Burnham Final 497 Filing 05.02.06

497 1 burnhamfinal497.htm BURNHAM FINAL 497 FILING 05.02.06 Burnham Final 497 Filing 05.02.06

May 1, 2006

PROSPECTUS

Burnham Fund

Burnham Financial Services Fund

Burnham Financial Industries Fund

THE BURNHAM FAMILY OF FUNDS

Burnham U.S. Government Money Market Fund

As with all mutual funds, the Securities and Exchange Commission does not approve or disapprove these shares or say whether the information in this prospectus is truthful or complete. It is a criminal offense for anyone to inform you otherwise.

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TABLE OF CONTENTS

THE FUNDS

Profiles of the principal strategies and risks of each fund

Burnham Fund………………………………………………………...................................................4

Burnham Financial Services Fund.......................................................................................................10

Burnham Financial Industries Fund.....................................................................................................17

Burnham U.S. Government Money Market Fund................................................................................38

THE INVESTMENT ADVISER........................................................................................................................42

YOUR ACCOUNT

Instructions and information on investing in the funds

Choosing A Share Class.......................................................................................................................43

How To Buy Shares.............................................................................................................................47

How To Exchange And Redeem Shares..............................................................................................48

Transaction Policies.............................................................................................................................49

Tax Considerations And Distributions.................................................................................................52

FINANCIAL HIGHLIGHTS

Fund Performance Data

Burnham Fund.....................................................................................................................................54

Burnham Financial Services Fund.......................................................................................................

Burnham Financial Industries Fund.....................................................................................................

Burnham U.S. Government Money Market Fund...............................................................................

WHERE TO GET MORE INFORMATION ......................................................BACK COVER

Each of the Burnham funds has its

own risk profile, so be sure to read

this prospectus carefully before

investing in any of the funds.

Mutual funds are not bank accounts

and are neither insured nor

guaranteed by the FDIC or any other

government agency. An investment in

any mutual fund entails the risk of

losing money.

THE BURNHAM FAMILY OF FUNDS

Burnham Asset Management Corporation (the “adviser”) was founded in 1989 and as of March 31, 2006, together with Burnham Securities Inc. (the “distributor”), manages approximately $5 billion in assets for investors.

The Burnham family of funds offers flexibility to investors. All the funds share Burnham's fundamental philosophy of prudent investment and risk management through all phases of the economic cycle.

No dealer, sales representative, or any other person has been authorized to give any information or to make any representations, other than those contained in this prospectus and in the related statement of additional information (“SAI”), in connection with the offer contained in this prospectus. If given or made, such other information or representations must not be relied upon as having been authorized by the funds or the distributor. This prospectus and the related SAI do not constitute an offer by the funds or by the distributor to sell shares of the funds to or to buy shares of the funds from any person to whom it is unlawful to make such an offer.

Class B shares of each fund are not currently being offered to investors. Current holders of Class B shares of the Burnham Fund and the Burnham Financial Services Fund may continue to reinvest dividends in additional Class B shares of their fund.

THE FUNDS 1

BURNHAM FUND

TICKER SYMBOL BURHX (Class A)

BURIX (Class B)

BURJX (Class C)

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PORTFOLIO MANAGER

Jon M. Burnham has had primary day-to-day responsibility for the fund's portfolio since 1995. Mr. Burnham is President, Chief Executive Officer and Chair of the board of trustees of the funds and the Chairman and Chief Executive Officer of the adviser and distributor. The SAI provides additional information about the portfolio manager’s compensation, other accounts under management and ownership of securities in the fund.

IS THIS FUND FOR YOU?

Burnham Fund is best suited for investors who:

- Want the relative stability of investments in large-capitalization companies with some of the growth opportunities of smaller companies

- Seek capital growth with a focus on risk management

- Are investing for the long-term

The fund may not be appropriate for investors who:

- Are worried about the possibility of sharp price swings and market declines

- Are interested in earning current income

- Are not investing for the long-term

THE FUND SEEKS CAPITAL APPRECIATION, MAINLY LONG-TERM. INCOME IS GENERALLY OF LESSER IMPORTANCE, MEANING THAT IT IS A SECONDARY GOAL.

MAIN STRATEGIES

The fund pursues its goals by investing in a diverse portfolio of common stocks. The fund will invest predominately in large-capitalization companies.

HOW THE FUND SELECTS SECURITIES

In managing the fund's stock portfolio, the manager first uses sector research, which focuses on selecting the industries the fund will invest in (top-down research). The fund seeks to reduce risk by diversifying across many different industries and economic sectors. In the past, the fund has tended to favor the following sectors:

- Consumer Discretionary

- Consumer Staples

- Energy

- Financial Services

- Health Care

- Industrials

- Information Technology

- Utilities

The fund may emphasize different sectors in the future.

In selecting individual stocks, the manager looks for companies that appear to have the following characteristics:

- Potential for sustained operating and revenue growth of at least 10% per year

- Product leadership and strong management teams that focus on enhancing shareholder value

- Companies with histories of paying regular dividends

- Securities that appear undervalued by the market or that seem to be poised to benefit from restructuring or similar business changes

Although the fund typically favors large "blue-chip" companies, it will consider opportunities in medium- and small-capitalization companies that meet its selection criteria.

OTHER INVESTMENTS

The fund may also invest in debt securities of any maturity, duration or credit quality (including junk bonds) from any government or corporate issuer. The fund generally invests in short to medium-term corporate bonds and maintains an average portfolio credit rating of A.

The fund may invest without limit in U.S. dollar-denominated securities of non-U.S. companies but may invest only up to 15% of its total assets in non-dollar denominated securities of non-U.S. companies. The fund may make limited investments in derivative instruments. Derivatives are a type of investment whose value is based on other securities or market indices.

Under normal conditions, the fund intends to remain fully invested. In extraordinary circumstances, the fund may invest extensively in cash or short-term investment grade debt securities. In such circumstances, the fund would be assuming a temporary defensive position and would not be pursuing its primary goal.

2 THE FUNDS

MAIN RISKS

The main risk of this fund is a downturn in the stock market, and particularly in stocks of large-capitalization companies. The fund's investments in debt securities will generally fall in value when interest rates rise.

Any of the following situations could cause the fund to lose money or underperform in comparison with its peer group:

- Any of the categories of securities that the fund emphasizes--large-capitalization stocks or particular sectors--could fall out of favor with the market.

- Companies in the fund's portfolio could fail to achieve earnings estimates or other market expectations, causing their stock prices to drop.

- The fund's management strategy or securities selection methods could prove less successful than anticipated.

- Investments in derivatives could magnify any of the fund's gains or losses.

- A bond issuer could be downgraded in credit rating or go into default. The risk of default and the price volatility associated with it are greater for junk bonds than for bonds of investment grade issuers.

- If any of the fund's bonds are redeemed substantially earlier or later than expected, performance could suffer.

Securities of Non-U.S. Companies. Investing in securities of non-U.S. companies, including depositary receipts of non-U.S. companies, typically involves more risks than investing in securities of U.S. companies. Certain of these risks also may apply to securities of U.S. companies with significant foreign operations. These risks can increase the potential for losses in the fund and affect its share price. These may include:

-	Unfavorable changes in currency exchange rates

-	Negative political and economic developments

-	Trading practices

-	Limited availability of information

-	Limited markets

These risks are magnified for foreign investments in less developed countries, sometimes referred to as emerging markets. These countries are more likely to experience higher levels of inflation, deflation or currency devaluation, than developed countries, which can harm their economies and securities markets and increase volatility.

Energy Sector Concentration Risk. The fund may hold a large concentration of investments within the energy sector. Accordingly, the fund could be disproportionately affected by events affecting the energy sector. Events affecting the energy sector may include the following:

-	changes in national and international economic and political conditions

-	companies in the energy sector may fall out of favor

-	concentration of investments may increase the volatility of the value of the fund’s investments

If the fund lends portfolio securities, there is a risk that the borrower may fail to return the securities. As a result, the fund may incur a loss or, in the event of a borrower's bankruptcy, may be delayed in, or prevented from, liquidating the collateral.

THE FUNDS 3

DEFINITION OF LARGE-CAPITALIZATION STOCKS

Large-capitalization stocks (commonly known as "blue-chip") are usually issued by well-established companies. These companies maintain a sound financial base and offer a variety of product lines and businesses. As compared with smaller-capitalization companies, securities of large companies historically have involved less market risk and lower long-term market returns. Their stock prices tend to rise and fall less dramatically than those of smaller-capitalization companies.

This fund considers a stock to be a large-capitalization stock if its total market capitalization (the value of all of its outstanding shares) is $9.3 billion or more.

PAST PERFORMANCE

The chart and table below describe the fund's performance history, as represented by the performance of Class A shares. All mutual funds present this information so that you can compare funds more readily. Bear in mind that past performance (before and after taxes) is not a guarantee of future performance.

The bar chart shows the fund's annual total returns for the last ten years. Returns for the fund's single best and single worst quarters give some indication of how widely short-term performance has varied. The returns in the chart do not include the effect of Class A shares’ front-end sales charges. These figures would be lower if they reflected such sales charges.

RETURN FOR CLASS A SHARES

[PERFORMANCE GRAPH OMITTED]

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

17.60% 24.74% 22.08% 32.71% 2.07% (14.26)% (23.14)% 21.60% 7.01% 5.55%

BEST QUARTER: 22.82% IN 4^TH QUARTER OF 1999

WORST QUARTER: (14.97)% IN 3^RD QUARTER OF 2002

AVERAGE ANNUAL RETURNS

The table presents the fund's average annual returns over 1, 5 and 10 years for Class A and Class B shares, and 1 year and since inception for Class C shares, along with those of recognized U.S. common stock and bond indices. The fund's performance figures assume that all distributions were reinvested in the fund. The performance calculations reflect the deduction of the maximum sales charges and annual fund operating expenses.

For the following periods ending 12/31/2005 1 year 5 years 10 years

CLASS A SHARES

Return Before Taxes 0.27% (2.97)% 7.62%

Return After Taxes on Distributions (1) (2) (0.32)% (3.98)% 5.77%

Return After Taxes on Distributions

and Sale of Fund Shares (1) (2) (3) 0.98 % (2.79)% 5.75%

CLASS B SHARES

Return Before Taxes (4) 0.77% (2.85)% 7.40%

CLASS C SHARES

(April 30, 2004)

Return Before Taxes (4) 3.77% n/a n/a

Standard & Poor’s 500 INDEX 4.91% 0.54% 9.07%

(reflects no deduction of fees, expenses or taxes)

Morningstar Large Cap Blend Average 5.85% 0.67% 8.44%

(reflects no deduction of fees, expenses and taxes)

The Standard &Poor’s 500 Index (“S&P 500 Index”) includes the common stocks of 500 large U.S. companies. The Morningstar Large Cap Blend category consists of equity mutual funds that invest primarily in large U.S. companies whose earnings are expected to increase. The Morningstar Large Cap Blend category and S&P 500 Index performance are shown for comparative purposes. Both are unmanaged.

(1) After-tax returns are calculated using the historical highest individual federal marginal income tax rates, and do not reflect the impact of state and local taxes.

(2) Actual after-tax returns depend on an investor's tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts (“IRAs”).

(3) Where the return after taxes on distributions and sale of fund shares is higher than the return before taxes, it is due to realized losses. If realized losses occur upon the sale of fund shares, the capital loss is recorded as a tax benefit, which increases the return.

(4) The after-tax returns are shown only for Class A shares; after-tax returns for Class B and Class C shares will vary.

4 THE FUNDS

FEES AND EXPENSES

The table below describes the fees and expenses you could expect as an investor in this fund. SHAREHOLDER FEES are one-time expenses charged directly to you. ANNUAL CLASS OPERATING EXPENSES come out of class assets, and are reflected in each class's total return.

FEE TABLE

Class A Class B Class C

SHAREHOLDER FEES

fees paid directly from your investment

Maximum front-end sales charge (load) 5.00%(1) NONE NONE

% of offering price

Maximum contingent deferred sales charge NONE(2) 5.00%(3) 1.00%(4)

% of offering price or the amount you

receive when you sell shares, whichever is less

Maximum short-term redemption fee(5) 2.00% 2.00% 2.00%

% of redemption proceeds

ANNUAL CLASS OPERATING EXPENSES

expenses that are deducted from class assets

Management fees 0.60% 0.60% 0.60%

Distribution (12b-1) fees(6) 0.25% 1.00% 1.00%

Other expenses (7) 0.57% 0.57% 0.57%

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TOTAL ANNUAL CLASS OPERATING EXPENSES (7) 1.42% 2.17% 2.17%

(1) Lower front-end sales charges for Class A shares may be available for purchases in excess of $50,000.

(2) Certain purchases of Class A shares will not be subject to a front-end sales charge but will be subject to a contingent deferred sales charge if the shares are redeemed within 2 years after purchase. See “Choosing a Share Class” below.

(3) Declines over 6 years from 5.00% to 0%.

(4) On Class C shares redeemed less than 1 year after purchase.

(5) The redemption fee applies to shares redeemed (either by selling or exchanging into another fund) within 30 days after purchase. The fee is withheld from redemption proceeds and retained by the fund.

(6) Because Rule 12b-1 fees are paid out of class assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying sales charges.

(7) The adviser currently intends to waive and/or reimburse certain expenses to the extent required to reduce total annual class operating expenses to 1.39%, 2.14% and 2.14% of the average daily net assets attributable to Class A, Class B and Class C shares, respectively (excluding transaction costs, taxes, interest charges, certain non-recurring expenses and extraordinary expenses). The adviser currently intends to waive its fees and/or reimburse certain expenses indefinitely, but this voluntary action by the adviser may be discontinued at any time on 30 days’ notice.

Example

This example shows what you could pay in expenses over time. To help you compare this fund's expenses with those of other funds, the example uses the same hypothetical assumptions as other mutual fund prospectuses:

- $10,000 original investment

- 5% annual return

- No changes in operating expenses

- Reinvestment of all dividends and distributions

- This example does not give effect to the fee waiver

1 year 3 years 5 years 10 years

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Class A $637 $927 $1,238 $2,117

Class B with redemption $720 $979 $1,364 $2,313

Class B without redemption $220 $679 $1,164 $2,313

Class C with redemption $320 $679 $1,164 $2,503

Class C without redemption $220 $679 $1,164 $2,503

Because actual returns and expenses may be different, this example is for comparison purposes only. For Class A shares, expenses would be the same whether you stayed in the fund or sold your shares at the end of each period. The 10 year figures for Class B shares assume the conversion to Class A shares after eight years.

THE FUNDS 5

UNDERSTANDING SHAREHOLDER FEES

The following definitions may be helpful in understanding shareholder fees.

FRONT-END SALES CHARGE

An amount charged for the sale of some fund shares, usually sold by a broker or sales professional. A sales charge or load is reflected in the asked or offering price.

ASKED OR OFFERING PRICE

The price at which the fund's shares may be purchased. The asked or offering price includes the current net asset value plus any sales charge.

CONTINGENT DEFERRED SALES CHARGE

A fee imposed when shares are redeemed during the first few years of ownership. Please refer to "Choosing a Share Class" for further information on alternative purchase arrangements.

SHORT-TERM REDEMPTION FEE

A fee imposed when shares are redeemed within 30 days of ownership. The fee is paid to the fund and is intended to compensate the fund and its shareholders for the costs associated with short-term investors.

UNDERSTANDING FUND EXPENSES

The following definitions may be helpful in understanding fund expenses.

MANAGEMENT FEES

Fees paid to the adviser for the supervision of the fund's investment program.

RULE 12b-1 FEES

Under SEC Rule 12b-1, mutual funds may use some of their assets to pay commissions to brokers, other marketing expenses and shareholder service fees. You should take 12b-1 fees into account when choosing a fund and share class.

OTHER EXPENSES

Fees paid by the fund for miscellaneous items such as transfer agency, custodian, administration, professional and registration fees.

BURNHAM FINANCIAL SERVICES FUND

TICKER SYMBOL BURKX (Class A)

BURMX (Class B)

BURNX (Class C)

SUBADVISER

Mendon Capital Advisors Corp. is a registered investment adviser incorporated in the State of Delaware. The subadviser has been providing investment advisory services focused in the financial services industry to private investment companies since 1996 and has served as the fund’s investment subadviser since its inception in 1999.

[GRAPHIC OMITTED]

PORTFOLIO MANAGER

Anton Schutz has had primary day-to-day responsibility for the fund's portfolio since its inception in 1999. Mr. Schutz is the President of Mendon Capital Advisors Corp. The SAI provides additional information about the portfolio manager’s compensation, other accounts under management and ownership of securities in the fund.

IS THIS FUND FOR YOU?

Burnham Financial Services Fund is best suited for investors who:

- Are investing for the long-term

- Believe that the financial services sector offers attractive long-term growth opportunities

- Wish to increase their exposure to small and medium capitalization companies within the financial services sector

- Seek potential for more rapid capital growth than might be achieved in a sector-diversified fund

- Are comfortable with increased price volatility

The fund may not be appropriate for investors who:

- Are worried about the possibility of sharp price swings and market declines

- Are interested in earning current income

- Do not wish to invest in a concentrated portfolio of financial services companies

- Are not investing for the long-term

This fund's goal is non-fundamental and may be changed without shareholder approval upon 60 days’ prior notice.

THE FUND SEEKS CAPITAL APPRECIATION.

MAIN STRATEGIES

The fund pursues its goal by investing at least 80% of its assets in stocks of U.S. companies, primarily with less than $9.3 billion in market capitalization that are in the financial services sector. (The Burnham Financial Industries Fund, which is also described in this prospectus, invests primarily in financial services companies without regard to market capitalization. Accordingly, the average market capitalization of the Burnham Financial Industries Fund’s portfolio is expected to be higher than the average market capitalization of this fund’s portfolio.) The fund considers all of the following as part of this sector:

- regional and money center banks

- insurance companies

- home, auto and other specialty finance companies

- securities brokerage firms and electronic trading networks

- investment management and advisory firms

- publicly traded, government-sponsored financial intermediaries, such as Fannie Mae or Freddie Mac

- thrift and savings banks

- financial conglomerates

- foreign financial service companies

- electronic transaction processors for financial services companies

- real estate investment trusts

- depository institutions

- any company that derives at least 50% of its revenues from doing business with financial services companies, such as

financial software companies

HOW THE FUND SELECTS SECURITIES

In selecting stocks, the fund's manager uses a combination of growth and value strategies. The manager seeks growth stocks of companies with the following characteristics:

- Capable management

- Attractive business niches

- Sound financial and accounting practices

- Demonstrated ability to sustain growth in revenues, earnings and cash flow

The manager also looks for opportunities to purchase value stocks of companies that appear to be:

- Undervalued based on their balance sheets or individual circumstances

- Temporarily distressed

- Poised for a merger or acquisition

Although the fund may invest in companies of any size, it typically focuses on those with market capitalizations of less than $9.3 billion. The fund generally intends to invest in U.S. companies and U.S. dollar denominated securities issued by non-U.S. companies (such as depositary receipts), but it may also invest up to 15% of its total assets in non-U.S. dollar denominated securities issued by non-U.S. companies. The fund may invest in initial public offerings (“IPOs”) of securities.

6 THE FUNDS

The manager constructs the fund’s portfolio using both a top-down and bottom-up analysis. Examples of top-down analysis include the study of interest rates, credit trends and other macroeconomic factors that broadly affect the financial services sector. Examples of bottom-up analysis include industry screens, sell-side company research reports, company models and other fundamental research that are used to construct the fund’s portfolio on a stock-by-stock basis. In addition to its own fundamental research, the manager relies on a broad information network to gather data and to find potential investments. This network includes buy-side and sell-side research analysts, portfolio managers of both mutual funds and hedge funds, management teams at companies and other industry contacts. Using both a top-down and bottom-up analysis, the manager attempts to identify how various financial services sub-sectors and the individual companies therein will move in reaction to market events. Every potential investment is evaluated by weighing its potential for gain against its associated risks. Because of the way the manager constructs the fund's portfolio, there may be times when the fund’s investments are focused in one or more financial services sub-sectors and/or a limited number of regions of the U.S.

OTHER INVESTMENTS

The fund may invest up to 20% of its total assets in:

- Companies outside the financial services sector

- Debt securities of any maturity, duration, or credit rating (including junk bonds) from any government or corporate issuer, U.S. or foreign

The fund may use derivatives (a type of investment whose value is based on one or more securities or market indices) to hedge against market changes or as a substitute for securities transactions. It may also use derivatives in attempts to profit from anticipated market and security movements.

Under normal conditions, the fund intends to remain fully invested. In extraordinary circumstances, the fund may invest extensively in cash or short-term investment-grade debt securities. In such circumstances, the fund would be assuming a temporary defensive position and would not be pursuing its primary goal.

THE FUNDS 7

MAIN RISKS

The main risks of this fund are the performance of the stock market and the level of interest rates. Because this fund concentrates its investments in one sector of the economy, investors should expect greater volatility than in a fund that invests across several sectors.

Any of the following situations could cause the fund to lose money or underperform in comparison with its peer group:

- An adverse event could disproportionately affect the financial services sector.

- Changing interest rates could reduce the profitability of certain types of companies in the financial services sector. For example, increasing interest rates increase the cost of financing to, and may reduce the profitability of, certain financial services companies.

- Financial services companies and companies with less than $9.3 billion in market capitalization could fall out of favor causing the fund to underperform funds that focus on other types of stocks.

- Companies in the fund's portfolio could fail to achieve earnings estimates or other market expectations, causing their stock prices to drop.

- The fund’s management strategy or securities selection methods could prove less successful than anticipated.

- Investments in derivatives could magnify any of the fund's gains or losses.

- A bond issuer could be downgraded in credit quality or go into default. The risk of default and the price volatility associated with it are greater for junk bonds than for bonds of investment grade users.

-	Unfavorable changes in currency exchange rates

-	Negative political and economic developments

-	Trading practices

-	Limited availability of information

-	Limited markets

These risks are magnified for foreign investments in less developed countries, sometimes referred to as emerging markets. These countries are more likely to experience higher levels of inflation, deflation or currency devaluation than developed countries, which can harm their economies and securities markets and increase volatility.

8 THE FUNDS

Small and Mid-Capitalization Companies. The fund may invest in the securities of companies with small or mid-capitalizations, which can involve greater risk and the possibility of greater portfolio volatility than investments in securities of large capitalization companies. Historically, stocks of small or mid-capitalization companies and recently organized companies have been more volatile in price than those of the larger market capitalization companies. Among the reasons for the greater price volatility is the lower degree of liquidity in the markets for such stocks. Small and mid-sized companies may have limited product lines and financial resources and may depend upon a limited or less experienced management group. The securities of small capitalization companies trade in the over-the-counter markets or on regional exchanges and may not be traded daily or in the volume typical of trading on a national securities exchange, which may make these securities more difficult to value and to sell.

IPO Risk. The fund may invest in initial public offerings (“IPOs”) of securities. The purchase of IPO shares may involve high transaction costs and may involve the risk that the market value of IPO shares will fluctuate considerably due to factors such as the absence of a prior public market, unseasoned trading, the small number of shares available for trading and limited information about the issuer. IPO shares are subject to market risk and liquidity risk. When the fund’s asset base is small, a significant portion of the fund’s performance could be attributable to investments in IPOs, because such investments would have a magnified impact on the fund. As the fund’s assets grow, the effect of the fund’s investments in IPOs on the fund’s performance probably will decline, which could reduce the fund’s performance.

Portfolio Turnover. The portfolio turnover rate measures the frequency with which the fund sells and replaces its securities within a given period. The fund has had a high portfolio turnover rate. High turnover can increase the fund's transaction costs, thereby lowering its returns. It also may increase your tax liability. The fund's portfolio turnover rates are shown in the financial highlights table.

THE FUNDS 9

WHY INVEST IN COMPANIES IN THE FINANCIAL SERVICES SECTOR?

DEMOGRAPHICS

The largest consumers of financial services are those in the 45 to 64 age group, which is projected to grow significantly over the next 20 years, leading to greater demand for financial products.

CONSOLIDATION

The manager believes that the current consolidation trend in the financial services sector presents investment opportunities that should result in improving profit margins for surviving companies.

STRONGER CASH FLOW

Many financial companies generate strong free cash flows that can be used to increase shareholder value through share repurchase programs, acquisitions and higher dividends.

SPECIALIZATION

Financial service providers are "unbundling" financial products to meet customer needs, which provides potential profit opportunities and the opportunity for financial service providers to expand their markets.

PAST PERFORMANCE

The bar chart shows the fund's annual total returns for each full calendar year since inception. Returns for the fund's single best and single worst quarters give some indication of how widely short-term performance has varied. The returns in the chart do not include the effect of Class A shares’ front-end sales charges. These figures would be lower if they reflected such sales charges.

RETURN FOR CLASS A SHARES

[PERFORMANCE GRAPH OMITTED]

2000 2001 2002 2003 2004 2005

52.78% 29.28% 17.55% 40.66% 13.13% 0.37%

BEST QUARTER: 26.51% IN 3^RD QUARTER OF 2000

WORST QUARTER: (5.82)% IN 1^ST QUARTER OF 2005

AVERAGE ANNUAL RETURNS

The table presents the fund's average annual returns over 1 and 5 years and since inception for each share class (other than Class C shares, the offering of which commenced on April 29, 2005) along with those of recognized U.S. common stock indices. The fund's performance figures assume that all distributions were reinvested in the fund. The performance calculations reflect the deduction of the maximum sales charges and annual fund operating expenses.

For the following periods ending 12/31/2005 1 year 5 years Since Inception

(June 7, 1999)

Class A Shares

Return Before Taxes (4.65)% 18.18% 20.77%

Return After Taxes on Distributions (1) (2) (6.05)% 15.01% 17.78%

Return After Taxes on Distributions

and Sale of Fund Shares (1) (2) (3) (2.31)% 14.22% 16.78%

Class B Shares

Return Before Taxes (4) (4.09)% 18.41% 20.77%

NASDAQ Bank Index (4.33)% 9.72% 8.04%

(reflects no deduction of fees, expenses or taxes)

NASDAQ Financial 100 Index (0.13)% 12.93% 5.11%

(reflects no deduction of fees, expenses or taxes)

The NASDAQ Bank Index contains stocks of all types of banks and savings institutions and related holding companies, and establishments performing functions closely related to banking. The NASDAQ Financial 100 Index includes the stocks of the 100 largest financial companies traded on the NASDAQ market system and NASDAQ small cap market.

(1) After-tax returns are calculated using the historical highest individual federal marginal income tax rates, and do not reflect the impact of state and local taxes.

(4) The after-tax returns are shown only for Class A shares; after-tax returns for Class B and Class C shares will vary.

10 THE FUNDS

FEES AND EXPENSES

FEE TABLE

Class A Class B Class C

SHAREHOLDER FEES

fees paid directly from your investment

Maximum front-end sales charge (load) 5.00% (1) NONE NONE

% of offering price

Maximum contingent deferred sales charge NONE(2) 5.00%(3) 1.00%(4)

% of offering price or the amount you receive

when you sell shares, whichever is less

Maximum short-term redemption fee(5) 2.00% 2.00% 2.00%

% of redemption proceeds

ANNUAL CLASS OPERATING EXPENSES

expenses that are deducted from class assets

Management fees 0.75% 0.75% 0.75%

Distribution (12b-1) fees(6) 0.25% 1.00% 1.00%

Other expenses (7) 0.65% 0.65% 0.65%

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TOTAL ANNUAL CLASS OPERATING EXPENSES (7) 1.65% 2.40% 2.40%

(1) Lower front-end sales charges for Class A shares may be available for purchases in excess of $50,000.

(3) Declines over 6 years from 5.00% to 0%.

(4) On Class C shares redeemed less than 1 year after purchase.

(6) Because Rule 12b-1 fees are paid out of class assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying sales charges.

(7) The adviser currently intends to waive and/or reimburse certain expenses to the extent required to reduce total annual class operating expenses to 1.60%, 2.35% and 2.35% of the average daily net assets attributable to Class A, Class B and Class C shares, respectively (excluding transaction costs, taxes, interest charges, certain non-recurring expenses and extraordinary expenses). The adviser currently intends to continue to waive and/or reimburse certain expenses indefinitely, but this voluntary action by the adviser may be discontinued at any time on 30 days’ notice.

EXAMPLE

- $10,000 original investment

- 5% annual return

- No changes in operating expenses

- Reinvestment of all dividends and distributions

- This example does not give effect to the fee waiver

1 year 3 years 5 years 10 years

----------------------------------------------------------------------------------------------------------------------

Class A $659 $994 $1,352 $2,357

Class B with redemption $743 $1,048 $1,480 $2,550

Class B without redemption $243 $748 $1,280 $2,550

Class C with redemption $343 $748 $1,280 $2,736

Class C without redemption $243 $748 $1,280 $2,736

Because actual return and expenses may be different, this example is for comparison purposes only. For Class A shares, expenses would be the same whether you stayed in the fund or sold your shares at the end of each period. The 10 year figures for Class B assume the conversion to Class A shares after 8 years.

THE FUNDS 11

UNDERSTANDING SHAREHOLDER FEES

The following definitions may be helpful in understanding shareholder fees.

FRONT-END SALES CHARGE

An amount charged for the sale of some fund shares, usually sold by a broker or sales professional. A sales charge or load is reflected in the asked or offering price.

ASKED OR OFFERING PRICE

The price at which the fund's shares may be purchased. The asked or offering price includes the current net asset value plus any sales charge.

CONTINGENT DEFERRED SALES CHARGE

A fee imposed when shares are redeemed during the first few years of ownership. Please refer to "Choosing a Share Class" for further information on alternative purchase arrangements.

SHORT-TERM REDEMPTION FEE

UNDERSTANDING FUND EXPENSES

The following definitions may be helpful in understanding fund expenses.

MANAGEMENT FEES

Fees paid to the adviser for the supervision of the fund's investment program.

RULE 12b-1 FEES

OTHER EXPENSES

Fees paid by the fund for miscellaneous items such as transfer agency, custodian, administration, professional and registration fees.

BURNHAM FINANCIAL INDUSTRIES FUND

TICKER SYMBOL BURFX (Class A)

BURCX (Class C)

SUBADVISER

[GRAPHIC OMITTED]

PORTFOLIO MANAGER

Anton Schutz has had primary day-to-day responsibility for the fund's portfolio since its inception in 2004. Mr. Schutz is the President of Mendon Capital Advisors Corp. The SAI provides additional information about the portfolio manager’s compensation, other accounts under management and ownership of securities in the fund.

IS THIS FUND FOR YOU?

Burnham Financial Industries Fund is best suited for investors who:

- Are investing for the long-term

- Believe that the financial services sector offers attractive long-term growth opportunities

- Wish to increase their exposure to the financial services sector

- Seek potentially more rapid capital growth than might be achieved in a sector-diversified fund

- Are comfortable with increased price volatility

The fund may not be appropriate for investors who:

- Are worried about the possibility of sharp price swings and market declines

- Are interested in earning current income

- Do not wish to invest in a concentrated portfolio of financial services companies

- Are not investing for the long-term

This fund's goal is non-fundamental and may be changed without shareholder approval upon 60 days’ prior notice.

THE FUND SEEKS CAPITAL APPRECIATION.

MAIN STRATEGIES

The fund pursues its goal by investing at least 80% of its assets in the common stocks of U.S. companies of any market capitalization that are in the financial services sector. (The Burnham Financial Services Fund, which is also described in this prospectus, invests primarily in financial services companies that have market capitalizations of less than $9.3 billion. Accordingly, the average market capitalization of the Burnham Financial Services Fund’s portfolio is expected to be lower than the average market capitalization of this fund’s portfolio.) The fund considers all of the following as part of this sector:

- Regional and money center banks

- Insurance companies

- Home, auto and other specialty finance companies

- Securities brokerage firms and electronic trading networks

- Investment management and advisory firms

- Publicly traded, government-sponsored financial intermediaries, such as Fannie Mae or Freddie Mac

- Thrift and savings banks

- Financial conglomerates

- Foreign financial service companies

- Electronic transaction processors for financial services companies

- Real estate investment trusts

- Depository institutions

- Any company that derives at least 50% of its revenues from doing business with financial services companies, such as

financial software companies

HOW THE FUND SELECTS SECURITIES

In selecting stocks, the fund's manager uses a combination of growth and value strategies. The manager seeks growth stocks of companies with the following characteristics:

- Capable management

- Attractive business niches

- Sound financial and accounting practices

- Demonstrated ability to sustain growth in revenues, earnings and cash flow

The manager also looks for opportunities to purchase value stocks of companies that appear to be:

- Undervalued based on their balance sheets or individual circumstances

- Temporarily distressed

- Poised for a merger or acquisition

The fund may invest in companies of all sizes of market capitalization. The fund generally intends to invest in U.S. companies and U.S. dollar denominated securities issued by non-U.S. companies (such as depositary receipts), but it may also invest up to 15% of its total assets in non-U.S. dollar denominated securities issued by non-U.S. companies. The fund may also invest in initial public offerings (“IPOs”) of securities.

12 THE FUNDS

portfolio managers of both mutual funds and hedge funds, management teams at companies and other industry contacts. Using both a top-down and bottom-up analysis, the manager attempts to identify how various financial services sub-sectors and the individual companies therein will move in reaction to market events. Every potential investment is evaluated by weighing its potential for gain against its associated risks. Because of the way the manager constructs the fund's portfolio, there may be times when the fund’s investments are focused in one or more financial services sub-sectors and/or a limited number of regions of the U.S.

The fund may use futures and options on securities, indices and other derivatives to hedge against market changes or as a substitute for securities transactions. It may also use derivatives in attempts to profit from anticipated market and security movements. A derivative is a security or instrument whose value is determined by reference to the value or the change in value of one or more securities, indices or other financial instruments. The fund expects that its primary investments in derivatives will be in written covered call options.

The fund may take “short” positions in (i.e., sell “short”) securities of companies believed to be overvalued, with a maximum short exposure limit of 25%. The fund generally makes money if the value of the security when repurchased by the fund is less than its value when the fund sold the security short. When the fund sells a security short, it borrows a security it does not own from a third party and sells it at the then current market price. The fund is then obligated to buy the security on a later date so that it can return the security to the lender. Until the fund replaces the borrowed security, it will maintain daily a segregated account with a broker or custodian, as required by law. The fund is also required to repay the lender the dividends or interest that accrue on the stock during the period of the loan. Selling “short” may be used to seek to hedge the fund’s long portfolio in periods of market decline and to seek to take advantage of negative information about companies gained from the manager’s research. A strategy involving selling a particular security short is separate and distinct from a strategy of buying and then selling the underlying security itself.

OTHER INVESTMENTS

The fund may invest up to 20% of its total assets in:

- Companies outside the financial services sector

- Debt securities of any maturity, duration, or credit rating (including junk bonds) from any government or corporate issuer, U.S. or

foreign

In pursuing its investment objective, the manager may from time to time purchase securities that do not meet its normal investment criteria, as described above, when it perceives an unusual opportunity for potential gain. These special situations might arise when the manager believes a security could increase in value for a variety of reasons, including a change of management, an extraordinary corporate event, or a temporary imbalance in the supply of, or demand for, the securities.

THE FUNDS 13

{Sidebar}

Call Options

The Fund Collects a Premium.

For the right to purchase the underlying securities from the fund, the buyer of a call option sold by the fund pays a fee or “premium” to the fund. The premium is paid at the time the option is purchased, and is not refundable to the buyer regardless of what happens to the securities’ price. Premiums received for writing various call options may decrease as a result of certain factors, such as a reduction in interest rates, a decline in stock market volumes or a decrease in the price volatility of the underlying securities on which the call options are written.

If the Option is Exercised.

The buyer of an option may elect to exercise the option at the exercise price at any time before the option expires. The fund is then obligated to deliver the underlying shares at that exercise price. Options are normally exercised if the market price of the securities exceeds the exercise price of the option.

If the Option Expires.

If the market price of the security does not exceed the exercise price, the call option will likely expire without being exercised. The fund keeps the premium. The fund may continue to hold the underlying security or may sell the position.

MAIN RISKS

The main risks of this fund are the performance of the stock market, especially stocks of financial services companies and to a lesser degree, the level of interest rates. Because this fund concentrates its investments in one sector of the economy, investors should expect greater volatility than in a fund that invests across several sectors.

Any of the following situations could cause the fund to lose money or underperform in comparison with its peer group:

- An adverse event could disproportionately affect the financial services sector.

- Changing interest rates could reduce the profitability of certain types of companies in the financial services sector. For example, increasing interest rates increase the cost of financing to, and may reduce, the profitability of certain financial services companies.

- Financial services companies could fall out of favor causing the fund to underperform funds that focus on other types of stocks.

- Companies in the fund's portfolio could fail to achieve earnings estimates or other market expectations, causing their stock prices to

drop.

- The fund's management strategy or securities selection methods could prove less successful than anticipated.

- Investments in derivatives could magnify any of the fund's gains or losses.

- If the fund lends portfolio securities, there is a risk that the borrower may fail to return the securities. As a result, the fund may incur

a loss or, in the event of a borrower's bankruptcy, may be delayed in, or prevented from, liquidating the collateral.

-	Unfavorable changes in currency exchange rates

-	Negative political and economic developments

-	Trading practices

-	Limited availability of information

-	Limited markets

These risks are magnified for foreign investments in less developed countries, sometimes referred to as emerging markets. These countries are more likely to experience higher levels of inflation, deflation or currency devaluation than developed countries, which can harm their economies and securities markets and increase volatility.

Derivative Securities. The fund’s ability to utilize derivatives successfully will depend on the manager's ability to predict pertinent market, security and interest rate movements, which cannot be assured. Derivatives involve a number of risks including possible default by the other party to the transaction, illiquidity and, to the extent the manager's view of certain market, security or interest rate movements is incorrect, the risk that the use of derivatives could result in losses greater than if they had not been used. The writing of put and call options may result in losses to the fund, force the purchase or sale, respectively, of portfolio securities at inopportune times or for prices

14 THE FUNDS

higher than (in the case of purchase due to the exercise of put options) or lower than (in the case of sales due to the exercise of call options) current market values, limit the amount of appreciation the fund can realize on its investments or cause the fund to hold a security it might otherwise sell or sell a security it might otherwise hold.

The use of options and futures transactions entail certain other risks. Futures markets are highly volatile, and the use of futures may increase the volatility of the fund’s investments. The variable degree of correlation between the price movements of future contracts and price movements in the related portfolio position of the fund creates the possibility that losses on the derivative instruments may be greater than gains in the value of the fund’s position. In addition, futures and options markets may not be liquid in all circumstances, and over-the-counter options may have no markets. As a result, in certain markets, the fund might not be able to close out a transaction without incurring substantial losses. Although the use of futures and options transactions for hedging should tend to minimize the risk of loss due to a decline in value of the position, at the same time, such transactions can limit the potential gain that might result from an increase in value of such position.

Covered Call Options Risk. Investments in covered calls involve certain risks. These risks include:

-	Limited gains. By selling a covered call option, the fund may forego the opportunity to benefit from an increase in price of the underlying security above the exercise price, but continues to bear the risk of a decline in the value of the underlying stock.

-	Lack of liquidity for the option. A liquid market may not exist for the option. If the fund is not able to close out the options transactions, the fund will not be able to sell the underlying security until the option expires or is exercised.

Non-Diversification. The fund is non-diversified and may invest a larger portion of its assets in the securities of a single company than diversified funds. As a result, matters affecting the stock price of a single company in which the fund invests may have a greater impact on the fund's share price than in a diversified fund. Such non-diversification will increase the volatility of the value of the fund's portfolio investments. Notwithstanding its non-diversified status, the fund may not invest in securities of more than three issuers, each of which represents 10% or more of the fund’s total assets, and the fund may not invest more than 15% of its total assets in the securities of any single issuer.

THE FUNDS 15

Short Sale Risk. Selling short may produce higher than normal portfolio turnover and result in increased transaction costs to the fund. In addition, selling short magnifies the potential for both gain and loss to the fund and its shareholders. The larger the fund’s short position, the greater the potential for gain and loss. If a security sold short increases in price, the fund may have to cover its short position at a higher price than the short sale price, resulting in a loss. To borrow the security, the fund also may be required to pay a premium, which could increase the cost of the security sold short. The amount of any gain will be decreased, and the amount of any loss increased, by the amount of the premium, dividends, interest or expenses the fund may be required to pay in connection with the short sale. In addition, because the fund’s loss on a short sale arises from increases in the value of the security sold short, such loss is theoretically unlimited. By contrast, the fund’s loss on a long position arises from decreases in the value of the security and is limited by the fact that a security’s value cannot drop below zero.

Portfolio Turnover. The portfolio turnover rate measures the frequency with which the fund sells and replaces its securities within a given period. The fund anticipates that it will experience a high portfolio turnover rate. High turnover can increase the fund's transaction costs, thereby lowering its returns. It also may increase your tax liability.

Tax Consequences to Writing Covered Call Options. The fund expects to generate premiums from its sale of call options. These premiums typically will result in short-term capital gains to the fund for federal and state income tax purposes, which usually will be taxable as ordinary income when distributed to shareholders. Transactions involving the disposition of a fund’s underlying securities (whether pursuant to the exercise of a call option or otherwise) will give rise to capital gains or losses. Because the fund will have no control over the exercise of the call options it writes, shareholder redemptions or corporate events involving its equity securities investments (such as mergers, acquisitions, or reorganizations), it may be forced to realize capital gains or losses at inopportune times.

Segregated Account Risk. A security held in a segregated account cannot be sold while the position it is covering is outstanding unless it is replaced with a similar security. Therefore, the segregation of a large percentage of the fund’s assets could possibly hinder management of the portfolio or the fund’s ability to meet redemption requests or other current obligations.

16 THE FUNDS

WHY INVEST IN COMPANIES IN THE FINANCIAL SERVICES SECTOR?

SIZE OF SECTOR

The manager believes that the financial services sector is broad enough to attract value in any combination of economic, credit and interest rate environments. There are over 40,000 firms in the financial services industry.

DEMOGRAPHICS

The largest consumers of financial services are those in the 45 to 64 age group, which is projected to grow significantly over the next 20 years, leading to greater demand for financial products.

CONSOLIDATION

The manager believes that the current consolidation trend in the financial services sector presents investment opportunities that should result in improving profit margins for surviving companies.

STRONGER CASH FLOW

Many financial companies generate strong free cash flows that can be used to increase shareholder value through share repurchase programs, acquisitions and higher dividends.

SPECIALIZATION

PAST PERFORMANCE

RETURN FOR CLASS A SHARES

[PERFORMANCE GRAPH OMITTED]

2005

8.38%

BEST QUARTER: 6.52% IN 4^TH QUARTER OF 2004

WORST QUARTER: (1.15)% IN 1^ST QUARTER OF 2005

AVERAGE ANNUAL RETURNS

The table presents the fund's average annual returns for 1 year and since inception for each share class along with those of recognized U.S. common stock indices. The fund's performance figures assume that all distributions were reinvested in the fund. The performance calculations reflect the deduction of the maximum sales charges and annual fund operating expenses.

For the following periods ending 12/31/2005 1 year Since Inception

(April 30, 2004)

Class A Shares

Return Before Taxes 2.96% 9.99%

Return After Taxes on Distributions (1) (2) 1.04% 8.70%

Return After Taxes on Distributions

and Sale of Fund Shares (1) (2) (3) 2.24% 7.90%

Class C Shares

Return Before Taxes (4) 6.65% 12.55%

The KBW/Philadelphia Exchange Bank Index (0.26)% 5.23%

(reflects no deduction of fees, expenses or taxes)

The KBW/Philadelphia Exchange Bank Index is comprised of 24 national money center banks and leading regional banks and is widely used on Wall Street to gauge the state of the banking industry.

(1) After-tax returns are calculated using the historical highest individual federal marginal income tax rates, and do not reflect the impact of state and local taxes.

(4) The after-tax returns are shown only for Class A shares; after-tax returns for Class C shares will vary.

THE FUNDS 17

FEES AND EXPENSES

The table below describes the fees and estimated expenses you could expect as an investor in this fund. SHAREHOLDER FEES are one-time expenses charged directly to you. ANNUAL CLASS OPERATING EXPENSES come out of class assets, and are reflected in each class's total return.

FEE TABLE

Class A Class C

SHAREHOLDER FEES

fees paid directly from your investment

Maximum front-end sales charge (load) 5.00%(2) NONE

% of offering price

Maximum contingent deferred sales charge NONE(3) 1.00%(4)

% of offering price or the amount you receive

when you sell shares, whichever is less

Maximum short-term redemption fee(5) 2.00% 2.00%

% of redemption proceeds

ANNUAL CLASS OPERATING EXPENSES

expenses that are deducted from class assets

Management fees(6) 0.94% 0.94%

Distribution (12b-1) fees (7) 0.30% 1.00%

Other expenses (1) 0.82% 0.81%

--------------------------------------------------------------------------------

TOTAL ANNUAL CLASS OPERATING EXPENSES (1) 2.06% 2.75%

(1) These are the gross fees and expenses that the fund would have incurred for the fiscal year ended December 31, 2005, if the adviser had not reimbursed certain expenses. The adviser has voluntarily agreed to limit the fund’s total annual operating expenses by limiting “Other expenses” to 0.55%. For purposes of the expense limitation, “Other expenses” does not include interest, taxes, brokerage commissions, short sale dividend expenses and any expenses incurred in connection with non-recurring events, such as mergers, reorganizations and shareholder meetings, or extraordinary expenses such as litigation. The adviser currently intends to continue to reimburse certain expenses indefinitely, but this voluntary action by the adviser may be discontinued at any time on 30 days’ notice. Giving effect to the current voluntary limitation, actual expenses for the fiscal year ended December 31, 2005 were:

Management fees (6) 0.94% 0.94%

Distribution (12b-1) fees 0.30% 1.00%

Other expenses 0.60% 0.60%

-------------------------------------------------------------------------

Net Annual Class Operating Expenses 1.84% 2.54%

(2) Lower front-end sales charges for Class A shares may be available for purchases in excess of $50,000.

(3) Certain purchases of Class A shares will not be subject to a front-end sales charge but will be subject to a contingent deferred sales charge if the shares are redeemed within 2 years after purchase. See “Choosing a Share Class” below.

(4) On Class C shares redeemed less than 1 year after purchase.

(6) The fund pays a management fee consisting of a basic annual fee of 0.90% of the fund’s average daily net assets and a performance adjustment, resulting in a minimum fee of 0.80% and a maximum fee of 1.00%. The average monthly management fee for the year ended December 31, 2005 was 0.94%. See “Management Fees.”

(7) Because Rule 12b-1 fees are paid out of class assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying sales charges.

18 THE FUNDS

EXAMPLE