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January 21, 1997
Dear Shareholder:
We are pleased to present to you the Annual Report of the Burnham Fund for 1996.
New and Noteworthy in 1996
Debut of The Burnham Fund on the World Wide Web. In August 1996, The Burnham
Fund began releasing information on the World Wide Web through Intuit's
"Networth" mutual fund web site. Visitors to Networth may easily download The
Burnham Fund's prospectus, quarterly data, and current Morningstar review. The
Burnham Fund's website was noted for its innovative style in September's "Fund
Marketing Alert", a mutual fund trade journal. The Fund's Internet address is
http://networth.galt.com/burnham.
Burnham Fund Questionnaire. Questionnaires were distributed during the year to
shareholders whose accounts reside at State Street Bank & Trust Co. Many
strategic questions were asked and management is actively researching specific
issues raised by shareholders' responses. We thank you for spending the time and
in many cases, writing candid and insightful commentary.
Changing Performance Benchmarks. In the fourth quarter of 1996, Morningstar
Inc., a mutual fund evaluation group, changed the methodology by which it
categorizes mutual funds. Rather than focus on "prospectus investment
objective", it began categorizing funds by the profile of its investment
components, or "style-box". The Burnham Fund's profile for the past two years
has been "large cap blend", which indicates that the manager invests
predominantly in large capitalization companies. The specific stocks management
selects are both "growth" (earnings growth) and "value" (low p/e, restructuring)
investments. Therefore, when we discuss the fund's investment components in the
context of its peers, we may refer to the "large cap blend" index, which more
closely resembles the Fund than the Standard & Poor's ("S&P") 500 index and
other benchmark indices.
Review of 1996.
On December 31, 1996, the Fund's net asset value per share for Class A, B and C
shares was $25.65, $26.31 and $25.69, respectively, which represent total
returns for the year of 17.6%, 17.3% and 16.6%, respectively. This compares to
an increase in Morningstar's Large Cap Blend Index of 20.3% for the
corresponding period. For the year, The Burnham Fund Class A, B and C shares
paid $1.66, $1.45 and $1.36 per share, respectively, in taxable dividends. Of
this amount, $0.82, $0.61 and $0.52, per share, respectively, were from ordinary
income and $0.84, $0.84 and $0.84 per share, respectively, were from capital
gains.
In the Fund's Annual Report of 1995, we stated that our goals for 1996 included
a) enhancing after-tax shareholder value, and b) increasing the Fund's equity
exposure so as to reduce the level of income earned and offer shareholders
better capital gains potential - while maintaining a lower risk profile versus
our peers. We believe that in 1996, we accomplished this task. We note the
following changes that illustrate these actions:
<TABLE>
<CAPTION>
YEAR END
----------------
1995 1996
---- ----
<S> <C> <C>
Equity investments (% of net assets) 73.0% 85.0%
Fixed income investments (% of net assets) 26.0% 10.7%
Income per share (ex gains) $ 0.75 $ 0.55
Ratio of net income to average net assets 3.3% 2.1%
Portfolio 3-year beta (S&P 500 = 1.0) 0.64 0.75
Portfolio turnover rate 78.3% 61.5%
</TABLE>
1996 was another rewarding year for equity investors. The S&P 500 index (with
dividends reinvested) progressed 22.95%, while the Lehman Government/Corporate
Bond Index rose a mere 2.90%. The equity index move, however, belies its periods
of volatility and uncertainty. Three of four sharp market declines during the
year were fueled by fear of rising interest rates. The decline of early January
was the
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only instance that was followed by what would be the single interest rate
increase of the year.
The factors which focused investors on equities were identical to those of 1995:
slow, steady economic growth accompanied by full employment and low inflation
rates. For 1996, we expect that final GDP figures will resemble 1995's 2.1%
growth rate. December's Consumer Price Index figure indicates inflation
(excluding food and energy) has remained relatively unchanged since it reached
3.1% in 1993. Washington provided a positive environment for domestic equities
during the year. No significant "external" events jarred investor confidence.
Progress on welfare reform and rudimentary discussions over social security
policy further our belief that the government seeks as a long term goal an
increase in the U.S. personal savings rate.
The S&P sectors that showed the best performance for 1996 were technology,
finance, capital goods and energy. For the year, The Burnham Fund overweighted
energy, technology and financial services in the portfolio because of their
outstanding growth and (with the exception of technology) income
characteristics. The stocks in the portfolio that were particularly strong
performers of note were Intel, Microsoft, Lucent Technologies, and Citicorp. The
worst performing sectors were communication services, utilities, transportation,
and basic materials; all areas that were not among major holdings of the Fund.
1997 Outlook.
We enter 1997 with optimism, as we did in 1996. The investment themes of 1995
and 1996 have continued into the present year. Corporate profits (as exhibited
by growth in S&P 500 earnings of over 8.0%) continue to expand in a healthy
environment of low inflation and stable to potentially lower interest rates.
While one cannot predict what may bring about a reversal of these trends, we
believe that earnings will continue to show positive comparisons against 1996,
and stock valuations have the potential to move upward. Second, we believe the
U.S. is capable of maintaining an extended expanding cycle as compared to
previous post-war measures. The longevity of the present cycle has not stemmed
from price increases, but rather from a combination of increasing global demand
for goods and internal margin expansion. The U.S. government has been able to
redirect defense expenditures into other sectors of our economy as a result of
the global peace from which we now benefit. Foreign markets are seeking American
goods and services, while U.S. companies are more efficient and profitable than
ever before due to corporate restructuring activity that began in the 1980's and
advances in telecommunications and other technologies in the 1990's. American
companies are in leadership positions, producing goods that are in global
demand. This results in confidence in our economy's longevity and the health of
our capital markets. In comparison, at present European economies are hampered
by high unemployment and high interest rates, and Japan continues to be mired in
a banking and real estate crisis, fiscal tightening, and unstable equity
markets. Third, we believe that the surge in merger and acquisition activity
seen during 1996 will continue as companies seek strategic moves to increase
their market share and growth rates. Such strategic mergers included Boeing and
McDonnell Douglas, CSX and Conrail, Lockheed and Loral, and Wells Fargo and
First Interstate. One side effect of large mergers and acquisitions is a
tightening of the supply of common stock in certain S&P sectors. Many
publicly-owned corporations stepped-up their common stock repurchase programs in
1996; we believe this trend will continue into 1997, further constricting the
supply of equities. Finally, net mutual fund purchases, particularly in U.S.
equity funds, continue to grow. The largest statistical component of the
workforce (baby boomers) are entering the most productive and savings-intensive
years of their lives with a positive inclination toward investing in equities.
The capital flowing into the market comes from both systematic retirement
savings plans and after tax investment. The inflow brings liquidity to the
capital markets and provides sources of new capital for public offerings.
We favor companies with sustained earnings growth potential of at least 15% to
20% per year for five years,
2
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product leadership, strong management with a shareholder-value orientation, and
a healthy dividend history, if possible. We also search for companies whose
stock appears undervalued in the market relative to its past, or those which may
benefit from restructuring actions. We remain overweighted in the energy sector
for both its earnings growth and income potential as growing global demand for
petroleum-based products moves prices higher. We continue to emphasize core
holdings in technology, health care and financial services. We regard the REIT
sector as one that has the potential to deliver above average dividend yield in
combination with capital appreciation. (National Golf Properties and Meditrust
have been among the Fund's best performers.) As in 1996, we anticipate
volatility in the markets if interest rates move higher, or if fear of weak
earnings comparisons surface. With stock valuations at high levels, and yields
under 2%, there is risk of a correction. Therefore, in structuring the Fund's
portfolio, we attempt to keep the beta (volatility) of the Fund below that of
the market. It is currently at 0.75 versus the S&P 500 Index (where S&P 500
Index = 1.0). In the fixed income component of the portfolio, currently 10%, we
own bonds with above average yields and short-term maturities.
We appreciate your confidence in The Burnham Fund, and look forward to serving
your investment needs in the year ahead.
Very sincerely yours,
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 December 31, 1996 were 17.60%, 11.11% and
11.14%, respectively. Such performance assuming the imposition of the Class A
shares' maximum 5% sales charge for the same periods would have been 11.72%,
9.97% and 10.57%, respectively. For Class B and C shares, average total return
for the one year period ended December 31, 1996 and life of class total return
for the period October 18, 1993 (inception date) to December 31, 1996, were
17.34% and 16.56%, and 11.00% and 11.02%, respectively.
CUMULATIVE PERFORMANCE COMPARISON
The Burnham Fund vs. Broad Market Indices
<TABLE>
<CAPTION>
Cumulative % Change Average Annualized % Change
------------------- ---------------------------
10 Years 5 Years 3 Years 10 Years 5 Years 3 Years
-------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
The Burnham Fund
(Class A Shares) 187.57% 69.31% 43.76% 11.14% 11.11% 12.86%
90-day US Treasury Bill 70.31% 23.15% 15.54% 5.47% 4.25% 4.93%
Standard & Poor's 500 Index
(with dividends reinvested) 314.60% 102.91% 71.31% 15.28% 15.20% 19.66%
Lehman Brothers Government/
Corporate Bond Index 123.59% 41.44% 18.41% 8.38% 7.18% 5.79%
</TABLE>
3
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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 on the
following page 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.
Because the Fund maintained a portion of its portfolio in fixed-income
investments during 1996, 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 performance information set forth on the line graph is based on a $10,000
investment made as of December 31, 1986, and reflects changes in value through
the 10-year period to December 31, 1996. Performance for The Burnham Fund Class
A shares is based on the imposition of a maximum initial sales charge of 5%.
Performance for other classes of the Fund will be greater or less than the line
graph shown based on differences in sales charges and fees paid by shareholders
investing in the different classes of the Fund. Average annualized total returns
for Classes B and C shares for the one year and life of class (inception date:
October 18, 1993), assuming reinvestment of dividends, were 17.34% and 16.56%,
and 11.00% and 11.02% , respectively.
Performance analysis
Jon M. Burnham, Portfolio Manager of the Fund, believed that equities had a more
positive total return potential than bonds for 1996. At mid year, he sold fixed
income securities to raise the equity portion of the portfolio, ending the year
at 85%. The Investment Committee had concerns regarding market volatility,
therefore Mr. Burnham kept the Fund's beta low in order to preserve capital in
the event of a correction. For the four quarters of 1996, consecutively, the
Fund posted quarterly returns of 4.5%, 2.3%, 2.6% and 7.3%. In comparison, the
S&P 500's quarterly returns were 9.7%, 4.5%, 3.1% and 8.3%, respectively, for
the same periods. The Lehman Government/Corporate Bond index returned 2.9% for
the year. The Morningstar Growth and Income Index rose 5.4%, 3.4% and 3.0% for
the first three quarters of 1996. In the fourth quarter, Morningstar changed its
valuation system to that of "style box". For the fourth quarter, the Large Cap
Blend index rose 6.9%. Management of the Fund attributes differentials in
performance to the fixed income component of the portfolio, which comprises a
larger percentage of Fund assets than many in its peer group. This may temper
performance during periods of volatility. As the Fund lowered the allocation of
fixed income investments in the second half of the year, the differential
between the Fund's performance and that of its peer group narrowed.
4
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COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN THE FUND TO CERTAIN MARKET INDICES
Value at end of period
----------------------
S&P 500 Index
$41,460
The Burnham Fund
$27,350
Lehman Brothers Corp/
Govt Bond Index
$22,359
Average 3-Month U.S.
Treasury Bill Rate
$17,031
Average Annualized
Total Return of
The Burnham Fund
(Class A)
<TABLE>
<S> <C>
One Year................. 11.72%
Five Years............... 9.97%
Ten Years................ 10.57%
</TABLE>
[GRAPH]
5
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INVESTMENT PERSPECTIVE
Equity Portfolio Distribution
by Industry Classification
December 31, 1996
<TABLE>
<CAPTION>
% Total
Equity Portfolio
----------------
<S> <C>
Energy - Oil & Gas 19.57%
Banking 9.16%
Real Estate 7.31%
Computer Products & Software 7.26%
Insurance 6.16%
Pharmaceuticals 5.92%
Communications Services 4.74%
Semiconductors 3.89%
Automotive 3.59%
Healthcare Facilities 2.35%
Engineering/Industrial Production 2.34%
Other 27.71%
----------------
Total Equities 100.00%
================
</TABLE>
Total Portfolio Distribution by Asset Class
December 31, 1996
[GRAPH]
Top 25% Portfolio Holdings
December 31, 1996
<TABLE>
<CAPTION>
Number of Shares/ % of
Principal Amount Value Net Assets
----------------- ----------- ----------
<S> <C> <C> <C>
Exxon Corporation 45,000 $4,410,000 3.72%
The Bank of New York Co., Inc. 120,000 $4,050,000 3.42%
Intel Corp. 30,000 $3,928,125 3.32%
Chrysler Corp. 110,000 $3,630,000 3.06%
Travelers Group Inc. 80,000 $3,630,000 3.06%
Allstate Corp. 45,000 $2,604,375 2.20%
Texaco Inc. 25,000 $2,453,125 2.07%
Mobil Corp. 20,000 $2,445,000 2.06%
MediTrust SBI 60,000 $2,400,000 2.03%
American Home Products Corp. 40,000 $2,345,000 1.98%
---------- ------
TOP 25% PORTFOLIO HOLDINGS $31,895,625 26.92%
=========== ======
</TABLE>
Cumulative Return
of a Hypothetical $10,000 Investment*
from inception (June 16, 1975)
through December 31, 1996
[GRAPH]
* 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, 1996
<TABLE>
<S> <C>
One Year................. 17.60%
Five Years............... 11.11%
Ten Years................ 11.14%
Fifteen Years............ 13.63%
Twenty Years............. 13.18%
</TABLE>
6
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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, 1996, 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, 1996 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Burnham Fund Inc. as of December 31, 1996, 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.
New York, New York Coopers & Lybrand L.L.P.
January 20, 1997.
7
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STATEMENT OF NET ASSETS
December 31, 1996
<TABLE>
<CAPTION>
NUMBER OF VALUE
SHARES (NOTE 1)
- ----------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 85.37%
ADVERTISING 0.40%
Interpublic Group Cos., Inc..................... 10,000 $ 475,000
AEROSPACE 1.76% ------------
Boeing Co....................................... 15,000 1,595,625
Gulfstream Aerospace Corp....................... 20,000 a 485,000
-------------
2,080,625
-------------
AIRCRAFT MANUFACTURING/
COMPONENTS 1.71%
Goodrich (B.F.) Co.............................. 50,000 2,025,000
-------------
AUTOMOTIVE 3.05%
Chrysler Corp................................... 110,000 3,630,000
-------------
BANKING 7.82%
The Bank of New York Co., Inc................... 120,000 4,050,000
Citicorp........................................ 20,000 2,060,000
Keycorp Inc..................................... 25,000 1,262,500
Wells Fargo & Co................................ 7,000 1,888,250
-------------
9,260,750
-------------
BROADCASTING 0.42%
U.S. Satellite Broadcasting Cl. A............... 50,000 a 493,750
-------------
CHEMICALS 1.62%
duPont (E.I.) deNemours & Co.................... 10,000 943,750
Monsanto Co..................................... 25,000 971,875
-------------
1,915,625
-------------
COMMUNICATIONS SERVICES 4.05%
ECI Telecom Ltd................................. 60,000 1,271,250
Loral Space Communications...................... 30,000 551,250
GTE Corp........................................ 40,000 1,820,000
Lucent Technologies Inc......................... 25,000 1,156,250
-------------
4,798,750
-------------
COMPUTER PRODUCTS & SOFTWARE 6.20%
Hewlett Packard Co.............................. 40,000 2,010,000
International Business Machines Corp............ 10,000 1,510,000
Microsoft Corp.................................. 26,000 a 2,149,875
Phoenix Technologies Ltd........................ 65,000 a 1,040,000
Safeguard Scientifics Inc....................... 20,000 a 635,000
-------------
7,344,875
-------------
CONGLOMERATES 0.80%
Textron Inc..................................... 10,000 942,500
-------------
CONSUMER PRODUCTS 1.67%
General Electric Co............................. 20,000 $ 1,977,500
-------------
DATA COMMUNICATIONS SYSTEMS 0.61%
U.S. Robotics Corp.............................. 10,000 a 720,625
-------------
DATA PROCESSING SYSTEMS 1.10%
Electronic Data Systems Corp.................... 30,000 1,297,500
-------------
ELECTRONICS 0.61%
Raytheon Co..................................... 15,000 a 721,875
-------------
ENERGY - OIL AND GAS 16.71%
Amoco Corp...................................... 25,000 2,012,500
Atlantic Richfield.............................. 7,500 993,750
Baker Hughes Inc................................ 35,000 1,207,500
British Petroleum PLC ADS....................... 10,000 1,413,750
Diamond Offshore Drilling....................... 10,000 a 570,000
Exxon Corporation............................... 45,000 4,410,000
Mobil Corporation............................... 20,000 2,445,000
Royal Dutch Petroleum Co. ADR................... 10,000 1,707,500
Santa Fe Energy Resources Inc................... 70,000 a 971,250
Texaco Inc...................................... 25,000 2,453,125
Union Pacific Resources Group Inc............... 55,000 1,608,750
-------------
19,793,125
-------------
ENGINEERING/
INDUSTRIAL PRODUCTION 2.00%
Thermo Electron Corp............................ 55,000 a 2,268,750
Thermolyte Corp. units (see Note 4)............. 10,000 a,b 100,000
-------------
2,368,750
FOOD PRODUCTS 1.13%
IBP, Inc........................................ 10,000 242,500
Ralston Purina Group............................ 15,000 1,100,625
-------------
1,343,125
-------------
HEALTHCARE FACILITIES 2.01%
Manor Care Inc.................................. 30,000 810,000
Oxford Healthcare Plans Inc..................... 20,000 a 1,171,250
Rehabcare Group Inc............................. 20,000 a 398,750
-------------
2,380,000
-------------
HOTELS 0.37%
Mirage Resorts Inc.............................. 20,000 a 432,500
-------------
INSURANCE 5.26%
Allstate Corp................................... 45,000 2,604,375
Travelers Group Inc............................. 80,000 3,630,000
-------------
6,234,375
-------------
</TABLE>
See notes to financial statements.
8
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STATEMENT OF NET ASSETS
December 31, 1996
<TABLE>
<CAPTION>
NUMBER OF VALUE
SHARES (NOTE 1)
- -----------------------------------------------------------------------------------
<S> <C> <C>
MEDICAL SUPPLIES 1.81%
Baxter International Inc........................ 25,000 $ 1,025,000
PLC Systems Inc................................. 50,000 a 1,125,000
-------------
2,150,000
-------------
PERSONAL CARE PRODUCTS 1.31%
Gillette Co..................................... 20,000 1,555,000
-------------
PHARMACEUTICALS 5.05%
American Home Products Corp..................... 40,000 2,345,000
Merck & Co...................................... 25,000 1,981,250
Pfizer Inc...................................... 20,000 1,657,500
-------------
5,983,750
-------------
PLASTICS 1.01%
Raychem Corp.................................... 15,000 1,201,875
-------------
RAILROADS 1.96%
Kansas City Southern Industries................. 25,000 1,125,000
Union Pacific Corp.............................. 20,000 1,202,500
-------------
2,327,500
-------------
REAL ESTATE REIT 6.24%
Franchise Finance Corp. of America.............. 80,000 2,210,000
Meditrust SBI................................... 60,000 2,400,000
National Golf Properties Inc.................... 40,000 1,265,000
New Plan Realty Trust........................... 60,000 1,522,500
-------------
7,397,500
-------------
SEMICONDUCTORS 3.32%
Intel Corp...................................... 30,000 3,928,125
-------------
TELEPHONE COMPANIES 1.96%
Century Telephone Enterprises Inc............... 25,000 771,875
SBC Communications Inc.......................... 30,000 1,552,500
-------------
2,324,375
-------------
TEMPORARY EMPLOYMENT SERVICES 1.50%
Interim Services................................ 50,000 1,775,000
TRAVEL RELATED &
FINANCIAL SERVICES 1.91%
American Express Co............................. 40,000 $ 2,260,000
-------------
TOTAL COMMON STOCKS
(identified cost: $73,224,797).............. 101,139,375
-------------
CORPORATE CONVERTIBLE BONDS 0.42%
STEEL 0.42%
USX Marathon Group,
7% conv. sub. deb. 6/15/17.................... $ 500,000 498,125
-------------
TOTAL CORPORATE CONVERTIBLE
BONDS (identified cost: $481,250)............. 498,125
-------------
CORPORATE BONDS 10.74%
BANKING 0.86%
Chase Manhattan Corp.,
7 7/8% sub. notes 8/01/04..................... 1,000,000 1,015,719
-------------
BUILDING PRODUCTS 1.27%
USG Corp., 8% sr. notes 3/15/97................. 1,500,000 1,505,215
-------------
COMMUNICATION SERVICES 0.86%
Storer Communications Inc.,
10% sub. deb. 5/15/03......................... 1,000,000 1,017,500
-------------
ENERGY - OIL & GAS 0.86%
Maxus Energy Corp.,
9 3/8% notes 11/01/03......................... 1,000,000 1,020,000
-------------
FINANCIAL SERVICES 4.36%
Ford Motor Credit Corp.,
9 1/4% notes 6/15/98.......................... 1,000,000 1,042,798
General Electric Capital Corp.,
8% notes 1/15/98.............................. 1,000,000 1,020,159
General Motors Acceptance Corp.,
7 3/4% notes 1/15/99.......................... 1,000,000 1,028,387
MGM Grand Hotel Finance Corp.,
11 3/4% gtd. notes 5/01/99.................... 1,000,000 1,041,878
Texaco Capital Inc.,
9% gtd. notes 11/15/97........................ 1,000,000 1,026,835
-------------
5,160,057
-------------
</TABLE>
See notes to financial statements.
9
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STATEMENT OF NET ASSETS
December 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------------------
<S> <C> <C>
HOTELS 1.24%
Marriott Corp.,
8 7/8% sr. notes "D" 5/01/97.................. $ 115,000 $ 115,625
Marriott Corp.,
9 7/8% sr. notes "E" 11/01/97................. 850,000 853,810
Marriott Corp., 9 3/8% deb. 6/15/07............. 500,000 506,508
-------------
1,475,943
-------------
PHARMACEUTICALS 0.85%
Johnson & Johnson,
7 3/8% euronotes 11/09/97..................... 1,000,000 1,012,189
-------------
UTILITIES 0.44%
AES Corp.,
9 3/4% sr. sub. notes 6/15/00.................... 500,000 520,000
-------------
TOTAL CORPORATE BONDS
(identified cost: $12,427,935).............. 12,726,623
-------------
COMMERCIAL PAPER 3.19%
Associates Corp. of NA,
5.55% 1/02/97................................. 3,775,000 3,775,000
-------------
TOTAL COMMERCIAL PAPER
(identified cost: $3,775,000).............. 3,775,000
-------------
TOTAL INVESTMENTS
(identified cost: $89,908,982) 99.72% 118,139,123
CASH AND OTHER ASSETS,
LESS LIABILITIES 0.28 328,963
------ -------------
NET ASSETS 100.00% $ 118,468,086
====== =============
</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 December 31, 1996 was $89,889,863. The aggregate gross unrealized
appreciation for all securities in which there was an excess of value over tax
cost was $29,275,932 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was $1,026,672.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investment in securities, at value (identified
cost: $89,908,982)(Note 1).......................... $ 118,139,123
Cash in bank......................................... 51,847
Dividends and interest receivable.................... 410,859
Receivable for capital stock sold.................... 50,352
Receivable from investment advisor................... 346
-------------
Total assets........................................ 118,652,527
-------------
LIABILITIES:
Payable for capital stock redeemed................... 4,489
Payable for investment advisory fees (Note 6)........ 66,008
Payable for distribution and
service fees (Note 7)............................... 25,429
Accrued expenses and other payables.................. 88,515
-------------
Total liabilities................................... 184,441
-------------
NET ASSETS $ 118,468,086
=============
CLASS A SHARES
Net asset value and redemption price per share
(NOTE 2): ($117,425,651/4,577,959.349 shares
outstanding)......................................... $ 25.65
==============
Calculation of Maximum Offering Price
Sales charge - 5% of public offering
price:
(NOTE 2): ($25.65 net asset value plus 5.0%
of public offering price)............................ $ 27.00
==============
CLASS B SHARES
Net asset value and offering price per share:
(NOTE 2): ($1,039,060/39,490.402 shares
outstanding)......................................... $ 26.31
==============
CLASS C SHARES
Net asset value and offering price per share:
(NOTE 2): ($3,375/131.343 shares
of capital stock outstanding)........................ $ 25.69
==============
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...................................... $ 84,278,935
Undistributed net investment
income.............................................. 2,427,853
Accumulated net realized gains
on investments...................................... 3,531,157
Net unrealized appreciation of
investments......................................... 28,230,141
--------------
$ 118,468,086
==============
</TABLE>
See notes to financial statements.
10
<PAGE>
<PAGE>
[LOGO]
STATEMENT OF OPERATIONS
Year ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends
(net of foreign withholding tax of $14,917)......... $ 2,062,066
Interest............................................. 1,842,189
--------------
Total income........................................ 3,904,255
--------------
Expenses:
Investment advisory fees (Note 6)................... 711,676
Distribution fee (Class A)(Note 7).................. 164,540
Distribution fee (Class B)(Note 7).................. 6,546
Distribution fee (Class C)(Note 7).................. 23
Service fees (Class B & C)(Note 7).................. 2,190
Transfer agent fees................................. 205,472
Professional fees................................... 66,797
Reports to shareholders............................. 55,240
Directors' fees and expenses........................ 79,811
Custodian fees...................................... 52,142
Registration fees and expenses...................... 64,789
Insurance expense................................... 53,099
Miscellaneous expense............................... 14,735
--------------
Total expenses before reimbursement................ 1,477,060
Less: Expenses voluntarily reimbursed
by Investment Adviser (Note 6)................. (346)
--------------
Total expenses after reimbursement................. 1,476,714
--------------
Net investment income............................. 2,427,541
--------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Realized gain from securities
transactions (excluding short-term
money market instruments)
Proceeds from sale $ 80,731,830
Cost of securities sold (75,339,223)
------------
Net realized gain from securities
transactions ...................................... 5,392,607
--------------
Increase in unrealized appreciation
of investments
Beginning of year $ 17,560,175
End of year 28,230,141
------------
Increase in unrealized appreciation................. 10,669,966
--------------
Net realized and unrealized gain
on investments...................................... 16,062,573
--------------
Net increase in net assets resulting
from operations..................................... $ 18,490,114
==============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year ended Year ended
December 31, December 31,
1996 1995
------------ ------------
<S> <C> <C>
INCREASE IN NET ASSETS:
From operations:
Net investment income............................... $ 2,427,541 $ 3,515,912
Net realized gain from security and,
in 1995, option transactions....................... 5,392,607 4,434,390
Increase in unrealized
appreciation of investments........................ 10,669,966 15,328,646
-------------- --------------
Net increase in net assets
resulting from operations......................... 18,490,114 23,278,948
-------------- --------------
Distributions to shareholders
(Note 1):
From net investment income:
Class A Shares..................................... (2,637,095) (3,774,236)
Class B Shares..................................... (6,330) (10,282)
Class C Shares..................................... (27) (83)
From realized gains from security
and option transactions:
Class A Shares..................................... (4,155,898) (2,856,113)
Class B Shares..................................... (23,246) (10,070)
Class C Shares.......... .......................... (108) (67)
-------------- --------------
Total distributions to
shareholders................................... (6,822,704) (6,650,851)
-------------- --------------
Capital share transactions
(Note 2):
Net proceeds from sale
of shares.......................................... 1,333,647 1,318,615
Net asset value of shares issued
to shareholders in reinvestment
of dividends....................................... 5,845,914 5,722,758
-------------- --------------
7,179,561 7,041,373
Cost of shares redeemed.. .......................... (13,059,437) (13,140,548)
-------------- --------------
Decrease in net assets derived
from capital share transactions................... (5,879,876) (6,099,175)
-------------- --------------
Increase in net
assets for the year............................... 5,787,534 10,528,922
-------------- --------------
NET ASSETS:
Beginning of year.................................... 112,680,552 102,151,630
-------------- --------------
End of year (including undistributed
net investment income of
$2,427,853 and $882,239,
respectively)....................................... $ 118,468,086 $ 112,680,552
============== ==============
</TABLE>
See notes to financial statements.
11
<PAGE>
<PAGE>
[LOGO]
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
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 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. During 1996, the Fund increased
undistributed net investment income by $1,761,525 and decreased accumulated net
realized gains on investments by $1,761,085 and decreased capital paid-in by
$440.
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 December 31, 1996, 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, 1996, Class D shares were not issued.
Transactions in capital stock for the years ended December 31, 1996 and 1995
for Class A, B and C shares were as follows:
12
<PAGE>
<PAGE>
[LOGO]
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
<TABLE>
<CAPTION>
1996 1995
--------------------------
<S> <C> <C>
CLASS A SHARES
Shares sold........................................... 44,731 52,477
Shares issued to shareholders
in reinvestment of distributions..................... 257,573 285,586
-------- --------
302,304 338,063
-------- --------
Shares redeemed....................................... (556,676) (626,658)
-------- --------
Net decrease.......................................... (254,372) (288,595)
======== ========
CLASS B SHARES
Shares sold........................................... 12,016 10,326
Shares issued to shareholders
in reinvestment of distributions..................... 1,251 1,002
-------- --------
13,267 11,328
Shares redeemed....................................... (807) (1,348)
-------- --------
Net increase.......................................... 12,460 9,980
======== ========
CLASS C SHARES
Shares sold........................................... -0- -0-
Shares issued to shareholders
in reinvestment of distributions..................... 6 7
-------- --------
6 7
Shares redeemed....................................... -0- -0-
-------- --------
Net increase.......................................... 6 7
======== ========
</TABLE>
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, 1996 were:
<TABLE>
<CAPTION>
PROCEEDS
COST OF FROM SALES
PURCHASES OR MATURITIES
--------- -------------
<S> <C> <C>
Short-term money
market instruments $576,856,500 $574,622,500
U.S. Government obligations -0- -0-
Common stocks and other securities 68,267,519 80,731,830
</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 December 31, 1996, 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:
Units Company Acquired Cost Value
- ------------------------------------------------------------
10,000 Thermolyte Corp. 03/16/1995 $100,000 $100,000
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 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 year-end 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
13
<PAGE>
<PAGE>
[LOGO]
to the Investment Adviser will be reduced to the extent that such expenses
exceed such limitation. For the year ended December 31, 1996, the Fund incurred
fees in the amount of $711,676. 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 $57 and
$289, 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, 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 year ended December 31, 1996, Class A, B and C shares incurred fees of
$164,540, $6,546, and $23, 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, 1996 were $2,183 and $7,
respectively. For the year ended December 31, 1996, the Distributor earned
$127,402 in brokerage commissions from Fund transactions and $12,067 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 year ended December 31, 1996, there were
$820 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
December 31, 1996. The distribution had an ex-dividend date of January 2, 1997
and was payable January 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 $0.13 $0.05
From short-term capital gains 0.32 0.32 0.32
From long-term capital gains 0.84 0.84 0.84
----- ----- -----
Total distributions paid $1.27 $1.29 $1.21
===== ===== =====
</TABLE>
14
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
NOTE 9 -- Financial Highlights
<TABLE>
<CAPTION>
Class A Shares
-----------------------------------------
Year ended Dec.31, 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $23.19 $19.88 $21.86 $21.95 $22.16
------------------------------------------
Income from Investment Operations
Net Investment Income 0.51 0.71 0.75 0.81 0.88
Net Gains or Losses on Securities
(both realized and unrealized) 3.36 3.91 (1.15) 1.11 0.69
------------------------------------------
Total from Investment Operations 3.87 4.62 (0.40) 1.92 1.57
Less Distributions
Dividends (from net investment income) (0.55) (0.75) (0.87) (0.90) (1.12)
Distributions from Capital Gains (from
securities and options transactions) (0.86) (0.56) (0.71) (1.11) (0.66)
------------------------------------------
Total Distributions (1.41) (1.31) (1.58) (2.01) (1.78)
Net Asset Value, End of Year $25.65 $23.19 $19.88 $21.86 $21.95
==========================================
Total Return 17.60% 24.45% (1.77)% 9.35% 7.70%
------------------------------------------
Ratios/Supplemental Data
Net Assets (in $millions), End of Year 117.4 112.0 101.8 118.5 117.2
------------------------------------------
Ratio of Expenses (net)
to Average Net Assets [1] 1.3% 1.5% 1.5% 1.5% 1.2%
------------------------------------------
Ratio of Net Income to Average Net
Assets 2.1% 3.3% 3.7% 3.7% 4.1%
------------------------------------------
Average Commission Rate*** $0.07 -.- -.- -.- -.-
Portfolio Turnover Rate 61.5% 78.3% 87.9% 54.1% 68.5%
------------------------------------------
<CAPTION>
Class B Shares
-----------------------------------
Year ended Dec.31, 1996 1995 1994 1993*`DD'
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $23.45 $19.94 $21.84 $22.17
---------------------------------
Income from Investment Operations
Net Investment Income 0.21 0.41 0.49 0.13
Net Gains or Losses on Securities
(both realized and unrealized) 3.69 4.10 (1.04) (0.46)
Total from Investment Operations 3.90 4.51 (0.55) (0.33)
Less Distributions
Dividends (from net investment income) (0.18) (0.44) (0.64) 0.0
Distributions from Capital Gains (from
securities and options transactions) (0.86) (0.56) (0.71) 0.0
---------------------------------
Total Distributions (1.04) (1.00) (1.35) 0.0
---------------------------------
Net Asset Value, End of Year $26.31 $23.45 $19.94 $21.84
=================================
Total Return 17.34% 23.54% (2.52)% (1.49)%
---------------------------------
Ratios/Supplemental Data
Net Assets (in $millions), End of Year 1.0 0.6 0.3 0.2
Ratio of Expenses (net)
to Average Net Assets [1] 2.1% 2.2% 2.3% 2.2%`D'
---------------------------------
Ratio of Net Income to Average Net
Assets 1.3% 2.5% 2.9% 3.9%`D'
---------------------------------
Average Commission Rate*** $0.07 -.- -.- -.-
Portfolio Turnover Rate 61.5% 78.3% 87.9% 54.1%
---------------------------------
<CAPTION>
Class C Shares
----------------------------------
Year ended Dec.31, 1996 1995 1994 1993*`DD'
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $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 Year $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 Year 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 years ended December 31, 1996, 1995 and
1994 would have been 2.1%, 2.5% and 2.5% for Class B shares and 2.5%, 2.5% and
2.5% for Class C shares, respectively.
15
<PAGE>
<PAGE>
OFFICERS OF THE FUND ANNUAL REPORT
I.W. Burnham, II Chairman
Jon M. Burnham, President December 31, 1996
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
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 BURNHAM Securities Inc.
preceded or accompanied by an effective PRINCIPAL DISTRIBUTOR
prospectus that includes information
regarding the Fund's objectives, policies,
management, records and other information.
STATEMENT DIFFERENCES
The dagger symbol shall be expressed as ............. `D'.
The double dagger symbol shall be expressed as ...... `DD'.
