United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM N-CSR/A
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)
Registrant's telephone number, including area code: (203) 977-1521
Date of fiscal year end: July 31
Date of reporting period: July 31, 2004
Form N-CSR/A 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/A in its regulatory, disclosure review, inspection and
policymaking roles.
A registrant is required to disclose the information
specified by Form N-CSR/A, 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/A
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.apexfund.net
ANNUAL REPORT dated July 31st , 2004
September 24, 2004
Performance: The Bottom Line
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
$3,201 (as of July 31,2004). 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]
Performance Comparison (Average Annual Total Returns - For the periods ended
July 31, 2004)
1 Year 5 Years 10 Years
Apex Mid Cap Growth Fund -8.48% -22.90% -11.27%
S&P 500 (reflects no deduction +11.25% -3.68% +9.17%
for fees, expenses, or taxes)
S&P 400 (reflects no deduction +16.52% +7.28% +13.04%
for fees, expenses, or taxes)
All Fund performance numbers represent past performance numbers, and are no
guarantee of future results and the graph and table do not reflect the deduction
of taxes that a shareholder would pay on Fund distributions or redemption of
Fund Shares.
Management's Discussion of Fund Performance
We booked profits in many of our longer-term holdings when our technical model
began to give warning signals. Among our long-term holdings we sold both Netflix
Inc. (NFLX), and Red Hat, Inc. (RHAT), booking a hefty profit. We also took
partial profits in several names, notably Advance Micro Devices. (AMD), Adobe
Systems (ADBE), Overstock.com (OSTK), Taser Internatiional. (TASR), and Xbernaut
(XYBR). At the same time we recorded significant losses in certain stocks
purchased several years ago, most notably Immune Response. (IMNR),
Superconductor Tech. (SCON), and Paradyne Network (PDYN).
Among our larger holdings we held on to Tivo Inc. (TIVO), although the stock has
been disappointing. We believe, however, that this will still prove to be a
great investment. Tivo personal DVRs are unique for their ease in automatically
pre- recording television programs of the viewers choice. Tivo also has the
technology and software to connect home television sets directly to broadband
internet. This will allow consumers to download movies and video programs of
their choice directly to television sets.
Broadly speaking, the primary sectors in which we are currently invested in are;
broadcasting, radio broadcasting, drug industry, securities brokerage, telecom
equipment, telecom services, computer software, advertising, internet service
and information portal industries. We note here that we do not invest on the
basis of sectors; rather we use a highly focused company specific approach and
diversification across a spectrum of growth industries that we believe best
contribute to long-term superior performance. Our primary focus is to identify
companies with revenues, earnings, and market share growing at above normal
rates due to the superiority of their respective business models.
Our fund continues to be distributed over a variety of industries, which
protects shareholders against stock-specific risk. As of July 31, 2004 we are
invested in seventy-six listings.
Although the stock market performed poorly in the first seven months of the
year, we believe prospects for the next few years are still exciting. The
fundamental factors that have always driven the stock market are expectations of
economic growth, inflation and corporate earnings and not extraneous factors
such as war or a presidential election.
In our view during the first half of this year the economy has been in the
process of adjusting from a 6.0% annual REAL GDP growth in the second half of
2003 to a more sustainable 3% to 4% growth rate for 2004. Indeed, so far the
evidence bears this out with real GDP growth of 4.5% and 2.8% respectively in
the first and second quarters of this year.
In the first half of this year financial markets were worried about the
reemergence of inflation due to rising energy product prices. Note that the
price of crude oil has risen by about 50% from the beginning of the year. While
there has been a case for rising crude oil prices due to strong secular
worldwide demand, much of the increase may have been due to supply disruptions
from global hot spots. Thankfully, these are unlikely to continue in the long
term. It should also be noted that prices of non-energy commodities have been
essentially unchanged for this year, as measured by the CRB futures commodity
price index.
In summary, we think that the increase in inflation due to rising commodity
prices is behind us for various reasons. It seems that productivity increases
and competitive forces are counter balancing forces to pressure commodity
prices. Note, for example, that the CPI rose at an annual rate of 5% during the
first six months of this year, but was -.1% in July and .1% in August.
Earnings estimates have shown an upward revision creep all year for the S&P 500
index, with revision to EPS estimates up by about 7% from the beginning of the
year. In addition, stock valuations are still reasonable with the S&P 500
selling at 17 times this years EPS estimate of $66.38. (Source Thomson
Financial)
The bottom line is that sustainable economic growth, low inflation, and
continued positive earnings surprises bode well for a substantial stock price
rally for the rest of 2004 and 2005. Stocks are still the only game in town
until credit tightening becomes the main priority for the Greenspan Fed. In the
meantime, stability in Iraq at any time in the foreseeable future would provide
the icing on the cake.
Our Philosophy of investing remains constant, with mid cap growth our primary
focus. Our single preoccupation is to identify and invest in companies that are
exciting for our times and conform to the models we project for the future. We
pick stocks both for investment, as well as achievement of extraordinary
returns. However, once again I must emphasize that investors should not expect
outsized returns every year or expect our fund to out perform the market every
quarter. We believe that our philosophy of picking potential winners and our
overall money management strategy will lead to superior long term returns. 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
SUMMARY OF FUNDS' EXPENSES - (AUDITED)
As a shareholder of the Fund, you incur ongoing costs, including management
fees, distribution and/or service (12b-1) fees; and other Fund expenses. This
Example 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 (August 1, 2003 through July 31, 2004).
Actual Expenses
The first line of the table 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 value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.60), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table 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 the 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 table are meant to highlight your
ongoing costs only and will not help you determine the relative total costs of
owning different funds.
Fund Beginning Ending Expenses Paid
Account Value Account During Period (*)
Value
August 1, 2003 July 31, August 1, 2003 -
2004 July 31, 2004
Actual (-8.48% $ 1,000 $915.15 $32.08
return**)
Hypothetical*** $ 1,000 $1,016.50 $33.78
* Expenses are equal to the Funds' annualized expense ratios, multiplied by
the average account value over the period. The annualized expense ratios
for the Fund were 3.35%.
** Returns are with expenses and not annualized.
*** Assumes a 5% annual return before expenses.
CAPITAL GOODS 0.64
CONSUMER DURABLES 2.95
FINANCIAL 5.72
MISC. 1.68
NONDURABLES 13.88
SERVICES 12.14
TECHNOLOGY 22.25
The above chart gives a visual breakdown of the Fund by the Industry Sectors the
underlying securities represent as a percentage of the portfolio of investments.
The Apex Mid Cap Growth Fund
Schedule of Investments report Date July 31st , 2004
CO. NAME Shares % MV Market
Value
ABLEAUCTIONS.COM INC * 20000 10,600
TOTAL ACTIONEERS 1.02 10,600
LOOKSMART LTD * 20000 35,800
TOTAL ADVERTISING - PROMOTIONAL 3.45 35,800
AUTOBYTEL.COM * 1000 6,810
TOTAL AUTO & TRUCK 0.66 6,810
TIBCO SOFTWARE * 1000 7,070
TOTAL BROADCAST'G/CABLE TV 0.68 7,070
TIVO * 5000 28,250
TOTAL BROADCASTING 2.73 28,250
HAUPPAUGE DIGITAL * 1000 3,260
M-SYSTEMS FLASH DISK PIONEE * 1000 13,880
METRICOM * 100 0
PALMSOURCE INC * 61 1,236
SANDISK * 500 12,160
SILICON STORAGE TECH * 1000 6,710
TRANSACTION SYSTEMS ARC * 1000 17,100
TOTAL COMPUTER & PERIP. 5.24 54,346
BEYOND.COM CORP * 600 6
CHINA.COM CORP CLASS A * 4000 24,480
CITYVIEW CORP * 10000 800
FVC.COM * 3000 2,490
I2 TECHNOLOGIES * 1000 750
INTERNET CAPITAL GROUP INC * 2000 10,500
MACROVISION CORP * 1000 21,640
NETMANAGE INC * 1000 5,290
PALMONE INC * 200 8,044
REALLNET WORKS * 3000 16,920
SONICWALL * 1000 6,570
VA LINUX SYSTEMS * 5000 9,700
VERTICALNET * 200 242
TOTAL COMPUTER SOFTW & SVC 10.37 107,432
INTERNET INITIATIVE JAPAN * 5000 16,860
TOTAL DATA CENTER SERVICES 1.63 16,860
EDULINK INC * 40000 24
TOTAL DIVERSIFIED CO 0.00 24
APPLIED DIGITAL SOLUTIONS * 4000 10,280
CYANOTECH CORP * 4000 6,960
CYTOGEN * 300 3,642
IMMUNE RESPONSE * 2000 1,900
KERAVISION * 5000 5
MAXIM PHARMACEUTICALS * 1000 7,860
MILLENNIUM PHARMACEUTICAL * 500 5,560
PRACEIS PHARMACEUTICALS * 1000 2,430
VERTEX PHARMACEUTICALS * 2000 18,460
VIVUS INC * 8 30
TOTAL DRUG INDUSTRY 5.51 57,127
AROTECH CORP * 5000 6,650
TOTAL ELECTRICAL EQUIPT. 0.64 6,650
ADAPTIVE BROADBAND * 1300 21
PARADYNE NETWORKS * 1000 4,900
STOCKERYALE INC COM. * 3000 3,660
VPGI CORP * 8500 425
TOTAL ELECTRONICS 0.87 9,006
DIAMOND HITTS PRODUCTION IN * 9000 1
LINKTONE * 3000 33,810
TOTAL ENTERTAINMENT 3.26 33,811
ESAFETYWORLD INC * 500 0
TALKPOINT COMMUNICATIONS IN * 200 1
TOTAL ENVIRONMENTAL 0.00 1
DRKOOP.COM INC * 2000 2
TOTAL HEALTHCARE INFO SYS 0.00 2
ACCLAIM ENTERTAINMENT INC. * 1000 160
TOTAL HOTEL / GAMING 0.02 160
IDENTIX INC. * 3343 18,019
VISAGE TECHNOLOGY * 4000 26,240
TOTAL INDUSTRIAL SERVICES 4.27 44,259
IVILLAGE * 3000 15,510
TOTAL INFORMATION PORTALS 1.50 15,510
CHINA LIFE INSURANCE CO. * 1000 21,870
TOTAL INSURANCE (LIFE) COMP. 2.11 21,870
AMERICA ONLINE LATIN AMERIC * 1000 460
DSL.NET INC * 20000 6,000
INTERNET GOLD-GOLDEN LINES * 500 2,270
PACIFIC INTERNET * 6000 46,380
SATYAM INFOWAY LIMITED * 4000 19,160
TOTAL INTERNET SERVICE PROVIDER 7.17 74,270
CMG INFORMATION SERVICES * 21000 28,980
TOTAL INVESTMENT CO. (DOM) COMP. 2.80 28,980
CAREMATRIX * 278 1
TRINITY BIO * 2000 5,560
TOTAL MEDICAL SERVICES 0.54 5,561
CARDIAC SCIENCE INC. * 3000 5,970
TRIMEDYNE INC * 20000 12,000
TOTAL MEDICAL SUPPLIES 1.73 17,970
CORPFIN.COM * 116 17
FUTUREMEDIA PLC ADR * 20000 17,400
TOTAL MISCELLANEOUS 1.68 17,417
MORTGAGE.COM * 4000 0
TOTAL MORTGAGE BANKERS & L 0.00 0
SINA CORPORATION * 1000 28,340
SOHU.COM INCORPORATED * 1000 20,720
TOTAL ONLINE MEDIA 4.73 49,060
SIRIUS SATELLITE RADIO INC * 20000 50,200
XM SATELLITE RADIO HLDGS IN * 2000 52,740
TOTAL RADIO BROADCASTING 9.93 102,940
HOMESTORE.COM * 3000 10,590
TOTAL REAL ESTATE INVESTME 1.02 10,590
EGGHEAD.COM * 4260 21
GSV INC * 200 110
LOUDEYE CORP * 19000 26,600
TASER INTERNATIONAL INCORPO * 500 15,645
TOTAL RETAIL SPECIALTY 4.09 42,376
E TRADE GROUP * 1500 16,605
KNIGHT TRADING GROUP * 2000 17,020
TRACK DATA CORPORATION * 25000 20,750
TOTAL SECURITIES BROKERAGE COMP. 5.25 54,375
ADVANCED MICRO DEVICES INC. * 1000 12,490
TRANSMETA CORPORATION * 4000 4,520
TOTAL SEMICONDUCTOR 1.64 17,010
FOCUS ENHANCEMENTS * 5000 6,250
TOTAL SEMICONDUCTOR CAP EQ 0.60 6,250
TOM ONLINE INC. * 2000 26,840
TOTAL TELECOM MESSAGING 2.59 26,840
ADC TELECOMMUNICATIONS INC. * 5000 12,000
AIRNET COMMUNICATIONS * 5000 2,350
CIENA CORP * 500 1,410
OCCAM NETWORKS * 2000 220
QIAO XING UNIV * 4000 34,000
TOTAL TELECOM. EQUIPMENT 4.82 49,980
AMERICAN INDEPENDENCE CORP * 122 1,891
HIGH SPEED ACCESS * 1000 20
INTERNAP CORP. * 20000 17,600
KOREA THRUNET CO LTD. * 25 1
TELESYSTEM INTL WIRELESS IN * 3000 31,860
USURF AMERICA INC. * 50000 3,250
TOTAL TELECOM. SERVICES 5.27 54,622
TOTAL COMMON STOCKS 97.83 1,013,829
TOTAL INVESTMENTS 97.83 1,013,829
OTHER ASSETS (LESS LIABILITIES) 2.17 22,466
NET ASSETS 100.00 1,036,295
NET ASSETS VALUE PER SHARE 1.51
OFFERING PRICE PER SHARE 1.51
See accompanying Notes to Financial Statements
THE APEX MID CAP GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES For the year ended July 31st ,
2004 (Audited)
ASSETS
Investment Securities at Value
(Identified cost - $2,565,390) (Note 1) 1,013,829
Cash 15,337
Due from Broker 28,129
Prepaid Insurance 593
Total Assets $1,057,888
LIABILITIES
Accrued expenses (21,593)
Total Liabilities ($ 21,593)
NET ASSETS (Equivalent to $1.51 per share $ 1,036,295
based on 688,228 shares outstanding)
COMPOSITION OF NET ASSETS:
Paid in Capital $4,022,615
Distribution in excess of accumulated Net (1,434,760)
Realized gain (loss)
Accumulated Net Investment Income --
Net Unrealized Appreciation (Depreciation) (1,551,560)
of Investments
Total Net Assets $ 1,036,295
STATEMENT OF OPERATIONS (AUDITED) FOR THE YEAR ENDED JULY 31st , 2004
INVESTMENT INCOME
Interest $ 518
Dividends 706
EXPENSES
Audit $ 4,000
Fund Accounting 11,632
Transfer Agent 5,132
Shareholder Report 760
Director 6,000
Registration 1,384
Insurance 606
Fund Administration (Note 4) 2,381
Custodian 6,683
Investment Advisor (Note 4) 11,908
12b-1 Fees (Note 6) 2,977
Total Expenses (53,463)
Expense Reimbursement/ waived by Advisor 14,289
(Note 4)
Expense net of Reimbursement/ waiver (39,174)
NET INVESTMENT GAIN (LOSS) (37,950)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net Realized Gain (Loss) on Investments (239,888)
Change in Unrealized Appreciation 54,765
(Depreciation) of Investments
NET REALIZED/UNREALIZED GAIN (LOSS) ON (185,123)
INVESTMENTS
NET INCREASE (DECREASE) IN NET ASSETS (223,073)
RESULTING FROM OPERATION
See accompanying Notes to Financial Statements
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, 2004 July 31, 2003
INCREASE (DECREASE) IN NET ASSETS
Net Investment Income/ (loss) $ (37,950) $ (24,497)
Net Realized Gain / (loss) on (239,888)
investment Securities Sold (112,094)
Net unrealized 54,765 366,255
appreciation/(depreciation) of
Investments
Net Increase (Decrease) in Net $ (223,073) $ 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 1,022,803 400,820
Shares issued in lieu of Cash 0 0
Distributions
Cost of shares Redeemed (580,930) (43,484)
Increase (Decrease) in Net Assets 441,873 357,336
Due to Capital Share Transactions
TOTAL INCREASE (DECREASE) IN NET 218,800 587,000
ASSETS
NET ASSETS BEGINNING OF PERIOD 817,495 230,495
NET ASSETS END OF PERIOD $ 1,036,295 817,495
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,
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 (0.02) (0.09) (0.15) (0.15) (0.14)
Income/(Loss)
Net Gain/(Loss) on (0.12) 0.95 (0.37) (2.48) (2.28)
Securities (Both Realized and
Unrealized)
Total from Investment (0.14) 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 $ 1.51 $ 1.65 $ 0.79 $ 1.31 $ 4.45
PERIOD
Total Return (8.48)% 108.86% (39.69)% (62.36)% (37.21)%
%
Ratios/Supplemental Data:
Net Assets, End of Period $ 1,036 $ 817 $ 230 $ 417 $1,379
(in thousands)
Ratios to Average Net
Assets:
Expenses 3.35% 9.19% 12.42% 7.04% 2.68%
Net Investment (3.24)% (8.67)% (12.31)% (6.72)% (2.37)%
Income/(Loss)
Effect of
Reimbursements/Waivers on 1.20% 1.20% 1.20% 1.20% 1.19%
Above - Ratios
Portfolio Turnover Rate
189.97% 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 YEAR ENDED JULY 31, 2004 (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, 2004, the Fund had capital loss carry forward for tax
purposes of $ 998,769, of which $442,745 expires in 2009, $204,042 expires
in 2010, $112,094 expires in 2011, and $239,888 expires in 2012.
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 , 2004 were as follows:
For the Year Ended For the Year Ended
July 31,2004 July 31, 2003
Shares Amount Shares Amount
Beginning Balance 494,749 3,612,533 290,089 $3,299,115
Shares Sold 528,246 1,022,803 258,852 400,820
Shares Issued in 0 0 0 0
Reinvestment of
Dividends
Shares Redeemed (334,767) (580,930) (54,192) (43,484)
Reclassification of 0 (24,497) 0 (43,918)
Capital Account
Net Increase 193,479 417,376 204,660 313,418
(Decrease)
Ending Balance 688,228 4,029,909 494,749 $3,612,533
THE APEX MID CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JULY 31, 2004 (Audited)
3. INVESTMENTS
Purchases and sales of securities for the year ended July 31st , 2004 other
than short-term securities, aggregated $2,690,645 and $2,295,406,
respectively. The cost of securities is substantially the same for Federal
income tax purposes. For Federal income tax purposes:
Aggregate Cost is $2,565,390.
Gross Unrealized Gross Unrealized Net Unrealized
Appreciation Depreciation Depreciation
$64,984 $(1,616,544) $(1,551,560)
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 , 2004 the Advisor elected to defer the payment of
Advisory fees payable in the amount of $ 11,908. 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 , 2004 the Administrator
elected to defer the payment of Administrative service fees payable in the
amount of $2,381.
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 , 2004, the Fund has incurred distribution costs of $2,796 payable to
Bhirud Associates, Inc.
7. TRANSACTIONS WITH AFFILIATES
During the year ended July 31st , 2004 the Fund paid $23,643, 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 $(37,950) as of July 31, 2004, 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.
VB&H Certified Public Accounts, LLC
183 Madison Avenue, Suite 204, 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, 2004, 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, 2004 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, 2004, 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 22, 2004
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, 56 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, 51 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
61 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
61 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, 69 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 & DistributorBhirud Associates, Inc.
Administrator Bhirud Associates, Inc.
Custodian US Bank, N.A.
Legal Counsel Sherman & Sterling
Independent Auditors VB&H CPA, LLC
OTHER ITEMS - PROXY VOTING
A description of the Company's proxy voting policies and procedures
relating to the holdings of the Fund is available, without charge and upon
request, by calling 1-877-593 8637, on the Mutual Shareholder Services, LLC
website at www.mutualss.com and on the SEC's website at www.sec.gov.
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
The registrant has adopted a code of ethics that applies to the regis-
trant's principal executive officer and principal financial officer.
The registrant has not made any amendments to its code of ethics
during the covered period. The registrant has not granted any waivers
from any provisions of the code of ethics during the covered period.
A copy of the registrant's Code of Ethics is filed herewith.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The registrant's Board of Trustees has determined that it does not
have an audit committee financial expert serving on its audit comm-
ittee. At this time, the registrant believes that the experience
provided by each member of the audit committee together offers the
registrant adequate oversight for the registrant's level of financial
complexity.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The registrant has engaged its principal accountant to perform audit
services, audit-related services, tax services and other services
during the past two fiscal years. "Audit services" refer to performing
an audit of the registrant's annual financial statements or services
that are normally provided by the accountant in connection with stat-
utory and regulatory filings or engagements for those fiscal years.
"Audit-related services" refer to the assurance and related services
by the principal accountant that are reasonably related to the perfor-
mance of the audit. "Tax services" refer to professional services ren-
dered by the principal accountant for tax compliance, tax advice, and
tax planning. The following table details the aggregate fees billed
for each of the last two fiscal years for audit fees, audit-related
fees, tax fees and other fees by the principal accountant.
----------------------------------------------------------------------
FYE 7/31/2003 FYE 7/31/2004 # of Hours spent
in FYE 2004
----------------------------------------------------------------------
Audit Fees $ 4,000 $ 4,000 40
Audit-Related Fees $ 0 $ 0 0
Tax Fees $ 0 $ 0 0
All Other Fees $ 0 $ 0 0
----------------------------------------------------------------------
The audit committee has adopted pre-approval policies and procedures
that require the audit committee to pre-approve all audit and non-
audit services of the registrant, including services provided to any
entity affiliated with the registrant. All of the principal account-
ant's hours spent on auditing the registrant's financial statements
were attributed to work performed by full-time permanent employees of
the principal accountant.
The following table indicates the non-audit fees billed by the regis-
trant's accountant for services to the registrant and to the regis-
trant's investment adviser (and any other controlling entity, etc.
-not sub-adviser) for the last two years. The Audit Committee of the
Board of Trustees has considered whether the provision of non-audit
services that were rendered to the registrant's investment adviser is
compatible with maintaining the principal accountant's independence
and has concluded that the provision of such non-audit services by the
accountant has not compromised the accountant's independence.
----------------------------------------------------------------------
Non-Audit Related Fees FYE 7/31/2003 FYE 7/31/2004
----------------------------------------------------------------------
Registrant $0 $ 0
Registrant's Investment Adviser $0 $ 0
----------------------------------------------------------------------
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable to open-end investment companies.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not applicable to open-end investment companies.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASES
Not applicable to open-end investment companies.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable to open-end investment companies.
ITEM 10.CONTROLS AND PROCEDURES
(a) The Registrant's President and Treasurer has concluded that the Regis-
trant's disclosure controls and procedures (as defined in Rule 30a-3
(c) under the Investment Company Act of 1940 (the "Act")) are eff-
ective as of a date within 90 days of the filing date of the report
that includes the disclosure required by this paragraph, based on the
evaluation of these controls and procedures required by Rule 30a-3(b)
under the Act.
(b) There were no changes in the Registrant's internal control over fin-
ancial reporting (as defined in Rule 30a-3(d) under the Act) that occ-
urred during the Registrant's last fiscal year that has material-
ly affected, or is reasonably likely to materially affect, the regis-
trant's internal control over financial reporting.
ITEM 11.EXHIBITS
(a) ANY CODE OF ETHICS OR AMENDMENT THERETO.
Filed herewith.
(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, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Bhirud Funds Inc.
By: /s/ Suresh L. Bhirud
--------------------
Suresh L. Bhirud
President and Treasurer
Date: September 30, 2004
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 30, 2004
Bhirud Funds Inc.
EXHIBIT INDEX FOR FORM N-CSR/A
AS FILED ON September 30, 2004
EXHIBIT INDEX
A. Code of Ethics for Principal Executive & Senior Financial
Officers.....................................................EX.99.CODE ETH
B. Certification....................................................EX.99.CERT
C. Certification pursuant to Section 906
of the Sarbanes-Oxley Act....................................EX.99.906.CERT