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 811-6680
BHIRUD FUNDS INC.
(Exact Name of Registrant as Specified in Charter)
c/o Bhirud Associates, Inc.
1266 E. Main Street, Stamford, Connecticut 06902
(Address of Principal Executive Offices) (Zip code)
Registrant's Telephone Number, including Area Code: (203) 977 - 1521
SURESH BHIRUD
Bhirud Associates, Inc.
1266 E. Main Street, Stamford, Connecticut 06902
(Name and Address of Agent for Service)
Copy to: Sarah A. Bessin
Sherman & Sterling
801 Pennsylvania Ave., NW
Washington, DC 20004
Registrant's telephone number, including area code: (203) 977-1521
Date of fiscal year end: July 31
Date of reporting period: July 31, 2003
Form N-CSR is to be used by management investment companies
to file reports with the Commission not later than 10 days
after the transmission to stockholders of any report that is
required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-
CSR in its regulatory, disclosure review, inspection and
policymaking roles.
A registrant is required to disclose the information
specified by Form N-CSR, and the Commission will make this
information public. A registrant is not required to respond
to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of
Management and Budget ("OMB") control number. Please direct
comments concerning the accuracy of the information
collection burden estimate and any suggestions for reducing
the burden to Secretary, Securities and Exchange Commission,
450 Fifth Street, NW, Washington, DC 20549-0609. The OMB
has reviewed this collection of information under the
clearance requirements of 44 U.S.C. 3507.
Item 1. Reports to Stockholders.
The Apex Mid Cap Growth Fund
C/o Bhirud Funds Inc.
Soundview Plaza, 1266 East Main Street
Stamford, CT 06902
Telephone (877) 593-8637
www.bhirud.com
ANNUAL REPORT
July 31st , 2003
September 24, 2003
Enclosed is Annual report for the Apex Mid Cap Growth Fund for the fiscal year
ending July 31,2003, and management's discussion of portfolio performance.
To say that we are pleased to present this report is a great understatement; in
fact we are downright exuberant. As of July 31, 2003 Apex is up 129% from
December 31, 2002 compared to a 13.73% total return for the S&P 500 and a 30%
price change for the Nasdaq composite over the same period. Since March of this
year Apex has consistently ranked among the top-performing funds for the 'year
to date' period as reported by financial websites, including Bloomberg.com. Due
to the continued high ranking of the fund, it has been the subject of several
news articles. Apex was prominently featured in a USA TODAY article on July 7,
2003 entitled 'Three of Boomtowns Hottest Residents; In the world of hot-and
cold-running funds, this risk-taking trio is back on top'
There is no single action that has led to this extraordinary performance.
Rather, it has been and continues to be a variety of factors that have
contributed to the success of our fund. Our improved stock selection process
has taken advantage of the anomalies created by the market place. At the same
time our fund continues to be well diversified, which protects shareholders
against stock-specific risk. At the beginning of this year we had 75 holdings;
as of July 31st we had 83 holdings.
What did we do right? 1.) We held on to many of the stocks in our portfolio
that may have been washed out by the markets, but in our view represented
extraordinary future potential. 2.) We took advantage of new opportunities as
they were created on a day-to-day basis. 3.) We took profits in stocks that met
our target and re- invested in stocks that had superior potential. 4.) We did
not hesitate to sell stocks that were under performing in pursuit of better
opportunities.
Philosophy of investing: Our main focus in stock selection is to identify
extraordinary growth opportunities. Our preoccupation is to single out
companies with revenues, earnings and market share that are growing at above
normal rates. Within this context, we prefer companies whose growth is
sustainable over a long period of time due to the superiority of their
respective business models. This superiority may be due to unique products,
specialized patents or a business franchise. Most often we find these companies
away from the largest capitalization segment.
A highly evolved and enhanced stock selection process: We do our own in-depth
fundamental research on the sustainability of the growth prospects for the
companies in which we are invested. We use various quantitative screens to
identify companies that have above average growth in revenues and earnings. We
also take into consideration the revised earnings estimates made by Wall Street
analysts for the future. We use our own proprietary technical analysis software
to identify volume, price trends and money flows to determine a potential top or
bottom for individual securities. On a day-to-day basis we use a variety of
technical tools to identify changing leadership and to measure the underlying
psychology of the stock market for identifying new investment opportunities. We
are keenly aware, however, that the stock price of any individual security is
subject to unforeseen and threatening negative factors. Substantial
diversification and enhanced portfolio management techniques are among our
attempts to manage this volatility.
In our view extremely cheap valuations were created in the aftermath of
the bust that followed the bubble. In hindsight, it appears that a variety of
factors, including a long period of uninterrupted economic growth, the monetary
stimulus provided by the Greenspan FRB, and the so called 'dot.com' mania led to
a massive bubble in stock prices during much of the 1990 s. This bubble was
punctured in March of 2000 and led to an extreme bear market for stocks. From
the high reached in March 2000, to the lows of October 2002, the S&P 500
declined by 42% while the Nasdaq composite declined by 77%. Individual stocks
in many cases were down by 95% or more and in some cases companies went
bankrupt. By many measures this bear market even surpassed the devastation
incurred during the bear market of 1929-1933.
Stock market recovery: In this cycle, to its credit, the Greenspan FRB has
provided an extraordinary monetary stimulus to the economy over the last 2 years
by aggressively cutting interest rates. The fed fund rate is now 1% compared to
a high of 6.5% in 2000. The second and equally important policy driver has been
the fiscal stimulus of tax cuts and increased government spending. Declining
mortgage rates and a lower cost of borrowing for businesses and consumers has
prevented the economic recovery from sinking and has led to a revival of
traditional consumer spending for autos and housing in particular. The net
result is that real GDP growth is at 2.5% over the 12-month period ending June
2003 and the economy is on its way to a sustainable recovery. Looking forward
we see the stock market driven by strong and sustainable economic growth for the
foreseeable future.
Highlighting a few of our best performing or most interesting holdings.
Pacific Internet (PCNTF). This year the stock is up almost 256% (as of July
31,2003). The company is the largest operator of broadband networks in Asia with
not much competition and extremely large potential markets.
Sonus Networks (SONS), up 586% this year. We increased our exposure to this
stock at a cool $.44 per share. Here we found a company that is potentially the
largest and perhaps the only example of voice communication over IP, selling at
a discount for cash against market value. We still have a decent position in
this company, as we believe that Internet telephony is the wave of the future in
the global market place.
Tivo Inc. (TIVO), up 106%. We have been researching and following this
fascinating company for few years and added more to our position at about $5 per
share. The company has created a personal television service that allows
viewers to select both the program and the preferred viewing time. The company
not only has patents on many aspects of recording TV shows, but also offers
convenience features that are not available from similar competitive products.
TIVO is a life style changing product with long-term growth potential. We think
it is the perfect product for aging baby boomers.
Netflix Inc. NFLX up 137%: This company is in the mundane business of providing
DVD rentals for a monthly subscription. It has patents on certain aspects of
the delivery, however it is the business franchise and the breadth of products
and superior service that separates it from the competition.
Avanex Corporation, AVNX: This company manufactures and markets photonic
processors for the fiber-optic market. We bought this stock at about $1 a share
when it was selling at close to cash value. Due to the availability of better
opportunities, we took profits at about $3.23 per share.
Red Hat, Inc. RHAT up 7%: While this holding has not been up as much as others,
we are mentioning it here as one of the most interesting and a potential big
winner. The company is a developer and service provider for Linux operating and
enterprise system and is virtually the only competitor for Microsoft operating
systems products. Moreover, RHAT is in the early phases of a growth cycle with
annualized revenues of about $120 million.
Summary: Our investment style focuses on growth companies with significant long
term potential that are in the early to mid stages of the growth curve, offering
above average stock price performance. While we believe that our philosophy of
picking big potential winners and our overall money management strategy will
lead to superior long term returns, we must point out that investors should not
expect returns of 100% or more every year. We also strongly emphasize the
benefits of long term investing and holing on to good companies during a
downturn. Similar to the way our portfolio has recovered as a result of holding
on to strong companies, the shareholders who held on to APEX have also
benefited.
We sincerely thank our shareholders that have stayed with us through one of the
most treacherous bear market in history. Together we are partners in the APEX
enterprise.
Suresh L. Bhirud, CFA
Chairman
The Apex Mid Cap Growth Fund
Schedule of Investments report Date July 31st , 2003
CO. NAME Shares % MV Market
Value
LOOKSMART LTD * 6000 25,380
TOTAL ADVERTISING - PROMOTIONAL 3.10 25,380
AUTOBYTEL.COM * 3421 22,510
TOTAL AUTO & TRUCK 2.75 22,510
NET BANK * 1000 12,420
TOTAL BANK 1.52 12,420
TIVO * 2000 21,500
TOTAL BROADCASTING 2.63 21,500
YOUBET.COM INC * 4000 15,440
TOTAL CASINOS 1.89 15,440
CAPSTONE TURBINE * 2000 2,360
TOTAL COAL/ALT ENERGY 0.29 2,360
METRICOM * 100 1
PALM * 200 3,210
XYBERNAUT * 20000 15,000
TOTAL COMPUTER & PERIP. 2.23 18,211
BEYOND.COM CORP * 600 11
CHINA.COM CORP CLASS A * 2000 24,200
CITYVIEW CORP * 10000 600
DIGITAL RIVER INC * 1000 21,480
I2 TECHNOLOGIES * 1000 1,030
INTERNET CAPITAL GROUP * 40000 24,000
RED HAT * 2000 12,640
SYMANTEC CORP * 500 23,385
VA LINUX SYSTEMS * 1000 1,880
VERTICALNET * 200 320
TOTAL COMPUTER SOFTW & SVC 13.40 109,546
INTERNET INITIATIVE JAPAN * 4000 33,840
TOTAL DATA CENTER SERVICES 4.14 33,840
EDULINK INC * 40000 380
TOTAL DIVERSIFIED CO 0.05 380
APPLIED DIGITAL SOLUTIONS * 20000 8,600
CYTOGEN * 300 2,724
IMMUNE RESPONSE * 2000 3,960
KERAVISION * 5000 2
LCA VISION * 750 10,013
MILLENNIUM PHARMACEUTICAL * 500 6,285
OXIGENE * 1000 11,200
VIVUS INC * 8 32
TOTAL DRUG INDUSTRY 5.24 42,815
ELECTRIC FUEL * 1800 1,908
SUPERCONDUCTOR 1300 3,484
TECHNOLOGIES *
TOTAL ELECTRICAL EQUIPT. 0.66 5,392
ADAPTIVE BROADBAND * 1300 3
PARADYNE NETWORKS * 2000 3,800
UNIVIEW TECHNOLOGIES * 8500 850
TOTAL ELECTRONICS 0.57 4,653
DIAMOND HITTS PRODUCTION * 9000 1
NETFLIX INC. * 950 24,890
TOTAL ENTERTAINMENT 3.04 24,891
ESAFETYWORLD INC * 500 1
VIDEO NETWORK COMM * 200 56
TOTAL ENVIRONMENTAL 0.01 57
DRKOOP.COM INC * 2000 2
HEALTHEON * 500 6,040
TOTAL HEALTHCARE INFO SYS 0.74 6,042
ACCLAIM ENTERTAINMENT * 19000 12,920
TOTAL HOTEL / GAMING 1.58 12,920
IDENTIX INC. * 1343 9,643
RAINMAKER SYSTEMS INC * 1000 750
VISAGE TECHNOLOGY * 1000 5,000
TOTAL INDUSTRIAL SERVICES 1.88 15,393
INTERNET GOLD-GOLDEN * 2000 10,320
REDIFF.COM INDIA LTD * 1500 10,860
TOTAL INFORMATION PORTALS 2.59 21,180
AMERICA ONLINE LATIN 10500 10,290
AMERIC *
PACIFIC INTERNET * 5000 48,550
SATYAM INFOWAY LIMITED * 2000 12,300
VIA NET WORKS * 10000 13,500
TOTAL INTERNET SERVICE PROVIDER 10.35 84,640
CMG INFORMATION SERVICES * 11000 19,690
TOTAL INVESTMENT CO. (DOM)COMP 2.41 19,690
CAREMATRIX * 278 1
TOTAL MEDICAL SERVICES 0.00 1
TRIMEDYNE INC * 20000 11,000
TOTAL MEDICAL SUPPLIES 1.35 11,000
CORPFIN.COM * 116 9
TOTAL MISCELLANEOUS 0.00 9
E-LOAN * 1000 4,150
MORTGAGE.COM * 4000 0
TOTAL MORTGAGE BANKERS & L 0.51 4,150
SIRIUS SATELLITE RADIO * 10500 18,690
XM SATELLITE RADIO HLDGS * 2000 27,540
TOTAL RADIO BROADCASTING 5.66 46,230
HOMESTORE.COM * 9000 33,120
TOTAL REAL ESTATE INVESTME 4.05 33,120
EGGHEAD.COM * 4260 3
GSV INC * 200 20
LOUDEYE CORP * 19000 38,380
PRICELINE.COM * 833 27,356
TOTAL RETAIL SPECIALTY 8.04 65,759
AMERITRADE HOLDING * 1500 14,235
E TRADE GROUP * 1500 13,740
KNIGHT/TRIMARK GROUP * 2000 17,640
TRACK DATA CORPORATION * 14000 21,140
WIT SOUNDVIEW * 400 4,024
TOTAL SECURITIES BROKERAGE 8.66 70,779
ADVANCED MICRO DEVICES * 500 3,650
TRANSMETA CORPORATION * 1000 1,660
TOTAL SEMICONDUCTOR 0.65 5,310
CIENA CORP * 500 2,880
LUCENT TECHNOLOGIES * 1000 1,750
OCCAM NETWORKS * 2000 224
QIAO XING UNIV * 2000 13,640
SONUS NETWORKS * 3000 20,580
TOTAL TELECOM. EQUIPMENT 4.78 39,074
HIGH SPEED ACCESS * 1000 145
INFOSPACE INC. * 1000 16,010
INTERNAP * 10000 12,700
KOREA THRUNET CO LTD * 1000 0
SOFTNET AMERICAN 122 1,354
INDEPENDEN *
SPRINT CORP (PCS GROUP) * 3000 18,450
TELESYSTEM INTL WIRELESS * 1200 4,668
USURF AMERICA INC * 16500 2,805
TOTAL TELECOM. SERVICES 6.87 56,132
TOTAL INVESTMENTS 101.63 830,823
OTHER ASSETS (LESS LIABILITIES) -1.63 (13,328)
NET ASSETS 100.00 817,495
NET ASSETS VALUE PER SHARE 1.65
OFFERING PRICE PER SHARE 1.75
* Non - income producing securities
See accompanying Notes to Financial Statements PAGE:
THE APEX MID CAP GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES For the year ended July 31st , 2003
(Audited)
ASSETS
Investment Securities at Value $ 830,823
(Identified cost - $2,437,149) (Note 1)
Cash 37,960
Prepaid Insurence 605
Total Assets $869,388
LIABILITIES
Securities Purchased (27,110)
Accrued expenses (24,783)
Total Liabilities ($ 51,893)
NET ASSETS (Equivalent to $1.65 per share $ 817,495
based on 494,749 shares outstanding)
COMPOSITION OF NET ASSETS:
Paid in Capital $3,588,036
Distribution in excess of accumulated Net-
Realized gain (loss) (1,164,215)
Accumulated Net Investment Income ---
Net Unrealized Appreciation (Depreciation)-
of Investments (1,606,326)
Total Net Assets $ 817,495
STATEMENT OF OPERATIONS (AUDITED) FOR THE YEAR ENDED JULY 31st , 2003
INVESTMENT INCOME
Dividends $ 1,472
EXPENSES
Audit $2,191
Fund Accounting 11,073
Transfer Agent 5,000
Shareholder Report 154
Registration 295
Insurance 606
Fund Administration (Note 4) 524
Custodian 6,000
Investment Advisor (Note 4) 2,622
12b-1 Fees (Note 6) 650
Total Expenses (29,115)
Expense Reimbursement/ waived by Advisor 3,146
(Note 4)
Expense net of Reimbursement/ waiver (25,969)
NET INVESTMENT GAIN (LOSS) (24,497)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net Realized Gain (Loss) on Investments (112,094)
Change in Unrealized Appreciation 366,255
(Depreciation) of Investments
NET REALIZED/UNREALIZED GAIN (LOSS) ON INVESTMENTS 254,161
NET INCREASE (DECREASE) IN NET ASSETS 229,664
RESULTING FROM OPERATION
See accompanying Notes to Financial Statements PAGE:
THE APEX MID CAP GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS FOR EACH PERIOD (AUDITED)
For the Year For the Year
Ended Ended
July 31, 2003 July 31, 2002
INCREASE (DECREASE) IN NET ASSETS
Net Investment Income/ (loss) $ (24,497) $ (43,918)
Net Realized Gain / (loss) on -
investment Securities Sold (112,094) (204,042)
Net unrealized appreciation/(depreciation)
of Investments 366,255 91,226
Net Increase (Decrease) in Net -
Assets Resulting from Operations $ 229,664 $ (156,734)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Dividend distributions paid 0 0
Capital Gains 0 0
Total Distributions 0 0
CAPITAL SHARE TRANSACTIONS
Shares Sold 400,820 9,240
Shares issued in lieu of Cash Distributions 0 0
Cost of shares Redeemed (43,484) (39,382)
Increase (Decrease) in Net Assets -
Due to Capital Share Transactions 357,336 (30,142)
TOTAL INCREASE (DECREASE) IN NET ASSETS 587,000 (186,876)
NET ASSETS BEGINNING OF PERIOD 230,495 417,371
NET ASSETS END OF PERIOD $ 817,495 $ 230,495
FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD (AUDITED)
For the For the For the For the For the
Year Year Year Year Year
Ended Ended Ended Ended Ended
July July July July July
31, 31, 31, 31, 31,
2003 2002 2001 2000 1999
NET ASSET VALUE, BEGINNING OF $0.79 $1.31 $4.45 $9.30 $7.53
PERIOD
Income/(Loss) from Investment Operations:
Net Investment Income/(Loss) (0.09) (0.15) (0.15) (0.14) (0.06)
Net Gain/(Loss) on Securities -
(Both Realized and Unrealized) 0.95 (0.37) (2.48) (2.28) 2.23
Total from Investment- 0.86 (0.52) (2.63) (2.42) 2.17
-Operations
Distributions:
Dividend Distributions Paid 0.00 0.00 (0.51) (2.43) (0.21)
Distributions from Capital 0.00 0.00 0.00 0.00 (0.19)
Gains
Total Distributions 0.00 0.00 (0.51) (2.43) (0.40)
NET ASSET VALUE, END OF $ 1.65 $ 0.79 $ 1.31 $ 4.45 $ 9.30
PERIOD
Total Return (Not Reflecting 108.86% (39.69) (62.36) (37.21) 31.36%
Sales Load) % % %
Ratios/Supplemental Data:
Net Assets, End of Period $ 817 $ 230 $ 417 $1,379 $2,527
(in thousands)
Ratios to Average Net Assets:
Expenses 9.19% 12.42% 7.04% 2.68% 2.26%
Net Investment (8.67)% (12.31)% (6.72)% (2.37)% (0.66)%
Income/(Loss)
Effect of
Reimbursements/Waivers on 1.20% 1.20% 1.20% 1.19% 1.19%
Above - Ratios
Portfolio Turnover Rate 128.42% 117.18% 158.17% 355.90% 405.39%
** Not annualized
See accompanying Notes to Financial Statements PAGE:
THE APEX MID CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JULY 31, 2003 (Audited)
1. SIGNIFICANT ACCOUNTING POLICIES
Bhirud Funds Inc. (the "Fund") is a diversified open-end management
investment company currently consisting of The Apex Mid Cap Growth Fund
portfolio (the "Portfolio"). The Fund was incorporated in Maryland on May
27, 1992. Prior to November 4, 1992 (commencement of operations), the Fund
had no operations other than the sale of 10,000 shares of stock on August
4, 1992 at a cost of $100,000 to Thomas James MidCap Partners representing
the initial capital. The following is a summary of significant accounting
policies followed by the Fund:
SECURITY VALUATION
Readily marketable portfolio securities listed on the New York Stock
Exchange are valued at the last sale price reflected at the close of the
regular trading session of the New York Stock Exchange on the business day
as of which such value is being determined. If there has been no sale on
such day, the securities are valued at the mean of the closing bid and
asked prices on such day. If no bid or asked prices are quoted on such day,
then the security is valued by such method as the Board of Directors shall
determine in good faith to reflect its fair value. Readily marketable
securities not listed on the New York Stock Exchange but listed on other
national securities exchanges or admitted to trading on the National
Association of Securities Dealers Automated Quotations, Inc. ("NASDAQ")
National List are valued in like manner. Portfolio securities traded on
more than one national securities exchange are valued at the last price on
the business day as of which such value is being determined as reflected on
the tape at the close of the exchange representing the principal market for
such securities.
Readily marketable securities traded in the over-the-counter market,
including listed securities whose primary market is believed by the Advisor
to be over-the-counter but excluding securities admitted to trading on the
NASDAQ National List, are valued at the mean of the current bid and asked
prices as reported by NASDAQ or, in the case of securities not quoted by
NASDAQ, the National Quotation Bureau or such other comparable sources as
the Board of Directors deem appropriate to reflect their fair value.
United States Government obligations and other debt instruments having
sixty days or less remaining until maturity are stated at amortized cost.
Debt instruments having a greater remaining maturity will be valued at the
highest bid price obtained from a dealer maintaining an active market in
that security or on the basis of prices obtained from a pricing service
approved as reliable by the Board of Directors.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are accounted for on the dates the securities are
purchased or sold (the trade dates), with realized gain and loss on
investments determined by using specific identification as the cost method.
Interest income (including amortization of premium and discount, when
appropriate) is recorded as earned. Dividend income and dividends and
capital gain distributions to shareholders are recorded on the ex-dividend
date.
FEDERAL INCOME TAXES
The Fund intends to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code and distribute all of its taxable
income to its shareholders. Therefore, no federal income tax provision is
required.
CAPITAL LOSS CARRY FORWARDS
The Fund intends to utilize provisions of the federal
income tax laws which allows it to carry a realized
capital loss for eight years following the year of loss
and offset such losses against any future realized
capital gains. At July 31, 2003, the Fund had capital
loss carry forward for tax purposes of $ 758,882, of
which $442,745 expires in 2009, $204,042 expires in
2010, and $112,094 expires in 2011.
2. CAPITAL STOCK TRANSACTIONS
The Articles of Incorporation, dated May 27, 1992, permit the Fund to issue
twenty billion shares (par value $0.001). Transactions in shares of common
stock for the year ended July 31st , 2003 were as follows:
For the Year For the Year
Ended Ended
July 31,2003 July 31, 2002
Shares Amount Shares Amount
Beginning Balance 290,089 3,299,115 318,599 3,381,090
Shares Sold 258,852 400,820 7,158 9,240
Shares Issued in 0 0 0 0
Reinvestment of Dividends
Shares Redeemed (54,192) (43,484) (35,668) (39,382)
Reclassification of 0 (43,918) 0 (51,833)
Capital Account
Net Increase (Decrease) 204,660 313,418 (28,510) (81,975)
Ending Balance 494,749 $3,612,533 290,08 $3,299,115
3. INVESTMENTS
Purchases and sales of securities for the year ended July 31st , 2003 other
than short-term securities, aggregated $681,614 and $383,510, respectively.
The cost of securities is substantially the same for Federal income tax
purposes. For Federal income tax purposes:
Aggregate Cost is $2,437,149.
Gross Unrealized Gross Unrealized Net Unrealized
Appreciation Depreciation Depreciation
$165,635 $(1,771,961) $(1,606,326)
4. INVESTMENT ADVISORY CONTRACT
The Fund employs Bhirud Associates, Incorporated (the "Advisor") to provide
a continuous investment program for the Fund's portfolio, provide all
facilities and personnel, including Officers required for its
administrative management, and to pay the compensation of all Officers and
Directors of the Fund who are affiliated with the Advisor. As compensation
for the services rendered and related expenses borne by the Advisor, the
Fund pays the Advisor a fee, computed and accrued daily and payable
monthly, equal to 1.00% of the first $250 million of the average net assets
of the Portfolio; 0.75% of the average net assets of the Portfolio between
$250 and $500 million; and 0.65% of the average net assets of the Portfolio
over $500 million. The Advisor has voluntarily agreed to reimburse the Fund
in the event the Fund's expenses exceed certain prescribed limits. During
the year ended July 31st , 2003 the Advisor elected to defer the payment of
Advisory fees payable in the amount of $ 2,622. The Advisor has voluntarily
agreed to waive these fees, considering the small assets of the Fund. The
Advisory and Administrative Services Contracts provide that if, in any
fiscal year, the aggregate expenses of a Fund, excluding interest, taxes,
brokerage and extraordinary expenses, but including the Advisory and
Administrative Services fees, exceed the expense limitation of any state in
which the Corporation is registered for sale, the Funds may deduct from
fees paid to the Advisor and Administrator their proportionate share of
such excess expenses to the extent of the fees payable. As a result of the
passage of the National Securities Markets Improvement Act of 1996, all
state expenses limitations have been eliminated at this time.
The Fund retained Bhirud Associates, Inc. ("BAI") to act as Administrator
for the Fund from November 1, 1994. BAI provided administrative services
for the Fund. During the year ended July 31st , 2003 the Administrator
elected to defer the payment of Administrative service fees payable in the
amount of $524.
From December 1, 1996, the U.S. Bank has been providing custodian services
and from February 1st, 1998, fund accounting and transfer agency functions
are provided by Mutual Shareholders Services LLC.
5. ORGANIZATION EXPENSES
The organizational expense was amortized over the first five years of the
Fund's operations and is now zero going forward.
6. DISTRIBUTION PLAN
The Fund's Board of Directors has adopted a distribution plan (the "Plan")
under Section 12(b) of the Investment Company Act of 1940 and Rule 12b-1
thereunder. The Plan provides that the Portfolio may bear certain expenses
and costs which in the aggregate are subject to a maximum of 0.25% per
annum of the Portfolio's average daily net assets. For the year ended July
31st , 2003, the Fund has incurred distribution costs of $650 payable to
Bhirud Associates, Inc.
7. TRANSACTIONS WITH AFFILIATES
During the year ended July 31st , 2003 the Fund paid $7,583, brokerage
commissions to Bhirud Associates, Inc.
8. RECLASSIFICATION OF CAPITAL ACCOUNTS
In accordance with generally accepted accounting principals, the Fund
recorded reclassifications in the capital accounts. The Fund recorded a
permanent book/tax difference of $(24,497) as of July 31, 2003, from
undistributed net investment income to paid in capital. These
reclassifications have no impact on net asset value of the Fund and are
designed generally to present undistributed income and realized gains on a
tax basis which is considered to be more informative to the shareholder.
The Apex Mid Cap Growth Fund
The line graph below shows how a $10,000 investment in the Fund made on December
23,1992 (the date the fund began to invest in assets other than cash or cash
equivalents in accordance with its investment objectives) would have become
$3,297 (as of July 31,2003). The line graph shows how this compares to the
broad based Standard & Poor's 500 Index and the Fund's bench mark, the
Standard & Poor's MidCap 400 Index, over the same period.
Graph
The line graph includes the initial sales charge (the maximum sales load of
5.75%) on the Fund (no comparable charge exists for the Standard & Poor's
indices). All Fund performance numbers represent past performance numbers, and
are no guarantee of future results.
Van Buren & Hauke, LLC
Certified Public Accounts
183 Madison Avenue, New York, NY 10016
Report of Independent Certified Public Accountants'
Shareholders and Board of Directors
Bhirud Funds Inc.
We have audited the accompanying statements of assets and liabilities of
the Apex Mid Cap Growth Fund (a portfolio of Bhirud Funds Inc.), including the
portfolio of investments, as of July 31, 2003, and the related statement of
operations, the statement of changes in net assets, and financial highlights for
the year then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 2003 by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly in all material respects, the financial position of the
Apex Mid Cap Growth Fund at July 31, 2003, the results of its operations and
changes in net assets and financial highlights for the year then ended in
conformity with generally accepted accounting principles.
September 9, 2003
New York, New York
THE APEX MID CAP GROWTH FUND
C/o Bhirud Funds Inc.
SOUNDVIEW PLAZA
1266 EAST MAIN STREET
STAMFORD, CT 06902
(877) 593-8637
Trustees Information
The Fund's Board of Trustees has responsibility for the overall management
and operations of the Portfolios. Each Trustee oversees Fund and serves until he
or she resigns, retires or his or her successor is elected and qualified. Each
officer serves until his or her successor is elected and qualified. The
following table provides information regarding each Trustee, including those who
are not an "interested person" of the Fund, as defined in the Investment Company
Act of 1940.
Name, Address and Age Position(s), Length Principal Occupations
of Time Served During Past 5 Years,
Directorship Held
Officers and Interested Directors
Suresh L. Bhirud, 55 Chairman of the Board Chairman of the Board
27 Winding Ln. and Treasurer since and Treasures;
Darien, CT 06820 August 6,1992 President of Bhirud
President since July Associates, Inc.
23, 2002
Harish L. Bhirud, 50 Director since April Director and Vice-
71 Strawberry Hill 7, 1997 President of Bhirud
Ave., #607 Vice President since Funds Inc.
Stamford, CT 06902 January 24, 1995 Vice-President-Bhirud
Associates, Inc.
Disinterested Directors
Timothy M. Fenton, Director since August Licensed Realtor with
60 6, 1992 William Raveis, Since
6 Jackson Dr. August 2002.
Norwalk, CT 06851 Chairman of Fenton &
Zalenetz Inc., a
direct marketing
consulting firm.
M. John Sterba, Jr., Director since August Chairman of
60 6,1992 Investment Management
Investment Mgmt Advisors, Inc.
Advisors Inc.
156 Fifth Ave.
New York, NY 10010
Alexander Norman Director since August Independent Management
Crowder, III, 68 6,1992 Consultant, Since 1991 and
159 E Ave., Old Forge part time Chairman of
Green EFI Actuaries, Inc.
New Canaan, CT 06840
Investment Advisor & Distributor Bhirud Associates, Inc.
Administrator Bhirud Associates, Inc.
Custodian US Bank, N.A.
Legal Counsel Sherman & Sterling
Independent Auditors Van Buren & Hauke, LLC
This report and the financial statements contained herein are submitted for the
general information of shareholders and are not authorized for distribution to
prospective investors unless preceded or accompanied by an effective prospectus.
Nothing herein contained is to be considered an offer of sale or solicitation of
an offer to buy shares of Bhirud Funds Inc. Such offering is made only by
prospectus, which includes details as to offering price and other material
information.
Item 2. Code of Ethics. Not applicable.
Item 3. Audit Committee Financial Expert. Not applicable.
Item 4. Principal Accountant Fees and Services. Not applicable.
Item 5. Audit Committee of Listed Companies. Not applicable.
Item 6. Reserved.
Item 7. Disclosure of Proxy Voting Policies and Procedures for
Closed-End Funds.
Not applicable.
Item 8. Reserved.
Item 9. Controls and Procedures.
(a)
Based on the evaluation of the Registrant's Disclosure Controls and Procedures
as of a date within 90 days of the Filing Date, the Registrant's President
and Treasurer/CFO has determined that the Disclosure Controls and
Procedures (as defined in Rule 30a-2(c) under the Act) are designed to
ensure that information required to be disclosed by the Registrant is
recorded, processed, summarized and reported by the Filing Date, and
that information required to be disclosed in the report is communicated
to the Registrant's management, as appropriate, to allow timely decisions
regarding required disclosure.
(b)
There were no significant changes in the registrants internal controls
or in other factors that could affect these controls subsequent to the
date of their evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.
Item 10.Exhibits.
(a)
ANY CODE OF ETHICS OR AMENDMENT THERETO.
Not applicable.
(b)
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002.
Filed herewith.
(c)
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.
Furnished herewith.
SIGNATURES
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 persons on behalf of the registrant
and in the capacities and on the dates indicated.
Bhirud Funds Inc.
By /s/Suresh L. Bhirud
Suresh L. Bhirud
President and Treasurer
Date September 24, 2003