The Bhirud Mid Cap Growth Fund
Soundview Plaza, 1226 East Main Street
Stamford, CT 06902 Telephone. (800) 424-2295
SEMI-ANNUAL REPORT
January 31,1996
March 1, 1996
Dear Shareholder:
We are pleased to present the semi-annual report of the Bhirud
Mid Cap Growth Fund, for the 6 months ending
January 31, 1996.
As of this writing the fund is up 6.2% this year and is
slightly outperforming the broader market averages. The
volatility of the technology sector took its toll on the fund's
performance in the 2nd half of 1995. As I have also pointed out
several times, during this market cycle the mid cap sector has
not done as well as the large cap stocks. In the long run,
however, the evidence is overwhelming that mid cap stocks out
perform the broader market averages.
The philosophy of the fund is to own stocks that are at the
cutting edge of technology in their respective businesses. The
fund is currently well diversified with exposure to
SEMICONDUCTORS, GOLD, SOFTWARE, BIOTECH, HEALTH CARE, AND
SELECTED CONSUMER GROWTH STOCKS.
INVESTMENT OUTLOOK: I remain extremely bullish on the stock
market. Although the DJIA is in record territory, the future
remains bright. There is a tendency to believe that since last
year was good for stocks, this year will not be so good.
History is replete with examples showing that when inflation
remains low, stocks continue to do well year after year. A good
case in point would be the performance of stocks in the 1950's.
While there is some confusion as to the economic outlook, the
economy continues to chug along at a modest 2% annual rate.
Inflation has remained in the low single digits. Rising
productivity is boosting corporate profitability. Interest rates
rose in the first two months of this year, however I expect
them to decline for the next few months as the inflation rate is
likely to remain low.
LIQUIDITY CONSIDERATIONS REMAIN IMPORTANT: Corporate cash flows
are strong. Stock buybacks and merger activity is reducing the
supply of stocks inspite of record IPO's and secondary
offerings. The demand for stocks from retail investors in the
form of cash flowing into equity mutual funds remains high.
The alternatives to stocks are a languishing real estate market
, 4.9% yield on 3 month CD's or 7% yield on Bonds. Also foreign
markets, especially emerging countries have proven to be
disastrous. In fact our stocks are benefiting from foreign
inflows due to the strong dollar and attractive valuations. I
would not be surprised to see the DJIA well over 7000 in the
foreseeable future.
TO SUM IT UP: In my view the outlook for stocks is bullish and
your fund is well positioned to take advantage of this trend.
While the fund may lag behind the market over short periods of
time, my goal is to manage the portfolio to produce consistently
superior returns over the long run.
Sincerely,
(Suresh L. Bhirud)
Chairman of the Board
<TABLE>
THE BHIRUD MID CAP GROWTH FUND
SCHEDULE OF INVESTMENTS REPORT DATE January 31, 1996
(UNAUDITED)
<CAPTION>
Ticker CO. NAME Shares % MV Cost Value Market Value
<S> <C> <C> <C> <C> <C>
PLACER DOME INC 6,000 157,545 168,750
AGNICO EAGLE MINES LTD 5,000 70,350 81,875
ASA LTD 4,000 160,280 186,000
HEMLO GOLD MINES INC 5,000 52,225 61,250
HOMESTAKE MNG CO 10,000 169,450 188,750
BARRICK GOLD CORP 5,000 143,475 146,875
TOTAL GOLD AND SILVER ORES 22.2 753,325 833,500
ROYAL OAK MINES INC * 5,000 21,550 21,875
TOTAL MNG, QUARRY NONMTL M 0.58 21,550 21,875
JOHNSON & JOHNSON 1,000 84,320 96,000
GENZYME CORP * 1,000 60,250 75,875
TOTAL PHARMACEUTICALS 4.58 144,570 171,875
BIOGEN INC * 1,000 64,250 70,250
TOTAL BIOLOGICAL PDS, EX DIA 1.87 64,250 70,250
FILA HLDGS S P A 1,000 50,039 48,500
NIKE INC 1,000 62,695 69,750
TOTAL RUBBER AND PLASTICS 3.15 112,734 118,250
ASARCO INC 1,000 35,070 31,750
TOTAL PRIM SMELT,REFIN NON 0.85 35,070 31,750
DATAWATCH CORP * 5,000 26,250 17,813
TOTAL ELECTRONIC COMPUTERS 0.47 26,250 17,813
SANCTUARY WOODS MULTMEDIA CP * 8,000 54,990 10,500
TOTAL COMPUTER STORAGE DEV 0.28 54,990 10,500
TELEVIDEO SYS INC * 10,000 12,050 7,500
TOTAL COMPUTER TERMINALS 0.2 12,050 7,500
MICRON ELECTRONICS INC * 1,000 26,563 10,250
GANDALF TECHNOLOGIESNC * 2,000 37,750 27,000
WESTERN DIGITAL CORP * 1,000 21,570 18,500
E M C CORP MASS * 6,000 105,795 114,750
TOTAL COMPUTER PERIPHERAL 4.54 191,678 170,500
TELEBIT CORP * 3,000 19,875 13,875
GLOBAL VLG COMMUNICATION * 3,000 43,875 48,000
DIGITAL SYS INTL INC * 5,000 53,750 64,375
TOTAL TELE & TELEGRAPH APP 3.36 117,500 126,250
DATA BROADCAS. CORP * 2,000 28,500 23,250
INTERDIGITAL COMM.N * 3,000 26,055 27,563
TOTAL RADIO,TV BROADCAST, 1.35 54,555 50,813
CHECKPOINT SYS INC * 2,000 55,890 77,750
TOTAL COMMUNICATIONS EQUIP 2.07 55,890 77,750
CHIPS & TECHNOLO. INC * 3,000 33,000 28,500
OAK TECHNOLOGY INC * 3,000 132,000 150,000
C-CUBE MICROSYS. INC * 1,000 57,675 60,000
BURR BROWN CORP * 2,000 74,000 54,000
SIERRA SEMICONDUCTOR * 3,000 54,750 50,250
LSI LOGIC CORP * 2,000 94,890 56,250
RAMTRON INTL CORP * 3,000 33,000 19,125
ESS TECHNOLOGY INC * 5,000 128,125 96,250
VISHAY INTERTECHNO.INC * 2,000 81,390 55,000
INTEGRATED DEVICE INC * 6,000 103,875 78,750
TOTAL SEMICONDUCTOR,RELATE 17.27 792,705 648,125
VISTA 2000 INC * 4,000 44,280 41,000
TOTAL ELECTRONIC COMPONENT 1.09 44,280 41,000
OAKLEY INC * 1,000 35,945 36,750
ADVANCED TECHNOLOGY * 1,000 26,675 27,250
TOTAL ELECTROMEDICAL APPAR 1.7 62,620 64,000
GALOOB LEWIS TOYS INC * 10,000 78,100 145,000
TOTAL GAMES,TOYS,CHLD VEH, 3.86 78,100 145,000
TRANS WORLD AIRLS INC * 5,000 48,080 50,000
U S AIR GROUP INC * 5,000 69,100 75,000
TOTAL AIR TRANSPORT, SCHED 3.33 117,180 125,000
JACO ELECTRS INC * 2,000 31,350 21,750
TOTAL ELECTRONIC PARTS,EQ- 0.58 31,350 21,750
EQUITY MARKETING INC * 6,000 75,375 83,250
TOTAL JEWELRY & WATCHES-WH 2.22 75,375 83,250
GRUPO TELEVISA S A 2,000 51,390 56,250
TOTAL RADIO,TV,CONS ELECTR 1.5 51,390 56,250
HOME SHOPPING NETWORK * 2,000 28,140 16,500
TOTAL CATALOG, MAIL-ORDER 0.44 28,140 16,500
CAMELOT CORP * 15,000 78,750 47,344
TOTAL SECURITY BROKERS & D 1.26 78,750 47,344
EPIC DESIGN TECHNOLOGY * 3,000 92,430 90,000
TOTAL COMPUTER PROGRAMMING 2.4 92,430 90,000
ACCLAIM ENTMT INC * 2,000 52,250 21,500
PROJECT SOFTWARE & INC * 2,000 61,120 71,000
AUTODESK INC 1,000 50,000 30,250
TOTAL PREPACKAGED SOFTWARE 3.27 163,370 122,750
NETWORK EQUIP TECHN. * 2,000 70,390 55,250
TOTAL CMP INTEGRATED SYS D 1.47 70,390 55,250
GUCCI GROUP N V * 3,000 114,585 121,875
GRUPO TRIBASA S A * 5,000 40,925 46,250
TOTAL OTHER 4.48 155,510 168,125
TOTAL COMMON STOCKS 90.38 3,485,999 3,392,969
- - - - - -
TOTAL INVESTMENTS 3,485,999 3,392,969
OTHER ASSETS (LESS LIABILITIES) 360,988 360988
- - - - - -
NET ASSETS 100 3,753,957
NET ASSETS VALUE PER SHARE 9.12
OFFERING PRICE PER SHARE 9.68
- - - - - -
<FN>
* Non - income producing securities
</FN>
</TABLE>
THE BHIRUD MID CAP GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS JANUARY 31,1996(UNAUDITED)
ASSETS
Investment Securities at Value $3,392,969
(Identified cost - $3,485,999) (Note 1)
Receivable Investment Securities Sold 307,873
Receivable From Advisor 0
Receivable for Fund Shares Sold 000
Due from Broker ------
Deferred organization expenses (Note 5) 0
Dividends receivable 0
Prepaid insurance 0
Other receivable 1119
Other Assets 119,148
Total Assets $3,821,109
LIABILITIES
Payables:
Investment Securities Purchases $ 0
Fund Shares Redeemed -31,453
Accrued Expenses 63,577
overdraft 35,028
Total Liabilities $ 67,152
NET ASSETS (Equivalent to $9.12 per share based
on 411,502 shares outstanding) $ 3,,753,957
COMPOSITION OF NET ASSETS:
Paid in Capital $ 4,641,534
Undistibuted net realized gain (loss) (632,059)
Accumulated Net Investment Income (loss) (162,488)
Net Unrealized Appreciation of Investments (93,030)
Total Net Assets $3,753,957
STATEMENT OF OPERATIONS (UNAUDITED) FOR THE 6 MONTHS ENDED JANUARY 31ST,1996
INVESTMENT INCOME
Dividends $ 12,896
EXPENSES
Audit $4,766
Fund Accounting 4,839
Transfer Agent (Note 6) 10,504
Legal 0
Miscellaneous 0
Shareholder Report 377
Directors 0
Registration 8,756
Organization (Note 5) 10,342
Insurance 2,600
Fund Administration (Note 4) 5,044
Custodian 3,932
Investment Advisor (Note 4) 25,218
12b-1 Fees 6,260
Total Expenses ( 82,638)
Expense Reimbursement/ waived by Advisor (Note 4) (24,372)
Expense net of Reimbursement/ waiver (58,266)
NET INVESTMENT LOSS $(45,370)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net Realized Gain(loss) on Investments $ 222,074
Change in Unrealized Appreciation of Investments $(470,371)
NET REALIZED/UNREALIZED (GAIN) ON INVESTMENTS $(248,298)
NET (INCREASE) IN NET ASSETS RESULTING FROM OPERATIONS $(293,667)
See accompanying Notes to Financial Statements PAGE: 4
<TABLE>
THE BHIRUD MID CAP GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS JANUARY 31,1996(UNAUDITED)
<CAPTION>
For the
Six Months For year
Ended Ended
January31,1996 July 31, 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Net Investment Income/ (loss) $ (45,370) $ (85,293)
Net Realized Gain / (loss) on
investment Securities Sold 222,074 (504,234)
Net unrealized appreciation/
(depreciation) of Investments (470,371) 1,105,777
Net Increase (Decrease) in Net
Assets Resulting from Operations$ (293,667) $ 516,250
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Dividend distirbutions paid 117,118 0
Capital Gains 00 (1,337,998)
Total Distributions 117,118 (1,337,998)
CAPITAL SHARE TRANSACTIONS
Shares Sold 113,462 1,235,531
Shares issued in lieu of Cash
Distributions (117,118) 1,330,680
Cost of shares Redeemed (2,655,335) (4,893,843)
Increase (Decrease) in Net Assets
Due to Capital Share Transactions (2,658,991) (2,307,632)
TOTAL INCREASE (DECREASE) IN
NET ASSETS (2,835,540) (3,129,380)
NET ASSETS BEGINNING OF PERIOD 6,589,497 9,718,877
NET ASSETS END OF PERIOD $ 3,753,957 $ 6,589,497
</TABLE>
<TABLE>
THE BHIRUD MID CAP GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS JANUARY 31,1996(UNAUDITED)
<CAPTION>
For the For For
Six the the
Months Year Year
Ended Ended Ended
January July July
31,1996 31, 1995 31, 1994
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.71 $10.50 $10.87
Income/(Loss) from Investment Operations:
Net Investment Income/(Loss) (0.12) (0.14) (0.04)*
Net Gain/(Loss) on Securities
Net Gain/(Loss) on Securities
(Both Realized and Urealized) (0.63) 0.86 (0.24)
Total from Investment Operations (0.75) 0.72 (0.28)
Distributions:
Dividend Distributions Paid 0.16 0.00 (0.09)
Distributions from Capital Gains 0.00 (1.51) 0.00
Total Distributions 0.00 (1.51) (0.09)
NET ASSET VALUE, END OF PERIOD $ 9.12 $ 9.71 $10.50
Total Return (Not Reflecting Sales Load) (6.07)% 9.51% (2.60)%
Ratios/Supplemental Data:
Net Assets, End of Period (in thousands) $3,754 $6,589 $9,719
Ratios to Average Net Assets:
Expenses 1.16% 2.68% 2.71%
Net Investment Income/(Loss) (0.90)% (1.02)% (0.36)%
Effect of Reimbursements/Waivers
on Above Ratios 0.48% 0.19% 0.71%
Portfolio Turnover Rate 208.12% 224.77% 276.26%
<FN>
* Based on weighted average shares outstanding ** Not annualized
See accompanying Notes to Financial Statements PAGE: 5
</FN>
</TABLE>
1. SIGNIFICANT ACCOUNTING POLICIES
Bhirud Funds, Inc. (the "Fund") is a diversified open-end
management investment company currently consisting of The Bhirud
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. 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 six month ended
January 31, 1996 were as follows:
Shares Amount
Beginning Balance 678,934 $ 7,300,525
Shares Sold 12,158 113,462
Shares Issued in Reinvestment of
Dividends 00 (117,118)
Shares Redeemed (279,590) (2,655,335)
Net Increase (267,432) (2,658,991)
Ending Balance 411,502 $4,641,534
3. INVESTMENTS
Purchases and sales of securities for the six month January
31st, 1996 other than short-term securities, aggregated
$ 9,616,166 and $12,026,933, respectively. The cost of
securities is substantially the same for Federal income tax
purposes.
For Federal income tax purposes:
Aggregate Cost $3,485,999
Gross Unrealized Appreciation 305,587
Gross Unrealized Depreciation (398,617)
Net Unrealized Appreciation ($93,030)
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.
For the six month ended January 31st, 1996, the Advisor was
entitled to fees of $25,218. The Advisor has voluntarily agreed
to reimburse the Fund in the event thatthe Fund's expenses
exceed certain prescribed limits. Reimbursements in the amount
of $24,372 were accrued during the six month ended January 31st,
1996. 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.
Currently, the most restrictive state limitation is 2.5% of the
first $30 million, 2% of the next $70 million and 1.5% of the
excess over $100 million of the average value of the Fund's net
assets. Pursuant to the provisions in the contract, expense
reimbursements were required for the six months ended January
31, 1996.
The Fund retained Bhirud Associates Incorporated ("BAI") to act
as Administrator for the Fund from
November 1, 1994. BAI provided management and administrative
services for the operation of the Fund and furnished office
space and facilities required for conducting the business of the
Fund. As compensation for their administrative services BAI was
paid a fee, computed daily and payable monthly, equal on an
annual basis to .20% of the Fund's aggregate average daily net
assets. For the six months ended January 31, 1996, BAI earned
administrative services fees of $5,044. From November 1, 1994
the Provident Bank has been providing custodian, fund
accounting, dividend and transfer agency functions for the Fund.
5. ORGANIZATION EXPENSES
The organization and start-up expenses of the Fund are being
amortized on a straight line basis over a period of 60 months.
The initial shareholder has agreed, in the event that any of the
initial 10,000 shares it owns are redeemed during the period of
amortization of the Fund's organization and start-up expenses,
the redemption proceeds will be reduced by any such unamortized
organizational expenses in the same proportion as the number of
shares being redeemed bears to the initial shares outstanding at
the time of redemption.
6. DISTRIBUTION PLAN
The Fund's Board of Directors has adopted a distribution plan
(the "Plan") under Section 12(b) of the Investment Company Act
of 1940 and Rule 12b-1 thereunder. The Plan provides that the
Portfolio may bear certain expenses and costs which in the
aggregate are subject to a maximum of 0.25% per annum of the
Portfolio's average daily net assets. For the six month ended
January 31st, 1996 the Fund has incurred distribution costs of
$5,379 payable to H. J. Meyers formerly Thomas James Associates,
Inc. and $571 payable to Bhirud Associates, Inc.
7. TRANSACTIONS WITH AFFILIATES
During the six month ended January 31st, 1996 the Fund paid no
brokerage commissions to Bhirud Associates, Inc.
8. RECLASSIFICATION OF CAPITAL ACCOUNTS
In accordance with recently approved accounting pronouncements,
the Fund recorded reclassifications in the capital accounts. The
Fund recorded permanent book/tax difference of $ (117,118) as of
July 31, 1995, 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 tax basis which is
considered to be more informative to the shareholder.
THE BHIRUD MID CAP GROWTH FUND
1266 EAST MAIN STREET, STAMFORD, CT 06902
Tel: (800) 424-2295
BOARD OF DIRECTORS
Suresh L. Bhirud Chairman of the Board; President of
Bhirud Associates, Inc.
Alexander N. Crowder, III Management Consultant
Michael Smith* General Counsel, H. J. Meyers & Co. 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
Michael Smith President & Secretary
Harish L. Bhirud Vice-President
Investment Advisor & Distributor Bhirud Associates, Inc.
Administrator Bhirud Associates, Inc.
Custodian Provident Bank
Legal Counsel Battle Fowler
Independent Auditors McCurdy & Associates CPA's,Inc.
