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<PAGE> PAGE 2
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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SIGNATURE MICHAEL E. BARNA
TITLE C.F.O. & SECRETARY
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BURNHAM
FUND ANNUAL REPORT DATED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH ANNUAL REPORT.
</LEGEND>
<CIK> 0000030126
<NAME> THE BURNHAM FUND INC.
<SERIES>
<NUMBER> 001
<NAME> CLASS A SHARES
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 93,452,821
<INVESTMENTS-AT-VALUE> 140,428,098
<RECEIVABLES> 217,733
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 140,645,831
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<TOTAL-LIABILITIES> 2,494,599
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 82,944,585
<SHARES-COMMON-STOCK> 4,541,504
<SHARES-COMMON-PRIOR> 4,577,959
<ACCUMULATED-NII-CURRENT> 593,535
<OVERDISTRIBUTION-NII> 0
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 46,975,277
<NET-ASSETS> 138,151,232
<DIVIDEND-INCOME> 2,384,042
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<NET-INVESTMENT-INCOME> 2,087,255
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<NET-CHANGE-FROM-OPS> 28,428,060
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<DISTRIBUTIONS-OF-INCOME> (2,041,644)
<DISTRIBUTIONS-OF-GAINS> (5,310,408)
<DISTRIBUTIONS-OTHER> 0
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<NUMBER-OF-SHARES-REDEEMED> (363,191)
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<PER-SHARE-DIVIDEND> (0.44)
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BURNHAM
FUND INC. ANNUAL REPORT DATED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH ANNUAL REPORT.
</LEGEND>
<CIK> 0000030126
<NAME> THE BURNHAM FUND INC.
<SERIES>
<NUMBER> 002
<NAME> CLASS B SHARES
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 93,452,821
<INVESTMENTS-AT-VALUE> 140,428,098
<RECEIVABLES> 217,733
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 140,645,831
<PAYABLE-FOR-SECURITIES> 2,314,250
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<TOTAL-LIABILITIES> 2,494,599
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<SHARES-COMMON-STOCK> 52,413
<SHARES-COMMON-PRIOR> 39,490
<ACCUMULATED-NII-CURRENT> 593,535
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<OVERDISTRIBUTION-GAINS> 0
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<DISTRIBUTIONS-OF-INCOME> (12,430)
<DISTRIBUTIONS-OF-GAINS> (45,808)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,773
<NUMBER-OF-SHARES-REDEEMED> (1,130)
<SHARES-REINVESTED> 2,280
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<ACCUMULATED-NII-PRIOR> 2,427,853
<ACCUMULATED-GAINS-PRIOR> 3,531,157
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 1,446,512
<AVERAGE-NET-ASSETS> 1,373,441
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<PER-SHARE-GAIN-APPREC> 5.75
<PER-SHARE-DIVIDEND> (0.28)
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BURNHAM
FUND INC. ANNUAL REPORT DATED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH ANNUAL REPORT.
</LEGEND>
<CIK> 0000030126
<NAME> THE BURNHAM FUND INC.
<SERIES>
<NUMBER> 003
<NAME> CLASS C SHARES
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
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<INVESTMENTS-AT-VALUE> 140,428,098
<RECEIVABLES> 217,733
<ASSETS-OTHER> 0
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<SHARES-COMMON-PRIOR> 131
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<OVERDISTRIBUTION-NII> 0
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<OVERDISTRIBUTION-GAINS> 0
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<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (122)
<DISTRIBUTIONS-OF-GAINS> (152)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,071
<NUMBER-OF-SHARES-REDEEMED> (25)
<SHARES-REINVESTED> 10
<NET-CHANGE-IN-ASSETS> 19,683,146
<ACCUMULATED-NII-PRIOR> 2,427,853
<ACCUMULATED-GAINS-PRIOR> 3,531,157
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 811,886
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,446,512
<AVERAGE-NET-ASSETS> 38,624
<PER-SHARE-NAV-BEGIN> 25.69
<PER-SHARE-NII> 0.13
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<PER-SHARE-DIVIDEND> (0.19)
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</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
_________________
To the Shareholders and Audit Committee of
The Burnham Fund Inc.:
In planning and performing our audit of the financial statements
of The Burnham Fund Inc. for the year ended December 31, 1997,
we considered its internal control, including controls over
safeguarding securities, in order to determine our auditing
procedures for the purpose of expressing our opinion on the
financial statements and to comply with the requirements of Form
N-SAR, not to provide assurance on internal control.
The management of The Burnham Fund Inc. is responsible for
establishing and maintaining internal control. In fulfilling
this responsibility, estimates and judgments by management are
required to assess the expected benefits and related costs of
controls. Generally, controls that are relevant to an audit
pertain to the entity's objective of preparing financial
statements for external purposes that are fairly presented in
conformity with generally accepted accounting principles. Those
controls include the safeguarding of assets against unauthorized
acquisition, use, or disposition.
Because of inherent limitations in internal control, errors or
irregularities may occur and may not be detected. Also,
projection of any evaluation of internal control to future
periods is subject to the risk that it may become inadequate
because of changes in conditions or that the effectiveness of
the design and operation may deteriorate.
Our consideration of internal control would not necessarily
disclose all matters in internal control that might be material
weaknesses under standards established by the American Institute
of Certified Public Accountants. A material weakness is a
condition in which the design or operation of any specific
internal control component does not reduce to a relatively low
level the risk that errors or irregularities in amounts that
would be material in relation to the financial statements being
audited may occur and not be detected within a timely period by
employees in the normal course of performing their assigned
functions. However, we noted no matters involving internal
control, including controls over safeguarding securities, that
we consider to be material weaknesses as defined above as of
December 31, 1997.
This report is intended solely for the information and use of
management and the Securities and Exchange Commission.
COOPERS & LYBRAND L.L.P.
New York, New York
January 30, 1998
<PAGE>
THE BURNHAM FUND INC.
Report of Purchase of Securities Pursuant to Rule 10f-3
A. Basic Information
1. Name of Issuer: American Italian Pasta Company
2. Description of securities and terms of transactions: A newly offered
company, American Italian Pasta Company is the third largest and one of the
fastest growing producers and marketers of pasta in North America.
3. Price per unit: $18.00
4. (a) Commission per unit: $1.24
(b) Commission as a percentage of price: 6.89%
5. Size of offering: 7,900,000 shares
6. (a) Size of purchase: 1,200 shares
(b) Purchase as a percentage of total offering: .015%
7. Date of offering to public: October 8, 1997
8. Date and time of purchase: Priced at market close on date of offering
9. Name of selling dealer: Morgan Stanley Dean Witter Inc.
10. Names of other members of the underwriting syndicate: see attached list
11. Information relating to commissions charged in recent comparable
offerings and other factors considered in determining that the commissions paid
are fair and reasonable as set forth in Appendix A attached hereto.
12. Information relating to the reason for purchase and the factors
considered in the decision to purchase are set forth in Appendix A attached
hereto.*
- --------------------------------------------------------------------------------
* To the extent that certain of the basic information, such as terms of the
transaction and identity of the underwriting syndicate members, may be contained
in an offering prospectus, that prospectus may be attached to this Report and
made a part hereof.
<PAGE>
UNDERWRITERS
Under the terms and subject to the conditions in the Underwriting Agreement
dated the date hereof (the 'Underwriting Agreement'), the U.S. Underwriters
named below for whom Morgan Stanley & Co. Incorporated, BT Alex. Brown
Incorporated, Goldman, Sachs & Co. and George K. Baum & Company are acting as
U.S. Representatives, and the International Underwriters named below for whom
Morgan Stanley & Co. International Limited, BT Alex. Brown International, a
division of Bankers Trust International PLC, Goldman Sachs International and
George K. Baum & Company are acting as International Representatives, have
severally agreed to purchase, and the Company has agreed to sell to them,
severally, the respective numbers of shares of Class A Common Stock set forth
opposite the names of such Underwriters below:
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
-------- ----------
<S> <C>
U.S. Underwriters:
Morgan Stanley & Co. Incorporated............................................................... 1,320,000
BT Alex. Brown Incorporated..................................................................... 1,320,000
Goldman, Sachs & Co............................................................................. 1,320,000
George K. Baum & Company........................................................................ 1,320,000
Burnham Securities Inc.......................................................................... 80,000
Donaldson, Lufkin & Jenrette Securities Corporation............................................. 160,000
A.G. Edwards & Sons, Inc........................................................................ 160,000
Furman Selz LLC................................................................................. 80,000
J.J.B. Hilliard, W.L. Lyons, Inc................................................................ 80,000
Janney Montgomery Scott Inc..................................................................... 80,000
Edward D. Jones & Co., LP....................................................................... 80,000
Kirkpatrick, Pettis, Smith, Polian Inc.......................................................... 80,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated.............................................. 160,000
Prudential Securities Incorporated.............................................................. 160,000
The Robinson-Humphrey Company, Inc.............................................................. 80,000
Smith Barney Inc................................................................................ 160,000
Stephens Inc.................................................................................... 80,000
---------
Subtotal................................................................................... 6,720,000
---------
International Underwriters:
Morgan Stanley & Co. International Limited...................................................... 295,000
BT Alex. Brown International, a division of Bankers Trust International PLC..................... 295,000
Goldman Sachs International..................................................................... 295,000
George K. Baum & Company........................................................................ 295,000
---------
Subtotal................................................................................... 1,180,000
---------
Total................................................................................. 7,900,000
---------
---------
</TABLE>
<PAGE>
APPENDIX A
TO BE COMPLETED BY INVESTMENT MANAGER
I. Information Relating to Commissions Charged in Comparable Offerings.
Due to the nature of the business that American Italian Pasta Company is
engaged in, there are no comparable offerings. Please see the attached
explanation.
II. Information Relating to the Reason for Purchase.
American Italian Pasta Company is a quality security suitable for the
Fund based on its outlook.
<PAGE>
A. CERTFICATE OF COMPLIANCE WITH RULE 10F-3 PROCEDURES.
- --------------------------------------------------------------
Based on the review of terms of the foregoing purchase, it has been
determined that:
1. The securities to be purchased have been registered under the
Securities Act of 1933, municipal securities defined in Section 3(a)(29)
of the Securities Exchange Act of 1934, foreign securities issued in an
"Eligible Foreign Offering" and Rule 144A securities issued in an
"Eligible Rule 144A offering". "Eligible Rule 144A offerings" will
encompass both foreign and domestic Rule 144A securities and are being
offered pursuant to an underwriting agreement committing the
underwriters to purchase all the securities being offered, except those
purchased by others pursuant to a rights of offering, if any are
purchased.
2. The securities are purchased at not more than the public offering
price prior to the end of the first full business day after the first
date on which the issue is offered to the public, if not offered for
subscription upon exercise of rights or, if so offered, purchased on or
before the fourth day preceding the day on which the rights offering
terminates.
3. The commission (spread) to be received by the principal underwriters
is reasonable and fair compared to the commission (spread) received by
other persons in connection with the underwriting of similar securities
being sold within a comparable period of time. The characteristics to be
considered in determining comparable securities include yield, rating,
degree of subordination, and any other factor reasonably believed to
affect underwriting spreads, such as anticipated market acceptability.
4. (i) With respect to any issue of securities other than municipal
securities, the issuer has been in continuous operation for not less
than three years (including the operation of any predecessors), and (ii)
with respect to any issue of municipal securities, (a) such issue shall
have received an investment grade rating from at least one of the
nationally recognized statistical rating organizations, or (b) if the
issuer supplying the revenues from which the issue is to be paid, has
been in continuous operation for less than three years, including the
operation of any predecessors, the issue shall have received one of the
highest ratings from one such rating organization.
6
<PAGE>
5. The amount of securities of the class purchased by the Fund, together
with securities purchased in the same offering by other investment
companies (whether or not registered) having Burnham Asset Management
Corporation as the investment adviser, does not exceed 25% of the
principal amount of the offering of such class.
1. The Fund will not purchase the securities directly or indirectly
from (i) an officer, director or employee of the Fund or Burnham
Asset Management Corporation or (ii) a person of which any such
person is an affiliated person and no such person will benefit
directly or indirectly from the transaction (or otherwise
allocated to the account of such persons) if the purchase is
being made from a syndicate manager.
2. The procedures approved by the Board of Directors for the
purpose of assuring that the provisions of Rule 10f-3 have been
complied with have been followed.
Burnham Asset Management Corporation
Name: /s/ MICHAEL E. BARNA
------------------------------
Position: E.V.P. & ASSISTANT SEC'Y
---------------------------
Dated: 10-15-97
7
<PAGE>
SCHEDULE A
Rule 10f-3--Compliance Worksheet
Issuer of Security: Morgan Stanley Dean Witter Inc.
Title of Security: AMERICAN ITALIAN PASTA COMPANY
Expected Purchase date: OCTOBER 8, 1997
<TABLE>
<S> <C>
Provision of Rule 10f-3 Compliance Check
(a)(1) Securities are either (i) part (a)(1) Check (i) or (ii):
of an issue registered under the 1933 (i) X
Act and offered to the public, (ii) (ii)
Municipal securities as defined in (ii)
Section 3(a)(29) of the 1934 Act, (iii) (iv)
Foreign securities issued in an "Eligible
Foreign Offering and (iv) Rule 144A
Securities issued in an "Eligible Rule 144A
Offering".
(a)(2) Securities are purchase at not (a)(2) NON-RIGHTS OFFERINGS:
more than the public offering price
prior to the end of the first full business Public offering price: $18.00
day on which issue is first offered to the Fund's purchase price $18.00
public, except if securities offered for First date offered: 10/8/97
subscription on exercise of rights, purchased Fund's purchase date: 10/8/97
on or before the fourth day preceding the day
on which the rights offering terminates. RIGHTS OFFERINGS:
Date offering terminates: N/A
Fund's purchase date: N/A
(a)(3) Securities are offered in a firm
commitment underwriting, except for (a)(3) CHECK ONE:
rights offerings. Firm commitment offering: X
Underwritten rights offering:
(b) Commission, spread or profit received
by principal underwriters is reasonable and (b) PREPARE ATTACHED SCHEDULE OF
fair compared to commissions, spreads or COMPARATIVE SPREADS:
profits received by other principal underwriters Offering price: $18.00
in connection with securities during a comparable Commission or spread: $ 1.24
period of time. Check if comparable: X
(c) If securities are not municipal securities, the issuer (c) FOR NON-MUNICIPAL ISSUES:
(including predecessors) has been in continuous
operation for at least three years. For municipal Check if issuer in operation at leas three years: X
securities, (i) issue has received an investment grade
rating from a recognized rating agency, or (ii) if issuer FOR MUNICIPAL ISSUES:
or entity supplying which issue to be paid (including Check if issuer or entity providing revenues in
predecessors) has been in operation for at least three operation for at least three years:
years, the issue has received one of the three highest ---------
ratings from a recognized rating agency.
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
(d) Amount purchased of any class of an issue does not (d) Total amount of offering:
exceed 25% of principal amount of offering Amount purchased by Fund:
of such class. Percent of offering purchased:
(e) Securities not purchased from affiliated person of (e) Purchases are to be made from following
the Fund or affiliated person of such affiliated person. broker-dealer(s)
Purchase From syndicate manager not deemed a purchase
from a specific underwriter if underwriter does not -------------------------------------------
benefit, directly or indirectly, from purchase, or allocated -------------------------------------------
to a person from whom the Fund could not purchase. If purchase is not made from any syndicate manager
state name of individual at that firm from whom
verification was received that purchase in question is
not a group sale:
______________________________________________________
Date of verification;_________________________________
(check one) Phone ________ Mail _______
</TABLE>
PURCHASE APPROVED BY:
/s/ JON M. BURNHAM President 10-15-97
- -------------------------------------------------------------------------------
Name Title Date
/s/ MICHAEL E. BARNA CFO & Sec'y 10-15-97
- -------------------------------------------------------------------------------
Name Title Date
9
<PAGE>
THE BURNHAM FUND INC.
PROCEDURES FOR PURCHASE OF SECURITIES
PURSUANT TO RULE 10f-3 UNDER THE INVESTMENT COMPANY ACT OF 1940
Section 10(f) of the Investment Company Act of 1940, as amended, (the
"Act"), generally prohibits an investment company from acquiring, during the
existence of an underwriting or selling syndicate, any securities the principal
underwriter of which is an officer, director, member of an advisory board,
investment adviser or employee of the investment company, or is a person of
which such officer, director, member of an advisory board, investment adviser or
employee is an affiliated person. Rule 10f-3, however, permits an investment
company to purchase such securities under the conditions set forth on pages 1
through 4.
Pursuant to the Rule, the Board of Directors of The Burnham Fund Inc.
(the "Fund"), including a majority of the disinterested directors, have adopted
procedures ("Rule 10f-3 Procedures") reasonably designed to assure that purchase
of securities in underwriting offerings in which an affiliate of the Fund is an
underwriter comply with the Rule's provisions and the Board will review such
procedures for their continued appropriateness as needed.
RULE 10f-3
Rule 10f-3 permits an investment company to purchase such securities
under the following conditions:
(1) PERMISSIBLE INVESTMENTS. The securities to be purchased are either
part of the Securities Act of 1933 which is being offered to the public,
municipal securities as defined Section 3(a)(29) of the Securities Exchange Act
of 1934, foreign securities used in an "Eligible Foreign Offering" and Rule 144A
securities issued in an "Eligible Rule 144A offering". "Eligible Rule 144A
offerings" may encompass both foreign and domestic Rule 144A securities.
(2) PRICE AND TIMING OF PURCHASE. The securities are purchased at not
more than the public offering price prior to the end of the first business day
after the first date on which the issue is offered to the public, if not offered
for subscription upon exercise of rights, or, if so offered, are purchased on or
before the fourth day preceding on which the rights offering terminates.
An "affiliated" person of another person means any person indirectly or
directly owning, controlling, or holding with power to vote, 5 percent or
more of the outstanding voting securities of such other person; any person 5
percent or more of whose outstanding voting securities are directly or
indirectly owned, controlled or held with power to vote, by such other
person; any person directly or indirectly controlling, controlled by, or
under common control with such other person; any officer, director,
partner, co-partner, or employee of such other person; if such other person
is an investment company, any investment adviser, thereof or any member of
an advisory board thereof.
1
<PAGE>
(3) SECURITIES OFFERED PURSUANT TO AN UNDERWRITING AGREEMENT. The
securities are offered pursuant to an underwriting agreement under which the
underwriters are committed to purchase all of the securities being offered,
except those purchased by others pursuant to a rights offering, if the
underwriters purchase any thereof.
(4) FAIR AND REASONABLE COMMISSION. The commission, spread or profit,
received or to be received by the principal underwriters is fair and reasonable
compared to the commission, spread or profit received by other persons in
connection with the underwriting of similar securities being sold during a
comparable period of time.*
(5) QUALIFICATIONS OF ISSUER AND RATING OF SECURITY.
(a) With respect to any issue of securities other than municipal
securities, the issuer of such securities to be purchased shall have been in
continuous operation for a period of not less than three years, including the
operations of any predecessors;
(b) With respect to any issue of municipal securities, (i) such
issue shall have received an investment grade rating from at least one of the
nationally recognized statistical rating organizations , or (ii) if the issuer
of the municipal securities to be purchased, or the entity supplying the
revenues from which the issue is to be paid, has been in continuous operation
for less than three years, including the operation of any predecessors, the
issue shall have received one of the highest ratings from one such rating
organization.
(5) INVESTMENT LIMITATIONS.
(a) The amount of securities of any class of issue to be purchased
by a Fund, or by two or more investment companies having the same investment
adviser, shall not exceed (i) with respect to an offering other than an Eligible
Rule 144A Offering, 25 percent of the principal amount of the offering of such
class, or (ii) with respect to an Eligible 144A Offering, 25 percent of the
total of (1) the principal amount of the offering of such class sold by
underwriters or members of the selling syndicate to qualified institutional
buyers, plus (2) the principal amount of the offering of such class in any
concurrent public offering.
- --------------------------------------------------------------------------------
* determining comparable securities, characteristics such as yield, rating and
degree of subordination, as well as any other factor which it is reasonably
believed may affect underwriting spreads, such as anticipated market
acceptability, should be considered. Investment Company Act Release No. 10736
(June 14, 1979).
2
<PAGE>
(7) PROHIBITION OF PURCHASES FROM CERTAIN AFFILIATED PERSONS. The
investment company does not purchase the securities directly or indirectly from
an officer, director, member of and advisory board, investment adviser or
employee of the investment company or from a person of which any such officer,
director, member of an advisory board, investment adviser or employee is an
affiliated person; provided, however, that a purchase from a syndicate manager
shall not be deemed to be a purchase from a specific underwriter (a) so long as
that underwriter does not benefit directly or indirectly from the transaction,
or (b) otherwise allocated to the account of persons from whom, in accordance
with this paragraph, purchases are not to be made.
(8) TRANSACTIONS REPORTED ON FORM N-SAR. The existence of any
transactions effected pursuant to this Rule shall be reported on the investment
company's semi-annual report on Form N-SAR and a written record of each such
transaction, setting forth from whom the securities were acquired, the identity
of the underwriting syndicate's members, the terms of the transaction, and the
information or materials upon which the determination described in paragraph
9(c) herein shall appear.
(9) BOARD REVIEW OF 10f-3 PROCEDURES AND TRANSACTIONS. The Board of
Directors, including a majority of the disinterested directors, (a) have
previously adopted procedures, pursuant to which such purchases may be effected
for the investment company, which are reasonably designed to provide that the
conditions of Rule 10f-3 have been complied with, (b) the procedures for their
continuing appropriateness as needed and (c) determine no less frequently than
quarterly that all purchases made during the preceding quarter were effected in
compliance with such procedures.
(10) MAINTENANCE AND PRESERVATION OF RECORDS. The investment company
maintains and preserves permanently in an easily accessible place a written copy
of the procedures ( and any modification thereto) and maintains and preserves
for a period not less than six years from the end of the fiscal year in which
any transactions occurred, the first two years in an easily accessible place, a
written record of each such transaction, setting forth from whom the securities
were acquired, the identity of the underwriting syndicate's members, the terms
of the transaction and the information or materials upon which the determination
described in paragraph 9(c) herein was made.
(11) PROCEDURES. Whenever Burnham Asset Management Corporation (the
"Investment Manager") determines that it would be desirable for the Fund to
purchase securities in a public offering in which an affiliate is one of the
underwriters, it must ascertain that all of the requirements set forth in
paragraphs 1-7 above are met, and prepare a "Report of Purchase of Securities
Pursuant to Rule 10f-3" (the "Report"). A copy of the Report is attached hereto
as
3
<PAGE>
Schedule A. The signature of the Investment Manager on the Report will verify
that a determination has been made that the various requirements of Rule 10f-3
as set forth above have been met with respect to the purchase. Under no
circumstances may securities be purchased from an affiliate.
The Investment Manager will report to the Board of Directors with
respect to each purchase made pursuant to these Rule 10f-3 Procedures, using the
Reports to enable the Board of Directors at least quarterly to determine that
all such purchases made during the preceding quarter have complied with the
procedures.
The Investment Manager shall cause the Board of Directors to review the
Rule 10f-3 Procedures to determine whether they continue to be appropriate
whenever the Investment Manager believes that such procedures are not effective
in insuring that the commission, spread or profit is reasonable and fair. The
Board of Directors will approve such procedures as needed, for their continuing
appropriateness.
A copy of these Rule 10f-3 Procedures and the form of Report will be
permanently maintained by the Fund in an easily accessible place. In addition,
the record of each purchase will be maintained for six years after such
purchases (the first two years in an easily accessible place).
Finally, the purchase will be recorded on the Fund's semi-annual report
on Form N-SAR to be filed with the Securities and Exchange Commission. The
Investment Manager will advise the Fund on a quarterly basis of each purchase
made pursuant to these Rule 10f-3 Procedures to insure that the proper notation
is made on Form N-SAR.
4
