The Apex Mid Cap Growth Funds, Inc.
C/O Bhirud Funds Inc.
Soundview Plaza, 1266 East Main Street
Stamford, CT 06902
Telephone (877) 593-8637
ANNUAL REPORT, July 31, 1999
September 24, 1999
Enclosed is the Annual Report of the Apex Mid Cap Growth Fund
for the 12 months ending July 31, 1999.
We are happy to report that the fund is up 40% year to date
through July 31,1999, comparing very favorably with an 8% return
for the S&P 500 index and a 4% return for the S&P 400 mid cap
index. We continue to focus on unique growth ideas, potential
takeovers and special situations. Within the context of our mid
cap and growth themes, we continue invest in companies that are
on the cutting edge of their respective businesses and are
playing a prominent role in the new economy.
Throughout 1999 we found the stock market to be exceptionally
volatile as the all time high levels of the stock market created
debate regarding the valuation of stocks in general. However we
have also found that our unique approach to stock selection is
paying off, even in a sometimes difficult market environment.
Our focus continues to be on achieving superior returns and
protecting capital in the event of a correction. We are not
adverse to raising cash and pursuing a defensive strategy as,
for example, we did during the financial crisis of October 1998.
The fund continues to recover from a long slump. It has battled
back from unanticipated redemptions during the past several
years.
I want to thank you for your continued support of the Fund and
suggest that existing shareholders consider adding to their
positions. Please call us for a prospectus and application form.
Suresh L. Bhirud
Chairman of the Board
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<TABLE>
THE APEX MID CAP GROWTH FUND
SCHEDULE OF INVESTMENTS REPORT DATE 31-Jul-99
<CAPTION>
CO. NAME Shares % MV Market Value
<S> <C> <C> <C>
Immune Response * 8,000 48,872
ICN Pharmaceuticals 750 23,063
Noven Pharmaceuticals * 2,000 12,438
KeraVision * 2,000 44,250
TOTAL DRUG INDUSTRY 5.09 128,623
Titanium Metals 10,000 130,630
TOTAL ALUMINUM 5.17 130,630
Newbridge Networks * 3,000 81,375
3DO * 4,000 26,500
Sun Microsystems * 1,000 67,875
TOTAL COMPUTER & PERIP. 6.96 175,750
Checkfree Holdings * 500 14,782
SoftNet Systems * 500 12,313
Beyond.Com Corp. * 4,000 94,500
Smith Micro Software * 15,000 29,070
Bottomline Technologies * 1,700 67,575
Acclaim Entertainment * 4,000 27,252
Amazon.com * 500 50,032
Digital River Inc. * 1,700 38,675
TOTAL COMPUTER SOFTW & SVC 13.23 334,198
eBay * 500 48,844
Avid Technology * 1,000 13,344
Uniview Technologies * 10,000 18,440
TOTAL ELECTRONICS 3.19 80,628
Terayon Cpmmunications * 1,000 39,125
Copper Mountain Networks * 1,000 121,000
SpeedFam International * 4,000 39,376
TOTAL SEMICONDUCTOR 7.9 199,501
Summit Technology * 2,000 47,876
TOTAL PRECISION INSTRUMENT 1.89 47,876
Speedus.com * 5,000 28,125
Premiere Technologies * 4,000 36,752
IDT Corp * 4,000 79,000
TOTAL TELECOM. SERVICES 5.69 143,877
CIENA Corp. * 4,000 135,000
TOTAL TELECOM. EQUIPMENT 5.34 135,000
PAGE:2
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Egghead.com * 4,000 34,752
Cybershop Intl Inc. * 1,000 8,313
CDnow * 4,660 92,035
Bluefly * 1,000 12,500
ValueVision International A * 10,000 262,500
Insight Enterprises * 3,000 87,000
ONSALE * 2,000 32,376
Sharper Image * 3,000 30,750
UBID Inc. * 1,700 39,313
TOTAL RETAIL SPECIALTY 23.73 599,539
Hibernia 7,000 99,750
TOTAL BANKING 3.95 99,750
Data Broadcasting * 4,000 35,500
TOTAL FINANCIAL SERVICES 1.4 35,500
NetGravity * 1,000 21,563
TOTAL ADVERTISING 0.85 21,563
DRKOOP.Com Inc. * 2,000 44,500
TOTAL HEALTHCARE INFO SYS 1.76 44,500
Autobytel.com Inc. * 4,000 71,752
Cyberian Outpost Inc. * 11,000 118,250
PSINET * 1,000 51,719
Lycos * 2,000 82,626
Autoweb.com * 4,000 51,752
e.spire Communications * 3,000 30,000
TOTAL INTERNET INDUSTRY 16.07 406,099
TMP Worldwide * 500 23,469
Trimedyne * 15,000 43,590
Preview Travel Inc. * 3,000 70,125
Applix * 3,000 26,439
TOTAL DIVERSIFIED CO 6.48 163,623
TOTAL COMMON STOCKS 108.7 2,746,629
TOTAL INVESTMENTS 108.7 2,746,629
OTHER ASSETS (LESS LIABILITIES) -8.7 (219,832)
NET ASSETS 100 2,526,797
NET ASSETS VALUE PER SHARE 9.3
OFFERING PRICE PER SHARE 9.87
<FN>
* Non - income producing securities
See accompanying notes to financial statements PAGE:3
</FN>
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</TABLE>
THE APEX MID CAP GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES (AUDITED) FOR THE YEAR ENDED
July 31, 1999
ASSETS
Investment Securities at Value $2,746,629
(Identified cost - $3,430,566) (Note 1)
Dividends receivable 735
Prepaid Insurance 88
Total Assets $2,747,452
LIABILITIES
Payables:
Cash - Overdraft $ 21,714
To broker 169,029
Accrued expenses 29,912
Total Liabilities ($220,655)
NET ASSETS (Equivalent to $9.30 per share based
on 271,621 shares outstanding) $ 2,526,797
COMPOSITION OF NET ASSETS:
Paid in Capital $ 3,063,236
Distribution in excess of accumulated
Net Realized gain 147,498
Accumulated Net Investment Income --
Net Unrealized Depreciation of Investments (683,937)
Total Net Assets $2,526,797
STATEMENT OF OPERATIONS (AUDITED) FOR THE YEAR ENDED JULY 31,1999
INVESTMENT INCOME
Dividends $ 960
Interest 30,061
EXPENSES
Audit $ 4,000
Fund Accounting 9,664
Transfer Agent (Note 6) 5,115
Shareholder Report 150
Directors 12000
Insurance 1,258
Fund Administration (Note 4) 3,833
Custodian 6,600
Investment Advisor (Note 4) 19,167
Dividends on Short Sales 132
12b-1 Fees 4,739
Total Expenses ( 66,658)
Expense Reimbursement/ waived by Advisor (Note 4) 23,000
Expense net of Reimbursement/ waiver (43,658)
NET INVESTMENT LOSS $ ( 12,637)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net Realized Gain (Loss) on Investments $ 583,967
Change in Unrealized Appreciation (Depreciation)
of Investments (81,105)
NET REALIZED(UNREALIZED) GAIN (LOSS) ON INVESTMENTS $502,862
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $490,225
See accompanying Notes to Financial Statements PAGE: 4
<PAGE>
<TABLE>
THE APEX MID CAP GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS JULY 31,1999 (AUDITED)
<CAPTION>
For the For the
Year Ended Year Ended
July 31,1999 July 31, 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Net Investment Income/ (loss) $ (12,637) $ (43,654)
Net Realized Gain / (loss) on investment
Securities Sold 583,967 472,323
Net unrealized appreciation/(depreciation) of
Investments (81,105) (280,018)
Net Increase (Decrease) in Net Assets Resulting
from Operations $ 490,225 $ 148,651
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Dividend distributions paid (48,682) 75,923
Capital Gains (44,136) 0
Total Distributions (92,818) 75,923
CAPITAL SHARE TRANSACTIONS
Shares Sold 566,490 214,637
Shares issued in lieu of Cash Distributions 92,489 (75,923)
Cost of shares Redeemed (232,582) (353,118)
Increase (Decrease) in Net Assets Due to Capital
Share Transactions 426,397 (214,404)
TOTAL INCREASE (DECREASE) IN NET ASSETS 823,804 10,170
NET ASSETS BEGINNING OF PERIOD 1,702,993 1,692,823
NET ASSETS END OF PERIOD $ 2,526,797 $ 1,702,993
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD (AUDITED)
<CAPTION>
For the For the For the
Year Ended Year Ended Year Ended
July 31, July 31, July 31,
1999 1998 1997
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $7.53 $6.93 $7.18
Income/(Loss) from Investment Operations:
Net Investment Income/(Loss) (0.03) (0.36) (0.33)
Net Gain/(Loss) on Securities (Both
Realized and Unrealized) 1.40 1.58 0.44
Total from Investment Operations 1.37 1.22 0.11
Distributions:
Dividend Distributions Paid (0.21) (0.62) (0.36)
Distributions from Capital Gains (0.19) 0 0
Total Distributions (0.40) (0.62) (0.36)
NET ASSET VALUE, END OF PERIOD $ 9.30 $ 7.53 $ 6.93
Total Return (Not Reflecting Sales Load) 31.36% 8.66% (3.48)%
Ratios/Supplemental Data:
Net Assets, End of Period (in thousands) $2,527 $1,703 $1,693
Ratios to Average Net Assets:
Expenses 2.26% 5.26% 5.25%
Net Investment Income/(Loss) (0.66)% (2.54)% (4.73)%
Effect of Reimbursements/Waivers on
Above Ratios 1.19% 1.19% 1.21%
Portfolio Turnover Rate 405.39% 205.06% 275.55%
<FN>
* Based on weighted average shares outstanding ** Not annualized
</FN>
See accompanying Notes to Financial Statements PAGE: 5
<PAGE>
1. SIGNIFICANT ACCOUNTING POLICIES
Bhirud Funds, Inc. (the "Fund") is a diversified open-end
management investment company currently consisting of The Apex
Mid Cap Growth Fund portfolio (the "Portfolio"). The Fund was
incorporated in Maryland on May 27, 1992. Prior to November 4,
1992 (commencement of operations), the Fund had no operations
other than the sale of 10,000 shares of stock on August 4, 1992
at a cost of $100,000 to Thomas James MidCap Partners
representing the initial capital. The following is a summary of
significant accounting policies followed by the Fund:
SECURITY VALUATION
Readily marketable portfolio securities listed on the New York
Stock Exchange are valued at the last sale price reflected at
the close of the regular trading session of the New York Stock
Exchange on the business day as of which such value is being
determined. If there has been no sale on such day, the
securities are valued at the mean of the closing bid and asked
prices on such day. If no bid or asked prices are quoted on
such day, then the security is valued by such method as the
Board of Directors shall determine in good faith to reflect its
fair value. Readily marketable securities not listed on the New
York Stock Exchange but listed on other national securities
exchanges or admitted to trading on the National Association of
Securities Dealers Automated Quotations, Inc. ("NASDAQ")
National List are valued in like manner. Portfolio securities
traded on more than one national securities exchange are valued
at the last price on the business day as of which such value is
being determined as reflected on the tape at the close of the
exchange representing the principal market for such securities.
Readily marketable securities traded in the over-the-counter
market, including listed securities whose primary market is
believed by the Advisor to be over-the-counter but excluding
securities admitted to trading on the NASDAQ National List, are
valued at the mean of the current bid and asked prices as
reported by NASDAQ or, in the case of securities not quoted by
NASDAQ, the National Quotation Bureau or such other comparable
sources as the Board of Directors deem appropriate to reflect
their fair value.
United States Government obligations and other debt instruments
having sixty days or less remaining until maturity are stated at
amortized cost. Debt instruments having a greater remaining
maturity will be valued at the highest bid price obtained from a
dealer maintaining an active market in that security or on the
basis of prices obtained from a pricing service approved as
reliable by the Board of Directors.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are accounted for on the dates the
securities are purchased or sold (the trade dates), with
realized gain and loss on investments determined by using
specific identification as the cost method. Interest income
(including amortization of premium and discount, when
appropriate) is recorded as earned. Dividend income and
dividends and capital gain distributions to shareholders are
recorded on the ex-dividend date.
FEDERAL INCOME TAXES
The Fund intends to qualify as a "regulated investment company"
under Subchapter M of the Internal Revenue Code and distribute
all of its taxable income to its shareholders. Therefore, no
federal income tax provision is required.
2. CAPITAL STOCK TRANSACTIONS
The Articles of Incorporation, dated May 27, 1992, permit the
Fund to issue twenty billion shares (par value $0.001).
Transactions in shares of common stock for the year ended July
31, 1999 were as follows:
Shares Amount
Beginning Balance 226,196 $ 2,724,147
Shares Sold 62,348 566,490
Shares Issued in Reinvestment
of Dividends 14,871 92,489
Shares Redeemed ( 31,794) ( 232,582)
Reclassification of Capital
Account Note#8 0 (43,654)
Net Increase (Decrease) 45,425 382,743
Ending Balance 271,621 $3,106,890
3. INVESTMENTS
Purchases and sales of securities for the year ended July 31st,
1999 other than short-term securities, aggregated $8,593,435 and
$6,770,970, respectively. There were short sale transactions for
the year ended July 31, 1999 which aggregate $1,368,834 of
purchases and $974,363 of sales. The cost of securities is
substantially the same for Federal income tax purposes.
For Federal income tax purposes:
Aggregate Cost $3,430,566
Gross Unrealized Appreciation 294,819
Gross Unrealized Depreciation (978,756)
Net Unrealized Depreciation ($683,937)
Short-Selling. The Fund is engaged in short selling which
obligates the Fund to replace the security borrowed by
purchasing the security at current market value. The Fund would
incur a loss if the price of the security increases between the
date of the short sale and the date on which the Fund replaces
the borrowed security. The Fund would realize a gain if the
price of the security declines between those dates. Until the
Fund replaces the borrowed security, the Fund will deposit
collateral with the broker-dealer, usually cash, U.S. government
securities, or other highly liquid securities, sufficient to
cover its short position.
4. INVESTMENT ADVISORY CONTRACT
The Fund employs Bhirud Associates, Incorporated (the "Advisor")
to provide a continuous investment program for the Fund's
portfolio, provide all facilities and personnel, including
Officers required for its administrative management, and to pay
the compensation of all Officers and Directors of the Fund who
are affiliated with the Advisor. As compensation for the
services rendered and related expenses borne by the Advisor, the
Fund pays the Advisor a fee, computed and accrued daily and
payable monthly, equal to 1.00% of the first $250 million of the
average net assets of the Portfolio; 0.75% of the average net
assets of the Portfolio between $250 and $500 million; and 0.65%
of the average net assets of the Portfolio over $500 million.
The Advisor has voluntarily agreed to reimburse the Fund in the
event the Fund's expenses exceed certain prescribed limits.
During the year ended July 31, 1999 the Advisor elected to defer
the payment of Advisory fees payable in amount of $ 19,167. The
Advisor has voluntarily agreed to waive these fees, considering
the small assets of the Fund. The Advisory and Administrative
Services Contracts provide that if, in any fiscal year, the
aggregate expenses of a Fund, excluding interest, taxes,
brokerage and extraordinary expenses, but including the Advisory
and Administrative Services fees, exceed the expense limitation
of any state in which the Trust is registered for sale, the
Funds may deduct from fees paid to the Advisor and Administrator
their proportionate share of such excess expenses to the extent
of the fees payable. As a result of the passage of the National
Securities Markets Improvement Act of 1996, all state expenses
limitations have been eliminated at this time.
The Fund retained Bhirud Associates, Inc. ("BAI") to act as
Administrator for the Fund from November 1, 1994. BAI provided
administrative services for the Fund. During the year ended July
31, 1999 the Administrator elected to defer the payment of
Administrative service fees payable in amount of $3,833.
From December 1, 1996, the Firstar Bank, N.A. (formerly "Star Bank N.A.>)
has been providing custodian services and fund accounting, and transfer
agency functions are provided by American Data Services for the Fund
until January 31st, 1998. From February 1st, 1998, the Mutual
Shareholders Services, Inc. has been providing fund accounting,
and transfer agency functions.
5. ORGANIZATION EXPENSES
The organizational expense was amortized over the first five
years of the Fund's operations and is now zero going forward.
6. DISTRIBUTION PLAN
The Fund's Board of Directors has adopted a distribution plan
(the "Plan") under Section 12(b) of the Investment Company Act
of 1940 and Rule 12b-1 thereunder. The Plan provides that the
Portfolio may bear certain expenses and costs which in the
aggregate are subject to a maximum of 0.25% per annum of the
Portfolio's average daily net assets. For the year ended July
31st, 1999, the Fund has incurred distribution costs of $4,657
payable to Bhirud Associates, Inc.
7. TRANSACTIONS WITH AFFILIATES
During the year ended July 31st, 1999 the Fund paid $24,380
brokerage commissions to Bhirud Associates, Inc.
8. RECLASSIFICATION OF CAPITAL ACCOUNTS
In accordance with generally accepted accounting principals, the
Fund recorded reclassifications in the capital accounts. The
Fund recorded a permanent book/tax difference of $( 12,637) as
of July 31, 1999, from undistributed net investment income to
paid in capital. These reclassifications have no impact on net
asset value of the Fund and are designed generally to present
undistributed income and realized gains on a tax basis which is
considered to be more informative to the shareholder.
PAGE: 8
<PAGE>
Report of Indedependent Certified Public Accountants'
Shareholders and Board of Directors
Bhirud Funds, Inc.
We have audited the accompanying statements of assets and
liabilities of the Apex Mid Cap Growth Fund (a portfolio of
Bhirud Funds, Inc.), including the portfolio of investments, as
of July 31, 1999, and the related statement of operations, the
statement of changes in net assets, and financial highlights for
the year then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial
statements and financial highlights based on our audit. The financial
statements and financial highlights of the Apex Mid Cap Growth
Fund (formerly known as the Bhirud Mid Cap Growth Fund) (a
portfolio of Bhirud Funds, Inc.) as of July 31, 1995 and 1994,
and for the years then ended, were audited by other auditors
whose reports dated August 31, 1995 and September 7, 1994,
respectively, expressed unqualified opinions on those financial
highlights.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of July 31, 1999 by correspondence with the
custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly in all material
respects, the financial position of the Apex Mid Cap Growth Fund
at July 31, 1999, the results of its operations and changes in
net assets and financial highlights for the year then ended in
conformity with generally accepted accounting principles.
September 15, 1999
PAGE: 9
<PAGE>
THE APEX MID CAP GROWTH FUND
c/o Bhirud Funds Inc.
1266 EAST MAIN STREET
STAMFORD, CT 06902
(877) 593 8637
BOARD OF DIRECTORS
Suresh L. Bhirud* Chairman of the Board;President of
Bhirud Associates, Inc.
Alexander N. Crowder, III Management Consultant
Harish L. Bhirud* Bhirud Funds Inc.
M. John Sterba, Jr. Chairman of Investment
Management Advisors, Inc.
Tim Fenton Partner, Fenton & Zelenetz, Inc.
* "Interested person" as defined in the Investment Company Act of 1940.
OFFICERS
Suresh L. Bhirud* Chairman of the Board & Treasurer
Harish L. Bhirud* Vice-President
Investment Advisor & Distributor Bhirud Associates, Inc.
Administrator Bhirud Associates, Inc.
Custodian Star Bank, N.A.
Legal Counsel Battle Fowler
Independent Auditors Van Buren & Hauke, LLC
The Apex Mid Cap Growth Fund
The line graph below shows how a $10,000 investment in the Fund
made on December 23,1992 (the date the fund began to invest in
assets other than cash or cash equivalents in accordance with
its investment objectives) would have become $11,077 (as of July
31,1999). The line graph shows how this compares to the
broad-based Standard & Poor's 500 Index and the Fund's
benchmark, the Standard & Poor's MidCap 400 Index, over the same
period.
[Graph]
The line graph includes the initial sales charge (the maximum
sales load of 5.75%) on the Fund (no comparable charge exists
for the Standard & Poor's indices). All Fund performance numbers
represent past performance numbers, and are no guarantee of
future results.
Page: 10
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