As filed with the Securities and Exchange Commission on March 1, 2010
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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
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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)
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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
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Date of fiscal year end: December 31, 2009
Date of reporting period: December 31, 2009
Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to stock-
holders of any report that is required to be transmitted to stockholders under
Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e -1). The
Commission may use the information provided on Form N-CSR in its regulatory,
disclosure review, inspection and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS
[GRAPHIC OMITTED]
THE BERKSHIRE FUNDS
2009 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 infor-
mation about the Berkshire 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.
*
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FUND OVERVIEW - BERKSHIRE FOCUS FUND
December 31, 2009 (unaudited)
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 12/31/09)
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1 Year 3 Year 5 Year 10 Year Since Inception(1)
BERKSHIRE FOCUS FUND 83.86% 2.98% 5.62% -14.15% -0.49%
- ---------------------------------------------------------------------------------------
Dow Jones Industrial Average 22.68% -3.11% 1.94% 1.31% 4.72%
S&P 500(R) Index 26.47% -5.61% 0.42% -0.95% 3.64%
Nasdaq Composite Index 45.36% -3.46% 1.71% -5.08% 4.28%
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NET ASSETS
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12/31/09 $18.8 Million
NET ASSET VALUE
- ---------------------------------------
Net Asset Value Per Share $8.66
TOP TEN HOLDINGS(2)
- -------------------------------------------------
Google, Inc. (Class A) 17.63%
Apple, Inc. 15.92%
Semiconductor HOLDRs Trust 10.21%
Amazon.com, Inc. 5.61%
Priceline.com, Inc. 4.82%
Hewlett-Packard Co. 4.80%
NVIDIA Corp. 4.73%
Microsoft Corp. 4.68%
Marvell Technology Group Ltd. 4.21%
Salesforce.com, Inc. 4.09%
GROWTH OF $10,000(3)
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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
JAN-07 18,892 8,573
FEB-07 18,523 8,443
MAR-07 18,730 8,280
APR-07 19,560 8,258
MAY-07 20,242 8,780
JUN-07 19,906 9,149
JUL-07 19,289 9,497
AUG-07 19,578 9,736
SEP-07 20,310 10,735
OCT-07 20,633 12,528
NOV-07 19,770 11,942
DEC-07 19,633 11,985
JAN-08 18,456 8,943
FEB-08 17,856 8,443
MAR-08 17,779 8,584
APR-08 18,645 9,866
MAY-08 18,886 10,507
JUN-08 17,294 9,334
JUL-08 17,149 9,269
AUG-08 17,397 9,029
SEP-08 15,847 6,965
OCT-08 13,184 5,933
NOV-08 12,238 4,998
DEC-08 12,369 5,118
JAN-09 11,326 5,205
FEB-09 10,120 5,096
MAR-09 11,007 5,781
APR-09 12,060 6,889
MAY-09 12,735 7,247
JUN-09 12,760 7,302
JUL-09 13,725 8,019
AUG-09 14,221 8,106
SEP-09 14,751 8,627
OCT-09 14,477 8,247
NOV-09 15,346 8,910
DEC-09 15,642 9,410
SECTOR ALLOCATION(4)
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Internet Software & Services 38.87%
Computer Hardware 20.72%
Semiconductors 16.63%
Exchange Traded Funds 10.21%
Software 4.91%
Storage Devices 4.02%
Communications 3.75%
Networking & Telecom Equipment 0.19%
Communications Equipment 0.01%
(1) The Fund's inception date was July 1, 1997.
(2) Stated as a percentage of total net assets as of 12/31/09. 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 12/31/09. 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
12/31/2009
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*
2
*
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LETTER TO THE SHAREHOLDERS
[PHOTO]
Dear Fellow Shareholders,
For the twelve month period ended December 31, 2009, the Berkshire Focus Fund
posted a total return of 83.86%. For comparative purposes, the Dow Jones
Industrial Average gained 22.68%, the S&P 500(R) Index increased 26.47% and
the Nasdaq Composite Index advanced 45.36% 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 does not reflect the impact of taxes.
The error of optimism dies in the crisis, but in dying it gives birth to an
error of pessimism. This new error is born, not of an infant, but a giant.
- - A.C. Pigou, Cambridge Economist, 1920
Calendar year 2009 can be best characterized as having the most negative
investor sentiment in the history of U.S. financial markets - despite the
sharp gains posted by equities. And with good reason, stock market averages
declined dramatically during 2008 representing the most severe bear market
since the Great Depression more than 70 years ago. Further fueling investor
angst was the fact that equity markets had underperformed bonds for 10 years.
As a result, investors looking to preserve capital poured an unprecedented
$374.6 billion into bond funds and removed $39.3 billion out of equity funds
during the year. It is during periods of such extreme pessimism that investors
tend to dramatically underestimate economic growth activity and corporate
profits. If true, then investing in bonds will be disastrous. On the other
hand, stocks which were expensive 10 years ago; now are not. Consider a
company such as Apple, our top holding. It trades at a valuation of just 12
times this year's earnings - ex cash - with our conservative forward growth
rate of over 18%. This valuation is on par with Hewlett-Packard; which itself
is inexpensive and has a forward growth rate of only 10%. That said, attrac-
tive stock valuations and continued investor pessimism leads us to believe
that 2010 will be a good year for the equity markets.
We are pleased to report that since the stock markets reached 12-year lows on
March 9, 2009, our concentrated style of investing along with our focus in the
technology sector, resulted in the significant outperformance of our Fund
relative to our equity market benchmarks; both on an absolute and relative
basis. Looking at the portfolio, every segment within the technology sector
was a contributor to the Fund's strong results. The Fund's biggest percentage
gainers for the year were also concentrated in some of our largest invest-
ments, including Apple (AAPL) and Google (GOOG). Meanwhile, the Semiconductor
sector also gave a boost to the Fund with outsized gains in Broadcom (BRCM),
Marvell Technology (MRVL) and Skyworks Solutions (SWKS). Other contributors to
the Fund's strong results during the period were Amazon.com (AMZN), Baidu
(BIDU) and Priceline.com (PCLN). Finally, some new additions to the portfolio
during the second half of the year included F5 Networks (FFIV), Ctrip.com
(CTRP), Salesforce.com (CRM) and VMware (VMW).
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
*
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AUDITED FINANCIAL STATEMENTS
12/31/2009
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*
4
*
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PORTFOLIO OF INVESTMENTS - BERKSHIRE FOCUS FUND
December 31, 2009
Shares Value
COMMON STOCKS - 89.10% $ 16,768,970
=========================================================
(Cost $16,099,063)
COMMUNICATIONS - 3.75% 705,367
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6,645 Equinix, Inc.* 705,367
COMMUNICATIONS EQUIPMENT - 0.01 % 2,844
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25 QUALCOMM, Inc. 1,156
25 Research In Motion Ltd.* 1,688
COMPUTER HARDWARE - 20.72% 3,899,298
---------------------------------------------------------
14,215 Apple, Inc.* 2,995,555
17,545 Hewlett-Packard Co. 903,743
INTERNET SOFTWARE & SERVICES - 38.87% 7,316,060
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7,855 Amazon.com, Inc.* 1,056,655
1,250 Baidu, Inc. - ADR* 514,037
10,440 Ctrip.com International Ltd. - ADR* 750,218
10 eBay, Inc.* 235
5,350 Google, Inc. (Class A)* 3,316,893
4,155 Priceline.com, Inc.* 907,494
10,445 Salesforce.com, Inc.* 770,528
NETWORKING & TELECOM EQUIPMENT - 0.19% 35,577
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10 Cisco Systems, Inc.* 239
1,325 Juniper Networks, Inc.* 35,338
SEMICONDUCTORS - 16.63% 3,129,680
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23,295 Broadcom Corp. (Class A)* 733,094
10 Intel Corp. 204
38,215 Marvell Technology Group Ltd.* 792,961
13,550 NetLogic Microsystems, Inc.* 626,823
47,665 NVIDIA Corp.* 890,382
10 RF Micro Devices, Inc.* 48
3,235 Skyworks Solutions, Inc.* 45,905
1,545 Texas Instruments, Inc. 40,263
SOFTWARE - 4.91% 923,877
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805 F5 Networks, Inc.* 42,641
28,905 Microsoft Corp. 881,024
5 VMware, Inc.* 212
STORAGE DEVICES - 4.02% 756,267
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10 EMC Corp.* 175
22,005 NetApp, Inc.* 756,092
EXCHANGE TRADED FUNDS - 10.21% 1,921,948
=========================================================
(Cost $1,842,765)
10 PowerShares QQQ 457
10 ProShares Ultra QQQ* 595
68,800 Semiconductor HOLDRs Trust 1,920,896
CASH EQUIVALENT - 0.87% 163,008
=========================================================
(Cost $163,008)
163,008 Fidelity Money Market Portfolio
Select Class (0.21%)** 163,008
TOTAL INVESTMENT SECURITIES - 100.18% 18,853,926
=========================================================
(Cost $18,104,836)
LIABILITIES IN EXCESS OF OTHER ASSETS - (0.18%) (34,741)
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NET ASSETS - 100.00% $ 18,819,185
=========================================================
Equivalent to $8.66 per share
*Non-income producing
**Variable Rate Security: The rate shown represents the rate as of 12/31/09
ADR - American Depositary Receipt
(See accompanying notes to financial statements)
5
*
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STATEMENT OF ASSETS AND LIABILITIES
December 31, 2009
BERKSHIRE
FOCUS FUND
ASSETS
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Investment securities:
At cost $ 18,104,836
=============
At value $ 18,853,926
Receivable for securities sold 757,119
Receivable for capital shares sold 10,500
Dividends and interest receivable 328
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TOTAL ASSETS 19,621,873
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LIABILITIES
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Payable for securities purchased 757,111
Payable for capital shares redeemed 14,304
Payable to affiliate (Note 5) 31,138
Accrued expenses 135
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TOTAL LIABILITIES 802,688
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NET ASSETS $ 18,819,185
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Net assets consist of:
Paid in capital $ 91,432,649
Accumulated net realized losses
from security transactions (73,362,554)
Net unrealized appreciation on investments 749,090
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NET ASSETS $ 18,819,185
=============
Shares of beneficial interest issued and outstanding
(unlimited number of shares authorized, without
par value) 2,172,477
=============
Net asset value and offering price per share $ 8.66
=============
Minimum redemption price per share* $ 8.49
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*The Fund will impose a 2.00% redemption fee on shares redeemed within
90 calendar days of purchase.
(see accompanying notes to financial statements)
6
*
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STATEMENT OF OPERATIONS
For the Year Ended December 31, 2009
BERKSHIRE
FOCUS FUND
INVESTMENT INCOME
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Interest $ 705
Dividends 68,089
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TOTAL INVESTMENT INCOME 68,794
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EXPENSES
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Investment advisory fees (Note 5) 204,044
Administrative fees (Note 5) 68,015
Interest expense 221
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TOTAL EXPENSES 272,280
-------------
NET INVESTMENT LOSS (203,486)
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REALIZED AND UNREALIZED
GAINS ON INVESTMENTS
- ---------------------------------------------------------------------
Net realized gains from security transactions 3,060,256
Net change in unrealized appreciation on investments 4,580,839
------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS 7,641,095
------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $ 7,437,609
=============
(see accompanying notes to financial statements)
7
*
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STATEMENTS OF CHANGES IN NET ASSETS - BERKSHIRE FOCUS FUND
For the Years Ended December 31, 2009 and December 31, 2008
Year Year
Ended Ended
12/31/09 12/31/08
FROM OPERATIONS:
- ----------------------------------------------------------------------------------------------
Net investment loss $ (203,486) $ (240,974)
Net realized gains (losses) from security transactions 3,060,256 (6,459,171)
Net change in unrealized appreciation
(depreciation) on investments 4,580,839 (5,248,758)
--------------------------------
Net increase (decrease) in net assets from operations 7,437,609 (11,948,903)
--------------------------------
FROM CAPITAL SHARE TRANSACTIONS:
- ----------------------------------------------------------------------------------------------
Proceeds from shares sold 9,129,841 6,922,408
Proceeds from redemption fees (Note 6) 23,714 26,136
Payments for shares redeemed (5,175,787) (9,121,317)
--------------------------------
Net increase (decrease) in net assets from
capital share transactions 3,977,768 (2,172,773)
--------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 11,415,377 (14,121,676)
- ----------------------------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------------------------
Beginning of period 7,403,808 21,525,484
--------------------------------
End of period $ 18,819,185 $ 7,403,808
================================
Accumulated undistributed net investment income: $ - $ -
================================
CAPITAL SHARE ACTIVITY:
- ----------------------------------------------------------------------------------------------
Shares sold 1,348,042 806,142
Shares redeemed (746,190) (1,187,099)
--------------------------------
Net increase (decrease) in shares outstanding 601,852 (380,957)
Shares outstanding, beginning of period 1,570,625 1,951,582
--------------------------------
Shares outstanding, end of period 2,172,477 1,570,625
================================
(see accompanying notes to financial statements)
8
*
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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
12/31/09 12/31/08 12/31/07 12/31/06 12/31/05
NET ASSET VALUE,
BEGINNING OF PERIOD $ 4.71 $ 11.03 $ 7.93 $ 7.61 $ 6.59
- -------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
- -------------------------------------------------------------------------------------------------------------
Net investment loss(A) (0.09) (0.16) (0.15) (0.02) (0.14)
Net realized and unrealized gains
(losses) on investments 4.03 (6.17) 3.25 0.34 1.16
-----------------------------------------------------------------
Total from investment operations 3.94 (6.33) 3.10 0.32 1.02
-----------------------------------------------------------------
Proceeds from redemption fees 0.01 0.01 - - -
-----------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $ 8.66 $ 4.71 $ 11.03 $ 7.93 $ 7.61
=============================================================================================================
TOTAL RETURN(B) 83.86% (57.30%) 39.09% 4.20% 15.48%
=============================================================================================================
SUPPLEMENTAL DATA AND RATIOS:
- -------------------------------------------------------------------------------------------------------------
Net assets at end of period
(thousands) $ 18,819 $ 7,404 $ 21,525 $ 14,431 $ 22,291
Ratio of expenses to average
net assets 2.00%(G) 2.00%(F) 2.00%(E) 2.00%(D) 2.00%(C)
Ratio of net investment loss
to average net assets (1.50%) (1.68%) (1.94%) (0.21%) (1.99%)
Portfolio turnover rate(H) 833.0% 539.9% 446.6% 386.2% 284.1%
(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, 2005 the ratio of expenses to average net assets excludes
interest expense. The ratio including interest expense would be 2.02%.
(D) 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%.
(E) For the year ended December 31, 2007 the ratio of expenses to average net assets excludes
interest expense. The ratio including interest expense would be 2.01%.
(F) For the year ended December 31, 2008 the ratio of expenses to average net assets excludes
interest expense. The ratio including interest expense would be 2.01%.
(G) For the year ended December 31, 2009 the ratio of expenses to average net assets excludes
interest expense. The ratio including interest expense would be 2.00%.
(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, 2009
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 t he 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 accordance with U.S. generally accepted accounting principles ("GAAP"),
fair value is defined as the price that the Fund would receive to sell an
investment or pay to transfer a liability in an orderly transaction with an
independent buyer in the principal market, or in the absence of a principal
market the most advantageous market for the investment or liability. GAAP
establishes a three-tier hierarchy to distinguish between (1) inputs that
reflect the assumptions market participants would use in pricing an asset or
liability developed based on market data obtained from sources independent of
the reporting entity (observable inputs) and (2) inputs that reflect the
reporting entity's own assumptions about the assumptions market participants
would use in pricing an asset or liability developed based on the best
information available in the circumstances (unobservable inputs) and to estab-
lish classification of fair value measurements for disclosure purposes.
Various inputs are used in determining the value of the Fund's investments.
The inputs are summarized in the three broad levels listed below:
Level 1 - quoted prices in active markets for identical investments.
Level 2 - other significant observable inputs (including quoted prices for
similar investments, interest rates, prepayment speeds, credit risk, etc.).
Level 3 - significant unobservable inputs (including the Fund's own assump-
tions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities.
10
*
-------------------------------
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
The following table summarizes the valuation of the Fund's investments by the
above fair value hierarchy levels as of December 31, 2009:
Level 1 Level 2 Level 3 Total
- ------------------------------------------------------------------------------
Common Stocks
Internet Software & Services $ 7,316,060 - - $ 7,316,060
Computer Hardware 3,899,298 - - 3,899,298
Semiconductors 3,129,680 - - 3,129,680
Software 923,877 - - 923,877
Storage Devices 756,267 - - 756,267
Communications 705,367 - - 705,367
Networking & Telecom Equipment 35,577 - - 35,577
Communications Equipment 2,844 - - 2,844
------------------------------------------
Total Common Stocks 16,768,970 - - 16,768,970
Exchange Traded Funds 1,921,948 - - 1,921,948
Cash Equivalent 163,008 - - 163,008
------------------------------------------
Total Investments $ 18,853,926 - - $ 18,853,926
- ------------------------------------------------------------------------------
Subsequent events evaluation - In preparing these financial statements, the
Fund has evaluated events and transactions for potential recognition or dis-
closure through March 1, 2010, the date the financial statements were avail-
able to be issued.
Investment income - Dividend income is recorded on the ex-dividend date.
Interest income is accrued as earned.
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 GAAP.
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
GAAP 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.
11
*
-------------------------------
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
As of and during the year ended December 31, 2009 the Fund did not have a
liability for any unrecognized tax benefits. The Fund recognizes interest and
penalties, if any, related to unrecognized tax benefits as income tax expense
on the statement of operations. During the year, the Fund did not incur any
interest or penalties. The Fund is not subject to examination by U.S. federal
tax authorities for tax years before 2006.
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
permanent in nature, they are reclassified in the components of the net assets
based on their ultimate characterization for federal income tax purposes. Any
such reclassifications will have no effect on net assets, results of opera-
tions or net asset value per share of the Fund. For the year ended December
31, 2009, the Fund increased accumulated net investment loss by $203,486,
increased accumulated net realized losses from security transactions by
$290,241,217 and decreased paid in capital by $290,444,703.
3. Investment Transactions
Purchases and sales of investment securities (excluding short-term
instruments) for the year ended December 31, 2009 were $115,103,732 and
$111,434,347, respectively. There were no purchases or sales of U.S. Govern-
ment securities for the Fund.
4. Tax Information
As of December 31, 2009, the components of accumulated earnings (deficit) on a
tax basis were as follows:
Federal income tax cost $ 18,118,261
==================================================
Gross unrealized appreciation $ 915,384
Gross unrealized depreciation (179,719)
--------------------------------------------------
Net unrealized appreciation 735,665
--------------------------------------------------
Undistributed ordinary income 0
--------------------------------------------------
Accumulated losses (73,349,129)
--------------------------------------------------
Total accumulated losses $ (72,613,464)
==================================================
12
*
-------------------------------
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
The cost basis of investments for tax and financial reporting purposes differs
primarily due to the deferral of capital losses from wash sales.
There were no distributions paid during the year ended December 31, 2009 or
the year ended December 31, 2008.
At December 31, 2009, the Fund had the following capital loss carryforwards
for tax purposes:
Capital Loss Carryforward Date of Expiration
----------------------------------------------------
$ 5,953,640 12/31/16
$ 542,380 12/31/12
$ 10,452,456 12/31/11
$ 56,400,653 12/31/10
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.
5. 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 $2,359 in Trustee fees and expenses directly by
Berkshire Capital during the year ended December 31, 2009.
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 holi-
days) at a rate of 1.50% per annum of the daily net assets of the Fund. Under
the Administration Agreement, Berkshire Capital renders all administrative
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, 2009, Berkshire Capital was paid an investment
advisory fee of $204,044 and an administration fee of $68,015 from the Fund.
The amount due to Berkshire Capital for these fees at December 31, 2009
totaled $31,138.
13
*
-------------------------------
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
6. Redemption Fee
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. For the year ended
December 31, 2009, proceeds from redemption fees were $23,714.
7. Beneficial Ownership
The 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. At December 31,
2009, Charles Schwab & Co. and National Financial Services Corp. owned 32.83%
and 26.33% of the Fund, respectively.
14
*
-------------------------------------------------
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,
including the portfolio of investments, of Berkshire Focus Fund (the "Fund"),
a series of The Berkshire Funds, as of December 31, 2009, 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 the finan-
cial highlights for each of the five years in the period then ended. These
financial statements and financial highlights are the responsibility of Fund
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
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 audit 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, 2009 by correspondence
with the custodian and broker. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as eval-
uating 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, 2009, the results of its operations
for the year then ended, the changes in its net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended, in conformity with accounting principles
generally accepted in the United States of America.
Cohen Fund Audit Services, Ltd.
Westlake, Ohio
March 1, 2010
15
*
-------------------------------
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, 2009 and held through
December 31, 2009.
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%
16
*
-------------------------------
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, 2009 to
July 1, 2009 December 31, 2009 December 31, 2009
------------ ----------------- -----------------
Actual $1,000.00 $1,288.70 $11.54
Hypothetical $1,000.00 $1,015.02 $10.16
(5% annual return
before expenses)
*Expenses are equal to the Fund's annualized expense ratio of 2.00%,
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, 2009 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).
17
*
-------------------------------
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: 45 Officer and United States
Chief Financial Natural Gas
Officer Fund, United
States 12 Month
Oil Fund, United
States Gasoline
Fund, United
States Heating
Oil Fund, United
States Short Oil
Fund, United
States 12 Month
Natural Gas Fund
- --------------------------------------------------------------------------------------------------------------
*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.
DISINTERESTED 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: 71
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: 44
- --------------------------------------------------------------------------------------------------------------
*Elesco Ltd. provides consulting services for corporations and government agencies in the field of
land-use management.
18
*
-------------------------------
ADDITIONAL INFORMATION
(unaudited)
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
At an in-person meeting held on December 19, 2009, 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 approp-
riate 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 2nd 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 inten-
sive 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.
19
*
-------------------------------
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 in particular the strong investment performance delivered
by the Adviser to the Fund over the past 1-year, 3-year and 5-year periods
relative to its Lipper, Inc. peer group universe. They also took into consid-
eration that the Fund tends to outperform its benchmarks in up markets and
underperform in down markets. Based on this review, the Trustees concluded
that the current and historical 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.
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
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.
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 12/31/2009 FYE 12/31/2008
---------------------------------------------------------------------
Audit Fees $10,500 $10,500
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 12/31/2009 FYE 12/31/2008
---------------------------------------------------------------------
Registrant $0 $0
Registrant's Investment Adviser $0 $0
---------------------------------------------------------------------
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable to registrants who are not listed issuers (as
defined in Rule 10A-3 under the Securities Exchange Act of 1934).
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 reviewed the Registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment
Company Act of 1940 (the "Act")) as of a date within 90 days of
the filing of this report, as required by Rule 30a-3(b) under the
Act and Rules 13a-15(b) or 15d-15(b) under the Securities Ex-
change Act of 1934. Based on this review, such officer has con-
cluded that the disclosure controls and procedures are effective
in ensuring that information required to be disclosed in this re-
port is appropriately recorded, processed, summarized and report-
ed and made known to them by others within the Registrant and by
the Registrant's service provider.
(b) There were no changes in the Registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act)
that occurred during the second fiscal quarter of the period
covered by this report that have materially affected, or are rea-
sonably likely to materially affect, the Registrant's internal
control over financial 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) A separate certification for each principal executive and
principal financial officer 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, 2010
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, 2010
THE BERKSHIRE FUNDS
EXHIBIT INDEX FOR FORM N-CSR
AS FILED ON MARCH 1, 2010
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