<PAGE>
<PAGE>
[LOGO]
August 4, 1997
Dear Shareholders:
We are pleased to present to you the Semi-Annual Report of the Burnham Fund for
1997.
FUND DATA
- -------------------------------------------------------------------------------
On June 30, 1997, The Burnham Fund's net asset value per share for Class A, B
and C shares was $27.99, $28.65 and $28.02 respectively, which represent
increases for the first half of the year of 15.3%, 14.8% and 14.8%,
respectively. This compares to an increase in The CDA/Wiesenberger Growth and
Income Average of 15.3%, and Morningstar's Large Cap Blend Index of 16.7% for
the corresponding period. On July 9, 1997, The Burnham Fund Class A, B and C
shares paid $0.11, $0.05 and $0.04 respectively, in taxable dividends per share
to shareholders of record on June 30, 1997. The dividend was comprised of
ordinary income.
MARKET ANALYSIS
- -------------------------------------------------------------------------------
The markets roared back in the second quarter, versus nearly unchanged levels in
the first quarter of the year. The unmanaged, Standard & Poor's 500 Index ("S&P
500"), rose 17.47%, and the average diversified equity mutual fund posted the
sharpest quarterly gain since 1991 according to Lipper Analytical Services Inc.
The Burnham Fund rose 14.2% for the second quarter of 1997. Impressive gains
continued in the large capitalization sector of the market (Dow Jones
Industrials and S&P 500), and the small capitalization market (NASDAQ OTC)
rebounded from depressed levels. The small cap market, however, continues to lag
the large cap market by a significant margin on a trailing 12 month basis.
The buoyant market of the second quarter is partly explained by the absence of
any indication that interest rates will trend higher for the near term. A quote
we excerpt from Chairman Greenspan's recent testimony on Capital Hill in July
seems particularly pertinent. Mr. Greenspan commented, "The world is undergoing
a once or twice in a century phenomenon that will carry productivity trends
nationally and globally to a new higher track." All data shows that, for the
present, inflation is under control. Macroeconomic data is compelling: demand
growth has moderated, producer prices have remained in check, consumer debt
growth has slowed, corporations are reporting positive earnings surprises, and
unemployment rates are low. However, Mr. Greenspan cautioned that while the
state of the U.S. economy is "exceptional, interest rates at some point will be
modified to foster sustainable growth." Fed officials anticipate GDP growth
between 3.0% and 3.25%. Wall Street analysts (consensus estimates as reported by
First Call) expect S&P 500 earnings to grow by approximately 11% for 1997 and 6%
for 1998.
FUND REVIEW
- -------------------------------------------------------------------------------
For the second quarter, the top performing sectors of the S&P 500 were Consumer
Staples, Financial Services and Technology; the worst performing sectors were
Transportation, Utilities and Basic Materials. The Fund's asset allocation
weightings changed materially in the quarter: The top five sectors at the end of
the second quarter were Energy, Real Estate Investment Trusts, Computer Products
and Software, Pharmaceuticals and Insurance. Banking dropped from the top five,
although Financial Services in total (which includes related industries) is an
area of major financial commitment. Three companies joined our top 25% holdings.
The companies in that group include (in order of weighting) Exxon Corp.,
Travelers Group, The Bank of New York, Diamond Offshore Drilling, Intel Corp.,
American Express Corp., Microsoft Corp., Allstate Corp., and American Home
Products Corp. The five best performing positions during the first half of the
year were RehabCare Group Inc., Microsoft Corp., Lucent Technologies, Travelers
Group and Pfizer Inc. The poorest performers were PLC Systems Inc. (which was
sold after the quarter's end), Phoenix Technology Corp., Thermo Electron Corp.,
New Plan Realty Trust SBI (also sold), and Franchise Finance Corp. of America.
We increased our commitment to several existing positions because of our
increasingly positive outlook for their earnings. These companies include Siebel
Systems, Gillette, Diamond Offshore, Golf Trust of America, Boeing, IBM, Lucent
Technologies and Johnson and Johnson. We added to our REIT holdings in order to
increase current income in a low-dividend yield environment. These REITs also
show potential for considerable capital gains potential. We purchased Ford Motor
Company, based on its home-run selling SUV "Expedition" and Lincoln "Navigator"
as well as the forthcoming new model of the Town Car. The stock is attractively
valued and sports a high yield. We added Automatic Data Processing, a data
processing concern with stable, rising earnings prospects. Motorola and Cisco
Systems were added as their earnings comparisons against 1996 levels have
improved and the stock valuations are compelling. Chase Manhattan Bank and Gulf
Stream Aerospace were added as well: Chase due to its strong earnings prospects
and Gulfstream due to new product introduction and the rising backlog of new
corporate jet orders. We purchased Oxford Health Care, because we feel it is a
<PAGE>
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leader in the rapidly growing managed-care industry. We disposed of our holdings
in Union Pacific Resources after the announcement of its intention to purchase
Pennzoil. Mirage was also sold, to be revisited after certain resort investments
have been completed. We lightened our long-standing position in Chrysler, mainly
to diversify into Ford. ECI Telecom was sold as it reached our valuation
targets.
OUTLOOK
- -------------------------------------------------------------------------------
We have expressed for some time now our thoughts behind the remarkable strength
of the equity market. First, we believe the United States is enjoying a long,
expanding business cycle due to the end of the cold war. Increasing global
demand for U.S. goods and services, accompanied by unprecedented managerial
creativity due to leaps in technology, innovation and investment has resulted in
internal margin expansion and rising corporate earnings. Global competition has
served to keep prices low. Second, the Clinton Administration and Congress
together have been incredibly effective in reducing the rate of deficit growth,
mostly due to unexpectedly strong corporate and individual tax payments. On July
28, the White House and Congress announced a balanced budget agreement which
includes liberalized inheritance taxes, capital gains cuts, education
scholarships and child credits. Reduction of the capital gains tax, which
possibly a depressant near term on stock prices, encourages the quest for new
capital (and makes bonds a less attractive investment.) Third, the Fed has
deftly focused on managing economic growth and keeping a watchful eye on
inflation. Fourth, corporate mergers have continued apace in the second quarter,
most notably in the semiconductor and brokerage/investment management sectors.
Significant size mergers combined with continued and new stock repurchase
programs reduce the amount of shares available for purchase, particularly in the
very companies that many "conservative growth" investors want to own. Finally,
mutual fund purchases continue at near-record levels through systematic
retirement programs and discretionary purchases.
Confidence that our economic house is getting in order has led to increased
valuation levels for the markets; the S&P 500 trades at approximately 20 times
1997 earnings estimates, and at about 6 times book value and a 1.6% dividend
yield. Our equity position was 89% of total net assets at the end of the second
quarter, bonds at 6%, convertible preferred stocks at 3% and cash at 2%. We
still favor investment in companies with at least 15% to 20% earning growth
potential per year for at least five years, product leadership, strong
management, valuable assets and a healthy dividend stream, if possible. We
also look for quality companies with depressed valuations versus their
historic levels.
While we are very optimistic on the economy the securities market, we caution
investors that the markets are extremely vulnerable to sudden and sharp
corrections based on unexpected news, and possibly no news at all. We are wary
of volatility of stock prices at current levels, and would use corrections to
buy equities befitting our conservative, low-risk growth focus. We watch
economic data and the response of the bond market carefully for signs that
the Fed may raise rates again.
Thank you for your continued confidence in The Burnham Fund.
Very truly yours,
/s/ I. W. Burnham, II /s/ Jon M. Burnham
- ----------------------- -------------------
I. W. Burnham, II Jon M. Burnham,
Chairman President &
Portfolio Manager
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, 1997 were 26.91%, 14.62% and
10.94%, respectively. Such performance assuming the imposition of the Class A
shares' maximum 5% sales charge for the same periods would have been 20.53%,
13.45% and 10.37%, respectively. For Class B and C shares, average total return
for the one year period ended June 30, 1997 and life of class total return for
the period October 18, 1993 (inception date) to June 30, 1997, were 26.07% and
25.68% and 13.90% and 13.65%, respectively. Class B shares bear a maximum
contingent deferred sales charge at a rate of 5% if they are redeemed within the
first six years of purchase. Such performance assuming the imposition of the
maximum contingent deferred sales charge of 5% for the one year period ended
June 30, 1997 and life of class were 21.07% and 12.96%, respectively. Class C
shares bear a maximum contingent deferred sales charge at a rate of 1% if they
are redeemed within the first year of purchase. Such performance assuming the
imposition of the contingent deferred sales charge for the one year period
ending June 30, 1997 was 24.68%.
2
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INVESTMENT PERSPECTIVE
Equity Portfolio Distribution
by Industry Classification
June 30, 1997
<TABLE>
<CAPTION>
% Total
Equity Portfolio
----------------
<S> <C>
Energy - Oil & Gas............ 14.37%
Real Estate Investment Trust.. 9.49%
Computer Products & Software.. 8.95%
Pharmaceuticals............... 7.69%
Insurance..................... 7.17%
Banking....................... 6.41%
Aerospace..................... 4.85%
Semiconductors................ 4.51%
Oil Drilling.................. 4.36%
Automotive.................... 3.60%
Other......................... 28.60%
-------
Total Equities................100.00%
=======
</TABLE>
Total Portfolio Distribution by Asset Class
June 30, 1997
[PERFORMANCE GRAPH]
Cash & Cash Equivalents 2%
Convertible Preferred Stocks 3%
Corporate Bonds 6%
Common Stocks 89%
Top 25% Portfolio Holdings
June 30, 1997
<TABLE>
<CAPTION>
NUMBER OF % OF
SHARES VALUE NET ASSETS
------ ----- ----------
<S> <C> <C> <C>
Exxon Corporation ........... 90,000 $ 5,535,000 4.19%
Travelers Group Inc. ........ 85,000 $ 5,360,312 4.06%
The Bank of New York Co. Inc. 100,000 $ 4,350,000 3.29%
Diamond Offshore Drilling ... 50,000 $ 3,906,250 2.96%
Intel Corp. ................. 25,000 $ 3,539,844 2.68%
American Express Co. ........ 45,000 $ 3,352,500 2.54%
Microsoft Corp. ............. 26,000 $ 3,288,187 2.49%
Allstate Corp. .............. 45,000 $ 3,285,000 2.49%
American Home Products Corp. 40,000 $ 3,060,000 2.32%
----------- ------
Top 25% Portfolio Holdings .. $35,677,093 27.02%
=========== ======
</TABLE>
Cumulative Return
of a Hypothetical $10,000 Investment*
from inception (June 16, 1975)
through June 30, 1997
The Burnham Fund - Class A
Value of hypothetical investment
on June 30, 1997: $166,355
Life of Fund
Cumulative Percent Return: 1,563,55%
Annual Compound Rate of Return: 13.58%
$10,000 investment on June 16, 1975
(inception date).
[PERFORMANCE GRAPH]
<TABLE>
<S> <C>
December 1975 ....................................... $ 9,792.00
December 1976 ....................................... 12,130.00
December 1977 ....................................... 11,656.00
December 1978 ....................................... 13,167.00
December 1979 ....................................... 16,265.00
December 1980 ....................................... 21,777.00
December 1981 ....................................... 21,219.00
December 1982 ....................................... 25,928.00
December 1983 ....................................... 29,066.00
December 1984 ....................................... 31,166.00
December 1985 ....................................... 50,169.00
December 1986 ....................................... 53,524.00
December 1987 ....................................... 59,883.00
December 1988 ....................................... 73,520.00
December 1989 ....................................... 72,216.00
December 1990 ....................................... 85,194.00
December 1991 ....................................... 91,758.00
December 1992 ....................................... 99,000.00
December 1993 ....................................... 98,564.00
December 1994 ....................................... 128,000.00
December 1995 ....................................... 144,252.00
December 1996 ....................................... 145,638.00
June 1997 ........................................... 166,355.00
</TABLE>
* 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, 1997
<TABLE>
<S> <C>
One Year............ 26.91%
Five Years.......... 14.62%
Ten Years........... 10.94%
Fifteen Years....... 14.99%
Twenty Years........ 14.12%
</TABLE>
3
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STATEMENT OF NET ASSETS
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
NUMBER OF VALUE
SHARES (NOTE 1)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS 88.63%
AEROSPACE 4.43%
Boeing Co. .................................... 40,000 $2,122,500
Gulfstream Aerospace Corp. (New) .............. 30,000 885,000
Rockwell International Corp. (New) ............ 20,000 1,180,000
United Technologies Corp. ..................... 20,000 1,660,000
----------
5,847,500
----------
AIRCRAFT MANUFACTURING/
COMPONENTS 1.31%
B.F. Goodrich Co. ............................. 40,000 1,732,500
----------
AUTOMOTIVE 3.29%
Chrysler Corp. ................................ 75,000 2,460,938
Ford Motor Co. ................................ 50,000 1,887,500
----------
4,348,438
----------
BANKING 5.85%
The Bank of New York Co., Inc. ................ 100,000 4,350,000
Chase Manhattan Corp. ......................... 10,000 970,625
Citicorp ...................................... 20,000 2,411,250
----------
7,731,875
----------
CHEMICALS 0.95%
duPont (E.I.) deNemours & Co. ................. 20,000 1,257,500
----------
COMMUNICATIONS SERVICES 2.97%
GTE Corp. ..................................... 40,000 1,755,000
Lucent Technologies Inc. ...................... 30,000 2,161,875
----------
3,916,875
----------
COMPUTER PRODUCTS &
SOFTWARE 8.18%
Cisco Systems Inc. ............................ 10,000(a) 671,562
Hewlett Packard Co. ........................... 30,000 1,680,000
International Business Machines Corp. ......... 25,000 2,254,688
Microsoft Corp. ............................... 26,000(a) 3,288,187
Phoenix Technologies Ltd. ..................... 50,000(a) 659,375
Safeguard Scientifics Inc. .................... 30,000(a) 954,375
Siebel Systems Inc. ........................... 40,000(a) 1,292,500
----------
10,800,688
----------
CONGLOMERATES 1.01%
Textron Inc. .................................. 20,000 1,327,500
----------
CONSUMER BEVERAGES 0.77%
Coca Cola Co. ................................. 15,000 1,012,500
----------
CONSUMER PRODUCTS 1.98%
General Electric Co. .......................... 40,000 2,615,000
----------
DATA PROCESSING SYSTEMS 0.71%
Automatic Data Processing Inc. ................ 20,000 940,000
----------
<CAPTION>
NUMBER OF VALUE
SHARES/UNITS (NOTE 1)
- --------------------------------------------------------------------------------
ENERGY - OIL AND GAS 13.13%
Amoco Corp. ................................... 25,000 $ 2,173,437
British Petroleum PLC ADS ..................... 20,000 1,497,500
Exxon Corporation ............................. 90,000 5,535,000
Mobil Corporation ............................. 40,000 2,795,000
Monterey Resources Inc. ....................... 30,000 446,250
Royal Dutch Petroleum Co. ADR ................. 40,000 2,175,000
Texaco Inc. ................................... 25,000 2,718,750
-----------
17,340,937
-----------
ENGINEERING/
INDUSTRIAL PRODUCTION 1.11%
Thermo Electron Corp. ......................... 40,000 1,360,000
Thermolyte Corp. units (Note 4) ............... 10,000(a)(b) 100,000
-----------
1,460,000
-----------
HEALTHCARE FACILITIES 1.38%
Oxford Health Plans ........................... 10,000(a) 717,812
Rehabcare Group Inc. .......................... 30,000(a) 1,110,938
-----------
1,828,750
-----------
INSURANCE 6.55%
Allstate Corp. ................................ 45,000 3,285,000
Travelers Group Inc. .......................... 85,000 5,360,312
-----------
8,645,312
-----------
MEDICAL SUPPLIES 2.97%
Baxter International Inc. ..................... 25,000 1,306,250
Johnson & Johnson ............................. 20,000 1,287,500
PLC Systems Inc. .............................. 60,000(a) 1,323,750
-----------
3,917,500
-----------
OIL DRILLING 3.98%
Baker Hughes Inc. ............................. 35,000 1,354,063
Diamond Offshore Drilling Inc. ................ 50,000 3,906,250
-----------
5,260,313
-----------
PERSONAL CARE PRODUCTS 1.79%
Gillette Co. .................................. 25,000 2,368,750
-----------
PHARMACEUTICALS 7.03%
American Home Products Corp. .................. 40,000 3,060,000
Merck & Co. ................................... 25,000 2,587,500
Pfizer Inc. ................................... 20,000 2,390,000
Warner Lambert Inc. ........................... 10,000 1,242,500
-----------
9,280,000
-----------
RAILROADS 1.07%
Union Pacific Corp. ........................... 20,000 1,410,000
-----------
</TABLE>
See notes to financial statements.
4
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STATEMENT OF NET ASSETS
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
NUMBER OF VALUE
SHARES (NOTE 1)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
REAL ESTATE INVESTMENT
TRUSTS 8.67%
Chateau Communities Inc. ...................... 60,000 $ 1,717,500
Developers Diversified Realty Corp. ........... 30,000 1,200,000
Franchise Finance Corp.
of America ................................... 80,000 2,085,000
Golf Trust Co. of America ..................... 65,000 1,807,812
Meditrust SBI ................................. 65,000 2,591,875
National Golf Properties Inc. ................. 40,000 1,390,000
New Plan Realty Trust ......................... 30,000 661,875
------------
11,454,062
------------
SEMICONDUCTORS 4.12%
Intel Corp. ................................... 25,000 3,539,844
Motorola, Inc. ................................ 25,000 1,900,000
------------
5,439,844
------------
TELEPHONE COMPANIES 1.41%
SBC Communications Inc. ....................... 30,000 1,856,250
------------
TEMPORARY EMPLOYMENT
SERVICES 1.43%
Interim Services .............................. 42,400(a) 1,886,800
------------
TRAVEL RELATED &
FINANCIAL SERVICES 2.54%
American Express Co. .......................... 45,000 3,352,500
------------
TOTAL COMMON STOCKS
(identified cost: $75,724,994) ............... 117,031,394
------------
CONVERTIBLE PREFERRED STOCK 2.74%
FOOD PRODUCTS 0.54%
Chiquita Brands International Inc.,
conv. preferred Cl.`A' ....................... 15,000 706,875
------------
PASSENGER CRUISE LINES 0.93%
Royal Caribbean Cruises,
conv. preferred Cl. `A' ...................... 20,000 1,235,000
------------
REAL ESTATE 1.00%
Vornado Realty Corp.
CONV. PREFERRED Cl. `A' ....................... 25,000 1,325,000
------------
UTILITIES 0.27%
AES Trust, conv. preferred Cl. `T' ............ 6,000 353,250
------------
TOTAL CONVERTIBLE
PREFERRED STOCK
(identified cost: $3,398,550) ................ 3,620,125
------------
<CAPTION>
NUMBER OF SHARES
OR PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------
CORPORATE BONDS 6.18%
BANKING 0.77%
Chase Manhattan Corp.,
7 7/8% sub. notes 8/01/04 .................... $ 1,000,000 $ 1,013,840
------------
BABY PRODUCTS 0.15%
Drypers Corp.
10 1/4% 6/15/07 .............................. 200,000 198,875
------------
ENERGY - OIL & GAS 0.82%
Maxus Energy Corp.,
9 3/8% notes 11/01/03 ........................ 1,000,000 1,077,500
------------
FINANCIAL SERVICES 3.08%
Ford Motor Credit Corp.,
9 1/4% notes 6/15/98 ......................... 1,000,000 1,029,327
General Electric Capital Corp.,
8% notes 1/15/98 ............................. 1,000,000 1,011,042
General Motors Acceptance Corp.,
7 3/4% notes 1/15/99 ......................... 1,000,000 1,021,528
Texaco Capital Inc.,
9% gtd. notes 11/15/97 ....................... 1,000,000 1,011,582
------------
4,073,479
------------
HOTELS 0.97%
Marriott Corp., 9 3/8% deb. 6/15/07 ........... 1,265,000 1,274,496
------------
UTILITIES 0.39%
AES Corp.,
9 3/4% sr. sub notes 6/15/00 ................. 500,000 519,375
------------
TOTAL CORPORATE BONDS
(identified cost: $7,876,941) ................ 8,157,565
------------
COMMERCIAL PAPER 2.28%
Associates Corp. of NA,
6.00% 7/01/97 ................................ 3,011,000 3,011,000
------------
TOTAL COMMERCIAL PAPER
(identified cost: $3,011,000) ................ 3,011,000
------------
TOTAL INVESTMENTS
(identified cost: $90,011,485) 99.83% 131,820,084
CASH AND OTHER ASSETS,
LESS LIABILITIES 0.17 224,143
------------
NET ASSETS 100.00% $132,044,227
------------
------------
</TABLE>
- -------------------------------------------------------------------------------
(a) Non-income producing security.
(b) A unit consists of one share of common stock of Thermolyte Corp.
and one redemption right.
Federal Income Tax Basis of Investment Securities
- -------------------------------------------------
For Federal income tax purposes, the tax basis of investment securities owned
at June 30, 1997 was $89,992,366. The aggregate gross unrealized appreciation
for all securities in which there was an excess of value over tax cost was
$41,979,761 and aggregate gross unrealized depreciation for all securities in
which there was an excess of tax cost over value was $152,043.
See notes to financial statements.
5
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STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (identified
cost: $90,011,485)(Note 1) ................................ $131,820,084
Cash in bank ................................................. 308,997
Dividends and interest receivable ............................ 319,237
Prepaid expenses ............................................. 31,376
Receivable for capital stock sold ............................ 9,500
Receivable from investment advisor ........................... 490
Receivable for investment securities sold .................... 845,384
------------
Total assets .............................................. 133,335,068
------------
LIABILITIES:
Payable for capital stock redeemed ........................... 22,547
Payable for investment securities purchased .................. 1,064,190
Payable for investment advisory fees (Note 6) ................ 66,085
Payable for distribution and
service fees (Note 7) ..................................... 1,091
Accrued expenses and other payables .......................... 136,928
------------
Total liabilities ......................................... 1,290,841
------------
NET ASSETS ...................................................... $132,044,227
============
CLASS A SHARES
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
(NOTE 2): ($130,649,012/4,667,851.453 shares
outstanding) .................................................. $ 27.99
============
CALCULATION OF MAXIMUM OFFERING PRICE SALES CHARGE - 5% OF
PUBLIC OFFERING PRICE:
(Note 2): ($27.99 net asset value plus 5.0%
of public offering price) ..................................... $ 29.46
============
CLASS B SHARES
NET ASSET VALUE AND OFFERING PRICE PER SHARE:
(NOTE 2): ($1,391,350/48,563.253 shares
outstanding) .................................................. $ 28.65
============
CLASS C SHARES
NET ASSET VALUE AND OFFERING PRICE PER SHARE:
(NOTE 2): ($3,865/137.970 shares
of capital stock outstanding) ................................. $ 28.02
============
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 .............................................. $ 86,474,862
Undistributed net investment
income ..................................................... 2,510,729
Accumulated net realized gains
on investments ............................................. 1,250,037
Net unrealized appreciation of
investments ................................................ 41,808,599
------------
$132,044,227
============
</TABLE>
STATEMENT OF OPERATIONS
Six months ended June 30, 1997 (Unaudited)
<TABLE>
- --------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
INCOME:
Dividends ..................................................... $ 1,151,952
Interest ...................................................... 649,367
------------
Total income ................................................. 1,801,319
------------
EXPENSES:
Investment advisory fees (Note 6) 378,968
Distribution fee (Class A)(Note 7) ............................ 22,610
Distribution fee (Class B)(Note 7) ............................ 4,452
Distribution fee (Class C)(Note 7) ............................ 13
Service fees (Class B & C)(Note 7) ............................ 1,488
Transfer agent fees ........................................... 98,588
Professional fees ............................................. 53,100
Reports to shareholders ....................................... 25,340
Directors' fees and expenses .................................. 35,388
Custodian fees ................................................ 24,797
Registration fees and expenses ................................ 5,457
Insurance expense ............................................. 26,549
Miscellaneous expense ......................................... 9,588
------------
Total expenses before reimbursement .......................... 686,338
Less: Expenses voluntarily reimbursed
by Investment Adviser (Note 6) .............................. (144)
------------
Total expenses after reimbursement ........................... 686,194
------------
Net investment income ....................................... 1,115,125
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Realized gain from securities
transactions (excluding short-term
money market instruments)
Proceeds from sales ....................... $ 39,365,720
Cost of securities sold ................... (36,290,472)
------------
Net realized gain from securities
transactions ................................................. 3,075,248
------------
Increase in unrealized appreciation
of investments
Beginning of period ..................... $ 28,230,141
End of period ........................... 41,808,599
------------
Increase in unrealized appreciation ........................... 13,578,458
------------
Net realized and unrealized gain
on investments ................................................. 16,653,706
------------
Net increase in net assets resulting
from operations ................................................ $ 17,768,831
============
</TABLE>
See notes to financial statements.
6
<PAGE>
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STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
FROM OPERATIONS:
Net investment income ....................... $ 1,115,125 $ 2,427,541
Net realized gain from
security and, in 1997,
option transactions ....................... 3,075,248 5,392,607
Increase in unrealized
appreciation of investments ................ 13,578,458 10,669,966
------------- -------------
Net increase in net assets
resulting from operations ................. 17,768,831 18,490,114
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTE 1):
From net investment income:
Class A Shares .............................. (1,024,300) (2,637,095)
Class B Shares .............................. (7,934) (6,330)
Class C Shares .............................. (15) (27)
From realized gains from security
and option transactions:
Class A Shares .............................. (5,310,408) (4,155,898)
Class B Shares .............................. (45,808) (23,246)
Class C Shares .............................. (152) (108)
------------- -------------
Total distributions to
shareholders ............................. (6,388,617) (6,822,704)
------------- -------------
CAPITAL SHARE TRANSACTIONS
(NOTE 2):
Net proceeds from sale
of shares ................................... 1,551,765 1,333,647
Net asset value of shares issued
to shareholders in
reinvestment of dividends ................. 5,568,005 5,845,914
------------- -------------
7,119,770 7,179,561
Cost of shares redeemed ...................... (4,923,843) (13,059,437)
------------- -------------
Increase/(decrease) in net
assets derived from capital
share transactions ......................... 2,195,927 (5,879,876)
------------- -------------
Increase in net
assets for the period ...................... 13,576,141 5,787,534
------------- -------------
NET ASSETS:
Beginning of period .......................... 118,468,086 112,680,552
------------- -------------
End of period (including
undistributed net investment
income of $2,510,729 and
$2,427,853, respectively) .................. $ 132,044,227 $ 118,468,086
============= =============
</TABLE>
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997 (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 management
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 for 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. 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
7
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its net investment income and net realized capital gains are distributed.
D. 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.
E. 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.
F. 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.
NOTE 2 -- CAPITAL STOCK
At June 30, 1997, 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, 1997, Class D shares were not issued.
Transactions in capital stock for the six months ended June 30, 1997 and year
ended 1996 for Class A, B and C shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1997 1996
------------- ----
<S> <C> <C>
CLASS A SHARES
Shares sold .................................... 53,020 44,731
Shares issued to shareholders
in reinvestment of distributions ............. 227,106 257,573
-------- --------
280,126 302,304
Shares redeemed ................................ (190,234) (556,676)
-------- --------
Net increase/(decrease) ........................ 89,892 (254,372)
======== ========
CLASS B SHARES
Shares sold .................................... 7,180 12,016
Shares issued to shareholders
in reinvestment of distributions ............. 2,129 1,251
-------- --------
9,309 13,267
Shares redeemed ................................ (235) (807)
-------- --------
Net increase ................................... 9,074 12,460
======== ========
CLASS C SHARES
Shares sold .................................... -0- -0-
Shares issued to shareholders
in reinvestment of distributions ............. 7 6
-------- --------
............................................ 7 6
Shares redeemed ................................ -0- -0-
-------- --------
Net increase ................................... 7 6
======== ========
</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, 1997 were:
<TABLE>
<CAPTION>
PROCEEDS
COST OF FROM SALES
PURCHASES OR MATURITIES
--------- -------------
<S> <C> <C>
Short-term money
market instruments ............................. $762,497,000 $763,261,000
U.S. Government obligations ...................... -0- -0-
Common stocks and other
securities ..................................... $ 37,156,975 $ 39,365,720
</TABLE>
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, 1997, 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
- --------------------------------------------------------------------------------
<S> <C> <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 particular classes of financial instruments and
8
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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. There were no
off-balance sheet financial instruments at the end of the period owned by the
Fund.
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, 1997, the Fund incurred fees
in the amount of $378,968. 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 C shares $144.
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, subject to certain NASD sales expense limitations
on 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, 1997, Class A, B and C shares incurred fees of
$22,610, $4,452, and $13, 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, 1997 were $1,484 and $4,
respectively. For the six months ended June 30, 1997, the Distributor earned
$72,398 in brokerage commissions from Fund transactions and $6,951 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 shareholder'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
is paid to the Distributor. For the six months ended June 30, 1997, there were
$188 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.
NOTE 8 -- DIVIDENDS AND DISTRIBUTIONS SUBSEQUENT TO END OF REPORTING PERIOD
The Fund announced a per-share distribution to shareholders of record June 30,
1997. The distribution had an ex-dividend date of July 1, 1997 and was payable
July 9, 1997.
The distribution was as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
From net investment income ............ $0.11 $0.05 $0.04
----- ----- -----
Total distributions paid .............. $0.11 $0.05 $0.04
===== ===== =====
</TABLE>
9
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
NOTE 9 -- FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED CLASS A SHARES ENDED CLASS B SHARES ENDED
JUNE 30, ------------------------------- JUNE 30, ------------------------- JUNE 30,
1997 1996 1995 1994 1993 1992 1997 1996 1995 1994 1993*'DD' 1997
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period.......... $25.65 $23.19 $19.88 $21.86 $21.95 $22.16 $26.31 $23.45 $19.94 $21.84 $22.17 $25.69
-------------------------------------------------------------------------------------
INCOME FROM
INVESTMENT
OPERATIONS
Net Investment
Income.......... 0.23 0.51 0.71 0.75 0.81 0.88 .07 0.21 0.41 0.49 0.13 0.10
Net Gains or
Losses on
Securities
(both realized
and unrealized). 3.49 3.36 3.91 (1.15) 1.11 0.69 3.62 3.69 4.10 (1.04) (0.46) 3.50
-------------------------------------------------------------------------------------
Total from
Investment
Operations...... 3.72 3.87 4.62 (0.40) 1.92 1.57 3.69 3.90 4.51 (0.55) (0.33) 3.60
LESS DISTRIBUTIONS
Dividends (from
net investment
income)......... (0.22) (0.55) (0.75) (0.87) (0.90) (1.12) (0.19) (0.18) (0.44) (0.64) 0.0 (0.11)
Distributions
from Capital
Gains (from
securities and
options
transactions)... (1.16) (0.86) (0.56) (0.71) (1.11) (0.66) (1.16) (0.86) (0.56) (0.71) 0.0 (1.16)
-------------------------------------------------------------------------------------
Total
Distributions.. (1.38) (1.41) (1.31) (1.58) (2.01) (1.78) (1.35) (1.04) (1.00) (1.35) 0.0 (1.27)
-------------------------------------------------------------------------------------
Net Asset Value,
End of Period.. $27.99 $25.65 $23.19 $19.88 $21.86 $21.95 $28.65 $26.31 $23.45 $19.94 $21.84 $28.02
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Total Return..... 15.35% 17.60% 24.45% (1.77%) 9.35% 7.70% 14.81% 17.34% 23.54% (2.52%) (1.49%) 14.77%
-------------------------------------------------------------------------------------
RATIOS/
SUPPLEMENTAL
DATA
Net Assets
(in $millions),
End of Period.. 130.6 117.4 112.0 101.81 18.5 117.2 1.4 1.0 0.6 0.3 0.2 0.0**
------------------------------------------------------------------------------------
Ratio of
Expenses (net)
to Average
Net Assets[1].. 1.1%'D' 1.3% 1.5% 1.5% 1.5% 1.2% 2.1%'D' 2.1% 2.2% 2.3% 2.2%'D' 2.1%'D'
-------------------------------------------------------------------------------------
Ratio of Net
Income to
Average Net
Assets......... 1.8%'D' 2.1% 3.3% 3.7% 3.7% 4.1% 0.9%'D' 1.3% 2.5% 2.9% 3.9%'D' 0.8%'D'
-------------------------------------------------------------------------------------
Average
Commission
Rate***........ $0.075 $0.07 -.- -.- -.- -.- $0.075 $0.07 -.- -.- -.- $0.075
Portfolio
Turnover Rate.. 63.9%'D' 61.5% 78.3% 87.9% 54.1% 68.5% 63.9%'D'61.5% 78.3% 87.9% 54.1% 63.9%'D'
-------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS C SHARES
------------------------------
1996 1995 1994 1993*'DD'
- ---------------------------------------------------
Net Asset Value,
Beginning of
<S> <C> <C> <C> <C>
Period.......... $23.10 $19.89 $21.87 $22.17
----------------------------------
INCOME FROM
INVESTMENT
OPERATIONS
Net Investment
Income.......... 0.29 0.54 0.72 0.15
Net Gains or
Losses on
Securities
(both realized
and unrealized). 3.37 3.91 (1.15) (0.45)
-----------------------------------
Total from
Investment
Operations...... 3.66 4.45 (0.43) (0.30)
LESS DISTRIBUTIONS
Dividends (from
net investment
income)......... (0.21) (0.68) (0.84) 0.0
Distributions
from Capital
Gains (from
securities and
options
transactions)... (0.86) (0.56) (0.71) 0.0
----------------------------------
Total
Distributions.. (1.07) (1.24) (1.55) 0.0
----------------------------------
Net Asset Value,
End of Period.. $25.69 $23.10 $19.89 $21.87
----------------------------------
----------------------------------
Total Return..... 16.56% 23.51% (1.95%) (1.35%)
----------------------------------
RATIOS/
SUPPLEMENTAL
DATA
Net Assets
(in $millions),
End of Period.. 0.0** 0.0** 0.0** 0.0**
-----------------------------------
Ratio of
Expenses (net)
to Average
Net Assets[1].. 2.2% 2.3% 1.5% 1.5%'D'
-----------------------------------
Ratio of Net
Income to
Average Net
Assets......... 1.2% 2.5% 3.6% 3.5%'D'
-----------------------------------
Average
Commission
Rate***........ $0.07 -.- -.- -.-
Portfolio
Turnover Rate.. 61.5% 78.3% 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.
*** Disclosure effective for fiscal year 1996 and all periods thereafter.
[1] Had the Investment Adviser not agreed to reimburse Class B and C shares
for expenses in excess of the expense limitation described in Note 6, the
ratios of expenses to average net assets for the six months ended June 30, 1997
and the years ended December 31, 1996, 1995 and 1994 would have been 2.1%,
2.1%, 2.5% and 2.5% for Class B shares and 2.5%, 2.5%, 2.5% and 2.5% for
Class C shares, respectively.
<PAGE>
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[THIS PAGE INTENTIONALLY LEFT BLANK.]
11
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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
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 L.L.P.
919 Third Avenue
New York, New York 10022
SERVICING AGENT
Boston Financial Data Services, Inc.
2 Heritage Drive
North Quincy, Massachusetts 02171
http://www.burnhamfunds.com
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, 1997
Continuity Knowledge
[LOGO]
Growth Income
BURNHAM Securities Inc.
Principal Distributor
STATEMENT OF DIFFERENCES
------------------------
The dagger symbol shall be expressed as ......................'D'
The double dagger symbol shall be expressed as ...............'DD'
