As filed with the Securities and Exchange Commission on March 1, 2007
- ------------------------------------------------------------------------------
==============================================================================
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 811-08043
-----------------------------------------------------------
THE BERKSHIRE FUNDS
(Exact name of registrant as specified in charter)
475 Milan Drive, Suite #103
San Jose, CA 95134-2453
(Address of principal executive offices)(Zip code)
-----------------------------------------------------------
MALCOLM R. FOBES III
The Berkshire Funds
475 Milan Drive, Suite #103
San Jose, CA 95134-2453
(Name and address of agent for service)
1-408-526-0707
Registrant's telephone number, including area code
-----------------------------------------------------------
Date of fiscal year end: December 31, 2006
Date of reporting period: December 31, 2006
ITEM 1. REPORT TO STOCKHOLDERS
[GRAPHIC OMITTED]
THE BERKSHIRE FUNDS
2006 Annual Report
This report is provided for the general information of the Berkshire Funds
shareholders. It is not authorized for distribution unless preceded or
accompanied by an effective Prospectus, which contains more complete
information about the Funds. Please read it carefully before you invest.
In recent years, returns have sustained significant gains and losses due to
market volatility in the technology sector. Due to market volatility, current
performance may be lower than the figures shown. Call 1-877-526-0707 or visit
berkshirefunds.com for more current performance information. Past performance
is no guarantee of future results and investment results and principal value
will fluctuate so that shares, when redeemed, may be worth more or less than
their original cost. The returns shown do not reflect the deduction of taxes
that a shareholder would pay on Fund distributions or the redemption of Fund
shares. Total return includes reinvestment of dividends and capital gain
distributions.
The Dow Jones Industrial Average is a measurement of general market price
movement for 30 widely-held stocks primarily listed on the New York Stock
Exchange. The S&P 500(R) Index is a registered trademark of Standard & Poor's
Corporation and is a market-weighted index of common stock prices for 500
large U.S. companies. The Nasdaq Composite Index is a capitalization-weighted
index of over 5,000 common stocks listed on the Nasdaq Stock Market. Each
index represents an unmanaged, broad-based basket of stocks. These indices are
typically used as benchmarks for overall market performance.
Portfolio composition is subject to change at any time and references to
specific securities, industries and sectors are not recommendations to
purchase or sell any particular security.
*
-------------------------------
FUND OVERVIEW - BERKSHIRE FOCUS FUND
December 31, 2006
The Fund normally concentrates its investments in a core group of 20-30 common
stocks selected for their long-term growth potential.
PERFORMANCE COMPARISON (Average annual total returns as of 12/31/06)
- -------------------------------------------------------------------
1 Year 3 Year 5 Year Since Inception(1)
BERKSHIRE FOCUS FUND 4.20% 7.63% -3.16% -1.55%
- --------------------------------------------------------------------------------------
Dow Jones Industrial Average 19.04% 8.44% 6.81% 7.33%
S&P 500(R) Index 15.79% 10.44% 6.19% 6.75%
Nasdaq Composite Index 10.39% 7.16% 4.99% 6.06%
- --------------------------------------------------------------------------------------
NET ASSETS
- ---------------------------------------
12/31/06 $14.4 Million
NET ASSET VALUE
- ---------------------------------------
Net Asset Value Per Share $7.93
TOP TEN HOLDINGS(2)
- -------------------------------------------------
Google, Inc. (Class A) 14.04%
Apple Computer, Inc. 14.02%
Marvell Technology Group Ltd. 7.60%
Research In Motion Ltd. 7.22%
Yahoo! Inc. 6.61%
NVIDIA Corp. 4.93%
F5 Networks, Inc. 4.89%
Rackable Systems, Inc. 4.87%
Broadcom Corp. (Class A) 4.87%
Baidu.com, Inc. ADR 4.85%
GROWTH OF $10,000(3)
- ---------------------------------------------
BERKSHIRE FOCUS FUND vs. THE S&P 500(R) INDEX
[GRAPHIC OMITTED]
S&P 500(R) BERKSHIRE FOCUS
INDEX FUND
MONTH $ AMOUNT $ AMOUNT
- ------ --------- -------------
JUN-97 $ 10,000 $ 10,000
JUL-97 10,796 10,000
AUG-97 10,191 9,950
SEP-97 10,749 10,050
OCT-97 10,390 9,500
NOV-97 10,871 9,510
DEC-97 11,058 8,738
JAN-98 11,180 9,699
FEB-98 11,986 10,174
MAR-98 12,600 10,174
APR-98 12,727 10,346
MAY-98 12,508 10,043
JUN-98 13,016 11,539
JUL-98 12,878 11,560
AUG-98 11,016 9,314
SEP-98 11,722 11,287
OCT-98 12,675 11,620
NOV-98 13,443 14,078
DEC-98 14,218 17,822
JAN-99 14,812 20,835
FEB-99 14,352 19,177
MAR-99 14,926 22,776
APR-99 15,504 23,741
MAY-99 15,138 20,976
JUN-99 15,978 23,036
JUL-99 15,480 21,735
AUG-99 15,403 24,001
SEP-99 14,981 24,749
OCT-99 15,929 26,884
NOV-99 16,253 31,405
DEC-99 17,210 43,289
JAN-00 16,346 44,376
FEB-00 16,036 62,228
MAR-00 17,605 60,273
APR-00 17,075 53,253
MAY-00 16,725 45,712
JUN-00 17,137 56,317
JUL-00 16,869 57,013
AUG-00 17,917 71,627
SEP-00 16,971 67,248
OCT-00 16,900 56,719
NOV-00 15,567 36,118
DEC-00 15,643 36,346
JAN-01 16,198 36,813
FEB-01 14,721 19,841
MAR-01 13,789 13,973
APR-01 14,860 19,624
MAY-01 14,960 17,418
JUN-01 14,596 16,440
JUL-01 14,452 13,398
AUG-01 13,547 10,257
SEP-01 12,453 6,498
OCT-01 12,691 8,845
NOV-01 13,664 10,518
DEC-01 13,784 10,116
JAN-02 13,583 10,464
FEB-02 13,321 8,171
MAR-02 13,822 9,649
APR-02 12,984 8,258
MAY-02 12,888 7,389
JUN-02 11,970 5,911
JUL-02 11,037 5,140
AUG-02 11,109 4,564
SEP-02 9,902 3,455
OCT-02 10,774 4,194
NOV-02 11,408 5,400
DEC-02 10,738 4,140
JAN-03 10,456 4,183
FEB-03 10,300 4,281
MAR-03 10,400 4,183
APR-03 11,256 4,857
MAY-03 11,849 5,791
JUN-03 12,000 5,552
JUL-03 12,212 5,672
AUG-03 12,450 6,509
SEP-03 12,318 5,878
OCT-03 13,015 6,943
NOV-03 13,129 7,280
DEC-03 13,818 6,911
JAN-04 14,071 7,552
FEB-04 14,267 7,291
MAR-04 14,052 6,791
APR-04 13,831 5,726
MAY-04 14,021 6,346
JUN-04 14,294 6,824
JUL-04 13,820 5,607
AUG-04 13,876 5,303
SEP-04 14,026 5,770
OCT-04 14,240 6,335
NOV-04 14,816 7,128
DEC-04 15,321 7,161
JAN-05 14,947 6,748
FEB-05 15,262 6,661
MAR-05 14,991 6,302
APR-05 14,707 5,987
MAY-05 15,175 6,911
JUN-05 15,197 6,509
JUL-05 15,762 6,878
AUG-05 15,618 6,900
SEP-05 15,744 7,215
OCT-05 15,482 7,660
NOV-05 16,067 8,236
DEC-05 16,073 8,269
JAN-06 16,498 8,943
FEB-06 16,543 8,573
MAR-06 16,749 8,877
APR-06 16,974 8,845
MAY-06 16,486 7,747
JUN-06 16,508 7,736
JUL-06 16,609 7,258
AUG-06 17,004 7,704
SEP-06 17,443 7,943
OCT-06 18,011 8,301
NOV-06 18,353 9,062
DEC-06 18,611 8,617
SECTOR ALLOCATION(4)
- ------------------------------------------
Internet Software & Services 34.89%
Semiconductors 26.05%
Computer Hardware 21.86%
Communications Equipment 7.22%
Software 4.89%
Networking & Telecom Equipment 4.70%
Exchange Traded Funds 0.08%
(1) The Fund's inception date was July 1, 1997.
(2) Stated as a percentage of total net assets as of 12/31/06. The holdings
information provided should not be construed as a recommendation to
purchase or sell a particular security and may not be representative of
the Fund's current or future investments.
(3) This chart assumes an initial investment of $10,000 made on July 1,
1997 (inception). Past performance does not guarantee future results.
Investment return and principal value will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. All
returns reflect reinvested dividends but do not reflect the impact of
taxes.
(4) Stated as a percentage of total net assets as of 12/31/06. The holdings
by sector are presented to illustrate examples of the sectors in which
the Fund has bought securities and may not be representative of the
Fund's current or future investments.
This Fund concentrates its investments in the technology industry.
As a result, the Fund is subject to greater risk than more diversified
funds because of its concentration of investments in fewer companies
and certain segments of a single industry.
1
*
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BERKSHIRE FOCUS FUND
Performance and Portfolio Discussion
12/31/2006
- ------------------------------------------------------------------------------
*
2
*
-------------------------------
LETTER TO THE SHAREHOLDERS
[PHOTO]
Dear Fellow Shareholders,
For the twelve month period ended December 31, 2006, the Berkshire Focus Fund
posted a total return of 4.20%. For comparative purposes, the Dow Jones
Industrial Average gained 19.04%, the S&P 500(R) Index increased 15.79% and
the Nasdaq Composite Index advanced 10.39% over the same period. Please see
the Fund Overview section and the accompanying financial statements for the
Fund's longer-term performance. All return data includes reinvested dividends
but do not reflect the impact of taxes.
The second-half of 2006 began with a modest decline in the overall markets as
investors continued to grapple with concerns over the Federal Reserve's exten-
ded campaign to raise interest rates. However, at its August meeting, the
Federal Reserve decided to hold interest rates steady at 5.25% after 17 con-
secutive interest rate hikes. The market indices hit a trough and never looked
back. Investors once again rushed to embrace stocks, optimistic that the Fed's
tightening cycle had finally come to an end. Meanwhile on the economic front,
retreating oil and gasoline prices, relatively benign inflation readings and a
rebound in consumer confidence - all helped to add fuel to the stock market's
advance. By the end of the period, the equity markets had staged a powerful
rally, quickly recouping much of the ground lost since the beginning of the
year. During the fourth quarter, Fed policymakers held overnight interest
rates stable at 5.25% on concerns of a softening U.S. economy and signs of
continued weakness in the housing market. The equity markets took this pause
as an indication that the Federal Reserve may be finished raising interest
rates for the foreseeable future, and that the Fed's next decision might be to
cut interest rates. Against this backdrop, investors cheered such underlying
conditions and moved to push stocks higher across-the-board. Not surprisingly,
by the end of the year the Dow Jones Industrial Average reached an all-time
high - finishing just north of the record it posted back in January 2000.
Turning to the portfolio, once again our two largest investments throughout
the year - Apple Computer (AAPL) and Google (GOOG) - posted very respectable
returns for the Fund. In addition, both Akamai Technologies (AKAM) and F5 Net-
works (FFIV) gave a much-needed boost to the portfolio with their outsized
gains. Other contributors to the Fund's results during the period were NVIDIA
(NVDA) and Network Appliance (NTAP). Meanwhile, some of the Fund's largest
percentage decliners for the year were concentrated in the Internet Software
& Services sector - this included eBay (EBAY) and Yahoo! (YHOO). Also weighing
heavily on the portfolio was Marvell Technology (MRVL) in the Semiconductor
sector. Finally, some new additions to the portfolio during the second half of
the year included Baidu.com (BIDU), Cisco Systems (CSCO), Integrated Device
Technology (IDTI), PMC-Sierra (PMCS) and Research In Motion (RIMM).
As always, we thank you for your confidence and continued investment in the
Berkshire Funds.
/s/ Malcolm R. Fobes III
Malcolm R. Fobes III
Chairman & Chief Executive Officer
3
*
- ------------------------------------------------------------------------------
AUDITED FINANCIAL STATEMENTS
12/31/2006
- ------------------------------------------------------------------------------
*
4
*
-------------------------------
PORTFOLIO OF INVESTMENTS - BERKSHIRE FOCUS FUND
December 31, 2006
Shares Value
COMMON STOCKS - 99.61% $ 14,375,778
=========================================================
(Cost $13,952,781)
COMMUNICATIONS EQUIPMENT - 7.22% 1,042,046
---------------------------------------------------------
8,155 Research In Motion Ltd.* 1,042,046
COMPUTER HARDWARE - 21.86% 3,155,339
---------------------------------------------------------
23,855 Apple Computer, Inc.* 2,023,858
10,900 Network Appliance, Inc.* 428,152
22,710 Rackable Systems, Inc.* 703,329
INTERNET SOFTWARE & SERVICES - 34.89% 5,034,437
---------------------------------------------------------
12,825 Akamai Technologies, Inc.* 681,264
6,210 Baidu.com, Inc. ADR* 699,805
22,365 eBay, Inc.* 672,516
4,400 Google, Inc. (Class A)* 2,026,112
5 Salesforce.com, Inc.* 182
37,375 Yahoo! Inc.* 954,558
NETWORKING & TELECOM EQUIPMENT - 4.70% 678,741
---------------------------------------------------------
24,835 Cisco Systems, Inc.* 678,741
SEMICONDUCTORS - 26.05% 3,758,837
---------------------------------------------------------
21,765 Broadcom Corp. (Class A)* 703,227
38,355 Integrated Device Technology, Inc.* 593,735
57,155 Marvell Technology Group Ltd.* 1,096,804
19,225 NVIDIA Corp.* 711,517
97,400 PMC-Sierra, Inc.* 653,554
SOFTWARE - 4.89% 706,378
---------------------------------------------------------
10 Citrix Systems, Inc.* 270
9,515 F5 Networks, Inc.* 706,108
EXCHANGE TRADED FUNDS - 0.08% 11,193
=========================================================
(Cost $12,683)
100 Internet HOLDRs Trust 5,245
60 Nasdaq-100 Trust, Series 1 2,590
100 Semiconductor HOLDRs Trust 3,358
TOTAL INVESTMENT SECURITIES - 99.69% 14,386,971
=========================================================
(Cost $13,965,464)
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.31% 44,155
---------------------------------------------------------
NET ASSETS - 100.00% $ 14,431,126
=========================================================
Equivalent to $7.93 per share
*Non-income producing
ADR American Depositary Receipt
(See accompanying notes to financial statements)
5
*
-------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2006
BERKSHIRE
FOCUS FUND
ASSETS
- ---------------------------------------------------------------------
Investment securities:
At acquisition cost $ 13,965,464
=============
At market value $ 14,386,971
Receivable for capital shares sold 100
Receivable for securities sold 469,692
Interest receivable 44
-------------
TOTAL ASSETS 14,856,807
-------------
LIABILITIES
- ---------------------------------------------------------------------
Payable for capital shares redeemed 47,715
Payable for securities purchased 218,754
Payable to affiliate (Note 4) 25,878
Accrued expenses 294
-------------
TOTAL LIABILITIES 425,681
-------------
NET ASSETS $ 14,431,126
=====================================================================
Net assets consist of:
Paid-in-capital $ 430,539,542
Accumulated net realized losses
from security transactions (416,529,923)
Net unrealized appreciation on investments 421,507
-------------
NET ASSETS $ 14,431,126
=============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, without par value) 1,819,591
=============
Net asset value, offering price and redemption
price per share $ 7.93
=============
(see accompanying notes to financial statements)
6
*
-------------------------------
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2006
BERKSHIRE
FOCUS FUND
INVESTMENT INCOME
- ---------------------------------------------------------------------
Dividends $ 311,240
Interest 2,354
-------------
TOTAL INVESTMENT INCOME 313,594
-------------
EXPENSES
- ---------------------------------------------------------------------
Investment advisory fees 260,744
Administrative fees 86,915
Interest expense 2,667
-------------
TOTAL EXPENSES 350,326
-------------
NET INVESTMENT LOSS (36,732)
- ---------------------------------------------------------------------
REALIZED AND UNREALIZED
GAINS (LOSSES) ON INVESTMENTS
- ---------------------------------------------------------------------
Net realized gains from security transactions 1,744,415
Net change in unrealized appreciation
(depreciation) on investments (1,198,896)
------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS 545,519
------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $ 508,787
=============
(see accompanying notes to financial statements)
7
*
-------------------------------
STATEMENTS OF CHANGES IN NET ASSETS - BERKSHIRE FOCUS FUND
For the Years Ended December 31, 2006 and December 31, 2005
Year Year
Ended Ended
12/31/06 12/31/05
FROM OPERATIONS:
- ----------------------------------------------------------------------------------------------
Net investment loss $ (36,732) $ (409,211)
Net realized gains from security transactions 1,744,415 5,458,914
Net change in unrealized appreciation
(depreciation) on investments (1,198,896) (3,110,112)
--------------------------------
Net increase in net assets from operations 508,787 1,939,591
--------------------------------
FROM CAPITAL SHARE TRANSACTIONS:
- ----------------------------------------------------------------------------------------------
Proceeds from shares sold 2,238,597 4,239,980
Payments for shares redeemed (10,607,486) (13,430,761)
--------------------------------
Net decrease in net assets from capital share transactions (8,368,889) (9,190,781)
--------------------------------
TOTAL DECREASE IN NET ASSETS (7,860,102) (7,251,190)
- ----------------------------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------------------------
Beginning of period 22,291,228 29,542,418
--------------------------------
End of period $ 14,431,126 $ 22,291,228
================================
Including accumulated undistributed
net investment income: $ 0 $ 0
================================
CAPITAL SHARE ACTIVITY:
- ----------------------------------------------------------------------------------------------
Shares sold 275,011 585,477
Shares redeemed (1,382,903) (2,144,167)
--------------------------------
Net decrease in shares outstanding (1,107,892) (1,558,690)
Shares outstanding, beginning of period 2,927,483 4,486,173
--------------------------------
Shares outstanding, end of period 1,819,591 2,927,483
================================
(see accompanying notes to financial statements)
8
*
-------------------------------
FINANCIAL HIGHLIGHTS - BERKSHIRE FOCUS FUND
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
Year Year Year Year Year
Ended Ended Ended Ended Ended
12/31/06 12/31/05 12/31/04 12/31/03 12/31/02
NET ASSET VALUE,
BEGINNING OF PERIOD $ 7.61 $ 6.59 $ 6.36 $ 3.81 $ 9.31
- -------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
- -------------------------------------------------------------------------------------------------------------
Net investment loss (0.02)(A) (0.14)(A) (0.13)(A) (0.10)(A) (0.14)(A)
Net realized and unrealized gains
(losses) on investments 0.34 1.16 0.36 2.65 (5.36)
-----------------------------------------------------------------
Total from investment operations 0.32 1.02 0.23 2.55 (5.50)
-----------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $ 7.93 $ 7.61 $ 6.59 $ 6.36 $ 3.81
=============================================================================================================
TOTAL RETURN(B) 4.20% 15.48% 3.62% 66.93% (59.08%)
=============================================================================================================
SUPPLEMENTAL DATA AND RATIOS:
- -------------------------------------------------------------------------------------------------------------
Net assets at end of period (thousands) $ 14,431 $ 22,291 $ 29,542 $ 36,657 $ 22,489
Ratio of expenses to average net assets 2.00%(G) 2.00%(F) 2.00%(E) 2.00%(D) 1.99%(C)
Ratio of net investment loss
to average net assets (0.21%) (1.99%) (1.98%) (1.93%) (1.97%)
Portfolio turnover rate(H) 386.2% 284.1% 316.5% 251.1% 165.8%
(A) Net investment loss per share is calculated using ending balances prior to consideration
or adjustment for permanent book and tax differences.
(B) Total return represents the rate that the investor would have earned or (lost) on an
investment in the Fund assuming reinvestment of dividends.
(C) For the year ended December 31, 2002 the ratio of expenses to average net assets excludes
interest expense. The ratio including interest expense would be 2.01%.
(D) For the year ended December 31, 2003 the ratio of expenses to average net assets excludes
interest expense. The ratio including interest expense would be 2.01%.
(E) For the year ended December 31, 2004 the ratio of expenses to average net assets excludes
interest expense. The ratio including interest expense would be 2.02%.
(F) For the year ended December 31, 2005 the ratio of expenses to average net assets excludes
interest expense. The ratio including interest expense would be 2.02%.
(G) For the year ended December 31, 2006 the ratio of expenses to average net assets excludes
interest expense. The ratio including interest expense would be 2.02%.
(H) Portfolio turnover is greater than most funds due to the investment style of the Fund.
(see accompanying notes to financial statements)
9
*
-------------------------------
NOTES TO FINANCIAL STATEMENTS
December 31, 2006
1. Organization
The Berkshire Focus Fund (the "Fund") is a non-diversified series of The
Berkshire Funds (the "Trust"), an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"). The Trust was organized as a Delaware business trust on November 25,
1996. The Fund commenced operations on July 1, 1997. The Fund's investment
objective is to seek long-term capital appreciation through investments in
equity securities.
2. Significant Accounting Policies
The following is a summary of the Trust's significant accounting policies:
Securities valuation - The Fund's portfolio securities are valued as of the
close of the regular session of trading on the New York Stock Exchange (the
"NYSE"), normally 4:00 p.m., Eastern time. Securities which are traded on
stock exchanges or are quoted by Nasdaq are valued at the last reported sale
price as of the close of the regular session of trading on the NYSE, or, if
not traded, at the most recent bid price. Securities which are traded in the
over-the-counter market, and which are not quoted by Nasdaq, are valued at the
most recent bid price, as obtained from one or more of the major market makers
for such securities. Securities for which market quotations are not readily
available are valued at their fair value as determined in good faith in
accordance with consistently applied procedures established by and under the
general supervision of the Board of Trustees.
In September 2006, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 157, "Fair Value Mea-
surements". SFAS No. 157 defines fair value, establishes a framework for mea-
suring fair value in accordance with generally accepted accounting principles,
and expands disclosure about fair value measurements. SFAS No. 157 applies to
fair value measurements already required or permitted by existing standards.
SFAS No. 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007. The changes to current generally accepted
accounting principles from the application of this Statement relate to the
definition of fair value, the methods used to measure fair value, and the ex-
panded disclosures about fair value measurement. Management is currently eval-
uating the implications of SFAS No. 157, and its impact, if any, on the Fund's
financial statements has not yet been determined.
Share valuation - The net asset value per share for the Fund is calculated
daily by dividing the total value of the Fund's assets, less liabilities, by
the number of shares outstanding, rounded to the nearest cent. The offering
and redemption price per share is equal to the net asset value per share.
Investment income - Dividend income is recorded on the ex-dividend date.
Interest income is accrued as earned.
10
*
-------------------------------
NOTES TO FINANCIAL STATEMENTS
December 31, 2006
Distributions to shareholders - Distributions to shareholders arising from net
investment income and net realized capital gains, if any, are distributed at
least once each year. Distributions to shareholders are recorded on the
ex-dividend date. Dividends from net investment income and capital gain
distributions are determined in accordance with income tax regulations, which
may differ from accounting principles generally accepted in the United States.
Security transactions - Security transactions are accounted for on the trade
date. Securities sold are determined on a specific identification basis.
Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
Federal income tax - The Fund intends to comply with the requirements of
Subchapter M of the Internal Revenue Code (the "Code") necessary to qualify as
a regulated investment company. As provided therein, in any fiscal year in
which the Fund so qualifies and distributes at least 90% of its taxable net
income, the Fund (but not the shareholders) will be relieved of federal
income tax on the income distributed. Accordingly, no provision for income
taxes has been made.
On July 13, 2006, the Financial Accounting Standards Board ("FASB") released
FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN
48"). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN
48 requires the evaluation of tax positions taken, or expected to be taken, in
the course of preparing the Fund's tax returns to determine whether the tax
positions are "more-likely-than-not" of being sustained by the applicable tax
authority. Tax positions not deemed to meet the more-likely-than-not threshold
would be recorded as a tax benefit or expense in the current year. Adoption of
FIN 48 is required for fiscal years beginning after December 15, 2006 and is
to be applied to all open tax years as of the effective date. At this time,
management is evaluating the implications of FIN 48 and its impact, if any, on
the Fund's financial statements has not yet been determined.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as dividends
in each calendar year at least 98% of its net investment income and 98% of its
net realized capital gains plus undistributed amounts from prior years.
Other - The treatment for financial reporting purposes of distributions made
to shareholders during the year from net investment income or net realized
capital gains may differ from their ultimate treatment for federal income tax
purposes. These differences are caused primarily by differences in the timing
of the recognition of certain components of income, expense or realized
capital gain for federal income tax purposes. Where such differences are perm-
anent
11
*
-------------------------------
NOTES TO FINANCIAL STATEMENTS
December 31, 2006
in nature, they are reclassified in the components of the net assets based on
their ultimate characterization for federal income tax purposes. Any such re-
classifications will have no effect on net assets, results of operations or
net asset value per share of the Fund. For the fiscal year ended December 31,
2006, net investment loss of $36,732 for the Fund was reclassified to paid-in-
capital.
3. Investment Transactions
Purchases and sales of investment securities (excluding short-term instru-
ments) for the year ended December 31, 2006 were $67,619,496 and $76,063,944,
respectively. There were no purchases or sales of U.S. Government securities
for the Fund.
The following information is based upon the federal income tax cost of port-
folio investments as of December 31, 2006:
Gross unrealized appreciation $ 996,094
Gross unrealized depreciation (761,751)
--------------------------------------------------
Net unrealized appreciation $ 234,343
==================================================
Federal income tax cost $ 14,152,628
The difference between the acquisition cost and the federal income tax cost
of portfolio investments is due to certain timing differences in the
recognition of capital losses under accounting principles generally accepted
in the United States and income tax regulations.
At December 31, 2006, the Fund had the following capital loss carryforwards
for tax purposes:
Capital Loss Carryforward Date of Expiration
----------------------------------------------------
$ 542,380 12/31/12
$ 10,452,456 12/31/11
$ 56,400,653 12/31/10
$ 292,752,183 12/31/09
$ 56,195,087 12/31/08
To the extent these loss carryforwards are used to offset future capital
gains, it is probable that the amount, which is offset, will not be distribut-
ed to shareholders.
4. Related Party Transactions, Investment Advisory and Administrative Fees
Certain Officers and Trustees of the Trust are also Officers and Directors of
Berkshire Capital Holdings, Inc. ("Berkshire Capital"). The non-interested
Trustees of the Fund were paid $2,264 in Trustee fees and expenses directly by
Berkshire Capital during the year ended December 31, 2006.
12
*
-------------------------------
NOTES TO FINANCIAL STATEMENTS
December 31, 2006
The Fund has an Investment Advisory Agreement (the "Advisory Agreement") and
a separate Administration Agreement with Berkshire Capital. Under the Advisory
Agreement, Berkshire Capital will determine what securities will be purchased,
retained or sold by the Fund on the basis of a continuous review of the port-
folio. For the services it provides under the Advisory Agreement, Berkshire
Capital receives a fee accrued each calendar day (including weekends and
holidays) at a rate of 1.50% per annum of the daily net assets of the Fund.
Under the Administration Agreement, Berkshire Capital renders all adminis-
trative and supervisory services of the Fund, as well as facilities furnished
and expenses assumed. For these services, Berkshire Capital receives a fee at
the annual rate of 0.50% of the Fund's average daily net assets up to $50
million, 0.45% of average net assets from $50 million to $200 million, 0.40%
of average net assets from $200 million to $500 million, 0.35% of average net
assets from $500 million to $1 billion and 0.30% of average net assets in
excess of $1 billion. Such fee is computed as a percentage of the Fund's daily
net assets and is accrued each calendar day (including weekends and holidays).
For the year ended December 31, 2006, Berkshire Capital was paid an investment
advisory fee of $260,744 and an administration fee of $86,915 from the Fund.
The amount due to Berkshire Capital for these fees at December 31, 2006 total-
ed $25,878.
5. Beneficial Ownership Disclosure
Beneficial ownership, either directly or indirectly, of more than 25% of the
voting securities of a fund creates a presumption of control of the fund under
Section 2(a)(9) of the Investment Company Act of 1940. As of December 31,
2006, there were no record owners of more than 25% of the voting securities of
the Fund.
6. Distributions to Shareholders
There were no distributions paid during the years ended December 31, 2006 and
December 31, 2005. As of December 31, 2006, the components of distributable
earnings (accumulated losses) on a tax basis were as follows:
Undistributed ordinary income $ 0
Accumulated losses (416,342,759)
Unrealized appreciation 234,343
- -----------------------------------------------------------------------------
Total accumulated deficit $ (416,108,416)
=============================================================================
The difference between the acquisition cost and the federal income tax cost
of unrealized appreciation is due to certain timing differences in the
recognition of capital losses under accounting principles generally accepted
in the United States and income tax regulations.
7. Subsequent Event
On October 12, 2006 the Board of Trustees unanimously approved a redemption
fee of 2.00% on shares held for 90 days or less, to become effective January
1, 2008, or thereafter as reasonably practical.
13
*
-------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Trustees
The Berkshire Funds
San Jose, California
We have audited the accompanying statement of assets and liabilities, includ-
ing the schedule of investments, of The Berkshire Funds, comprising the
Berkshire Focus Fund as of December 31, 2006, and the related statement of
operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, and financial highlights
for each of the three years in the period then ended. These financial state-
ments and financial highlights are the responsibility of Fund management. Our
responsibility is to express an opinion on these financial statements and fin-
ancial highlights based on our audits. The financial highlights for the
periods indicated prior to December 31, 2004 were audited by another indepen-
dent accounting firm who expressed an unqualified opinion on those statements
and highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstate-
ment. 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 December 31, 2006 by correspondence
with the Fund's custodian and broker. 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 audits provide 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
Berkshire Focus Fund as of December 31, 2006, the results of its operations
for the year then ended, the changes in its net assets for each of the two
years then ended, and the financial highlights for each of the three periods
then ended, in conformity with accounting principles generally accepted in the
United States of America.
Cohen Fund Audit Services, Ltd.
(f.k.a. Cohen McCurdy, Ltd.)
Westlake, Ohio
February 26, 2007
14
*
-------------------------------
ADDITIONAL INFORMATION
(unaudited)
EXPENSE EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, and (2) ongoing costs, including advisory fees, administrative fees and
interest expense. This Example is intended to help you understand your ongoing
costs (in dollars) of investing in the Fund 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 in the Fund on July 1, 2006 and held through
December 31, 2006.
Actual Expenses
The first line of the table on the following page provides information about
actual account values and actual expenses. Although the Fund charges no sales
load or transaction fees, you will be assessed fees for outgoing wire trans-
fers, returned checks and stop payment orders at prevailing rates charged by
Mutual Shareholder Services, LLC, the Fund's transfer agent. If you request
that a redemption be made by wire transfer, currently a $20.00 fee is charged
by the Fund's transfer agent. IRA accounts will be charged an $8.00 annual
maintenance fee. To the extent the Fund invests in shares of other investment
companies as part of its investment strategy, you will indirectly bear your
proportionate share of any fees and expenses charged by the underlying funds
in which the Fund invests in addition to the expenses of the Fund. Actual
expenses of the underlying funds are expected to vary among the various
underlying funds. These expenses are not included in the example. The example
includes advisory fees, administrative fees and interest expense. However, the
example does not include portfolio trading commissions and related expenses
and other extraordinary expenses as determined under generally accepted
accounting principles. You may use the information in this line, together with
the amount you invested, to estimate the expenses that you paid over the per-
iod. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and
an assumed rate of return of 5% per year before expenses, which is not the
Fund's actual return. 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 in-
vesting in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5%
15
*
-------------------------------
ADDITIONAL INFORMATION
(unaudited)
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 do not reflect any transactional costs. Therefore,
the second line of the table is useful in comparing ongoing costs only, and
will not help you determine the relative total costs of owning different
funds. In addition, if these transactional costs were included, your costs
would have been higher.
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value July 1, 2006 to
July 1, 2006 December 31, 2006 December 31, 2006
------------ ----------------- -----------------
Actual $1,000.00 $1,113.80 $10.76
Hypothetical $1,000.00 $1,015.05 $10.26
(5% annual return
before expenses)
*Expenses are equal to the Fund's annualized expense ratio of 2.02%,
multiplied by the average account value over the period, multiplied by 184/365
to reflect the one-half year period.
OTHER INFORMATION
Proxy Voting Guidelines
Berkshire Capital Holdings, Inc., the Fund's Adviser, is responsible for exer-
cising the voting rights associated with the securities held by the Fund. A
description of the policies and procedures used by the Adviser in fulfilling
this responsibility and a record of the Fund's proxy votes for the twelve
months ended June 30, 2006 are available without charge, upon request, by
calling toll free 1-877-526-0707. They are also available on the Securities
and Exchange Commission's ("SEC") website at http://www.sec.gov.
Quarterly Filing of Portfolio Holdings
The Fund files its complete schedule of portfolio holdings with the SEC for
the first and third quarters of each fiscal year on Form N-Q. The Fund's Forms
N-Q are available on the SEC's website at http://www.sec.gov. The Fund's Forms
N-Q may also be reviewed and copied at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the Public Reference Room may
be obtained by calling 1-202-551-8090 (direct) or 1-800-SEC-0330 (general SEC
number).
16
*
-------------------------------
ADDITIONAL INFORMATION
(unaudited)
TRUSTEE AND OFFICER INFORMATION
The business and affairs of the Fund are managed under the direction of the
Fund's Board of Trustees. Information pertaining to the Trustees and Officers
of the Fund is set forth below. The SAI includes additional information about
the Fund's Trustees and Officers and is available without charge, upon
request, by calling toll-free 1-877-526-0707.
INTERESTED TRUSTEES AND OFFICERS
- --------------------------------------------------------------------------------------------------------------
Number of
portfolios
Term of in fund Other
office and Principal complex directorships
Position(s) held length of occupation during overseen held by trustee
Name, address and age with trust time served past five years by trustee and officer
===================== =============== =========== ==================== ========== ===============
Malcolm R. Fobes III* Trustee, Indefinite; Chairman and CEO; 1 Independent
475 Milan Drive President, Since 1996 Berkshire Capital Director;
Suite #103 Treasurer, Holdings, Inc. United States
San Jose, CA 95134 Chief Compliance (1993-present) Oil Fund,
Age: 42 Officer and United States
Chief Financial Natural Gas
Officer Fund
Ronald G. Seger, O.D.* Trustee and Indefinite; Optometrist; 1 None
475 Milan Drive Secretary Since 1996 Ronald G. Seger, O.D.
Suite #103 (1989-present)
San Jose, CA 95134
Age: 57
- --------------------------------------------------------------------------------------------------------------
*Trustees who are considered "interested persons" as defined in Section 2(a)(19)
of the Investment Company Act of 1940 by virtue of their affiliation with the Investment Adviser.
NON-INTERESTED TRUSTEES
- --------------------------------------------------------------------------------------------------------------
Number of
portfolios
Term of in fund
office and Principal complex Other
Position held length of occupation during overseen directorships
Name, address and age with trust time served past five years by trustee held by trustee
===================== =============== =========== ==================== ========== ===============
Leland F. Smith Independent Indefinite; Chairman and CEO; 1 None
475 Milan Drive Trustee Since 1997 Elesco Ltd.*
Suite #103 (1989-present)
San Jose, CA 95134
Age: 68
Andrew W. Broer Independent Indefinite; Global Data Center 1 None
475 Milan Drive Trustee Since 1998 Manager;
Suite #103 Cisco Systems, Inc.
San Jose, CA 95134 (1996-present)
Age: 41
- --------------------------------------------------------------------------------------------------------------
*Elesco Ltd. provides consulting services for corporations and government agencies in the field of
land-use management.
17
*
-------------------------------
ADDITIONAL INFORMATION
(unaudited)
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
At an in-person meeting held on December 16, 2006, the Board of Trustees,
including a majority of Trustees that are not "interested" persons of the Fund
(as that term is defined in the 1940 Act), re-approved the Advisory Agreement
based upon its review of the qualitative and quantitative information provided
by the Investment Adviser. The Trustees, pursuant to the advice of counsel
regarding their fiduciary duties when re-approving the Advisory Agreement,
considered, among other things, the following information regarding the
Investment Adviser:
Nature, Extent and Quality of Services Provided by the Investment Adviser
The Trustees reviewed the nature, quality and scope of current and anticipated
services provided by the Investment Adviser under the Advisory Agreement. The
Trustees also analyzed the Investment Adviser's experience and the capabili-
ties of the Investment Adviser's portfolio manager. For example, the Trustees
reviewed and discussed the Investment Adviser's Form ADV and internal compli-
ance policies, as well as the experience of the Investment Adviser as invest-
ment adviser or sub-adviser to other investment companies. In addition to the
above considerations, the Trustees reviewed and considered a description of
the Investment Adviser's portfolio and brokerage transactions. Based on this
review, the Trustees concluded that the range and quality of services to be
provided by the Investment Adviser to the Fund were appropriate and continued
to support its original selection of the Investment Adviser.
Costs of Services to the Fund
The Trustees discussed at length the advisory fee of 1.50%, noting that it
fell within the 4th Quartile relative to similar funds within its benchmark
category and asset range, as provided by Lipper, Inc. The Trustees also con-
sidered the 0.50% administrative fee and concluded that it was more appropri-
ate to compare the Fund's total expense ratio to those of similar funds within
its benchmark category and asset range. The Trustees noted the Fund's total
expense ratio fell within the 3rd Quartile and near the industry average when
compared to its benchmark funds. The Trustees further noted that the Adviser
paid all of the Fund's expenses from the fees it received. The Trustees also
considered that managing a technology fund requires more intensive research
than the average mutual fund, which holds more securities and more stable
stocks across various sectors. Based on this review, the Trustees concluded
that the expense level of the Fund, as managed by the Investment Adviser, was
satisfactory.
18
*
-------------------------------
ADDITIONAL INFORMATION
(unaudited)
Investment Performance
The Trustees considered short-term and long-term investment performance for
the Fund over various periods of time as compared to both relevant equity
indices and the performance of the Fund's Lipper, Inc. peer group universe.
The Trustees noted the strong investment performance delivered by the Adviser
to the Fund over the past 1-year and 3-year periods. The Trustees further
noted that the Fund was in the top 32% of all technology funds for 2006 acc-
ording to Morningstar, Inc. They also took into consideration that the Fund
tends to outperform its benchmarks in up markets and underperform in down mar-
kets. Based on this review, the Trustees concluded that the current and his-
torical performance of the Fund, as managed by the Investment Adviser, was
satisfactory.
Profitability of the Adviser
The Trustees considered the level of profits that could be expected to accrue
to the Investment Adviser from the fee payable under the Advisory Agreement.
In addition, the Trustees reviewed the current financial condition of the
Investment Adviser and a summary of total expense ratios and management fees.
The Trustees also discussed the existence of other compensation arrangements
with the Investment Adviser. Based on this review, the Trustees concluded that
the Fund's advisory fee is competitive with those of comparable funds and that
the Investment Adviser's profit margin was reasonable.
Economies of Scale
The Trustees received and considered information regarding whether there have
been economies of scale with respect to the management of the Fund, whether
the Fund has appropriately benefited from any economies of scale, and whether
there is potential for realization of any further economies of scale. The
Trustees noted that the total operating expenses of the Fund contain break-
points and, accordingly, reflect the potential that economies of scale may be
realized as the Fund grows.
Conclusion
The Trustees who are non-interested persons met separately to further discuss
the performance of the Fund and the Adviser's compensation. On the basis of
its review and the foregoing information, the Board of Trustees determined
that the Advisory Agreement, including the advisory fee rates payable there-
under, continued to be fair and reasonable in light of all relevant circum-
stances and concluded that it is in the best interest of the Fund and its
shareholders to approve the Advisory Agreement.
19
*
-------------------------------
NOTES
20
THE BERKSHIRE FUNDS
475 Milan Drive
Suite #103
San Jose, CA 95134
(Toll-Free) 1-877-526-0707
BOARD OF TRUSTEES
Malcolm R. Fobes III, Chairman
Ronald G. Seger
Leland F. Smith
Andrew W. Broer
INVESTMENT ADVISER
Berkshire Capital Holdings, Inc.
475 Milan Drive
Suite #103
San Jose, CA 95134
COUNSEL
Thompson Hine LLP
312 Walnut Street
14th Floor
Cincinnati, OH 45202
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Cohen Fund Audit Services, Ltd.
(f.k.a. Cohen McCurdy, Ltd.)
800 Westpoint Parkway
Suite #1100
Westlake, OH 44145
TRANSFER AGENT
Mutual Shareholder Services, LLC
8000 Town Centre Drive
Suite #400
Broadview Heights, OH 44147
CUSTODIAN
U.S. Bank, N.A.
1555 North RiverCenter Drive
Suite #302
Milwaukee, WI 53212
WEBSITE
www.berkshirefunds.com
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics that applies to the reg-
istrant's principal executive officer and principal financial off-
icer. The registrant has not made any amendments to its code of
ethics during the period covered by this report. The registrant has
not granted any waivers from any provisions of the code of ethics
during the period covered by this report.
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 commit-
tee. At this time, the registrant believes that the experience pro-
vided 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 and audit-related 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 statutory 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 performance of the audit. The following
table details the aggregate fees billed for each of the last two
fiscal years for audit fees and audit-related fees by the principal
accountant.
---------------------------------------------------------------------
FYE 12/31/2006 FYE 12/31/2005
---------------------------------------------------------------------
Audit Fees $12,500 $12,500
Audit-Related Fees $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 for the last two years. The audit commit-
tee 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 12/31/2006 FYE 12/31/2005
---------------------------------------------------------------------
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. SCHEDULE OF INVESTMENTS
Schedule of Investments is included as part of the report to share-
holders filed under Item 1 of this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not applicable to open-end investment companies.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable to open-end investment companies.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS
Not applicable to open-end investment companies.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 11. CONTROLS AND PROCEDURES
(a) The Registrant's President, Treasurer and Chief Financial Officer
has concluded that the Registrant's disclosure controls and pro-
cedures (as defined in Rule 30a-3(c) under the Investment Company
Act of 1940 (the "1940 Act")) are effective as of a date within
90 days of the filing of the report that includes the disclosure
required by this paragraph, based on the evaluation of these con-
trols and procedures required by Rule 30a-3(b) under the 1940 Act
and Rule 15d-15(b) under the Securities Exchange Act of 1934, as
amended.
(b) There were no significant changes in the Registrant's internal
control over financial reporting (as defined in Rule 30a-3(d)
under the Act) that occurred during the last fiscal half-year
that have materially affected, or are reasonably likely to
materially affect, the Registrant's internal control over finan-
cial reporting.
ITEM 12. EXHIBITS
(a) (1) Any code of ethics or amendment thereto that is the subject
of the disclosure required by Item 2, to the extent that the
registrant intends to satisfy Item 2 requirements through
filing an exhibit.
Incorporated by reference to the Registrant's Form N-CSR
filed February 25, 2005.
(2) Certification pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
Filed herewith.
(3) Any written solicitation to purchase securities under Rule
23c-1 under the Act sent or given during the period covered
by the report by or on behalf of the registrant to 10 or more
persons.
Not applicable to open-end investment companies.
(b) 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 author-
ized.
The Berkshire Funds
By: /s/ Malcolm R. Fobes III
--------------------
Malcolm R. Fobes III
President, Treasurer and Chief Financial Officer
Date: March 1, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed below by
the following person on behalf of the registrant and in the capacities and
on the date indicated.
The Berkshire Funds
By: /s/ Malcolm R. Fobes III
--------------------
Malcolm R. Fobes III
President, Treasurer and Chief Financial Officer
Date: March 1, 2007
THE BERKSHIRE FUNDS
EXHIBIT INDEX FOR FORM N-CSR
AS FILED ON MARCH 1, 2007
EXHIBIT INDEX
A. Certification pursuant to Section 302
of the Sarbanes-Oxley Act of 2002................................EX.99.CERT
B. Certification pursuant to Section 906
of the Sarbanes-Oxley Act of 2002............................EX.99.906.CERT