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 811-06680
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: January 31, 2004
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
For Prospectus Call: (877) 289-2739
For Shareholder Services Call: (877) 593-8637
www.apexfund.net
SEMI ANNUAL REPORT
dated January 31, 2004
(UNAUDITED)
March 27, 2004.
Enclosed is the semi-annual report for Apex Mid Cap Growth Fund for the period
ending January 31, 2004, managements discussion of portfolio performance and
the stock market outlook for the near future.
We are pleased to present this report and are proud that Apex has continued to
perform well, even from time to time retaining its position as the number one
performing fund measured by year over year performance. As of January 31, 2004
Apex is up 162% year over year, compared to a 34.6% total return for the S&P 500
index. Over the same period the Russell mid cap index and Nasdaq composite are
up 45% and 56% respectively. (Price appreciation).
Before discussing our investment style and performance, it is important to
examine our outlook for the economy and the stock market.
Most skepticism about stock market outlook stems from a fear that the economy
will loose momentum. This is coupled with the misperception that current
economic growth is sluggish and that stock prices cannot continue to rise after
last years hefty gains. In fact, reported economic growth has been stronger
than expected during the post 9/11 period. Real GDP grew at an annual rate of
2.8% in 2002 and 4.2% in 2003. The widespread expectations of economic
depression leading to a doom and gloom scenario for the stock market that were
prevalent at the start of the Iraq war about a year ago have already been proven
wrong.
There have been, and continue to be, many factors driving this economic growth.
Historically low interest rates have clearly been a major factor. However, the
role of low cost financing is somewhat misunderstood. For the first time in 50
years interest rates are so low (yield for 90 day T bills at 0.94%) that the
benefits are being passed on to the broader population. This explains the
sustained strength in the housing and auto markets. The second, and equally
powerful driver for the domestic economy is changing demographics. According to
the most recent census, from 1990 to 2000 the population has grown by about 3.3
million annually across all age groups and ethnic backgrounds. Contrary to fears
of slowing economic growth due to aging baby boomers, the country has shown
significant growth in the younger age groups.
The domestic economy is also benefiting from a surprisingly strong global
economy, where the big surprise is both the degree of strength and the breadth
of the recovery. According to recent data from The Economist magazine China and
India are leading the world with real GDP growth rates at 9.9% and 8.4%
respectively over the last 12 months. There is also significant economic growth
in the non-EU countries and Latin America. It is unlikely that global economic
growth will slow in the near future, as there is significant unspent consumer
demand which is not affected by slight changes in currency values or interest
rates.
Overall for 2004 the economy is likely to grow at a sustainable growth rate of 3
to 4% annually with inflation remaining closer to a 1% rate. This bodes well
for interest rates remaining at the low end. In addition, interest rates may
not rise much in the long run because borrowing demand may have reached a
saturation level, with total debt now at 2 times GDP (a 50 year high). Both
consumers and businesses have continued to refinance old debt and take on even
more over the last 2 years.
It also appears that the trade deficit and a weak dollar have not been an
impediment for economic growth or the bull market and the budget deficit can
only decrease with extended economic recovery. Finally, this is a presidential
election year, which is normally good for stocks regardless of who is elected.
Stock valuations are also not excessive. The S&P500 is currently selling at a
p/e of 18 times 2004 EPS, compared to a historical range of 6 to 26 times over
the last 78 years. Overall, it appears that stocks could outperform other
financial assets for the foreseeable future, as they are the only game in town
with risk free interest rates at a historically low level (1% in round numbers).
However, one should not expect only smooth sailing. From time to time market
sentiment and bad news from the non-fundamental factors, such as random
terrorists attacks, could lead to market volatility. We hope investors with
longterm orientation will take advantage of the market dips to make purchases.
Why does our fund continue to do well?
Our research fortifies a belief that the bull market is sustainable. On this
basis we examine attractive opportunities for investment and pursue new ideas
aggressively. On a tactical level, we do not hesitate to take profits when
necessary and reinvest cash for further growth.
Philosophy of investing: the constant theme to our stock selection is to
identify extraordinary growth companies in exciting industries. Our main focus
is to single out companies whose revenues, earnings, and market share are
growing at above normal rates due to the superiority of their respective
business models. In addition to our own in-depth fundamental research, we use
our own proprietary earnings momentum screen to differentiate strong from weak
companies. We also use our own proprietary technical analysis software to
identify volume, price trends, and money flows and determine a potential top or
bottom for individual securities. On a day-to-day basis we use a variety of
technical tools to monitor changing leadership and to measure the underlying
psychology of the stock market for identifying new investment opportunities.
There is no single factor or one industry that has led to our extraordinary
performance since this bull market started in March of 2003. Rather, it is a
highly focused company specific approach and intelligent diversification that
has contributed to our performance. Our fund continues to be distributed over a
variety of industries, which protects shareholders against stock-specific risk.
In July 31 2003 we held 75 listings and as of January 31, 2004 we have 88
holdings.
Some of our longer-term holdings that continue to perform well are Pacific
Internet (PCNTF), Netflix Inc.(NFLX), Red Hat, Inc. (RHAT), and Tivo Inc.
(TIVO). While holding on to some of our long-term winners, we also have been
opportunistically taking advantage of new ideas. Broadly speaking the sectors
that have contributed to our performance are; broadcasting, entertainment,
securities brokerage, telecom equipment, telecom services, computer software,
advertising, Internet service and information portal industries
In conclusion, with mid cap growth as our primary focus, our single pre-
occupation is to identify and invest in companies that are exciting for our
times. We pick stocks not just for investing but also for achieving
extraordinary returns. However, once again I must emphasize that investors
should not expect returns of 100% or more every year. We believe that our
philosophy of picking big potential winners and our overall money management
strategy will lead to superior long term returns, although we all must
anticipate a blip or two in the future. We hope investors will look at market
dips as an opportunity to add Apex to their holding.
We sincerely appreciate our shareholders that have stayed with us through one of
the most treacherous bear market in history and thank you for partnering with us
in the APEX enterprise.
Suresh L. Bhirud, CFA
Chairman
See accompanying Notes to Financial Statements
The Apex Mid Cap Growth Fund
Schedule of Investments report Date January 31, 2004
(UNAUDITED)
CO. NAME Shares % MV Market
Value
ABLEAUCTIONS.COM INC * 20000 20,000
TOTAL ACTIONEERS 1.33 20,000
LOOKSMART LTD * 12000 22,800
TOTAL ADVERTISING PROMOTIONAL 1.52 22,800
AUTOBYTEL.COM * 1000 12,570
TOTAL AUTO & TRUCK 0.84 12,570
TIVO * 4000 43,000
TOTAL BROADCASTING 2.87 43,000
METRICOM * 100 0
PALMSOURCE INC * 64 1,184
SILICON STORAGE TECH * 1000 12,020
XYBERNAUT * 20000 35,200
TOTAL COMPUTER & PERIP. 3.23 48,404
BEYOND.COM CORP * 600 3
CHINA.COM CORP CLASS A * 4000 44,320
CITYVIEW CORP * 10000 450
E.PIPHANY INC. * 1000 8,580
I2 TECHNOLOGIES * 1000 1,550
INTERNET CAPITAL GROUP INC * 40000 16,400
PALMONE INC * 200 2,050
RED HAT * 3000 57,900
SONICWALL * 1000 9,360
VA LINUX SYSTEMS * 3000 11,970
VERTICALNET * 200 610
TOTAL COMPUTER SOFTW & SVC 10.22 153,193
INTERNET INITIATIVE JAPAN * 5000 26,150
TOTAL DATA CENTER SERVICES 1.74 26,150
EDULINK INC * 40000 232
TOTAL DIVERSIFIED CO 0.02 232
APPLIED DIGITAL SOLUTIONS * 40000 16,000
CYANOTECH CORP * 10000 20,900
CYTOGEN * 300 4,053
IMMUNE RESPONSE * 4000 7,200
KERAVISION * 5000 5
LCA VISION * 750 18,375
MILLENNIUM PHARMACEUTICAL * 500 8,800
PHARMOS CORPORATION * 10000 44,600
PRACEIS PHARMACEUTICALS * 1000 6,610
VAXGEN * 1000 10,010
VIVUS INC * 8 36
TOTAL DRUG INDUSTRY 9.11 136,589
AROTECH CORP * 5000 9,650
SUPERCONDUCTOR TECHNOLOGIES * 3000 17,640
TOTAL ELECTRICAL EQUIPT. 1.82 27,290
ADAPTIVE BROADBAND * 1300 5
PARADYNE NETWORKS * 4000 16,840
VPGI CORP * 8500 1,020
TOTAL ELECTRONICS 1.19 17,865
DIAMOND HITTS PRODUCTION IN * 9000 1
NETFLIX INC. * 950 69,740
TOTAL ENTERTAINMENT 4.65 69,740
ESAFETYWORLD INC * 500 0
TALKPOINT COMMUNICATIONS IN * 200 5
TOTAL ENVIRONMENTAL 0.00 5
DRKOOP.COM INC * 2000 6
WEB MD CORPORATION * 4000 36,000
TOTAL HEALTHCARE INFO SYS 2.40 36,006
ACCLAIM ENTERTAINMENT INC. * 1000 700
TOTAL HOTEL / GAMING 0.05 700
IDENTIX INC. * 1343 7,145
RAINMAKER SYSTEMS INC * 1000 1,630
VISAGE TECHNOLOGY * 1000 4,760
TOTAL INDUSTRIAL SERVICES 0.90 13,535
IVILLAGE * 3000 13,560
TOTAL INFORMATION PORTALS 0.90 13,560
AMERICA ONLINE LATIN AMERIC * 20000 33,400
DSL.NET INC * 20000 13,800
INTERNET GOLD-GOLDEN LINES * 500 2,130
PACIFIC INTERNET * 6000 46,440
SATYAM INFOWAY LIMITED * 4000 28,520
VIA NET WORKS * 20000 37,400
TOTAL INTERNET SERVICE PROVIDER 10.79 161,690
CMG INFORMATION SERVICES * 21000 58,170
TOTAL INVESTMENT CO. (DOM) COMP. 3.88 58,170
CAREMATRIX * 278 1
TRINITY BIO * 2000 8,620
TOTAL MEDICAL SERVICES 0.58 8,621
TRIMEDYNE INC * 20000 26,000
TOTAL MEDICAL SUPPLIES 1.73 26,000
CORPFIN.COM * 116 157
FUTUREMEDIA PLC ADR * 20000 22,800
TOTAL MISCELLANEOUS 1.53 22,957
E-LOAN * 1000 2,650
MORTGAGE.COM * 4000 0
TOTAL MORTGAGE BANKERS & L 0.18 2,650
SINA CORPORATION * 500 22,845
TOTAL ONLINE MEDIA 1.52 22,845
SIRIUS SATELLITE RADIO INC * 20000 54,000
XM SATELLITE RADIO HLDGS IN * 2000 46,840
TOTAL RADIO BROADCASTING 6.73 100,840
DRUGSTORE.COM * 2000 13,480
EGGHEAD.COM * 4260 4
GSV INC * 200 16
LOUDEYE CORP * 19000 40,850
OVERSTOCK.COM * 2000 37,820
TOTAL RETAIL SPECIALTY 6.15 92,170
E TRADE GROUP * 1500 20,985
KNIGHT/TRIMARK GROUP * 3000 41,400
TRACK DATA CORPORATION * 25000 40,250
TOTAL SECURITIES BROKERAGE COMP. 6.85 102,635
ADVANCED MICRO DEVICES INC. * 3000 44,580
TRANSMETA CORPORATION * 4000 15,200
TOTAL SEMICONDUCTOR 3.99 59,780
ADC TELECOMMUNICATIONS INC. * 5000 17,600
CIENA CORP * 500 3,625
LUCENT TECHNOLOGIES * 1000 4,480
OCCAM NETWORKS * 2000 410
QIAO XING UNIV * 4000 52,800
ZHONE TECHNOLOGIES INC * 5000 30,700
TOTAL TELECOM. EQUIPMENT 7.31 109,615
AMERICAN INDEPENDENCE CORP * 122 1,723
HIGH SPEED ACCESS * 1000 20
INTERNAP * 20000 45,800
KOREA THRUNET CO LTD * 1000 0
TELESYSTEM INTL WIRELESS IN * 3000 38,730
UBIQUITEL INC * 3000 8,880
USURF AMERICA INC * 50000 13,500
TOTAL TELECOM. SERVICES 7.25 108,653
TOTAL COMMON STOCKS 101.30 1,518,265
TOTAL INVESTMENTS 101.30 1,518,265
OTHER ASSETS (LESS LIABILITIES) -1.30 (19,557)
NET ASSETS 100.00 1,498,708
NET ASSETS VALUE PER SHARE 2.12
OFFERING PRICE PER SHARE 2.25
* Non - income producing securities
See accompanying Notes to Financial Statements
THE APEX MID CAP GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES For the six months ended January 31, 2004
(Unaudited)
ASSETS
Investment Securities at Value $ 1,518,265
(Identified cost - $2,771,627) (Note 1)
Securities Sold 44,375
Prepaid Insurance 296
Total Assets $1,562,936
LIABILITIES
Cash Overdraft (38,092)
Securities Purchased (9,450)
Accrued expenses (16,686)
Total Liabilities ($ 64,228)
NET ASSETS (Equivalent to $2.12 per share $ 1,498,708
based on 707,300 shares outstanding)
COMPOSITION OF NET ASSETS:
Paid in Capital $4,047,112
Distribution in excess of accumulated Net (1,295,042)
Realized gain (loss)
Accumulated Net Investment Income --
Net Unrealized Appreciation (Depreciation) (1,253,362)
of Investments
Total Net Assets $ 1,498,708
STATEMENT OF OPERATIONS (UNAUDITED) FOR SIX MONTHS ENDED JANUARY 31, 2004
INVESTMENT INCOME
Dividends $ 443
EXPENSES
Audit $2,000
Fund Accounting 5,850
Transfer Agent 2,580
Shareholder Report 360
Directors 3,000
Registration 637
Insurance 311
Fund Administration (Note 4) 1,020
Custodian 3,360
Investment Advisor (Note 4) 5,104
12b-1 Fees (Note 6) 1,276
Total Expenses (25,498)
Expense Reimbursement/ waived by Advisor 6,124
(Note 4)
Expense net of Reimbursement/ waiver (19,374)
NET INVESTMENT GAIN (LOSS) (18,931)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net Realized Gain (Loss) on Investments (111,895)
Change in Unrealized Appreciation 352,963
(Depreciation) of Investments
NET REALIZED/UNREALIZED GAIN (LOSS) ON 241,068
INVESTMENTS
NET INCREASE (DECREASE) IN NET ASSETS 222,137
RESULTING FROM OPERATION
See accompanying Notes to Financial Statements
THE APEX MID CAP GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS FOR EACH PERIOD (UNAUDITED)
For the 6 Months For the Year
Ended Ended
January 31, 2004 July 31, 2003
INCREASE (DECREASE) IN NET ASSETS
Net Investment Income/ (loss) $ (18,931) $ (24,497)
Net Realized Gain / (loss) on (111,895)
investment Securities Sold (112,094)
Net unrealized 352,963 366,255
appreciation/(depreciation) of
Investments
Net Increase (Decrease) in Net $ 222,137 $ 229,664
Assets Resulting from Operations
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Dividend distributions paid 0 0
Capital Gains 0 0
Total Distributions 0 0
CAPITAL SHARE TRANSACTIONS
Shares Sold 855,376 400,820
Shares issued in lieu of Cash 0 0
Distributions
Cost of shares Redeemed (396,300) (43,484)
Increase (Decrease) in Net Assets 459,076 357,336
Due to Capital Share Transactions
TOTAL INCREASE (DECREASE) IN NET 681,213 587,000
ASSETS
NET ASSETS BEGINNING OF PERIOD 817,495 230,495
NET ASSETS END OF PERIOD $ 1,498,708 $ 817,495
FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD (UNAUDITED)
For the For the For the For the For the
6 Year Year Year Year
months Ended Ended Ended Ended
Ended
January July July July July
31, 31, 31, 31, 31,
2004 2003 2002 2001 2000
NET ASSET VALUE, BEGINNING OF $1.65 $0.79 $1.31 $4.45 $9.30
PERIOD
Income/(Loss) from Investment
Operations:
Net Investment (0.04) (0.09) (0.15) (0.15) (0.14)
Income/(Loss)
Net Gain/(Loss) on
Securities (Both Realized and 0.51 0.95 (0.37) (2.48) (2.28)
Unrealized)
Total from Investment 0.47 0.86 (0.52) (2.63) (2.42)
Operations
Distributions:
Dividend Distributions Paid 0.00 0.00 0.00 (0.51) (2.43)
Distributions from Capital 0.00 0.00 0.00 0.00 0.00
Gains
Total Distributions 0.00 0.00 0.00 (0.51) (2.43)
NET ASSET VALUE, END OF $ 2.12 $ 1.65 $ 0.79 $1.31 $ 4.45
PERIOD
Total Return (Not Reflecting 28.48%** 108.86% (39.69)% (62.36)%(37.21)%
Sales Load)
Ratios/Supplemental Data:
Net Assets, End of Period $1,499 $ 817 $ 230 $ 417 $1,379
(in thousands)
Ratios to Average Net
Assets:
Expenses 1.87%** 9.19% 12.42% 7.04% 2.68%
Net Investment (1.82)%** (8.67)% (12.31)% (6.72)% (2.37)%
Income/(Loss)
Effect of
Reimbursements/Waivers on 0.60%** 1.20% 1.20% 1.20% 1.19%
Above - Ratios
Portfolio Turnover Rate 92.53%** 128.42% 117.18% 158.17% 355.90%
** Not annualized
See accompanying Notes to Financial Statements
THE APEX MID CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JANUARY 31, 2004 (Unaudited)
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 six months ended January 31, 2004 were as follows:
For the 6 months For the Year
Ended Ended
January 31,2004 July 31, 2003
Shares Amount Shares Amount
Beginning Balance 494,749 $3,612,533 290,08 $3,299,115
Shares Sold 443,647 855,376 258,85 400,820
Shares Issued in 0 0 0 0
Reinvestment of Dividends
Shares Redeemed (231,096) (396,300) (54,192) (43,484)
Reclassification of 0 (24,497) 0 (43,918)
Capital Account
Net Increase (Decrease) 212,551 434,579 204,660 313,418
Ending Balance 707,300 $4,047,112 494,749 $3,612,533
THE APEX MID CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JANUARY 31, 2004 (Unaudited)
3. INVESTMENTS
Purchases and sales of securities for the six months ended January 31, 2004
other than short-term securities, aggregated $1,446,949 and $973,465,
respectively. The cost of securities is substantially the same for Federal
income tax purposes. For Federal income tax purposes:
Aggregate Cost is $2,771,627.
Gross Unrealized Gross Unrealized Net Unrealized
Appreciation Depreciation Depreciation
$308,194 $(1,561,556) $(1,253,362)
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 six months ended January 31, 2004 the Advisor elected to defer the
payment of Advisory fees payable in the amount of $ 5,104. 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 six months ended January 31, 2004 the
Administrator elected to defer the payment of Administrative service fees
payable in the amount of $1,020.
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 six months ended
January 31, 2004, the Fund has incurred distribution costs of $1,202
payable to Bhirud Associates, Inc.
7. TRANSACTIONS WITH AFFILIATES
During the six months ended January 31, 2004 the Fund paid $15,255,
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
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
Crowder, III, 68 6,1992 Management
159 E Ave., Old Forge Consultant, Since
Green 1991 and part time
New Canaan, CT 06840 Chairman of EFI
Actuaries, Inc.
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 to Semi-Annual Reports for the period
ended January 31, 2004.
Item 3. Audit Committee Financial Expert.
Not applicable to Semi-Annual Reports for the period
ended January 31, 2004.
Items 4-8. Reserved
Item 9. Controls and Procedures.
Not applicable to Reports for the period ended January 30, 2004.
Item 10. Exhibits. Certifications required by Item 10(b) of
Form N-CSR are filed 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 March 27, 2004