International Fund

Manager Commentary as of 06/30/10

International equity markets, like U.S. markets, were pressured in the quarter as uncertainty about the risk of a sovereign debt crisis, notably in Europe, and fears about a "double dip" economic recession fueled a retreat from equities. What had been an impressive year for equity prices, as economies stabilized and started to grow after the recession, became another period of volatility and uncertainty in markets.

The dollar continued to rebound versus most international currencies, especially the Euro, based on expectations that the Fed will keep rates exceptionally low for an extended period of time, while the travails of Greece and the spreading of a debt crisis in the European Union kept investors skeptical of the future role of the Euro.

For the first quarter of 2010, the Buffalo International Fund (BUFIX) was down 9.20%, beating the MSCI EAFE Index (-13.97%) and the MSCI AC World ex US Index (-12.45%). For the calendar year to date, BUFIX was down 7.93% besting the MSCI EAFE Index return of -13.23% and the MSCI AC World ex US Index return of -11.06%.

Data represented reflects past performance and is no guarantee of 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 value. Current performance may be lower or higher than the performance quoted. Performance current to the most recent quarter end may be obtained by clicking here. Performance current to the most recent month end may be obtained by clicking here.

The fund, as its hallmark, benefited from stock selection, particularly in the Consumer Discretionary, Financials and Industrial sectors. The cash position north of 10.00 percent also helped the fund in the downward-trending market of this last quarter (ending June 30, 2010).

The fund's top contributor for both the quarter and the year to date was Dr. Reddy's Laboratories Ltd. The company is an India-based generic drug manufacture benefiting from increased cost awareness throughout the global health sector as well as the increasing penetration of generic drugs in general.

Another of the fund's top contributors for the quarter and year to date was Jardine Strategic Holdings Ltd.  The company is a holding company with interests in food and retailing, auto distribution, property investment and hotel operations in Malaysia.
 
The weakest sector in the quarter was the financial sector.  Two of fund's worst performers were in this sector: Artio Global Investors Inc., an asset manager, and Julius Baer Group AG, a private banking services company.  The fund benefitted, however, from having a smaller allocation to the financial sector than its benchmarks.

We are pleased with our overall performance for the quarter and calendar year to date. We are actively seeking companies whose valuation and growth prospects meet our requirements and expect to continue to reduce our relative cash position in the coming quarters as we identify attractive investment opportunities. Our longer-term view is quite favorable for growth around the globe as disparities in standards of living continue to lessen. We will continue to let bottom-up stock selection drive portfolio construction and asset allocation decisions and we continue to look for companies that will benefit from secular growth trends that are attractively priced. We do not base our stock selections on benchmark weightings of sectors or countries, but on our perceptions of the risk-adjusted return potential of individual companies.

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"We are pleased with our overall performance for the quarter and calendar year to date. Our longer-term view is quite favorable for growth around the globe as disparities in standards of living continue to lessen."