UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-08191
Name of Fund: Bullfinch Fund, Inc.
Fund Address: 1370 Pittsford Mendon Road
Mendon, New York 14506
Name and address of agent for service: Christopher Carosa, President,
Bullfinch Fund, Inc., 1370 Pittsford Mendon Road,
Mendon, New York 14506
Mailing address: 1370 Pittsford Mendon Road
Mendon, New York 14506
Registrant's telephone number, including area code: (585) 624-3150
Date of fiscal year end: 06/30/04
Date of reporting period: 07/01/03 - 6/30/04
Item 1 - Attach shareholder report
BULLFINCH FUND, INC.
1370 PITTSFORD MENDON ROAD
MENDON, NEW YORK 14506
(585) 624-3150
1-888-BULLFINCH
(1-888-285-5346)
Annual Report
June 30, 2004
Management's Discussion of Fund Performance
August 25, 2004
Dear Fellow Shareholders:
We are very proud to present the June 2004 Annual Report of the Bullfinch Fund,
Inc. This report contains the audited financial statements for both the
Unrestricted Series and the Western New York Series.
We have been very fortunate to experience above average investment performance
over the last several years. While past performance can never guarantee future
results, we believe our attention to downside risk has helped set us apart from
our peers. This appears to be more apparent when focusing on long-term results,
as we feel it should.
The biggest factors that may impact performance over the next year include both
uncertainties relating to the national and geopolitical events as well as the
turmoil within the mutual fund industry itself. With regard to the latter, it
appears investor psychology will continue to be pessimistic heading into our
presidential election. Any bad news on the geopolitical front - including a
domestic terrorist attack - will only exasperate this negativity. In terms of
behavioral finance, this excessive myopic reaction to recent events might
suggest a buying opportunity. As such, we feel most of the gains in calendar
2004 will occur after the election.
The second matter is, interestingly enough, perhaps of more pertinence to every
person who invests in any mutual fund. With the new compliance rules put in
place in 2004, some mutual funds will be forced to change their business
practices which may likely lead to increased expenses. Fortunately, the
Bullfinch Fund has always tried its best to avoid some of these marketing
tricks. So, when and if the SEC bans "Directed Brokerage" or "12(b)-1" fees,
many other mutual funds will find it more costly - if not more difficult - to
distribute their funds. We're happy to say we've purposely shunned these
methods of distribution because we feel they may not be fair for current
shareholders. As a result, when these rules change, the Bullfinch Fund - and
its own shareholders - will not suffer. In addition to these rules, new fund
governance rules - including the hiring of a Compliance Officer and an
independent director - may also substantially increase expenses of some mutual
funds. Again, fortunately, Carosa, Stanton & DePaolo - the investment adviser
of the Bullfinch Fund - will continue to cap the expense ratio of the fund.
Be sure to track both our funds on your favorite internet site. The ticker of
the Unrestricted Series is BUNRX and the ticker of the Western New York Series
is BWNYX. We did this because shareholders wanted to follow the funds on the
web.
We wish to thank our shareholders for expressing their confidence in us and
wish you continued good fortune in the coming year.
Best Regards,
Bullfinch Fund, Inc.
Christopher Carosa, CTFA
President
UNRESTRICTED SERIES
(A Series Within Bullfinch Fund, Inc.)
FINANCIAL STATEMENTS AS OF
JUNE 30, 2004
TOGETHER WITH
INDEPENDENT AUDITORS' REPORT
ROTENBERG & CO.
Certified Public Accountants
1870 Winton South Road
Suite 200
Rochester, NY 14618
Tel 585-295-2400
Fax 585-295-2150
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors of Bullfinch Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of the
Unrestricted Series (a series within the Bullfinch Fund, Inc.), including the
schedules of investments in securities, as of June 30, 2004, and the related
statements of operations, changes in net assets and the financial highlights
for the year then ended. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audit.
We conducted our audit in accordance with The Public Company Accounting
Oversight Board Standards (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of June 30, 2004 by correspondence
with the custodian. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Unrestricted Series (a series within the Bullfinch Fund, Inc.) as of June 30,
2004, and the results of its operations, the change in its net assets and the
financial highlights for the year then ended, in conformity with generally
accepted accounting principles in the United States of America.
The financial statements and financial highlights of the Unrestricted Series
(a series within the Bullfinch Fund, Inc.) as of June 30, 2003 and 2002 were
audited by other auditors whose reports dated August 13, 2003 and August 15,
2002, respectively, expressed an unqualified opinion on those statements.
/s/ Rotenberg & Company, LLP
Rotenberg & Company, LLP
Rochester, New York
July 21, 2004
UNRESTRICTED SERIES
(A SERIES WITHIN THE BULLFINCH FUND, INC.)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2004
ASSETS
Investments in Securities, at Fair Value,
Identified Cost of $2,956,801 $3,665,795
Cash 271,446
Accrued Interest and Dividends 5,467
Prepaid Expenses 3,444
----------
Total Assets $3,946,152
==========
LIABILITIES AND NET ASSETS
LIABILITIES
Accounts Payable $ 13,859
----------
NET ASSETS
Net Assets (Equivalent to $14.49/share based
On 271,338.635 shares of stock outstanding) $3,932,293
----------
Total Liabilities and Net Assets $3,946,152
==========
COMPOSITION OF NET ASSETS
Shares of Common Stock - Par Value $.01;
10,000,000 Shares Authorized,
271,338.635 Shares Outstanding $3,332,819
Accumulated Net Investment Loss (109,520)
Net Unrealized Appreciation on Investments 708,994
----------
Net Assets at June 30, 2004 $3,932,293
==========
The accompanying notes are an integral part of these statements.
UNRESTRICTED SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
SCHEDULE OF INVESTMENTS IN SECURITIES
JUNE 30, 2004
Historical
Common Stocks - 100% Shares Cost Value
Banking and Finance - 9.3%
BISYS Group Inc. 6,300 $ 83,378 $ 88,578
Fiserv, Inc. 3,000 75,229 116,670
National City Corp. 2,200 55,431 77,022
Trustco Bank Corp NY 4,400 47,300 57,640
--------- ---------
261,338 339,910
Computers - Software - 8.1%
Microsoft Corp. 3,850 97,289 109,956
Oracle 5,500 63,140 65,615
Synopsis, Inc. 4,300 99,496 122,249
--------- ---------
259,925 297,820
Pharmaceuticals - 6.8%
Mylan Laboratories Inc. 5,400 110,246 109,350
Pharmaceutical Product 4,400 114,092 139,788
--------- ---------
224,338 249,138
Food & Beverages - 6.1%
Conagra Foods, Inc. 4,100 89,953 111,028
Sensient Technologies 5,300 110,829 113,844
--------- ---------
200,782 224,872
Medical Products and Supplies - 6.0%
Polymedica Corporation 3,200 83,194 99,328
Serologicals Corp. 6,000 79,732 119,940
--------- ---------
162,926 219,268
Insurance - 5.5%
AmerUs Group Co. CL A 3,000 91,169 124,200
Gallagher Arthur J & Co. 2,600 79,638 79,170
--------- ---------
170,807 203,370
Electrical Equipment - 5.4%
Corning Inc. 9,000 71,358 117,540
General Electric Co. 2,450 64,576 79,380
--------- ---------
135,934 196,920
Shoes & Leather - 4.2%
Genesco Inc. 6,500 98,762 153,595
Apparel - 3.5%
VF Corp 2,600 110,625 126,620
Manufacturing - 3.5%
Lincoln Electric Holdings 3,700 70,781 126,133
Retail - General - 3.4%
Dollar General 6,300 95,632 123,228
Utilities - Natural Resources - 3.3%
Chesapeake Utilities 3,100 57,194 70,370
NiSource Inc. 2,500 46,325 51,550
--------- ---------
103,519 121,920
Retail - Specialty - 3.2%
Christopher & Banks Corp. 6,700 110,081 118,657
Computers - Hardware - 3.2%
Dell Corp 3,250 79,273 116,415
Automotive - 3.1%
Delphi Corporation 10,600 118,618 113,208
Semiconductors - 3.1%
Intel Corp 4,100 96,931 113,160
Leisure & Recreational - 3.0%
Hasbro Inc. 1,400 16,142 26,600
Mattel Inc. 4,550 52,852 83,038
--------- ---------
68,994 109,638
Consumer Durables - 2.6%
Maytag Corp. 3,900 111,911 95,589
Tobacco Products - 2.5%
Altria Group 1,850 40,459 92,593
Computer - Networking - 2.5%
Cisco Systems, Inc. 3,800 55,371 90,060
Office Equipment - 2.4%
Diebold, Inc. 1,650 41,069 87,236
Real Estate & Related - 2.1%
First American Financial 3,000 55,075 77,670
Medical Services - 2.1%
Curative Health Services 8,700 111,442 75,342
Commercial Services, Inc. - 1.8%
Paychex, Inc. 2,000 64,090 67,760
Instruments - 1.7%
Checkpoint Systems, Inc. 3,700 32,716 66,341
Furniture - 1.6%
LA-Z-Boy Inc. 3,300 75,402 59,332
------------ -----------
Total Investments in Securities $ 2,956,801 $ 3,665,795
=========== ===========
The accompanying notes are an integral part of these statements.
UNRESTRICTED SERIES (A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENTS OF OPERATIONS FOR THE YEARS ENDED JUNE 30, 2004, 2003 AND 2002
2004 2003 2002
INVESTMENT INCOME:
Dividends $ 45,850 $ 29,972 $ 28,180
EXPENSES:
Management fees 35,915 23,194 20,086
Legal and Professional 9,048 7,465 6,375
Director's Fees 1,200 1,000 850
Amortization - - 337
Fidelity Bond 1,400 1,106 863
Taxes 450 300 550
Telephone 226 - -
Registration Fees 1,024 511 1,080
Bank Services Charges 2,055 1,533 1,422
Dues and Subscriptions 2,162 752 750
----------------------------------
Total expense 53,480 35,861 32,313
----------------------------------
Net investment income (loss) (7,630) (5,889) (4,133)
----------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain (loss) from
securities transactions 102,654 (50,233) (1,324)
Unrealized appreciation (depreciation)
during the period 397,468 231,445 (191,148)
----------------------------------
Net gain (loss) on investments 500,122 181,212 (192,472)
----------------------------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 492,492 $ 175,323 $(196,605)
==================================
The accompanying notes are an integral part of these statements.
UNRESTRICTED SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 2004, 2003 AND 2002
2004 2003 2002
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ (7,630) $ (5,889) $ (4,133)
Net realized gain (loss) from
security transactions 102,654 (50,233) (1,324)
Net change in unrealized appreciation
(depreciation) of investments 397,468 231,445 (191,148)
-------------------------------------
Increase (decrease) in net assets resulting
from operations 492,492 175,323 (196,605)
CAPITAL SHARE TRANSACTION:
Sales 1,026,695 443,128 796,385
Redemptions (124,930) (76,112) (119,805)
-------------------------------------
Total capital share transactions 901,765 367,016 676,580
-------------------------------------
Increase in net assets 1,394,257 542,339 479,975
NET ASSETS:
Beginning of period 2,538,036 1,995,697 1,515,722
-------------------------------------
End of period $3,932,293 $2,538,036 $1,995,697
The accompanying notes are an integral part of these statements.
UNRESTRICTED SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2004
NOTE A - SCOPE OF BUSINESS
The Unrestricted Series (the "Series") is a series within the Bullfinch Fund,
Inc. (the "Fund"), which was organized as a Maryland corporation registered
under the Investment Company Act of 1940 as an open-ended non-diversified
management investment company.
The investment objective of the Series is to seek conservative long-term growth
in capital. The Adviser seeks to achieve this objective by using an asset mix
consisting primarily of exchange listed securities and over-the-counter common
stocks as well as U.S. Government securities maturing within five years.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash - Cash consists of amounts deposited in money market accounts and is not
federally insured. The Series has not experienced any losses on such amounts
and believes it is not exposed to any significant credit risk on cash.
Security Valuation - The Series records its investments at fair value.
Securities traded on national securities exchanges or the NASDAQ National
Market System are valued daily at the closing prices of the securities on those
exchanges and securities traded on over-the-counter markets are valued daily at
the closing bid prices. Short-term and money market securities are valued at
amortized cost, which approximates market value.
Income Taxes - It is the policy of the Fund to comply with the requirements of
Subchapter M of the Internal Revenue Code (the "Code") applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. In addition, the Fund intends to distribute an amount sufficient
to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision for federal income taxes or excise taxes has been made.
Organization Expenses - Organization expenses have been amortized over a 60-
month period.
Distributions to Shareholders - Distributions to shareholders are recorded on
the ex-dividend date. The Series made a distribution of its net investment
income and net realized capital gains to its shareholders on June 29, 2004, in
the form of stock dividends equal to 7,145.311 shares of stock.
Other - The Series follows industry practice and records security transactions
on the trade date. The specific identification method is used for determining
gains and losses for financial statement and income tax purposes. Dividend
income is recorded on the ex-dividend date and interest income is recorded on
the accrual basis.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results can differ from those estimates.
NOTE C - INVESTMENTS
For the year ended June 30, 2004, the Series purchased $1,807,912 of common
stock. During the same period, the Series sold $748,577 of common stock.
For the year ended June 30, 2003, the Series purchased $613,488 of common
stock. During the same period, the Series sold $155,491 of common stock.
For the year ended June 30, 2002, the Series purchased $681,874 of common
stock. During the same period, the Series sold $439,466 of common stock.
At June 30, 2004, the gross unrealized appreciation for all securities totaled
$784,259 and the gross unrealized depreciation for all securities totaled
$75,265, or a net unrealized appreciation of $708,994. The aggregate cost of
securities for federal income tax purposes at June 30, 2004 was $2,956,801.
At June 30, 2003, the gross unrealized appreciation for all securities totaled
$401,497 and the gross unrealized depreciation for all securities totaled
$89,971, or a net unrealized appreciation of $311,526. The aggregate cost of
securities for federal income tax purposes at June 30, 2003 was $1,794,813.
At June 30, 2002, the gross unrealized appreciation for all securities totaled
$302,040 and the gross unrealized depreciation for all securities totaled
$222,175, or a net unrealized appreciation of $79,865. The aggregate cost of
securities for federal income tax purposes at June 30, 2002 was $1,387,048.
NOTE D - INVESTMENT ADVISORY AGREEMENT
Carosa, Stanton & DePaolo Asset Management, LLC serves as investment advisor to
the Fund pursuant to an investment advisory agreement which was approved by the
Fund's board of directors. Carosa, Stanton & DePaolo Asset Management, LLC is a
Registered Investment Adviser under the Investment Advisers Act of 1940. The
Investment advisory agreement provides that Carosa, Stanton & DePaolo Asset
Management, LLC, subject to the supervision and approval of the Fund's board of
directors, is responsible for the day-to-day management of the Fund's
portfolio, which includes selecting investments and handling its business
affairs.
As compensation for its services to the Fund, the investment advisor receives
monthly compensation at an annual rate of 1.25% on the first $1 million of
daily average net assets and 1% on that portion of the daily average net assets
in excess of $1 million. These fees will be reduced by any sub-transfer agent
fees incurred by the Fund.
Carosa, Stanton & DePaolo Asset Management, LLC has agreed to forego sufficient
investment advisory fees to limit total expenses of the Fund to 2% of the first
$10 million in average assets and 1.5% of the next $20 million in average
assets.
During the fiscal years ended June 30, 2004, 2003 and 2002, the fund paid
investment advisory fees of $35,915, $23,194 and $20,086, respectively.
NOTE E - CAPITAL SHARE TRANSACTIONS
The Fund has authorized 10,000,000 shares of common stock at $0.01 par value
per share. Each share has equal dividend, distribution and liquidation rights.
Transactions in capital stock of the Series were as follows:
Shares Amount
Balance at June 30, 2001 115,143.033 $ 1,284,424
----------- -----------
Shares sold during 2002 62,800.889 796,385
Shares redeemed during 2002 (10,370.596) (119,805)
----------- -----------
Balance at June 30, 2002 167,573.326 1,961,004
----------- -----------
Shares sold during 2003 38,498.370 443,127
Shares redeemed during 2003 (6,113.927) (76,112)
----------- -----------
Balance at June 30, 2003 199,957.769 $ 2,328,019
----------- -----------
Shares sold during 2004 72,954.003 1,026,695
Shares Redeemed During 2004 (8,718.448) (124,930)
Reinvestment of Distributions,
June 29, 2004 7,145.311 103,035
----------- -----------
Balance at June 30, 2004 271,338.635 $ 3,332,819
=========== ===========
UNRESTRICTED SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
FINANCIAL HIGHLIGHTS
(SUPPLEMENTAL DATA FOR A SHARE OUTSTANDING)
FOR THE YEARS ENDED JUNE 30, 2004, 2003 AND 2002
2004 2003 2002
NET ASSET VALUE, beginning of period $12.69 $11.91 $13.16
----------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.03) (0.06) (0.06)
Net gain (loss) on securities both
realized and unrealized 1.44 0.84 (1.19)
----------------------------
Total from investment operations 1.41 0.78 (1.25)
----------------------------
DISTRIBUTIONS
Dividends 0.39 0.00 0.00
----------------------------
NET ASSET VALUE, end of period 14.49 $12.69 $11.91
============================
NET ASSETS, end of period $3,932,293 $2,538,036 $1,995,697
Actual Actual Actual
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.6 % 1.7 % 1.8 %
RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS (0.2)% (0.3)% (0.3)%
PORTFOLIO TURNOVER RATE 22.6 % 7.5 % 25.1 %
The accompanying notes are an integral part of these statements.
WESTERN NEW YORK SERIES
(A Series Within Bullfinch Fund, Inc.)
FINANCIAL STATEMENTS AS OF
JUNE 30, 2004
TOGETHER WITH
INDEPENDENT AUDITORS' REPORT
ROTENBERG & CO.
Certified Public Accountants
1870 Winton South Road
Suite 200
Rochester, NY 14618
Tel 585-295-2400
Fax 585-295-2150
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors of Bullfinch Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of the
Western New York Series (a series within the Bullfinch Fund, Inc.), including
the schedules of investments in securities, as of June 30, 2004, and the
related statements of operations, changes in net assets and the financial
highlights for the year then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit.
We conducted our audit in accordance with The Public Company Accounting
Oversight Board Standards (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of June 30, 2004 by correspondence
with the custodian. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Western New York Series (a series within the Bullfinch Fund, Inc.) as of June
30, 2004, and the results of its operations, the change in its net assets and
the financial highlights for the year then ended, in conformity with generally
accepted accounting principles in the United States of America.
The financial statements and financial highlights of the Western New York
Series (a series within the Bullfinch Fund, Inc.) as of June 30, 2003 and 2002
were audited by other auditors whose reports dated August 13, 2003 and August
15, 2002, respectively, expressed an unqualified opinion on those statements.
/s/ Rotenberg & Company, LLP
Rotenberg & Company, LLP
Rochester, New York
July 21, 2004
WESTERN NEW YORK SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2004
ASSETS
Investments in securities, at fair value,
identified cost of $306,734 $ 409,804
Cash 88,797
Accrued interest and dividends 548
Prepaid expenses 635
Due from investment advisor 1,267
---------
Total assets $ 501,051
=========
LIABILITIES AND NET ASSETS
LIABILITIES
Accounts payable $ 2,846
Unsettled Trades 7,623
---------
NET ASSETS
Net assets (equivalent to $12.22 per shares based
on 40,155.482 shares of stock outstanding) $ 490,582
---------
Total Liabilities and Net Assets $ 501,051
=========
COMPOSITION OF NET ASSETS
Shares of common Stock - Par Value $.01;
10,000,000 Shares Authorized,
40,155.482 Shares Outstanding $ 398,820
Accumulated net investment loss (11,308)
Net unrealized appreciation on investments 103,070
---------
Net assets at June 30, 2004 $ 490,582
=========
The accompanying notes are an integral part of these statements.
WESTERN NEW YORK SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
SCHEDULE OF INVESTMENTS IN SECURITIES
JUNE 30, 2004
Historical
Common Stocks - 100% Shares Cost Value
Electrical Equipment - 18.8%
Corning, Inc. 2,500 $ 15,652 $ 32,650
General Electric 350 9,305 11,340
Ultralife Batteries, Inc. 1,700 6,766 32,912
-------- --------
31,723 76,902
Commercial Services - 8.0%
Harris Interactive, Inc. 2,600 8,918 17,472
Paychex, Inc. 450 11,885 15,246
-------- --------
20,803 32,718
Railroads - 5.2%
Genesee & Wyoming Class A 900 3,783 21,330
Aerospace - 4.7%
Moog, Inc. Class A 225 2,930 8,350
Northrop Grunmman 200 2,536 10,740
-------- --------
5,466 19,090
Leisure & Recreational - 4.5%
Mattel, Inc. 1,000 14,245 18,250
Computers - Software - 4.3%
Oracle 1,300 16,642 15,509
Veramark Tech, Inc. 1,500 9,782 1,935
-------- --------
26,424 17,444
Real Estate & Related - 4.2%
Home Properties of New York, Inc. 200 5,624 7,796
Sovran Self Storage 250 6,892 9,545
-------- --------
12,516 17,341
Steel - 4.0%
Gibraltar Steel Corp 500 8,975 16,410
Retail - Specialty - 3.9%
Christopher & Banks 900 15,565 15,939
Automotive - 3.6%
Delphi Corporation 1,400 15,726 14,952
Food & Beverages - 3.6%
Constellation Brands 400 5,017 14,852
Airlines - 3.5%
Southwest Airlines Co. 850 15,105 14,255
Retail - General - 3.1%
Dollar General 650 9,065 12,714
Computers - Hardware - 3.1%
Dell Corporation 350 10,735 12,537
Utilities - Natural Resources - 3.1%
National Fuel Gas 500 11,250 12,500
Computers - Networking - 2.8%
Performance Technologies, Inc. 1,200 12,851 11,292
Metal Fabrication & Hardware - 2.7%
Graham Corp. 1,000 8,828 11,250
Photographic Equipment and Suppliers - 2.6%
Eastman Kodak 400 11,746 10,792
Tobacco Products - 2.4%
Altria Group 200 4,892 10,010
Medical Products & Supplies - 2.4%
Wilson Greatbatch Technologies 350 12,782 9,783
Computers - Distributors - 2.1%
Ingram Micro 600 10,909 8,682
Electronic Components - 1.8%
Astronics Corp 1,431 7,065 7,569
Chemical - 1.7%
CPAC, Inc. 1,200 7,236 7,080
Office Equipment - 1.6%
Xerox Corp 450 12,058 6,525
Packaging and Containers - 1.5%
Mod Pac Corporation 715 3,461 6,377
Industrial Services - 0.3%
American Locker Group, Inc. 100 636 1,205
Computers - Services - 0.2%
Computer Task Group, Inc. 200 3,927 790
Machinery - 0.2%
Columbus McKinnon Corp 100 2,344 707
Industrial Materials - 0.1%
Servotronics, Inc. 100 937 425
Telecommunications - 0.0%
Choice One Communications 400 664 83
Total Investments in Securities $ 306,734 $ 409,804
========= =========
WESTERN NEW YORK SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 2004, 2003, AND 2002
2004 2003 2002
INVESTMENT INCOME:
Dividends $ 4,786 $ 4,590 $ 4,698
EXPENSES:
Management fees 5,591 3,716 4,020
Reimbursement of Management Fees (1,767) (1,000) (1,741)
Legal and Professional 1,049 1,275 1,290
Director's Fees 1,200 1,000 850
Amortization - 17 666
Fidelity Bond 155 190 216
Taxes 250 300 350
Telephone 226 - -
Registration Fees 270 200 200
Bank Services Charges 705 (964) 405
Dues and Subscriptions 1,362 250 250
-------- -------- --------
Total expense 9,041 4,984 6,506
-------- -------- --------
Net investment income (loss) (4,255) (394) (1,808)
-------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain (loss) from
securities transactions (136) (5,051) (1,242)
Unrealized appreciation (depreciation)
during the period 95,527 28,678 (32,377)
-------- -------- --------
Net gain (loss) on investments 95,391 23,627 (33,619)
-------- -------- --------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 91,136 $ 23,233 $ (35,427)
========= ========= =========
The accompanying notes are an integral part of these statements.
WESTERN NEW YORK SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 2004, 2003, AND 2002
2004 2003 2002
DECREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ (4,255) $ (394) $ (1,808)
Net realized gain (loss) from
security transactions (136) (5,051) (1,242)
Net change in unrealized appreciation
(depreciation) of investments 95,527 28,678 (32,377)
-------- --------- ---------
Increase (decrease) in net assets resulting
from operations 91,136 23,233 (35,427)
CAPITAL SHARE TRANSACTIONS:
Sales 41,948 2,000 81,125
Redemptions (9,822) - (2,503)
-------- --------- ---------
Total capital share transactions 32,126 2,000 78,622
-------- --------- ---------
Increase in net assets 123,262 25,233 43,195
NET ASSETS:
Beginning of period 367,320 342,087 298,892
--------- --------- ---------
End of period $ 490,582 $ 367,320 $ 342,087
========= ========= =========
The accompanying notes are an integral part of these statements.
WESTERN NEW YORK SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2004
NOTE A - SCOPE OF BUSINESS
The Western New York Series (the "Series") is a series within the Bullfinch
Fund, Inc. (the "Fund"), which was organized as a Maryland corporation
registered under the Investment Company Act of 1940 as an open-ended non-
diversified management investment company.
The investment objective of the Series is to seek capital appreciation through
the investment in common stock of companies with an important economic presence
in the Greater Western New York Region. The Adviser seeks to achieve this
objective by using an asset mix consisting primarily of exchange listed
securities and over-the-counter common stocks as well as U.S. Government
securities maturing within five years.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash - Cash consists of amounts deposited in money market accounts and is not
federally insured. The Series has not experienced any losses on such amounts
and believes it is not exposed to any significant credit risk on cash.
Security Valuation - The Series records its investments at fair value.
Securities traded on national securities exchanges or the NASDAQ National
Market System are valued daily at the closing prices of the securities on those
exchanges and securities traded on over-the-counter markets are valued daily at
the closing bid prices. Short-term and money market securities are valued at
amortized cost, which approximates market value.
Income Taxes - It is the policy of the Fund to comply with the requirements of
Subchapter M of the Internal Revenue Code (the "Code") applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. In addition, the Fund intends to distribute an amount sufficient
to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision for federal income taxes or excise taxes has been made.
Organization Expenses - Organization expenses have been amortized over a 60-
month period.
Distributions to Shareholders - Distributions paid to shareholders are recorded
on the ex-dividend date. There were no distributions to shareholders during the
fiscal years ended June 30, 2004, 2003 or 2002.
Other - The Series follows industry practice and records security transactions
on the trade date. The specific identification method is used for determining
gains and losses for financial statement and income tax purposes. Dividend
income is recorded on the ex-dividend date and interest income is recorded on
the accrual basis.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results can differ those estimates.
NOTE C - INVESTMENTS
For the year ended June 30, 2004, the Series purchased $50,274 of common stock.
During the same period, the Series sold $70,284 of common stock.
For the year ended June 30, 2003, the Series purchased $34,755 of common stock.
During the same period, the Series sold $24,170 of common stock.
For the year ended June 30, 2002, the Series purchased $134,659 of common stock.
During the same period, the Series sold $90,260 of common stock.
At June 30, 2004, the gross unrealized appreciation for all securities totaled
$132,970 and the gross unrealized depreciation for all securities totaled
$29,900, or a net unrealized appreciation of $103,070. The aggregate cost of
securities for federal income tax purposes at June 30, 2004 was $306,734.
At June 30, 2003, the gross unrealized appreciation for all securities totaled
$82,696 and the gross unrealized depreciation for all securities totaled
$75,154, or a net unrealized appreciation of $7,542. The aggregate cost of
securities for federal income tax purposes at June 30, 2003 was $326,856.
At June 30, 2002, the gross unrealized appreciation for all securities totaled
$71,689 and the gross unrealized depreciation for all securities totaled
$92,825, or a net unrealized depreciation of $21,136. The aggregate cost of
securities for federal income tax purposes at June 30, 2002 was $321,346.
NOTE D - INVESTMENT ADVISORY AGREEMENT
Carosa, Stanton & DePaolo Asset Management, LLC serves as investment advisor to
the Fund pursuant to an investment advisory agreement which was approved by the
Fund's board of directors. Carosa, Stanton & DePaolo Asset Management, LLC is a
Registered Investment Adviser under the Investment Advisers Act of 1940. The
Investment advisory agreement provides that Carosa, Stanton & DePaolo Asset
Management, LLC, subject to the supervision and approval of the Fund's board of
directors, is responsible for the day-to-day management of the Fund's
portfolio, which includes selecting investments and handling its business
affairs.
As compensation for its services to the Fund, the investment advisor receives
monthly compensation at an annual rate of 1.25% on the first $1 million of
daily average net assets and 1% on that portion of the daily average net assets
in excess of $1 million. These fees will be reduced by any sub-transfer agent
fees incurred by the Fund.
Carosa, Stanton & DePaolo Asset Management, LLC has agreed to forego sufficient
investment advisory fees to limit total expenses of the Fund to 2% of the first
$10 million in average assets and 1.5% of the next $20 million in average
assets.
During the fiscal years ended June 30, 2004, 2003 and 2002, the fund paid
investment advisory fees of $3,824, $2,716 and $2,279, respectively.
NOTE E - CAPITAL SHARE TRANSACTIONS
The Fund has authorized 10,000,000 shares of common stock at $0.01 par value
per share. Each share has equal dividend, distribution and liquidation rights.
Transactions in capital stock of the Series were as follows:
Shares Amount
Balance at June 30, 2001 29,538.211 $ 286,072
---------- ---------
Shares sold during 2002 7,943.301 81,125
Shares redeemed during 2002 (242.034) (2,503)
---------- ---------
Balance at June 30, 2002 37,239.478 364,694
---------- ---------
Shares sold during 2003 242.130 2,000
Shares redeemed during 2003 - -
---------- ---------
Balance at June 30, 2003 37,481.608 $ 366,694
---------- ---------
Shares sold during 2004 3,460.239 41,948
Shares redeemed during 2004 (786.365) (9,822)
---------- ---------
Balance at June 30, 2004 40,155.482 $ 398,820
========== =========
WESTERN NEW YORK SERIES
(A SERIES WITHIN BULLFINCH FUND, INC.)
FINANCIAL HIGHLIGHTS
(SUPPLEMENTAL DATA FOR A SHARE OUTSTANDING)
FOR THE YEARS ENDED JUNE 30, 2004, 2003, AND 2002
2004 2003 2002
NET ASSET VALUE, beginning of period $ 9.80 $ 9.19 $10.12
------ ------ ------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.11) (0.03) (0.34)
Net gain (loss) on securities both
realized and unrealized 2.53 0.64 (0.59)
------ ------ ------
Total from investment operations 2.42 0.61 (0.93)
DISTRIBUTIONS
Dividends - - -
------ ------ ------
NET ASSET VALUE, end of period 12.22 $ 9.80 $ 9.19
====== ====== ======
NET ASSETS, end of period $ 490,582 $ 367,320 $ 342,087
========= ========= =========
Actual Actual Actual
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.0 % 1.6 % 2.0 %
RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS (1.0)% 0.0 % (1.4)%
PORTFOLIO TURNOVER RATE 11.3 % 7.7 % 28.0 %
The accompanying notes are an integral part of these statements.
Item 2 - CODE OF ETHICS.
(a) The registrant has adopted a code of ethics that applies to the
registrant's principal executive officer, its principal financial
officer, principal accounting officer, controller, as well as
any other officers and persons providing similar functions. This
code of ethics is included as Exhibit 11(a)(1).
(b) During the period covered by this report, no amendments were made to
the provisions of the code of ethics
(c) During the period covered by this report, no implicit or explicit
waivers to the provisions of the code of ethics were granted.
Item 3 - AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Directors determined that the registrant
does not have an Audit Committee member who possesses all of the
attributes required to be an "audit committee financial expert" as
defined in instruction 2(b) of Item 3 of Form N-CSR. It was the
consensus of the board that, although no one individual Audit
Committee member meets the technical definition of an audit
committee financial expert, the Committee has sufficient expertise
collectively among its members to effectively discharge its duties
and that the Committee will engage additional expertise if needed.
Item 4 - PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The registrant has engaged its principal accountant to perform
audit services. "Audit services" refer to performing an audit of
the registrant's annual financial statements or services that are
normally provided by the accountant in connection with statutory
and regulatory filings or engagements for those fiscal years.
"Audit-related services" refer to the assurance and related
services by the principal accountant that are reasonably related
to the performance of the audit. "Tax services" refer to
professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning. The following table
details the aggregate fees billed for each of the last two fiscal
years for audit fees, audit-related fees, tax fees and other fees
by the principal accountant. Since the accounting fees were
approved by the Board of Directors in total, the principal
accountant has provided an estimate of the split between audit and
preparation of the tax filings.
06/30/2004 06/30/2003
Audit Fees $8,000 $6,000
Audit-Related Fees $ 0 $ 0
Tax Fees $2,000 $1,000
All Other Fees $ 0 $ 0
The Audit Committee of the registrant's Board of Directors
recommends a principal accountant to perform audit services for
the registrant. Each year, the registrant's Board of Directors
vote to approve or disapprove the principal accountant recommended
by the Audit Committee for the following year's accounting work.
Item 5 - AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to open-end investment companies.
Item 6 - Reserved
Item 7 - DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to open-end investment companies.
Item 8 - PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANIES.
Not applicable to open-end investment companies.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
Item 10(a) -The registrant's principal executive and principal financial
officer has determined that the registrant's disclosure controls
and procedures (as defined in Rule 30a-3(c) under the Investment
Company Act of 1940) are effective based on the evaluation of
these controls and procedures are effective as of a date within 90
days prior to the filing date of this report.
Item 10(b) -There were no changes in the registrant's internal control
over financial reporting (as defined in Rule 30a-3(d) under the
Investment Company Act of 1940) that occurred during the
registrant's last fiscal half-year (the registrant's second fiscal
half-year in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 11 - EXHIBITS.
(a)(1) Code of Ethics - referred to in Item 2 is attached hereto.
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002 are attached hereto.
(b) Certifications pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Bullfinch Fund, Inc.
By: /s/ Christopher Carosa
----------------------------------------
Christopher Carosa,
President of Bullfinch Fund, Inc.
Date: August 25, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Christopher Carosa
----------------------------------------
Christopher Carosa,
President of Bullfinch Fund, Inc.
Date: August 25, 2004