.69% 7.04% 11.31% Russell 1000 Growth Index .................................. N/A 11.35% 19.35% 13.84% 4.06% 8.86% S&P 500 Index .............................................. N/A 8.44% 16.44% 15.45% 6.57% 10.98% Russell 3000 Growth Index .................................. N/A 10.95% 19.31% 14.19% 3.97% 8.76% Lipper Multi-Cap Growth Fund Index ......................... N/A 12.21% 22.20% 16.72% 5.28% 9.27%
* As reported in the Funds' Prospectus dated July 30, 2007. ** The performance figure shown for comparison purposes is a weighted average made up of 60% of the S&P 500 Index and 40% of the Merrill Lynch High Yield Master Index. *** Cumulative since inception date of 12/18/06. PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE; PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE OF THE FUNDS MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. - -------------------------------------------------------------------------------- 8 THE BUFFALO BALANCED, JAYHAWK CHINA, LARGE CAP, MID CAP, SCIENCE & TECHNOLOGY AND USA GLOBAL FUNDS IMPOSE A 2.00% REDEMPTION FEE ON SHARES HELD FOR LESS THAN 60 DAYS AND THE BUFFALO HIGH YIELD, MICRO CAP AND SMALL CAP FUNDS IMPOSE A 2.00% REDEMPTION FEE ON SHARES HELD LESS THAN 180 DAYS. PERFORMANCE DATA DOES NOT REFLECT THE REDEMPTION FEE. IF REFLECTED, TOTAL RETURNS WOULD BE REDUCED. The Funds' returns shown do not reflect the deduction of taxes that a shareholder would pay on distributions or the redemption of shares. The benchmark returns shown, excluding the Lipper Indices, reflect the reinvestment of dividends and capital gains but do not reflect the deduction of any investment management fees, other expenses or taxes. The performance of the Lipper Indices is presented net of the Funds' fees and expenses; however, applicable sales charges are not taken into consideration. One cannot invest directly in an index. The S&P 500 Index is a capitalization weighted index of 500 large capitalization stocks which is designed to measure broad domestic securities markets. The Merrill Lynch High Yield Master Index is an unmanaged index comprised of over 1,200 high yield bonds representative of high yield bond markets as a whole. The Lipper Balanced Funds Index is an unmanaged, net asset value weighted index of the 30 largest balanced mutual funds. The Lipper High Yield Bond Funds Index is a widely recognized index of the 30 largest mutual funds that invest primarily in high yield bonds. The MSCI China Free Index is a capitalization weighted index that measures the performance of stocks from the country of China. The Russell 1000 Growth Index measures the performance of those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values. The Russell 1000 Index consists of the 1,000 largest companies in the Russell 3000 Index. The Lipper Large-Cap Growth Funds Index is an unmanaged, equally weighted performance index of the 30 largest qualifying mutual funds (based on net assets) in the Lipper Large-Cap classification. The Russell Microcap Growth Index measures the performance of those Russell Microcap companies with higher price-to-book ratios and higher forecasted growth values. The Russell Microcap Index consists of the smallest 1,000 companies in the small-cap Russell 2000 Index plus the next 1,000 securities. The Russell 2000 Index consists of the smallest 2,000 securi- ties in the Russell 3000 Index, representing approximately 8% of the Russell 3000 total market capitalization. The Lipper Micro-Cap Funds Index is an unmanaged equally weighted performance index of the 30 largest qualifying mutual funds (based on net assets) in the Lipper Micro-Cap classification. The Russell Midcap Growth Index measures the perform- ance of those Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values. The Russell Midcap Index consists of the 800 smallest companies in the Russell 1000 Index. The S&P Midcap 400 Index con- sists of 400 domestic stocks chosen for market size, liquidity and industry group representation. It is a market-weighted index with each stock affecting the index in proportion to its market value. The Lipper Mid-Cap Growth Funds Index is an unmanaged, equally weighted performance index of the 30 largest qualifying mutual funds (based on net assets) in the Lipper Mid-Cap classification. The NASDAQ Composite Index is a broad-based capitalization-weighted index of stocks in all three NASDAQ tiers: Global Select, Global Market and Capital Market. The Lipper Science & Technology Funds Index is an unmanaged, equally weighted performance index of the 30 largest qualifying mutual funds (based on net assets) in the Lipper Science and Technology classification. The Russell 2000 Growth Index measures the perform- ance of those Russell 2000 Index companies with higher price-to-book ratios and higher forecasted growth values. The S&P Smallcap 600 Index consists of 600 domestic stocks chosen for market size, liquidity, bid-asked spread, ownership, share turnover and number of no-trade days and industry group representation. The Lipper Small-Cap Growth Funds Index is an unmanaged, equally weighted performance index of the 30 largest qualifying mutual funds (based on net assets) in the Lipper Small-Cap classification. The Russell 3000 Growth Index measures the performance of those Russell 3000 Index companies with higher price-to-book ratios and higher forecasted growth values. The Russell 3000 Index consists of the 3,000 largest U.S. companies based on total market capitalization. The Lipper Multi-Cap Growth Funds Index is an unmanaged, equally weighted performance index of the 30 largest qualifying mutual funds (based on net assets) in the Lipper Multi-Cap Growth classification. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Please refer to the schedule of investments in the report for Fund holdings information. Cash flow measures the cash generating capability of a company by adding non-cash charges (e.g. depreciation) and interest to pretax income. The price to earnings (P/E) ratio reflects the multiple of earnings at which a stock sells. PLEASE REFER TO THE PROSPECTUS FOR SPECIAL RISKS ASSOCIATED WITH INVESTING IN THE BUFFALO FUNDS, INCLUDING, BUT NOT LIMITED TO, RISKS INVOLVED WITH INVESTMENTS IN SCIENCE AND TECHNOLOGY, FOREIGN, LOWER- OR NON-RATED SECURITIES AND SMALLER COMPANIES. Must be preceded or accompanied by a current prospectus. Quasar Distributors, LLC, distributor. 11/07 - -------------------------------------------------------------------------------- 9 EXPENSE EXAMPLE As a shareholder of the Funds, you incur two types of costs: (1) transaction costs (including redemption fees) and (2) ongoing costs, including management fees and other Fund specific expenses. The example below is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (4/1/07 - 9/30/07). This information is unaudited. ACTUAL EXPENSES The first line of the tables below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During the Period" to estimate the expenses you paid on your account during the period. Although the Funds charge no sales load or transaction fees, you will be assessed fees for outgoing wire transfers, returned checks and stop payment orders at prevailing rates charged by U.S. Bancorp Fund Services, LLC, the Funds' transfer agent. If you request that a redemption be made by wire transfer, currently a $15.00 fee is charged by the Funds' transfer agent. You will be charged a redemption fee equal to 2.00% of the net amount of the redemption if you redeem your shares of the Buffalo Balanced, Jayhawk China, Large Cap, Mid Cap, Science & Technology and USA Global Funds within 60 days of purchase. The Buffalo High Yield, Small Cap and Micro Cap Funds will charge a redemption fee equal to 2.00% of the net amount of the redemption if you redeem your shares within 180 days of purchase. To the extent a Fund invests in shares of other investment companies as part of its investment strategy, you will indirectly bear your proportionate share of any fees and expenses charged by the underlying funds in which the Fund invests in addition to the expenses of the Fund. Actual expenses of the underlying funds are expected to vary among the various underlying funds. These expenses are not included in the example below. The example below includes management fees, registration fees and other expenses. However, the example below does not include portfolio trading commissions and related expenses and other extraordinary expenses as determined under U.S. generally accepted accounting principles. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the tables below provides information about hypothetical account values and hypothetical expenses based on the Funds' actual expense ratios and an assumed rate of return of 5% per year before expenses, which are not the Funds' actual returns. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in our Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the tables is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. BUFFALO BALANCED FUND
BEGINNING ENDING EXPENSES PAID DURING ACCOUNT VALUE ACCOUNT VALUE PERIOD APRIL 1, 2007 - APRIL 1, 2007 SEPTEMBER 30, 2007 SEPTEMBER 30 , 2007* - ------------------------------------------------------------------------------------------------------------ Actual .................................... $1,000.00 $1,091.80 $5.39 Hypothetical (5% return before expenses) .. $1,000.00 $1,019.85 $5.20
* Expenses are equal to the Fund's annualized expense ratio of 1.03%, multiplied by the average account value over the period, multiplied by 183/366 to reflect the one-half year period. BUFFALO HIGH YIELD FUND
BEGINNING ENDING EXPENSES PAID DURING ACCOUNT VALUE ACCOUNT VALUE PERIOD APRIL 1, 2007 - APRIL 1, 2007 SEPTEMBER 30, 2007 SEPTEMBER 30, 2007* - ------------------------------------------------------------------------------------------------------------ Actual .................................... $1,000.00 $1,022.10 $5.16 Hypothetical (5% return before expenses) .. $1,000.00 $1,019.90 $5.15
* Expenses are equal to the Fund's annualized expense ratio of 1.02%, multiplied by the average account value over the period, multiplied by 183/366 to reflect the one-half year period. - -------------------------------------------------------------------------------- 10 BUFFALO JAYHAWK CHINA FUND
BEGINNING ENDING EXPENSES PAID DURING ACCOUNT VALUE ACCOUNT VALUE PERIOD APRIL 1, 2007 - APRIL 1, 2007 SEPTEMBER 30, 2007 SEPTEMBER 30, 2007* - ------------------------------------------------------------------------------------------------------------ Actual .................................... $1,000.00 $1,331.70 $10.26 Hypothetical (5% return before expenses) .. $1,000.00 $1,016.20 $ 8.87
* Expenses are equal to the Fund's annualized expense ratio of 1.76%, multiplied by the average account value over the period multiplied by 183/366 to reflect the period since commencement of operations. BUFFALO LARGE CAP FUND
BEGINNING ENDING EXPENSES PAID DURING ACCOUNT VALUE ACCOUNT VALUE PERIOD APRIL 1, 2007 - APRIL 1, 2007 SEPTEMBER 30, 2007 SEPTEMBER 30, 2007* - ------------------------------------------------------------------------------------------------------------ Actual .................................... $1,000.00 $1,085.00 $5.42 Hypothetical (5% return before expenses) .. $1,000.00 $1,019.80 $5.25
* Expenses are equal to the Fund's annualized expense ratio of 1.04%, multiplied by the average account value over the period, multiplied by 183/366 to reflect the one-half year period. BUFFALO MICRO CAP FUND
BEGINNING ENDING EXPENSES PAID DURING ACCOUNT VALUE ACCOUNT VALUE PERIOD APRIL 1, 2007 - APRIL 1, 2007 SEPTEMBER 30, 2007 SEPTEMBER 30, 2007* - ------------------------------------------------------------------------------------------------------------ Actual .................................... $1,000.00 $985.70 $7.45 Hypothetical (5% return before expenses) .. $1,000.00 $1,017.50 $7.57
* Expenses are equal to the Fund's annualized expense ratio of 1.50%, multiplied by the average account value over the period, multiplied by 183/366 to reflect the one-half year period. BUFFALO MID CAP FUND
BEGINNING ENDING EXPENSES PAID DURING ACCOUNT VALUE ACCOUNT VALUE PERIOD APRIL 1, 2007 - APRIL 1, 2007 SEPTEMBER 30, 2007 SEPTEMBER 30, 2007* - ------------------------------------------------------------------------------------------------------------ Actual .................................... $1,000.00 $1,118.50 $5.35 Hypothetical (5% return before expenses) .. $1,000.00 $1,019.95 $5.10
* Expenses are equal to the Fund's annualized expense ratio of 1.01%, multiplied by the average account value over the period, multiplied by 183/366 to reflect the one-half year period. BUFFALO SCIENCE & TECHNOLOGY FUND
BEGINNING ENDING EXPENSES PAID DURING ACCOUNT VALUE ACCOUNT VALUE PERIOD APRIL 1, 2007 - APRIL 1, 2007 SEPTEMBER 30, 2007 SEPTEMBER 30, 2007* - ------------------------------------------------------------------------------------------------------------ Actual .................................... $1,000.00 $1,132.80 $5.44 Hypothetical (5% return before expenses) .. $1,000.00 $1,019.90 $5.15
* Expenses are equal to the Fund's annualized expense ratio of 1.02%, multiplied by the average account value over the period, multiplied by 183/366 to reflect the one-half year period. BUFFALO SMALL CAP FUND
BEGINNING ENDING EXPENSES PAID DURING ACCOUNT VALUE ACCOUNT VALUE PERIOD APRIL 1, 2007 - APRIL 1, 2007 SEPTEMBER 30, 2007 SEPTEMBER 30, 2007* - ------------------------------------------------------------------------------------------------------------ Actual .................................... $1,000.00 $1,036.40 $5.09 Hypothetical (5% return before expenses) .. $1,000.00 $1,020.00 $5.05
* Expenses are equal to the Fund's annualized expense ratio of 1.01%, multiplied by the average account value over the period, multiplied by 183/366 to reflect the one-half year period. BUFFALO USA GLOBAL FUND
BEGINNING ENDING EXPENSES PAID DURING ACCOUNT VALUE ACCOUNT VALUE PERIOD APRIL 1, 2007 - APRIL 1, 2007 SEPTEMBER 30, 2007 SEPTEMBER 30, 2007* - ------------------------------------------------------------------------------------------------------------ Actual .................................... $1,000.00 $1,082.00 $5.36 Hypothetical (5% return before expenses) .. $1,000.00 $1,019.85 $5.20
* Expenses are equal to the Fund's annualized expense ratio of 1.03%, multiplied by the average account value over the period, multiplied by 183/366 to reflect the one-half year period. - -------------------------------------------------------------------------------- 11 ALLOCATION OF PORTFOLIO HOLDINGS Percentages represent market value as a percentage of total investments as of September 30, 2007. [The following tables were represented as a pie chart in the printed material.] BUFFALO BALANCED FUND Short Term Investments ......... 10.42% Common Stocks .................. 61.26% Convertible Bonds .............. 6.84% Corporate Bonds ................ 21.48% BUFFALO LARGE CAP FUND Short Term Investments ......... 4.34% Health Care .................... 27.35% Information Technology ......... 24.71% Financials ..................... 18.08% Industrials .................... 5.11% Consumer Discretionary ......... 11.79% Consumer Staples ............... 8.62% BUFFALO HIGH YIELD FUND Short Term Investments ......... 7.96% Common Stocks .................. 0.20% Corporate Bonds ................ 69.19% Preferred Stocks ............... 1.59% Convertible Bonds .............. 17.75% Convertible Preferred Stocks ... 3.31% BUFFALO MICRO CAP FUND Short Term Investments ......... 1.98% Health Care .................... 24.78% Consumer Discretionary ......... 20.60% Information Technology ......... 19.19% Industrials .................... 19.37% Financials ..................... 14.08% BUFFALO JAYHAWK CHINA FUND Financials ..................... 3.98% Consumer Discretionary ......... 15.28% Energy ......................... 8.72% Health Care .................... 13.19% Industrials .................... 16.94% Consumer Staples ............... 6.16% Utilities ...................... 6.69% Materials ...................... 4.75% Telecommunication Services ..... 5.87% Information Technology ......... 8.49% Short Term Investments ......... 9.93% - -------------------------------------------------------------------------------- 12 BUFFALO MID CAP FUND Consumer Staples ............... 2.16% Health Care .................... 24.44% Consumer Discretionary ......... 23.74% Information Technology ......... 22.63% Financials ..................... 9.77% Industrials .................... 9.04% Short Term Investments ......... 8.22% BUFFALO SMALL CAP FUND Short Term Investments ......... 2.74% Consumer Discretionary ......... 28.03% Health Care .................... 25.25% Preferred Stocks ............... 0.12% Information Technology ......... 22.99% Industrials .................... 14.88% Financials ..................... 5.99% BUFFALO SCIENCE & TECHNOLOGY FUND Short Term Investments ......... 6.39% Information Technology ......... 52.12% Consumer Discretionary ......... 1.42% Health Care .................... 35.66% Industrials .................... 4.41% BUFFALO USA GLOBAL FUND Energy ......................... 3.42% Health Care .................... 24.64% Information Technology ......... 28.96% Consumer Discretionary ......... 12.18% Consumer Staples ............... 9.63% Industrials .................... 5.96% Financials ..................... 5.01% Short Term Investments ......... 10.20% - -------------------------------------------------------------------------------- 13 BUFFALO BALANCED FUND SCHEDULE OF INVESTMENTS September 30, 2007 (Unaudited) SHARES MARKET VALUE - ------------------------------------------------------------------------------- COMMON STOCKS -- 60.55% CONSUMER DISCRETIONARY -- 1.07% AUTO COMPONENTS -- 0.48% 35,000 Modine Manufacturing Co. ....................... $ 931,700 LEISURE EQUIPMENT & PRODUCTS -- 0.59% 42,600 Eastman Kodak Co. .............................. 1,139,976 - ------------------------------------------------------------------------------- TOTAL CONSUMER DISCRETIONARY ................... 2,071,676 -------------- CONSUMER STAPLES -- 9.56% BEVERAGES -- 3.34% 80,000 The Coca-Cola Co. .............................. 4,597,600 25,000 PepsiCo, Inc. .................................. 1,831,500 -------------- 6,429,100 -------------- FOOD & STAPLES RETAILING -- 1.35% 40,000 Costco Wholesale Corp. ......................... 2,454,800 3,000 Whole Foods Market, Inc. ....................... 146,880 -------------- 2,601,680 -------------- FOOD PRODUCTS -- 3.40% 70,000 ConAgra Foods, Inc. ............................ 1,829,100 25,000 Del Monte Foods Co. ............................ 262,500 30,000 General Mills, Inc. ............................ 1,740,300 20,000 Kellogg Co. .................................... 1,120,000 25,000 Wm. Wrigley Jr. Co. ............................ 1,605,750 -------------- 6,557,650 -------------- HOUSEHOLD PRODUCTS -- 1.47% 30,000 Colgate-Palmolive Co. .......................... 2,139,600 10,000 Kimberly-Clark Corp. ........................... 702,600 -------------- 2,842,200 - ------------------------------------------------------------------------------- TOTAL CONSUMER STAPLES ......................... 18,430,630 -------------- ENERGY -- 20.99% ENERGY EQUIPMENT & SERVICES -- 2.92% 50,000 Patterson-UTI Energy, Inc. ..................... 1,128,500 30,000 Schlumberger Ltd. .............................. 3,150,000 20,000 Weatherford International Ltd.(a) .............. 1,343,600 -------------- 5,622,100 -------------- OIL & GAS -- 18.07% 45,000 Anadarko Petroleum Corp. ....................... 2,418,750 25,000 Apache Corp. ................................... 2,251,500 50,000 BP, PLC -- ADR(b) .............................. 3,467,500 70,000 ChevronTexaco Corp. ............................ 6,550,600 85,000 ConocoPhillips ................................. 7,460,450 35,000 Exxon Mobil Corp. .............................. 3,239,600 25,000 Hess Corp. ..................................... 1,663,250 70,000 Marathon Oil Corp. ............................. 3,991,400 40,000 Suncor Energy, Inc. ............................ 3,792,400 -------------- 34,835,450 - ------------------------------------------------------------------------------- TOTAL ENERGY ................................... 40,457,550 -------------- - -------------------------------------------------------------------------------- 14 SHARES MARKET VALUE - ------------------------------------------------------------------------------- FINANCIALS -- 8.57% COMMERCIAL BANKS -- 1.83% 20,000 Bank of America Corp. .......................... $ 1,005,400 20,000 Marshall & Ilsley Corp. ........................ 875,400 10,000 Northern Trust Corp. ........................... 662,700 25,000 Wilmington Trust Corp. ......................... 972,500 -------------- 3,516,000 -------------- DIVERSIFIED FINANCIAL SERVICES -- 2.77% 90,000 Citigroup, Inc. ................................ 4,200,300 25,000 JPMorgan Chase & Co. ........................... 1,145,500 -------------- 5,345,800 -------------- INSURANCE -- 3.97% 50,000 The Allstate Corp. ............................. 2,859,500 45,000 The Chubb Corp. ................................ 2,413,800 55,000 Cincinnati Financial Corp. ..................... 2,382,050 -------------- 7,655,350 - ------------------------------------------------------------------------------- TOTAL FINANCIALS ............................... 16,517,150 -------------- HEALTH CARE -- 6.20% HEALTH CARE EQUIPMENT & SUPPLIES -- 0.59% 20,000 Baxter International, Inc. ..................... 1,125,600 -------------- PHARMACEUTICALS -- 5.61% 60,000 Abbott Laboratories ............................ 3,217,200 28,000 Eli Lilly & Co. ................................ 1,594,040 30,000 GlaxoSmithKline, PLC -- ADR .................... 1,596,000 40,000 Johnson & Johnson .............................. 2,628,000 40,000 Wyeth .......................................... 1,782,000 -------------- 10,817,240 - ------------------------------------------------------------------------------- TOTAL HEALTH CARE .............................. 11,942,840 -------------- INDUSTRIALS -- 7.84% AEROSPACE & DEFENSE -- 2.98% 20,000 Lockheed Martin Corp. .......................... 2,169,800 20,000 Northrop Grumman Corp. ......................... 1,560,000 25,000 United Technologies Corp. ...................... 2,012,000 -------------- 5,741,800 -------------- COMMERCIAL SERVICES & SUPPLIES -- 2.36% 100,000 Pitney Bowes, Inc. ............................. 4,542,000 -------------- INDUSTRIAL CONGLOMERATES -- 2.50% 100,000 General Electric Co. ........................... 4,140,000 10,000 ITT Corp. ...................................... 679,300 -------------- 4,819,300 - ------------------------------------------------------------------------------- TOTAL INDUSTRIALS .............................. 15,103,100 -------------- INFORMATION TECHNOLOGY -- 5.59% SEMICONDUCTOR & SEMICONDUCTOR EQUIPMENT -- 3.76% 100,000 Applied Materials, Inc. ........................ 2,070,000 200,000 Intel Corp. .................................... 5,172,000 -------------- 7,242,000 -------------- SOFTWARE -- 1.83% 120,000 Microsoft Corp. ................................ 3,535,200 - ------------------------------------------------------------------------------- TOTAL INFORMATION TECHNOLOGY ................... 10,777,200 -------------- - -------------------------------------------------------------------------------- 15 BUFFALO BALANCED FUND SCHEDULE OF INVESTMENTS September 30, 2007 (Unaudited) (Continued) SHARES OR FACE AMOUNT MARKET VALUE - ------------------------------------------------------------------------------- MATERIALS -- 0.30% METALS & MINING -- 0.30% 15,000 Alcoa, Inc. .................................... $ 586,800 - ------------------------------------------------------------------------------- TOTAL MATERIALS ................................ 586,800 -------------- UTILITIES -- 0.43% ELECTRIC UTILITIES -- 0.43% 25,000 OGE Energy Corp. ............................... 827,500 - ------------------------------------------------------------------------------- TOTAL UTILITIES ................................ 827,500 -------------- TOTAL COMMON STOCKS .......................................... 116,714,446 - ------------------------------------------------------------------------------- (COST $81,573,216) CORPORATE BONDS -- 21.24% CONSUMER DISCRETIONARY -- 6.34% AUTOMOBILES -- 2.04% Ford Motor Credit Company $ 4,000,000 7.375%, 10/28/2009 ........................... 3,924,068 -------------- HOTELS RESTAURANTS & LEISURE -- 0.51% Circus Circus 1,000,000 7.625%, 07/15/2013 ........................... 987,500 -------------- LEISURE EQUIPMENT & PRODUCTS -- 0.86% Eastman Kodak Co. 1,000,000 7.250%, 11/15/2013 ........................... 997,500 Mikohn Gaming Corp. 692,000 11.875%, 08/15/2008 .......................... 660,860 -------------- 1,658,360 -------------- MEDIA -- 0.05% Fisher Communications, Inc. 100,000 8.625%, 09/15/2014 ........................... 104,000 -------------- SPECIALTY RETAIL -- 1.25% FTD, Inc. 1,000,000 7.750%, 02/15/2014 ........................... 955,000 United Auto Group, Inc. 1,500,000 7.750%, 12/15/2016 ........................... 1,443,750 -------------- 2,398,750 -------------- TEXTILES, APPAREL & LUXURY GOODS -- 1.63% Interface, Inc. 3,000,000 9.500%, 02/01/2014 ........................... 3,150,000 - ------------------------------------------------------------------------------- TOTAL CONSUMER DISCRETIONAR .................... 12,222,678 -------------- CONSUMER STAPLES -- 3.42% FOOD PRODUCTS -- 2.39% Pilgrims Pride Corp. 3,500,000 8.375%, 05/01/2017 ........................... 3,587,500 Smithfield Foods, Inc. 1,000,000 7.750%, 07/01/2017 ........................... 1,030,000 -------------- 4,617,500 -------------- PERSONAL PRODUCTS -- 1.03% Elizabeth Arden, Inc. 2,000,000 7.750%, 01/15/2014 ........................... 1,980,000 - ------------------------------------------------------------------------------- TOTAL CONSUMER STAPLES ......................... 6,597,500 -------------- - -------------------------------------------------------------------------------- 16 FACE AMOUNT MARKET VALUE - ------------------------------------------------------------------------------- ENERGY -- 4.33% OIL & GAS -- 2.85% United Refining Co. $ 5,300,000 10.500%, 08/15/2012 .......................... $ 5,485,500 -------------- OIL, GAS & CONSUMABLE FUELS -- 1.48% Swift Energy Co. 3,000,000 7.125%, 06/01/2017 ........................... 2,857,500 - ------------------------------------------------------------------------------- TOTAL ENERGY ................................... 8,343,000 -------------- HEALTH CARE -- 4.25% HEALTH CARE PROVIDERS & SERVICES -- 2.09% Carriage Services, Inc. 3,000,000 7.875%, 01/15/2015 ........................... 3,015,000 Psychiatric Solutions, Inc. 1,000,000 7.750%, 07/15/2015 ........................... 1,017,500 -------------- 4,032,500 -------------- PHARMACEUTICALS -- 2.16% Warner Chilcott Corp. 4,000,000 8.750%, 02/01/2015 ........................... 4,160,000 - ------------------------------------------------------------------------------- TOTAL HEALTH CARE .............................. 8,192,500 -------------- INDUSTRIALS -- 2.90% COMMERCIAL SERVICES & SUPPLIES -- 2.37% Greenbrier Companies, Inc. 1,500,000 8.375%, 05/15/2015 ........................... 1,503,750 Iron Mountain, Inc. 3,000,000 8.625%, 04/01/2013 ........................... 3,052,500 -------------- 4,556,250 -------------- DIVERSIFIED MANUFACTURING -- 0.53% Blount, Inc. 1,000,000 8.875%, 08/01/2012 ........................... 1,021,250 - ------------------------------------------------------------------------------- TOTAL INDUSTRIALS .............................. 5,577,500 -------------- TOTAL CORPORATE BONDS ........................................ 40,933,178 - ------------------------------------------------------------------------------- (COST $40,088,958) CONVERTIBLE BONDS -- 6.76% CONSUMER DISCRETIONARY -- 4.89% HOTELS RESTAURANTS & LEISURE -- 1.39% Magna Entertainment Corp. 3,000,000 7.250%, 12/15/2009 ........................... 2,685,000 -------------- MEDIA -- 3.50% Lions Gate Entertainment Corp.: 3,500,000 2.938%, 10/15/2024 ........................... 3,714,375 3,000,000 3.625%, 03/15/2025 ........................... 3,030,000 -------------- 6,744,375 - ------------------------------------------------------------------------------- TOTAL CONSUMER DISCRETIONARY ................... 9,429,375 -------------- - -------------------------------------------------------------------------------- 17 BUFFALO BALANCED FUND SCHEDULE OF INVESTMENTS September 30, 2007 (Unaudited) (Continued) SHARES OR FACE AMOUNT MARKET VALUE - ------------------------------------------------------------------------------- HEALTH CARE -- 1.87% BIOTECHNOLOGY -- 1.87% Amylin Pharmaceuticals, Inc. $ 2,300,000 2.500%, 04/15/2011 ........................... $ 3,602,375 - ------------------------------------------------------------------------------- TOTAL HEALTH CARE .............................. 3,602,375 -------------- TOTAL CONVERTIBLE BONDS ...................................... 13,031,750 - ------------------------------------------------------------------------------- (COST $11,700,879) SHORT TERM INVESTMENTS -- 10.30% INVESTMENT COMPANY -- 0.52% 1,001,549 SEI Daily Income Trust Treasury II Fund -- Class B ...................................... 1,001,549 - ------------------------------------------------------------------------------- TOTAL INVESTMET COMPANY ........................ 1,001,549 -------------- U.S. TREASURY BILLS -- 9.78% PUBLIC FINANCE, TAXATION AND MONETARY POLICY -- 9.78% 7,053,000 3.730%, 10/04/2007 ........................... 7,050,807 5,564,000 4.875%, 10/11/2007 ........................... 5,559,440 5,468,000 2.870%, 10/18/2007 ........................... 5,460,582 784,000 4.800%, 10/25/2007 ........................... 782,312 - ------------------------------------------------------------------------------- TOTAL U.S. TREASURY BILLS 18,853,141 -------------- TOTAL SHORT TERM INVESTMENTS ................................. 19,854,690 - ------------------------------------------------------------------------------- (COST $19,854,690) TOTAL INVESTMENTS -- 98.85% .................................. 190,534,064 (COST $153,217,743) Other Assets in Excess of Liabilities -- 1.15% ............... 2,225,350 -------------- TOTAL NET ASSETS -- 100.00% .................................. $ 192,759,414 ============== ADR -- American Depository Receipt PLC -- Public Limited Company (a) Non-Income Producing (b) A portion of this investment is segregated as collateral for open written option contracts. The accompanying notes are an integral part of these financial statements. - -------------------------------------------------------------------------------- 18 SCHEDULE OF OPTIONS WRITTEN September 30, 2007 (Unaudited) CONTRACTS MARKET VALUE - ------------------------------------------------------------------------------- CALL OPTIONS WRITTEN BP, PLC -- ADR 300 Expiration: October, 2007, Exercise Price: $70.00 ....................... $ 36,750 - ------------------------------------------------------------------------------- TOTAL CALL OPTIONS WRITTEN (PREMIUMS RECEIVED $36,899) ............................ $ 36,750 ============== ADR -- American Depository Receipt The accompanying notes are an integral part of these financial statements. - -------------------------------------------------------------------------------- 19 BUFFALO HIGH YIELD FUND SCHEDULE OF INVESTMENTS September 30, 2007 (Unaudited) SHARES OR FACE AMOUNT MARKET VALUE - ------------------------------------------------------------------------------- COMMON STOCKS -- 0.19% ENERGY -- 0.19% ENERGY EQUIPMENT & SERVICES -- 0.19% 17,025 Eagle Geophysical, Inc.(a)(b) .................. $ 357,525 - ------------------------------------------------------------------------------- TOTAL ENERGY ................................... 357,525 -------------- MEDIA -- 0.00% SPECIAL PURPOSE ENTITY -- 0.00% 7,250 Adelphia Recovery Trust Escrow(a)(b) ........... 0 725,000 Adelphia Recovery Trust(a)(b) .................. 0 - ------------------------------------------------------------------------------- TOTAL MEDIA .................................... 0 -------------- TOTAL COMMON STOCKS .......................................... 357,525 - ------------------------------------------------------------------------------- (COST $719,125) CONVERTIBLE PREFERRED STOCKS -- 3.18% FINANCIALS -- 3.18% COMMERCIAL BANKS -- 3.18% 118,200 Boston Private Capital Trust I(a) .............. 5,850,900 - ------------------------------------------------------------------------------- TOTAL FINANCIALS ............................... 5,850,900 -------------- TOTAL CONVERTIBLE PREFERRED STOCKS ........................... 5,850,900 - ------------------------------------------------------------------------------- (COST $5,842,000) PREFERRED STOCKS -- 1.53% FINANCIALS -- 1.53% REAL ESTATE MANAGEMENT & DEVELOPMENT -- 1.53% 125,000 Firstservice Corp.(a) .......................... 2,812,500 - ------------------------------------------------------------------------------- TOTAL FINANCIALS ............................... 2,812,500 -------------- TOTAL PREFERRED STOCKS ....................................... 2,812,500 - ------------------------------------------------------------------------------- (COST $2,656,250) CONVERTIBLE BONDS -- 17.07% CONSUMER DISCRETIONARY -- 8.08% LEISURE EQUIPMENT & PRODUCTS -- 4.33% WMS Industries, Inc. $ 3,140,000 2.750%, 07/15/2010 ........................... 7,979,525 -------------- MEDIA -- 3.75% Lions Gate Entertainment Corp. 6,500,000 2.938%, 10/15/2024 ........................... 6,898,125 - ------------------------------------------------------------------------------- TOTAL CONSUMER DISCRETIONARY ................... 14,877,650 -------------- FINANCIALS -- 0.27% COMMERCIAL BANKS -- 0.27% Privatebancorp, Inc. 500,000 3.630%, 03/15/2027 ........................... 491,250 - ------------------------------------------------------------------------------- TOTAL FINANCIALS ............................... 491,250 -------------- - -------------------------------------------------------------------------------- 20 FACE AMOUNT MARKET VALUE - ------------------------------------------------------------------------------- HEALTH CARE -- 3.11% BIOTECHNOLOGY -- 3.11% Amylin Pharmaceuticals, Inc. $ 3,655,000 2.500%, 04/15/2011 ........................... $ 5,724,644 - ------------------------------------------------------------------------------- TOTAL HEALTH CARE .............................. 5,724,644 -------------- INDUSTRIALS -- 3.01% AIRLINES -- 3.01% JetBlue Airways Corp. 6,030,000 3.750%, 03/15/2035 ........................... 5,540,062 - ------------------------------------------------------------------------------- TOTAL INDUSTRIALS .............................. 5,540,062 -------------- INFORMATION TECHNOLOGY -- 2.60% SEMICONDUCTOR & SEMICONDUCTOR EQUIPMENT -- 2.60% Fairchild Semiconductor International 4,830,000 5.000%, 11/01/2008 ........................... 4,781,700 - ------------------------------------------------------------------------------- TOTAL INFORMATION TECHNOLOGY ................... 4,781,700 -------------- TOTAL CONVERTIBLE BONDS ...................................... 31,415,306 - ------------------------------------------------------------------------------- (COST $24,194,514) CORPORATE BONDS -- 66.55% CONSUMER DISCRETIONARY -- 31.54% AUTOMOBILES -- 3.27% Ford Motor Credit Company 4,700,000 7.375%, 10/28/2009 ........................... 4,610,780 General Motors Acceptance Corp. 1,495,000 6.875%, 08/28/2012 ........................... 1,403,706 -------------- 6,014,486 -------------- HOTELS RESTAURANTS & LEISURE -- 7.89% Circus Circus 3,100,000 7.625%, 07/15/2013 ........................... 3,061,250 Isle of Capri Casinos 4,025,000 7.000%, 03/01/2014 ........................... 3,622,500 Las Vegas Sands Corp. 925,000 6.375%, 02/15/2015 ........................... 899,563 MGM Mirage 180,000 8.375%, 02/01/2011 ........................... 188,550 Park Place Entertainment Corp. 300,000 8.875%, 09/15/2008 ........................... 307,125 Pinnacle Entertainment, Inc. 2,685,000 8.250%, 03/15/2012 ........................... 2,731,988 Royal Caribbean Cruises Ltd. 3,930,000 7.500%, 10/15/2027 ........................... 3,703,691 -------------- 14,514,667 -------------- HOUSEHOLD DURABLES -- 3.70% Jarden Corp. 2,000,000 7.500%, 05/01/2017 ........................... 1,945,000 Rent-A-Center, Inc. 5,100,000 7.500%, 05/01/2010 ........................... 4,870,500 -------------- 6,815,500 -------------- - -------------------------------------------------------------------------------- 21 BUFFALO HIGH YIELD FUND SCHEDULE OF INVESTMENTS September 30, 2007 (Unaudited) (Continued) FACE AMOUNT MARKET VALUE - ------------------------------------------------------------------------------- CONSUMER DISCRETIONARY (Continued) LEISURE EQUIPMENT & PRODUCTS -- 1.67% Mikohn Gaming Corp. $ 3,211,000 11.875%, 08/15/2008 .......................... $ 3,066,505 -------------- MEDIA -- 0.10% Fisher Communications, Inc. 175,000 8.625%, 09/15/2014 ........................... 182,000 -------------- SPECIALTY RETAIL -- 6.78% Autonation, Inc. 2,000,000 7.000%, 04/15/2014 ........................... 1,920,000 FTD, Inc. 4,150,000 7.750%, 02/15/2014 ........................... 3,963,250 Group 1 Automotive, Inc. 900,000 8.250%, 08/15/2013 ........................... 904,500 GSC Holdings Corp. 1,770,000 8.000%, 10/01/2012 ........................... 1,849,650 United Auto Group, Inc. 4,000,000 7.750%, 12/15/2016 ........................... 3,850,000 -------------- 12,487,400 -------------- TEXTILES, APPAREL & LUXURY GOODS -- 7.16% Interface, Inc. 2,250,000 10.375%, 02/01/2010 .......................... 2,385,000 3,570,000 9.500%, 02/01/2014 ........................... 3,748,500 Oxford Industries, Inc. 3,820,000 8.875%, 06/01/2011 ........................... 3,877,300 Phillips Van-Heusen 3,120,000 7.750%, 11/15/2023 ........................... 3,172,840 -------------- 13,183,640 -------------- WIRELESS TELECOMMUNICATION SERVICES -- 0.97% Rogers Wireless, Inc. 1,665,000 7.500%, 03/15/2015 ........................... 1,786,971 - ------------------------------------------------------------------------------- TOTAL CONSUMER DISCRETIONARY ................... 58,051,169 -------------- CONSUMER STAPLES -- 8.44% BEVERAGES -- 1.11% Constellation Brands, Inc. 2,000,000 8.125%, 01/15/2012 ........................... 2,045,000 -------------- FOOD & STAPLES RETAILING -- 0.95% Pantry, Inc. 1,800,000 7.750%, 02/15/2014 ........................... 1,746,000 -------------- FOOD PRODUCTS -- 3.65% Pilgrims Pride Corp. 3,800,000 8.375%, 05/01/2017 ........................... 3,895,000 Smithfield Foods, Inc. 2,750,000 7.750%, 07/01/2017 ........................... 2,832,500 -------------- 6,727,500 -------------- HOUSEHOLD PRODUCTS -- 1.65% Prestige Brands, Inc. 3,000,000 9.250%, 04/15/2012 ........................... 3,045,000 -------------- PERSONAL PRODUCTS -- 1.08% Elizabeth Arden, Inc. 2,000,000 7.750%, 01/15/2014 ........................... 1,980,000 - ------------------------------------------------------------------------------- TOTAL CONSUMER STAPLES ......................... 15,543,500 -------------- - -------------------------------------------------------------------------------- 22 FACE AMOUNT MARKET VALUE - ------------------------------------------------------------------------------- ENERGY -- 6.29% OIL & GAS -- 6.29% Inergy L.P./Inergy Finance Corp.: $ 3,600,000 6.875%, 12/15/2014 ........................... $ 3,492,000 600,000 8.250%, 03/01/2016 ........................... 622,500 The Premcor Refining Group, Inc.: 450,000 9.500%, 02/01/2013 ........................... 475,214 2,530,000 7.500%, 06/15/2015 ........................... 2,639,248 United Refining Co. 4,200,000 10.500%, 08/15/2012 .......................... 4,347,000 - ------------------------------------------------------------------------------- TOTAL ENERGY ................................... 11,575,962 -------------- FINANCIALS -- 2.07% CAPITAL MARKETS -- 2.07% E*Trade Financial Corp.: 2,500,000 8.000%, 06/15/2011 ........................... 2,500,000 1,400,000 7.875%, 12/01/2015 ........................... 1,302,000 - ------------------------------------------------------------------------------- TOTAL FINANCIALS ............................... 3,802,000 -------------- HEALTH CARE -- 5.12% HEALTH CARE EQUIPMENT & SUPPLIES -- 0.27% Cooper Cos, Inc. 500,000 7.125%, 02/15/2015 ........................... 495,000 -------------- HEALTH CARE PROVIDERS & SERVICES -- 2.63% Carriage Services, Inc. 3,000,000 7.875%, 01/15/2015 ........................... 3,015,000 Davita, Inc. 1,000,000 7.250%, 03/15/2015 ........................... 1,007,500 Psychiatric Solutions, Inc. 800,000 7.750%, 07/15/2015 ........................... 814,000 -------------- 4,836,500 -------------- PHARMACEUTICALS -- 2.22% Warner Chilcott Corp. 3,936,000 8.750%, 02/01/2015 ........................... 4,093,440 - ------------------------------------------------------------------------------- TOTAL HEALTH CARE .............................. 9,424,940 -------------- INDUSTRIALS -- 11.10% COMMERCIAL SERVICES & SUPPLIES -- 9.76% Allied Waste North America 3,600,000 7.875%, 04/15/2013 ........................... 3,735,000 Education Management LLC 3,800,000 8.750%, 06/01/2014 ........................... 3,914,000 FTI Consulting, Inc. 500,000 7.750%, 10/01/2016 ........................... 520,000 Greenbrier Companies, Inc. 2,715,000 8.375%, 05/15/2015 ........................... 2,721,787 Iron Mountain, Inc.: 1,350,000 8.625%, 04/01/2013 ........................... 1,373,625 4,875,000 7.750%, 01/15/2015 ........................... 4,887,188 Williams Scotsman, Inc. 750,000 8.500%, 10/01/2015 ........................... 828,750 -------------- 17,980,350 -------------- DIVERSIFIED MANUFACTURING -- 1.23% Blount, Inc. 2,210,000 8.875%, 08/01/2012 ........................... 2,256,963 -------------- - -------------------------------------------------------------------------------- 23 BUFFALO HIGH YIELD FUND SCHEDULE OF INVESTMENTS September 30, 2007 (Unaudited) (Continued) SHARES OR FACE AMOUNT MARKET VALUE - -------------------------------------------------------------------------------- INDUSTRIALS (Continued) MACHINERY -- 0.11% American Railcar Industries, Inc. $ 200,000 7.500%, 03/01/2014 ........................... $ 200,000 - ------------------------------------------------------------------------------- TOTAL INDUSTRIALS .............................. 20,437,313 -------------- MANUFACTURING -- 0.13% TRANSPORTATION EQUIPMENT -- 0.13% Transdigm, Inc. 235,000 7.750%, 07/15/2014 ........................... 238,525 - ------------------------------------------------------------------------------- TOTAL MANUFACTURING ............................ 238,525 -------------- MATERIALS -- 1.33% CONSTRUCTION MATERIALS -- 1.33% U.S. Concrete, Inc. 2,615,000 8.375%, 04/01/2014 ........................... 2,445,025 - ------------------------------------------------------------------------------- TOTAL MATERIALS ................................ 2,445,025 -------------- SERVICES -- 0.53% BUSINESS SERVICES -- 0.53% Lamar Media Corp. 1,000,000 6.625%, 08/15/2015 ........................... 970,000 - ------------------------------------------------------------------------------- TOTAL SERVICES ................................. 970,000 -------------- TOTAL CORPORATE BONDS ........................................ 122,488,434 - ------------------------------------------------------------------------------- (COST $121,395,032) SHORT TERM INVESTMENTS -- 7.65% INVESTMENT COMPANY -- 0.48% 887,503 SEI Daily Income Trust Treasury II Fund -- Class B....................................... $ 887,503 - ------------------------------------------------------------------------------- TOTAL INVESTMENT COMPANY ....................... 887,503 -------------- U.S. TREASURY BILLS -- 7.17% $ 7,823,000 3.730%, 10/04/2007 ........................... 7,820,567 3,436,000 4.875%, 10/11/2007 ........................... 3,433,182 1,947,000 2.850%, 10/18/2007 ........................... 1,944,378 - ------------------------------------------------------------------------------- TOTAL U.S. TREASURY BILLS ...................... 13,198,127 -------------- TOTAL SHORT TERM INVESTMENTS ................................. 14,085,630 - ------------------------------------------------------------------------------- (COST $14,085,630) TOTAL INVESTMENTS -- 96.17% .................................. 177,010,295 (COST $168,892,551) Other Assets in Excess of Liabilities -- 3.83% ............... 7,040,501 -------------- TOTAL NET ASSETS -- 100.00% .................................. $ 184,050,796 ============== (a) Non Income Producing (b) Fair valued security. The total value of these securities amounted to $357,525 (0.19% of net assets) at September 30, 2007. The accompanying notes are an integral part of these financial statements. - -------------------------------------------------------------------------------- 24 BUFFALO JAYHAWK CHINA FUND SCHEDULE OF INVESTMENTS September 30, 2007 (Unaudited) SHARES MARKET VALUE - -------------------------------------------------------------------------------- COMMON STOCKS -- 83.98% CONSUMER DISCRETIONARY -- 14.25% AUTO COMPONENTS -- 3.23% 4,730,000 Launch Tech Company Ltd. -- Class H ............ $ 991,774 40,000 Wonder Auto Technology, Inc.(a) ................ 309,600 -------------- 1,301,374 -------------- DISTRIBUTORS -- 2.08% 172,000 China Resources Enterprise Ltd. ................ 730,140 130,000 Matsunichi Communication Holdings Ltd. ......... 106,189 -------------- 836,329 -------------- HOUSEHOLD DURABLES -- 0.95% 618,000 China Water Affairs Group Ltd.(a) .............. 380,792 -------------- MEDIA -- 2.40% 5,779,000 HC International, Inc.(a) ...................... 966,407 -------------- TEXTILES, APPAREL & LUXURY GOODS -- 5.59% 896,000 Bauhaus International Holdings Ltd.(a) ......... 184,413 14,360,000 Tack Fat Group International Ltd. .............. 2,068,885 -------------- 2,253,298 - ------------------------------------------------------------------------------- TOTAL CONSUMER DISCRETIONARY ................... 5,738,200 -------------- CONSUMER STAPLES -- 5.74% FOOD PRODUCTS -- 5.20% 1,806,000 China Green Holdings Ltd. ...................... 1,953,789 224,000 COFCO International Ltd. ....................... 142,344 -------------- 2,096,133 -------------- PERSONAL PRODUCTS -- 0.54% 58,000 Hengan International Group Company Ltd. ........ 217,859 - ------------------------------------------------------------------------------- TOTAL CONSUMER STAPLES ......................... 2,313,992 -------------- ENERGY -- 8.13% COAL & CONSUMABLE FUELS -- 1.05% 70,500 China Shenhua Energy Co.(a) .................... 423,516 -------------- OIL & GAS -- 7.08% 722,000 China Petroleum & Chemical Corp. -- Class H .... 901,820 667,000 CNOOC Ltd.(a) .................................. 1,120,555 438,000 PetroChina Company Ltd. ........................ 830,493 -------------- 2,852,868 - ------------------------------------------------------------------------------- TOTAL ENERGY ................................... 3,276,384 -------------- FINANCIALS -- 3.71% INSURANCE -- 0.89% 26,000 Ping An Insurance Company of China Ltd (a) ..... 359,873 -------------- REAL ESTATE -- 2.82% 296,000 Beijing Capital Land Ltd. -- Class H ........... 265,773 1,088,000 Shanghai Forte Land Company Ltd. ............... 867,730 -------------- 1,133,503 - ------------------------------------------------------------------------------- TOTAL FINANCIALS ............................... 1,493,376 -------------- HEALTH CARE -- 12.30% HEALTH CARE EQUIPMENT & SUPPLIES -- 7.01% 6,165,000 Golden Meditech Company Ltd.(a) ................ 2,823,234 -------------- - -------------------------------------------------------------------------------- 25 BUFFALO JAYHAWK CHINA FUND SCHEDULE OF INVESTMENTS September 30, 2007 (Unaudited) (Continued) SHARES MARKET VALUE - ------------------------------------------------------------------------------- HEALTH CARE (Continued) PHARMACEUTICALS -- 5.29% 7,294,000 Hua Han Bio-Pharmaceutical Holdings Ltd. -- Class H ...................................... $ 2,129,882 - ------------------------------------------------------------------------------- TOTAL HEALTH CARE .............................. 4,953,116 -------------- INDUSTRIALS -- 15.80% AIRLINES -- 1.34% 346,000 China Southern Airlines Company Ltd. -- Class H(a) ................................... 537,658 -------------- CHEMICALS -- 0.36% 182,000 Sinofert Holdings Ltd.(a) ...................... 143,046 -------------- COMMERCIAL SERVICES & SUPPLIES -- 2.23% 7,508,000 Jolimark Holdings Ltd.(a) ...................... 898,196 -------------- CONSTRUCTION & ENGINEERING -- 1.72% 350,000 Baoye Group Company Ltd. -- Class H ............ 487,146 204,000 Cosco International Holdings Ltd. .............. 205,998 -------------- 693,144 -------------- MACHINERY -- 3.16% 218,285 China International Marine Containers Co., Ltd. -- Class B .............................. 468,926 291,400 Shanghai Zhenhua Port Machinery Co. Ltd. -- Class B ...................................... 803,098 -------------- 1,272,024 -------------- ROAD & RAIL -- 3.98% 1,314,350 China Shipping Container Lines Company Ltd. -- Class H(a) ................................... 1,019,512 298,910 Dazhong Transportation Co. Ltd. ................ 585,565 -------------- 1,605,077 -------------- TRANSPORTATION INFRASTRUCTURE -- 3.01% 472,000 Anhui Expressway Co. Ltd. -- Class H ........... 431,086 258,000 Beijing Capital International Airport Company Ltd. -- Class H .............................. 536,985 266,400 Guangdong Provincial Expressway Development Co., Ltd. -- Class B .............................. 244,679 -------------- 1,212,750 - ------------------------------------------------------------------------------- TOTAL INDUSTRIALS .............................. 6,361,895 -------------- INFORMATION TECHNOLOGY -- 7.91% COMMUNICATIONS EQUIPMENT -- 0.35% 19,000 VTech Holdings Ltd. ............................ 140,535 -------------- ELECTRONIC EQUIPMENT & INSTRUMENTS -- 4.50% 184,000 AAC Acoustic Technologies Holdings Inc.(a) ..... 226,987 4,836,000 Kwang Sung Electronics H.K ..................... 1,586,318 -------------- 1,813,305 -------------- INTERNET SOFTWARE & SERVICES -- 0.81% 594,000 China Lotsynergy Holding Ltd.(a) ............... 68,005 4,730,000 China.com, Inc.(a) ............................. 258,591 -------------- 326,596 -------------- SOFTWARE -- 2.25% 123,700 CDC Corp. -- Class A(a) ........................ 906,721 - ------------------------------------------------------------------------------- TOTAL INFORMATION TECHNOLOGY ................... 3,187,157 -------------- MATERIALS -- 4.43% METALS & MINING -- 4.43% 189,000 Jiangxi Copper Company Ltd. -- Class H ......... 611,454 324,000 Yanzhou Coal Mining Company Ltd. -- Class H .... 666,851 326,000 Zijin Mining Group Co., Ltd. -- Class H ........ 506,580 - ------------------------------------------------------------------------------- TOTAL MATERIALS ................................ 1,784,885 -------------- - -------------------------------------------------------------------------------- 26 SHARES MARKET VALUE - ------------------------------------------------------------------------------- TELECOMMUNICATION SERVICES -- 5.47% DIVERSIFIED TELECOMMUNICATION SERVICES -- 2.22% 792,000 China Telecom Corp. Ltd. -- Class H ............ $ 597,017 46,000 Tencent Holdings Ltd. .......................... 297,047 -------------- 894,064 -------------- WIRELESS TELECOMMUNICATION SERVICES -- 3.25% 80,000 China Mobile Ltd. .............................. 1,310,032 - ------------------------------------------------------------------------------- TOTAL TELECOMMUNICATION SERVICES ............... 2,204,096 -------------- UTILITIES -- 6.24% ELECTRIC UTILITIES -- 6.24% 784,000 Datang International Power Generation Company Ltd. -- Class H .............................. 900,599 1,298,000 Huadian Power International Corp. Ltd. -- Class H ...................................... 831,511 566,000 Huaneng Power International, Inc. -- Class H ... 781,960 - ------------------------------------------------------------------------------- TOTAL UTILITIES ................................ 2,514,070 -------------- TOTAL COMMON STOCKS .......................................... 33,827,171 - ------------------------------------------------------------------------------- (COST $25,988,012) SHORT TERM INVESTMENTS -- 9.27% INVESTMENT COMPANIES -- 9.27% 427,644 AIM STIT -- STIC Prime Portfolio ............... 427,644 1,608,862 Fidelity Institutional Money Market Portfolio .. 1,608,862 1,696,249 SEI Daily Income Trust Treasury II Fund -- Class B ...................................... 1,696,249 - ------------------------------------------------------------------------------- TOTAL INVESTMENT COMPANIES ..................... 3,732,755 -------------- TOTAL SHORT TERM INVESTMENTS ................................. 3,732,755 - ------------------------------------------------------------------------------- (COST $3,732,755) TOTAL INVESTMENTS -- 93.25% .................................. 37,559,926 (COST $29,720,767) Other Assets in Excess of Liabilities -- 6.75% ............... 2,720,851 -------------- TOTAL NET ASSETS -- 100.00% .................................. $ 40,280,777 ============== (a) Non Income Producing As of September 30, 2007, the country diversification was as follows: MARKET VALUE PERCENTAGE - -------------------------------------------------------------------------------- China ............................................... $19,047,894 47.29% Hong Kong ........................................... 14,779,277 36.69% ----------- ------ Total Common Stocks ................................. 33,827,171 83.98% Total Short Term Investments ........................ 3,732,755 9.27% ----------- ------ Total Investments ................................... 37,559,926 93.25% Other Assets in Excess of Liabilities ............... 2,720,851 6.75% ----------- ------ TOTAL NET ASSETS .................................... $40,280,777 100.00% =========== ====== The accompanying notes are an integral part of these financial statements. - -------------------------------------------------------------------------------- 27 BUFFALO LARGE CAP FUND SCHEDULE OF INVESTMENTS September 30, 2007 (Unaudited) SHARES MARKET VALUE - ------------------------------------------------------------------------------- COMMON STOCKS -- 96.01% CONSUMER DISCRETIONARY -- 11.83% HOTELS RESTAURANTS & LEISURE -- 3.43% 28,100 Marriott International, Inc. -- Class A ........ $ 1,221,507 13,700 Starwood Hotels & Resorts Worldwide, Inc. ...... 832,275 -------------- 2,053,782 -------------- INTERNET & CATALOG RETAIL -- 1.41% 21,600 eBay, Inc.(a) .................................. 842,832 -------------- MEDIA -- 6.99% 84,300 Time Warner, Inc. .............................. 1,547,748 35,250 Viacom Inc. -- Class B(a) ...................... 1,373,693 36,500 The Walt Disney Co. ............................ 1,255,235 -------------- 4,176,676 - ------------------------------------------------------------------------------- TOTAL CONSUMER DISCRETIONARY ................... 7,073,290 -------------- CONSUMER STAPLES -- 8.66% BEVERAGES -- 1.73% 14,100 PepsiCo, Inc. .................................. 1,032,966 -------------- FOOD & STAPLES RETAILING -- 6.93% 45,200 CVS Corp. ...................................... 1,791,276 15,000 Walgreen Co. ................................... 708,600 33,500 Whole Foods Market, Inc. ....................... 1,640,160 -------------- 4,140,036 - ------------------------------------------------------------------------------- TOTAL CONSUMER STAPLES ......................... 5,173,002 -------------- FINANCIALS -- 18.15% CAPITAL MARKETS -- 4.28% 48,000 E*Trade Financial Corp.(a) ..................... 626,880 3,700 The Goldman Sachs Group, Inc. .................. 801,938 17,900 Morgan Stanley ................................. 1,127,700 -------------- 2,556,518 -------------- COMMERCIAL BANKS -- 2.93% 26,400 Northern Trust Corp. ........................... 1,749,528 -------------- CONSUMER FINANCE -- 0.31% 8,950 Discover Financial Services .................... 186,160 -------------- DIVERSIFIED FINANCIAL SERVICES -- 8.27% 25,500 American Express Co. ........................... 1,513,935 8,800 Franklin Resources, Inc. ....................... 1,122,000 14,800 Legg Mason, Inc. ............................... 1,247,492 19,000 T. Rowe Price Group, Inc. ...................... 1,058,110 -------------- 4,941,537 -------------- INSURANCE -- 2.36% 22,400 Principal Financial Group, Inc. ................ 1,413,216 - ------------------------------------------------------------------------------- TOTAL FINANCIALS ............................... 10,846,959 -------------- - -------------------------------------------------------------------------------- 28 SHARES MARKET VALUE - ------------------------------------------------------------------------------- HEALTH CARE -- 27.45% BIOTECHNOLOGY -- 1.96% 28,700 Gilead Sciences, Inc.(a) ....................... $ 1,172,969 -------------- HEALTH CARE EQUIPMENT & SUPPLIES -- 4.77% 31,500 Baxter International, Inc. ..................... 1,772,820 12,200 C.R. Bard, Inc. ................................ 1,075,918 -------------- 2,848,738 -------------- HEALTH CARE PROVIDERS & SERVICES -- 2.92% 19,300 Medco Health Solutions, Inc.(a) ................ 1,744,527 -------------- PHARMACEUTICALS -- 17.80% 40,100 Bayer AG -- ADR ................................ 3,176,473 57,600 Schering-Plough Corp. .......................... 1,821,888 16,700 Shire PLC -- ADR ............................... 1,235,466 53,300 Teva Pharmaceutical Industries, Ltd. -- ADR .... 2,370,251 45,700 Wyeth .......................................... 2,035,935 -------------- 10,640,013 - ------------------------------------------------------------------------------- TOTAL HEALTH CARE .............................. 16,406,247 -------------- INDUSTRIALS -- 5.12% AIR FREIGHT & LOGISTICS -- 2.92% 16,700 FedEx Corp. .................................... 1,749,325 -------------- COMMERCIAL SERVICES & SUPPLIES -- 2.20% 28,600 Automatic Data Processing, Inc. ................ 1,313,598 - ------------------------------------------------------------------------------- TOTAL INDUSTRIALS .............................. 3,062,923 -------------- INFORMATION TECHNOLOGY -- 24.80% COMMUNICATIONS EQUIPMENT -- 8.70% 40,500 Cisco Systems, Inc.(a) ......................... 1,340,955 103,700 Corning, Inc.(a) ............................... 2,556,205 70,400 Motorola, Inc. ................................. 1,304,512 -------------- 5,201,672 -------------- COMPUTERS & PERIPHERALS -- 1.69% 37,500 Network Appliance, Inc.(a) ..................... 1,009,125 -------------- INTERNET SOFTWARE & SERVICES -- 1.49% 33,100 Yahoo!, Inc.(a) ................................ 888,404 -------------- SEMICONDUCTOR & SEMICONDUCTOR EQUIPMENT -- 9.35% 61,700 Altera Corp. ................................... 1,485,736 70,800 Applied Materials, Inc. ........................ 1,465,560 49,200 Intel Corp. .................................... 1,272,312 37,400 Texas Instruments, Inc. ........................ 1,368,466 -------------- 5,592,074 -------------- SOFTWARE -- 3.57% 40,000 Microsoft Corp. ................................ 1,178,400 49,300 Symantec Corp.(a) .............................. 955,434 -------------- 2,133,834 - ------------------------------------------------------------------------------- TOTAL INFORMATION TECHNOLOGY ................... 14,825,109 -------------- TOTAL COMMON STOCKS .......................................... 57,387,530 - ------------------------------------------------------------------------------- (COST $42,324,747) - -------------------------------------------------------------------------------- 29 BUFFALO LARGE CAP FUND SCHEDULE OF INVESTMENTS September 30, 2007 (Unaudited) (Continued) SHARES OR FACE AMOUNT MARKET VALUE - ------------------------------------------------------------------------------- SHORT TERM INVESTMENTS -- 4.35% INVESTMENT COMPANY -- 1.71% 1,018,067 SEI Daily Income Trust Treasury II Fund -- ..... $ 1,018,067 Class B - ------------------------------------------------------------------------------- TOTAL INVESTMENT COMPANY ....................... 1,018,067 -------------- U.S. TREASURY BILL -- 2.64% PUBLIC FINANCE, TAXATION, AND MONETARY POLICY -- 2.64% $ 1,580,000 3.740%, 10/04/2007 ........................... 1,579,508 - ------------------------------------------------------------------------------- TOTAL U.S. TREASURY BILL ....................... 1,579,508 -------------- TOTAL SHORT TERM INVESTMENTS ................................. 2,597,575 - ------------------------------------------------------------------------------- (COST $2,597,575) TOTAL INVESTMENTS -- 100.36% ................................. 59,985,105 (COST $44,922,322) Liabilities in Excess of Other Assets -- (0.36)% ............. (214,289) -------------- TOTAL NET ASSETS -- 100.00% .................................. $ 59,770,816 ============== ADR -- American Depository Receipt (a) Non Income Producing The accompanying notes are an integral part of these financial statements. - -------------------------------------------------------------------------------- 30 BUFFALO MICRO CAP FUND SCHEDULE OF INVESTMENTS September 30, 2007 (Unaudited) SHARES MARKET VALUE - ------------------------------------------------------------------------------- COMMON STOCKS -- 97.11% CONSUMER DISCRETIONARY -- 20.41% HOTELS RESTAURANTS & LEISURE -- 7.17% 16,900 Ambassadors Group, Inc. ........................ $ 643,890 30,726 McCormick & Schmick's Seafood Restaurants, Inc.(a) ...................................... 578,571 73,100 Morton's Restaurant Group, Inc.(a) ............. 1,162,290 41,200 Shuffle Master, Inc.(a) ........................ 615,940 15,400 Steiner Leisure Ltd.(a) ........................ 668,360 -------------- 3,669,051 -------------- LEISURE EQUIPMENT & PRODUCTS -- 3.70% 54,800 MarineMax, Inc.(a) ............................. 797,888 77,900 Monaco Coach Corp. ............................. 1,092,937 -------------- 1,890,825 -------------- MEDIA -- 1.47% 15,300 Value Line, Inc. ............................... 753,831 -------------- MULTILINE RETAIL -- 1.18% 67,400 Tuesday Morning Corp. .......................... 605,926 -------------- SPECIALTY RETAIL -- 3.99% 51,300 A.C. Moore Arts & Crafts, Inc.(a) .............. 808,488 69,150 Cache, Inc.(a) ................................. 1,234,327 -------------- 2,042,815 -------------- TEXTILES, APPAREL & LUXURY GOODS -- 2.90% 48,900 The Dixie Group, Inc.(a) ....................... 464,550 28,200 Oxford Industries, Inc. ........................ 1,018,584 -------------- 1,483,134 - ------------------------------------------------------------------------------- TOTAL CONSUMER DISCRETIONARY ................... 10,445,582 -------------- FINANCIALS -- 13.95% CAPITAL MARKETS -- 3.13% 81,400 Sanders Morris Harris Group, Inc. .............. 826,210 53,400 Thomas Weisel Partners Group, Inc.(a) .......... 774,834 -------------- 1,601,044 -------------- COMMERCIAL BANKS -- 3.32% 24,100 Boston Private Financial Holdings, Inc. ........ 670,944 29,500 PrivateBancorp, Inc. ........................... 1,027,780 -------------- 1,698,724 -------------- DIVERSIFIED FINANCIAL SERVICES -- 7.50% 29,700 Cohen & Steers, Inc. ........................... 1,099,791 62,000 Hennessy Advisors, Inc. ........................ 675,800 137,500 MarketAxess Holdings, Inc.(a) .................. 2,062,500 -------------- 3,838,091 - ------------------------------------------------------------------------------- TOTAL FINANCIALS ............................... 7,137,859 -------------- - -------------------------------------------------------------------------------- 31 BUFFALO MICRO CAP FUND SCHEDULE OF INVESTMENTS September 30, 2007 (Unaudited) (Continued) SHARES MARKET VALUE - ------------------------------------------------------------------------------- HEALTH CARE -- 24.55% BIOTECHNOLOGY -- 3.01% 41,000 LifeCell Corp.(a) .............................. $ 1,540,370 -------------- HEALTH CARE EQUIPMENT & SUPPLIES -- 17.04% 84,500 Align Technology, Inc.(a) ...................... 2,140,385 42,500 AngioDynamics, Inc.(a) ......................... 801,125 789,500 CardioDynamics International Corp.(a) .......... 410,540 48,100 ev3, Inc.(a) ................................... 789,802 90,500 Lifecore Biomedical, Inc.(a) ................... 1,167,450 41,525 Meridian Bioscience, Inc. ...................... 1,259,038 43,500 NxStage Medical, Inc.(a) ....................... 630,315 60,900 Spectranetics Corp.(a) ......................... 820,932 67,000 Trinity Biotech plc -- ADR(a) .................. 703,500 -------------- 8,723,087 -------------- HEALTH CARE PROVIDERS & SERVICES -- 4.50% 9,300 athenahealth Inc. (a) .......................... 315,363 21,300 ICON PLC -- ADR (a) ............................ 1,086,939 23,800 MWI Veterinary Supply, Inc.(a) ................. 898,450 -------------- 2,300,752 - ------------------------------------------------------------------------------- TOTAL HEALTH CARE .............................. 12,564,209 -------------- INDUSTRIALS -- 19.19% COMMERCIAL SERVICES & SUPPLIES -- 19.19% 26,700 Capella Education Company(a) ................... 1,492,797 123,600 Cbiz, Inc.(a) .................................. 982,620 99,958 Clayton Holdings, Inc.(a) ...................... 800,663 15,800 CRA International, Inc.(a) ..................... 761,402 22,100 First Advantage Corp. -- Class A(a) ............ 390,507 30,800 FirstService Corp.(a) .......................... 957,264 29,100 Heidrick & Struggles International, Inc.(a) .... 1,060,695 56,300 Hudson Highland Group, Inc.(a) ................. 716,699 76,900 Innerworkings, Inc.(a) ......................... 1,324,987 74,000 Universal Technical Institute, Inc.(a) ......... 1,332,000 - ------------------------------------------------------------------------------- TOTAL INDUSTRIALS .............................. 9,819,634 -------------- INFORMATION TECHNOLOGY -- 19.01% ELECTRONIC EQUIPMENT & INSTRUMENTS -- 5.09% 47,500 DTS, Inc.(a) ................................... 1,442,575 41,700 Measurement Specialties, Inc.(a) ............... 1,163,430 -------------- 2,606,005 -------------- INTERNET SOFTWARE & SERVICES -- 6.74% 67,100 Internap Network Services Corp.(a) ............. 950,807 53,700 The Knot, Inc.(a) .............................. 1,141,662 65,950 LoopNet, Inc.(a) ............................... 1,354,613 -------------- 3,447,082 -------------- SEMICONDUCTOR & SEMICONDUCTOR EQUIPMENT -- 1.46% 85,84 Entegris, Inc.(a) .............................. 745,100 -------------- - -------------------------------------------------------------------------------- 32 SHARES MARKET VALUE - ------------------------------------------------------------------------------- INFORMATION TECHNOLOGY (Continued) SOFTWARE -- 5.72% 75,300 Monotype Imaging Holdings Inc.(a) .............. $ 947,274 174,200 Packeteer, Inc.(a) ............................. 1,323,920 66,700 PDF Solutions, Inc.(a) ......................... 658,996 -------------- 2,930,190 - ------------------------------------------------------------------------------- TOTAL INFORMATION TECHNOLOGY ................................. 9,728,377 -------------- TOTAL COMMON STOCKS .......................................... 49,695,661 - ------------------------------------------------------------------------------- (COST $41,221,807) SHORT TERM INVESTMENTS -- 1.95% INVESTMENT COMPANY -- 1.95% 999,963 SEI Daily Income Trust Treasury II Fund -- Class B ...................................... 999,963 - ------------------------------------------------------------------------------- TOTAL INVESTMENT COMPANY ....................... 999,963 -------------- TOTAL SHORT TERM INVESTMENTS ................................. 999,963 - ------------------------------------------------------------------------------- (COST $999,963) TOTAL INVESTMENTS -- 99.06% .................................. 50,695,624 (COST $42,221,770) Other Assets Excess of Liabilities -- 0.94% .................. 480,912 -------------- TOTAL NET ASSETS -- 100.00% .................................. $ 51,176,536 ============== ADR -- American Depository Receipt (a) Non Income Producing The accompanying notes are an integral part of these financial statements. - -------------------------------------------------------------------------------- 33 BUFFALO MID CAP FUND SCHEDULE OF INVESTMENTS September 30, 2007 (Unaudited) SHARES MARKET VALUE - ------------------------------------------------------------------------------- COMMON STOCKS -- 91.29% CONSUMER DISCRETIONARY -- 23.62% AUTO COMPONENTS -- 3.66% 140,300 Autoliv, Inc. .................................. $ 8,382,925 446,800 Gentex Corp. ................................... 9,579,392 -------------- 17,962,317 -------------- HOTELS RESTAURANTS & LEISURE -- 4.13% 128,475 Life Time Fitness, Inc.(a) ..................... 7,880,656 140,000 Penn National Gaming, Inc.(a) .................. 8,262,800 105,800 Royal Caribbean Cruises Ltd. ................... 4,129,374 -------------- 20,272,830 -------------- LEISURE EQUIPMENT & PRODUCTS -- 0.96% 205,400 Brunswick Corp. ................................ 4,695,444 -------------- MEDIA -- 0.85% 84,600 Lamar Advertising Co. -- Class A ............... 4,142,862 -------------- SPECIALTY RETAIL -- 11.59% 113,000 Abercrombie & Fitch Co. -- Class A ............. 9,119,100 159,610 Barnes & Noble, Inc. ........................... 5,627,849 280,900 Chico's FAS, Inc.(a) ........................... 3,946,645 234,500 PETsMART, Inc. ................................. 7,480,550 238,500 Talbots, Inc. .................................. 4,293,000 184,300 Tiffany & Co. .................................. 9,648,105 397,900 Urban Outfitters, Inc.(a) ...................... 8,674,220 73,600 Weight Watchers International, Inc. ............ 4,236,416 116,900 Williams-Sonoma, Inc. .......................... 3,813,278 -------------- 56,839,163 -------------- TEXTILES, APPAREL & LUXURY GOODS -- 2.43% 45,600 Mohawk Industries, Inc.(a) ..................... 3,707,280 105,600 Polo Ralph Lauren Corp. ........................ 8,210,400 -------------- 11,917,680 - ------------------------------------------------------------------------------- TOTAL CONSUMER DISCRETIONARY ................... 115,830,296 -------------- CONSUMER STAPLES -- 2.14% FOOD & STAPLES RETAILING -- 2.14% 214,900 Whole Foods Market, Inc. ....................... 10,521,504 - ------------------------------------------------------------------------------- TOTAL CONSUMER STAPLES ......................... 10,521,504 -------------- FINANCIALS -- 9.72% CAPITAL MARKETS -- 1.49% 87,275 A.G. Edwards, Inc. ............................. 7,309,281 -------------- COMMERCIAL SERVICES -- 0.24% 41,800 Interactive Data Corp. ......................... 1,178,760 -------------- DIVERSIFIED FINANCIAL SERVICES -- 7.99% 366,800 Janus Capital Group, Inc. ...................... 10,373,104 97,450 Legg Mason, Inc. ............................... 8,214,060 232,100 Morningstar, Inc.(a) ........................... 14,250,940 114,000 T. Rowe Price Group, Inc. ...................... 6,348,660 -------------- 39,186,764 - ------------------------------------------------------------------------------- TOTAL FINANCIALS ............................... 47,674,805 -------------- - -------------------------------------------------------------------------------- 34 SHARES MARKET VALUE - ------------------------------------------------------------------------------- HEALTH CARE -- 24.31% BIOTECHNOLOGY -- 2.33% 228,600 Amylin Pharmaceuticals, Inc.(a) ................ $ 11,430,000 -------------- HEALTH CARE EQUIPMENT & SUPPLIES -- 6.91% 92,800 Dade Behring Holdings, Inc. .................... 7,085,280 130,000 DENTSPLY International, Inc. ................... 5,413,200 463,300 Qiagen N.V.(a) ................................. 8,992,653 160,100 Sigma-Aldrich Corp. ............................ 7,803,274 68,500 Waters Corp.(a) ................................ 4,584,020 -------------- 33,878,427 -------------- HEALTH CARE PROVIDERS & SERVICES -- 6.92% 215,800 Charles River Laboratories International, Inc.(a) 12,117,170 333,600 IMS Health, Inc. ............................... 10,221,504 327,800 Pharmaceutical Product Development, Inc. ....... 11,617,232 -------------- 33,955,906 -------------- PHARMACEUTICALS -- 8.15% 161,600 Barr Pharmaceuticals, Inc.(a) .................. 9,196,656 289,900 Endo Pharmaceuticals Holdings, Inc.(a) ......... 8,989,799 346,600 Medicis Pharmaceutical Corp. -- Class A ........ 10,574,766 151,600 Shire Pharmaceuticals PLC -- ADR ............... 11,215,368 -------------- 39,976,589 - ------------------------------------------------------------------------------- TOTAL HEALTH CARE .............................. 119,240,922 -------------- INDUSTRIALS -- 8.99% COMMERCIAL SERVICES & SUPPLIES -- 8.99% 115,800 ChoicePoint Inc.(a) ............................ 4,391,136 230,000 DeVry, Inc. .................................... 8,512,300 437,000 Hewitt Associates, Inc. -- Class A(a) .......... 15,316,850 303,150 Iron Mountain, Inc.(a) ......................... 9,240,012 195,100 Monster Worldwide Inc.(a) ...................... 6,645,106 - ------------------------------------------------------------------------------- TOTAL INDUSTRIALS .............................. 44,105,404 -------------- INFORMATION TECHNOLOGY -- 22.51% COMMUNICATIONS EQUIPMENT -- 1.94% 79,900 Garmin Ltd. .................................... 9,540,060 -------------- ELECTRONIC EQUIPMENT & INSTRUMENTS -- 2.44% 523,000 Jabil Circuit, Inc. ............................ 11,945,320 -------------- INTERNET SOFTWARE & SERVICES -- 1.26% 215,500 Akamai Technologies, Inc.(a) ................... 6,191,315 -------------- IT SERVICES -- 3.08% 324,500 CheckFree Corp.(a) ............................. 15,102,230 -------------- SEMICONDUCTOR & SEMICONDUCTOR EQUIPMENT -- 6.79% 373,800 Altera Corp. ................................... 9,001,104 108,300 KLA-Tencor Corp. ............................... 6,040,974 204,100 National Semiconductor Corp. ................... 5,535,192 249,600 Novellus Systems, Inc.(a) ...................... 6,804,096 107,200 SanDisk Corp.(a) ............................... 5,906,720 -------------- 33,288,086 -------------- - -------------------------------------------------------------------------------- 35 BUFFALO MID CAP FUND SCHEDULE OF INVESTMENTS September 30, 2007 (Unaudited) (Continued) SHARES OR FACE AMOUNT MARKET VALUE - -------------------------------------------------------------------------------- INFORMATION TECHNOLOGY (Continued) SOFTWARE -- 7.00% 534,400 BEA Systems, Inc.(a) ........................... $ 7,412,128 275,600 Citrix Systems, Inc.(a) ........................ 11,112,192 141,400 F5 Networks, Inc.(a) ........................... 5,258,666 531,200 Red Hat, Inc.(a) ............................... 10,554,944 -------------- 34,337,930 - ------------------------------------------------------------------------------- TOTAL INFORMATION TECHNOLOGY ................... 110,404,941 -------------- TOTAL COMMON STOCKS .......................................... 447,777,872 - ------------------------------------------------------------------------------- (COST $345,084,291) SHORT TERM INVESTMENTS -- 8.17% INVESTMENT COMPANY -- 0.31% 1,500,706 SEI Daily Income Trust Treasury II Fund -- Class B ...................................... 1,500,706 - ------------------------------------------------------------------------------- TOTAL INVESTMENT COMPANY ....................... 1,500,706 -------------- U.S. TREASURY BILLS -- 7.86% $ 8,904,000 3.730%, 10/04/2007 ........................... 8,901,229 14,002,000 4.875%, 10/11/2007 ........................... 13,990,421 15,145,000 3.050%, 10/18/2007 ........................... 15,123,155 549,000 4.800%, 10/25/2007 ........................... 547,818 - ------------------------------------------------------------------------------- TOTAL U.S. TREASURY BILLS ...................... 38,562,623 -------------- TOTAL SHORT TERM INVESTMENTS ................................. 40,063,329 - ------------------------------------------------------------------------------- (COST $40,063,329) TOTAL INVESTMENTS -- 99.46% .................................. 487,841,201 (COST $385,147,620) Other Assets in Excess of Liabilities -- 0.54% ............... 2,666,906 -------------- TOTAL NET ASSETS -- 100.00% .................................. $ 490,508,107 ============== ADR -- American Depository Receipt (a) Non Income Producing The accompanying notes are an integral part of these financial statements. - -------------------------------------------------------------------------------- 36 BUFFALO SCIENCE & TECHNOLOGY FUND SCHEDULE OF INVESTMENTS September 30, 2007 (Unaudited) SHARES MARKET VALUE - ------------------------------------------------------------------------------- COMMON STOCKS -- 94.51% CONSUMER DISCRETIONARY -- 1.43% INTERNET & CATALOG RETAIL -- 1.43% 76,900 eBay, Inc.(a) .................................. $ 3,000,638 - ------------------------------------------------------------------------------- TOTAL CONSUMER DISCRETIONARY ................... 3,000,638 -------------- HEALTH CARE -- 36.01% BIOTECHNOLOGY -- 4.68% 54,800 Amylin Pharmaceuticals, Inc.(a) ................ 2,740,000 52,500 Gilead Sciences, Inc.(a) ....................... 2,145,675 100,300 InterMune, Inc.(a) ............................. 1,918,739 80,000 LifeCell Corp.(a) .............................. 3,005,600 -------------- 9,810,014 -------------- HEALTH CARE EQUIPMENT & SUPPLIES -- 13.02% 133,100 Align Technology, Inc.(a) ...................... 3,371,423 145,000 American Medical Systems Holdings, Inc.(a) ..... 2,457,750 23,000 C.R. Bard, Inc. ................................ 2,028,370 162,400 ev3, Inc.(a) ................................... 2,666,608 99,500 Mentor Corp. ................................... 4,581,975 146,800 NxStage Medical, Inc.(a) ....................... 2,127,132 195,000 Qiagen N.V.(a) ................................. 3,784,950 40,000 Sigma-Aldrich Corp. ............................ 1,949,600 119,471 Trinity Biotech PLC -- ADR(a) .................. 1,254,445 73,700 Varian Medical Systems, Inc.(a) ................ 3,087,293 -------------- 27,309,546 -------------- HEALTH CARE PROVIDERS & SERVICES -- 8.69% 144,800 AMN Healthcare Services, Inc.(a) ............... 2,712,104 33,500 athenahealth Inc.(a) ........................... 1,135,985 51,600 Charles River Laboratories International, Inc.(a) 2,897,340 28,000 Covance, Inc.(a) ............................... 2,181,200 103,700 IMS Health, Inc. ............................... 3,177,368 123,400 Pharmaceutical Product Development, Inc. ....... 4,373,296 46,951 Quality Systems, Inc. .......................... 1,719,815 -------------- 18,197,108 -------------- PHARMACEUTICALS -- 9.63% 57,300 Barr Pharmaceuticals, Inc.(a) .................. 3,260,943 26,300 Bayer AG -- ADR ................................ 2,083,323 117,800 Medicis Pharmaceutical Corp. -- Class A ........ 3,594,078 67,400 Schering-Plough Corp. .......................... 2,131,862 42,500 Shire Pharmaceuticals Group PLC -- ADR ......... 3,144,150 47,600 Teva Pharmaceutical Industries, Ltd. -- ADR .... 2,116,772 86,900 Wyeth .......................................... 3,871,395 -------------- 20,202,523 - ------------------------------------------------------------------------------- TOTAL HEALTH CARE .............................. 75,519,191 -------------- INDUSTRIALS -- 4.45% COMMERCIAL SERVICES & SUPPLIES -- 4.45% 37,800 Capella Education Co.(a) ....................... 2,113,398 137,600 Hewitt Associates, Inc. -- Class A(a) .......... 4,822,880 70,400 Monster Worldwide, Inc.(a) ..................... 2,397,824 - ------------------------------------------------------------------------------- TOTAL INDUSTRIALS .............................. 9,334,102 -------------- - -------------------------------------------------------------------------------- 37 BUFFALO SCIENCE & TECHNOLOGY FUND SCHEDULE OF INVESTMENTS September 30, 2007 (Unaudited) (Continued) SHARES MARKET VALUE - ------------------------------------------------------------------------------- INFORMATION TECHNOLOGY -- 52.62% COMMUNICATIONS EQUIPMENT -- 6.95% 102,800 Adtran, Inc. ................................... $ 2,367,484 84,400 Cisco Systems, Inc.(a) ......................... 2,794,484 127,800 Corning, Inc.(a) ............................... 3,150,270 144,400 Motorola, Inc. ................................. 2,675,732 94,700 Nokia OYJ -- ADR ............................... 3,591,971 -------------- 14,579,941 -------------- COMPUTERS & PERIPHERALS -- 3.16% 118,000 EMC Corp.(a) ................................... 2,454,400 155,100 Network Appliance, Inc.(a) ..................... 4,173,741 -------------- 6,628,141 -------------- ELECTRONIC EQUIPMENT & INSTRUMENTS -- 7.66% 60,200 Dolby Laboratories, Inc. -- Class A(a) ......... 2,096,164 225,900 Jabil Circuit, Inc. ............................ 5,159,556 106,800 Molex, Inc. .................................... 2,876,124 102,450 National Instruments Corp. ..................... 3,517,109 61,800 Trimble Navigation Ltd.(a) ..................... 2,423,178 -------------- 16,072,131 -------------- INTERNET SOFTWARE & SERVICES -- 4.77% 116,300 Akamai Technologies, Inc.(a) ................... 3,341,299 207,500 Internap Network Services Corp.(a) ............. 2,940,275 138,600 Yahoo!, Inc.(a) ................................ 3,720,024 -------------- 10,001,598 -------------- IT SERVICES -- 2.20% 99,200 CheckFree Corp.(a) ............................. 4,616,768 -------------- SEMICONDUCTOR & SEMICONDUCTOR EQUIPMENT -- 16.52% 111,150 Altera Corp. ................................... 2,676,492 102,400 Applied Materials, Inc. ........................ 2,119,680 60,800 Broadcom Corp. -- Class A(a) ................... 2,215,552 105,600 Cabot Microelectronics Corp.(a) ................ 4,514,400 81,800 Cree, Inc.(a) .................................. 2,543,980 123,900 Fairchild Semiconductor International, Inc.(a) . 2,314,452 57,900 FormFactor, Inc.(a) ............................ 2,569,023 99,950 Intel Corp. .................................... 2,584,707 88,850 Maxim Integrated Products, Inc. ................ 2,607,747 153,700 MKS Instruments, Inc.(a) ....................... 2,923,374 48,400 SanDisk Corp.(a) ............................... 2,666,840 103,000 Semtech Corp.(a) ............................... 2,109,440 76,600 Texas Instruments, Inc. ........................ 2,802,794 -------------- 34,648,481 -------------- - -------------------------------------------------------------------------------- 38 SHARES OR FACE AMOUNT MARKET VALUE - -------------------------------------------------------------------------------- INFORMATION TECHNOLOGY (Continued) SOFTWARE -- 11.36% 229,500 BEA Systems, Inc.(a) ........................... $ 3,183,165 73,000 Citrix Systems, Inc.(a) ........................ 2,943,360 40,800 F5 Networks, Inc.(a) ........................... 1,517,352 70,707 Manhattan Associates, Inc.(a) .................. 1,938,079 67,900 Microsoft Corp. ................................ 2,000,334 134,200 Oracle Corp.(a) ................................ 2,905,430 329,600 Packeteer, Inc.(a) ............................. 2,504,960 216,900 Red Hat, Inc.(a) ............................... 4,309,803 130,000 Symantec Corp.(a) .............................. 2,519,400 -------------- 23,821,883 - ------------------------------------------------------------------------------- TOTAL INFORMATION TECHNOLOGY ................... 110,368,943 -------------- TOTAL COMMON STOCKS .......................................... 198,222,874 - ------------------------------------------------------------------------------- (COST $159,576,186) SHORT TERM INVESTMENTS -- 6.45% INVESTMENT COMPANY -- 0.48% 1,000,181 SEI Daily Income Trust Treasury II Fund -- Class B ...................................... 1,000,181 - ------------------------------------------------------------------------------- TOTAL INVESTMENT COMPANY ....................... 1,000,181 -------------- U.S. TREASURY BILLS -- 5.97% $ 8,377,000 3.730%, 10/04/2007 ........................... 8,374,395 2,293,000 4.875%, 10/11/2007 ........................... 2,291,047 1,865,000 2.850%, 10/18/2007 ........................... 1,862,488 - ------------------------------------------------------------------------------- TOTAL U.S. TREASURY BILLS ...................... 12,527,930 -------------- TOTAL SHORT TERM INVESTMENTS ................................. 13,528,111 - ------------------------------------------------------------------------------- (COST $13,528,111) TOTAL INVESTMENTS -- 100.96% ................................. 211,750,985 (COST $173,104,297) Liabilities in Excess of Other Assets -- (0.96)% ............. (2,010,395) -------------- TOTAL NET ASSETS -- 100.00% .................................. $ 209,740,590 ============== ADR -- American Depositary Receipt (a) Non Income Producing The accompanying notes are an integral part of these financial statements. - -------------------------------------------------------------------------------- 39 BUFFALO SMALL CAP FUND SCHEDULE OF INVESTMENTS September 30, 2007 (Unaudited) SHARES MARKET VALUE - ------------------------------------------------------------------------------- COMMON STOCKS -- 96.74% CONSUMER DISCRETIONARY -- 27.92% AUTO COMPONENTS -- 1.30% 1,396,964 Gentex Corp. ................................... $ 29,950,908 -------------- HOTELS RESTAURANTS & LEISURE -- 8.71% 1,453,653 Ameristar Casinos, Inc. ........................ 40,847,649 243,500 Life Time Fitness, Inc.(a) ..................... 14,936,290 843,050 Orient-Express Hotels Ltd. -- Class A .......... 43,223,174 1,452,600 P.F. Chang's China Bistro, Inc.(a) ............. 42,996,960 540,600 Panera Bread Co. -- Class A(a) ................. 22,056,480 625,208 Penn National Gaming, Inc.(a) .................. 36,899,776 -------------- 200,960,329 -------------- HOUSEHOLD DURABLES -- 0.02% 12,600 Ethan Allen Interiors, Inc. .................... 411,894 -------------- INTERNET & CATALOG RETAIL -- 1.43% 3,025,100 Coldwater Creek Inc.(a) ........................ 32,852,586 -------------- LEISURE EQUIPMENT & PRODUCTS -- 7.75% 4,700 Brunswick Corp. ................................ 107,442 1,263,632 MarineMax, Inc.(a)(b) .......................... 18,398,482 937,800 Pool Corp. ..................................... 23,426,244 1,245,600 Winnebago Industries, Inc. ..................... 29,744,928 3,236,625 WMS Industries, Inc.(a)(b) ..................... 107,132,288 -------------- 178,809,384 -------------- MEDIA -- 1.50% 3,345,700 Lions Gate Entertainment Corp.(a) .............. 34,494,167 -------------- MULTILINE RETAIL -- 0.35% 905,220 Tuesday Morning Corp. .......................... 8,137,928 -------------- SPECIALTY RETAIL -- 5.67% 1,869,500 Borders Group, Inc. ............................ 24,920,435 615,150 Central Garden & Pet Co.(a) .................... 5,474,835 1,724,100 Central Garden & Pet Co. -- Class A(a) ......... 15,482,418 2,276,200 Christopher & Banks Corp. ...................... 27,587,544 1,019,204 Gamestop Corp. -- Class A(a) ................... 57,432,145 -------------- 130,897,377 -------------- TEXTILES, APPAREL & LUXURY GOODS -- 1.19% 760,725 Oxford Industries, Inc. ........................ 27,477,387 - ------------------------------------------------------------------------------- TOTAL CONSUMER DISCRETIONARY ................... 643,991,960 -------------- FINANCIALS -- 5.96% CAPITAL MARKETS -- 1.59% 1,114,162 Raymond James Financial, Inc. .................. 36,600,222 -------------- COMMERCIAL BANKS -- 3.39% 1,162,500 Boston Private Financial Holdings, Inc. ........ 32,364,000 829,900 PrivateBancorp, Inc. ........................... 28,913,716 436,350 Wilmington Trust Corp. ......................... 16,974,015 -------------- 78,251,731 -------------- DIVERSIFIED FINANCIAL SERVICES -- 0.98% 1,121,201 MarketAxess Holdings, Inc.(a) .................. 16,818,015 94,765 Morningstar, Inc.(a) ........................... 5,818,571 -------------- 22,636,586 - ------------------------------------------------------------------------------- TOTAL FINANCIALS ............................... 137,488,539 -------------- - -------------------------------------------------------------------------------- 40 SHARES MARKET VALUE - ------------------------------------------------------------------------------- HEALTH CARE -- 25.15% BIOTECHNOLOGY -- 3.55% 1,196,150 Amylin Pharmaceuticals, Inc.(a) ................ $ 59,807,500 1,155,700 InterMune, Inc.(a) ............................. 22,108,541 -------------- 81,916,041 -------------- HEALTH CARE EQUIPMENT & SUPPLIES -- 11.34% 2,643,100 Align Technology, Inc.(a) ...................... 66,949,723 2,498,060 American Medical Systems Holdings, Inc.(a) ..... 42,342,117 2,045,531 ev3, Inc.(a) ................................... 33,587,619 935,300 Immucor, Inc.(a) ............................... 33,436,975 1,283,800 Mentor Corp. ................................... 59,118,990 971,450 Wright Medical Group, Inc.(a) .................. 26,054,289 -------------- 261,489,713 -------------- HEALTH CARE PROVIDERS & SERVICES -- 8.13% 828,100 AMN Healthcare Services, Inc.(a) ............... 15,510,313 793,675 Charles River Laboratories International, Inc.(a) 44,564,851 593,925 Covance, Inc.(a) ............................... 46,266,757 1,493,556 Pharmaceutical Product Development, Inc. ....... 52,931,625 1,472,200 PSS World Medical, Inc.(a) ..................... 28,163,186 -------------- 187,436,732 -------------- PHARMACEUTICALS -- 2.13% 1,611,600 Medicis Pharmaceutical Corp. -- Class A ........ 49,169,916 - ------------------------------------------------------------------------------- TOTAL HEALTH CARE .............................. 580,012,402 -------------- INDUSTRIALS -- 14.82% COMMERCIAL SERVICES & SUPPLIES -- 14.82% 531,700 Bright Horizons Family Solutions, Inc.(a) ...... 22,778,028 4,503,390 Corinthian Colleges, Inc.(a) ................... 71,648,935 1,554,000 DeVry, Inc. .................................... 57,513,540 1,333,100 FirstService Corp.(a) .......................... 41,432,748 1,209,200 Heidrick & Struggles International, Inc.(a)(b) . 44,075,340 412,400 ITT Educational Services, Inc.(a) .............. 50,184,956 2,078,600 Korn/Ferry International(a) .................... 34,317,686 1,573,750 Navigant Consulting, Inc.(a) ................... 19,923,675 -------------- 341,874,908 - ------------------------------------------------------------------------------- TOTAL INDUSTRIALS .............................. 341,874,908 -------------- INFORMATION TECHNOLOGY -- 22.89% COMMUNICATIONS EQUIPMENT -- 1.88% 1,881,150 Adtran, Inc. ................................... 43,322,884 -------------- ELECTRONIC EQUIPMENT & INSTRUMENTS -- 4.08% 1,378,325 Dolby Laboratories, Inc. -- Class A(a) ......... 47,993,276 900,375 National Instruments Corp. ..................... 30,909,874 390,150 Trimble Navigation Ltd.(a) ..................... 15,297,782 -------------- 94,200,932 -------------- INTERNET SOFTWARE & SERVICES -- 2.72% 262,250 Equinix, Inc.(a) ............................... 23,258,953 1,324,100 The Knot, Inc.(a) .............................. 28,150,366 547,200 LoopNet, Inc.(a) ............................... 11,239,488 -------------- 62,648,807 -------------- - -------------------------------------------------------------------------------- 41 BUFFALO SMALL CAP FUND SCHEDULE OF INVESTMENTS September 30, 2007 (Unaudited) (Continued) SHARES OR FACE AMOUNT MARKET VALUE - -------------------------------------------------------------------------------- INFORMATION TECHNOLOGY (Continued) SEMICONDUCTOR & SEMICONDUCTOR EQUIPMENT -- 12.66% 1,438,200 Cabot Microelectronics Corp.(a) ................ $ 61,483,050 1,519,500 Cree, Inc.(a) .................................. 47,256,450 1,936,350 Fairchild Semiconductor International, Inc.(a) . 36,171,018 877,600 FormFactor, Inc.(a) ............................ 38,939,112 3,334,300 Micrel, Inc. ................................... 36,010,440 2,266,068 MKS Instruments, Inc.(a) ....................... 43,100,613 1,425,800 Semtech Corp.(a) ............................... 29,200,384 -------------- 292,161,067 -------------- SOFTWARE -- 1.55% 1,304,600 Manhattan Associates, Inc.(a) .................. 35,759,086 - ------------------------------------------------------------------------------- TOTAL INFORMATION TECHNOLOGY ................... 528,092,776 -------------- TOTAL COMMON STOCKS .......................................... 2,231,460,585 - ------------------------------------------------------------------------------- (COST $1,684,275,931) PREFERRED STOCKS -- 0.12% FINANCIALS -- 0.12% REAL ESTATE MANAGEMENT & DEVELOPMENT -- 0.12% 127,350 FirstService Corp.(a) .......................... 2,865,375 - ------------------------------------------------------------------------------- TOTAL FINANCIALS ............................... 2,865,375 -------------- TOTAL PREFERRED STOCK ........................................ 2,865,375 - ------------------------------------------------------------------------------- (COST $2,443,330) SHORT TERM INVESTMENTS -- 2.73% INVESTMENT COMPANY -- 0.44% 10,001,030 SEI Daily Income Trust Treasury II Fund -- Class B ...................................... 10,001,030 - ------------------------------------------------------------------------------- TOTAL INVESTMENT COMPANY ....................... 10,001,030 -------------- U.S. TREASURY BILLS -- 2.29% $15,068,000 3.260%, 10/04/2007 ........................... 15,063,901 21,657,000 4.875%, 10/11/2007 ........................... 21,639,349 9,364,000 3.100%, 10/18/2007 ........................... 9,350,283 6,810,000 4.800%, 10/25/2007 ........................... 6,795,850 - ------------------------------------------------------------------------------- TOTAL U.S. TREASURY BILLS ...................... 52,849,383 -------------- TOTAL SHORT TERM INVESTMENTS 62,850,413 - ------------------------------------------------------------------------------- (COST $62,850,413) TOTAL INVESTMENTS -- 99.59% .................................. 2,297,176,373 (COST $1,749,569,674) Other Assets in Excess of Liabilities -- 0.41% ............... 9,553,185 -------------- TOTAL NET ASSETS -- 100.00% .................................. $2,306,729,558 ============== (a) Non Income Producing (b) Affiliated company; the Fund owns 5% or more of the outstanding voting securities of the issuer. See footnote 7 to the financial statements for further information. The accompanying notes are an integral part of these financial statements. - -------------------------------------------------------------------------------- 42 BUFFALO USA GLOBAL FUND SCHEDULE OF INVESTMENTS September 30, 2007 (Unaudited) SHARES MARKET VALUE - ------------------------------------------------------------------------------- COMMON STOCKS -- 89.14% CONSUMER DISCRETIONARY -- 12.09% AUTO COMPONENTS -- 4.68% 135,400 Gentex Corp. ................................... $ 2,902,976 21,400 Johnson Controls, Inc. ......................... 2,527,554 -------------- 5,430,530 -------------- HOTELS RESTAURANTS & LEISURE -- 4.41% 19,400 Las Vegas Sands Corp.(a) ....................... 2,588,348 46,400 McDonald's Corp. ............................... 2,527,408 -------------- 5,115,756 -------------- LEISURE EQUIPMENT & PRODUCTS -- 0.83% 42,100 Brunswick Corp. ................................ 962,406 -------------- SPECIALTY RETAIL -- 2.17% 48,200 Tiffany & Co. .................................. 2,523,270 - ------------------------------------------------------------------------------- TOTAL CONSUMER DISCRETIONARY ................... 14,031,962 -------------- CONSUMER STAPLES -- 9.56% BEVERAGES -- 2.50% 50,500 The Coca-Cola Co. .............................. 2,902,235 -------------- FOOD PRODUCTS -- 1.61% 28,950 Wm. Wrigley Jr. Co. ............................ 1,859,459 -------------- HOUSEHOLD PRODUCTS -- 5.45% 25,300 Colgate-Palmolive Co. .......................... 1,804,396 26,800 Kimberly-Clark Corp. ........................... 1,882,968 37,515 Procter & Gamble Co. ........................... 2,638,805 -------------- 6,326,169 - ------------------------------------------------------------------------------- TOTAL CONSUMER STAPLES ......................... 11,087,863 -------------- ENERGY -- 3.40% ENERGY EQUIPMENT & SERVICES -- 1.99% 60,200 Halliburton Co. ................................ 2,311,680 -------------- OIL & GAS -- 1.41% 39,900 World Fuel Services Corp. ...................... 1,628,319 - ------------------------------------------------------------------------------- TOTAL ENERGY ................................... 3,939,999 -------------- FINANCIALS -- 4.97% INSURANCE -- 4.97% 53,100 AFLAC, Inc. .................................... 3,028,824 40,500 American International Group, Inc. ............. 2,739,825 - ------------------------------------------------------------------------------- TOTAL FINANCIALS ............................... 5,768,649 -------------- HEALTH CARE -- 24.46% HEALTH CARE EQUIPMENT & SUPPLIES -- 11.17% 46,900 Baxter International, Inc. ..................... 2,639,532 39,900 Dentsply International, Inc. ................... 1,661,436 110,200 ev3, Inc.(a) ................................... 1,809,484 47,600 Mentor Corp. ................................... 2,191,980 38,800 Sigma-Aldrich Corp. ............................ 1,891,112 46,600 Varian Medical Systems, Inc.(a) ................ 1,952,074 12,100 Waters Corp.(a) ................................ 809,732 -------------- 12,955,350 -------------- - -------------------------------------------------------------------------------- 43 BUFFALO USA GLOBAL FUND SCHEDULE OF INVESTMENTS September 30, 2007 (Unaudited) (Continued) SHARES MARKET VALUE - ------------------------------------------------------------------------------- HEALTH CARE (Continued) HEALTH CARE PROVIDERS & SERVICES -- 3.76% 72,300 IMS Health, Inc. ............................... $ 2,215,272 60,500 Pharmaceutical Product Development, Inc. ....... 2,144,120 -------------- 4,359,392 -------------- PHARMACEUTICALS -- 9.53% 41,500 Abbott Laboratories ............................ 2,225,230 29,100 Johnson & Johnson .............................. 1,911,870 105,200 Schering-Plough Corp. .......................... 3,327,476 80,700 Wyeth .......................................... 3,595,185 -------------- 11,059,761 - ------------------------------------------------------------------------------- TOTAL HEALTH CARE .............................. 28,374,503 -------------- INDUSTRIALS -- 5.91% AIR FREIGHT & LOGISTICS -- 1.11% 27,200 Expeditors International Washington, Inc. ...... 1,286,560 -------------- COMMERCIAL SERVICES & SUPPLIES -- 4.80% 42,200 Getty Images, Inc.(a) .......................... 1,174,848 46,500 Heidrick & Struggles International, Inc.(a) .... 1,694,925 47,700 Monster Worldwide Inc.(a) ...................... 1,624,662 22,600 Sotheby's ...................................... 1,080,054 -------------- 5,574,489 - ------------------------------------------------------------------------------- TOTAL INDUSTRIALS .............................. 6,861,049 -------------- INFORMATION TECHNOLOGY -- 28.75% COMMUNICATIONS EQUIPMENT -- 4.31% 90,900 Cisco Systems, Inc.(a) ......................... 3,009,699 107,100 Motorola, Inc. ................................. 1,984,563 -------------- 4,994,262 -------------- ELECTRONIC EQUIPMENT & INSTRUMENTS -- 5.34% 53,400 Dolby Laboratories, Inc. -- Class A(a) ......... 1,859,388 114,100 Jabil Circuit, Inc. ............................ 2,606,044 64,400 Molex, Inc. .................................... 1,734,292 -------------- 6,199,724 -------------- SEMICONDUCTOR & SEMICONDUCTOR EQUIPMENT -- 14.61% 90,102 Applied Materials, Inc. ........................ 1,865,111 52,600 Broadcom Corp. -- Class A(a) ................... 1,916,744 56,105 Cabot Microelectronics Corp.(a) ................ 2,398,489 88,400 Entegris, Inc.(a) .............................. 767,312 39,300 FormFactor, Inc.(a) ............................ 1,743,741 81,000 Integrated Device Technology, Inc.(a) .......... 1,253,880 109,300 Intel Corp. .................................... 2,826,498 35,200 KLA-Tencor Corp. ............................... 1,963,456 81,800 National Semiconductor Corp. ................... 2,218,416 -------------- 16,953,647 -------------- - -------------------------------------------------------------------------------- 44 SHARES OR FACE AMOUNT MARKET VALUE - -------------------------------------------------------------------------------- INFORMATION TECHNOLOGY (Continued) SOFTWARE -- 4.49% 63,400 Microsoft Corp. ................................ $ 1,867,764 99,400 Oracle Corp.(a) ................................ 2,152,010 60,000 Red Hat, Inc.(a) ............................... 1,192,200 -------------- 5,211,974 - ------------------------------------------------------------------------------- TOTAL INFORMATION TECHNOLOGY ................... 33,359,607 -------------- TOTAL COMMON STOCKS .......................................... 103,423,632 - ------------------------------------------------------------------------------- (COST $76,343,002) SHORT TERM INVESTMENTS -- 10.13% INVESTMENT COMPANY -- 0.86% 1,000,932 SEI Daily Income Trust Treasury II Fund -- Class B ...................................... 1,000,932 - ------------------------------------------------------------------------------- TOTAL INVESTMENT COMPANY ....................... 1,000,932 -------------- U.S. TREASURY BILLS -- 9.27% $ 6,241,000 3.740%, 10/04/2007 ........................... 6,239,057 1,104,000 4.875%, 10/11/2007 ........................... 1,103,078 3,416,000 2.850%, 10/18/2007 ........................... 3,411,399 - ------------------------------------------------------------------------------- TOTAL U.S. TREASURY BILLS ...................... 10,753,534 -------------- TOTAL SHORT TERM INVESTMENTS ................................. 11,754,466 - ------------------------------------------------------------------------------- (COST $11,754,466) TOTAL INVESTMENTS -- 99.27% .................................. 115,178,098 (COST $88,097,468) Other Assets in Excess of Liabilities -- 0.73% ............... 845,596 -------------- TOTAL NET ASSETS -- 100.00% .................................. $ 116,023,694 ============== (a) Non-Income Producing The accompanying notes are an integral part of these financial statements. - -------------------------------------------------------------------------------- 45 STATEMENTS OF ASSETS AND LIABILITIES September 30, 2007 (Unaudited)
BUFFALO BUFFALO BUFFALO BALANCED HIGH YIELD JAYHAWK CHINA FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------- ASSETS: Investments in securities, at cost: Investments in securities of unaffiliated issuers ................... $153,217,743 $168,892,551 $ 29,720,767 Investments in securities of affiliated issuers ..................... -- -- -- ------------ ------------ ------------ Total investments, at cost ............................................ $153,017,743 $168,892,551 $ 29,720,767 ============ ============ ============ Investments in securities, at value: Investments in securities of unaffiliated issuers ................... $190,534,064 $177,010,295 $ 37,559,926 Investments in securities of affiliated issuers ..................... -- -- -- ------------ ------------ ------------ Total investments, at value ........................................... 190,534,064 177,010,295 37,559,926 Cash .................................................................. 36,899 -- 37,476 Cash denominated in foreign currencies, at value(1) ................... -- -- 1,340,239 Receivables: Investments sold .................................................... -- 4,232,474 1,195,315 Fund shares sold .................................................... 1,336,916 151,604 217,010 Dividends ........................................................... 135,083 30,568 132,187 Interest ............................................................ 1,142,520 3,248,140 13,764 Other assets .......................................................... 25,857 15,377 500 ------------ ------------ ------------ Total assets ...................................................... 193,211,339 184,688,458 40,496,417 ------------ ------------ ------------ LIABILITIES: Fund shares purchased ................................................. 262,756 484,634 47,523 Payables: Investments purchased ............................................... -- -- 79,563 Written option, at value(2) ......................................... 36,750 -- -- Management fees ..................................................... 150,170 151,748 45,573 Accrued expenses ...................................................... 2,249 1,280 42,981 ------------ ------------ ------------ Total liabilities ................................................. 451,925 637,662 215,640 ------------ ------------ ------------ NET ASSETS .............................................................. $192,759,414 $184,050,796 $ 40,280,777 ============ ============ ============ NET ASSETS CONSIST OF: Capital (capital stock and paid-in capital) ........................... $151,497,161 $176,005,491 $ 30,276,083 Accumulated net investment income (loss) .............................. 105,370 45,890 59,808 Accumulated net realized gain (loss) from investment transactions and foreign currency ................................... 3,840,413 (118,329) 2,110,628 Net unrealized appreciation (depreciation) on investments, options and foreign currency ........................................ 37,316,470 8,117,744 7,834,258 ------------ ------------ ------------ NET ASSETS APPLICABLE TO OUTSTANDING SHARES ............................. $192,759,414 $184,050,796 $ 40,280,777 ============ ============ ============ Capital shares, $1.00 par value: Authorized ............................................................ 25,000,000 100,000,000 10,000,000 ============ ============ ============ Outstanding ........................................................... 15,394,180 16,488,787 2,894,938 ============ ============ ============ NET ASSET VALUE PER SHARE ............................................... $ 12.52 $ 11.16 $ 13.91 ============ ============ ============ (1) Cash denominated in foreign currencies, at cost ..................... -- -- 1,345,694 (2) Writen option, premium received ..................................... 36,899 -- --
The accompanying notes are an integral part of these financial statements. - -------------------------------------------------------------------------------- 46
BUFFALO BUFFALO BUFFALO BUFFALO SCIENCE & BUFFALO BUFFALO LARGE CAP MICRO CAP MID CAP TECHNOLOGY SMALL CAP USA GLOBAL FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------- $ 44,922,322 $ 42,221,770 $ 385,147,620 $ 173,104,297 $1,635,893,052 $ 88,097,468 -- -- -- -- 113,676,622 -- - -------------- -------------- -------------- -------------- -------------- -------------- $ 44,922,322 $ 42,221,770 $ 385,147,620 $ 173,104,297 $1,749,569,674 $ 88,097,468 ============== ============== ============== ============== ============== ============== $ 59,985,105 $ 50,695,624 $ 487,841,201 $ 211,750,985 $2,127,570,264 $ 115,178,098 -- -- -- -- 169,606,109 -- - -------------- -------------- -------------- -------------- -------------- -------------- 59,985,105 50,695,624 487,841,201 211,750,985 2,297,176,373 115,178,098 -- 37,561 -- -- -- -- -- -- -- -- -- -- -- 900,367 259,582 856,183 10,308,795 613,080 11,579 11,583 2,710,634 850,193 2,105,462 523,468 32,534 2,607 160,805 44,266 733,711 82,006 2,847 -- 5,126 3,126 21,425 3,590 14,196 9,510 15,357 15,810 63,495 22,801 - -------------- -------------- -------------- -------------- -------------- -------------- 60,046,261 51,657,252 490,992,706 213,520,563 2,310,409,261 116,423,043 - -------------- -------------- -------------- -------------- -------------- -------------- 226,926 214,160 96,407 119,120 1,793,621 308,086 -- 205,184 -- 3,495,370 -- -- -- -- -- -- -- -- 48,286 61,008 383,823 163,908 1,885,047 91,073 233 364 4,369 1,575 1,035 190 - -------------- -------------- -------------- -------------- -------------- -------------- 275,445 480,716 484,599 3,779,973 3,679,703 399,349 - -------------- -------------- -------------- -------------- -------------- -------------- $ 59,770,816 $ 51,176,536 $ 490,508,107 $ 209,740,590 $2,306,729,558 $ 116,023,694 ============== ============== ============== ============== ============== ============== $ 43,257,000 $ 39,098,390 $ 370,371,760 $ 164,721,577 $1,643,957,732 $ 87,919,544 (5,391) (311,044) (636,829) (293,246) (5,031,658) 63,990 1,456,424 3,915,337 18,079,595 6,665,571 120,196,785 959,530 15,062,783 8,473,853 102,693,581 38,646,688 547,606,699 27,080,630 - -------------- -------------- -------------- -------------- -------------- -------------- $ 59,770,816 $ 51,176,536 $ 490,508,107 $ 209,740,590 $2,306,729,558 $ 116,023,694 ============== ============== ============== ============== ============== ============== 10,000,000 Unlimited Unlimited Unlimited 100,000,000 10,000,000 ============== ============== ============== ============== ============== ============== 2,582,567 3,897,072 28,244,587 13,732,761 79,484,177 4,786,623 ============== ============== ============== ============== ============== ============== $ 23.14 $ 13.13 $ 17.37 $ 15.27 $ 29.02 $ 24.24 ============== ============== ============== ============== ============== ============== -- -- -- -- -- -- -- -- -- -- -- --
- -------------------------------------------------------------------------------- 47 STATEMENTS OF OPERATIONS For the Six Months Ended September 30, 2007 (Unaudited)
BUFFALO BUFFALO BUFFALO BALANCED HIGH YIELD JAYHAWK CHINA FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Interest .............................................................. $ 2,234,345 $ 5,927,383 $ 51,836 Dividends ............................................................. 1,198,374 180,019 404,783 Foreign tax withheld .................................................. (1,198) (5,394) (3,420) ------------ ------------ ------------ Total investment income ............................................. 3,431,521 6,102,008 453,199 ------------ ------------ ------------ EXPENSES: Management fees ....................................................... 882,072 919,903 233,838 Custody fees .......................................................... -- -- 23,973 Registration fees ..................................................... 19,398 12,627 15,189 Other ................................................................. 2,983 3,210 902 ------------ ------------ ------------ Total expenses ...................................................... 904,453 935,740 273,902 ------------ ------------ ------------ Net investment income (loss) ........................................ 2,527,068 5,166,268 179,297 ------------ ------------ ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain from: Investment transactions ............................................. 3,901,978 1,112,608 2,106,802 Foreign currency translation ........................................ -- -- 3,817 ------------ ------------ ------------ Total net realized gains .......................................... 3,901,978 1,112,608 2,110,619 ------------ ------------ ------------ Net unrealized appreciation/depreciation during the period on: Investments ......................................................... 9,046,692 (2,254,633) 6,835,200 Options ............................................................. 149 -- -- Foreign currency .................................................... -- -- (4,642) ------------ ------------ ------------ Total net unrealized appreciation/depreciation .................... 9,046,841 (2,254,633) 6,830,558 ------------ ------------ ------------ Net realized and unrealized gain (loss) on investments .............. 12,948,819 (1,142,025) 8,941,177 ------------ ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..... $ 15,475,887 $ 4,024,243 $ 9,120,474 ============ ============ ============
The accompanying notes are an integral part of these financial statements. - -------------------------------------------------------------------------------- 48
BUFFALO BUFFALO BUFFALO BUFFALO SCIENCE & BUFFALO BUFFALO LARGE CAP MICRO CAP MID CAP TECHNOLOGY SMALL CAP USA GLOBAL FUND FUND FUND FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------- $ 90,238 $ 38,431 $ 573,667 $ 205,529 $ 2,002,651 $ 214,250 279,011 64,119 1,013,322 421,396 4,287,219 466,392 (9,636) -- -- (15,316) (5,496) -- - -------------- -------------- -------------- -------------- -------------- -------------- 359,613 102,550 1,586,989 611,609 6,284,374 680,642 - -------------- -------------- -------------- -------------- -------------- -------------- 292,873 401,141 2,199,803 888,414 11,268,028 495,619 -- -- -- -- -- -- 11,346 10,980 17,934 13,542 19,947 12,078 1,386 1,473 6,081 2,899 28,057 1,618 - -------------- -------------- -------------- -------------- -------------- -------------- 305,605 413,594 2,223,818 904,855 11,316,032 509,315 - -------------- -------------- -------------- -------------- -------------- -------------- 54,008 (311,044) (636,829) (293,246) (5,031,658) 171,327 - -------------- -------------- -------------- -------------- -------------- -------------- 1,465,213 1,046,244 14,155,297 5,221,895 73,585,970 1,273,065 -- -- -- -- -- -- - -------------- -------------- -------------- -------------- -------------- -------------- 1,465,213 1,046,244 14,155,297 5,221,895 73,585,970 1,273,065 - -------------- -------------- -------------- -------------- -------------- -------------- 2,939,562 (1,453,291) 34,656,203 17,066,298 2,394,560 5,810,438 -- -- -- -- -- -- -- -- -- -- -- -- - -------------- -------------- -------------- -------------- -------------- -------------- 2,939,562 (1,453,291) 34,656,203 17,066,298 2,394,560 5,810,438 - -------------- -------------- -------------- -------------- -------------- -------------- 4,404,775 (407,047) 48,811,500 22,288,193 75,980,530 7,083,503 - -------------- -------------- -------------- -------------- -------------- -------------- $ 4,458,783 $ (718,091) $ 48,174,671 $ 21,994,947 $ 70,948,872 $ 7,254,830 ============== ============== ============== ============== ============== ==============
- -------------------------------------------------------------------------------- 49 STATEMENTS OF CHANGES IN NET ASSETS September 30, 2007
BUFFALO BALANCED FUND SIX MONTHS ENDED SEPTEMBER 30, 2007 YEAR ENDED (UNAUDITED) MARCH 31, 2007 - ----------------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) ........................................................... $ 2,527,068 $ 4,645,911 Net realized gain from investment transactions ......................................... 3,901,978 9,401,706 Net unrealized appreciation/depreciation during the period on investments .............. 9,046,841 3,564,122 -------------- -------------- Net increase (decrease) in net assets resulting from operations ...................... 15,475,887 17,611,739 DISTRIBUTIONS TO SHAREHOLDERS: Net investment income .................................................................. (2,482,249) (4,688,752) Net realized gains ..................................................................... (1,292,029) -- -------------- -------------- Total distributions to shareholders .................................................. (3,774,278) (4,688,752) CAPITAL SHARE TRANSACTIONS: Shares sold ............................................................................ 33,502,843 120,178,149 Reinvested distributions ............................................................... 3,405,960 3,698,814 -------------- -------------- 36,908,803 123,876,963 Redemptions ............................................................................ (22,255,684) (120,662,898) Redemption fees (Note 5) ............................................................... 8,167 31,040 -------------- -------------- Shares repurchased ................................................................... (22,247,517) (120,631,858) -------------- -------------- Net increase (decrease) from capital share transactions ............................ 14,661,286 3,245,105 -------------- -------------- Total increase (decrease) in net assets .......................................... 26,362,895 16,168,092 NET ASSETS: Beginning of period .................................................................... 166,396,519 150,228,427 -------------- -------------- End of period .......................................................................... $ 192,759,414 $ 166,396,519 ============== ============== Accumulated net investment income (loss) at end of period .............................. $ 105,370 $ 60,551 ============== ============== Fund share transactions: Shares sold ............................................................................ 2,733,373 10,636,147 Reinvested distributions ............................................................... 274,522 327,587 -------------- -------------- 3,007,895 10,963,734 Shares repurchased ..................................................................... (1,827,666) (10,675,901) -------------- -------------- Net increase (decrease) in fund shares ............................................... 1,180,229 287,833 ============== ==============
(1) Commenced operations on December 18, 2006. The accompanying notes are an integral part of these financial statements. - -------------------------------------------------------------------------------- 50
BUFFALO BUFFALO HIGH YIELD FUND JAYHAWK CHINA FUND SIX MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 30, 2007 YEAR ENDED SEPTEMBER 30, 2007 PERIOD ENDED (UNAUDITED) MARCH 31, 2007 (UNAUDITED) MARCH 31, 2007(1) - ---------------------------------------------------------------------------------- $ 5,166,268 $ 10,604,915 $ 179,297 $ (28,038) 1,112,608 3,338,296 2,110,619 135,193 (2,254,633) (3,166,870) 6,830,558 1,003,700 -------------- -------------- -------------- -------------- 4,024,243 10,776,341 9,120,474 1,110,855 (5,527,195) (10,858,286) (117,450) -- -- -- (109,321) -- -------------- -------------- -------------- -------------- (5,527,195) (10,858,286) (226,771) -- 34,729,096 26,212,844 11,348,082 22,884,319 4,072,696 8,151,175 218,687 -- -------------- -------------- -------------- -------------- 38,801,792 34,364,019 11,566,769 22,884,319 (34,718,831) (64,421,478) (3,588,335) (602,042) 11,471 22,161 12,770 2,738 -------------- -------------- -------------- -------------- (34,707,360) (64,399,317) (3,575,565) (599,304) -------------- -------------- -------------- -------------- 4,094,432 (30,035,298) 7,991,204 22,285,015 -------------- -------------- -------------- -------------- 2,591,480 (30,117,243) 16,884,907 23,395,870 181,459,316 211,576,559 23,395,870 -- -------------- -------------- -------------- -------------- $ 184,050,796 $ 181,459,316 $ 40,280,777 $ 23,395,870 ============== ============== ============== ============== $ 45,890 $ 406,817 $ 59,808 $ (2,039) ============== ============== ============== ============== 3,104,070 2,340,460 950,151 2,280,846 365,786 738,068 17,955 -- -------------- -------------- -------------- -------------- 3,469,856 3,078,528 968,106 2,280,846 (3,101,607) (5,811,071) (295,107) (58,907) -------------- -------------- -------------- -------------- 368,249 (2,732,543) 672,999 2,221,939 ============== ============== ============== ============== BUFFALO BUFFALO LARGE CAP FUND MICRO CAP FUND SIX MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 30, 2007 YEAR ENDED SEPTEMBER 30, 2007 YEAR ENDED (UNAUDITED) MARCH 31, 2007 (UNAUDITED) MARCH 31, 2007 - --------------------------------------------------------------------------------- $ 54,008 $ (9,350) $ (311,044) $ (536,496) 1,465,213 1,084,420 1,046,244 4,073,744 2,939,562 4,263,538 (1,453,291) (1,698,997) -------------- -------------- -------------- -------------- 4,458,783 5,338,608 (718,091) 1,838,251 (59,399) (43,455) -- -- (682,470) -- -- (2,891,049) -------------- -------------- -------------- -------------- (741,869) (43,455) -- (2,891,049) 9,965,821 7,052,191 1,590,666 6,939,489 732,613 42,790 -- 2,832,253 -------------- -------------- -------------- -------------- 10,698,434 7,094,981 1,590,666 9,771,742 (6,929,077) (14,358,026) (7,147,505) (12,466,299) 2,206 2,379 2,887 5,591 -------------- -------------- -------------- -------------- (6,926,871) (14,355,647) (7,144,618) (12,460,708) -------------- -------------- -------------- -------------- 3,771,563 (7,260,666) (5,553,953) (2,688,966) -------------- -------------- -------------- -------------- 7,488,477 (1,965,513) (6,272,044) (3,741,764) 52,282,339 54,247,852 57,448,580 61,190,344 -------------- -------------- -------------- -------------- $ 59,770,816 $ 52,282,339 $ 51,176,536 $ 57,448,580 ============== ============== ============== ============== $ (5,391) $ -- $ (311,044) $ -- ============== ============== ============== ============== 431,381 352,970 119,010 534,700 31,375 2,327 -- 219,384 -------------- -------------- -------------- -------------- 462,756 355,297 119,010 754,084 (301,987) (722,996) (534,943) (979,314) -------------- -------------- -------------- -------------- 160,769 (367,699) (415,933) (225,230) ============== ============== ============== ==============
- -------------------------------------------------------------------------------- 51 STATEMENTS OF CHANGES IN NET ASSETS September 30, 2007
BUFFALO MID CAP FUND SIX MONTHS ENDED SEPTEMBER 30, 2007 YEAR ENDED (UNAUDITED) MARCH 31, 2007 - ----------------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) ........................................................... $ (636,829) $ (1,169,333) Net realized gain from investment transactions ......................................... 14,155,297 11,499,914 Net unrealized appreciation/depreciation during the period on investments .............. 34,656,203 (1,203,630) -------------- -------------- Net increase in net assets resulting from operations ................................. 48,174,671 9,126,951 DISTRIBUTIONS TO SHAREHOLDERS: Net investment income .................................................................. -- -- Net realized gains ..................................................................... -- (7,186,450) -------------- -------------- Total distributions to shareholders .................................................. -- (7,186,450) CAPITAL SHARE TRANSACTIONS: Shares sold ............................................................................ 83,942,835 179,479,373 Reinvested distributions ............................................................... -- 6,869,162 -------------- -------------- 83,942,835 186,348,535 Redemptions ............................................................................ (38,028,371) (136,138,862) Redemption fees (Note 5) ............................................................... 11,473 50,925 -------------- -------------- Shares repurchased ................................................................... (38,016,898) (136,087,937) -------------- -------------- Net increase (decrease) from capital share transactions ............................ 45,925,937 50,260,598 -------------- -------------- Total increase (decrease) in net assets .......................................... 94,100,608 52,201,099 NET ASSETS: Beginning of period .................................................................... 396,407,499 344,206,400 -------------- -------------- End of period .......................................................................... $ 490,508,107 $ 396,407,499 ============== ============== Accumulated net investment income (loss) at end of period .............................. $ (636,829) $ -- ============== ============== Fund share transactions: Shares sold ............................................................................ 4,988,453 12,167,344 Reinvested distributions ............................................................... -- 457,639 -------------- -------------- 4,988,453 12,624,983 Shares repurchased ..................................................................... (2,276,706) (9,362,906) -------------- -------------- Net increase (decrease) in fund shares ............................................... 2,711,747 3,262,077 ============== ==============
The accompanying notes are an integral part of these financial statements. - -------------------------------------------------------------------------------- 52
BUFFALO BUFFALO BUFFALO SCIENCE & TECHNOLOGY FUND SMALL CAP FUND USA GLOBAL FUND SIX MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 30, 2007 YEAR ENDED SEPTEMBER 30, 2007 YEAR ENDED SEPTEMBER 30, 2007 YEAR ENDED (UNAUDITED) MARCH 31, 2007 (UNAUDITED) MARCH 31, 2007 (UNAUDITED) MARCH 31, 2007 - --------------------------------------------------------------------------------------------------------------------------- $ (293,246) $ (462,103) $ (5,031,658) $ (8,239,029) $ 171,327 $ 165,267 5,221,895 4,538,110 73,585,970 123,373,979 1,273,065 5,163,322 17,066,298 982,925 2,394,560 (25,748,484) 5,810,438 2,137,187 -------------- -------------- -------------- -------------- -------------- -------------- 21,994,947 5,058,932 70,948,872 89,386,466 7,254,830 7,465,776 -- -- -- -- (136,795) (192,295) -- (6,400,155) -- (142,939,633) (3,146,993) (1,999,838) -------------- -------------- -------------- -------------- -------------- -------------- -- (6,400,155) -- (142,939,633) (3,283,788) (2,192,133) 58,820,159 88,607,228 359,965,352 400,156,726 43,274,700 13,813,188 -- 6,347,756 -- 138,893,161 3,249,914 2,149,677 -------------- -------------- -------------- -------------- -------------- -------------- 58,820,159 94,954,984 359,965,352 539,049,887 46,524,614 15,962,865 (23,940,743) (52,115,066) (237,219,777) (488,847,222) (9,502,982) (19,326,090) 11,759 24,274 47,669 164,616 4,917 3,179 -------------- -------------- -------------- -------------- -------------- -------------- (23,928,984) (52,090,792) (237,172,108) (488,682,606) (9,498,065) (19,322,911) -------------- -------------- -------------- -------------- -------------- -------------- 34,891,175 42,864,192 122,793,244 50,367,281 37,026,549 (3,360,046) -------------- -------------- -------------- -------------- -------------- -------------- 56,886,122 41,522,969 193,742,116 (3,185,886) 40,997,591 1,913,597 152,854,468 111,331,499 2,112,987,442 2,116,173,328 75,026,103 73,112,506 -------------- -------------- -------------- -------------- -------------- -------------- $ 209,740,590 $ 152,854,468 $2,306,729,558 $2,112,987,442 $ 116,023,694 $ 75,026,103 ============== ============== ============== ============== ============== ============== $ (293,246) $ -- $ (5,031,658) $ -- $ 63,990 $ 29,458 ============== ============== ============== ============== ============== ============== 4,334,643 6,715,884 12,120,925 14,788,847 1,808,370 617,660 -- 521,246 -- 5,188,389 136,838 96,999 -------------- -------------- -------------- -------------- -------------- -------------- 4,334,643 7,237,130 12,120,925 19,977,236 1,945,208 714,659 (1,945,102) (4,035,093) (8,109,212) (18,211,542) (399,331) (892,369) -------------- -------------- -------------- -------------- -------------- -------------- 2,389,541 3,202,037 4,011,713 1,765,694 1,545,877 (177,710) ============== ============== ============== ============== ============== ==============
- -------------------------------------------------------------------------------- 53 FINANCIAL HIGHLIGHTS BUFFALO BALANCED FUND
SIX MONTHS ENDED Condensed data for a share of capital SEPTEMBER 30, 2007 YEARS ENDED MARCH 31, stock outstanding throughout the period. (UNAUDITED) 2007 2006 2005 2004 2003 - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period .......... $ 11.71 $ 10.79 $ 9.98 $ 9.38 $ 7.27 $ 9.27 ---------- ---------- ---------- ---------- ---------- ---------- Income from investment operations: Net investment income ..................... 0.17 0.32 0.30 0.29 0.29 0.20 Net gains (losses) on securities (both realized and unrealized) .......... 0.90 0.92 0.81 0.62 2.12 (1.99) ---------- ---------- ---------- ---------- ---------- ---------- Total from investment operations ............ 1.07 1.24 1.11 0.91 2.41 (1.79) ---------- ---------- ---------- ---------- ---------- ---------- Less distributions: Dividends from net investment income ...... (0.17) (0.32) (0.30) (0.31) (0.30) (0.21) Distributions from capital gains .......... (0.09) -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- Total distributions ......................... (0.26) (0.32) (0.30) (0.31) (0.30) (0.21) ---------- ---------- ---------- ---------- ---------- ---------- Paid-in capital from redemption fees (Note 5) --(1) --(1) --(1) --(1) -- -- ---------- ---------- ---------- ---------- ---------- ---------- Net asset value, end of period ................ $ 12.52 $ 11.71 $ 10.79 $ 9.98 $ 9.38 $ 7.27 ========== ========== ========== ========== ========== ========== Total return* ................................. 9.18% 11.67% 11.23% 9.75% 33.50% (19.32%) ========== ========== ========== ========== ========== ========== RATIOS/SUPPLEMENTAL DATA Net assets, end of year (in thousands) ........ $ 192,759 $ 166,397 $ 150,228 $ 143,041 $ 77,275 $ 18,050 Ratio of expenses to average net assets** ..... 1.03% 1.03% 1.03% 1.03% 1.05% 1.10% Ratio of net investment income to average net assets** ................................ 2.87% 2.85% 2.89% 3.13% 3.47% 2.60% Portfolio turnover rate* ...................... 11% 28% 18% 30% 32% 45%
* Not annualized for periods less than one full year. ** Annualized for periods less than one full year. (1) Less than $0.01 per share. The accompanying notes are an integral part of these financial statements. - -------------------------------------------------------------------------------- 54 FINANCIAL HIGHLIGHTS BUFFALO HIGH YIELD FUND
SIX MONTHS ENDED Condensed data for a share of capital SEPTEMBER 30, 2007 YEARS ENDED MARCH 31, stock outstanding throughout the period. (UNAUDITED) 2007 2006 2005 2004 2003 - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period .......... $ 11.26 $ 11.22 $ 11.13 $ 11.24 $ 9.86 $ 9.87 ---------- ---------- ---------- ---------- ---------- ---------- Income from investment operations: Net investment income ..................... 0.30 0.63 0.58 0.42 0.43 0.55 Net gains (losses) on securities (both realized and unrealized) .......... (0.07) 0.06 0.16 (0.09) 1.37 0.01 ---------- ---------- ---------- ---------- ---------- ---------- Total from investment operations ............ 0.25 0.69 0.74 0.33 1.80 0.56 ---------- ---------- ---------- ---------- ---------- ---------- Less dividends from net investment income ... (0.35) (0.65) (0.65) (0.44) (0.43) (0.57) ---------- ---------- ---------- ---------- ---------- ---------- Paid-in capital from redemption fees (Note 5) --(1) --(1) --(1) --(1) 0.01 -- ---------- ---------- ---------- ---------- ---------- ---------- Net asset value, end of period ................ $ 11.16 $ 11.26 $ 11.22 $ 11.13 $ 11.24 $ 9.86 ========== ========== ========== ========== ========== ========== Total return* ................................. 2.21% 6.42% 6.82% 2.96% 18.56% 5.95% ========== ========== ========== ========== ========== ========== RATIOS/SUPPLEMENTAL DATA Net assets, end of year (in thousands) ........ $ 184,051 $ 181,459 $ 211,577 $ 304,746 $ 324,123 $ 143,008 Ratio of expenses to average net assets** ..... 1.02% 1.02% 1.02% 1.02% 1.03% 1.03% Ratio of net investment income to average net assets** ................................ 5.63% 5.66% 5.03% 3.71% 3.89% 6.24% Portfolio turnover rate* ...................... 16% 9% 28% 45% 51% 33%
* Not annualized for periods less than one full year. ** Annualized for periods less than one full year. (1) Less than $0.01 per share. The accompanying notes are an integral part of these financial statements. - -------------------------------------------------------------------------------- 55 FINANCIAL HIGHLIGHTS BUFFALO JAYHAWK CHINA FUND
FOR THE PERIOD FROM DECEMBER 18, 2006 SIX MONTHS ENDED (COMMENCEMENT OF Condensed data for a share of capital SEPTEMBER 30, 2007 OPERATIONS) TO stock outstanding throughout the period. (UNAUDITED) MARCH 31, 2007 - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period ................................................... $ 10.53 $ 10.00 ---------- ---------- Income from investment operations: Net investment income (loss) ....................................................... 0.07 (0.01) Net gains on securities (both realized and unrealized) ............................. 3.40 0.54 ---------- ---------- Total from investment operations ..................................................... 3.47 0.53 ---------- ---------- Less distributions: Dividends from net investment income ............................................... (0.05) -- Distributions from capital gains ................................................... (0.04) -- ---------- ---------- Total distributions .................................................................. (0.09) -- ---------- ---------- Paid-in capital from redemption fees (Note 5) ........................................ --(1) --(1) ---------- ---------- Net asset value, end of period ......................................................... $ 13.91 $ 10.53 ========== ========== Total return* .......................................................................... 33.17% 5.30% ========== ========== RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) ............................................... $ 40,281 $ 23,396 Ratio of expenses to average net assets** .............................................. 1.76% 2.13% Ratio of net investment income (loss) to average net assets** .......................... 1.15% (0.48%) Portfolio turnover rate* ............................................................... 35% 3%
* Not annualized for periods less than one full year. ** Annualized for periods less than one full year. (1) Less than $0.01 per share. The accompanying notes are an integral part of these financial statements. - -------------------------------------------------------------------------------- 56 FINANCIAL HIGHLIGHTS BUFFALO LARGE CAP FUND
SIX MONTHS ENDED Condensed data for a share of capital SEPTEMBER 30, 2007 YEARS ENDED MARCH 31, stock outstanding throughout the period. (UNAUDITED) 2007 2006 2005 2004 2003 - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period .......... $ 21.59 $ 19.45 $ 17.81 $ 17.57 $ 12.57 $ 18.14 ---------- ---------- ---------- ---------- ---------- ---------- Income from investment operations: Net investment income ..................... 0.02 -- 0.03 0.12 0.01 0.03 Net gains (losses) on securities (both realized and unrealized) .......... 1.82 2.16 1.73 0.15 5.02 (5.60) ---------- ---------- ---------- ---------- ---------- ---------- Total from investment operations ............ 1.84 2.16 1.76 0.27 5.03 (5.57) ---------- ---------- ---------- ---------- ---------- ---------- Less distributions: Dividends from net investment income ...... (0.02) (0.02) (0.12) (0.03) (0.03) -- Distributions from capital gains .......... (0.27) -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- Total distributions ......................... (0.29) (0.02) (0.12) (0.03) (0.03) -- ---------- ---------- ---------- ---------- ---------- ---------- Paid-in capital from redemption fees (Note 5) --(1) --(1) --(1) --(1) -- -- ---------- ---------- ---------- ---------- ---------- ---------- Net asset value, end of period ................ $ 23.14 $ 21.59 $ 19.45 $ 17.81 $ 17.57 $ 12.57 ========== ========== ========== ========== ========== ========== Total return* ................................. 8.50% 11.10% 9.95% 1.52% 40.05% (30.71%) ========== ========== ========== ========== ========== ========== RATIOS/SUPPLEMENTAL DATA Net assets, end of year (in thousands) ........ $ 59,771 $ 52,282 $ 54,248 $ 56,299 $ 57,657 $ 35,664 Ratio of expenses to average net assets** ..... 1.04% 1.05% 1.04% 1.05% 1.04% 1.06% Ratio of net investment income (loss) to average net assets** ........................ 0.18% (0.02%) 0.16% 0.64% 0.10% 0.21% Portfolio turnover rate* ...................... 11% 17% 40% 17% 41% 16%
* Not annualized for periods less than one full year. ** Annualized for periods less than one full year. (1) Less than $0.01 per share. The accompanying notes are an integral part of these financial statements. - -------------------------------------------------------------------------------- 57 FINANCIAL HIGHLIGHTS BUFFALO MICRO CAP FUND
FOR THE PERIOD FROM MAY 21, 2004 SIX MONTHS ENDED (COMMENCEMENT OF Condensed data for a share of capital SEPTEMBER 30, 2007 YEAR ENDED MARCH 31, OPERATIONS) TO stock outstanding throughout the period. (UNAUDITED) 2007 2006 MARCH 31, 2005 - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period .................................... $ 13.32 $ 13.48 $ 10.62 $ 10.00 ---------- ---------- ---------- ---------- Income from investment operations: Net investment loss ................................................. (0.08) (0.13) (0.12) (0.07) Net gains (losses) on securities (both realized and unrealized) .................................... (0.11) 0.66 3.03 0.66 ---------- ---------- ---------- ---------- Total from investment operations ...................................... (0.19) 0.53 2.91 0.59 ---------- ---------- ---------- ---------- Less distributions from capital gains ................................. -- (0.69) (0.05) -- ---------- ---------- ---------- ---------- Paid-in capital from redemption fees (Note 5) ......................... --(1) --(1) --(1) 0.03 ---------- ---------- ---------- ---------- Net asset value, end of period .......................................... $ 13.13 $ 13.32 $ 13.48 $ 10.62 ========== ========== ========== ========== Total return* ........................................................... (1.43%) 4.13% 27.48% 6.20% ========== ========== ========== ========== RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) ................................ $ 51,177 $ 57,449 $ 61,190 $ 39,327 Ratio of expenses to average net assets** ............................... 1.50% 1.50% 1.51% 1.58% Ratio of net investment loss to average net assets** .......................................................... (1.13%) (0.95%) (1.09%) (1.14%) Portfolio turnover rate* ................................................ 15% 38% 50% 28%
* Not annualized for periods less than one full year. ** Annualized for periods less than one full year. (1) Less than $0.01 per share. The accompanying notes are an integral part of these financial statements. - -------------------------------------------------------------------------------- 58 FINANCIAL HIGHLIGHTS BUFFALO MID CAP FUND
SIX MONTHS ENDED Condensed data for a share of capital SEPTEMBER 30, 2007 YEARS ENDED MARCH 31, stock outstanding throughout the period. (UNAUDITED) 2007 2006 2005 2004 2003 - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period .......... $ 15.53 $ 15.46 $ 12.54 $ 12.43 $ 7.54 $ 10.12 ---------- ---------- ---------- ---------- ---------- ---------- Income from investment operations: Net investment loss ....................... (0.02) (0.05) (0.02) (0.04) (0.04) (0.04) Net gains (losses) on securities (both realized and unrealized) .......... 1.86 0.41 3.17 0.31 4.93 (2.54) ---------- ---------- ---------- ---------- ---------- ---------- Total from investment operations ............ 1.84 0.36 3.15 0.27 4.89 (2.58) ---------- ---------- ---------- ---------- ---------- ---------- Less distributions from capital gains ....... -- (0.29) (0.23) (0.16) -- -- ---------- ---------- ---------- ---------- ---------- ---------- Paid-in capital from redemption fees (Note 5) --(1) --(1) --(1) --(1) -- -- ---------- ---------- ---------- ---------- ---------- ---------- Net asset value, end of period ................ $ 17.37 $ 15.53 $ 15.46 $ 12.54 $ 12.43 $ 7.54 ========== ========== ========== ========== ========== ========== Total return* ................................. 11.85% 2.41% 25.21% 2.15% 64.85% (25.49%) ========== ========== ========== ========== ========== ========== RATIOS/SUPPLEMENTAL DATA Net assets, end of year (in thousands) ........ $ 490,508 $ 396,407 $ 344,206 $ 170,880 $ 112,070 $ 39,193 Ratio of expenses to average net assets** ..... 1.01% 1.02% 1.02% 1.03% 1.03% 1.10% Ratio of net investment loss to average net assets** ................................ (0.29%) (0.32%) (0.21%) (0.39%) (0.48%) (0.59%) Portfolio turnover rate* ...................... 10% 21% 19% 21% 24% 8%
* Not annualized for periods less than one full year. ** Annualized for periods less than one full year. (1) Less than $0.01 per share. The accompanying notes are an integral part of these financial statements. - -------------------------------------------------------------------------------- 59 FINANCIAL HIGHLIGHTS BUFFALO SCIENCE & TECHNOLOGY FUND
SIX MONTHS ENDED Condensed data for a share of capital SEPTEMBER 30, 2007 YEARS ENDED MARCH 31, stock outstanding throughout the period. (UNAUDITED) 2007 2006 2005 2004 2003 - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period .......... $ 13.48 $ 13.68 $ 10.73 $ 11.04 $ 6.01 $ 10.18 ---------- ---------- ---------- ---------- ---------- ---------- Income from investment operations: Net investment loss ....................... (0.02) (0.04) (0.04) (0.02) (0.04) (0.05) Net gains (losses) on securities (both realized and unrealized) .......... 1.81 0.54 3.04 (0.29) 5.07 (4.12) ---------- ---------- ---------- ---------- ---------- ---------- Total from investment operations ............ 1.79 0.50 3.00 (0.31) 5.03 (4.17) ---------- ---------- ---------- ---------- ---------- ---------- Less distributions from capital gains ....... -- (0.70) (0.05) -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- Paid-in capital from redemption fees (Note 5) --(1) --(1) --(1) --(1) -- -- ---------- ---------- ---------- ---------- ---------- ---------- Net asset value, end of period ................ $ 15.27 $ 13.48 $ 13.68 $ 10.73 $ 11.04 $ 6.01 ========== ========== ========== ========== ========== ========== Total return* ................................. 13.28% 4.28% 27.96% (2.81%) 83.69% (40.96%) ========== ========== ========== ========== ========== ========== RATIOS/SUPPLEMENTAL DATA Net assets, end of year (in thousands) ........ $ 209,741 $ 152,854 $ 111,331 $ 62,690 $ 34,924 $ 14,537 Ratio of expenses to average net assets** ..... 1.02% 1.03% 1.03% 1.05% 1.03% 1.23% Ratio of net investment loss to average net assets** ................................ (0.33%) (0.37%) (0.40%) (0.24%) (0.55%) (0.73%) Portfolio turnover rate* ...................... 13% 35% 46% 25% 38% 26%
* Not annualized for periods less than one full year. ** Annualized for periods less than one full year. (1) Less than $0.01 per share. The accompanying notes are an integral part of these financial statements. - -------------------------------------------------------------------------------- 60 FINANCIAL HIGHLIGHTS BUFFALO SMALL CAP FUND
SIX MONTHS ENDED Condensed data for a share of capital SEPTEMBER 30, 2007 YEARS ENDED MARCH 31, stock outstanding throughout the period. (UNAUDITED) 2007 2006 2005 2004 2003 - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period .......... $ 28.00 $ 28.71 $ 26.30 $ 25.70 $ 13.79 $ 21.08 ---------- ---------- ---------- ---------- ---------- ---------- Income from investment operations: Net investment loss ....................... (0.06) (0.11) (0.11) (0.07) (0.10) (0.10) Net gains (losses) on securities (both realized and unrealized) .......... 1.08 1.44 5.63 1.56 12.21 (7.16) ---------- ---------- ---------- ---------- ---------- ---------- Total from investment operations ............ 1.02 1.33 5.52 1.49 12.11 (7.26) ---------- ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Dividends from net investment income ...... -- -- -- (0.02) -- -- Distributions from capital gains .......... -- (2.04) (3.11) (0.87) (0.20) (0.03) ---------- ---------- ---------- ---------- ---------- ---------- Total dividends and distributions ........... -- (2.04) (3.11) (0.89) (0.20) (0.03) ---------- ---------- ---------- ---------- ---------- ---------- Paid-in capital from redemption fees (Note 5) --(1) --(1) --(1) --(1) -- -- ---------- ---------- ---------- ---------- ---------- ---------- Net asset value, end of period ................ $ 29.02 $ 28.00 $ 28.71 $ 26.30 $ 25.70 $ 13.79 ========== ========== ========== ========== ========== ========== Total return* ................................. 3.64% 4.95% 22.46% 5.75% 88.07% (34.49%) ========== ========== ========== ========== ========== ========== RATIOS/SUPPLEMENTAL DATA Net assets, end of year (in thousands) ........ $2,306,730 $2,112,987 $2,116,173 $1,845,847 $1,704,869 $ 685,634 Ratio of expenses to average net assets** ..... 1.01% 1.01% 1.01% 1.01% 1.01% 1.02% Ratio of net investment loss to average net assets** ................................ (0.45%) (0.42%) (0.42%) (0.28%) (0.53%) (0.55%) Portfolio turnover rate* ...................... 12% 15% 27% 35% 22% 24%
* Not annualized for periods less than one full year. ** Annualized for periods less than one full year. (1) Less than $0.01 per share. The accompanying notes are an integral part of these financial statements. - -------------------------------------------------------------------------------- 61 FINANCIAL HIGHLIGHTS BUFFALO USA GLOBAL FUND
SIX MONTHS ENDED Condensed data for a share of capital SEPTEMBER 30, 2007 YEARS ENDED MARCH 31, stock outstanding throughout the period. (UNAUDITED) 2007 2006 2005 2004 2003 - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period .......... $ 23.15 $ 21.39 $ 18.82 $ 19.18 $ 13.04 $ 18.84 ---------- ---------- ---------- ---------- ---------- ---------- Income from investment operations: Net investment income (loss) .............. 0.04 0.05 0.05 0.12 0.02 (0.01) Net gains (losses) on securities (both realized and unrealized) .......... 1.89 2.45 2.59 (0.37) 6.12 (5.79) ---------- ---------- ---------- ---------- ---------- ---------- Total from investment operations ............ 1.93 2.50 2.64 (0.25) 6.14 (5.80) ---------- ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Dividends from net investment income ...... (0.03) (0.06) (0.07) (0.11) -- -- Distributions from capital gains .......... (0.81) (0.68) -- -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- Total dividends and distributions ........... (0.84) (0.74) (0.07) (0.11) -- -- ---------- ---------- ---------- ---------- ---------- ---------- Paid-in capital from redemption fees (Note 5) --(1) --(1) --(1) --(1) -- -- ---------- ---------- ---------- ---------- ---------- ---------- Net asset value, end of period ................ $ 24.24 $ 23.15 $ 21.39 $ 18.82 $ 19.18 $ 13.04 ========== ========== ========== ========== ========== ========== Total return* ................................. 8.20% 11.86% 14.05% (1.30%) 47.11% (30.79%) ========== ========== ========== ========== ========== ========== RATIOS/SUPPLEMENTAL DATA Net assets, end of year (in thousands) ....... $ 116,024 $ 75,026 $ 73,113 $ 73,977 $ 79,192 $ 60,735 Ratio of expenses to average net assets** ..... 1.03% 1.04% 1.04% 1.04% 1.03% 1.04% Ratio of net investment income (loss) to average net assets** ........................ 0.35% 0.24% 0.23% 0.67% 0.14% (0.10%) Portfolio turnover rate* ...................... 4% 13% 11% 33% 21% 7%
* Not annualized for periods less than one full year. ** Annualized for periods less than one full year. (1) Less than $0.01 per share. The accompanying notes are an integral part of these financial statements. - -------------------------------------------------------------------------------- 62 NOTES TO FINANCIAL STATEMENTS September 30, 2007 (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES: The Buffalo Balanced Fund, Inc., Buffalo High Yield Fund, Inc., Buffalo Large Cap Fund, Inc., Buffalo Funds (comprised of the Buffalo Jayhawk China Fund, Buffalo Micro Cap Fund, Buffalo Mid Cap Fund and Buffalo Science & Technology Fund), Buffalo Small Cap Fund, Inc. and Buffalo USA Global Fund, Inc. (the "Funds") are registered under the Investment Company Act of 1940, as amended, as diversified open-end management investment companies. The shares of the Buffalo Funds are issued in multiple series, with each series, in effect, representing a separate fund. The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. A. INVESTMENT VALUATION -- Corporate stocks and bonds traded on a national securities exchange or national market, except those traded using the National Association of Securities Dealers' Automated Quotation System ("NASDAQ"), are valued at the latest sales price thereof, or if no sale was reported on that date, the mean between the most recent quoted bid and asked price is used. All equity securities that are traded using NASDAQ are valued using the NASDAQ Official Closing Price ("NOCP"), which may not necessarily represent the last sales price. If there has been no sale on such exchange or on NASDAQ on such day, the security is valued at the closing bid price on such day. When market quotations are not readily available, any security or other asset is valued at its fair value as determined in good faith under procedures approved by the Boards of Directors/Trustees (the "Board"). If events occur that will affect the value of a Fund's portfolio securities before the NAV has been calculated (a "significant event"), the security will generally be priced using a fair value procedure. The Board has adopted specific procedures for valuing portfolio securities and delegated the responsibility of fair value determinations to a Valuation Committee. Some of the factors that may be considered by the Valuation Committee in determining fair value are fundamental analytical data relating to the investment; the nature and duration of any restriction on the disposition; trading in similar securities of the same issuer or comparable companies; information from broker-dealers; and an evaluation of the forces that influence the market in which the securities are purchased or sold. As of September 30, 2007, the Buffalo High Yield Fund held fair valued securities with market a value of $357,525 or 0.19% of total net assets. Debt securities with remaining maturities of 60 days or less are normally valued at amortized cost, unless the Board determines that amortized cost does not represent fair value. When the Buffalo Jayhawk China Fund buys or sells securities on a foreign stock exchange, the transaction is undertaken in the local currency rather than in U.S. dollars. In purchasing or selling local currency to execute transactions on foreign exchanges, the Buffalo Jayhawk China Fund will be exposed to the risk that the value of the foreign currency will increase or decrease, which may impact the value of the portfolio holdings and your investment. China has, and may continue to adopt, internal economic policies that affect its currency valuations in a manner that may be disadvantageous for U.S. investors or U.S. companies seeking to do business in China. In addition, a country may impose formal or informal currency exchange controls (or "capital controls"). These types of controls may restrict or prohibit the Buffalo Jayhawk China Fund's ability to repatriate both investment capital and income, which could undermine the value of the portfolio holdings and potentially place the Buffalo Jayhawk China Fund's assets at risk of total loss. B. FEDERAL INCOME TAXES -- Each Fund complies with the requirements of Subchapter M of the Internal Revenue Code necessary to qualify as a regulated investment company and makes the requisite distributions of income and capital gains to its shareholders sufficient to relieve it from all or substantially all federal income taxes. Therefore, no federal income tax provision has been provided. The Funds adopted the provisions of the Financial Accounting Standards Board's ("FASB") Interpretation No. 48 "Accounting for Uncertainty in Income Taxes," on September 30, 2007. As of September 30, 2007, this did not result in an impact to the Funds' financial statements. - -------------------------------------------------------------------------------- 63 NOTES TO FINANCIAL STATEMENTS September 30, 2007 (Unaudited) (Continued) C. INVESTMENT TRANSACTIONS AND INVESTMENT INCOME -- Investment transactions are accounted for on the date the securities are purchased or sold (trade date). Dividend income is recorded on the ex-dividend date except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income is recognized on the accrual basis. Realized gains and losses from investment transactions are reported on the identified cost basis. All discounts/premiums are accreted/amortized for financial reporting purposes and are included in interest income. D. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on the ex-dividend date. Distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. These differences are primarily due to differing treatments for premium amortization on debt securities and deferral of post October and wash sale losses. E. USE OF ESTIMATES -- The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from such estimates. F. FOREIGN CURRENCY TRANSLATION -- Values of investments denominated in foreign currencies are converted into U.S. dollars using a spot market rate of exchange on the day of valuation. Purchases and sales of investments and dividend and interest income are translated to U.S. dollars using a spot market rate of exchange prevailing on the respective dates of such transactions. The portion of security gains or losses resulting from changes in foreign exchange rates is included with net realized and unrealized gain or loss from investments, as appropriate, for both financial reporting and tax purposes. G. PURCHASED AND WRITTEN OPTION CONTRACTS -- Certain of the Funds may purchase and write call or put options on securities and indices and enter into related closing transactions. As a holder of a call option, a Fund has the right, but not the obligation, to purchase a security at the exercise price during the exercise period. As the writer of a call option, a Fund has the obligation to sell the security at the exercise price during the exercise period. As a holder of a put option, a Fund has the right, but not the obligation, to sell a security at the exercise price during the exercise period. As the writer of a put option, a Fund has the obligation to buy the underlying security at the exercise price during the exercise period. The premium that a Fund pays when purchasing a call option or receives when writing a call option will reflect, among other things, the market price of the security, the relationship of the exercise price to the market price of the security, the relationship of the exercise price to the volatility of the security, the length of the option period and supply and demand factors. The premium is the market value of an option. A purchaser (holder) of a put option pays a non-refundable premium to the seller (writer) of a put option to obtain the right to sell a specified amount of a security at a fixed price (the exercise price) during a specified period (exercise period). Conversely, the seller (writer) of a put option, upon payment by the holder of the premium, has the obligation to buy the security from the holder of the put option at the exercise price during the exercise period. An option that is written by a Fund is generally valued at the last sale price or, in the absence of the last sale price, the average of the quoted bid and asked prices. An option that is purchased by a Fund is generally valued at the last sale price or, in the absence of the last sale price, the average of the quoted bid and asked prices. If an options exchange closes after the time at which a Fund's net asset value is calculated, the last sale or last bid and asked prices as of that time will be used to calculate the net asset value. H. INDEMNIFICATIONS -- Under the Funds' organizational documents, officers and directors/trustees are indemnified against certain liabilities arising out of the performance of their duties to the Funds. In addition, in the normal course of business, the Funds enter into contracts that provide general indemnification to other parties. The Funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred, and may not occur. However, the Funds have not had prior claims or losses pursuant to these contracts and expect the risk of loss to be remote. - -------------------------------------------------------------------------------- 64 I. RECENT ACCOUNTING PRONOUNCEMENTS -- In September 2006, the Financial Accounting Standards Board (FASB) issued Statement on Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. As of September 30, 2007, the Funds do not believe the adoption of FAS 157 will impact the amounts reported in the financial statements, however, additional disclosures will be required about the inputs used to develop the measurements of fair value and the effect of certain of the measurements reported in the statement of operations for a fiscal period. 2. FEDERAL TAX MATTERS: The tax character of distributions paid during the periods ended September 30, 2007 and March 31, 2007 was as follows:
PERIOD ENDED SEPTEMBER 30, 2007 YEAR ENDED MARCH 31, 2007 -------------------------------- -------------------------------- ORDINARY LONG-TERM ORDINARY LONG-TERM INCOME CAPITAL GAINS INCOME CAPITAL GAINS - --------------------------------------------------------------------------------------------------------------------------------- Buffalo Balanced Fund ................................ $ 2,482,249 $ 1,292,029 $ 4,688,752 $ -- Buffalo High Yield Fund .............................. 5,527,195 -- 10,858,286 -- Buffalo Jayhawk China Fund ........................... 226,771 -- -- -- Buffalo Large Cap Fund ............................... 59,399 682,470 24,521 18,934 Buffalo Micro Cap Fund ............................... -- -- -- 2,891,049 Buffalo Mid Cap Fund ................................. -- -- 58,754 7,127,696 Buffalo Science & Technology Fund .................... -- -- 238,846 6,161,309 Buffalo Small Cap Fund ............................... -- -- -- 142,939,633 Buffalo USA Global Fund .............................. 161,258 3,122,530 578,234 1,613,899
The Funds designated as long-term capital gain dividends, pursuant to Internal Revenue Code Section 852(b)(3), the amount necessary to reduce the earnings and profits of the Fund related to net capital gain to zero for the year ended March 31, 2007. Total distributions paid differ from the Statements of Changes in Net Assets due primarily to the recharacterization of short- term capital gain distributions to ordinary distributions for tax purposes. On the Statements of Assets and Liabilities, the following adjustments were made for permanent tax adjustments for the year ended March 31, 2007:
UNDISTRIBUTED ACCUMULATED NET INVESTMENT NET REALIZED PAID IN INCOME (LOSS) GAIN (LOSS) CAPITAL - --------------------------------------------------------------------------------------------------------------------------------- Buffalo Balanced Fund ................................................... $ 10,673 $ (10,675) $ 2 Buffalo High Yield Fund ................................................. 1,394,238 (1,394,230) (8) Buffalo Jayhawk China Fund .............................................. 25,999 (25,863) (136) Buffalo Large Cap Fund .................................................. 28,284 (18,934) (9,350) Buffalo Micro Cap Fund .................................................. 536,496 (197,737) (338,759) Buffalo Mid Cap Fund .................................................... 1,169,333 (1,169,333) -- Buffalo Science & Technology Fund ....................................... 462,103 (462,103) -- Buffalo Small Cap Fund .................................................. 8,239,029 (8,239,029) -- Buffalo USA Global Fund ................................................. -- -- --
- -------------------------------------------------------------------------------- 65 NOTES TO FINANCIAL STATEMENTS September 30, 2007 (Unaudited) (Continued) As of March 31, 2007, the components of accumulated earnings on a tax basis were as follows:
BUFFALO BUFFALO BUFFALO BUFFALO BUFFALO BALANCED HIGH YIELD JAYHAWK CHINA LARGE CAP MICRO CAP FUND FUND FUND FUND FUND - --------------------------------------------------------------------------------------------------------------------------------- Cost of investments(a) ................. $ 137,397,245 $ 168,577,899 $ 20,987,744 $ 40,158,558 $ 49,622,298 -------------- -------------- -------------- -------------- -------------- Gross unrealized appreciation .......... 29,607,060 11,232,806 1,835,741 13,214,510 12,318,691 Gross unrealized depreciation .......... (1,442,387) (1,694,971) (831,782) (1,100,078) (2,398,868) -------------- -------------- -------------- -------------- -------------- Net unrealized appreciation ............ $ 28,164,673 $ 9,537,835 $ 1,003,959 $ 12,114,432 $ 9,919,823 ============== ============== ============== ============== ============== Undistributed ordinary income .......... 103,974 730,821 109,330 -- -- Undistributed long-term capital gain ... 1,291,997 -- -- 682,470 2,876,414 -------------- -------------- -------------- -------------- -------------- Total distributable earnings ........... $ 1,395,971 $ 730,821 $ 109,330 $ 682,470 $ 2,876,414 ============== ============== ============== ============== ============== Other accumulated losses ............... -- (720,399) (2,298) -- -- -------------- -------------- -------------- -------------- -------------- Total accumulated earnings ............. $ 29,560,644 $ 9,548,257 $ 1,110,991 $ 12,796,902 $ 12,796,237 ============== ============== ============== ============== ==============
(a) Represents cost for federal income tax purposes and differs from the cost for financial reporting purposes.
BUFFALO BUFFALO BUFFALO BUFFALO MID CAP SCIENCE & SMALL CAP USA GLOBAL FUND TECHNOLOGY FUND FUND FUND - --------------------------------------------------------------------------------------------------------------------------------- Cost of investments(a) ................................... $ 328,337,515 $ 131,787,701 $1,567,987,915 $ 53,621,531 -------------- -------------- -------------- -------------- Gross unrealized appreciation ............................ 77,420,245 26,665,589 636,511,518 21,771,792 Gross unrealized depreciation ............................ (9,382,867) (5,898,376) (91,770,234) (815,107) -------------- -------------- -------------- -------------- Net unrealized appreciation .............................. $ 68,037,378 $ 20,767,213 $ 544,741,284 $ 20,956,685 ============== ============== ============== ============== Undistributed ordinary income ............................ 319,498 830,387 20,342,199 53,908 Undistributed long-term capital gain ..................... 3,604,800 1,426,466 26,739,471 3,122,515 -------------- -------------- -------------- -------------- Total distributable earnings ............................. $ 3,924,298 $ 2,256,853 $ 47,081,670 $ 3,176,423 ============== ============== ============== ============== Other accumulated losses ................................. -- -- -- -- -------------- -------------- -------------- -------------- Total accumulated earnings ............................... $ 71,961,676 $ 23,024,066 $ 591,822,954 $ 24,133,108 ============== ============== ============== ==============
(a) Represents cost for federal income tax purposes and differs from the cost for financial reporting purposes. As of March 31, 2007, the accumulated net realized loss on sales of investments and losses deferred for federal income tax purposes which are available to offset future taxable gains are as follows: CAPITAL LOSS CARRYOVER EXPIRES ----------------------------------------------------------- Buffalo High Yield Fund ........... $ 720,399 2014 The Buffalo Balanced Fund, Buffalo High Yield Fund, Buffalo Large Cap Fund and Buffalo USA Global Fund utilized $6,677,577, $550,441, $389,320 and $24,117, respectively of prior year capital loss carryovers in the current year. The Buffalo Jayhawk China Fund incurred a currency loss for tax purposes from December 18, 2006 to March 31, 2007 in the amount of $2,039. As permitted by tax regulations, the Fund elected to defer and treat the loss as arising on the first day of the fiscal year ended March 31, 2008. For the fiscal year ended March 31, 2007, certain dividends paid by the Funds may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The percentage of dividends declared from net investment income designated as qualified dividend income for each Fund were as follows (unaudited): Buffalo Balanced Fund .................................................... 46% Buffalo High Yield Fund .................................................. 1% Buffalo Mid Cap Fund ..................................................... 100% Buffalo USA Global Fund .................................................. 100% - -------------------------------------------------------------------------------- 66 For corporate shareholders, the percentage of ordinary income distributions qualifying for the corporate dividends received deduction for the fiscal year ended March 31, 2007 were as follows (unaudited): Buffalo Balanced Fund .................................................... 42% Buffalo High Yield Fund .................................................. 1% Buffalo Mid Cap Fund ..................................................... 100% Buffalo USA Global Fund .................................................. 100% Additional Information Applicable to Foreign Shareholders Only: The percentage of ordinary income distributions that are designated as interest-related dividends under Internal Revenue Code Section 871(k)(1)(C) for each Fund for the fiscal year ended March 31, 2007 were as follows (unaudited): Buffalo Balanced Fund .................................................... 65% Buffalo High Yield Fund .................................................. 97% Buffalo Large Cap Fund ................................................... 6% Buffalo Mid Cap Fund ..................................................... 23% Buffalo Science & Technology Fund ........................................ 11% Buffalo USA Global Fund .................................................. 6% The percentage of ordinary income distributions that are designated as short-term capital gain distributions under Internal Revenue Code Section 871(k)(2)(C) for each Fund for the fiscal year ended March 31, 2007 were as follows (unaudited): Buffalo Mid Cap Fund ..................................................... 100% Buffalo Science & Technology Fund ........................................ 100% Buffalo USA Global Fund .................................................. 67% 3. RELATED PARTY TRANSACTIONS: Management fees are paid to Kornitzer Capital Management, Inc. ("KCM") at the rate of 1.00% per annum of the average daily net asset values of the Funds or series, except for the Buffalo Jayhawk China Fund and Buffalo Micro Cap Fund, which have a management fee rate of 1.50% and 1.45%, respectively. The management fees are for services, which include the costs of all management, supervisory and administrative services required in the normal operation of the Funds. This includes investment management and supervision; fees of the custodian (except for the additional cost of maintaining custody of assets in foreign jurisdictions, when compared to domestic custody costs), independent registered public accounting firm and legal counsel; fees and expenses of officers, directors and other personnel; rent; shareholder services; and other items incidental to corporate administration. Pursuant to a Master Services Agreement with U.S. Bancorp Fund Services, LLC ("US Bancorp"), KCM pays US Bancorp a fee of 30/100 of 1% (0.30%) of each Fund's average daily net assets out of the fees KCM receives from the Funds. US Bancorp provides or obtains various operational services required by the Funds, pays various Fund expenses and acts as paying agent to compensate other Fund service providers. Some of the other Fund service providers are affiliates of US Bancorp. The Buffalo Jayhawk China Fund is sub-advised by Jayhawk Capital Management, LLC ("JCM"). Together with KCM, JCM is responsible for implementing the Fund's investment program, and is responsible for the day-to-day investment activity of the Fund. For its services, KCM pays JCM, out of its own resources, a monthly sub-advisory fee at the annual rate of 0.55% of the Fund's average daily net assets. The management fees do not include the cost of acquiring and disposing of portfolio securities, taxes, if any, imposed directly on the Funds or series and their shares, insurance, certain director expenses and the cost of qualifying the Funds' or series' shares for sale in any jurisdiction. Certain officers and a director/trustee of the Funds are also officers and/or directors of Kornitzer Capital Management, Inc. A director/trustee of the Funds is affiliated with US Bancorp and U.S. Bank, N.A., which provide accounting, administration, transfer agency and custodian services to the Funds, as described above. - -------------------------------------------------------------------------------- 67 NOTES TO FINANCIAL STATEMENTS September 30, 2007 (Unaudited) (Continued) 4. AGGREGATE COMPENSATION TO DIRECTORS/TRUSTEES: The Buffalo Funds do not directly compensate any of their directors or trustees. U.S. Bancorp Fund Services, LLC pays director/trustee fees to non-interested Board members from its share of the management fee that it receives from Kornitzer Capital Management, Inc. The aggregate compensation paid to the Funds' non-interested directors/trustees for their service on the Funds' Boards for the six months ended September 30, 2007 was $25,200. Interested directors/trustees who are affiliated with either the advisor or the Funds' service providers do not receive any compensation from the Funds, but are compensated directly by the advisor or service provider in connection with their employment with those entities. 5. REDEMPTION FEE: Shares of the Buffalo Balanced Fund, Buffalo Jayhawk China Fund, Buffalo Large Cap Fund, Buffalo Mid Cap Fund, Buffalo Science & Technology Fund and Buffalo USA Global Fund sold or exchanged within 60 days of their purchase and shares of the Buffalo High Yield Fund, Buffalo Micro Cap Fund and Buffalo Small Cap Fund sold or exchanged within 180 days of their purchase are subject to a redemption fee of 2.00% of the value of the shares sold or exchanged. The Fund will employ the "first in, first out" method to calculate the 60-day or 180-day holding period. The redemption fee is retained by the Funds and will help pay transaction and tax costs that long-term investors may bear when the Funds realize capital gains as a result of selling securities to meet investor redemptions. 6. INVESTMENT TRANSACTIONS: The aggregate purchases and sales of securities, excluding short-term investments and U.S. government securities, for the Funds for the period ended September 30, 2007, were as follows:
BUFFALO BUFFALO BUFFALO BUFFALO BUFFALO BALANCED HIGH YIELD JAYHAWK LARGE CAP MICRO CAP FUND FUND CHINA FUND FUND FUND - --------------------------------------------------------------------------------------------------------------------------------- Purchases .......................................... $21,898,751 $28,320,100 $14,638,022 $7,313,175 $ 7,935,158 Proceeds from Sales ................................ $18,135,578 $26,302,926 $ 9,621,621 $5,777,823 $11,650,300 BUFFALO SCIENCE & BUFFALO BUFFALO MID CAP TECHNOLOGY SMALL USA GLOBAL FUND FUND CAP FUND FUND - --------------------------------------------------------------------------------------------------------------------------------- Purchases .......................................................... $58,523,013 $53,706,988 $393,225,701 $31,024,972 Proceeds from Sales ................................................ $39,358,183 $22,175,269 $250,570,289 $ 3,407,141
There were no purchases or sales of long-term U.S. government securities for any Funds during the period ended September 30, 2007. - -------------------------------------------------------------------------------- 68 7. TRANSACTIONS WITH AFFILIATES:* Investments representing 5% or more of the outstanding voting securities of a portfolio company result in that company being considered an affiliated company, as defined in the 1940 Act. The aggregate market value of all securities of affiliated companies held in the Buffalo Small Cap Fund as of September 30, 2007 amounted to $169,606,109 representing 7.35% of net assets. There were no affiliated companies held in any other Funds. Transactions in the Buffalo Small Cap Fund during the six months ended September 30, 2007 in which the issuer was an "affiliated person" are as follows:
HEIDRICK & STRUGGLES WMS MARINEMAX, INC. INTERNATIONAL, INC. INDUSTRIES, INC. TOTAL - ---------------------------------------------------------------------------------------------------------------------------------- March 31, 2007 Balance Shares ....................................... -- 1,155,600 3,198,525** Cost ......................................... $ -- $ 36,519,343 $ 48,328,222 $ 84,847,565 Gross Additions Shares ....................................... 1,263,632 53,600 38,100 Cost ......................................... $ 24,973,166 $ 2,752,896 $ 1,102,995 $ 28,829,057 Gross Deductions Shares ....................................... -- -- -- Cost ......................................... $ -- $ -- $ -- $ -- September 30, 2007 Balance Shares ....................................... 1,263,632 1,209,200 3,236,625 Cost ......................................... $ 24,973,166 $ 39,272,239 $ 49,431,217 $ 113,676,622 ============== ============== ============== ============== Realized gain .................................. $ -- $ -- $ -- $ -- ============== ============== ============== ============== Investment income .............................. $ -- $ -- $ -- $ -- ============== ============== ============== ==============
* As a result of the Buffalo Small Cap Fund's beneficial ownership of the common stock of these companies, regulators require that the Fund state that it may be deemed an affiliate of the respective issuer. The Fund disclaims that the "affiliated persons" are affiliates of the Distributor, Advisor, Funds or any other client of the Advisor. ** This figure includes a 3:2 stock split which took place on June 15, 2007. 8. OPTIONS WRITTEN: The number of option contracts written and the premiums received by the Buffalo Balanced Fund during the six months ended September 30, 2007 were as follows: CALL OPTIONS WRITTEN CONTRACTS PREMIUMS - -------------------------------------------------------------------- Outstanding, beginning of period -- -- Options Written 300 $ 36,750 Options terminated Options exercised -- -- Options expired -- -- ----- -------- Outstanding, end of period 300 $ 36,750 ===== ======== 9. SUBSEQUENT EVENT: The Buffalo Funds introduced a new series, the Buffalo International Fund, which became effective on September 28, 2007 and commenced operations on October 2, 2007. This report has been prepared for the information of the shareholders of the Funds, and is not to be construed as an offering of the shares of the Funds. Shares of the Funds are offered only by the Prospectus, a copy of which may be obtained from Buffalo Funds c/o U.S. Bancorp Fund Services, LLC, 1-800-49-BUFFALO or at www.buffalofunds.com. - -------------------------------------------------------------------------------- 69 NOTICE TO SHAREHOLDERS A NOTE ON FORWARD-LOOKING STATEMENTS Except for historical information contained in this report for the Funds, the matters discussed in this report may constitute forward-looking statements made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. These include any advisor and/or portfolio manager predictions, assessments, analyses or outlooks for individual securities, industries, market sectors and/or markets. These statements involve risks and uncertainties. In addition to the general risks described for the Funds in the current Prospectus, other factors bearing on these reports include the accuracy of the advisor's or portfolio managers' forecasts and predictions, and the appropriateness of the investment programs designed by the advisor or portfolio manager to implement their strategies efficiently and effectively. Any one or more of these factors, as well as other risks affecting the securities markets and investment instruments generally, could cause the actual results of the Funds to differ materially as compared to benchmarks associated with the Funds. ADDITIONAL INFORMATION The Buffalo Funds have adopted proxy voting policies and procedures that delegate to Kornitzer Capital Management, Inc., the Funds' investment advisor, the authority to vote proxies. A description of the Buffalo Funds' proxy voting policies and procedures is available without charge, upon request, by calling the Funds toll free at 1-800-49-BUFFALO. A description of these policies and procedures is also included in the Funds' Statement of Additional Information, which is available on the SEC's website at http://www.sec.gov. The actual voting records relating to portfolio securities during the most recent twelve month period ended June 30 (as filed with the SEC on Form N-PX) are available without charge, upon request, by calling the Funds toll free at 1-800- 49-BUFFALO or by accessing the SEC's website at http://www.sec.gov. The Funds file their complete schedule of portfolio holdings with the SEC four times each fiscal year at quarter-ends. The Funds file the Schedule of Portfolio Holdings with the SEC on Form N-CSR (second and fourth quarters) and on Form N-Q (first and third quarters). Shareholders may view the Funds' Forms N-CSR and N-Q on the SEC's website at http://www.sec.gov. Forms N-CSR and N-Q may also be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the SEC's Public Reference Room may be obtained by calling 1-202-551-8090 (direct) or 1-800-SEC- 0330 (general SEC number). - -------------------------------------------------------------------------------- 70 This page left blank intentionally. [BUFFALO FUNDS LOGO] 1-800-49-BUFFALO (1-800-492-8332) www.buffalofunds.com ITEM 2. CODE OF ETHICS. Not applicable for semi-annual reports. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable for semi-annual reports. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable for semi-annual reports. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not Applicable. ITEM 11. CONTROLS AND PROCEDURES. (a) The Registrant's Principal Executive Officer and Principal Financial Officer has reviewed the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the "1940 Act")) as of a date within 90 days of the filing of this report, as required by Rule 30a-3(b) under the 1940 Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934. Based on his review, the Principal Executive Officer and Principal Financial Officer has concluded that the disclosure controls and procedures are effective in ensuring that information required to be disclosed in this report is appropriately recorded, processed, summarized and reported and made known to him by others within the Registrant and by the Registrant's service provider. (b) There were no changes in the Registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a) (1) ANY CODE OF ETHICS OR AMENDMENT THERETO, THAT IS SUBJECT OF THE DISCLOSURE REQUIRED BY ITEM 2, TO THE EXTENT THAT THE REGISTRANT INTENDS TO SATISFY ITEM 2 REQUIREMENTS THROUGH FILING AN EXHIBIT. Not Applicable. (2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 are filed herewith. (3) Not applicable. (b) Certifications required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are furnished herewith. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Registrant: Buffalo High Yield Fund, Inc. By /s/ Kent W. Gasaway ---------------------------------------- Kent W. Gasaway, President and Treasurer Date 12/06/2007 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following person on behalf of the Registrant and in the capacities and on the date indicated. By /s/ Kent W. Gasaway ---------------------------------------- Kent W. Gasaway, President and Treasurer Date 12/06/2007 EX-99.CERT 2 exh99cert.txt EX.99.CERT CERTIFICATIONS I, Kent W. Gasaway, certify that: 1. I have reviewed this report on Form N-CSR of Buffalo High Yield Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 12/06/2007 /s/ Kent W. Gasaway --------------------------- Kent W. Gasaway Principal Executive Officer CERTIFICATIONS I, Kent W. Gasaway, certify that: 1. I have reviewed this report on Form N-CSR of Buffalo High Yield Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 12/06/2007 /s/ Kent W. Gasaway --------------------------- Kent W. Gasaway Principal Financial Officer EX-99.906CERT 3 exh99-906cert.txt EX.99.906CERT CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officer of the Buffalo High Yield Fund, Inc. (the "Fund"), does hereby certify, to such officer's knowledge, that the report on Form N-CSR of the Fund for the period ended September 30, 2007 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as applicable, and that the information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Fund for the stated period. /s/ Kent W. Gasaway - ------------------------------------------------------ Kent W. Gasaway President and Treasurer, Buffalo High Yield Fund, Inc. Dated: 12/06/2007 This statement accompanies this report on Form N-CSR pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed as filed by Buffalo High Yield Fund, Inc. for purposes of Section 18 of the Securities Exchange Act of 1934. -----END PRIVACY-ENHANCED MESSAGE-----