<PAGE>
BURNHAM
Fund
August 8, 1995
Dear Shareholder:
We are pleased to present to you the Second Quarter Report of The Burnham
Fund Inc. for 1995.
On June 30, 1995, the Fund's net asset value per share for Class A, B and C
shares was $21.39, $21.56 and $21.39, respectively, which represent increases
for the second quarter of 1995 of 6.85%, 6.57% and 6.79%, respectively (with
dividends reinvested but without the imposition of the maximum 5% sales charge
for Class A shares). In the same period, the unmanaged Standard & Poor's 500
Index rose 9.53% (with dividends reinvested) and the unmanaged Lehman Brothers
Government/Corporate Bond Index increased 6.48%.
The Burnham Fund paid dividends in respect of its Class A, Class B and
Class C shares for the second quarter on July 11, 1995 to shareholders of record
on June 30, 1995. The distribution of $0.20, $0.15 and $0.19 per Class A, B & C
share, respectively, consisted entirely of net investment income.
At June 30, the Fund's asset allocation was as follows: 64.6% of the
portfolio was invested in common and preferred stocks; 31.0% of the portfolio
was invested in corporate bonds; 2.8% of the portfolio was invested in
convertible corporate bonds; and the remaining 1.6% of the portfolio was
invested in cash and cash equivalents.
This past period has been one of the most spectacular bull markets we have
witnessed. The continuation of the stock market's strength in the second quarter
of 1995 is attributable, in our view, to a number of factors. First, a
multi-month string of weak economic releases confirmed the consensus view that
the economy had indeed slowed down from the brisk pace of first half 1994. The
bond markets rose as managers correctly anticipated that the Federal Reserve
Board would reduce interest rates. This move occurred in early July. Second,
corporations in the S&P 500 showed operating earnings growth in excess of 20%.
This encouraged analysts to raise estimates -- perhaps too high based on the
accompanying economic view that the economy was indeed weakening and that
second-half 1995 earnings comparisons versus 1994 would prove to be difficult.
Third, talk in Washington, D.C. that focused on fiscal restraint led investors
to believe that the government would be more successful in its efforts at
deficit reduction.
In keeping with our positive long-term views of the equity markets, we
reduced our fixed income position by selling some of our shorter duration bonds
and adding to or purchasing stocks of companies we believe to be undervalued
relative to their industry, and which show strong sustainable earnings and
rising dividends or exhibit exceptional growth prospects. We added funds to some
of our longer standing positions such as McDonald's, Phoenix Technologies and
Motorola. We moved profits from some of our petroleum holdings and initiated a
new position in Chevron. We reduced or elimi-
1
<PAGE>
BURNHAM
Fund
nated some positions due to sharp price appreciation, lackluster performance or
deteriorating fundamentals. We initiated positions in Xerox Corp., Apple
Computer, Microsoft and Humana. Our equity position currently stands at
approximately 66% of total net assets.
While we are positive on our long-term views of the equity markets, we
believe that the second half of the year may be volatile. The factors stated
above that led to such buoyant returns in the first half may in the second
half cause caution. Recession fears have abated, but now the markets will focus
on economic strength and the possibility of reheated inflation. Investors
will question whether the Federal Reserve will loosen interest rates again --
we believe it will, but not until the fall or perhaps later. Reported earnings
may fall short of analysts' unrealistically high expectations, as in the case
of Intel and Microsoft, and profit taking on very small earnings shortfalls may
be swift. The worsening Bosnia conflict may bring an increased U.S. presence
overseas which may cause investor concern on our shores. We believe that any
such downturns are an opportunity to add to positions. We are confident that
U.S. industry's return to global competitiveness will achieve longer term,
sustainable economic growth.
We thank you for your continued confidence in The Burnham Fund.
Very sincerely yours,
I.W. BURNHAM
I.W. Burnham, II, President
* The performance data quoted represents past performance and is not indicative
of future performance. The investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Average total return for Class A
shares, assuming the reinvestment of dividends and excluding the maximum sales
charge for the one, five and ten year periods ended June 30, 1995 were 16.41%,
8.98% and 11.75%, respectively. Such performance assuming the imposition of
the Class A shares's maximum 5% sales charge for the same periods would have
been 10.59%, 7.87% and 11.18%, respectively. For Class B and C shares, average
total return for the one year period ended June 30, 1995 and life of class
total return for the period October 18, 1993 (inception date) to June 30,
1995, were 15.24% and 16.70%, and 4.61% and 5.34%, respectively.
Cumulative Performance Comparison
The Burnham Fund vs. Broad Market Indices
<TABLE>
<CAPTION>
Cumulative % Change Average Annualized % Change
------------------------------ ------------------------------
10 Years 5 Years 3 Years 10 Years 5 Years 3 Years
-------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
The Burnham Fund............................. 203.77% 53.74% 32.10% 11.75% 8.98% 9.72%
Standard & Poor's 500 Index
(with dividends reinvested)................ 293.16% 74.84% 44.60% 14.67% 11.82% 13.08%
Lehman Brothers Government/Corporate
Bond Index................................. 158.15% 58.06% 25.60% 9.95% 9.59% 7.89%
</TABLE>
2
<PAGE>
BURNHAM
Fund
INVESTMENT PERSPECTIVE
Equity Portfolio Distribution
by Industry Classification
June 30, 1995
<TABLE>
<CAPTION>
% Total
Equity Portfolio
----------------
<S> <C>
Energy -- Oil & Gas................... 14.20%
Pharmaceuticals....................... 11.87%
Telephone Companies................... 7.67%
Communications Services............... 6.94%
Banking............................... 6.08%
Semiconductors........................ 5.28%
Utilities............................. 4.61%
Hotels................................ 4.51%
Computers & Software.................. 4.03%
Real Estate........................... 3.64%
Others................................ 31.17%
----------------
Total Equities........................ 100.00%
----------------
----------------
</TABLE>
Total Portfolio Distribution by Asset Class
June 30, 1995
[SEE APPENDIX TO GRAPHIC AND IMAGE MATERIAL]
Top 25% Portfolio Holdings
June 30, 1995
<TABLE>
<CAPTION>
Number of Shares/ % of
Principal Amount Value Net Assets
----------------- ----------- ----------
<S> <C> <C> <C>
Exxon Corporation................................ 45,000 $ 3,178,125 2.97%
Motorola, Inc.................................... 35,000 $ 2,349,375 2.20%
Texaco Capital Inc., 8.65% nts. 1/30/98.......... $ 2,000,000 $ 2,117,785 1.98%
Ford Motor Credit Corp., 8% nts. 10/1/96......... $ 2,000,000 $ 2,043,140 1.91%
The Bank of New York Co., Inc.,
7.5% conv. sub. deb. 8/15/01................... $ 1,000,000 $ 2,040,000 1.91%
Caremark International Inc....................... 100,000 $ 2,000,000 1.87%
SBC Communications Inc........................... 40,000 $ 1,905,000 1.78%
AT&T Corp........................................ 35,000 $ 1,859,375 1.74%
Mobil Corp....................................... 19,000 $ 1,824,000 1.70%
Georgia Pacific Corp............................. 20,000 $ 1,735,000 1.62%
Bell Atlantic Corp............................... 30,000 $ 1,680,000 1.57%
Chrysler Corp.................................... 35,000 $ 1,675,625 1.57%
Amoco Oil Co..................................... 25,000 $ 1,665,625 1.56%
US West Inc...................................... 40,000 $ 1,665,000 1.56%
----------- ----------
Total Top 25% Portfolio Holdings................. $27,738,050 25.94%
----------- ----------
----------- ----------
</TABLE>
Cumulative Return
of a Hypothetical $10,000 Investment*
from inception (June 16, 1975)
through June 30, 1995
[SEE APPENDIX TO GRAPHIC AND IMAGE MATERIAL]
* All performance analyses shown herein represent past performance and are not
indicative of future performance. All dividends and distributions from income
and capital gains have been continually reinvested. Performance does not
include the imposition of the maximum 5% sales charge. Performance for other
classes of the Fund will be greater or less than the data shown in the graph
and tables based on differences in sales charges and fees paid by shareholders
investment in the different classes of the Fund.
Average Annual Total Return
Period ending June 30, 1995
<TABLE>
<S> <C>
One Year................. 16.41%
Five Years............... 8.98%
Ten Years................ 11.75%
Fifteen Years............ 12.97%
Twenty Years............. 12.58%
</TABLE>
3
<PAGE>
BURNHAM
Fund
STATEMENT OF NET ASSETS
June 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
Number of Value
Shares (Note 1)
--------- ------------
<S> <C> <C> <C>
COMMON STOCKS 64.01%
AEROSPACE 1.09%
Textron, Inc............................... 20,000 $ 1,162,500
------------
ALUMINUM PRODUCTION 1.17%
Aluminum Company of America................ 25,000 1,253,125
------------
AUTOMOTIVE 1.57%
Chrysler Corp.............................. 35,000 1,675,625
------------
BAKED GOODS & SNACK FOODS 0.37%
Flowers Industries Inc..................... 20,000 395,000
------------
BANKING 3.90%
Citicorp................................... 20,000 1,157,500
Home Financial Corp........................ 50,000 709,375
Mellon Bank Corp........................... 30,000 1,248,750
Morgan (J.P.) & Co., Inc................... 15,000 1,051,875
------------
4,167,500
------------
BUILDING PRODUCTS 1.20%
Manville Corp.............................. 50,000 a 687,500
USG Corp................................... 25,000 a 593,750
------------
1,281,250
------------
COMMUNICATIONS SERVICES 4.44%
AT&T Corp.................................. 35,000 1,859,375
ECI Telecom Ltd............................ 60,000 825,000
GTE Corp................................... 40,000 1,365,000
TeleCommunications Inc. Cl. A.............. 30,000 a 703,125
------------
4,752,500
------------
COMPUTERS & SOFTWARE 2.58%
Apple Computer Inc......................... 25,000 1,162,500
Microsoft Corp............................. 10,000 a 903,750
Phoenix Technologies Ltd................... 65,000 a 698,750
------------
2,765,000
------------
CONSUMER PRODUCTS 0.79%
General Electric Co........................ 15,000 845,625
------------
DATA PROCESSING SYSTEMS 0.91%
EMC Corp................................... 40,000 a 970,000
------------
ENERGY -- OIL AND GAS 9.09%
Amoco Oil Co............................... 25,000 1,665,625
Chevron Corp............................... 25,000 1,165,625
Exxon Corporation.......................... 45,000 3,178,125
Hugoton Energy Corp........................ 30,000 a 255,000
Mobil Corporation.......................... 19,000 1,824,000
Texaco Inc................................. 25,000 1,640,625
------------
9,729,000
------------
ELECTRICAL CONNECTORS 0.79%
AMP Inc.................................... 20,000 $ 845,000
------------
ENGINEERING/INDUSTRIAL PRODUCTION 1.50%
Thermo Electron Corp....................... 37,500 a 1,509,375
Thermolyte Corp. (Note 4).................. 10,000 a 100,000
------------
1,609,375
------------
FOOD CHAINS 1.28%
McDonald's Corp............................ 20,000 1,369,375
------------
FOREST PRODUCTS 1.62%
Georgia Pacific Corp....................... 20,000 1,735,000
------------
HEALTH & PERSONAL CARE PRODUCTS 0.00%
Cooper Development Co...................... 1,260 a 3,780
------------
HEALTHCARE REIT 1.28%
Meditrust SBI.............................. 40,000 1,365,000
------------
HOTELS 2.89%
Hilton Hotels Corp......................... 22,500 1,580,625
Marriott International Inc................. 25,000 896,875
Mirage Resorts Inc......................... 20,000 a 612,500
------------
3,090,000
------------
INSURANCE 0.97%
Allstate Corp.............................. 35,000 1,036,875
------------
MEDICAL SUPPLIES 0.18%
PLC Systems Inc............................ 20,000 a 196,250
------------
MINING 0.78%
Homestake Mining........................... 50,000 825,000
------------
OFFICE EQUIPMENT 1.32%
Xerox Corp................................. 12,000 1,407,000
------------
PHARMACEUTICALS 7.60%
American Home Products Corp................ 20,000 1,547,500
Bristol Myers Squibb Co.................... 20,000 1,362,500
Caremark International Inc................. 100,000 2,000,000
Humana Inc................................. 10,000 176,250
Merck & Co., Inc........................... 25,000 1,225,000
Pall Corp.................................. 30,000 667,500
Pfizer Inc................................. 12,500 1,154,687
------------
8,133,437
------------
PHOTO PRODUCTS & SERVICES 1.13%
Eastman Kodak Co........................... 20,000 1,212,500
------------
REAL ESTATE REIT 2.33%
Franchise Finance Corp. of America......... 57,600 1,238,400
National Golf Properties................... 60,000 1,260,000
------------
2,498,400
------------
</TABLE>
See notes to financial statements.
4
<PAGE>
BURNHAM
Fund
STATEMENT OF NET ASSETS (Continued)
June 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
Number of
Shares, Put Options, Value
or Principal Amount (Note 1)
------------------- --------
<S> <C> <C> <C>
COMMON STOCKS (CONCLUDED)
Semiconductors 3.38%
Intel Corp................................. 20,000 $1,266,250
Motorola, Inc.............................. 35,000 2,349,375
------------
3,615,625
------------
SPECIALTY CHEMICALS 0.68%
Morton International Inc................... 25,000 731,250
------------
TELEPHONE COMPANIES 4.91%
Bell Atlantic Corp......................... 30,000 1,680,000
SBC Communications Inc..................... 40,000 1,905,000
US West Inc................................ 40,000 1,665,000
------------
5,250,000
------------
TRAVEL RELATED & FINANCIAL SERVICES 1.31%
American Express Co........................ 40,000 1,405,000
------------
UTILITIES 2.95%
Northeast Utilities........................ 50,000 1,125,000
Puget Sound Power & Light.................. 40,000 915,000
Southern Co................................ 50,000 1,118,750
------------
3,158,750
------------
TOTAL COMMON STOCKS (COST: $60,081,652)...... 68,484,742
------------
Put Options 0.01%
Standard & Poor's 100 July 1995 @ 470...... 100 puts a 2,500
Standard & Poor's 100 July 1995 @ 475...... 50 puts a 1,250
Standard & Poor's 100 July 1995 @ 485...... 50 puts a 2,500
Standard & Poor's 100 Aug. 1995 @ 490...... 50 puts a 9,688
------------
TOTAL PUT OPTIONS (COST: $217,654)........... 15,938
------------
CONVERTIBLE PREFERRED STOCK 0.53%
Storage Technology Corp. $3.50 cum. conv.
pfd...................................... 10,000 570,000
------------
TOTAL CONVERTIBLE PREFERRED STOCK (COST:
$480,800)................................ 570,000
------------
CORPORATE CONVERTIBLE BONDS 2.83%
BANKING 1.91%
The Bank of New York Company, Inc., 7 1/2%
conv. sub. deb. 8/15/01.................. $1,000,000 2,040,000
------------
STEEL 0.43%
USX Corp., 7% conv. sub. deb. 6/15/17...... 500,000 460,000
------------
UTILITIES 0.49%
Consolidated Natural Gas Co., 7 1/4% conv.
sub. deb. 12/15/15....................... 500,000 522,500
------------
TOTAL CORPORATE CONVERTIBLE BONDS (COST:
$1,971,250).............................. 3,022,500
------------
<CAPTION>
Principal Value
Amount Note 1
--------- ------
CORPORATE BONDS 31.03%
BANKING 1.93%
Chase Manhattan Corp., 7 7/8% sub. notes
8/01/04.................................. $1,000,000 $1,023,812
Morgan (J.P.) & Co., Inc., 7 5/8% sub. notes
11/15/98................................. 1,000,000 1,040,788
------------
2,064,600
------------
BROADCASTING 0.49%
Ackerley Communications, Inc., 10 3/4% sr.
secured notes 'Series A' 10/01/03........ 500,000 527,500
------------
BUILDING PRODUCTS 1.86%
USG Corp., 8% sr. notes 12/15/96........... 500,000 498,750
USG Corp., 8% sr. notes 3/15/97............ 1,500,000 1,496,250
------------
1,995,000
------------
CHEMICALS 1.38%
duPont (E.I.) de Nemours & Co., 6% notes
12/01/01................................. 1,000,000 971,250
duPont (E.I.) de Nemours & Co., 6 3/4%
notes 10/15/02........................... 500,000 503,056
------------
1,474,306
------------
COMMUNICATION SERVICES 0.94%
Storer Communications Inc., 10% deb.
5/15/03.................................. 1,000,000 1,005,000
------------
CONSUMER PRODUCTS 0.95%
General Electric Corp., 7 7/8% notes
5/01/96.................................. 1,000,000 1,015,699
------------
ENERGY -- OIL & GAS 0.88%
Maxus Energy Corp., 9 3/8% notes 11/01/03.. 1,000,000 945,000
------------
FINANCIAL SERVICES 11.11%
Exxon Capital Corp., 7% gtd. notes
4/15/96.................................. 1,000,000 1,013,772
Ford Motor Credit Corp., 8% notes
10/01/96................................. 2,000,000 2,043,140
Ford Motor Credit Corp., 9 1/4% notes
6/15/98.................................. 1,000,000 1,075,680
General Electric Capital Corp., 8% notes
1/15/98.................................. 1,000,000 1,039,315
GMAC Corp., 7.65% notes 2/04/97............ 400,000 407,755
GMAC Corp., 7 3/4% notes 4/15/97........... 1,000,000 1,014,975
</TABLE>
See notes to financial statements.
5
<PAGE>
BURNHAM
Fund
STATEMENT OF NET ASSETS (Concluded)
June 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
--------- --------
<S> <C> <C> <C>
CORPORATE BONDS (CONTINUED)
GMAC Corp., 7 3/4% notes 1/15/99............. $1,000,000 $1,037,345
MGM Grand Hotel Finance Corp., 11 3/4% gtd.
notes 5/01/99............................ 1,000,000 1,082,500
Texaco Capital Inc., 9% gtd. notes
11/15/97................................. 1,000,000 1,051,250
Texaco Capital Corp., 8.65% 1/30/98........ 2,000,000 2,117,785
------------
11,883,517
------------
FOOD & BEVERAGE 0.47%
Spreckles Industries Inc., 11 1/2% sr. sec.
notes 9/01/00............................ 500,000 507,500
------------
FOOD & TOBACCO 1.97%
Philip Morris Companies Inc., 9 1/4%
12/01/97................................. 1,000,000 1,064,986
RJR Nabisco, 8% notes 1/15/00.............. 1,000,000 1,045,000
------------
2,109,986
------------
HOTELS 2.28%
Marriott Corp., 9 5/8% sr. notes 'B' 2/01/96. 525,000 525,846
Marriott Corp., 8 1/8% sr. notes 'C'
12/01/96................................. 450,000 442,980
Marriott Corp., 8 7/8% sr. notes 'D' 5/01/97. 115,000 114,288
Marriott Corp., 9 7/8% sr. notes 'E'
11/01/97................................. 850,000 849,576
Marriott Corp., 9 3/8% deb. 6/15/07........ 500,000 510,282
------------
2,442,972
------------
PAPER PRODUCTS 1.74%
Kimberly Clark Corp. 9% notes 8/01/00...... 700,000 778,800
Riverwood International Corp., 10 3/4% sr.
notes II 6/15/00......................... 500,000 540,000
Riverwood International Corp., 10 3/4% sr.
notes 6/15/00............................ 500,000 540,000
------------
1,858,800
------------
PHARMACEUTICALS 1.98%
Johnson & Johnson, 7 3/8% euronotes 11/09/97. 1,000,000 1,030,625
Lilly (Eli) & Co., 8 1/8% notes 12/01/01..... 1,000,000 1,082,471
------------
2,113,096
------------
TELEPHONE COMPANIES 2.57%
Bell South TeleCommunications Inc., 6 1/4%
notes 5/15/03............................ $1,000,000 $ 978,747
GTE California Inc., 6 1/4% 1/15/98........ 1,000,000 1,001,043
Southwestern Bell Corp., 8.30% notes
6/01/96.................................. 750,000 764,209
------------
2,743,999
------------
UTILITIES 0.48%
AES Corp., 9 3/4% sr. sub. notes 6/15/00... 500,000 510,000
------------
TOTAL CORPORATE BONDS (COST:
$32,413,424)............................. 33,196,975
COMMERCIAL PAPER 1.14%
Associates Corp. of NA, 5.93% 7/03/95...... 1,219,000 1,219,000
------------
TOTAL COMMERCIAL PAPER (COST:
$1,219,000).............................. 1,219,000
------------
TOTAL INVESTMENTS (COST: $96,383,780) 99.55% 106,509,155
CASH AND OTHER ASSETS, LESS LIABILITIES 0.45 481,156
------ ------------
NET ASSETS 100.00% $106,990,311
------ ------------
------ ------------
</TABLE>
a Non-income producing security.
Federal Income Tax Basis of Investment
Securities
For Federal income tax purposes, the tax basis of investment securities
owned at June 30, 1995 was $96,510,156. The aggregate gross unrealized
appreciation for all securities in which there was an excess of value over tax
cost was $10,941,204 and aggregate gross unrealized depreciation for all
securities in which there was excess of tax cost over value was $942,205.
See notes to financial statements.
6
<PAGE>
BURNHAM
Fund
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1995
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (identified cost: $98,383,780) (Note 1)................... $106,509,155
Receivable for investments sold.............................................................. 3,619,382
Dividends and interest receivable............................................................ 851,850
Receivable for capital stock sold............................................................ 28,666
Prepaid expenses............................................................................. 52,609
Receivable from investment adviser........................................................... 4,771
------------
Total assets............................................................................ 111,066,433
------------
LIABILITIES:
Bank overdraft............................................................................... 121,668
Payable for investment securities purchased.................................................. 3,691,854
Payable for capital stock redeemed........................................................... 31,625
Accrued expenses and other payables.......................................................... 230,975
------------
Total liabilities....................................................................... 4,076,122
------------
NET ASSETS........................................................................................ $106,990,311
------------
------------
CLASS A SHARES
Net asset value and redemption price per share
(Note 2): ($106,447,513/4,977,458 shares outstanding)........................................... $ 21.39
------------
------------
Calculation of Maximum Offering Price
Sales charge -- 5% of public offering price:(Note 2): ($21.39 net asset value plus 5.0% of public
offering price)................................................................................. $ 22.52
------------
------------
CLASS B SHARES
Net asset value and offering price per share:
(Note 2): ($540,147/25,047.598 shares outstanding).............................................. $ 21.56
------------
------------
CLASS C SHARES
Net asset value and offering price per share:
(Note 2): ($2,651/123.944 shares of capital stock outstanding).................................. $ 21.39
------------
------------
Redemption price per share varies with the length of time Class B and C shares are held. (Note 5)
Net assets consisted of:
Capital paid-in.............................................................................. $ 93,343,012
Undistributed net investment income.......................................................... 946,076
Accumulated net realized gains on investments................................................ 2,575,848
Net unrealized appreciation of investments................................................... 10,125,375
------------
$106,990,311
------------
------------
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1995
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Income:
Dividends............................................................................. $ 921,742
Interest.............................................................................. 1,772,870
------------
Total income..................................................................... 2,694,612
------------
Expenses:
Investment advisory fees (Note 6)..................................................... 318,773
Distribution fee (Class A) (Note 7)................................................... 127,813
Distribution fee (Class B) (Note 7)................................................... 1,595
Distribution fee (Class C) (Note 7)................................................... 4
Service fees (Class B & C) (Note 7)................................................... 537
Transfer agent fees................................................................... 98,176
Professional fees..................................................................... 129,745
Reports to shareholders............................................................... 23,380
Directors' fees and expenses.......................................................... 33,400
Custodian fees........................................................................ 23,790
Registration fees and expenses........................................................ 33,095
Miscellaneous expense................................................................. 36,433
------------
Total expenses before reimbursement.............................................. 826,741
------------
Less: Expenses voluntarily reimbursed by Investment Adviser (Note 4)............. (4,755)
------------
Total expenses after reimbursement............................................... 821,986
------------
Net investment income....................................................... 1,872,626
------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Realized gain from securities and options transactions (excluding short-term
money market instruments)
Proceeds from sales................................................... $ 53,357,645
Cost of securities sold............................................... (50,699,074)
-----------
Net realized gain from securities and
options transactions............................................. 2,658,571
------------
Increase in unrealized appreciation of investments
Beginning of period................................................... $ 2,231,529
End of period......................................................... 10,125,375
-----------
Increase in unrealized appreciation................................................... 7,893,846
------------
Net realized and unrealized gain on investments............................................ 10,552,417
------------
Net increase in net assets resulting from operations....................................... $12,425,043
------------
------------
</TABLE>
See notes to financial statements.
7
<PAGE>
BURNHAM
Fund
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Year
ended ended
June 30, 1995 December 31, 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in net assets:
From operations:
Net investment income................................................... $ 1,872,626 $ 3,970,955
Net realized gain from security and option transactions................. 2,658,571 3,854,723
Increase (Decrease) in unrealized appreciation of investments........... 7,893,846 (10,028,824)
------------- -----------------
Net increase (decrease) in net assets resulting from operations.... 12,425,043 (2,203,146)
------------- -----------------
Distributions to shareholders
(Note 1):
From net investment income:
Class A Shares.......................................................... (2,045,595) (4,681,668)
Class B Shares.......................................................... (4,876) (7,380)
Class C Shares.......................................................... (48) (96)
From realized gains from security and option transactions:
Class A Shares........................................................ (2,611,673) (3,806,005)
Class B Shares........................................................ (8,696) (7,594)
Class C Shares........................................................ (60) (79)
------------- -----------------
Total distributions to shareholders................................ (4,670,948) (8,502,822)
------------- -----------------
Capital share transactions
(Note 2):
Net proceeds from sale of shares........................................... 714,835 2,874,828
Net asset value of shares issued to shareholders in reinvestment of
dividends............................................................... 4,044,720 7,340,553
------------- -----------------
4,759,555 10,215,381
Cost of shares redeemed.................................................... (7,674,969) (15,991,754)
------------- -----------------
Decrease in net assets derived from capital share transactions............. (2,915,414) (5,776,373)
------------- -----------------
Increase (Decrease) in net assets for the period........................... 4,838,681 (16,482,341)
------------- -----------------
Net Assets:
Beginning of period........................................................ 102,151,630 118,633,971
------------- -----------------
End of period (including undistributed net investment income of $946,076
and $1,123,969, respectively)........................................... $ 106,990,311 $ 102,151,630
------------- -----------------
------------- -----------------
</TABLE>
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
(unaudited)
- --------------------------------------------------------------------------------
NOTE 1 -- Significant Accounting Policies
The Burnham Fund Inc. ('Fund') is registered under the Investment Company Act of
1940, as amended (the '1940 Act'), as a diversified, open-end investment
company.
The Fund offers three classes of shares. Class A shares are sold with a
front-end sales charge of up to 5.0%. Class B shares are sold with a contingent
deferred sales charge of 5.0% which declines to zero for purchases held more
than six years. Class C shares are sold with a contingent deferred sales charge
of 1%, which declines to zero if held for more than one year.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A. Security valuation -- Investments in securities traded, or in options
purchased, on a national securities exchange are valued at the last reported
sales price on the primary exchange on which they are traded on the last
business day of the period. Securities traded in the over-the-counter market
(including securities listed on exchanges whose primary market is believed to be
over-the-counter) and listed securities for which no sale was reported on that
date are valued at the mean between the last reported bid and asked prices.
Short-term money market instruments which have a maturity of more than 60 days
are valued at prices based on market quotations for securities of similar type,
yield and maturity. Short-term money market instruments which have a maturity of
60 days or less are valued at amortized cost which approximates value.
B. Repurchase agreements -- Securities held as collateral for repurchase
agreements are held by the Federal Reserve Bank and are designated as being held
for the Fund's behalf by its custodian under the book-entry system. The Fund
monitors the adequacy of the collateral (U.S. Government securities) daily and
can require the seller to provide additional collateral in the event the market
value of the securities pledged falls below 102% of the carrying value of the
repurchase agreement.
C. Option Writing -- When the Fund writes a covered call option, the amount
received is included in the Statement of
8
<PAGE>
BURNHAM
Fund
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
(Unaudited)
Assets and Liabilities as an asset and an equivalent liability. The liability
is subsequently marked to market to reflect the current value of the option
written. When a call option expires or when the Fund enters into a closing
purchase transaction, the Fund will recognize a gain (or loss) without regard
to any unrealized gain or loss on the underlying security. When a call option
is exercised, the proceeds from the delivery of the underlying security are
increased by the amount originally received and the resulting gain or loss is
recorded by the Fund.
Transactions in written options for the six months ended June 30, 1995 were as
follows:
<TABLE>
<CAPTION>
Number of
Options Premiums
--------- ---------
<S> <C> <C>
Options written at December 31, 1994..................................................... -0- $ -0-
Options written.......................................................................... (20) (29,299)
Options cancelled in closing purchase transactions....................................... 20 29,299
--------- ---------
Options outstanding at June 30, 1995..................................................... -0- $ -0-
--------- ---------
--------- ---------
</TABLE>
The cost of cancelling options in closing transactions was $38,200 resulting in
a net realized capital loss of $8,001.
D. Federal income taxes -- It is the Fund's policy to qualify each year as a
'regulated investment company' under Subchapter M of the Internal Revenue Code.
By so qualifying, the Fund will not be subject to Federal income taxes to the
extent that its net investment income and net realized capital gains are
distributed.
E. Other -- Security transactions are accounted for on the date the securities
are purchased or sold. Interest income is recorded on the accrual basis and
dividend income on the ex-dividend date. Dividends and distributions to
shareholders are recorded on the ex-dividend dates. The Fund may periodically
make reclassifications among certain of its capital accounts as a result of the
timing and characteristics of certain income and capital gains distributions
determined annually in accordance with Federal tax regulations which may differ
from generally accepted accounting principles. During 1995, the Fund has not
made classifications of undistributed net investment income or accumulated net
realized gains.
F. Expenses -- Expenses that are attributable to a specific class of shares will
be charged to that class. Fund-level expenses will be allocated daily based upon
the relative percentage of net assets of each class of shares as they relate to
the Fund.
NOTE 2 -- Capital Stock
At June 30, 1995, there were 40,000,000 shares of capital stock ($0.10 par
value) authorized, divided into four classes designated Class A, B, C and D
shares. At June 30, 1995, Class D shares were not issued.
Transactions in capital stock for the six months ended June 30, 1995 and
for the year ended December 31, 1994 for Class A, B and C shares were as
follows:
<TABLE>
<CAPTION>
Six months ended Year ended
June 30, 1995 Dec. 31, 1994
---------------- -------------
<S> <C> <C>
CLASS A SHARES
Shares sold..................................................................... 28,022 130,430
Shares issued to shareholders in reinvestment of distributions.................. 208,438 361,712
---------------- -------------
236,460 492,142
Shares redeemed................................................................. (379,929) (790,191)
---------------- -------------
Net decrease.................................................................... (143,469) (298,049)
---------------- -------------
---------------- -------------
CLASS B SHARES
Shares sold..................................................................... 7,306 9,254
Shares issued to shareholders in reinvestment of distributions.................. 693 748
---------------- -------------
7,999 10,002
Shares redeemed................................................................. (2) (254)
---------------- -------------
Net increase.................................................................... 7,997 9,748
---------------- -------------
---------------- -------------
CLASS C SHARES
Shares sold..................................................................... -0- -0-
Shares issued to shareholders in reinvestment of distributions.................. 5 9
---------------- -------------
5 9
Shares redeemed................................................................. -0- -0-
---------------- -------------
Net increase.................................................................... 5 9
---------------- -------------
---------------- -------------
</TABLE>
NOTE 3 -- Purchase and Sales of Securities
The aggregate cost of purchases and the proceeds from sales of securities
or maturities for the six months ended June 30, 1995 were:
<TABLE>
<CAPTION>
Cost of Proceeds from sales
purchases or maturities
------------ -------------------
<S> <C> <C>
Short-term money market instruments.......................................... $105,991,500 $ 104,772,500
Long-term U.S. government obligations........................................ -0- -0-
Common stocks and other securities........................................... 46,370,476 53,357,645
</TABLE>
9
<PAGE>
BURNHAM
Fund
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
(Unaudited)
For the six months ended June 30, 1995, the Fund had net realized losses of
$535,518 resulting from purchased option transactions.
NOTE 4 -- Restricted Securities
A restricted security is a security which has not been registered with the
U.S. Securities and Exchange Commission pursuant to the Securities Act of 1933.
The Fund may purchase restricted securities through a private offering and they
cannot be sold without prior registration under the Securities Act of 1933
unless such sale is pursuant to an exemption therefrom. Subsequent costs of
registration of such securities are borne by the issuer. A secondary market
exists for certain privately placed securities. At June 30, 1995, the Fund held
restricted securities with a value aggregating $100,000, representing 0.1% of
the Fund's net assets. Such securities are:
<TABLE>
<CAPTION>
Shares Company Acquired Value Cost
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
10,000 Thermolyte 03/10/1995 $100,000 $100,000
Corp.
</TABLE>
NOTE 5 -- Off Balance Sheet Risk in Financial Instruments
The Fund may from time to time trade in financial instruments with
off-balance sheet risk in the normal course of its investing activities to
assist in managing exposure to various market risks. These financial instruments
include written as well as purchased options, and may involve, to a varying
degree, elements of risk in excess of the amounts recognized for financial
statement purposes. The notional or contractual amounts of these instruments
represent the investment the Fund has in particular classes of financial
instruments and does not necessarily represent the amounts potentially
subject to risk. The measurement of risks associated with these instruments
is meaningful only when all related and offsetting transactions are considered.
A summary of obligations under these financial instuments at June 30, 1995 is as
follows:
<TABLE>
<CAPTION>
Expiration Number of Security Security Net Unrealized
Date Contracts Position Type Depreciation
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
July, 1995 100 puts S&P 100 puts @ 470 long $ 81,803
July, 1995 50 puts S&P 100 puts @ 475 long 45,290
July, 1995 50 puts S&P 100 puts @ 485 long 42,786
July, 1995 50 puts S&P 100 puts @ 490 long 31,837
--------------
$201,716
--------------
--------------
</TABLE>
NOTE 6 -- Investment Advisory Fees and Other Transactions
The Investment Adviser provides research and statistical services and makes
investment recommendations to the Fund. With its affiliate, Burnham Securities
Incorporated (the 'Distributor'), the Investment Adviser supplies a staff
trained in accounting and shareholder services to aid in the Fund's
administration and day-to-day operations.
The Investment Adviser receives an investment advisory fee paid monthly at
an annual rate of 5/8 of 1% of the Fund's average daily net asset values. In
addition, if in any year the Fund's operating expenses, including investment
advisory fees but excluding interest, taxes and brokerage commissions, exceed
2.5% of the first $30 million of the Fund's average net assets, 2.0% of the next
$70 million and 1.5% of the remaining average net assets, the fees to be paid to
the Investment Adviser will be reduced to the extent that such expenses exceed
such limitation. For the six months ended June 30, 1995, the Fund incurred fees
in the amount of $318,773. The advisory fees and the expenses of the Fund as
defined above did not exceed the maximum allowable limitation. The Investment
Adviser has voluntarily agreed to reimburse expenses of Class B and C shares in
order to limit such expenses to an annual rate of 2.3% and 2.3%, respectively.
Accordingly, the Investment Adviser has reimbursed Class B and C shares $2,183
and $2,572, respectively.
NOTE 7 -- Distribution Services Agreement
The Distributor serves as principal distributor of Fund shares. The Fund
has adopted a Distribution Service Agreement (the 'Agreement') pursuant to Rule
12b-1 under the 1940 Act for Classes A, B and C shares. Under the agreement, the
Fund pays a distribution fee to the Distributor at an annual rate of 0.25%,
0.75% and 0.75%, respectively, of the Fund's average daily net assets
attributable to each respective class. For the six months ended June 30, 1995,
Class A, B and C shares incurred fees of $127,813, $1,595, and $4, respectively.
Class B and C shares of the Fund will also pay a service fee at an annual rate
of 0.25% of the average daily net assets of Class B and C shares. The service
fee will be used by the Distributor to compensate broker-dealers and other NASD
members for rendering continuing, ongoing service to Class B and C shareholders.
Service fees incurred for Class B and C shares for the six months ended June 30,
1995 was
10
<PAGE>
BURNHAM
Fund
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
(Unaudited)
$536 and $1, respectively. For the six months ended June 30, 1995, the
Distributor earned $118,306 in brokerage commissions from Fund transactions and
$6,096 in sales commissions from the distribution of Class A shares.
A contingent deferred sales charge ('CDSC') at a maximum rate of 5% is
imposed on Class B shares if an investor redeems within six years of the
purchase date. A CDSC is imposed on Class C shares at a rate of 1% if shares are
redeemed within 12 months from the date of purchase. A CDSC will be imposed on
the proceeds of the redemptions of shares purchased aggregating $1 million or
more if they are redeemed within 24 months of the end of the calendar month of
their purchase, in an amount equal to 1% if the redemption occurs within 12
months and .50 of 1% if the redemption occurs within the next 12 months. No CDSC
will be imposed on Class A, B and C shares derived from reinvestment of
dividends or capital gain distributions, or on amounts which represent an
increase in the value of the share-holder's account resulting from capital
appreciation above the amount paid for Class A, B and C
shares purchased during the CDSC period. Any sales charge imposed on redemptions
are paid to the Distributor. For the six months ended June 30, 1995, there were
no charges paid to the Distributor.
Certain directors and officers of the Fund are also directors, officers
and/or employees of the Investment Adviser and/or Distributor. None of the
directors so affiliated received compensation for his services as director of
the Fund. Similarly, none of the Fund's officers received compensation from the
Fund.
NOTE 8 -- Financial Highlights
<TABLE>
<CAPTION>
Class A Shares Class B Shares
-------------------------------------------------------- -----------------------------
Six Six
months Year months Year
ended ended Dec. 31, ended ended Dec. 31,
6/30/1995 1994 1993 1992 1991 1990 6/30/1995 1994 1993*`DD'
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period... $19.88 $ 21.86 $ 21.95 $ 22.16 $ 20.01 $ 23.62 $19.94 $ 21.84 $ 22.17
------- ------- ------- ------- ------- ------- ------- ------- -------
Income from Investment
Operations
Net Investment Income... 0.37 0.75 0.81 0.88 1.07 1.19 0.17 0.49 0.13
Net Gains or Losses on
Securities (both
realized and
unrealized)........... 2.05 (1.15) 1.11 0.69 2.36 (1.62) 2.19 (1.04) (0.46)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations............ 2.42 (0.40) 1.92 1.57 3.43 (0.43) 2.36 (0.55) (0.33)
Less Distributions
Dividends (from net
investment income).... (0.40 ) (0.87) (0.90) (1.12) (1.06) (1.24) (0.23 ) (0.64) -0-
Distributions from
Capital Gains (from
securities and options
transactions)......... (0.51 ) (0.71) (1.11) (0.66) (0.22) (1.94) (0.51 ) (0.71) -0-
------- ------- ------- ------- ------- ------- ------- ------- -------
Total
Distributions..... (0.91 ) (1.58) (2.01) (1.78) (1.28) (3.18) (0.74 ) (1.35) -0-
------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period................ $21.39 $ 19.88 $ 21.86 $ 21.95 $ 22.16 $ 20.01 $21.56 $ 19.94 $ 21.84
------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- -------
Total Return............ 12.70 % (1.77%) 9.35% 7.70% 17.98% (1.76%) 12.24 % (2.52%) (1.49%)
------- ------- ------- ------- ------- ------- ------- ------- -------
Ratios/Supplemental
Data
Net Assets (in
$millions), End of
Period................ 107.0 101.8 118.5 117.2 125.4 123.7 0.5 0.3 0.2
------- ------- ------- ------- ------- ------- ------- ------- -------
Ratio of Expenses to
Average Net Assets.... 1.6 %`D' 1.5% 1.5% 1.2% 1.1% 1.2% 2.3 %`D' 2.3% 2.2%`D'
------- ------- ------- ------- ------- ------- ------- ------- -------
Ratio of Net Income to
Average Net Assets.... 3.6 %`D' 3.7% 3.7% 4.1% 5.0% 5.6% 2.8 %`D' 2.9% 3.9%`D'
------- ------- ------- ------- ------- ------- ------- ------- -------
Portfolio Turnover
Rate.................. 89.9 %`D' 87.9% 54.1% 68.5% 120.8% 107.4% 89.9 %`D' 87.9% 54.1%
------- ------- ------- ------- ------- ------- ------- ------- -------
<CAPTION>
Class C Shares
-----------------------------
Six
months Year
ended ended Dec. 31,
6/30/1995 1994 1993*`DD'
------- ------- -------
<S> <C> <C> <C>
Net Asset Value,
Beginning of Period... $19.89 $ 21.87 $ 22.17
Income from Investment
Operations
Net Investment Income... 0.35 0.72 0.15
Net Gains or Losses on
Securities (both
realized and
unrealized)........... 2.06 (1.15) (0.45)
------- ------- -------
Total from Investment
Operations............ 2.41 (0.43) (0.30)
Less Distributions
Dividends (from net
investment income).... (0.40 ) (0.84) -0-
Distributions from
Capital Gains (from
securities and options
transactions)......... (0.51 ) (0.71) -0-
------- ------- -------
Total
Distributions..... (0.91 ) (1.55) -0-
------- ------- -------
Net Asset Value, End of
Period................ $21.39 $ 19.89 $ 21.87
------- ------- -------
------- ------- -------
Total Return............ 12.75 % (1.95%) (1.35%)
------- ------- -------
Ratios/Supplemental
Data
Net Assets (in
$millions), End of
Period................ 0.0 ** 0.0** 0.0**
------- ------- -------
Ratio of Expenses to
Average Net Assets.... 1.7 %`D' 1.5% 1.5%`D'
------- ------- -------
Ratio of Net Income to
Average Net Assets.... 3.5 %`D' 3.6% 3.5%`D'
------- ------- -------
Portfolio Turnover
Rate.................. 89.9 %`D' 87.9% 54.1%
------- ------- -------
</TABLE>
* The Fund commenced offering Class B shares and Class C shares on October 18,
1993.
** Less than $100,000 of net assets. `D' Annualized. `DD' Based on average
shares outstanding.
NOTE 9 -- Dividends and Distributions Subsequent to end of Reporting Period
The Fund announced a per-share distribution to shareholders of record June 30,
1995. The distribution has an ex-dividend date of July 3, 1995 and was payable
July 11, 1995.
The distribution was as follows:
<TABLE>
<CAPTION>
CLASS CLASS CLASS
A B C
------ ------ ------
<S> <C> <C> <C>
From net investment income................................ $0.20 $0.15 $0.19
------ ------ ------
Total distributions paid.................................. $0.20 $0.15 $0.19
------ ------ ------
------ ------ ------
</TABLE>
11
<PAGE>
OFFICERS OF THE FUND
I.W. Burnham, II President
and Chief Executive Officer
Jon M. Burnham, Executive Vice President
Michael E. Barna, First Vice President
Chief Financial Officer, Treasurer and Secretary
Ronald M. Geffen, Vice President
Debra B. Hyman, Vice President
Frank A. Passantino, Vice President and Assistant Secretary
Louis S. Rosenthal, Vice President
Leon C. Sunstein, Jr., Vice President
Mara D. Cohen, Assistant Treasurer
INVESTMENT ADVISER
Burnham Asset Management Corporation
1325 Avenue of the Americas
New York, New York 10019
DISTRIBUTOR
Burnham Securities Incorporated
1325 Avenue of the Americas
New York, New York 10019
Telephone: 1 (800) 874-FUND
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
SERVICING AGENT
Boston Financial Data Services, Inc.
2 Heritage Drive
North Quincy, Massachusetts 02171
This report has been prepared for the information of shareholders of The Burnham
Fund Inc. and is not authorized for distribution to prospective investors unless
preceded or accompanied by an effective prospectus that includes information
regarding the Fund's objectives, policies, management, records and other
information.
Semi-Annual Report
June 30, 1995
CONTINUITY KNOWLEDGE
[PHOTOGRAPH OF CLOCK] [PHOTOGRAPH OF CHESS PIECE]
[LOGO]
GROWTH INCOME
[PHOTOGRAPH OF STEPS] [PHOTOGRAPH OF COINS]
Burnham Securities Inc.
PRINCIPAL DISTRBUTOR
<PAGE>
APPENDIX TO GRAPHIC AND IMAGE MATERIAL
Graph 1 Page 3 of Report 'Total Portfolio Distribution by Asset Class'
The pie chart sets out to describe the asset allocation of The Burnham Fund as
of June 30, 1995. The asset allocation is broken out in the following manner:
Common stocks, Convertible preferred securities and Options - 64%; Corporate &
Convertible bonds - 34%; Cash equivalents - 2%.
Graph 2 Page 3 of Report 'Cumulative Return of a Hypothetical $10,000
Investment'
The line chart describes a hypothetical investment of $10,000 over the
investment period June 16, 1975 (inception date) to June 30, 1995. The
performance figures do not include the imposition of the maximum sales charge of
5%. All dividends and distributions from income and capital gains have been
continually reinvested. The performance in the graph represent past performance
and are not indicative of future performance. The performance at the end of the
period reflects a total hypothetical value of $111,089 representing a cumulative
total return of 1,010.89% and an annualized compound rate of return of 12.73%.
STATEMENT OF DIFFERENCES
The dagger shall be expressed as............. 'D'
The double dagger shall be expressed as...... 'DD'
