The Apex Mid Cap Growth Fund
C/O Bhirud Funds Inc.
Soundview Plaza, 1266 East Main Street
Stamford, CT 06902
Telephone (877) 593-8637
SEMI ANNUAL REPORT
JANUARY 31, 2000
March 21, 2000
Enclosed is the Semi-Annual Report of the Apex Mid Cap Growth Fund for the six
months ending January 31, 2000.
The fund had a flying start in 2000, up 19.6% for the first two months ending
February 29, 2000 compared with a (-6.8)% return for the S&P 500 index and 4.0%
for the S&P Mid-Cap 400 index. For calendar year 1999, the fund was up 42%
compared with 20% for the S&P 500 index and 13% for the S&P Mid-Cap 400 index.
We have been excited about the continued economic growth and persistent low
inflation. It is not a surprise that stock market continues to trend up inspite
of negatives such as very high equity valuations and attempts by the Greenspan
Fed to slow the economy. It is out view that as long as inflation remains low,
stocks will continue to march up. THE NEW ERA THEME FOR THE ECONOMY is clearly
not just a fad or a clich. In our view the Internet revolution is still in its
infancy. Its potential to change how consumers and businesses make their basic
day-to-day decisions cannot be overemphasized. As far as productivity goes the
best is yet to come. So inflation in the long run should remain low, although on
short-term basis it can always bump up occasionally
Our focus continues to be on identifying unique growth ideas with special
emphasis on companies that benefit from new economy, particularly in the
Internet, technology, and telecom industries. We believe that with the DJIA at
close to the 11,000 level the overall market is not cheap and the big returns
going forward are going to come from creative stock selection. We continue to
position the Apex Mid Cap Growth Fund to achieve superior long-term returns.
I want to thank you for your 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
The Apex Mid Cap Growth Fund
Schedule of Investments report Date January 31st , 2000
Ticker CO. NAME Shares % MV Market
Value
KeraVision * 5000 50000
Noven Pharmaceuticals * 2000 32250
Immune Response * 8000 60000
ICN Pharmaceuticals 750 18844
TOTAL DRUG INDUSTRY 6.85 161094
Datalink Corp * 1000 19750
Xerox 2000 41750
TOTAL OFFICE EQUIP & SUP 2.61 61500
Cobalt Networks Inc. * 500 39250
Learn2.com * 2000 15500
TOTAL COMPUTER & PERIP. 2.33 54750
Acclaim Entertainment * 4000 12500
SoftNet Systems * 500 16344
Connectinc.com * 3000 8109
Digital Insight Corporation * 1000 42875
CityView Energy * 5000 7500
ESPS Inc. * 2000 9250
Backweb Technologies * 1000 35000
Centura Software * 5000 35938
Smith Micro Software * 15000 58125
Microware Systems * 3000 14250
Bottomline Technologies * 1700 53444
Digital River Inc. * 1700 44413
Beyond.Com Corp. * 4000 25063
TOTAL COMPUTER SOFTW & SVC 15.42 362809
Paradyne Networks * 1000 27000
PLX Technology * 1000 21875
Uniview Technologies * 10000 43125
eBay * 400 60025
Creative Technology 500 8469
Avid Technology * 1000 12813
TOTAL ELECTRONICS 7.37 173306
Advanced Micro Devices * 1000 36250
Terayon Cpmmunications * 500 53500
Cirrus Logic * 500 6844
TOTAL SEMICONDUCTOR 4.11 96594
Autobytel.com Inc. * 2000 21875
Autoweb.com * 4000 36500
TOTAL AUTO & TRUCK 2.48 58375
4 Kids Entertainment * 500 11563
TOTAL TOYS 0.49 11563
Internet Gold-Golden Lines * 1000 19625
Wireless Facilities Inc. * 1000 50375
Speedus.com * 5000 23750
Premiere Technologies * 4000 28250
Korea Thrunet Co. Ltd * 300 13444
TOTAL TELECOM. SERVICES 5.76 135444
Telular Corporation * 4000 76000
TOTAL TELECOM. EQUIPMENT 3.23 76000
Cyberian Outpost Inc. * 11000 101750
TOTAL RETAIL STORE 4.33 101750
Toys 'R' Us * 2000 20625
Egghead.com * 4260 48990
Priceline.com * 1000 58000
Cybershop Intl Inc. * 1000 5500
Garden.com Inc. * 2000 16500
CDnow * 660 7590
TOTAL RETAIL SPECIALTY 6.68 157205
Mortgage.com Inc. * 4000 21750
Data Broadcasting * 4000 33000
TOTAL FINANCIAL SERVICES 2.33 54750
Wit Capital Group * 2000 25750
TOTAL SECURITIES BROKERAGE COMP. 1.09 25750
Rare Medium Group * 1000 35875
Rainmaker Systems Inc. * 1000 14313
TOTAL INDUSTRIAL SERVICES 2.13 50188
Topjobs.net PLC * 2000 22250
Jupiter Communications Inc. * 1000 25000
TOTAL ADVERTISING 2.01 47250
DRKOOP.Com Inc. * 2000 27250
Healtheon * 2000 130000
TOTAL HEALTHCARE INFO SYS 6.68 157250
Mattel 3000 31313
TOTAL RECREATION 1.33 31313
CareMatrix * 5000 10625
TOTAL MEDICAL SERVICES 0.45 10625
Imatron * 20000 61250
Trimedyne * 15000 41250
TOTAL MEDICAL SUPPLIES 4.36 102500
Pacific Internet * 1000 64500
Looksmart LTD * 2000 65625
NetZero. Inc * 2000 64250
e.spire Communications * 3000 31688
e FAX COM INC. * 3000 22125
RealNetworks * 400 62875
TOTAL INTERNET INDUSTRY 13.22 311063
Applix * 4000 57500
TOTAL MISCELLANEOUS 2.44 57500
TOTAL ASSETS - COMMON STOCKS 97.71 2298577
COMMON STOCKS - SHORT SELLS
Apple Computer * -400 -41500
TOTAL COMPUTER & PERIP. -1.76 -41500
Lexmark International * -500 -47125
Solectron * -500 -36313
TOTAL ELECTRONICS -3.55 -83438
TOTAL ASSETS - SHORT SELLS -5.31 -124938
TOTAL INVESTMENTS 92.40 2173639
OTHER ASSETS (LESS 7.60 178770
LIABILITIES)
NET ASSETS 100.00 2352409
NET ASSETS VALUE PER SHARE 7.50
OFFERING PRICE PER SHARE 7.96
* Non - income producing securities
THE APEX MID CAP GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES 6 months ended January 31, 2000 (UNAUDITED)
ASSETS
Investment Securities at Value $2,173,639
(Identified cost - $3,096,748) (Note 1)
Dividends receivable 97
Receivable Investment Securities Sold 50,108
Due from broker - Short sales 253,229
Prepaid Insurance 604
Total Assets $2,477,677
LIABILITIES
Payables:
Investment Securities Purchases $8,587
Cash - Overdraft 95,896
Accrued expenses 20,785
Total Liabilities ($125,268)
NET ASSETS (Equivalent to $7.50 per share $2,352,409
based on 313,704 shares outstanding)
COMPOSITION OF NET ASSETS:
Paid in Capital $3,383,804
Distribution in excess of accumulated Net (108286)
Realized gain (loss)
Accumulated Net Investment Income --
Net Unrealized Appreciation (Depreciation) (923109)
of Investments
Total Net Assets $2,352,409
STATEMENT OF OPERATIONS (UNAUDITED) FOR THE SIX MONTHS ENDED JANUARY 31, 2000
INVESTMENT INCOME
Dividends $1,115
Interest 3,413
EXPENSES
Audit $4,000
Fund Accounting 5,850
Transfer Agent (Note 6) 2,579
Legal 0
Miscellaneous 0
Shareholder Report 942
Directors 3,752
Registration 610
Organization (Note 5) 0
Insurance 1,142
Fund Administration (Note 4) 2,229
Custodian 3,360
Investment Advisor (Note 4) 11,147
12b-1 Fees 2,787
Total Expenses (38,398)
Expense Reimbursement/ waived by Advisor 13,376
(Note 4)
Expense net of Reimbursement/ waiver (25,022)
NET INVESTMENT GAIN (LOSS) 20,494
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net Realized Gain (Loss) on Investments 367,046
Change in Unrealized Appreciation (239,172)
(Depreciation) of Investments
NET REALIZED/UNREALIZED GAIN (LOSS) ON INVESTMENTS 127,874
NET INCREASE (DECREASE) IN NET ASSETS 107,380
RESULTING FROM OPERATION
See accompanying Notes to Financial Statements PAGE: 4
THE APEX MID CAP GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS 6 Months Ended JANUARY 31, 2000 (UNAUDITED)
For the 6 months For the Year
Ended Ended
January 31, 2000 July 31, 1999
INCREASE (DECREASE) IN NET ASSETS
Net Investment Income/ (loss) $ (20,494) $ (12,637)
Net Realized Gain / (loss) on 367,046 583,967
investment Securities Sold
Net unrealized (239,172) (81,105)
appreciation/(depreciation) of
Investments
Net Increase (Decrease) in Net $ 107,380 $ 490,225
Assets Resulting from Operations
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Dividend distributions paid (571,317) (48,682)
Capital Gains (0) (44,136)
Total Distributions (571,317) (92,818)
CAPITAL SHARE TRANSACTIONS
Shares Sold 54,000 566,490
Shares issued in lieu of Cash 569,302 92,489
Distributions
Cost of shares Redeemed (333,753) (232,582)
Increase (Decrease) in Net Assets 289,549 426,397
Due to Capital Share Transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS 174,388 823,804
NET ASSETS BEGINNING OF PERIOD 2,526,797 1,702,993
NET ASSETS END OF PERIOD $ 2,352,409 2,526,797
FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
(UNAUDITED)
For the For the For the
6 months Year Year
Ended Ended Ended
January 31, July 31, July 31,
2000 1999 1998
NET ASSET VALUE, BEGINNING OF PERIOD $9.30 $7.53 $6.93
Income/(Loss) from Investment
Operations:
Net Investment Income/(Loss) (0.11) (0.06) (0.36)
Net Gain/(Loss) on Securities (Both 0.74 2.23 1.58
Realized and Unrealized)
Total from Investment Operations 0.63 2.17 1.22
Distributions:
Dividend Distributions Paid (2.43) (0.21) (0.62)
Distributions from Capital Gains (0.00) (0.19) 0
Total Distributions (2.43) (0.40) (0.62)
NET ASSET VALUE, END OF PERIOD $ 7.50 $ 9.30 $ 7.53
Total Return (Not Reflecting Sales 5.83%** 31.36% 8.66%
Load)
Ratios/Supplemental Data:
Net Assets, End of Period (in $2,352 $2,527 $1,703
thousands)
Ratios to Average Net Assets:
Expenses 1.71%** 2.26% 5.26%
Net Investment Income/(Loss) (0.91)%** (0.66)% (2.54)%
Effect of Reimbursements/Waivers 0.60%** 1.19% 1.19%
on Above Ratios
Portfolio Turnover Rate 209.12%** 405.39% 205.06%
* Based on weighted average shares outstanding ** Not annualized
See accompanying Notes to Financial Statements PAGE: 5
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 six months ended
January 31, 2000 were as follows:
Shares Amount
Beginning Balance 271,621 $ 3,106,890
Shares Sold 6,665 54,000
Shares Issued in Reinvestment of 73,269 569,302
Dividends
Shares Redeemed ( 37,851) ( 333,753)
Net Increase (Decrease) 42,083 289,551
Ending Balance 313,704 $3,396,441
3. INVESTMENTS
Purchases and sales of securities for the six months ended
January 31st, 2000 other than short-term securities, aggregated
$3,733,154 and $4,461,058, respectively. There were short sale
transactions for the six months ended January 31, 2000
aggregate to $548,007 of purchases and $649,396 of sales. The
cost of securities is substantially the same for Federal income
tax purposes.
For Federal income tax purposes:
Aggregate Cost $3,096,748
Gross Unrealized Appreciation 209,777
Gross Unrealized Depreciation (1,132,886)
Net Unrealized Depreciation ($923,109)
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 January 31st, 2000 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 six months ended January
31, 2000 the Advisor elected to defer the payment of Advisor
fees payable in amount of $ 11,147. 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 six months
ended January 31, 2000 the Administrator elected to defer the
payment of Administrative service fees payable in amount of
$2,229.
From December 1, 1996, the FirStar Bank, N.A. has been
providing custodian services and from February 1st, 1998, fund
accounting and transfer agency functions are provided by Mutual
Shareholders Services, LLC.
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 six months ended
January 31st, 2000, the Fund has incurred distribution costs of
$2,726 payable to Bhirud Associates, Inc.
7. TRANSACTIONS WITH AFFILIATES
During the six months ended January 31st, 2000 the Fund paid $
17,855 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 $(43,658)
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.
THE APEX MID CAP GROWTH FUND
c/o Bhirud Funds Inc.
SOUNDVIEW PLAZA
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
