BFF - December 2014 - FINAL.pptx
+ Burnham Financial Funds Burnham Financial Services Burnham Financial Long/Short
December 2014
For Professional Use Only BFD0116151R
Important Disclosures Burnham Financial Services Fund Class A shares average annualized total returns for one-‐year, five-‐year, ten-‐year and since incep>on for the period ended December 31, 2014 was 11.11%, 11.19%, 5.70% and 12.56% respec>vely. Including the maximum sales charge (5%) and all fees, performance was 5.54%, 10.06%, 5.16% and 12.19% respec>vely. The Fund’s opera>ng expense ra>o gross of fee waivers or expense reimbursements was 1.80% for Class A shares as of December 31, 2014.
Burnham Financial Long/Short Fund Class A shares average annualized returns for one-‐year, five-‐year, ten-‐year and since incep>on for the period ended December 31, 2014 was 12.08%, 8.54%, 8.67% and 9.43% respec>vely. Including the maximum sales charge (5%) and all fees, performance was 6.48%, 7.43%, 8.12% and 8.90% respec>vely. The Fund’s opera>ng expense ra>o gross of fee waivers or expense reimbursements was 2.35% for Class A shares as of December 31, 2014.
The performance data quoted represents past performance and is not a guarantee of future results. The investment return and principal value of an investment will fluctuate, so that those shares, when redeemed, may be worth more or less than their original cost. All returns reflect reinvested dividends, but do not reflect the deduc>on of taxes that an investor would pay on distribu>ons or redemp>ons. Current performance may be lower or higher than the data quoted due to market vola>lity.
For more complete informa>on about either fund, including a free prospectus and performance current to the most recent month-‐end, please contact Burnham Securi>es Inc. at 800-‐874-‐FUND, or visit the website at www.burnhamfunds.com. The prospectus contains important informa>on about the funds, including investment objec>ves, risks, management fees, sales charges, and other expenses which you should consider carefully. Please read the prospectus carefully before you invest or send money.
Owning mutual fund shares involves investment risk, including possible loss of principal. There are special risks associated with sector funds, which primarily limit their investments to companies in specific industries. This type of fund may be suscep>ble to factors affec>ng these industries, and each fund's value may fluctuate more than a fund that invests in a wider range of industries. Because each fund concentrates its investments in one sector of the economy (financial services), and it invests in deriva>ve securi>es, investors should consider these risks because they may experience greater vola>lity than in a fund that invests across several sectors. In par>cular, companies within the financial services sector have recently been subject to unprecedented stock price vola>lity and deprecia>on, and there is significant uncertainty regarding the viability and prospects of many financial services companies. Investments in deriva>ves could magnify any of the fund's gains or losses. Deriva>ves involve a number of risks, including possible default by the other party to the transac>on, 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 deriva>ves could result in losses greater than if they had not been used.
Morningstar Inc. is an independent monitor of fund performance and has no rela>onship with Burnham Securi>es Inc. Morningstar rates mutual funds from one to five stars based on how well they've performed (aaer adjus>ng for risk and accoun>ng for all sales charges) in comparison to similar funds. Within each Morningstar Category, the top 10% of funds receive five stars, the next 22.5% four stars, the middle 35% three stars, the next 22.5% two stars, and the bocom 10% receive one star. Funds are rated for up to three >me periods -‐-‐ three-‐, five-‐, and 10 years -‐-‐ and these ra>ngs are combined to produce an overall ra>ng. Funds with less than three years of history are not rated. Ra>ngs are objec>ve, based en>rely on a mathema>cal evalua>on of past performance. They're a useful tool for iden>fying funds worthy of further research, but shouldn't be considered buy or sell recommenda>ons.
Shares of the Burnham Investors Trust are offered by Burnham Securi8es Inc., Principal Distributor, 1325 Avenue of the Americas, New York, NY 10019; 800-‐874-‐FUND.
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Table of Contents I.
About Burnham Investors Trust – Mutual Fund History §
Burnham Investor Trust – Financial Sector Funds
§
Investment Selection Process
II.
Sector Breadth
III.
Consolidation
IV.
Investment Process
V.
Financial Sector Funds - Performance
VI.
§
Burnham Financial Long/Short (BURFX)
§
Burnham Financial Services Fund (BURKX)
Appendix
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Burnham Investors Trust – Mutual Fund History Mutual Funds In 1975, when the Burnham Fund was launched, there were fewer than 30 mutual funds that used a growth and income approach to investing. Today, there are over 7,000. In this increasingly competitive market, the Burnham Funds have distinguished themselves not only through their performance, but by evolving their investment strategies to keep pace with new market opportunities. Burnham advises a family of mutual funds that follow a comparatively conservative approach to investing that has served the firm and our clients well over the course of the firm’s history. Each fund is designed to take advantage of a specific investment concept or technique. The firm’s mutual funds can be utilized as components of a client portfolio and may be appropriate choices for any prudent asset allocation strategy.
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Burnham Investor Trust – Financial Sector Funds Funds:
Investment Objective:
§ Burnham Financial Services Fund (BURKX) § Burnham Financial Long/Short Fund (BURFX)
§ The funds seek capital appreciation, mainly long term.
§ Mendon Capital Advisors Corporation Sub-Advisor:
§ Founded in 1996 by Anton Schutz, Portfolio Manager § Assets managed by Anton Schutz $268 million (as of December 31, 2014)
Track Record:
§ 15+ years track record within financial services sector funds
Portfolio Managers Bios
Anton Schutz
Anton Schutz is the President of Mendon Capital, the sub-advisor of the Burnham Financial Funds. Anton has over 25 years of financial services experience beginning his career working within major global banks giving him a unique perspective on investment opportunities in the sector. He founded Mendon Capital in 1996. He is a frequent guest speaker on CNBC and Fox Business. Anton has an M.B.A from Fordham University and B.A. from Franklin and Marshall.
Russell Echlov
Russell Echlov is the Assistant Portfolio Manager at Mendon Capital, primarily responsible for new idea generation, monitoring of current positions, and assisting with the ongoing portfolio construction. Russell also served as a partner at Columbia Financial Partners, L.P., senior analyst at Stadia Capital/ Frontpoint Partners, and analyst at both Keefe Bruyette & Woods and KBW Asset Management. Russell earned a bachelor’s degree in Modified Economics and Geography from Dartmouth College.
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Investment Selection Process The Funds employ a screening process to find potentially promising investments. The Funds also use options to generate income, protect positions and enforce sell disciplines. The Screening Process Seeks: • Strong management
Additional Considerations Include: • Low valuations, based on
• Defensible business niche • Sound financial and accounting practices
The Funds Employ Options for a Variety of Purposes: • To seek to reduce risk
managers’ opinion
• Enforce a sell discipline
• Temporary distress
• Provide income and protection when
• M&A potential
equity position is established
• Sustainable growth in earnings, Revenue and cash flow
While primarily focused on banks and thrifts, we seek attractive investment opportunities across the broad spectrum of financial institutions. Two Types of Opportunities Deserve Special Focus: Long-term Consolidation Driven:
Shorter-term Catalyst Driven:
• Identify potential targets and acquirers
• Earnings expectations vs. results
• Thrift conversions
• Buybacks • IPOs/Capital Raises
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+ Sector Breadth As of December 31, 2014
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Sector Breadth Key Investments Theme: Vast Breadth of the Financial Services Sector Opportunities in any economic, credit or rate environment Financial Services
Insurance
Financial Technology
Depository Institutions
REITS
Specialty Finance
Asset Management
Exchanges
Life & Health
Payments
Banks
Mortgage REIT’S
Commercial & Consumer Finance
Traditional Asset Managers
Equities
Property & Casualty
Business Services
Regional
BDC’s
Alternative Asset Managers
Reinsurance
Money Center
Brokers
Broker/ Dealer
Multiline
Community
Mortgage Insurance
Property REIT’S
Debt Collectors
E-Brokers
Options
Commodities
ETFS Foreign Exchange
Thrifts
Title Insurance
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Index Exposures as of December 31, 2014
Index Exposures Lack Diversification Levels S&P 500 Components Materials, 3%
S&P Financial Components
Utilities, 3% Telecom Services, 2%
Energy, 9% Information Technology, 20%
Insurance, 25%
Diversified Financials, 29%
Industrials, 10%
Consumer Staples, 10%
Consumer Discretionary , 12%
Real Estate, 26% Healthcare, 14%
Financials, 17%
Banks, 20%
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+ Consolidation Hurdles to Staying Independent
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Consolidation Hurdles to Staying Independent
Current Banking Activity Thesis: Resumption of Merger and Acquisition Wave Dodd Frank Act
New regulatory environment has caused a need for higher staff levels, higher capital requirements and measurable negative EPS impact
Tired Boards
Directors are feeling fatigued from navigating through the current credit cycle and the 6+ year old financial crisis
Tired Management
Regulators and investors hold management teams accountable
Capital Markets
Smaller banks can have more restricted access to the capital markets
Weak Loan Demands
Management must evaluate strategic alternatives if they cannot grow their bank organically
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Investment Theme: Consolidation at the Top All of the Top 25 Banks Today Were Formed Through M&A Activity; From 1990, Only 9 Banks Remain 1990
2014
$8,238
J.P. Morgan & Co. $5,654
BankAmerica
$4,408
Bank One Corp.
$4,248
Citicorp
$3,510
Bankers Trust NY*
$157,854
Citigroup Inc.
First Wachovia
$2,918
Bank of Nova Scotia
SunTrust Banks
$2,885
U.S. Bancorp
$2,572
$164,914 $115,393
Royal Bank of Canada Toronto-Dominion Bank
Security Pacific
$219,657
JPMorgan Chase & Co. Bank of America Corporation
$2,977
Wells Fargo
$238,675
Wells Fargo & Company
$102,322 $83,969 $73,720 $53,047
BMO Financial Group
NBD Bancorp*
$2,407
Capital One Financial Corporation
$43,873
NCNB
$2,353
PNC Financial Services Group, Inc.
$41,350
C&S/Sovran
$2,106
Canadian Imperial Bank of Commerce
$40,850
Norwest Corp.
$2,100
Bank of New York Mellon Corporation
$39,910
PNC Bank
$2,066
State Street Corporation
National City Corp. CoreStates Financial
$1,878 $1,725
BB&T Corporation SunTrust Banks, Inc.
$31,861 $26,371 $19,734
Republic New York*
$1,703
Fifth Third Bancorp
$17,987
First Union
$1,679
National Bank of Canada
$17,347
M&T Bank Corporation
$15,200
Manufacturers Hanover
$1,546
First Interstate
$1,461
Northern Trust Corporation
$14,688
Chase Manhattan
$1,383
Regions Financial Corporation
$13,626
KeyCorp
$11,954
Bank of New York
$1,231
U.S. Bancorp
$1,222
Comerica Incorporated
$8,667
Fleet/Norstar Financial
$1,212
Huntington Bancshares Incorporated
$8,019
Fifth Third
$1,200
New York Community Bancorp, Inc.
$7,428
AVERAGE
$2,587
AVERAGE
$62,737
Source: SNL Interactive – Banks by Market Cap As of December 31, 2014
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M&A Deal Activity Number of Deals Continue to Rise YEAR
Aggregate Deal Value
Average Deal Value/ Earnings (x)
Average Deal Value/ Tangible Book Value
Average Tangible Book Premium/ Core Deposits (%)
Number of Deals
2002
16,971.6
22.0
187.5
11.37
211
2003
72,348.4
23.1
215.6
14.83
260
2004
130,794.0
24.9
224.7
15.97
270
2005
29,198.7
25.0
228.7
17.68
271
2006
108,821.6
25.8
244.4
18.98
296
2007
72,041.4
25.7
230.2
17.36
288
2008
35,606.1
27.3
170.0
9.52
143
2009
1,323.6
18.7
114.4
2.29
118
2010
12,251.9
25.5
118.2
3.61
178
2011
16,999.9
28.5
108.2
1.52
147
2012
16,960.8
21.8
115.5
1.95
236
2013
14,162.7
21.9
127.3
3.66
228
2014
18,627.7
27.6
137.5
5.30
302
Source: SNL Interactive Announce Date: 1/1/2002 – 12/31/2014 Completed/Pending Transactions Whole Deals Includes Private Equity deals
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Crisis Failures Lead to Regional Opportunities Bank Failures During the Crisis Led to Regional Opportunities Today
Source: SNL Interactive 2008 – 12/31/14 14
14
+ Investment Process
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Investment Process The Funds employ a screening process to find potentially promising investments. The Funds may use options to generate income, protect positions and enforce sell disciplines. Investment Universe
7,000 Insured Deposits
Idea Generation
Fundamental Bottom-Up Research
Networking
Disciplined on-site and one-on-one due diligence process
There are 600 publicly traded banks out of 7000 regulated depositories
Active Screening Process
All Market Caps
Portfolio Manager is sole decision maker and has final decision or authority
Fundamental and Valuation Criteria Must Be Met
financial institutions
Targeted Sectors Insurance, Financial,
Develop Investable Themes
REITs, Specialty Finance, Exchanges, E-Brokers
Attend Numerous Industry Conferences
Portfolio
Balance sheet analysis – crucial component of investing in financial services
Depository Institutions, Asset Managers,
Investment team members propose ideas to Portfolio Manager
Deep understanding of a bank’s income statement
With emphasis on micro and small cap
Investment Team Decision Making
Active modeling of portfolio companies
If Portfolio Manager is unavailable, Assistant Portfolio and/or Head Trader have limited authority
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Fundamental Research Management
Balance Sheet
Fundamental Research:
- Experience
- Interest-rate risk
The factors that determine value in financial equities
- Inside ownership
- Deposit/loan composition
- Age of Chairman and/or CEO
- Leverage
- Attitude toward growth
- Flexibility
Credit
Funding
- Lending history - Portfolio diversification - Aggressive/Conservative
- Quality of deposits
VALUE
- Reliance on wholesale funding
- Adequacy of reserves Geography
Valuation
- Market growth
- Price/Earning Ratio
- Industries served
- Price/tangible book
- Competition
- Core deposit premium
- Growth vs. peers
M&A Attitude - Willingness to acquire or be acquired - Management’s prior M&A record - History of integration
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+
Burnham Long/Short Fund(1)
December 2014
BURFX Rated overall FIVE STARS by Morningstar Among 328 funds in the Long/Short Equity category. This fund is the Long/Short Equity Category (as of 2012) The fund is rated 5 stars for the 3-year; 3 stars for the 5-year, and 4 stars for the 10-year periods ended 12/31/14 (among 150, 80 and 32 funds respectively.)
(1) Inception date April 30 2004. See Historical Returns Table, Page 21. The main risks of the 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 the fund concentrates its investments in one sector of the economy, investors should expect greater volatility than in a fund that invests across several sectors. 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. Please refer to page 2 for important disclosure information. 18
Burnham Financial Long/Short Fund As of December 31, 2014
Burnham Financial Long/Short Fund Strategy • The Fund seeks capital appreciation 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. • May use futures and options on securities, indices and other derivatives to hedge against market changes or as a substitute for securities transactions. • May ‘short’ up to 25% of net assets. Inception Date
April 30, 2004
Ticker Symbol
Class A
BURFX
Class C
BURCX
Portfolio Manager
Since Inception (May 2004)
Anton Schutz
Minimum Investment
Regular Accounts
$2,500
IRAs
$100
“We attempt to identify how various financial sub-sectors and individual companies, of any market capitalization, will perform given market
Net Assets (as of 12/31/14)
$81.0 million
conditions and our economic
Expense Ratios
Annualized expenses 12/31/14
projections. Additionally, we look to capitalize on M&A in the financial services industry.” Anton Schutz
Portfolio Manager
⃰ ⃰
Class A: 2.35% Class C: 3.05%
Modern Portfolio Statistics (Class A) Three Year Range Beta
0.57
R2
61.75
Alpha
5.16
Standard Deviation
10.24
Sharpe Ratio
1.85
Portfolio Data Source: Per Morningstar as of 12/31/14 unless otherwise noted. MPT Statistics are for three years and use the KBW Bank Index TR as the benchmark. Please see important disclosures on page 2 regarding performance and ranking information. 19 For a glossary of terms, please see last page of this presentation.
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Burnham Financial Long/Short – Class A As of December 31, 2014
Investment Strategy: The Fund seeks capital appreciation. The fund pursues its goal by fund investing at least 80% of its net assets (including borrowing, if any) in the common stocks of the U.S. companies of any market capitalization that are in the financial services sector. It may invest in companies in the financial services sector of any size and the portion invested in small, medium or large companies is expected to vary over time based on the subadviser’s view as to how to achieve the fund’s objective. The fund is non-diversified.
Investment Principles: § Seek companies with strong management, defensible business niche, and sound financial practices § Focus on firms with sustainable growth in earnings, revenue and cash flow § Identify undervalued equities that are temporarily distressed with M&A potential § May ‘short’ up to 25% of net assets § May use futures, options, and derivatives to hedge positions
Growth of $10,000 Investments (Since Inception) 25,000.0
$22,976
Burnham Financial Long/Short A 20,000.0
Total Annualized Returns (in %) BURFX
KBW Bank
YTD
12.08
9.37
1 Year
12.08
9.37
3 Years
20.18
26.05
5 Years
8.54
13.67
10 Years
8.67
-0.80
Since Inception
9.43
0.26
KBW Bank Index TR
15,000.0
$9,225
10,000.0
5,000.0
0.0
10/31/2004 10/31/2005 10/31/2006 10/31/2007 10/31/2008 10/31/2009 10/31/2010 10/31/2011 10/31/2012 10/31/2013 10/31/2014
Risk Measures & Statistics (3 Years) Return
Std Dev
Alpha
Beta
R2
Sharpe Ratio
Up Capture
Down Capture
BURFX
20.18
10.24
5.16
0.57
61.75
1.85
73.08
59.66
KBW Bank Index TR
26.05
14.15
0.00
1.00
100.00
1.72
100.00
100.00
Please refer to page 2 for important disclosure information
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Burnham Financial Long/Short A (BURFX) – Adding Alpha As of December 31, 2014
Demonstrated Track Record of Outperforming Sector Index 50.00% 40.00%
BURFX
KBW Bank Index
30.00% 20.00% 10.00% 0.00% -‐10.00% -‐20.00% -‐30.00% -‐40.00% -‐50.00% -‐60.00%
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
BURFX
13.87%
8.38%
16.74%
-‐1.04%
-‐6.99%
31.00%
2.41%
-‐15.26%
25.16%
23.74%
12.08%
KBW Bank Index
11.42%
3.15%
16.98%
-‐21.81%
-‐47.55%
-‐1.76%
23.36%
-‐23.20%
32.89%
37.76%
9.36%
Cumulative Performance Since Inception: April 2004 – December 2014 BURFX KBW Bank Index TR
161.63% 2.75% Please refer to page 2 for important disclosure information
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+ Burnham Financial Services Fund
(1)
December 2014
BURKX Rated overall FOUR STARS by Morningstar among 96 funds in the Specialty Financial Category The fund is rated 3 stars for the 3-year, 3 stars for the 5-year, and 4 stars for the10-year periods ended 12/31/14 (among 91, 85 and 65 funds respectively.)
(1) Inception date June 7, 1999. See Historical Returns Table, Page 28. The main risks of the 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 the fund concentrates its investments in one sector of the economy, investors should expect greater volatility than in a fund that invests across several sectors. 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. Please refer to page 2 for important disclosure information. 22
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Burnham Financial Services Fund As of December 31, 2014
Burnham Financial Services Fund • The Fund seeks out opportunities among lesser known financial institutions, particularly small cap regional savings and loans. Because these companies typically are followed by fewer analysts, there is a greater potential for identifying opportunities others have missed. These range from stocks that appear temporarily undervalued, to those that may be targets for acquisition by larger companies. • May employ a covered call strategy.
Class A
June 7, 1999
Class C
May 29, 2005
Class A
BURKX
Class C
BURNX
Portfolio Manager
Since Inception
Anton Schutz
Minimum Investment
Regular Accounts
$2,500
IRAs
$100
Inception Date
“We us our own research expertise in seeking to capitalize on M&A activity in the
Ticker Symbol
U.S. banking industry, focusing on smaller cap financial services companies.” Anton Schutz
Portfolio Manager
⃰
Net Assets (as of 12/31/14)
$88.9 million
Expense Ratios
Annualized expenses 12/31/14
Class A: 1.80% Class C: 2.55%
Modern Portfolio Statistics (Class A) Three Year Range Beta
0.69
R2
80.59
Alpha
8.99
Standard Deviation
9.46
Sharpe Ratio
2.24
Portfolio Data Source: Per Morningstar as of 11/30/14 unless otherwise noted. MPT Statistics are for three years and use the NASDAQ Banks PR Index as the best fit index. Please see important disclosures on page 2 regarding performance and ranking information. ⃰ For a glossary of terms, please see last page of this presentation. 23
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Burnham Financial Services – Class A As of December 31, 2014 Investment Strategy: The Fund seeks capital appreciation. The fund
Investment Principles:
pursues its goal by fund investing at least 80% of its net assets (including borrowing, if any) in stocks of U.S. companies that are financial services sector. It may invest in companies of any size, but, under normal conditions, the fund invests primarily in small capitalization. Under normal conditions, the fund intends to remain fully invested with only minimal investments in cash, or short-term debt instruments or money market funds.
§ Seek companies with strong management, defensible business niche, and sound financial practices. § Focus on firms with sustainable growth in earnings, revenue and cash flow. § Identify undervalued equities that are temporarily distressed with M&A potential.
Growth of $10,000 Investments (Since Inception) 20,000.0 18,000.0 16,000.0
Total Annualized Returns (in%)
Burnham Financial Services A
$17,029 BURKX
NASDAQ (Banks PR USD)
YTD
11.11
2.84
1 Year
11.11
2.84
3 Years
22.91
18.26
5 Years
11.19
10.14
10 Years
5.70
-1.83
15 Years
13.21
3.11
Since Inception
12.56
2.39
NASDAQ Banks PR USD
14,000.0 12,000.0
$8,058
10,000.0 8,000.0 6,000.0 4,000.0 2,000.0 0.0
10/31/2004 9/30/2005 8/31/2006 7/31/2007 6/30/2008 5/31/2009 4/30/2010 3/31/2011 2/29/2012 1/31/2013 12/31/2013 11/30/14
Risk Measures & Statistics (3 Years) Return
Std Dev
Alpha
Beta
R2
Sharpe Ratio
Up Capture
Down Capture
BURKX
22.91
9.46
8.99
0.69
80.59
2.24
91.11
45.12
NASDAQ Banks PR USD
18.26
12.23
0.00
1.00
100.00
1.44
100.00
100.00
Please refer to page 2 for important disclosure information
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Burnham Financial Services (BURKX) As of December 31, 2014
Demonstrated Track Record of Outperforming Sector Index 60.00% BURKX
NASDAQ Bank Index
50.00% 40.00% 30.00% 20.00% 10.00% 0.00% -‐10.00% -‐20.00% -‐30.00% BURKX
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
-‐1.90% 52.78% 29.28% 17.55% 40.66% 13.13% 0.37% 17.02% -‐13.96% -‐14.78% 18.90% 2.07% -‐10.34% 23.35% 35.49% 11.11%
NASDAQ Bank Index -‐7.39% 17.74% 12.55% 6.94% 33.04% 13.50% -‐2.03% 13.71% -‐19.91% -‐21.55% -‐16.30% 14.15% -‐10.50% 18.69% 41.72% 4.92%
Cumulative Performance Since Inception: June 1999 – December 2014 BURKX
530.68%
NASDAQ Bank Index
109.32% Please refer to page 2 for important disclosure information
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Fund Performance As of December 31, 2014
FUND
Annualized Return (%) – as of December 31, 2014 1 Year
3 Year
5 Year
10 Year
Since Inception
Burnham Financial Services Class A (without max. 5% sales charge)
11.11%
22.91%
11.19%
5.70%
12.56% (6/7/99)
Burnham Financial Services Class A (SEC return*)
5.54%
20.83%
10.06%
5.16%
12.19% (6/7/99)
Burnham Financial Services Class C (without CDSC)
10.26%
21.98%
10.34%
NA
6.08% (4/29/05)
Burnham Financial Services Class C (SEC return*)
9.26%
21.98%
10.34%
NA
6.08% (4/29/05)
Burnham Financial Long/Short Class A (without max. 5% sales charge)
12.08%
20.18%
8.54%
8.67%
9.43% (4/30/04)
Burnham Financial Long/Short Class A (SEC return*)
6.48%
18.16%
7.43%
8.12%
8.90% (4/30/04)
Burnham Financial Long/Short Class C (without CDSC)
11.33%
19.35%
7.79%
7.94%
8.67% (4/30/04)
Burnham Financial Long/Short Class C (SEC return*)
10.33%
19.35%
7.79%
7.94%
8.67% (4/30/04)
NA = not applicable * SEC return includes all sales charges and fees. Please see additional important disclosures on page 2 regarding performance and ranking information.
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+ Appendix
27
27
Important Disclosures Burnham Financial Services Fund Class A shares average annualized total returns for one-‐year, five-‐year, ten-‐year and since incep>on for the period ended December 31, 2014 was 11.11%, 11.19%, 5.70% and 12.56% respec>vely. Including the maximum sales charge (5%) and all fees, performance was 5.54%, 10.06%, 5.16% and 12.19% respec>vely. The Fund’s opera>ng expense ra>o gross of fee waivers or expense reimbursements was 1.80% for Class A shares as of December 31, 2014.
Burnham Financial Long/Short Fund Class A shares average annualized returns for one-‐year, five-‐year, ten-‐year and since incep>on for the period ended December 31, 2014 was 12.08%, 8.54%, 8.67% and 9.43% respec>vely. Including the maximum sales charge (5%) and all fees, performance was 6.48%, 7.43%, 8.12% and 8.90% respec>vely. The Fund’s opera>ng expense ra>o gross of fee waivers or expense reimbursements was 2.35% for Class A shares as of December 31, 2014.
The performance data quoted represents past performance and is not a guarantee of future results. The investment return and principal value of an investment will fluctuate, so that those shares, when redeemed, may be worth more or less than their original cost. All returns reflect reinvested dividends, but do not reflect the deduc>on of taxes that an investor would pay on distribu>ons or redemp>ons. Current performance may be lower or higher than the data quoted due to market vola>lity.
For more complete informa>on about either fund, including a free prospectus and performance current to the most recent month-‐end, please contact Burnham Securi>es Inc. at 800-‐874-‐FUND, or visit the website at www.burnhamfunds.com. The prospectus contains important informa>on about the funds, including investment objec>ves, risks, management fees, sales charges, and other expenses which you should consider carefully. Please read the prospectus carefully before you invest or send money.
Owning mutual fund shares involves investment risk, including possible loss of principal. There are special risks associated with sector funds, which primarily limit their investments to companies in specific industries. This type of fund may be suscep>ble to factors affec>ng these industries, and each fund's value may fluctuate more than a fund that invests in a wider range of industries. Because each fund concentrates its investments in one sector of the economy (financial services), and it invests in deriva>ve securi>es, investors should consider these risks because they may experience greater vola>lity than in a fund that invests across several sectors. In par>cular, companies within the financial services sector have recently been subject to unprecedented stock price vola>lity and deprecia>on, and there is significant uncertainty regarding the viability and prospects of many financial services companies. Investments in deriva>ves could magnify any of the fund's gains or losses. Deriva>ves involve a number of risks, including possible default by the other party to the transac>on, 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 deriva>ves could result in losses greater than if they had not been used.
Morningstar Inc. is an independent monitor of fund performance and has no rela>onship with Burnham Securi>es Inc. Morningstar rates mutual funds from one to five stars based on how well they've performed (aaer adjus>ng for risk and accoun>ng for all sales charges) in comparison to similar funds. Within each Morningstar Category, the top 10% of funds receive five stars, the next 22.5% four stars, the middle 35% three stars, the next 22.5% two stars, and the bocom 10% receive one star. Funds are rated for up to three >me periods -‐-‐ three-‐, five-‐, and 10 years -‐-‐ and these ra>ngs are combined to produce an overall ra>ng. Funds with less than three years of history are not rated. Ra>ngs are objec>ve, based en>rely on a mathema>cal evalua>on of past performance. They're a useful tool for iden>fying funds worthy of further research, but shouldn't be considered buy or sell recommenda>ons. Shares of the Burnham Investors Trust are offered by Burnham Securi>es Inc., Principal Distributor, 1325 Avenue of the Americas, New York, NY 10019; 800-‐874-‐FUND.
28
28
Glossary of Terms Alpha: Alpha measures the difference between a fund's actual returns and its expected performance, given its level of risk (as measured by beta). A positive alpha figure indicates the fund has performed better than its beta would predict. In contrast, a negative alpha indicates a fund has underperformed, given the expectations established by the fund's beta. Some investors see alpha as a measurement of the value added or subtracted by a fund's manager. Beta: A component of Modern Portfolio Theory statistics, is a measure of a fund's sensitivity to market movements. It measures the relationship between a fund's excess return over T-bills and the excess return of the benchmark index. R2: Ranges from 0 to 100 and reflects the percentage of a fund's movements that are explained by movements in its benchmark index. An R-squared of 100 means that all movements of a fund are completely explained by movements in the index. Thus, index funds that invest only in S&P 500 stocks will have an R-squared very close to 100. Sharpe Ratio: Sharpe ratio is based on a risk-adjusted measure developed by Nobel Laureate William Sharpe. It is calculated using standard deviation and excess return to determine reward per unit of risk. First, the average monthly return of the 90-day Treasury bill (over a 36-month period) is subtracted from the fund's average monthly return. The difference in total return represents the fund's excess return beyond that of the 90-day Treasury bill, a risk-free investment. An arithmetic annualized excess return is then calculated by multiplying this monthly return by 12. To show a relationship between excess return and risk, this number is then divided by the standard deviation of the fund's annualized excess returns. The higher the Sharpe ratio, the better the fund's historical risk-adjusted performance. Standard Deviation: A statistical measure of the range of a fund's performance. When a fund has a high standard deviation, its range of performance has been very wide, indicating that there is a greater potential for volatility. The standard deviation figure provided here is an annualized statistic based on 36 monthly returns. Return on Equity: The percentage a company earns on its total equity in a given year (Year 1, 2, etc.). Price/Tangible Book: The price of a security compared to its hard, or tangible, book value as reported in the company's balance sheet. P/EPS: The stock price divided by net income (net of preferred dividends) by a weighted average of total shares outstanding for the year. Also known as PE Ratio. PE/G: The ratio calculated by dividing the PE ratio (above) by its earning growth rate (generally the average of trailing three years).
29
29
December 2014
For Professional Use Only BFD0116151R
Important Disclosures Burnham Financial Services Fund Class A shares average annualized total returns for one-‐year, five-‐year, ten-‐year and since incep>on for the period ended December 31, 2014 was 11.11%, 11.19%, 5.70% and 12.56% respec>vely. Including the maximum sales charge (5%) and all fees, performance was 5.54%, 10.06%, 5.16% and 12.19% respec>vely. The Fund’s opera>ng expense ra>o gross of fee waivers or expense reimbursements was 1.80% for Class A shares as of December 31, 2014.
Burnham Financial Long/Short Fund Class A shares average annualized returns for one-‐year, five-‐year, ten-‐year and since incep>on for the period ended December 31, 2014 was 12.08%, 8.54%, 8.67% and 9.43% respec>vely. Including the maximum sales charge (5%) and all fees, performance was 6.48%, 7.43%, 8.12% and 8.90% respec>vely. The Fund’s opera>ng expense ra>o gross of fee waivers or expense reimbursements was 2.35% for Class A shares as of December 31, 2014.
The performance data quoted represents past performance and is not a guarantee of future results. The investment return and principal value of an investment will fluctuate, so that those shares, when redeemed, may be worth more or less than their original cost. All returns reflect reinvested dividends, but do not reflect the deduc>on of taxes that an investor would pay on distribu>ons or redemp>ons. Current performance may be lower or higher than the data quoted due to market vola>lity.
For more complete informa>on about either fund, including a free prospectus and performance current to the most recent month-‐end, please contact Burnham Securi>es Inc. at 800-‐874-‐FUND, or visit the website at www.burnhamfunds.com. The prospectus contains important informa>on about the funds, including investment objec>ves, risks, management fees, sales charges, and other expenses which you should consider carefully. Please read the prospectus carefully before you invest or send money.
Owning mutual fund shares involves investment risk, including possible loss of principal. There are special risks associated with sector funds, which primarily limit their investments to companies in specific industries. This type of fund may be suscep>ble to factors affec>ng these industries, and each fund's value may fluctuate more than a fund that invests in a wider range of industries. Because each fund concentrates its investments in one sector of the economy (financial services), and it invests in deriva>ve securi>es, investors should consider these risks because they may experience greater vola>lity than in a fund that invests across several sectors. In par>cular, companies within the financial services sector have recently been subject to unprecedented stock price vola>lity and deprecia>on, and there is significant uncertainty regarding the viability and prospects of many financial services companies. Investments in deriva>ves could magnify any of the fund's gains or losses. Deriva>ves involve a number of risks, including possible default by the other party to the transac>on, 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 deriva>ves could result in losses greater than if they had not been used.
Morningstar Inc. is an independent monitor of fund performance and has no rela>onship with Burnham Securi>es Inc. Morningstar rates mutual funds from one to five stars based on how well they've performed (aaer adjus>ng for risk and accoun>ng for all sales charges) in comparison to similar funds. Within each Morningstar Category, the top 10% of funds receive five stars, the next 22.5% four stars, the middle 35% three stars, the next 22.5% two stars, and the bocom 10% receive one star. Funds are rated for up to three >me periods -‐-‐ three-‐, five-‐, and 10 years -‐-‐ and these ra>ngs are combined to produce an overall ra>ng. Funds with less than three years of history are not rated. Ra>ngs are objec>ve, based en>rely on a mathema>cal evalua>on of past performance. They're a useful tool for iden>fying funds worthy of further research, but shouldn't be considered buy or sell recommenda>ons.
Shares of the Burnham Investors Trust are offered by Burnham Securi8es Inc., Principal Distributor, 1325 Avenue of the Americas, New York, NY 10019; 800-‐874-‐FUND.
2
2
Table of Contents I.
About Burnham Investors Trust – Mutual Fund History §
Burnham Investor Trust – Financial Sector Funds
§
Investment Selection Process
II.
Sector Breadth
III.
Consolidation
IV.
Investment Process
V.
Financial Sector Funds - Performance
VI.
§
Burnham Financial Long/Short (BURFX)
§
Burnham Financial Services Fund (BURKX)
Appendix
3
3
Burnham Investors Trust – Mutual Fund History Mutual Funds In 1975, when the Burnham Fund was launched, there were fewer than 30 mutual funds that used a growth and income approach to investing. Today, there are over 7,000. In this increasingly competitive market, the Burnham Funds have distinguished themselves not only through their performance, but by evolving their investment strategies to keep pace with new market opportunities. Burnham advises a family of mutual funds that follow a comparatively conservative approach to investing that has served the firm and our clients well over the course of the firm’s history. Each fund is designed to take advantage of a specific investment concept or technique. The firm’s mutual funds can be utilized as components of a client portfolio and may be appropriate choices for any prudent asset allocation strategy.
4
4
Burnham Investor Trust – Financial Sector Funds Funds:
Investment Objective:
§ Burnham Financial Services Fund (BURKX) § Burnham Financial Long/Short Fund (BURFX)
§ The funds seek capital appreciation, mainly long term.
§ Mendon Capital Advisors Corporation Sub-Advisor:
§ Founded in 1996 by Anton Schutz, Portfolio Manager § Assets managed by Anton Schutz $268 million (as of December 31, 2014)
Track Record:
§ 15+ years track record within financial services sector funds
Portfolio Managers Bios
Anton Schutz
Anton Schutz is the President of Mendon Capital, the sub-advisor of the Burnham Financial Funds. Anton has over 25 years of financial services experience beginning his career working within major global banks giving him a unique perspective on investment opportunities in the sector. He founded Mendon Capital in 1996. He is a frequent guest speaker on CNBC and Fox Business. Anton has an M.B.A from Fordham University and B.A. from Franklin and Marshall.
Russell Echlov
Russell Echlov is the Assistant Portfolio Manager at Mendon Capital, primarily responsible for new idea generation, monitoring of current positions, and assisting with the ongoing portfolio construction. Russell also served as a partner at Columbia Financial Partners, L.P., senior analyst at Stadia Capital/ Frontpoint Partners, and analyst at both Keefe Bruyette & Woods and KBW Asset Management. Russell earned a bachelor’s degree in Modified Economics and Geography from Dartmouth College.
5
5
Investment Selection Process The Funds employ a screening process to find potentially promising investments. The Funds also use options to generate income, protect positions and enforce sell disciplines. The Screening Process Seeks: • Strong management
Additional Considerations Include: • Low valuations, based on
• Defensible business niche • Sound financial and accounting practices
The Funds Employ Options for a Variety of Purposes: • To seek to reduce risk
managers’ opinion
• Enforce a sell discipline
• Temporary distress
• Provide income and protection when
• M&A potential
equity position is established
• Sustainable growth in earnings, Revenue and cash flow
While primarily focused on banks and thrifts, we seek attractive investment opportunities across the broad spectrum of financial institutions. Two Types of Opportunities Deserve Special Focus: Long-term Consolidation Driven:
Shorter-term Catalyst Driven:
• Identify potential targets and acquirers
• Earnings expectations vs. results
• Thrift conversions
• Buybacks • IPOs/Capital Raises
6
+ Sector Breadth As of December 31, 2014
7
7
Sector Breadth Key Investments Theme: Vast Breadth of the Financial Services Sector Opportunities in any economic, credit or rate environment Financial Services
Insurance
Financial Technology
Depository Institutions
REITS
Specialty Finance
Asset Management
Exchanges
Life & Health
Payments
Banks
Mortgage REIT’S
Commercial & Consumer Finance
Traditional Asset Managers
Equities
Property & Casualty
Business Services
Regional
BDC’s
Alternative Asset Managers
Reinsurance
Money Center
Brokers
Broker/ Dealer
Multiline
Community
Mortgage Insurance
Property REIT’S
Debt Collectors
E-Brokers
Options
Commodities
ETFS Foreign Exchange
Thrifts
Title Insurance
8
8
Index Exposures as of December 31, 2014
Index Exposures Lack Diversification Levels S&P 500 Components Materials, 3%
S&P Financial Components
Utilities, 3% Telecom Services, 2%
Energy, 9% Information Technology, 20%
Insurance, 25%
Diversified Financials, 29%
Industrials, 10%
Consumer Staples, 10%
Consumer Discretionary , 12%
Real Estate, 26% Healthcare, 14%
Financials, 17%
Banks, 20%
9
9
+ Consolidation Hurdles to Staying Independent
10
10
Consolidation Hurdles to Staying Independent
Current Banking Activity Thesis: Resumption of Merger and Acquisition Wave Dodd Frank Act
New regulatory environment has caused a need for higher staff levels, higher capital requirements and measurable negative EPS impact
Tired Boards
Directors are feeling fatigued from navigating through the current credit cycle and the 6+ year old financial crisis
Tired Management
Regulators and investors hold management teams accountable
Capital Markets
Smaller banks can have more restricted access to the capital markets
Weak Loan Demands
Management must evaluate strategic alternatives if they cannot grow their bank organically
11
11
Investment Theme: Consolidation at the Top All of the Top 25 Banks Today Were Formed Through M&A Activity; From 1990, Only 9 Banks Remain 1990
2014
$8,238
J.P. Morgan & Co. $5,654
BankAmerica
$4,408
Bank One Corp.
$4,248
Citicorp
$3,510
Bankers Trust NY*
$157,854
Citigroup Inc.
First Wachovia
$2,918
Bank of Nova Scotia
SunTrust Banks
$2,885
U.S. Bancorp
$2,572
$164,914 $115,393
Royal Bank of Canada Toronto-Dominion Bank
Security Pacific
$219,657
JPMorgan Chase & Co. Bank of America Corporation
$2,977
Wells Fargo
$238,675
Wells Fargo & Company
$102,322 $83,969 $73,720 $53,047
BMO Financial Group
NBD Bancorp*
$2,407
Capital One Financial Corporation
$43,873
NCNB
$2,353
PNC Financial Services Group, Inc.
$41,350
C&S/Sovran
$2,106
Canadian Imperial Bank of Commerce
$40,850
Norwest Corp.
$2,100
Bank of New York Mellon Corporation
$39,910
PNC Bank
$2,066
State Street Corporation
National City Corp. CoreStates Financial
$1,878 $1,725
BB&T Corporation SunTrust Banks, Inc.
$31,861 $26,371 $19,734
Republic New York*
$1,703
Fifth Third Bancorp
$17,987
First Union
$1,679
National Bank of Canada
$17,347
M&T Bank Corporation
$15,200
Manufacturers Hanover
$1,546
First Interstate
$1,461
Northern Trust Corporation
$14,688
Chase Manhattan
$1,383
Regions Financial Corporation
$13,626
KeyCorp
$11,954
Bank of New York
$1,231
U.S. Bancorp
$1,222
Comerica Incorporated
$8,667
Fleet/Norstar Financial
$1,212
Huntington Bancshares Incorporated
$8,019
Fifth Third
$1,200
New York Community Bancorp, Inc.
$7,428
AVERAGE
$2,587
AVERAGE
$62,737
Source: SNL Interactive – Banks by Market Cap As of December 31, 2014
12
12
M&A Deal Activity Number of Deals Continue to Rise YEAR
Aggregate Deal Value
Average Deal Value/ Earnings (x)
Average Deal Value/ Tangible Book Value
Average Tangible Book Premium/ Core Deposits (%)
Number of Deals
2002
16,971.6
22.0
187.5
11.37
211
2003
72,348.4
23.1
215.6
14.83
260
2004
130,794.0
24.9
224.7
15.97
270
2005
29,198.7
25.0
228.7
17.68
271
2006
108,821.6
25.8
244.4
18.98
296
2007
72,041.4
25.7
230.2
17.36
288
2008
35,606.1
27.3
170.0
9.52
143
2009
1,323.6
18.7
114.4
2.29
118
2010
12,251.9
25.5
118.2
3.61
178
2011
16,999.9
28.5
108.2
1.52
147
2012
16,960.8
21.8
115.5
1.95
236
2013
14,162.7
21.9
127.3
3.66
228
2014
18,627.7
27.6
137.5
5.30
302
Source: SNL Interactive Announce Date: 1/1/2002 – 12/31/2014 Completed/Pending Transactions Whole Deals Includes Private Equity deals
13
13
Crisis Failures Lead to Regional Opportunities Bank Failures During the Crisis Led to Regional Opportunities Today
Source: SNL Interactive 2008 – 12/31/14 14
14
+ Investment Process
15
15
Investment Process The Funds employ a screening process to find potentially promising investments. The Funds may use options to generate income, protect positions and enforce sell disciplines. Investment Universe
7,000 Insured Deposits
Idea Generation
Fundamental Bottom-Up Research
Networking
Disciplined on-site and one-on-one due diligence process
There are 600 publicly traded banks out of 7000 regulated depositories
Active Screening Process
All Market Caps
Portfolio Manager is sole decision maker and has final decision or authority
Fundamental and Valuation Criteria Must Be Met
financial institutions
Targeted Sectors Insurance, Financial,
Develop Investable Themes
REITs, Specialty Finance, Exchanges, E-Brokers
Attend Numerous Industry Conferences
Portfolio
Balance sheet analysis – crucial component of investing in financial services
Depository Institutions, Asset Managers,
Investment team members propose ideas to Portfolio Manager
Deep understanding of a bank’s income statement
With emphasis on micro and small cap
Investment Team Decision Making
Active modeling of portfolio companies
If Portfolio Manager is unavailable, Assistant Portfolio and/or Head Trader have limited authority
16
16
Fundamental Research Management
Balance Sheet
Fundamental Research:
- Experience
- Interest-rate risk
The factors that determine value in financial equities
- Inside ownership
- Deposit/loan composition
- Age of Chairman and/or CEO
- Leverage
- Attitude toward growth
- Flexibility
Credit
Funding
- Lending history - Portfolio diversification - Aggressive/Conservative
- Quality of deposits
VALUE
- Reliance on wholesale funding
- Adequacy of reserves Geography
Valuation
- Market growth
- Price/Earning Ratio
- Industries served
- Price/tangible book
- Competition
- Core deposit premium
- Growth vs. peers
M&A Attitude - Willingness to acquire or be acquired - Management’s prior M&A record - History of integration
17
17
+
Burnham Long/Short Fund(1)
December 2014
BURFX Rated overall FIVE STARS by Morningstar Among 328 funds in the Long/Short Equity category. This fund is the Long/Short Equity Category (as of 2012) The fund is rated 5 stars for the 3-year; 3 stars for the 5-year, and 4 stars for the 10-year periods ended 12/31/14 (among 150, 80 and 32 funds respectively.)
(1) Inception date April 30 2004. See Historical Returns Table, Page 21. The main risks of the 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 the fund concentrates its investments in one sector of the economy, investors should expect greater volatility than in a fund that invests across several sectors. 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. Please refer to page 2 for important disclosure information. 18
Burnham Financial Long/Short Fund As of December 31, 2014
Burnham Financial Long/Short Fund Strategy • The Fund seeks capital appreciation 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. • May use futures and options on securities, indices and other derivatives to hedge against market changes or as a substitute for securities transactions. • May ‘short’ up to 25% of net assets. Inception Date
April 30, 2004
Ticker Symbol
Class A
BURFX
Class C
BURCX
Portfolio Manager
Since Inception (May 2004)
Anton Schutz
Minimum Investment
Regular Accounts
$2,500
IRAs
$100
“We attempt to identify how various financial sub-sectors and individual companies, of any market capitalization, will perform given market
Net Assets (as of 12/31/14)
$81.0 million
conditions and our economic
Expense Ratios
Annualized expenses 12/31/14
projections. Additionally, we look to capitalize on M&A in the financial services industry.” Anton Schutz
Portfolio Manager
⃰ ⃰
Class A: 2.35% Class C: 3.05%
Modern Portfolio Statistics (Class A) Three Year Range Beta
0.57
R2
61.75
Alpha
5.16
Standard Deviation
10.24
Sharpe Ratio
1.85
Portfolio Data Source: Per Morningstar as of 12/31/14 unless otherwise noted. MPT Statistics are for three years and use the KBW Bank Index TR as the benchmark. Please see important disclosures on page 2 regarding performance and ranking information. 19 For a glossary of terms, please see last page of this presentation.
19
Burnham Financial Long/Short – Class A As of December 31, 2014
Investment Strategy: The Fund seeks capital appreciation. The fund pursues its goal by fund investing at least 80% of its net assets (including borrowing, if any) in the common stocks of the U.S. companies of any market capitalization that are in the financial services sector. It may invest in companies in the financial services sector of any size and the portion invested in small, medium or large companies is expected to vary over time based on the subadviser’s view as to how to achieve the fund’s objective. The fund is non-diversified.
Investment Principles: § Seek companies with strong management, defensible business niche, and sound financial practices § Focus on firms with sustainable growth in earnings, revenue and cash flow § Identify undervalued equities that are temporarily distressed with M&A potential § May ‘short’ up to 25% of net assets § May use futures, options, and derivatives to hedge positions
Growth of $10,000 Investments (Since Inception) 25,000.0
$22,976
Burnham Financial Long/Short A 20,000.0
Total Annualized Returns (in %) BURFX
KBW Bank
YTD
12.08
9.37
1 Year
12.08
9.37
3 Years
20.18
26.05
5 Years
8.54
13.67
10 Years
8.67
-0.80
Since Inception
9.43
0.26
KBW Bank Index TR
15,000.0
$9,225
10,000.0
5,000.0
0.0
10/31/2004 10/31/2005 10/31/2006 10/31/2007 10/31/2008 10/31/2009 10/31/2010 10/31/2011 10/31/2012 10/31/2013 10/31/2014
Risk Measures & Statistics (3 Years) Return
Std Dev
Alpha
Beta
R2
Sharpe Ratio
Up Capture
Down Capture
BURFX
20.18
10.24
5.16
0.57
61.75
1.85
73.08
59.66
KBW Bank Index TR
26.05
14.15
0.00
1.00
100.00
1.72
100.00
100.00
Please refer to page 2 for important disclosure information
20
20
Burnham Financial Long/Short A (BURFX) – Adding Alpha As of December 31, 2014
Demonstrated Track Record of Outperforming Sector Index 50.00% 40.00%
BURFX
KBW Bank Index
30.00% 20.00% 10.00% 0.00% -‐10.00% -‐20.00% -‐30.00% -‐40.00% -‐50.00% -‐60.00%
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
BURFX
13.87%
8.38%
16.74%
-‐1.04%
-‐6.99%
31.00%
2.41%
-‐15.26%
25.16%
23.74%
12.08%
KBW Bank Index
11.42%
3.15%
16.98%
-‐21.81%
-‐47.55%
-‐1.76%
23.36%
-‐23.20%
32.89%
37.76%
9.36%
Cumulative Performance Since Inception: April 2004 – December 2014 BURFX KBW Bank Index TR
161.63% 2.75% Please refer to page 2 for important disclosure information
21
21
+ Burnham Financial Services Fund
(1)
December 2014
BURKX Rated overall FOUR STARS by Morningstar among 96 funds in the Specialty Financial Category The fund is rated 3 stars for the 3-year, 3 stars for the 5-year, and 4 stars for the10-year periods ended 12/31/14 (among 91, 85 and 65 funds respectively.)
(1) Inception date June 7, 1999. See Historical Returns Table, Page 28. The main risks of the 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 the fund concentrates its investments in one sector of the economy, investors should expect greater volatility than in a fund that invests across several sectors. 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. Please refer to page 2 for important disclosure information. 22
22
Burnham Financial Services Fund As of December 31, 2014
Burnham Financial Services Fund • The Fund seeks out opportunities among lesser known financial institutions, particularly small cap regional savings and loans. Because these companies typically are followed by fewer analysts, there is a greater potential for identifying opportunities others have missed. These range from stocks that appear temporarily undervalued, to those that may be targets for acquisition by larger companies. • May employ a covered call strategy.
Class A
June 7, 1999
Class C
May 29, 2005
Class A
BURKX
Class C
BURNX
Portfolio Manager
Since Inception
Anton Schutz
Minimum Investment
Regular Accounts
$2,500
IRAs
$100
Inception Date
“We us our own research expertise in seeking to capitalize on M&A activity in the
Ticker Symbol
U.S. banking industry, focusing on smaller cap financial services companies.” Anton Schutz
Portfolio Manager
⃰
Net Assets (as of 12/31/14)
$88.9 million
Expense Ratios
Annualized expenses 12/31/14
Class A: 1.80% Class C: 2.55%
Modern Portfolio Statistics (Class A) Three Year Range Beta
0.69
R2
80.59
Alpha
8.99
Standard Deviation
9.46
Sharpe Ratio
2.24
Portfolio Data Source: Per Morningstar as of 11/30/14 unless otherwise noted. MPT Statistics are for three years and use the NASDAQ Banks PR Index as the best fit index. Please see important disclosures on page 2 regarding performance and ranking information. ⃰ For a glossary of terms, please see last page of this presentation. 23
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Burnham Financial Services – Class A As of December 31, 2014 Investment Strategy: The Fund seeks capital appreciation. The fund
Investment Principles:
pursues its goal by fund investing at least 80% of its net assets (including borrowing, if any) in stocks of U.S. companies that are financial services sector. It may invest in companies of any size, but, under normal conditions, the fund invests primarily in small capitalization. Under normal conditions, the fund intends to remain fully invested with only minimal investments in cash, or short-term debt instruments or money market funds.
§ Seek companies with strong management, defensible business niche, and sound financial practices. § Focus on firms with sustainable growth in earnings, revenue and cash flow. § Identify undervalued equities that are temporarily distressed with M&A potential.
Growth of $10,000 Investments (Since Inception) 20,000.0 18,000.0 16,000.0
Total Annualized Returns (in%)
Burnham Financial Services A
$17,029 BURKX
NASDAQ (Banks PR USD)
YTD
11.11
2.84
1 Year
11.11
2.84
3 Years
22.91
18.26
5 Years
11.19
10.14
10 Years
5.70
-1.83
15 Years
13.21
3.11
Since Inception
12.56
2.39
NASDAQ Banks PR USD
14,000.0 12,000.0
$8,058
10,000.0 8,000.0 6,000.0 4,000.0 2,000.0 0.0
10/31/2004 9/30/2005 8/31/2006 7/31/2007 6/30/2008 5/31/2009 4/30/2010 3/31/2011 2/29/2012 1/31/2013 12/31/2013 11/30/14
Risk Measures & Statistics (3 Years) Return
Std Dev
Alpha
Beta
R2
Sharpe Ratio
Up Capture
Down Capture
BURKX
22.91
9.46
8.99
0.69
80.59
2.24
91.11
45.12
NASDAQ Banks PR USD
18.26
12.23
0.00
1.00
100.00
1.44
100.00
100.00
Please refer to page 2 for important disclosure information
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Burnham Financial Services (BURKX) As of December 31, 2014
Demonstrated Track Record of Outperforming Sector Index 60.00% BURKX
NASDAQ Bank Index
50.00% 40.00% 30.00% 20.00% 10.00% 0.00% -‐10.00% -‐20.00% -‐30.00% BURKX
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
-‐1.90% 52.78% 29.28% 17.55% 40.66% 13.13% 0.37% 17.02% -‐13.96% -‐14.78% 18.90% 2.07% -‐10.34% 23.35% 35.49% 11.11%
NASDAQ Bank Index -‐7.39% 17.74% 12.55% 6.94% 33.04% 13.50% -‐2.03% 13.71% -‐19.91% -‐21.55% -‐16.30% 14.15% -‐10.50% 18.69% 41.72% 4.92%
Cumulative Performance Since Inception: June 1999 – December 2014 BURKX
530.68%
NASDAQ Bank Index
109.32% Please refer to page 2 for important disclosure information
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Fund Performance As of December 31, 2014
FUND
Annualized Return (%) – as of December 31, 2014 1 Year
3 Year
5 Year
10 Year
Since Inception
Burnham Financial Services Class A (without max. 5% sales charge)
11.11%
22.91%
11.19%
5.70%
12.56% (6/7/99)
Burnham Financial Services Class A (SEC return*)
5.54%
20.83%
10.06%
5.16%
12.19% (6/7/99)
Burnham Financial Services Class C (without CDSC)
10.26%
21.98%
10.34%
NA
6.08% (4/29/05)
Burnham Financial Services Class C (SEC return*)
9.26%
21.98%
10.34%
NA
6.08% (4/29/05)
Burnham Financial Long/Short Class A (without max. 5% sales charge)
12.08%
20.18%
8.54%
8.67%
9.43% (4/30/04)
Burnham Financial Long/Short Class A (SEC return*)
6.48%
18.16%
7.43%
8.12%
8.90% (4/30/04)
Burnham Financial Long/Short Class C (without CDSC)
11.33%
19.35%
7.79%
7.94%
8.67% (4/30/04)
Burnham Financial Long/Short Class C (SEC return*)
10.33%
19.35%
7.79%
7.94%
8.67% (4/30/04)
NA = not applicable * SEC return includes all sales charges and fees. Please see additional important disclosures on page 2 regarding performance and ranking information.
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+ Appendix
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Important Disclosures Burnham Financial Services Fund Class A shares average annualized total returns for one-‐year, five-‐year, ten-‐year and since incep>on for the period ended December 31, 2014 was 11.11%, 11.19%, 5.70% and 12.56% respec>vely. Including the maximum sales charge (5%) and all fees, performance was 5.54%, 10.06%, 5.16% and 12.19% respec>vely. The Fund’s opera>ng expense ra>o gross of fee waivers or expense reimbursements was 1.80% for Class A shares as of December 31, 2014.
Burnham Financial Long/Short Fund Class A shares average annualized returns for one-‐year, five-‐year, ten-‐year and since incep>on for the period ended December 31, 2014 was 12.08%, 8.54%, 8.67% and 9.43% respec>vely. Including the maximum sales charge (5%) and all fees, performance was 6.48%, 7.43%, 8.12% and 8.90% respec>vely. The Fund’s opera>ng expense ra>o gross of fee waivers or expense reimbursements was 2.35% for Class A shares as of December 31, 2014.
The performance data quoted represents past performance and is not a guarantee of future results. The investment return and principal value of an investment will fluctuate, so that those shares, when redeemed, may be worth more or less than their original cost. All returns reflect reinvested dividends, but do not reflect the deduc>on of taxes that an investor would pay on distribu>ons or redemp>ons. Current performance may be lower or higher than the data quoted due to market vola>lity.
For more complete informa>on about either fund, including a free prospectus and performance current to the most recent month-‐end, please contact Burnham Securi>es Inc. at 800-‐874-‐FUND, or visit the website at www.burnhamfunds.com. The prospectus contains important informa>on about the funds, including investment objec>ves, risks, management fees, sales charges, and other expenses which you should consider carefully. Please read the prospectus carefully before you invest or send money.
Owning mutual fund shares involves investment risk, including possible loss of principal. There are special risks associated with sector funds, which primarily limit their investments to companies in specific industries. This type of fund may be suscep>ble to factors affec>ng these industries, and each fund's value may fluctuate more than a fund that invests in a wider range of industries. Because each fund concentrates its investments in one sector of the economy (financial services), and it invests in deriva>ve securi>es, investors should consider these risks because they may experience greater vola>lity than in a fund that invests across several sectors. In par>cular, companies within the financial services sector have recently been subject to unprecedented stock price vola>lity and deprecia>on, and there is significant uncertainty regarding the viability and prospects of many financial services companies. Investments in deriva>ves could magnify any of the fund's gains or losses. Deriva>ves involve a number of risks, including possible default by the other party to the transac>on, 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 deriva>ves could result in losses greater than if they had not been used.
Morningstar Inc. is an independent monitor of fund performance and has no rela>onship with Burnham Securi>es Inc. Morningstar rates mutual funds from one to five stars based on how well they've performed (aaer adjus>ng for risk and accoun>ng for all sales charges) in comparison to similar funds. Within each Morningstar Category, the top 10% of funds receive five stars, the next 22.5% four stars, the middle 35% three stars, the next 22.5% two stars, and the bocom 10% receive one star. Funds are rated for up to three >me periods -‐-‐ three-‐, five-‐, and 10 years -‐-‐ and these ra>ngs are combined to produce an overall ra>ng. Funds with less than three years of history are not rated. Ra>ngs are objec>ve, based en>rely on a mathema>cal evalua>on of past performance. They're a useful tool for iden>fying funds worthy of further research, but shouldn't be considered buy or sell recommenda>ons. Shares of the Burnham Investors Trust are offered by Burnham Securi>es Inc., Principal Distributor, 1325 Avenue of the Americas, New York, NY 10019; 800-‐874-‐FUND.
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Glossary of Terms Alpha: Alpha measures the difference between a fund's actual returns and its expected performance, given its level of risk (as measured by beta). A positive alpha figure indicates the fund has performed better than its beta would predict. In contrast, a negative alpha indicates a fund has underperformed, given the expectations established by the fund's beta. Some investors see alpha as a measurement of the value added or subtracted by a fund's manager. Beta: A component of Modern Portfolio Theory statistics, is a measure of a fund's sensitivity to market movements. It measures the relationship between a fund's excess return over T-bills and the excess return of the benchmark index. R2: Ranges from 0 to 100 and reflects the percentage of a fund's movements that are explained by movements in its benchmark index. An R-squared of 100 means that all movements of a fund are completely explained by movements in the index. Thus, index funds that invest only in S&P 500 stocks will have an R-squared very close to 100. Sharpe Ratio: Sharpe ratio is based on a risk-adjusted measure developed by Nobel Laureate William Sharpe. It is calculated using standard deviation and excess return to determine reward per unit of risk. First, the average monthly return of the 90-day Treasury bill (over a 36-month period) is subtracted from the fund's average monthly return. The difference in total return represents the fund's excess return beyond that of the 90-day Treasury bill, a risk-free investment. An arithmetic annualized excess return is then calculated by multiplying this monthly return by 12. To show a relationship between excess return and risk, this number is then divided by the standard deviation of the fund's annualized excess returns. The higher the Sharpe ratio, the better the fund's historical risk-adjusted performance. Standard Deviation: A statistical measure of the range of a fund's performance. When a fund has a high standard deviation, its range of performance has been very wide, indicating that there is a greater potential for volatility. The standard deviation figure provided here is an annualized statistic based on 36 monthly returns. Return on Equity: The percentage a company earns on its total equity in a given year (Year 1, 2, etc.). Price/Tangible Book: The price of a security compared to its hard, or tangible, book value as reported in the company's balance sheet. P/EPS: The stock price divided by net income (net of preferred dividends) by a weighted average of total shares outstanding for the year. Also known as PE Ratio. PE/G: The ratio calculated by dividing the PE ratio (above) by its earning growth rate (generally the average of trailing three years).
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