The Apex Mid Cap Growth Fund
Soundview Plaza, 1266 East Main Street
Stamford, CT 06902
Telephone (800) 446-2987
ANNUAL REPORT, JULY 31, 1998
September 25, 1998
Enclosed is the Annual Report of the Apex Mid Cap Growth Fund for the year
ending July 31, 1998. I am pleased to announce that the fund has done well
during a period of extremely difficult market conditions. To illustrate,
below is a table from USA TODAY published on September 23, 1998. As the
table below shows, Apex is at the top of the list of the top 14 performing
funds for the four-week period ended September 17, 1998 (source: Lipper
Analytical Services). Also note that Apex has a 12 month return of 7.5%
compared with a -5.7% return for the average general stock fund for the
same period. In light of difficult market conditions we anticipated early
in July of this year, we raised a great deal of cash in our portfolio.
As we go to press, the Greenspan Fed is considering cutting short-term
interest rates and, thereby, boosting economic growth. We are watching
this development carefully and are ready to take advantage of a rebound
in stock prices.
Now that the fund has started to do well, my goal is to continue to
maintain the good performance going forward. 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
From USA Today dated September 23, 1998
Category: Mid Cap Funds
--------- Total Return(1) ----------
Top funds 4 Weeks 1998 12-mos.
Apex Mid Cap Growth 2.7% 4.8% 7.5%
Anchor Captl Accumulation -3.5% 1.7% 2.3%
Artisan Mid Cap Fund -5.1% 2.8% 6.8%
Marshall Mid Cap Value -5.8% -7.3% -8.6%
Columbia Special Fund -6.0% -5.1% -9.5%
UAM Rice Hall/James Sm -6.1% -5.6% -6.0%
PBHG Mid Cap Value Fund -6.2% -0.3% 0.5%
Quaker Mid Cap Value Cap -6.2% -6.5% new
Centura Mid Cap Eqty -6.4% -5.3% -3.8%
Fountain Square Mid Cap -6.5% -12.8% -11.1%
One Group Disciplined Val -6.5% -9.3% -3.5%
Kayne Anderson Sm Mid -6.7% -2.8% -5.3%
Heritage Mid Cap Growth -6.7% -9.9% new
UAM C&B Mid Cap Equity -6.9% new new
Avg. General Stock Fund -8.6% -4.9% -5.7%
1- Cap. Gains and dividends reinvested thru. Sept. 17 Source: Lipper
Analytical Services
<TABLE>
THE APEX MID CAP GROWTH FUND
SCHEDULE OF INVESTMENTS REPORT DATE 31-Jul-98
<CAPTION>
CO. NAME Shares % MV Market Value
<S> <C> <C> <C>
Agouron Pharmaceuticals * 700 18,113
ICN Pharmaceuticals 750 21,281
Vivus * 1000 6,625
Noven Pharmaceuticals * 2000 12,000
TOTAL DRUG INDUSTRY 3.41 58,019
Smart Modular Technologies * 1000 19,125
Sequent Computer Systems * 1000 11,406
TOTAL COMPUTER & PERIP. 1.79 30,531
VIASOFT * 1000 12,875
TOTAL COMPUTER SOFTW & SVC 0.76 12,875
Zenith Electronics * 2000 1,140
TOTAL ELECTRONICS 0.07 1,140
Integrated Device Techno.* 1000 5,375
TOTAL SEMICONDUCTOR 0.32 5,375
Boeing 1000 38,813
TOTAL AEROSPACE / DEFENSE 2.28 38,813
CAI Wireless Systems * 5000 225
TOTAL TELECOM. EQUIPMENT 0.01 225
Sharper Image * 2000 10,750
CDnow * 1000 16,313
TOTAL RETAIL SPECIALTY 1.59 27,063
Imatron * 2000 4,876
TOTAL MEDICAL SUPPLIES 0.29 4,876
Noise Cancellation Tech * 3000 1,923
TeleVideo * 2500 2,813
Trimedyne * 5000 6,250
Camelton Corp. * 625 88
Vista 2000 Inc. * 4000 320
Applix * 3000 10,689
Sanctuary Woods Multimedia * 400 28
TOTAL MISCELLANEOUS 1.30 22,110
TOTAL COMMON STOCKS 11.80 201,022
Linear Technology -500 -29,907
TOTAL SEMICONDUCTOR -1.76 -29,907
Novellus Systems * -700 -27,475
TOTAL SEMICONDUCTOR CAP EQ -1.61 -27,475
Travelers Group -500 -33,625
TOTAL FINANCIAL SERVICES COMP. -1.97 -33,625
Infoseek * -1000 -24,875
RealNetworks * -1000 -29,688
Lycos * -500 -28,563
TOTAL INTERNET INDUSTRY -4.88 -83,126
TOTAL COMMON STOCKS - SHORT SELLS -10.22 -174,131
STAR BANK REPO'S 1331000 78.16 1,331,000
TOTAL SECURITY INVESTMENTS 79.74 1,357,891
TOTAL INVESTMENTS 79.74 1,357,891
OTHER ASSETS 20.26 345,102
NET ASSETS 100.00 1,702,993
<FN>
* Non - income producing securities PAGE: 2
</FN>
</TABLE>
THE APEX MID CAP GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES July 31, 1998 (AUDITED)
ASSETS
Investment Securities at Value $1,357,891
(Identified cost - $1,960,668) (Note 1)
Cash 200
Interest receivable 174
Due from broker - Short sales 378,955
Total Assets $1,737,220
LIABILITIES
Payables:
Accrued expenses $34,227
Total Liabilities ($34,227)
NET ASSETS (Equivalent to $7.53 per share based on 226,196
shares outstanding) $ 1,702,993
COMPOSITION OF NET ASSETS:
Paid in Capital $ 2,648,224
Distribution in excess of accumulated Net Realized gain (342,454)
Accumulated Net Investment Income --
Net Unrealized Depreciation of Investments (602,777)
Total Net Assets $1,702,993
STATEMENT OF OPERATIONS (AUDITED) FOR THE YEAR ENDED JULY 31,1998
INVESTMENT INCOME
Dividends $ 3,024
Interest 23,233
EXPENSES
Audit $ 4,000
Fund Accounting 11,175
Transfer Agent (Note 6) 7,560
Legal 5,000
Miscellaneous 500
Shareholder Report 1,800
Directors 12000
Registration 4,640
Organization (Note 5) 9,889
Insurance 1,458
Fund Administration (Note 4) 3,416
Custodian 7,000
Investment Advisor (Note 4) 17,082
Dividends on Short Sales 633
12b-1 Fees 4,256
Total Expenses ( 90,409)
Expense Reimbursement/ waived by Advisor (Note 4) 20,498
Expense net of Reimbursement/ waiver (69,911)
NET INVESTMENT LOSS $ ( 43,654)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net Realized Gain (Loss) on Investments $ 472,323
Change in Unrealized Appreciation (Depreciation) of
Investments (280,018)
NET REALIZED/UNREALIZED GAIN (LOSS) ON INVESTMENTS $192,305
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $148,651
See accompanying Notes to Financial Statements PAGE: 3
<TABLE>
THE APEX MID CAP GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS JULY 31,1998 (AUDITED)
<CAPTION>
For the For the
Year Ended Year Ended
July 31,1998 July 31, 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Net Investment Income/ (loss) $ (43,654) $ (75,923)
Net Realized Gain / (loss) on investment
Securities Sold 472,323 (198,579)
Net unrealized appreciation/(depreciation)
of Investments (280,018) 300,684
Net Increase (Decrease) in Net Assets Resulting from
Operations $ 148,651 $ 26,182
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Dividend distributions paid 75,923 83,993
Capital Gains 0 0
Total Distributions 75,923 83,993
CAPITAL SHARE TRANSACTIONS
Shares Sold 214,637 708,471
Shares issued in lieu of Cash Distributions (75,923) (83,993)
Cost of shares Redeemed (353,118) (896,690)
Increase (Decrease) in Net Assets Due to Capital
Share Transactions (214,404) (272,212)
TOTAL INCREASE (DECREASE) IN NET ASSETS 10,170 (162,037)
NET ASSETS BEGINNING OF PERIOD 1,692,823 1,854,860
NET ASSETS END OF PERIOD $ 1,702,993 $1,692,823
</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,
1998 1997 1996
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $6.93 $7.18 $9.71
Income/(Loss) from Investment Operations:
Net Investment Income/(Loss) (0.36) (0.33) (0.35)
Net Gain/(Loss) on Securities
(Both Realized and Unrealized) 1.58 0.44 (2.63)
Total from Investment Operations 1.22 0.11 (2.98)
Distributions:
Dividend Distributions Paid (0.62) (0.36) 0.45
Distributions from Capital Gains 0 0 0
Total Distributions (0.62) (0.36) 0.45
NET ASSET VALUE, END OF PERIOD $ 7.53 $ 6.93 $ 7.18
Total Return (Not Reflecting Sales Load) 8.66% (3.48)% (26.05)%
Ratios/Supplemental Data:
Net Assets, End of Period
(in thousands) $1,703 $1,693 $1,855
Ratios to Average Net Assets:
Expenses 5.26% 5.25% 2.52%
Net Investment Income/(Loss) (2.54)% (4.73)% (2.11)%
Effect of Reimbursements/Waivers
on Above Ratios 1.19% 1.21% 1.28%
Portfolio Turnover Rate 205.06% 275.55% 320.89%
Average Commission Rate Paid $/Share $0.0617 $ 0.06 $ 0.0413
<FN>
* Based on weighted average shares outstanding ** Not annualized
See accompanying Notes to Financial Statements PAGE: 4
</FN>
</TABLE>
THE APEX MID CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JULY 31, 1998
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, 1998 were as follows:
Shares Amount
Beginning Balance 244,425 $ 2,938,551
Shares Sold 29,035 214,637
Shares Issued in Reinvestment of Dividends 0 (75,923)
Shares Redeemed ( 47,264) ( 353,118)
Net Increase (Decrease) ( 18,229) ( 214,404)
Ending Balance 226,196 $2,724,147
3. INVESTMENTS
Purchases and sales of securities for the year ended July 31st,
1998 other than short-term securities, aggregated $2,311,033 and
$3,967,676, respectively. There were short sale transactions for
the year ended July 31, 1998 which aggregate $748,844 of
purchases and $754,543 of sales. The cost of securities is
substantially the same for Federal income tax purposes.
PAGE:5
For Federal income tax purposes:
Aggregate Cost $1,960,668
Gross Unrealized Appreciation 8,218
Gross Unrealized Depreciation (610,995)
Net Unrealized Depreciation ($602,777)
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. Securities sold short at July 31st,
1998 and their related market values and proceeds are set forth
in the Schedule of Securities Sold Short.
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, 1998 the Advisor elected to defer
the payment of Advisor fees payable in amount of $ 17,082. 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. 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.
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, 1998 the Administrator elected to defer the payment of
Administrative service fees payable in amount of $3,416.
From December 1, 1996, the 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 operation 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, 1998, the Fund has incurred distribution costs of $2,675
payable to Bhirud Associates, Inc.
7. TRANSACTIONS WITH AFFILIATES
During the six months ended January 31st, 1998 the Fund paid $3,268
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 $(43654) as of
July 31, 1998, 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:6
Report of Independent Certified Public Accountants'
The Shareholders and Board of Directors
Bhirud Funds, Inc.
We have audited the accompanying statement 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, 1998, 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 our audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatements. 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, 1998 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 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 Apex Mid Cap Growth Fund
at July 31, 1998, the results of its operations, changes in its
net assets and the financial highlights for the year then ended,
in conformity with generally accepted accounting principles.
Van Buren & Hauke, LLC
Certified Public Accountants
63 Wall Street, Suite 2501
New York, NY 10005
September 23, 1998
PAGE:7
THE APEX MID CAP GROWTH FUND
SOUNDVIEW PLAZA
1266 EAST MAIN STREET
STAMFORD, CT 06902
(800) 446 2987
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 $8,432 (as of July
31,1998). 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: 8
