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February 5, 1996
Dear Shareholder:
We are pleased to present to you the Annual Report of The Burnham Fund Inc. for
1995.
On December 31, 1995, the Fund's net asset value per share for Class A, B and C
shares was $23.19, $23.45 and $23.10, respectively (with dividends reinvested
but without the imposition of the maximum sales charge for Class A shares),
which represent increases for the year of 24.5%, 23.5% and 23.5%, respectively.
For the fourth quarter, the Fund rose 4.8% versus 4.8% for the Morningstar
Growth and Income Average, 6.1% for the unmanaged Standard & Poor's 500 index,
and 4.7% for the Lehman Brothers Government/Corporate Bond Index.
During 1995, The Burnham Fund paid taxable dividends in respect of its Class A,
B and C shares of $1.62, $1.31, and $1.45, respectively. Of this amount, $1.13,
$0.82 and $0.96, respectively, was from ordinary income and $0.49 was
distributed from capital gains with respect to the Class A, B and C shares.
Portfolio Manager Change
Effective October 19, 1995, the Board of Directors of The Burnham Fund approved
the transfer of Portfolio Manager responsibilities from I.W. Burnham, II to
Jon M. Burnham. I.W. Burnham, II remains Chairman of the Board of Directors of
The Burnham Fund and Jon M. Burnham assumes the title of President and Chief
Executive Officer. Jon Burnham is Chairman and Chief Executive Officer of both
Burnham Securities Inc. and Burnham Asset Management Corporation.
Charles Schwab & Co., Inc. Institutional Mutual Fund OneSource`r' Program
The Fund is pleased to announce that as of October 1995, The Burnham Fund is now
a participant in the Charles Schwab & Co. Inc.'s Institutional Mutual Fund
OneSource`r' Program. The Burnham Fund (Class A shares) is now available without
sales charge through fee-based registered investment advisors who clear their
business through Charles Schwab. We look forward to a successful relationship
with Charles Schwab and its clients.
Investment Strategy
During 1995, our quarterly correspondence to shareholders indicated our
intention to increase the level of equity investments in the Fund's portfolio.
We described how such an increase in equity exposure would lead to a decline in
quarterly investment income and, depending on trading activity in the Fund, a
potential decline in short term capital gains which had supplemented those
quarterly income distributions. Since the late 1980's, our high percentage of
bond investments and the high-yield nature of our stock investment led to an
above average yield on the Fund's shares but below average capital gains in the
portfolio. As of the fourth quarter of 1995, the Investment Committee has
determined that the Fund will make the following strategic changes:
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We are committed to enhancing after-tax shareholder value. Given the current tax
code environment, which may be changing, we believe that shareholders are better
served by long term investments; deciding for themselves when to take
distributions to fulfill their specific income needs. As asset managers, we must
weigh these issues against changing market conditions. We anticipate
opportunistically increasing the Fund's equity exposure to the 80% level or
higher (it is presently 73%) by reducing its corporate bond position and
interest-based investment income. Therefore, income distributions are likely to
fluctuate from quarter to quarter. Stock selection should not change
significantly from our past style of concentration in large capitalization
growth and income securities supplemented by value-oriented and small
capitalization opportunities.
We believe these changes will result in a portfolio with more diverse
investments, higher capital appreciation potential and continued above-average
yield while remaining within the Growth and Income fund category.
1996 Outlook
1995 was by all accounts a superlative year for investors. As expected, a
prolonged recovery accompanied by declining rates led to continued growth in
corporate profits; the most favorable on investment conditions. While almost all
areas of the markets showed strong gains, the winners by far were companies
whose earnings momentum increased over the year. Health care, finance,
technology and utilities sectors were among the best performing components for
the S&P 500 index as well as for the Fund. Among the less favored sectors were
those that failed to show positive earnings comparisons in such a buoyant
environment. The Fund avoided areas which showed prolonged signs of weakness
beyond cyclical factors. These areas included consumer cyclicals (retail) and
raw materials and processing (metals and other commodities).
We remain positive toward the equity markets as 1996 begins, although there are
more risks than last year. The economy appears to be slowing down, and while we
do not forecast a recession, we believe that growth will moderate for the next
few quarters. For the first half of the year, corporate earnings will run
against tough comparisons. We see analyst earnings estimates being reduced for
1996. Companies that meet or exceed earnings estimates should outperform
relative to those with slowing earnings momentum. The Federal Reserve -- and the
central banks of many developed countries -- have been lowering interest rates
to stimulate economic activity. Reductions follow a pattern over the course of a
business cycle; we expect more easing will occur over the course of 1996, and
economic growth should resume. Much of the strength of the rally in January 1996
was due to investors' anticipation of lower interest rates. We believe the
equity markets will continue to perform well so long as the economy shows
moderate growth and interest rates trend lower. Generally, economic and equity
performance improves in an election year -- we do not believe 1996 will be an
exception.
The foreseeable risks in 1996 relate to global politics and the economy. The
Republican Party truly sparked the market rally in late 1994 when it gained a
majority from the Democrats and began the process of legislation pursuant to its
"Contract with
2
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America". The momentum of curtailing government spending continues, but voters
are reflecting on some of its harshness. We may see some realignment in 1996.
Republicans are further under siege by Mr. Forbes and his flat tax ideas; a deja
vu of Mr. Perot's spoiler campaign of 1992. For Mr. Clinton, Whitewater, the
Balkans effort, and regional turmoil in Russia are still volatile issues that
may affect currently positive voter sentiment as we head into the campaign
season. We believe that the budget impasse will be resolved and the U.S. will
not default on it debt, but the risk remains that a totally unexpected default
could occur, which would have serious and far-reaching consequences. The
Consumer Price Index is at a 10 year low, the fifth year in a row it has been
under 3% (as reported by the U.S. Labor Department). A change in this stability
of prices would concern us.
As observers of demographic trends, we note that the baby boomers are aging and
facing college financing and retirement funding. We believe that much of the
decline in soft goods retail sales has been due to this group's shifting
discretionary spending from retail goods to financial assets. The U.S.
government, which is facing the prospect of lowering entitlement spending, will
as a long term goal seek an increase in the U.S. savings rate and encourage the
public to invest for the future. The liquidity provided by an investing public
as evidenced by the influx into mutual funds through IRAs, 401(k) plans and
conventional investing has important bullish ramifications for the health of the
capital markets for years to come.
Moreover, since the 1991 recession, U.S. corporations have regained their
international stature. U.S. products are of higher quality and are more
competitive than ever before. With enhanced profits, corporations actively
repurchase their own stock or effect synergistic mergers. With more money
flowing into mutual funds and other investment vehicles, and with relatively low
yields to be attained in the bond markets, investors perceive greater growth
potential in equities over the long term.
The Burnham Fund continues to overweight the financial services sector (banks,
insurance and investment services), health care, telecommunications and energy
as we start the new year. These areas show continued earnings growth and rising
dividends. We anticipate adding to the technology group and the media area, and
to special value situations. We also intend to add to our REIT holdings, as they
provide us with very attractive dividends along with capital appreciation
potential. Our fixed income portfolio continues to favor bonds that are medium
term in duration with an average "A" rating.
As always, we thank you for your trust and support, and we look forward to
serving your financial needs.
Very sincerely yours,
I.W. BURNHAM, II
I.W. Burnham, II
Chairman
JON M. BURNHAM,
Jon M. Burnham,
President & Portfolio Manager
3
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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
(Class A Shares) 197.79% 69.8% 33.68% 11.53% 11.18% 10.16%
Standard & Poor's 500
Index (with dividends
reinvested) ............ 300.34% 115.43% 53.45% 14.88% 16.59% 15.33%
Lehman Brothers
Government/ ...Corporate
Bond Index ............. 151.20% 59.60% 27.76% 9.65% 9.80% 8.50%
</TABLE>
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 December 31, 1995 were 24.45%, 11.18% and
11.53%, respectively. Such performance assuming the imposition of the Class A
shares' maximum 5% sales charge for the same periods would have been 18.23%,
10.04% and 10.96%, respectively. For Class B and C shares, average total return
for the one year period ended December 31, 1995 and life of class total return
for the period October 18, 1993 (inception date) to December 31, 1995, were
23.54% and 23.51%, and 8.21% and 8.56%, respectively.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
The Burnham Fund Inc.:
We have audited the accompanying statement of assets and liabilities and
statement of net assets of The Burnham Fund Inc., as of December 31, 1995, and
the related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended, and
financial highlights for each of the five years in the period 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995 by correspondence with the custodian and brokers. 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
Burnham Fund Inc. as of December 31, 1995, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended, and financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
New York, New York
February 5, 1996.
4
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COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE FUND TO CERTAIN
MARKET INDICES
[SEE APPENDIX TO GRAPHIC AND IMAGE MATERIAL]
Comparison of Performance to Certain Market Indices.
Although the Fund's investment objectives do not include matching or exceeding
the performance of any securities-related index, the line graph set forth above
may be viewed as useful in that it enables an investor to compare the
performance of the Fund to certain securities-related market indices. The line
graph includes performance information relating to the Standard & Poor's 500
Index, a broad-based stock market index which is comprised of a large, unmanaged
"basket" of stocks. Since the Fund is a managed investment vehicle, and its
investment policies permit it to invest in debt securities, convertible
securities, warrants and options, the Fund may be able to reduce the volatility
and downside risk inherent in an investment in an index comprised exclusively of
equity securities. In addition, the line graph sets forth information regarding
the Lehman Government/Corporate Bond Index, an index reflecting the broad-based
bond market, as well as the average quarterly return of 3-month U.S. Treasury
Bills. Since the Fund maintained a significant portion of its portfolio in
fixed-income investments during 1995, the information pertaining to these market
indices may be useful in providing a comparison of the Fund's performance to
that of the bond market in general. In making any of these comparisons, it
should be understood that the performance of a market index is not adjusted to
reflect the brokerage expenses that would be incurred in purchasing and selling
the securities comprising the index, and does not include the management fees
and other expenses that are generally incurred in investing through mutual
funds. The information pertaining to the Fund's performance is stated in terms
of total return and is adjusted to reflect the maximum sales charge of 5% to
which Class A shares are currently subject at the time of their purchase. The
performance information set forth on the line graph is based on a $10,000
investment made as of December 31, 1985, and reflects changes in value through
the 10-year period to December 31, 1995.
Performance during 1995.
In 1995, The Burnham Fund gradually increased its exposure in the equity markets
from 54% to 73% by the end of the year. Positions were added in industries that
the investment committee believed would benefit from an extended economic cycle
and declining interest rate environment. Sectors that were stressed included
financial services, energy, health care, technology and telecom/utilities. Jon
M. Burnham assumed portfolio management responsibilities on October 19, 1995. He
directed the Fund to raise its equity allocation further to approximately 75%
with the intention of moving higher opportunistically. These moves effectively
reduced the Fund's net investment income at year-end. For the year, the S&P 500
index returned 37.5%, its highest return since 1958, and the Lehman Brothers
Government/Corporate Bond Index rose 19.2%. The Morningstar Growth and Income
Index rose 31.6% for the year. The Fund rose 24.5% for the year, underperforming
its peers in the Growth and Income category; for the first three quarters of
1995 its allocation was geared toward both growth and income objectives rather
than capital appreciation. During the fourth quarter of 1995, when its
allocation to equities was effectively increased, the Fund matched the Growth
and Income index's increase of 4.8%.
5
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INVESTMENT PERSPECTIVE
Equity Portfolio Distribution
by Industry Classification
December 31, 1995
<TABLE>
<CAPTION>
% Total
Equity Portfolio
----------------
<S> <C>
Energy -- Oil & Gas................... 15.97%
Pharmaceuticals....................... 9.42%
Communications Services............... 8.72%
Insurance............................. 7.55%
Telephone Companies................... 6.34%
Automotive............................ 5.71%
Utilities............................. 4.89%
Real Estate........................... 4.16%
Computers & Software.................. 4.15%
Semiconductors........................ 3.83%
Banking............................... 3.79%
Others................................ 25.47%
----------------
Total Equities........................ 100.00%
----------------
----------------
</TABLE>
Total Portfolio Distribution by Asset Class
December 31, 1995
[SEE APPENDIX TO GRAPHIC AND IMAGE MATERIAL]
Top 25% Portfolio Holdings
December 31, 1995
Number of Shares/ % of
<TABLE>
<CAPTION>
Principal Amount Value Net Assets
----------------- ----------- ----------
<S> <C> <C> <C>
Chrylser Corp. .................................. 70,000 $ 3,876,250 3.44%
Exxon Corporation................................ 45,000 $ 3,605,625 3.20%
AT&T Corp........................................ 40,000 $ 2,590,000 2.30%
The Bank of New York Co., Inc.,
7.5% conv. sub. deb. 8/15/01................... $1,000,000 $ 2,490,000 2.21%
Mobil Corp....................................... 20,000 $ 2,240,000 1.99%
Texaco Capital Inc., 8.65% gtd. notes 1/30/98.... $2,000,000 $ 2,123,204 1.88%
Thermo Electron Corp............................. 40,000 $ 2,080,000 1.85%
Goodrich (B.F.) Co............................... 30,000 $ 2,043,750 1.81%
Texaco Inc....................................... 25,000 $ 1,962,500 1.74%
American Home Products Corp...................... 20,000 $ 1,940,000 1.72%
McDonald's Corp.................................. 40,000 $ 1,805,000 1.60%
Amoco Corp....................................... 25,000 $ 1,796,875 1.59%
----------
Total Top 25% Portfolio Holdings................. 25.33%
----------
----------
</TABLE>
Cumulative Return
of a Hypothetical $10,000 Investment*
from inception (June 16, 1975)
through December 31, 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 December 31, 1995
<TABLE>
<S> <C>
One Year................. 24.45%
Five Years............... 11.18%
Ten Years................ 11.53%
Fifteen Years............ 12.21%
Twenty Years............. 13.47%
</TABLE>
6
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<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
December 31, 1995
Number of Value
Shares/Units (Note 1)
------------ --------
<S> <C> <C>
COMMON STOCKS 72.54%
AEROSPACE ........................... 1.81%
Goodrich (B.F.) Co. ......... 30,000 $2,043,750
AUTOMOTIVE 4.14%
Chrysler Corp. .............. 70,000 3,876,250
General Motors Corp. ........ 15,000 793,125
----------
4,669,375
----------
BANKING 2.75%
The Bank of New York
Co., Inc. ........... 20,000 975,000
Citicorp .................... 20,000 1,345,000
Home Financial Corp. ........ 50,000 775,000
----------
3,095,000
----------
BUILDING PRODUCTS 1.06%
USG Corp. ................... 40,000 a 1,200,000
COMMUNICATIONS SERVICES 6.33%
AT&T Corp. .................. 40,000 2,590,000
ECI Telecom Ltd. ............ 50,000 1,143,750
GTE Corp. ................... 40,000 1,760,000
U.S. West Media Group ....... 86,000 a 1,634,000
---------
7,127,750
---------
COMPUTERS & SOFTWARE 3.01%
Hewlett Packard Co. ......... 17,000 1,423,750
Microsoft Corp. ............. 10,000 a 878,125
Phoenix Technologies Ltd. ... 70,000 a 1,093,750
---------
3,395,625
---------
CONGLOMERATES 0.27%
ITT Industries .............. 12,500 300,000
---------
DATA PROCESSING SYSTEMS 1.15%
General Motors Corp. Cl. "E" 25,000 1,300,000
---------
ENERGY - OIL AND GAS 11.58%
Amoco Oil Co. ............... 25,000 1,796,875
Exxon Corporation ........... 45,000 3,605,625
Mobil Corporation ........... 20,000 2,240,000
Royal Dutch Petroleum ADR ... 10,000 1,411,250
Texaco Inc. ................. 25,000 1,962,500
Triton Energy Corp. ......... 20,000 a 1,147,500
Union Pacific Resources
Group Inc. .......... 35,000 888,125
----------
13,051,875
----------
ENGINEERING/INDUSTRIAL PRODUCTION 1.93%
Thermo Electron Corp. ....... 40,000 a 2,080,000
Thermolyte Corp. units
(Note 4) ............ 10,000 a,b 100,000
---------
2,180,000
---------
FOOD CHAINS 1.60%
McDonald's Corp. ............ 40,000 1,805,000
---------
FOOD PRODUCTS 1.03%
General Mills Inc. .......... 20,000 1,155,000
---------
HEALTHCARE REIT 1.55%
Meditrust Corp. ............. 50,000 1,743,750
---------
HOTELS 2.70%
Hilton Hotels Corp. ......... 20,000 1,230,000
ITT Corp. ................... 12,500 a 662,500
Marriott International Inc. . 30,000 1,147,500
---------
3,040,000
---------
INSURANCE 5.48%
Allstate Corp. .............. 35,000 1,439,375
American Annuity Group Inc. . 50,000 593,750
Chubb Corp. ................. 15,000 1,451,250
ITT Hartford Group Inc. ..... 12,500 a 604,688
TIG Holdings Inc. ........... 40,000 1,140,000
Travelers Group Inc. ........ 15,000 943,125
---------
6,172,188
---------
MEDICAL SUPPLIES 0.56%
PLC Systems Inc. ............ 38,000 a 631,750
---------
OFFICE EQUIPMENT 1.46%
Xerox Corp. ................. 12,000 1,644,000
---------
OPTICAL EYE CARE 0.03%
Sterling Vision Inc. ........ 5,000 a 34,375
---------
PHARMACEUTICALS 6.83%
American Home Products Corp. 20,000 1,940,000
Caremark International Inc. . 50,000 906,250
Humana Inc. ................. 50,000 a 1,368,750
IVAX Corp. .................. 30,000 855,000
Pfizer Inc. ................. 20,000 1,260,000
Schering Plough Corp. ....... 25,000 1,368,750
---------
7,698,750
---------
PLASTICS 1.26%
Raychem Corp. ............... 25,000 1,421,875
---------
RAILROADS 0.59%
Union Pacific Corp. ......... 10,000 660,000
---------
REAL ESTATE REIT 3.02%
Franchise Finance Corp.
of America .......... 70,000 1,583,750
National Golf Properties Inc. 60,000 1,372,500
Sizeler Property
Investments Inc. .... 50,000 443,750
---------
3,400,000
---------
</TABLE>
See notes to financial statements ...
7
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<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS (Continued)
December 31, 1995
Number of Shares
or Principal Value
Amount (Note 1)
<S> <C> <C>
SEMICONDUCTORS 2.78%
Intel Corp. .......................... 25,000 $ 1,420,312
Motorola, Inc. ....................... 30,000 1,710,000
-----------
3,130,312
-----------
TELEPHONE COMPANIES 4.60%
Bell Atlantic Corp. .................. 25,000 1,671,875
SBC Communications Inc. .............. 30,000 1,725,000
U.S. West Communications
Group ........................ 50,000 1,787,500
-----------
5,184,375
-----------
TRAVEL RELATED & FINANCIAL SERVICES 1.47%
American Express Co. ................. 40,000 1,655,000
UTILITIES 3.55%
Detroit Edison Co. ................... 25,000 862,500
Kansas City Power & Light Co. ........ 20,000 522,500
Montana Power Co. .................... 20,000 452,500
Puget Sound Power & Light Co. ........ 40,000 930,000
Southern Co. ......................... 50,000 1,231,250
-----------
3,998,750
-----------
TOTAL COMMON STOCKS
(COST: $66,610,917) .......... 81,738,500
-----------
Principal Value
Amount (Note 1)
CORPORATE CONVERTIBLE BONDS 4.18%
BANKING 2.21%
The Bank of New York
Company, Inc., 71/2% conv
sub. deb. 8/15/01 ............ $ 1,000,000 2,490,000
---------
DATA PROCESSING 0.89%
EMC Corp.,
4 1/4% conv. sub. deb. 1/01/01 1,000,000 997,500
---------
ELECTRONICS 0.20%
VLSI Technology Inc.,
8 1/4% conv. sub. note 10/01/05 250,000 230,625
---------
STEEL 0.42%
USX Marathon Group,
7% conv. sub. deb. 6/15/17 ... 500,000 476,250
---------
UTILITIES 0.46%
Consolidated Natural Gas Co.,
7 1/4% conv. sub. deb. 12/15/15 500,000 518,125
---------
TOTAL CORPORATE CONVERTIBLE
BONDS (COST: $3,257,563) ..... 4,712,500
---------
CORPORATE BONDS 21.58%
BANKING 1.88%
Chase Manhattan Corp.,
7 7/8% sub. notes 8/01/04 .... 1,000,000 1,060,132
Morgan (J.P.) & Co., Inc.,
7 5/8% sub. notes 11/15/98 ... 1,000,000 1,054,131
---------
2,114,263
---------
BUILDING PRODUCTS 1.79%
USG Corp., 8% sr .....................
notes 12/15/96 ............... 500,000 504,381
USG Corp., 8% sr. notes
3/15/97 ...................... 1,500,000 1,516,405
---------
2,020,786
---------
CHEMICALS 1.35%
du Pont (E.I.) de Nemours & Co.,
6% notes 12/01/01 ............ 1,000,000 993,750
du Pont (E.I.) de Nemours & Co.,
6 3/4% notes 10/15/02 ......... 500,000 524,133
---------
1,517,883
---------
COMMUNICATION SERVICES 0.89%
Storer Communications Inc.,
10% deb. 5/15/03 ............. 1,000,000 1,006,250
---------
ENERGY - OIL & GAS 0.88%
Maxus Energy Corp.,
9 3/8% notes 11/01/03 ........ 1,000,000 991,250
---------
FINANCIAL SERVICES 6.96%
Ford Motor Credit Corp.,
9 1/4% notes 6/15/98 .......... 1,000,000 1,082,284
General Electric Capital Corp.,
8% notes 1/15/98 ............. 1,000,000 1,047,801
GMAC Corp.,
7.65% notes 2/04/97 .......... 400,000 408,810
GMAC Corp.,
7 3/4% notes 1/15/99 .......... 1,000,000 1,056,177
MGM Grand Hotel Finance Corp.,
11 3/4% gtd. notes 5/01/99 .... 1,000,000 1,062,500
Texaco Capital Inc.,
9% gtd. notes 11/15/97 ....... 1,000,000 1,062,779
Texaco Capital Inc.,
8.65% gtd. notes 1/30/98 ..... 2,000,000 2,123,204
---------
7,843,555
---------
FOOD & BEVERAGE 0.44%
Spreckles Industries Inc.,
11 1/2% sr. sec. notes 9/01/00 500,000 502,500
---------
FOOD & TOBACCO 1.89%
Philip Morris Companies Inc.,
9 1/4% notes 12/01/97 ......... 1,000,000 1,066,699
Nabisco Inc., 8% notes
1/15/00 ...................... 1,000,000 1,058,750
---------
2,125,449
---------
</TABLE>
See notes to financial statements
8
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STATEMENT OF NET ASSETS (Concluded)
<TABLE>
<CAPTION>
December 31, 1995
Principal Value
Amount (Note 1)
<S> <C> <C>
HOTELS 2.18%
Marriott Corp.,
9 5/8% sr. notes "B"
2/01/96 .................... $ 525,000 $ 525,369
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 .................... 115,000 115,395
Marriott Corp.,
9 7/8% sr. notes "E"
11/01/97 ................... 850,000 851,774
Marriott Corp., 9 3/8% deb .........
6/15/07 .................... 500,000 516,803
------------
2,452,321
------------
PAPER PRODUCTS 0.95%
Riverwood International Corp.,
10 3/4% sr. notes II 6/15/00 500,000 534,375
Riverwood International Corp.,
10 3/4% sr. notes 6/15/00 ... 500,000 540,000
------------
1,074,375
------------
PHARMACEUTICALS 1.91%
Johnson & Johnson,
7 3/8% euronotes 11/09/97 .. 1,000,000 1,035,626
Lilly (Eli) & Co.,
8 1/8% notes 12/01/01 ...... 1,000,000 1,114,353
------------
2,149,979
------------
UTILITIES 0.46%
AES Corp.,
9 3/4% sr. sub. notes 6/15/00 500,000 516,250
------------
TOTAL CORPORATE BONDS
(COST: $23,337,206) 24,314,861
------------
COMMERCIAL PAPER 1.37%
Associates Corp. of NA,
5.65% 1/02/96 .............. 1,541,000 1,541,000
------------
TOTAL COMMERCIAL PAPER
(COST: $1,541,000).. 1,541,000
------------
TOTAL INVESTMENTS
(COST: $94,746,686) ................99.67% $112,306,861
CASH AND OTHER ASSETS,
LESS LIABILITIES ........... 0.33% 373,691
----- ------------
Net Assets ................................100.00% $112,680,552
----- ------------
----- ------------
</TABLE>
a Non-income producing security.
b A unit consists of one share of common stock of Thermolyte Corp. and one
redemption right.
For Federal income tax purposes, the tax basis of investment securities
owned at Dec. 31, 1995 was $94,746,686. The aggregate gross unrealized
appreciation for all securities in which there was an excess of value over tax
cost was $17,880,513 and aggregate gross unrealized depreciation for all
securities in which there was excess of tax cost over value was $320,338.
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
<S> <C>
ASSETS:
Investment in securities,
at value (identified
cost: $94,746,686)(Note 1) ....................... $112,306,861
Cash in bank ..................................... 23,576
Dividends and interest receivable ................ 622,590
Receivable for capital stock sold ................ 735
Prepaid expenses ................................. 54,122
------------
Total assets ..................................... 113,007,884
------------
LIABILITIES:
Payable for investment
securities purchased ............................. 34,375
Payable for capital stock redeemed ............... 41,406
Payable for investment
advisory fees (Note 6) ........................... 58,251
Payable for distribution and
service fees (Note 7) ............................ 25,289
Accrued expenses and other payables .............. 168,011
------------
Total liabilities ................................ 327,332
------------
NET ASSETS ....................................... $112,680,552
------------
------------
CLASS A SHARES
Net asset value and redemption price
per share (Note 2):
($112,043,842/4,832,331.635 shares
outstanding) ..................................... $ 23.19
------------
------------
Calculation of Maximum Offering Price
Sales charge - 5% of public offering price:
(Note 2): ($23.19 net asset value
plus 5.0% of public offering price) .............. $ 24.41
------------
------------
CLASS B SHARES
Net asset value and offering price
per share: (Note 2):
($633,807/27,029.953 shares
outstanding) ..................................... $ 23.45
------------
------------
CLASS C SHARES
Net asset value and offering price
per share: (Note 2):
($2,903/125.672 shares
of capital stock outstanding) .................... $ 23.10
------------
------------
Redemption price per share varies
with the length of time
Class B and C shares are held. (Note 7)
NET ASSETS CONSISTED OF:
Capital paid-in .................................. $ 90,159,251
Undistributed net investment income .............. 882,239
Accumulated net realized gains
on investments ................................... 4,078,887
Net unrealized appreciation of
investments ...................................... 17,560,175
------------
$112,680,552
------------
------------
</TABLE>
See notes to financial statements
9
<PAGE>
<PAGE>
[LOGO]
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year ended December 31, 1995
INVESTMENT INCOME:
<S> <C>
Income:
Dividends ................................................... $ 2,011,639
Interest .................................................... 3,109,848
------------
Total income ................................................ 5,121,487
------------
Expenses:
Investment advisory fees (Note 6) ........................... 658,253
Distribution fee (Class A)(Note 7) .......................... 262,863
Distribution fee (Class B)(Note 7) .......................... 3,801
Distribution fee (Class C)(Note 7) .......................... 15
Service fees (Class B & C)(Note 7) .......................... 1,280
Transfer agent fees ......................................... 207,406
Professional fees ........................................... 182,142
Reports to shareholders ..................................... 48,860
Directors' fees and expenses ................................ 69,800
Custodian fees .............................................. 51,987
Registration fees and expenses .............................. 69,144
Insurance expense ........................................... 53,099
Miscellaneous expense ....................................... 19,817
------------
Total expenses before reimbursement ......................... 1,628,467
Less: Expenses voluntarily reimbursed
by Investment Adviser (Note 6) .............................. (22,892)
------------
Total expenses after reimbursement .......................... 1,605,575
------------
Net investment income ....................................... 3,515,912
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Realized gain from securities and options
transactions (excluding short-term
money market instruments)
Proceeds from sales ............................$ 92,874,358
Cost of securities sold .........................(88,439,968)
-------------
Net realized gain from securities
and options transactions .................................... 4,434,390
------------
Increase in unrealized appreciation
of investments
Beginning of year ..............................$ 2,231,529
End of year .................................... 17,560,175
------------
Increase in unrealized appreciation ......................... 15,328,646
------------
Net realized and unrealized gain
on investments .............................................. 19,763,036
------------
Net increase in net assets resulting from
operations .................................................. $ 23,278,948
------------
------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
Year ended Year ended
December 31, December 31,
1995 1994
----------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income .......................... $ 3,515,912 $ 3,970,955
Net realized gain from security
and option transactions ........................ 4,434,390 3,854,723
Increase (Decrease) in unrealized
appreciation of investments .................... 15,328,646 (10,028,824)
------------- ------------
Net increase (decrease) in net
assets resulting from
operations ..................................... 23,278,948 (2,203,146)
------------- ------------
Distributions to shareholders
(Note 1):
From net investment income:
Class A Shares ................................. (3,774,236) (4,681,668)
Class B Shares ................................. (10,282) (7,380)
Class C Shares ................................. (83) (96)
From realized gains from
security and option transactions:
Class A Shares ................................. (2,856,113) (3,806,005)
Class B Shares ................................. (10,070) (7,594)
Class C Shares ................................. (67) (79)
------------- ------------
Total distributions to
shareholders ................................... (6,650,851) (8,502,822)
------------- ------------
Capital share transactions
(Note 2):
Net proceeds from sale
of shares ...................................... 1,318,615 2,874,828
Net asset value of shares issued
to shareholders in reinvestment
of dividends ................................... 5,722,758 7,340,553
------------- ------------
7,041,373 10,215,381
------------- ------------
Cost of shares redeemed ........................ (13,140,548) (15,991,754)
Decrease in net assets derived
from capital share
transactions ................................... (6,099,175) (5,776,373)
------------- ------------
Increase (Decrease) in net
assets for the year ............................ 10,528,922 (16,482,341)
------------- ------------
NET ASSETS:
Beginning of year .............................. 102,151,630 118,633,971
------------- ------------
End of year (including
undistributed .... net investment
income of $882,239 and
$1,123,969, respectively) ...................... $ 112,680,552 $ 102,151,630
------------- ------------
------------- ------------
</TABLE>
See notes to financial statements
10
<PAGE>
<PAGE>
[LOGO]
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
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 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 year ended December 31, 1995 were as
follows:
<TABLE>
<CAPTION>
Number of
Options Premiums
<S> <C> <C>
Options written at December 31, 1994 ............ -0- $ -0-
Options written ................................. (200) (29,299)
Options canceled in closing
purchase transactions ........................... 200 29,299
Options outstanding at
------- ---------
December 31, 1995 ............................... -0- $ -0-
======= =========
</TABLE>
The cost of canceling options in closing transactions was $38,200 resulting in a
net realized capital loss of $8,901.
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
11
<PAGE>
<PAGE>
[LOGO]
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
reclassified $26,959 from accumulated net realized gains on investments to
undistributed net investment income
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.
NOTE 2 - Capital Stock
At December 31, 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 December 31, 1995, Class D shares were not issued.
Transactions in capital stock for the years ended December 31, 1995 and 1994 for
Class A, B and C shares were as follows:
<TABLE>
<CAPTION>
Year ended Year ended
CLASS A SHARES Dec. 31, 1995 Dec. 31, 1994
<S> <C> <C>
Shares sold .......................................... 52,477 130,430
Shares issued to shareholders
in reinvestment of distributions ..................... 285,586 361,712
--------- ---------
338,063 492,142
Shares redeemed ...................................... (626,658) (790,191)
--------- ---------
Net decrease ......................................... (288,595) (298,049)
--------- ---------
--------- ---------
CLASS B SHARES
Shares sold .......................................... 10,326 9,254
Shares issued to shareholders
in reinvestment of distributions ..................... 1,002 748
--------- ---------
11,328 10,002
Shares redeemed ...................................... (1,348) (254)
Net increase ......................................... 9,980 9,748
========= =========
CLASS C SHARES
Shares sold .......................................... -0- -0-
Shares issued to shareholders
in reinvestment of distributions ..................... 7 9
--------- ---------
7 9
Shares redeemed ...................................... -0- -0-
--------- ---------
Net increase ......................................... 7 9
========= =========
NOTE 3 - Purchase and Sales of Securities
The aggregate cost of purchases and the proceeds from sales of securities or
maturities for the year ended December 31, 1995 were:
</TABLE>
<TABLE>
<CAPTION>
Proceeds
Cost of from sales
purchases or maturities
<S> <C> <C>
Short-term money
market instruments ............................. $306,293,800 $304,752,800
U.S. Government obligations .................... -0- 2,441,875
Common stocks and other securities ............. 82,152,276 90,432,483
</TABLE>
For the year ended December 31, 1995, the Fund had net realized losses of
$1,105,296 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 December 31, 1995, the Fund
held a restricted security with a value aggregating $100,000, representing less
than 0.1% of the Fund's net assets. Currently, a market does not exist for the
security listed below:
<TABLE>
<CAPTION>
Units Company Acquired Cost Value
- ------------------------------------------------------------------------
<C> <S> <C> <C> <C>
10,000 Thermolyte Corp. 03/16/1995 $100,000 $100,000
</TABLE>
This security has been valued in good faith by management.
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
12
<PAGE>
<PAGE>
[LOGO]
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
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.
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 A 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 year ended December 31, 1995, the Fund incurred fees in
the amount of $658,253. 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 $8,119
and $14,773, 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 year ended December 31, 1995,
Class A, B and C shares incurred fees of $262,863, $3,801, and $15,
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 year ended
December 31, 1995 were $1,276 and $4, respectively. For the year ended December
31, 1995, the Distributor earned $183,771 in brokerage commissions from Fund
transactions and $11,368 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 Class A 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 shareholders 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 is paid to the
Distributor. For the year ended December 31, 1995, there were $1,433 in CDSC
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.
13
<PAGE>
<PAGE>
[LOGO]
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE 8 - Financial Highlights
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class C
-------------------------------------- ------------------------ ----------------------
Shares
- --------------------------
Year ended Dec.31, 1995 1994 1993 1992 1991 1995 1994 1993*`DD' 1995 1994 1993*'DD'
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $19.88 $21.86 $21.95 $22.16 $20.01 $19.94 $21.84 $22.17 $19.89 $21.87 $22.17
Income from Investment
Operations
Net Investment Incom 0.71 0.75 0.81 0.88 1.07 0.41 0.49 0.13 0.54 0.72 0.15
Net Gains or Losses on
Securities
(both realized
and unrealized) .. 3.91 (1.15) 1.11 0.69 2.36 4.10 (1.04) (0.46) 3.91 (1.15) (0.45)
--------------------------------------------------------------------------------------------------------------
Total from Investment
Operations ....... 4.62 (0.40) 1.92 1.57 3.43 4.51 (0.55) (0.33) 4.45 (0.43) (0.30)
Less Distributions
Dividends (from net
investment income) (0.75) (0.87) (0.90) (1.12) (1.06) (0.44) (0.64) -0- (0.68) (0.84) -0-
Distributions from
Capital Gains
(from securities
and options
transactions) .... (0.56) (0.71) (1.11) (0.66) (0.22) (0.56) (0.71) -0- (0.56) (0.71) -0-
--------------------------------------------------------------------------------------------------------------
Total Distributions (1.31) (1.58) (2.01) (1.78) (1.28) (1.00) (1.35) -0- (1.34) (1.55) -0-
--------------------------------------------------------------------------------------------------------------
Net Asset Value,
End of Year ...... $23.19 $19.88 $21.86 $21.95 $22.16 $23.45 $19.94 $21.84 $23.10 $19.89 $21.87
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Total Return ..... 24.45% (1.77%) 9.35% 7.70% 17.98% 23.54% (2.52%) (1.49%) 23.51% (1.95%) (1.35%)
--------------------------------------------------------------------------------------------------------------
Ratios/Supplemental
Data
Net Assets
(in $millions),
End of Year ...... 112.0 101.8 118.5 117.2 125.4 0.6 0.3 0.2 0.0** 0.0** 0.0**
--------------------------------------------------------------------------------------------------------------
Ratio of
Expenses (net)
to Average
Net Assets ....... 1.5% 1.5% 1.5% 1.2% 1.1% 2.2% 2.3% 2.2%`D' 2.3% 1.5% 1.5%`D'
--------------------------------------------------------------------------------------------------------------
Ratio of
Net Income
to Average
Net Assets ....... 3.3% 3.7% 3.7% 4.1% 5.0% 2.5% 2.9% 3.9%`D' 2.5% 3.6% 3.5%`D'
--------------------------------------------------------------------------------------------------------------
Portfolio Turnover
Rate ............. 78.3% 87.9% 54.1% 68.5% 120.8% 78.3% 87.9% 54.1% 78.3% 87.9% 54.1%
--------------------------------------------------------------------------------------------------------------
* 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 December
29, 1995. The distribution had an ex-dividend date of January 2, 1996 and was
payable January 9, 1996.
The distribution was as follows:
</TABLE>
<TABLE>
<CAPTION>
Class A Class B Class C
<S> <C> <C> <C>
From net investment income ....................... $ 0.16 $ 0.02 $ 0.06
From short-term capital gains .................... 0.37 0.37 0.37
From long-term capital gains ..................... 0.49 0.49 0.49
-------- -------- --------
Total distributions paid ......................... $ 1.02 $ 0.88 $ 0.92
======== ======== ========
NOTE 10 - Management's Use of Estimates
The preparation of financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses during the
reporting period.
Actual results could differ from those estimates.
14
<PAGE>
<PAGE>
[THIS PAGE LEFT INTENTIONALLY BLANK.]
15
<PAGE>
<PAGE>
Officers of the Fund
I.W. Burnham, II Chairman
Jon M. Burnham, President
and Chief Executive Officer
Debra B. Hyman, Executive Vice President
Michael E. Barna, First Vice President
Chief Financial Officer, Treasurer and Secretary
Ronald M. Geffen, Vice President
Frank A. Passantino, Vice President and
Assistant Secretary
Louis S. Rosenthal, Vice President
Leon C. Sunstein, Jr., Vice President
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
Independent Accountants
Coopers & Lybrand L.L.P.
1301 Avenue of the Americas
New York, New York 10019
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.
Annual Report
DECEMBER 31, 1995
CONTINUITY KNOWLEDGE
[PHOTOGRAPH OF CLOCK] [PHOTOGRAPH OF CHESS PIECE]
[LOGO]
GROWTH INCOME
[PHOTOGRAPH OF STEPS] [PHOTOGRAPH OF COINS]
Burnham Securities Inc.
Principal Distributor
<PAGE>
<PAGE>
APPENDIX TO GRAPHIC AND IMAGE MATERIAL
Graph 1 Page 5 of Report 'Comparison of Change in Value of $10,000 Investment in
the Fund to Certain Market Indices'
The line chart describes a hypothetical investment of $10,000 over the 10-year
investment period January 1, 1985 to December 31, 1995 for The Burnham Fund
Class A shares compared to comparable performance of the S&P 500 Index, Lehman
Brothers Corporate/Government Bond Index and the Average 3-month U.S. Treasury
Bill Rate. Performance for The Burnham Fund Class A shares is based on the
imposition of a maximum initial 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 $28,290 for The Burnham Fund Class A shares, $40,034 for
the S&P 500 Index, $25,120 for the Lehman Brothers Corporate/Government Bond
Index and $17,135 for the Average 3-month U.S. Treasury Bill Rate. The Average
Annualized Total Return of the The Burnham Fund Class A shares was 18.23% for
the past year, 10.04% for the past 5 years and 10.96% for the past 10 years.
Graph 1 Page 6 of Report 'Total Portfolio Distribution by Asset Class'
The pie chart sets out to describe the asset allocation of The Burnham Fund as
of December 31, 1995. The asset allocation is broken out in the following
manner: Common Stocks - 73%; Corporate & Convertible Bonds - 26%; Cash and Cash
Equivalents - 1%.
Graph 2 Page 6 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 December 31, 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 $122,675 representing a cumulative
total return of 1,126.75% and an annualized compound rate of return of 12.95%.
<PAGE>
<PAGE>
</TABLE>
